1997 Stock Option Plan - J Crew Group Inc.
EXHIBIT A
J. CREW GROUP, INC.
1997 STOCK OPTION PLAN
1. Purpose of the Plan
The purpose of the J. Crew Group, Inc. 1997 Stock Option
Plan (the "Plan") is to promote the interests of the Company and
its stockholders by providing the Company's key employees and
consultants with an appropriate incentive to encourage them to
continue in the employ of the Company and to improve the growth
and profitability of the Company.
2. Definitions
As used in this Plan, the following capitalized terms shall
have the following meanings:
(a) "Affiliate" shall mean the Company and any of its direct
or indirect subsidiaries.
(b) "Board" shall mean the Board of Directors of the
Company.
(c) "Cause" shall mean, when used in connection with the
termination of a Participant's Employment, unless otherwise
provided in the Participant's Stock Option Grant Agreement, the
termination of the Participant's Employment by the Company or an
Affiliate on account of (i) the willful violation by the
Participant of any federal or state law or any rule of the
Company or any Affiliate, (ii) a breach by a Participant of the
Participant's duty of loyalty to the Company and its Affiliates
in contemplation of the Participant's termination of Employment,
such as the Participant's pre-termination of Employment
solicitation of customers or employees of the Company or an
Affiliate, (iii) the Participant's unauthorized removal from the
premises of the Company or Affiliate of any document (in any
medium or form) relating to the Company or an Affiliate or the
customers of the Company or an Affiliate, or (iv) any gross
negligence in connection with the performance of the
Participant's duties as an Employee. Any rights the Company or an
Affiliate may have hereunder in respect of the events giving rise
to Cause shall
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be in addition to the rights the Company or Affiliate may have
under any other agreement with the Employee or at law or in
equity. If, subsequent to a Participant's termination of
Employment, it is discovered that such Participant's Employment
could have been terminated for Cause, the Participant's
Employment shall, at the election of the Committee, in its sole
discretion, be deemed to have been terminated for Cause
retroactively to the date the events giving rise to Cause
occurred.
(d) "Change in Control" shall mean the occurrence of any of
the following events: (i) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions)
of all or substantially all of the assets of the Company or JCC
to any Person or group of related persons for purposes of Section
13(d) of the Exchange Act (a "Group"), together with any
affiliates thereof other than to TPG Partnership II, L.P. or any
of its affiliates (hereinafter "TPG II"); (ii) the approval by
the holders of capital stock of the Company or JCC of any plan or
proposal for the liquidation or dissolution of the Company or
JCC, as the case may be; (iii) (A) any Person or Group (other
than TPG II) shall become the owner, directly or indirectly,
beneficially or of record, of shares representing more than 40%
of the aggregate voting power of the issued and outstanding stock
entitled to vote in the election of directors, managers or
trustees (the "Voting Stock") of the Company or JCC and (B) TPG
II beneficially owns, directly or indirectly, in the aggregate a
lesser percentage of the Voting Stock of the Company than such
other Person or Group; (iv) the replacement of a majority of the
Board of Directors of the Company or JCC over a two-year period
from the directors who constituted the Board of Directors of the
Company or JCC, as the case may be, at the beginning of such
period, and such replacement shall not have been approved by a
vote of at least a majority of the Board of Directors of the
Company or JCC, as the case may be, then still in office who
either were
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members of such Board of Directors at the beginning of such
period or whose election as a member of such Board of Directors
was previously so approved or who were nominated by, or designees
of, TPG II; (v) any Person or Group other than TPG II shall have
acquired the power to elect a majority of the members of the
Board of Directors of the Company; or (vi) a merger or
consolidation of the Company with another entity in which holders
of the Common Stock of the Company immediately prior to the
consummation of the transaction hold, directly or indirectly,
immediately following the consummation of the transaction, 50% or
less of the common equity interest in the surviving corporation
in such transaction.
(e) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(f) "Commission" shall mean the U.S. Securities and Exchange
Commission.
(g) "Committee" shall mean the Committee appointed by the
Board pursuant to Section 3 of the Plan.
(h) "Common Stock" shall mean the common stock of the
Company.
(i) "Company" shall mean J. Crew Group, Inc.
(j) "Disability" shall mean a permanent disability as
defined in the Company's or an Affiliate's disability plans, or
as defined from time to time by the Company, in its discretion,
or as specified in the Participant's Stock Option Grant
Agreement.
(k) "EBITDA" shall mean, for any period, the consolidated
earnings (losses) of the Company and its affiliates before
extraordinary items and the cumulative effect of accounting
changes, as determined by the Company in accordance with U.S.
generally accepted accounting principles, and before interest
(expense or income), taxes, depreciation, amortization, non-cash
gains and losses from sales of assets other than in the ordinary
course of business, Transaction Costs and Valuation Adjustments.
For purposes of clarification, in determining EBITDA,
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consolidated earnings shall be reduced (or, with respect to
losses, increased), but only once, by compensation expenses
attributable to this Plan and any other compensation plan,
program or arrangement of the Company or any of its affiliates,
to the extent such expenses are recorded in accordance with U.S.
generally accepted accounting principles. In the event of the
occurrence of any business combination transaction affecting the
earnings or indebtedness of the Company, including (without
limitation) any transaction accounted for as a pooling or as a
recapitalization, the Committee shall adjust EBITDA as the
Committee shall in good faith consider necessary or appropriate,
including (without limitation) to reflect transaction-related
costs attributable to such accounting method ("Transaction
Costs").
(l) "Eligible Employee" shall mean (i) any Employee who is a
key executive of the Company or an Affiliate, or (ii) certain
other Employees or consultants who, in the judgment of the
Committee, should be eligible to participate in the Plan due to
the services they perform on behalf of the Company or an
Affiliate.
(m) "Employment" shall mean employment with the Company or
any Affiliate and shall include the provision of services as a
consultant for the Company or any Affiliate. "Employee" and
"Employed" shall have correlative meanings.
(n) "Exercise Date" shall have the meaning set forth in
Section 4.10 herein.
(o) "Exercise Notice" shall have the meaning set forth in
Section 4.10 herein.
(p) "Exercise Price" shall mean the price that the
Participant must pay under the Option for each share of Common
Stock as determined by the Committee for each Grant and specified
in the Stock Option Grant Agreements.
(q) "Fair Market Value" shall mean, as of any date:
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(1) prior to the existence of a Public Market for the
Common Stock, the quotient obtained by dividing (i) the excess of
(x) the product of (A) 10 (as such number may be changed as provided
below, the "Multiple") and (B) EBITDA for the twelve month period
ending on the fiscal quarter-end immediately preceding such date
over (y) the sum of (I) the weighted arithmetic average
indebtedness (net of all cash and cash equivalents) during such
period of the Company and its consolidated direct and indirect
wholly-owned subsidiaries and (II) for each less than
wholly-owned direct or indirect subsidiary of the Company the
earnings of which are either consolidated with those of the
Company or accounted for on an equity basis, the weighted
arithmetic average indebtedness (net of all cash and cash
equivalents) during such period of such subsidiary multiplied by
the proportion of the total earnings (determined on the same
basis as, and excluding the same items as in the determination
of, EBITDA) of such subsidiary included in EBITDA (excluding
earnings attributable to dividends received from such
subsidiary), by (ii) the total number of shares of Common Stock
on the last day of such period, determined on a fully diluted
basis. For purposes of determining the indebtedness of an entity,
all preferred stock of the entity, other than preferred stock
convertible into Common Stock, shall be considered indebtedness
in the amount of the liquidation value thereof plus accumulated
but unpaid dividends thereon. Notwithstanding the foregoing
provisions of this paragraph (1), for the ten (10) day period
immediately following the occurrence of a Change of Control, Fair
Market Value shall not be less than the price per share, if any,
paid to any member of the Initial Ownership Group or the public
tender offer price paid in connection with such Change of
Control. The Committee shall review the Multiple then in effect
following the audit of the Company's financial statements each
fiscal year, and shall make such increases or decreases in the
Multiple
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as shall be determined by the Committee in good faith to reflect
market conditions and Company performance.
(2) on which a Public Market for the Common Stock
exists, (i) the average of the high and low sales prices on such
day of a share of Common Stock as reported on the principal
securities exchange on which shares of Common Stock are then
listed or admitted to trading or (ii) if not so reported, the
average of the closing bid and ask prices on such day as reported
on the National Association of Securities Dealers Automated
Quotation System or (iii) if not so reported, as furnished by any
member of the National Association of Securities Dealers, Inc.
selected by the Committee. The Fair Market Value of a share of
Common Stock as of any such date on which the applicable exchange
or inter-dealer quotation system through which trading in the
Common Stock regularly occurs is closed shall be the Fair Market
Value determined pursuant to the preceding sentence as of the
immediately preceding date on which the Common Stock is traded, a
bid and ask price is reported or a trading price is reported by
any member of NASD selected by the Committee. In the event that
the price of a share of Common Stock shall not be so reported or
furnished, the Fair Market Value shall be determined by the
Committee in good faith to reflect the fair market value of a
share of Common Stock.
(r) "Grant" shall mean a grant of an Option under the Plan
evidenced by a Stock Option Grant Agreement.
(s) "Grant Date" shall mean the Grant Date as defined in
Section 4.3 herein.
(t) "Initial Ownership Group" shall mean TPG Partners II,
L.P., each beneficial owner of Common Stock immediately after
October 17, 1997 and each person or entity directly or indirectly
controlling, controlled by or under common control with TPG
Partners II, L.P., or any such beneficial owner.
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(u) "JCC" shall mean J. Crew Operating Corp., a wholly owned
subsidiary of the Company.
(v) "Non-Qualified Stock Option" shall mean an Option that
is not an 'incentive stock option" within the meaning of Section
422 of the Code.
(w) "Option" shall mean the option to purchase Common Stock
granted to any Participant under the Plan. Each Option granted
hereunder shall be a Non-Qualified Stock Option and shall be
identified as such in the Stock Option Grant Agreement by which
it is evidenced.
(x) "Option Spread" shall mean, with respect to an Option,
the excess, if any, of the Fair Market Value of a share of Common
Stock as of the applicable Valuation Date over the Exercise
Price.
(y) "Participant" shall mean an Eligible Employee to whom a
Grant of an Option under the Plan has been made, and, where
applicable, shall include Permitted Transferees.
(z) "Permitted Transferee" shall have the meaning set forth
in Section 4.6.
(aa) "Person" means an individual, partnership, corporation,
limited liability company, unincorporated organization, trust or
joint venture, or a governmental agency or political subdivision
thereof.
(bb) A "Public Market" for the Common Stock shall be deemed
to exist for purposes of the Plan if the Common Stock is
registered under Section 12(b) or 12(g) of the Exchange Act and
trading regularly occurs in such Common Stock in, on or through
the facilities of securities exchanges and/or inter-dealer
quotation systems in the United States (within the meaning of
Section 902(n) of the Securities Act) or any designated offshore
securities market (within the meaning of Rule 902(a) of the
Securities Act).
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(cc) "Securities Act" shall mean the Securities Act of 1933,
as amended.
(dd) "Stock Option Grant Agreement" shall mean an agreement
entered into by each Participant and the Company evidencing the
Grant of each Option pursuant to the Plan (a sample of which is
attached hereto as Exhibit A).
(ee) "Stockholders' Agreement" shall mean the Stockholders'
Agreement, attached hereto as Exhibit B or such other
stockholders' agreement as may be entered into between the
Company and any Participant.
(ff) "Transfer" shall mean any transfer, sale, assignment,
gift, testamentary transfer, pledge, hypothecation or other
disposition of any interest. "Transferee" and "Transferor" shall
have correlative meanings.
(gg) "Valuation Adjustments" shall mean that amount of
non-cash expense charged against earnings for any period
resulting from the application of accounting for business
combinations in accordance with Accounting Principles Board
Opinion #16. These charges may include, but are not limited to,
amounts such as inventory revaluations, property, plant and
equipment revaluations, goodwill amortization and finance fee
amortization.
(hh) "Valuation Date" shall mean (i) prior to the existence
of a Public Market for the Common Stock, the last day of each
calendar quarter, or (ii) on or after the existence of a Public
Market for the Common Stock, the trading date immediately
preceding the date of the relevant transaction.
(ii) "Vesting Date" shall mean the date an Option becomes
exercisable as defined in Section 4.4 herein.
(jj) "Withholding Request" shall have the meaning set forth
in Section 4.10 herein.
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3. Administration of the Plan
The Committee shall be appointed by the Board and shall
administer the Plan. No member of the Committee shall participate
in any decision that specifically affects such member's interest
in the Plan.
3.1 Powers of the Committee. In addition to the other powers
granted to the Committee under the Plan, the Committee shall have
the power: (a) to determine to which of the Eligible Employees
Grants shall be made; (b) to determine the time or times when
Grants shall be made and to determine the number of shares of
Common Stock subject to each such Grant; (c) to prescribe the
form of any instrument evidencing a Grant; (d) to adopt, amend
and rescind such rules and regulations as, in its opinion, may be
advisable for the administration of the Plan; (e) to construe and
interpret the Plan, such rules and regulations and the
instruments evidencing Grants; and (f) to make all other
determinations necessary or advisable for the administration of
the Plan.
3.2 Determinations of the Committee. Any Grant,
determination, prescription or other act of the Committee shall
be final and conclusively binding upon all persons.
3.3 Indemnification of the Committee. No member of the
Committee or the Board shall be liable for any action or
determination made in good faith with respect to the Plan or any
Grant. To the full extent permitted by law, the Company shall
indemnify and hold harmless each person made or threatened to be
made a party to any civil or criminal action or proceeding by
reason of the fact that such person, or such person's testator or
intestate, is or was a member of the Committee.
3.4 Compliance with Applicable Law. Notwithstanding
anything herein to the contrary, the Company shall not be
required to issue or deliver any certificates evidencing shares
of Common Stock pursuant to the exercise of any Options, unless
and until the Committee has
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determined, with advice of counsel, that the issuance and
delivery of such certificates is in compliance with all
applicable laws, regulations of governmental authorities and, if
applicable, the requirements of any exchange on which the shares
of Common Stock are listed or traded. The Company shall use its
reasonable efforts to register such shares of Common Stock or to
take any other action in order to comply with any such law,
regulation or requirement with respect to the issuance and
delivery of such certificates. In addition to the terms and
conditions provided herein, the Committee may require that a
Participant make such reasonable covenants, agreements and
representations as the Committee, in its sole discretion, deems
advisable in order to comply with any such laws, regulations or
requirements.
3.5 Inconsistent Terms. In the event of a conflict between
the terms of the Plan and the terms of any Stock Option Grant
Agreement, the terms of the Stock Option Grant Agreement shall
govern.
4. Options
Subject to adjustment as provided in Section 4.13 hereof,
the Committee may grant to Participants Options to purchase
shares of Common Stock of the Company which, in the aggregate, do
not exceed 7388 shares of Common Stock. To the extent that any
Option granted under the Plan terminates, expires or is canceled
without having been exercised, the shares covered by such Option
shall again be available for Grant under the Plan.
4.1 Identification of Options. The Options granted under the
Plan shall be clearly identified in the Stock Option Grant
Agreement as Non-Qualified Stock Options.
4.2 Exercise Price. The Exercise Price of any Option granted
under the Plan shall be such price as the Committee shall
determine (which may be equal to, less than or greater than the
Fair Market Value of a share of Common Stock on the Grant Date
for such Options) and which
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shall be specified in the Stock Option Grant Agreement; provided
that such price may not be less than the minimum price required
by law.
4.3 Grant Date. The Grant Date of the Options shall be the
date designated by the Committee and specified in the Stock
Option Grant Agreement as the date the Option is granted.
4.4 Vesting Date of Options. Each Stock Option Grant
Agreement shall indicate the date or conditions under which such
Option shall become exercisable; provided, however, that, upon a
Change in Control, all outstanding Options shall immediately
become vested.
4.5 Expiration of Options. With respect to each Participant,
such Participant's Option(s), or portion thereof, which have not
become exercisable shall expire on the date such Participant's
Employment is terminated for any reason unless otherwise
specified in the Stock Option Grant Agreement. With respect to
each Participant, each Participant's Option(s), or any portion
thereof, which have become exercisable on the date such
Participant's Employment is terminated shall expire on the
earlier of (i) the commencement of business on the date the
Participant's Employment is terminated for Cause; (ii) 90 days
after the date the Participant's Employment is terminated for any
reason other than Cause, death or Disability; (iii) one year
after the date the Participant's Employment is terminated by
reason of death or Disability; or (iv) the 10th anniversary of
the Grant Date for such Option(s). Notwithstanding the foregoing,
the Committee may specify in the Stock Option Grant Agreement a
different expiration date or period for any Option Granted
hereunder, and such expiration date or period shall supersede the
foregoing expiration period.
4.6 Limitation on Transfer. During the lifetime of a
Participant, each Option shall be exercisable only by such
Participant unless the Participant obtains written consent from
the
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Company to Transfer such Option to a specified Transferee (a
"Permitted Transferee") or the Participant's Stock Option Grant
Agreement provides otherwise.
4.7 Condition Precedent to Transfer of Any Option. It shall
be a condition precedent to any Transfer of any Option by any
Participant that the Transferee, if not already a Participant in
the Plan, shall agree prior to the Transfer in writing with the
Company to be bound by the terms of the Plan and the Stock Option
Grant Agreement as if he had been an original signatory thereto.
4.8 Effect of Void Transfers. In the event of any purported
Transfer of any Options in violation of the provisions of the
Plan, such purported Transfer shall, to the extent permitted by
applicable law, be void and of no effect.
4.9 Exercise of Options. A Participant may exercise any or
all of his vested Options by serving an Exercise Notice on the
Company as provided in Section 4.10 hereto.
4.10 Method of Exercise. The Option shall be exercised by
delivery of written notice to the Company's principal office (the
"Exercise Notice"), to the attention of its Secretary, no less
than five business days in advance of the effective date of the
proposed exercise (the "Exercise Date"). Such notice shall (a)
specify the number of shares of Common Stock with respect to
which the Option is being exercised, the Grant Date of such
Option and the Exercise Date, (b) be signed by the Participant,
and (c) prior to the existence of a Public Market for the Common
Stock, indicate in writing that the Participant agrees to be
bound by the Stockholders' Agreement, and (d) if the Option is
being exercised by the Participant's Permitted Transferee(s),
such Permitted Transferee(s) shall indicate in writing that they
agree to and shall be bound by the Plan and Stock Option Grant
Agreement as if they had been original signatories thereto. The
Exercise Notice shall include (i) payment in cash for an amount
equal to the Exercise Price
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multiplied by the number of shares of Common Stock specified in
such Exercise Notice, (ii) a certificate representing the number
of shares of Common Stock with a Fair Market Value equal to the
Exercise Price (provided the Participant has owned such shares at
least six months prior to the Exercise Date) multiplied by the
number of shares of Common Stock specified in such Exercise
Notice, or (iii) a combination of (i) and (ii) or any method
otherwise approved by the Committee. In addition, the Exercise
Notice shall include payment either in cash or previously-owned
shares of Common Stock in an amount equal to the applicable
withholding taxes based on the Option Spread for each share of
Common Stock specified in the Exercise Notice as of the most
recent Valuation Date unless the Participant requests, in
writing, that the Company withhold a portion of the shares that
are to be distributed to the Participant to satisfy the
applicable federal, state and local withholding taxes incurred in
connection with the exercise of the Option (the "Withholding
Request"). The Committee, in its sole discretion, will either
grant or deny the Withholding Request and shall notify the
Participant of its determination prior to the Exercise Date. If
the Withholding Request is denied, the Participant shall pay an
amount equal to the applicable withholding taxes based on the
Option Spread for each share of Common Stock specified in the
Exercise Notice as of the most recent Valuation Date on or before
such Exercise Date. The partial exercise of the Option, alone,
shall not cause the expiration, termination or cancellation of
the remaining Options.
4.11 Certificates of Shares. Upon the exercise of the
Options in accordance with Section 4.10 and, prior to the
existence of a Public Market for the Common Stock, execution of
the Stockholders' Agreement, certificates of shares of Common
Stock shall be issued in the name of the Participant and
delivered to such Participant as soon as practicable following
the Exercise Date. Prior to the existence of a Public Market, no
shares of Common Stock shall be issued to
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any Participant until such Participant agrees to be bound by and
executes the Stockholders' Agreement.
4.12 Administration of Options.
(a) Termination of the Options. The Committee may, at any
time, in its absolute discretion, without amendment to the Plan
or any relevant Stock Option Grant Agreement, terminate the
Options then outstanding, whether or not exercisable, provided,
however, that the Company, in full consideration of such
termination, shall pay (a) with respect to any Option, or portion
thereof, then outstanding, an amount equal to the Option Spread
determined as of the Valuation Date coincident with or next
succeeding the date of termination. Such payment shall be made as
soon as practicable after the payment amounts are determined,
provided, however, that the Company shall have the option to make
payments to the Participants by issuing a note to the Participant
bearing a reasonable rate of interest as determined by the
Committee in its absolute discretion.
(b) Amendment of Terms of Options. The Committee may, in its
absolute discretion, amend the Plan or terms of any Option,
provided, however, that any such amendment shall not impair or
adversely affect the Participants' rights under the Plan or such
Option without such Participant's written consent.
4.13 Adjustment Upon Changes in Company Stock.
(a) Increase or Decrease in Issued Shares Without
Consideration. Subject to any required action by the stockholders
of the Company, in the event of any increase or decrease in the
number of issued shares of Common Stock resulting from a
subdivision or consolidation of shares of Common Stock or the
payment of a stock dividend (but only on the shares of Common
Stock), or any other increase or decrease in the number of such
shares effected without receipt of
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consideration by the Company, the Committee shall, make such
adjustments with respect to the number of shares of Common Stock
subject to the Options, the exercise price per share of Common
Stock and the Option Value of each such Option, as the Committee
may consider appropriate to prevent the enlargement or dilution
of rights.
(b) Certain Mergers. Subject to any required action by the
stockholders of the Company, in the event that the Company shall
be the surviving corporation in any merger or consolidation
(except a merger or consolidation as a result of which the
holders of shares of Common Stock receive securities of another
corporation), the Options outstanding on the date of such merger
or consolidation shall pertain to and apply to the securities
which a holder of the number of shares of Common Stock subject to
any such Option would have received in such merger or
consolidation (it being understood that if, in connection with
such transaction, the stockholders of the Company retain their
shares of Common Stock and are not entitled to any additional or
other consideration, the Options shall not be affected by such
transaction).
(c) Certain Other Transactions. In the event of (i) a
dissolution or liquidation of the Company, (ii) a sale of all or
substantially all of the Company's assets, (iii) a merger or
consolidation involving the Company in which the Company is not
the surviving corporation or (iv) a merger or consolidation
involving the Company in which the Company is the surviving
corporation but the holders of shares of Common Stock receive
securities of another corporation and/or other property,
including cash, the Committee shall, in its absolute discretion,
have the power to provide for the exchange of each Option
outstanding immediately prior to such event (whether or not then
exercisable) for an option on or stock appreciation right with
respect to, as appropriate, some or all of the property for which
the stock underlying such Options are exchanged and, incident
thereto, make an equitable adjustment, as determined by the
Committee
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in the exercise price of the options or stock appreciation
rights, or the number of shares or amount of property subject to
the options or stock appreciation rights or, if appropriate,
provide for a cash payment to the Participants in partial
consideration for the exchange of the Options as the Committee
may consider appropriate to prevent dilution or enlargement of
rights.
(d) Other Changes. In the event of any change in the
capitalization of the Company or a corporate change other than
those specifically referred to in Sections 4.13(a), (b) or (c)
hereof, the Committee shall, make such adjustments in the number
and class of shares subject to Options outstanding on the date on
which such change occurs and in the per-share exercise price of
each such Option as the Committee may consider appropriate to
prevent dilution or enlargement of rights.
(e) No Other Rights. Except as expressly provided in the
Plan or the Stock Option Grant Agreements evidencing the Options,
the Participants shall not have any rights by reason of any
subdivision or consolidation of shares of Common Stock or shares
of stock of any class, the payment of any dividend, any increase
or decrease in the number of shares of Common Stock or shares of
stock of any class or any dissolution, liquidation, merger or
consolidation of the Company or any other corporation. Except as
expressly provided in the Plan or the Stock Option Grant
Agreements evidencing the Options, no issuance by the Company of
shares of Common Stock or shares of stock of any class, or
securities convertible into shares of Common Stock or shares of
stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number of shares of
Common Stock subject to the Options or the exercise price of such
Options.
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5. Miscellaneous
5.1 Rights as Stockholders. The Participants shall not have
any rights as stockholders with respect to any shares of Common
Stock covered by or relating to the Options granted pursuant to
the Plan until the date the Participants become the registered
owners of such shares. Except as otherwise expressly provided in
Sections 4.12 and 4.13 hereof, no adjustment to the Options shall
be made for dividends or other rights for which the record date
occurs prior to the date such stock certificate is issued.
5.2 No Special Employment Rights. Nothing contained in the
Plan shall confer upon the Participants any right with respect to
the continuation of their Employment or interfere in any way with
the right of the Company or an Affiliate, subject to the terms of
any separate Employment agreements to the contrary, at any time
to terminate such Employment or to increase or decrease the
compensation of the Participants from the rate in existence at
the time of the grant of any Option.
5.3 No Obligation to Exercise. The Grant to the Participants
of the Options shall impose no obligation upon the Participants
to exercise such Options.
5.4 Restrictions on Common Stock. The rights and obligations
of the Participants with respect to Common Stock obtained through
the exercise of any Option provided in the Plan shall be governed
by the terms and conditions of the Stockholders' Agreement.
5.5 Notices. All notices and other communications hereunder
shall be in writing and shall be given and shall be deemed to
have been duly given if delivered in person, by cable, telegram,
telex or facsimile transmission, to the parties as follows:
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If to the Participant:
To the address shown on the Stock Option Grant
Agreement.
If to the Company:
J. Crew Group Inc.
625 Sixth Avenue
Third Floor
New York, NY 10011
Attention: Chief Financial Officer
or to such other address as any party may have furnished to the
other in writing in accordance herewith, except that notices of
change of address shall only be effective upon receipt.
5.6 Descriptive Headings. The headings in the Plan are for
convenience of reference only and shall not limit or otherwise
affect the meaning of the terms contained herein.
5.7 Severability. In the event that any one or more of the
provisions, subdivisions, words, clauses, phrases or sentences
contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any
respect for any reason, the validity, legality and enforceability
of any such provision, subdivision, word, clause, phrase or
sentence in every other respect and of the remaining provisions,
subdivisions, words, clauses, phrases or sentences hereof shall
not in any way be impaired, it being intended that all rights,
powers and privileges of the Company and Participants shall be
enforceable to the fullest extent permitted by law.
5.8 Governing Law. The Plan shall be governed by and
construed and enforced in accordance with the laws of the State
of New York, without regard to the provisions governing conflict
of laws.
October 17, 1997
18
<PAGE>
EXHIBIT A-1 Time Based Vesting
STOCK OPTION GRANT AGREEMENT
THIS AGREEMENT, made as of this ___ day of _________,
199_ between J. CREW GROUP INC. (the "Company") and ____________
(the "Participant").
WHEREAS, the Company has adopted and maintains the
J. Crew Group 1997 Stock Option Plan (the "Plan") to promote the
interests of the Company and its stockholders by providing the
Company's key employees with an appropriate incentive to
encourage them to continue in the employ of the Company and to
improve the growth and profitability of the Company;
WHEREAS, the Plan provides for the Grant to
Participants in the Plan of Non-Qualified Stock Options to
purchase shares of Common Stock of the Company.
NOW, THEREFORE, in consideration of the premises and
the mutual covenants hereinafter set forth, the parties hereto
hereby agree as follows:
1. Grant of Options. Pursuant to, and subject to, the
terms and conditions set forth herein and in the Plan, the
Company hereby grants to the Participant a NON-QUALIFIED STOCK
OPTION (the "Option") with respect to _____ shares of Common
Stock of the Company.
2. Grant Date. The Grant Date of the Option hereby
granted is __________.
3. Incorporation of Plan. All terms, conditions and
restrictions of the Plan are incorporated herein and made part
hereof as if stated herein. If there is any conflict between the
terms and conditions of the Plan and this Agreement, the terms
and conditions of this Agreement, as interpreted by the
Committee, shall govern. All capitalized terms used herein shall
have the meaning given to such terms in the Plan.
4. Exercise Price. The exercise price of each share
underlying the Option hereby granted is ___________.
5. Vesting Date. The Option shall become exercisable as
follows: (i) [___ (10%)] of the shares of Common Stock underlying
the Option immediately upon Grant; (ii) [___ 10%)] of the shares
of Common Stock underlying the Option on the first anniversary of
the Grant Date; and (iii) [___ 20%)] of the shares of Common
Stock underlying the Option on each of the second through the
fifth anniversaries of the Grant Date. Notwithstanding the
foregoing, in the event of a Change in Control, all shares of
Common Stock underlying the Option shall become immediately
exercisable.
<PAGE>
6. Expiration Date. Subject to the provisions of the Plan,
with respect to the Option or any portion thereof which has not
become exercisable, the Option shall expire on the date the
Participant's Employment is terminated for any reason, and with
respect to any Option or any portion thereof which has become
exercisable, the Option shall expire on the earlier of: (i) 90
days after the Participant's termination of Employment other than
for Cause, death or Disability; (ii) one year after termination
of the Participant's Employment by reason of death or Disability;
(iii) the commencement of business on the date the Participant's
Employment is, or is deemed to have been, terminated for Cause;
or (iv) the tenth anniversary of the Grant Date.
7. Delays or Omissions. No delay or omission to exercise
any right, power or remedy accruing to any party hereto upon any
breach or default of any party under this Agreement, shall impair
any such right, power or remedy of such party nor shall it be
construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default
thereafter occurring nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent
or approval of any kind or character on the part of any party of
any breach or default under this Agreement, or any waiver on the
part of any party or any provisions or conditions of this
Agreement, shall be in writing and shall be effective only to the
extent specifically set forth in such writing.
8. Limitation on Transfer. During the lifetime of the
Participant, the Option shall be exercisable only by the
Participant. The Option shall not be assignable or transferable
otherwise than by will or by the laws of descent and
distribution. Notwithstanding the foregoing, the Participant may
request authorization from the Committee to assign his rights
with respect to the Option granted herein to a trust or
custodianship, the beneficiaries of which may include only the
Participant, the Participant's spouse or the Participant's lineal
descendants (by blood or adoption), and, if the Committee grants
such authorization, the Participant may assign his rights
accordingly. In the event of any such assignment, such trust or
custodianship shall be subject to all the restrictions,
obligations, and responsibilities as apply to the Participant
under the Plan and this Stock Option Grant Agreement and shall be
entitled to all the rights of the Participant under the Plan. All
shares of Common Stock obtained pursuant to the Option granted
herein shall not be transferred except as provided in the Plan
and, where applicable, the Stockholders' Agreement.
9. Integration. This Agreement, and the other documents
referred to herein or delivered pursuant hereto which form a part
hereof contain the entire understanding of the parties with
respect to its subject matter. There are no restrictions,
agreements, promises, representations, warranties, covenants or
undertakings with respect to the subject matter hereof other than
those expressly set forth herein. This Agreement, including
without limitation the Plan, supersedes all prior agreements and
understandings between the parties with respect to its subject
matter.
2
<PAGE>
10. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but
all of which shall constitute one and the same instrument.
11. Governing Law. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the
State of NEW YORK, without regard to the provisions governing
conflict of laws.
12. Participant Acknowledgment. The Participant hereby
acknowledges receipt of a copy of the Plan. The Participant
hereby acknowledges that all decisions, determinations and
interpretations of the Committee in respect of the Plan, this
Agreement and the Option shall be final and conclusive.
* * * * *
3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this
Agreement to be duly executed by its duly authorized officer and said
Participant has hereunto signed this Agreement on his own behalf,
thereby representing that he has carefully read and understands
this Agreement and the Plan as of the day and year first written
above.
J. CREW GROUP INC.
By: __________________________
______________________________
[Name of Participant]
[Address]
4
<PAGE>
EXHIBIT A-2 Performance Based Vesting
STOCK OPTION GRANT AGREEMENT
THIS AGREEMENT, made as of this ___ day of _________, 199_
between J. CREW GROUP INC. (the "Company") and ____________ (the
"Participant").
WHEREAS, the Company has adopted and maintains the
J. Crew Group 1997 Stock Option Plan (the "Plan") to promote the
interests of the Company and its stockholders by providing the
Company's key employees with an appropriate incentive to
encourage them to continue in the employ of the Company and to
improve the growth and profitability of the Company.
WHEREAS, the Plan provides for the grant to
Participants in the Plan of Non-Qualified Stock Options to
purchase shares of Common Stock of the Company.
NOW, THEREFORE, in consideration of the premises and
the mutual covenants hereinafter set forth, the parties hereto
hereby agree as follows:
1. Grant of Options. Pursuant to, and subject to, the
terms and conditions set forth herein and in the Plan, the
Company hereby grants to the Participant a NON-QUALIFIED STOCK
OPTION (the "Option") with respect to _____ shares of Common
Stock of the Company.
2. Grant Date. The Grant Date of the Option hereby
granted is ______________.
3. Incorporation of Plan. All terms, conditions and
restrictions of the Plan are incorporated herein and made part
hereof as if stated herein. If there is any conflict between the
terms and conditions of the Plan and this Agreement, the terms
and conditions of this Agreement, as interpreted by the
Committee, shall govern. All capitalized terms used herein shall
have the meaning given to such terms in the Plan.
4. Exercise Price. The exercise price of each share
underlying the Option hereby granted is ___________.
5. Vesting Date. On the last day of each of the fiscal
years [______] through [________], (each an "Anniversary Date"),
the Option will become exercisable with respect to up to twenty
percent of the shares of Common Stock underlying the Option (the
"Eligible Portion") in accordance with the following: (i) if less
than 90% of the Annual EBITDA Target is achieved in the fiscal
year ending on the respective Anniversary Date, 0% of the
Eligible Portion will become exercisable; (ii) if 90% of the
Annual EBITDA Target is achieved in the fiscal year ending on the
respective Anniversary Date, 50% of the Eligible Portion will
<PAGE>
become exercisable; (iii) if 95% of the Annual EBITDA Target is
achieved in the fiscal year ending on the respective Anniversary
Date, 100% of the Eligible Portion will become exercisable, and
(iv) if between 90% and 95% of the Annual EBITDA Target is
achieved in the fiscal year ending on the respective Anniversary
Date, the percentage of the Eligible Portion which will become
exercisable shall be determined on the basis of straight line
interpolation based on the amounts set forth in (ii) and (iii)
above. Notwithstanding the foregoing, the Option shall become
immediately exercisable upon the occurrence of any of the
following: (i) the Participant's employment is terminated by the
Company without Cause, (ii) the Participant's employment is
terminated by reason of death or Disability, or (iii) upon a
Change in Control of the Company. In addition, the Option shall
become exercisable on the seventh anniversary of the Grant Date.
For purposes of this Stock Option Grant Agreement, the "Annual
EBITDA Target" for each fiscal year shall be determined by the
Committee, in its absolute discretion.
6. Expiration Date. Subject to the provisions of the
Plan, the Option shall expire and be canceled on the tenth
anniversary of the Grant Date; provided that the Option shall
expire prior to the tenth anniversary of the Grant Date as
follows: (i) to the extent the Option is not exercisable on the
date the Participant's Employment terminates for any reason, such
Option shall expire and be canceled on the date the Employment
terminates; and (ii) to the extent the Option is exercisable on
the date the Participant's Employment terminates, the Option
shall expire and be canceled (A) 90 days after the Participant's
termination of Employment other than for Cause, death or
Disability (but not later than the tenth anniversary of the Grant
Date); (B) one year after termination of the Participant's
Employment by reason of death or Disability (but not later than
the tenth anniversary of the Grant Date); or (C) the commencement
of business on the date the Participant's Employment is, or is
deemed to have been, terminated for Cause.
7. Delays or Omissions. No delay or omission to exercise
any right, power or remedy accruing to any party hereto upon any
breach or default of any party under this Agreement, shall impair
any such right, power or remedy of such party nor shall it be
construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default
thereafter occurring nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent
or approval of any kind or character on the part of any party of
any breach or default under this Agreement, or any waiver on the
part of any party or any provisions or conditions of this
Agreement, shall be in writing and shall be effective only to the
extent specifically set forth in such writing.
8. Limitation on Transfer. During the lifetime of the
Participant, the Option shall be exercisable only by the
Participant. The Option shall not be assignable or transferable
otherwise than by will or by the laws of descent and
distribution. Notwithstanding the foregoing, the Participant may
request authorization from the Committee to assign his rights
with respect to the Option granted herein to a trust or
custodianship, the beneficiaries of which may include only the
Participant, the Participant's spouse, or the Participant's
lineal descendants (by blood or adoption), and, if the Committee
grants such authorization, the Participant may assign his rights
accordingly. In the event of any such assignment, such trust or
custodianship shall be subject to all the restrictions,
obligations and responsibilities as apply
2
<PAGE>
to the Participant under the Plan and this Agreement and shall be
entitled to all the rights of the Participant under the Plan. All
shares of Common Stock obtained pursuant to the Option Granted
herein shall not be transferred except as provided in the Plan
and, where applicable, the Stockholders' Agreement.
9. Integration. This Agreement, and the other documents
referred to herein or delivered pursuant hereto which form a part
hereof contain the entire understanding of the parties with
respect to its subject matter. There are no restrictions,
agreements, promises, representations, warranties, covenants or
undertakings with respect to the subject matter hereof other than
those expressly set forth herein. This Agreement, including
without limitation the Plan, supersedes all prior agreements and
understandings between the parties with respect to its subject
matter.
10. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but
all of which shall constitute one and the same instrument.
11. Governing Law. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the
State of NEW YORK, without regard to the provisions governing
conflict of laws.
12. Participant Acknowledgment. The Participant hereby
acknowledges receipt of a copy of the Plan. The Participant
hereby acknowledges that all decisions, determinations and
interpretations of the Committee in respect of the Plan, this
Agreement and the Option shall be final and conclusive.
* * * * *
3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this
Agreement to be duly executed by its duly authorized officer and said
Participant has hereunto signed this Agreement on his own behalf,
thereby representing that he has carefully read and understands
this Agreement and the Plan as of the day and year first written
above.
J. CREW GROUP INC.
By: __________________________
_______________________________
[Name of Participant]
[Address]
4
<PAGE>
Exhibit B
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT (this "Agreement"), dated as of
________, 199__, between J. Crew Group, Inc. (the "Company"), TPG
Partners II, L.P. ("TPG") and ___________________ (the
"Stockholder").
WHEREAS, the Stockholder is an employee of the Company
and in such capacity was granted an option (the "Option") to
purchase shares of common stock of the Company, $.01 par value
per share ("Common Stock"), pursuant to the Company's 1997 Stock
Option Plan (the "Option Plan");
WHEREAS, as a condition to the issuance of shares of
Common Stock pursuant to the exercise of an Option, the
Stockholder is required under the Option Plan to execute this
Agreement;
WHEREAS, the Stockholder desires to exercise the Option to
purchase __________ shares of Common Stock; and
WHEREAS, the Stockholder and the Company desire to
enter this Agreement and to have this Agreement apply to the
shares to be purchased pursuant to the Option Plan and to any
shares of Common Stock acquired after the date hereof by the
Stockholder from whatever source, subject to any future agreement
between the Company and the Stockholder to the contrary (in the
aggregate, the "Shares").
NOW THEREFORE, in consideration of the premises
hereinafter set forth, and other good and valuable consideration,
the receipt of which is hereby acknowledged, the parties hereto
agree as follows.
1. Investment. The Stockholder represents that the Shares
are being acquired for investment and not with a view toward the
distribution thereof.
2. Issuance of Shares. The Stockholder acknowledges
and agrees that the certificate for the Shares shall bear the
following legends (except that the second paragraph of this
legend shall not be required after the Shares have been
registered and except that the first paragraph of this legend
shall not be required after the termination of this Agreement):
The shares represented by this certificate are subject to
the terms and conditions of a Stockholders' Agreement dated
as of ______________, 19__ and may not be sold,
transferred, hypothecated, assigned or encumbered, except
as may be permitted by the aforesaid Agreement. A copy of
the Stockholders' Agreement may be obtained from the
Secretary of the Company.
The shares represented by this certificate have not been
registered under the Securities Act of 1933. The shares
have been acquired for investment and may
<PAGE>
not be sold, transferred, pledged or hypothecated in the
absence of an effective registration statement for the
shares under the Securities Act of 1933 or an opinion of
counsel for the Company that registration is not required
under said Act.
Upon the termination of this Agreement, or upon
registration of the Shares under the Securities Act of 1933 (the
"Securities Act"), the Stockholder shall have the right to
exchange any Shares containing the above legend (i) in the case
of the registration of the Shares, for Shares legended only with
the first paragraph described above and (ii) in the case of the
termination of this Agreement, for Shares legended only with the
second paragraph described above.
3. Transfer of Shares; Call Rights.
(a) The Stockholder agrees that he will not cause or
permit the Shares or his interest in the Shares to be sold,
transferred, hypothecated, assigned or encumbered except as
expressly permitted by this Section 3; provided, however, that
the Shares or any such interest may be transferred (i) on the
Stockholder's death by bequest or inheritance to the
Stockholder's executors, administrators, testamentary trustees,
legatees or beneficiaries, (ii) to a trust or custodianship the
beneficiaries of which may include only the Stockholder, the
Stockholder's spouse, or the Stockholder's lineal descendants (by
blood or adoption), (iii) in accordance with Section 4 of this
Agreement, and (iv) to the Company pursuant to Section 4.10 of
the Option Plan, subject in any such case to the agreement by
each transferee (other than the Company) in writing to be bound
by the terms of this Agreement and provided in any such case that
no such transfer that would cause the Company to be required to
register the Common Stock under Section 12(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), shall be
permitted.
(b) The Company (or its designated assignee) shall
have the right, during the one-hundred-twenty-day period (x)
beginning on the one-year anniversary of the termination of the
Stockholder's employment as a result of death or Disability or
(y) immediately following the termination of the employment of
the Stockholder with the Company for any other reason at any
time, to purchase from the Stockholder, and upon the exercise of
such right the Stockholder shall sell to the Company (or its
designated assignee), all or any portion of the Shares held by
the Stockholder as of the date as of which such right, is
exercised at a per Share price equal to the Fair Market Value (as
defined in the Option Plan) of a share of Common Stock determined
as of the date as of which such right is exercised. The Company
(or its designated assignee) shall exercise such right by
delivering to the Stockholder a written notice specifying its
intent to purchase Shares held by the Stockholder, the date as of
which such right is to be exercised and the number of Shares to
be purchased. Such purchase and sale shall occur on such date as
the Company (or its designated assignee) shall specify which date
shall not be later than ninety (90) days after the fiscal
quarter-end immediately following the date as of which the
Company's right is exercised.
2
<PAGE>
4. Certain Rights.
(a) Drag Along Rights. If TPG desires to sell all or
substantially all of its shares of Common Stock to a good faith
independent purchaser (a "Purchaser") (other than any other
investment partnership, limited liability company or other entity
established for investment purposes and controlled by the
principals of TPG or any of its affiliates and other than any
employees of TPG, hereinafter referred to as a "Permitted
Transferee") and said Purchaser desires to acquire all or
substantially all of the issued and outstanding shares of Common
Stock (or all or substantially all of the assets of the Company)
upon such terms and conditions as agreed to with TPG, the
Stockholder agrees to sell all of his Shares to said Purchaser
(or to vote all of his Shares in favor of any merger or other
transaction which would effect a sale of such shares of Common
Stock or assets of the Company) at the same price per share of
Common Stock and pursuant to the same terms and conditions with
respect to payment for the shares of Common Stock as agreed to by
TPG. In such case, TPG shall give written notice of such sale to
the Stockholder at least 30 days prior to the consummation of
such sale, setting forth (i) the consideration to be received by
the holders of shares of Common Stock, (ii) the identity of the
Purchaser, (iii) any other material items and conditions of the
proposed transfer and (iv) the date of the proposed transfer.
(b) Tag Along Rights. (i) Subject to paragraph (iv)
of this Section 4(b), if TPG or its affiliates proposes to
transfer any of its shares of Common Stock to a Purchaser (other
than a Permitted Transferee), then TPG or such Permitted
Transferee (hereinafter referred to as a "Selling Stockholder")
shall give written notice of such proposed transfer to the
Stockholder (the "Selling Stockholder's Notice") at least 30 days
prior to the consummation of such proposed transfer, and shall
provide notice to all other stockholders of the Company to whom
TPG has granted similar "tag-along" rights (such stockholders
together with the Stockholder, referred to herein as the "Other
Stockholders") setting forth (A) the number of shares of Common
Stock offered, (B) the consideration to be received by such
Selling Stockholder, (C) the identity of the Purchaser, (D) any
other material items and conditions of the proposed transfer and
(E) the date of the proposed transfer.
(ii) Upon delivery of the Selling Stockholder's
Notice, the Stockholder may elect to sell up to the sum of (A)
the Pro Rata Portion (as hereinafter defined) and (B) the Excess
Pro Rata Portion (as hereinafter defined) of his Shares, at the
same price per share of Common Stock and pursuant to the same
terms and conditions with respect to payment for the shares of
Common Stock as agreed to by the Selling Stockholder, by sending
written notice to the Selling Stockholder within 15 days of the
date of the Selling Stockholder's Notice, indicating his election
to sell up to the sum of the Pro Rata Portion plus the Excess Pro
Rata Portion of his Shares in the same transaction. Following
such 15 day period, the Selling Stockholder and each Other
Stockholder shall be permitted to sell to the Purchaser on the
terms and conditions set forth in the Selling Stockholder's
Notice the sum of (X) the Pro Rata Portion and (Y) the Excess Pro
Rata Portion of its Shares.
(iii) For purposes of Section 4(b) and 4(c) hereof,
"Pro Rata Portion" shall mean, with respect to shares of Common
Stock held by the Stockholder or Selling Stockholder,
3
<PAGE>
as the case may be, a number equal to the product of (x) the
total number of such shares then owned by the Stockholder or the
Selling Stockholder, as the case may be, and (y) a fraction, the
numerator of which shall be the total number of such shares
proposed to be sold to the Purchaser as set forth in the Selling
Stockholder's Notice or initially proposed to be registered by
the Selling Stockholder, as the case may be, and the denominator
of which shall be the total number of such shares then
outstanding (including such shares proposed to be sold or
registered by the Selling Stockholder); provided, however, that
any fraction of a share resulting from such calculation shall be
disregarded for purposes of determining the Pro Rata Portion. For
purposes of Sections 4(b) and 4(c), "Excess Pro Rata Portion"
shall mean, with respect to shares of Common Stock held by the
Stockholder or the Selling Stockholder, as the case may be, a
number equal to the product of (x) the number of Non-Elected
Shares (as defined below) and (y) a fraction, the numerator of
which shall be such Stockholder's Pro Rata Portion with respect
to such shares, and the denominator of which shall be the sum of
(1) the aggregate Pro Rata Portions with respect to the shares of
Common Stock of all of the Other Stockholders that have elected
to exercise in full their rights to sell their Pro Rata Portion
of shares of Common Stock, and (2) the Selling Stockholder's Pro
Rata Portion of shares of Common Stock (the aggregate amount of
such denominator is hereinafter referred to as the "Elected
Shares"). For purposes of this Agreement, "Non-Elected Shares"
shall mean the excess, if any, of the total number of shares of
Common Stock, proposed to be sold to a Purchaser as set forth in
a Selling Stockholder's Notice or initially proposed to be
registered by the Selling Stockholder, as the case may be, less
the amount of Elected Shares.
(iv) Notwithstanding anything to the contrary
contained herein, the provisions of this Section 4(b) shall not
apply to any sale or transfer by TPG of shares of Common Stock
unless and until TPG, after giving effect to the proposed sale or
transfer, shall have sold or transferred in the aggregate (other
than to Permitted Transferees) shares of Common Stock,
representing 7.5% of shares of Common Stock owned by TPG on the
date hereof.
(c) Piggyback Registration Rights.
(i) Notice to Stockholder. If the Company determines
that it will file a registration statement under the Securities
Act, other than a registration statement on Form S-4 or Form S-8
or any successor form, for an offering which includes shares of
Common Stock held by TPG or its affiliates (hereinafter in this
paragraph (c) of Section 4 referred to as a "Selling
Stockholder"), then the Company shall give prompt written notice
to the Stockholder that such filing is expected to be made (but
in no event less than 30 days nor more than 60 days in advance of
filing such registration statement), the jurisdiction or
jurisdictions in which such offering is expected to be made, and
the underwriter or underwriters (if any) that the Company (or the
person requesting such registration) intends to designate for
such offering. If the Company, within 15 days after giving such
notice, receives a written request for registration of any Shares
from the Stockholder, then the Company shall include in the same
registration statement the number of Shares to be sold by the
Stockholder as shall have been specified in his request, except
that the Stockholder shall not be permitted to register more than
the Pro Rata Portion plus the Excess Pro Rata portion of his
Shares. The Company shall bear all costs of preparing and filing
the registration statement, and shall indemnify and hold
harmless, to the extent customary and
4
<PAGE>
reasonable, pursuant to indemnification and contribution
provisions to be entered into by the Company at the time of
filing of the registration statement, the seller of any shares of
Common Stock covered by such registration statement.
Notwithstanding anything herein to the contrary, the
Company, on prior notice to the participating Stockholder, may
abandon its intention to file a registration statement under this
Section 4(c) at any time prior to such filing.
(ii) Allocation. If the managing underwriter shall
inform the Company in writing that the number of shares of Common
Stock requested to be included in such registration exceeds the
number which can be sold in (or during the time of) such offering
within a price range acceptable to TPG, then the Company shall
include in such registration such number of shares of Common
Stock which the Company is so advised can be sold in (or during
the time of) such offering. All holders of shares of Common Stock
proposing to sell shares of Common Stock shall share pro rata in
the number of shares of Common Stock to be excluded from such
offering, such sharing to be based on the respective numbers of
shares of Common Stock as to which registration has been
requested by such holders.
(iii) Permitted Transfer. Notwithstanding anything to
the contrary contained herein, sales of Shares pursuant to a
registration statement filed by the Company may be made without
compliance with any other provision of this Agreement.
5. Termination. This Agreement shall terminate
immediately following the existence of a Public Market for the
Common Stock except that (i) the requirements contained in
Section 2 hereof shall survive the termination of this Agreement
and (ii) the provisions contained in Section 3 hereof shall
continue with respect to each Share during such period of time,
if any, as the Stockholder is precluded from selling such Shares
pursuant to Rule 144 of the Securities Act. For this purpose, a
"Public Market" for the Common Stock shall be deemed to exist if
the Common Stock is registered under Section 12(b) or 12(g) of
the Exchange Act and trading regularly occurs in such Common
Stock in, on or through the facilities of securities exchanges
and/or inter-dealer quotation systems in the United States
(within the meaning of Section 902(n) of the Securities Act) or
any designated offshore securities market (within the meaning of
Rule 902(a) of the Securities Act).
6. Distributions With Respect To Shares. As used herein,
the term "Shares" includes securities of any kind whatsoever
distributed with respect to the Common Stock acquired by the
Stockholder pursuant to the Option Plan or any such securities
resulting from a stock split or consolidation involving such
Common Stock.
7. Amendment; Assignment. This Agreement may be
amended, superseded, canceled, renewed or extended, and the terms
hereof may be waived, only by a written instrument signed by
authorized representatives of the parties or, in the case of a
waiver, by an authorized representative of the party waiving
compliance. No such written instrument shall be effective unless
it expressly recites that it is intended to amend, supersede,
cancel, renew or extend this Agreement or to waive compliance
with one or more of the terms hereof, as the case may be. Except
for the Stockholder's right to assign his or her rights under
Section 3(a) or the
5
<PAGE>
Company's right to assign its rights under Section 3(b), no party
to this Agreement may assign any of its rights or obligations
under this Agreement without the prior written consent of the
other parties hereto.
8. Notices. All notices and other communications
hereunder shall be in writing, shall be deemed to have been given
if delivered in person or by certified mail, return receipt
requested, and shall be deemed to have been given when personally
delivered or three (3) days after mailing to the following
address:
If to the Stockholder:
If to the Company:
If to TPG:
or to such other address as any party may have
furnished to the others in writing in accordance herewith, except
that notices of change of address shall only be effective upon
receipt.
9. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an
original, but each of which together shall constitute one and the
same document.
10. Governing Law. 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.
11. Binding Effect. This Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the heirs,
personal representatives, successors and permitted assigns of the
parties hereto. Nothing expressed or referred to in this
Agreement is intended or shall be construed to give any person
other than the parties to this Agreement, or their respective
heirs, personal representatives, successors or assigns, any legal
or equitable rights, remedy or claim under or in respect of this
Agreement or any provision contained herein.
12. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject
matter hereof.
13. Severability. If any term, provision, covenant or
restriction of this Agreement, is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no
way be affected, impaired or invalidated.
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<PAGE>
14. Miscellaneous. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
* * * * * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the day and year first
above written.
_____________________________
[Stockholder]
J. CREW GROUP, INC.
_____________________________
By:
Title:
TPG PARTNERS II, L.P.
_____________________________
By:
Title:
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