THIS AGREEMENT, made as of this 12th day of May, 2004 between J.CREW GROUP INC. (the Company) and Millard S. Drexler (the Participant).
(b) Premium Option Tranche 2. An Option with respect to 836,889 shares of Common Stock of the Company (the Premium Option Tranche 2 and together with the Premium Option Tranche 1, the Premium Options).
3. Incorporation of the Plan; Modification of Specific Sections of the Plan.
(a) Incorporation of the Plan. Except as otherwise provided herein, all terms, conditions and restrictions of the Plan are incorporated herein and made part hereof as if stated herein. Notwithstanding anything to the contrary in the Plan, 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. Unless otherwise indicated herein, all capitalized terms used herein shall have the meanings given to such terms in the Plan. Notwithstanding anything to the contrary in the Plan, the Committee shall interpret the Plan and this Agreement in a manner consistent with the terms of the Plan and this Agreement and such interpretation and determination shall be final and binding on all parties.
(b) Modification of Sections 5.11 and 5.12 of the Plan.
(i) Section 5.11. The last sentence of Section 5.11 of the Plan shall not apply to the Options, unless the Participant provides his prior written consent to such application.
(ii) Section 5.12. The last sentence of Section 5.12 of the Plan shall not apply to the Options, unless the Participant provides his prior written consent to such application. The remaining provisions of Section 5.12 of the Plan shall be applicable to the Options only to the extent that the rights in such Section are being exercised in connection with the exercise of and in accordance with the terms of Sections 5(a) or 5(b) of the Stockholders Agreement, dated as of January 24, 2003, between the Company, the Participant and TPG Partners II, L.P. (the Stockholders Agreement).
Services Agreement, dated as of January 24, 2003, between the Company, J. Crew Operating Corp., the Participant and Millard S. Drexler, Inc. (the Services Agreement)) has not terminated as of each such applicable Vesting Date. Notwithstanding the foregoing, (i) in the event that the Company terminates the Services without Cause (as each term is defined in the Services Agreement) or the Participant terminates the Services for Good Reason (as defined in the Services Agreement) prior to the consummation of a Change in Control (as defined in the Plan), that portion of each Option that would have become vested and exercisable on the next succeeding Vesting Date shall vest and become immediately exercisable and any remaining portion of each Option that has not become vested and exercisable shall immediately expire and be forfeited, (ii) in the event that, within the two-year period following the consummation of a Change in Control, the Company terminates the Services without Cause or the Participant terminates the Services for Good Reason, all or any portion of each Option that has not yet become exercisable shall vest and become immediately exercisable, or (iii) if the Service Period terminates for any other reason, any portion of each Option which has not become exercisable on the date of termination of the Services shall immediately expire and be forfeited. For the avoidance of doubt, the last sentence of Section 2(d) of the Plan does not apply to this Agreement.
6. Expiration Date. Subject to the provisions of the Plan and this Agreement, with respect to the Options (or any portions thereof) which have not become exercisable, the Options shall expire on the date the Services are terminated for any reason, and with respect to the Options (or any portions thereof) which have become exercisable, the Options shall expire on the earlier of (A) the tenth anniversary of the date of Grant, (B) the commencement of business on the date the Services are terminated for Cause, (C) ninety days after the Services are terminated by the Participant without Good Reason, or (D) the second anniversary of the date the Services are terminated (x) on account of the Participants death or Disability, (y) by the Company without Cause, or (z) by the Participant for Good Reason.
7. Right to Quarterly Reports. Following a termination of the Participants Employment, as soon as reasonably practicable following its receipt of a written request from the Participant, the Company shall provide the Participant with a quarterly valuation of the Fair Market Value per share of Common Stock.
8. 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.
9. Limitation on Transfer. During the lifetime of the Participant, the Options shall be exercisable only by the Participant and a Permitted Transferee under this Section 9. The Options shall not be Transferred otherwise than in accordance with the terms and conditions of Section 5.6 of the Plan and Sections 5(a) or 5(b) of the Stockholders Agreement. In the event of any such Transfer, such trust or custodianship or transferee shall be subject to all the restrictions, obligations, and responsibilities as apply 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 Options granted herein shall not be Transferred except as provided in the Plan and, where applicable, the Stockholders Agreement. In the event of any purported Transfer of any portion of the Options in violation of the provisions of the Plan and this Agreement, such purported Transfer shall, to the extent permitted by applicable law, be void and of no effect.
10. Integration. This Agreement, the Plan and the Stockholders 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, in the Plan, the Services Agreement and the Stockholders Agreement. This Agreement, the Plan, the Services Agreement and the Stockholders Agreement supersede all prior agreements and understandings between the parties with respect to its subject matter.
11. 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.
12. 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.
13. 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.