STOCKHOLDERS' AGREEMENT
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This AGREEMENT is made as of this 17th day of October,
1997, by and among J. Crew Group, Inc., a New York corporation
(the "Company"), and each of the following (hereinafter severally
referred to as a "Stockholder" and collectively referred to as
the "Stockholders"): TPG Partners II, L.P. ("TPG II"), TPG
Parallel II, L.P. ("TPG Parallel II"), TPG Investors II, L.P.
("TPG Investors II," and, together with TPG II and TPG Parallel
II, the "TPG Holders"), each of the other signatories hereto, and
each of the parties who become parties to this Agreement pursuant
to Article V hereof as stockholders of the Company.
WHEREAS, TPG II, the Company and certain shareholders
of the Company have heretofore entered into a Recapitalization
Agreement dated as of July 22, 1997, as amended (the
"Recapitalization Agreement"), which provides for, among other
things, the recapitalization of the Company on the terms and
subject to the conditions set forth in the Recapitalization
Agreement (the "Recapitalization") and the related acquisition of
shares of common stock of the Company by certain parties as
described therein;
WHEREAS, the Company, each of the TPG Holders and
certain other Stockholders are on the date hereof entering into a
Preferred Stock Subscription Agreement (the "Subscription
Agreement") which provides for, among other things, the
subscription for shares of Series A Cumulative Preferred Stock,
$.01 par value, of the Company ("Series A Preferred Stock") and
Series B Cumulative Redeemable Preferred Stock, $.01 par value,
of the Company ("Series B Preferred Stock" and, together with the
Series A Preferred Stock, the "Preferred Shares") by the other
parties thereto on the terms and subject to the conditions set
forth in the Subscription Agreement;
WHEREAS, the Stockholders, together with Xxxxx Xxxxx,
will acquire or hold all of the issued and outstanding shares of
common stock, $.01 par value, of the Company (such shares,
together with any additional shares of common stock issued by the
Company, being hereinafter severally referred to as a "Common
Share" and collectively referred to as the "Common Shares," and,
together with the Preferred Shares, being hereinafter severally
referred to as a "Share" and collectively referred to as the
"Shares"); and
WHEREAS, in consideration of the Recapitalization
Agreement and the Subscription Agreement and the transactions
contemplated thereby, the parties hereto desire to enter into an
agreement regarding certain matters described herein, including
the imposition of certain restrictions on the transferability of
Common Shares.
NOW, THEREFORE, in consideration of the mutual
covenants and agreements contained herein, the parties mutually
agree as follows:
ARTICLE I
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Representations and Warranties
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Each of the parties hereby severally represents and
warrants to each of the other parties as follows:
1.1 Authority; Enforceability. Such party has the
legal capacity or corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder. Such
party, if not an individual, is duly organized and validly
existing under the laws of its jurisdiction of organization, and
the execution of this Agreement and the consummation of the
transactions contemplated herein have been duly authorized by all
necessary action. No other act or proceeding, corporate or
otherwise, on its part is necessary to authorize the execution of
this Agreement or the consummation of any of the transactions
contemplated hereby. This Agreement has been duly executed by
such party and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with the terms
of this Agreement, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the rights of
creditors generally and to the exercise of judicial discretion in
accordance with general principles of equity (whether applied by
a court of law or of equity).
1.2 No Breach. Neither the execution of this Agreement
nor the performance by such party of its obligations hereunder
nor the consummation of the transactions contemplated hereby does
or will:
(a) conflict with or violate its articles of
incorporation, bylaws or other organizational documents;
(b) violate, conflict with or result in the breach or
termination of, or otherwise give any other person the right to
accelerate, re-negotiate or terminate or receive any payment, or
constitute a default or an event of default (or an event which
with notice, lapse of time, or both, would constitute a default
or event of default) under the terms of, any contract or
agreement to which it is a party or by which it or any of its
assets or operations are bound or affected; or
(c) constitute a violation by such party of any laws,
rules or regulations of any governmental, administrative or
regulatory authority or any judgments, orders, rulings or awards
of any court, arbitrator or other judicial authority or any
governmental, administrative or regulatory authority.
1.3 Consents. No consent, waiver, approval,
authorization, exemption, registration, license or declaration is
required to be made or obtained by such party, other than those
which have been made or obtained, in connection with (i) the
execution or enforceability of this Agreement or (ii) the
consummation of any of the transactions contemplated hereby.
1.4 Share Ownership. Such party will own, immediately
following the consummation of the transactions contemplated by
the Recapitalization Agreement, the number of Shares of each
class set forth opposite such party's name in Schedule 1.4
attached hereto, free
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and clear of any and all liens, claims and encumbrances, other
than those created by this Agreement.
ARTICLE II
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Transfer of Shares
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2.1 Restrictions on Transfers.
(a) No Stockholder may transfer by way of sale,
exchange, assignment, pledge, gift or other disposition (all of
which acts shall be deemed included in the term "transfer" as
used in this Agreement) any or all of the Shares (whether held in
its, his or her own right or by a representative of the
Stockholder, such Stockholder hereinafter being referred to as a
"Transferor") unless (i) such transfer of Shares is made on the
books of the Company and in accordance with the provisions of
Article II of this Agreement and (ii) the transferee of such
Shares (if other than (A) the Company or another Stockholder, (B)
a transferee in a sale of Shares made under Rule 144 (or any
successor provision) under the Securities Act of 1933, as amended
(the "Securities Act") or (C) a transferee of Shares registered
under the Securities Act, that is otherwise permitted by this
Agreement) agrees to become a party to this Agreement pursuant to
Article V hereof and executes such further documents as may be
necessary, in the opinion of the Company, to make him, her or it
a party hereto.
(b) Any purported transfer of Shares other than in
accordance with this Agreement by any Transferor shall be null
and void, and the Company shall refuse to recognize any such
transfer for any purpose and shall not reflect in its records any
change in record ownership of Shares pursuant to any such
transfer.
(c) The Company shall not, without the written consent
of the holders of a majority, by voting power, of the outstanding
Shares, issue any Shares upon original issue or reissue or
otherwise dispose of any Shares unless the recipient or
transferee of such Shares (if other than a Stockholder) shall
agree to become a party to this Agreement pursuant to Article V
hereof and executes such further documents as may be necessary,
in the opinion of the Company, to make him, her or it a party
hereto; provided that if the recipient or transferee of such
Shares is an affiliate of any of the TPG Holders that is not a
Stockholder and the TPG Holders shall hold a majority of the
outstanding Shares, the aforementioned consent must be obtained
from holders of a majority, by voting power, of the outstanding
Shares other than Shares held by the TPG Holders.
2.2 Right of First Offer.
(a) Prior to any underwritten initial public offering
by the Company of any Shares, in the event that a Transferor
desires to sell or transfer all or part of its Common Shares
("Offered Common Shares"), other than pursuant to Section 2.3,
2.4 or 2.5 of this Agreement or in reliance and in accordance
with Rule 144 (or any successor provision) under the Securities
Act, the Transferor shall give prompt written notice (a
"Transferor's Notice") of its desire to sell the Offered Common
Shares to the Company and TPG II, which notice shall identify (i)
the
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number of Offered Common Shares, (ii) the number of shares, if
any, of Series A Preferred Stock and/or Series B Preferred Stock
which the Transferor proposes to sell or transfer in conjunction
with the sale or transfer of the Offer Common Shares (the
"Offered Preferred Shares" and, together with the Offered Common
Shares, "Offered Shares") and (iii) any other material items and
conditions of the proposed transfer (other than the offering
price). The date on which such Transferor's Notice is actually
received by the Company and TPG II is referred to hereinafter as
the "Notice Date." Following consummation of any underwritten
initial public offering by the Company of any Shares, a
Transferor shall, subject to compliance with the provisions of
Section 2.1(a), have the right to sell or transfer all or part of
its Shares without complying with the requirements of this
Section 2.2. Unless a Transferor desires to sell or transfer any
or all of its Preferred Shares in conjunction with the sale or
transfer of any or all of its Common Shares, prior to any
underwritten initial public offering by the Company of any
Shares, such Transferor may, subject to compliance with the
provisions of Section 2.1(a), sell any or all of its Preferred
Shares without complying with the provisions of this Section 2.2.
(b) The TPG Holders shall have fifteen (15) days
following the Notice Date to notify the Transferor and the
Company in writing of an offer to purchase in cash (the "Offer to
Purchase") all (but not less than all) of the Offered Shares by
one or more of the TPG Holders (the "Electing Holders"), the
proposed cash purchase price thereof, the proposed closing date
for the purchase and any other material term or condition of the
proposed purchase. If the Transferor does not receive a written
notice from any of the TPG Holders containing a cash offer to
purchase the Offered Shares within the fifteen (15) day period,
the TPG Holders shall be deemed to have declined to purchase such
Offered Shares and the Transferor may, subject to compliance with
the provisions of Section 2.1(a) and Section 2.2(e), thereafter
transfer to any purchaser at any time within one hundred twenty
(120) days following the Notice Date all (but not less than all)
of the Offered Shares upon the terms and conditions set forth in
the Transferor's Notice; provided that if TPG II notifies the
Transferor in writing, within fifteen (15) days following receipt
of the notice required by Section 2.2(e), of an objection to the
purchaser because the purchaser or one or more of its affiliates
competes with one or more of the businesses of the Company and
its subsidiaries, the Transferor shall not have the right to
transfer any of the Offered Common Shares to such purchaser (but
shall be permitted to transfer the Offered Preferred Shares); and
provided further that if the Offered Common Shares are not
transferred to a purchaser for any reason within one hundred
twenty (120) days following the Notice Date, then such Offered
Common Shares may be transferred only by again complying with all
of the terms and procedures set forth in this Article II.
(c) The Transferor shall have fifteen (15) days
following receipt of the Offer to Purchase to accept the offer
made by the Electing Holders to purchase all (but not less than
all) of the Offered Shares on the terms and subject to the
conditions set forth in the Offer to Purchase. If, in accordance
with the terms of the preceding sentence, the Transferor accepts
the offer made by the Electing Holders to purchase all (but not
less than all) of the Offered Shares on the terms and subject to
the conditions set forth in the Offer to Purchase, the closing
for such transaction shall take place at a time and place
reasonably acceptable to the Transferor and the Electing Holders;
provided that such closing shall not occur more than thirty (30)
days after the date on which the Electing Holders actually
receive notice that their Offer to Purchase has been
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accepted by the Transferor. At such closing, the Electing Holders
shall deliver to the Transferor the consideration to be exchanged
for such Offered Shares, in immediately available funds, and the
Transferor shall deliver to the Electing Holders all documents
required to effect the sale of such Offered Shares, duly endorsed
and free of any liens, including appropriate documentation
providing indemnities to the Electing Holders regarding its title
to such Offered Shares and such other matters as are customary
for such transactions.
(d) If, within fifteen (15) days following receipt of
the Offer to Purchase, the Transferor rejects or does not accept
the Offer to Purchase made by the Electing Holders, such
Transferor may, subject to compliance with the provisions of
Section 2.1(a) and Section 2.2(e), thereafter sell all (but not
less than all) of the Offered Shares to any purchaser at any time
within one hundred twenty (120) days following the Notice Date;
provided that (i) the purchase price for such Offered Shares in
any such transaction is in cash and is greater than the proposed
cash purchase price offered by the Electing Holders for such
Offered Shares and (ii) if TPG II notifies the Transferor in
writing, within ten (10) days following receipt of the notice
required by Section 2.2(e), of an objection to the purchaser
because the purchaser or one or more of its affiliates competes
with one or more of the businesses of the Company and its
subsidiaries, the Transferor shall not have the right to transfer
any of the Offered Common Shares to such purchaser (but shall be
permitted to transfer the Offered Preferred Shares); and provided
further that if the Offered Common Shares are not transferred to
a purchaser for any reason within one hundred twenty (120) days
following the Notice Date, then such Offered Common Shares may be
transferred only by again complying with all of the terms and
procedures set forth in this Article II.
(e) As soon as practicable, but in any event no less
than fifteen (15) days prior to the consummation of a proposed
sale of Offered Shares to a purchaser pursuant to Section 2.2(d),
the Transferor shall give written notice to the Company and TPG
II, which notice shall specify with respect to each such proposed
sale (i) the identity of the purchaser, (ii) the cash purchase
price to be paid by such purchaser for the Offered Shares, (iii)
the date of the proposed transfer and (iv) any other material
items and conditions of the proposed sale.
2.3 Transfers to Permitted Transferees. A Stockholder
may transfer any or all of the Shares held by such Stockholder to
a Permitted Transferee (as hereinafter defined) of such
Stockholder without complying with any other provision of this
Article II other than Section 2.1. For purposes of this
Agreement, a "Permitted Transferee" means (a) in the case of any
Stockholder that is not a corporation, any general or limited
partner, member, managing director, officer, employee or
affiliate (as defined in Rule 12b-2 under the Securities Exchange
Act of 1934, as amended) of such Stockholder, (b) in the case of
any Stockholder that is a corporation, any other entity that
owns, directly or indirectly, at least 51% of the equity
securities of such Stockholder ("majority ownership") or that is
under common majority ownership with such Stockholder, (c) in the
case of any Stockholder that is an individual, any successor by
death or divorce or (d) in the case of any Stockholder that is a
trust whose sole beneficiaries are individuals, such individuals
or their spouses or lineal descendants.
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2.4 Bankruptcy of a Stockholder.
(a) Upon the bankruptcy (as hereinafter defined in
Section 2.4(d) below) of a Stockholder (a "Bankrupt
Stockholder"), the TPG Holders may, by written notice given to
the Bankrupt Stockholder, the other Stockholders and the Company
within 30 days following the occurrence of the event specified in
Section 2.4(d) which gives rise to such bankruptcy, elect to
purchase for cash part or all of such Bankrupt Stockholder's
shares (the "Bankrupt Shares") at a price equal to the fair
market value of such shares at the time of purchase, as
determined by an independent appraiser to be selected by the
Company. Fees and expenses of any independent appraiser selected
pursuant to this subsection shall be shared equally by the
Bankrupt Stockholder and the TPG Holders.
(b) If the TPG Holders elect to acquire fewer than all
of the Bankrupt Shares within 30 days after the event giving rise
to such bankruptcy, the Company shall thereupon have the option,
exercisable by written notice given to the Bankrupt Stockholder
and the other Stockholders within 45 days after the event giving
rise to such bankruptcy, to purchase for cash all or part of the
remaining Bankrupt Shares at the price determined in accordance
with Section 2.4(a) above.
(c) Upon the giving of the notices provided in
Sections 2.4(a) and (b) above, the TPG Holders and/or the
Company, as the case may be, shall be obligated severally, but
not jointly, to purchase, and the Bankrupt Stockholder shall be
obligated to sell to each of them, the respective numbers of such
Bankrupt Shares specified in such notices (or determined in
accordance with Section 2.4(a) above, as the case may be) for
cash at the price determined in accordance with Section 2.4(a)
above.
(d) The bankruptcy of a Stockholder shall be deemed to
occur upon the occurrence of any of the following events:
(i) The filing of a voluntary petition in bankruptcy
by such Stockholder;
(ii) The filing of an involuntary petition in
bankruptcy with respect to such Stockholder which remains
undismissed for a period of 90 days;
(iii) The appointment of a receiver with respect to
such Stockholder or with respect to all or substantially all of
his, her or its assets or affairs which remains undismissed for a
period of 60 days; or
(iv) The admission in writing by the Stockholder of
his, her or its inability to pay his, her or its debts generally
as they become due.
2.5 Certain Rights.
(a) Drag Along Rights. If the TPG Holders desire to
sell all or substantially all of their Common Shares to a
purchaser (other than pursuant to Section 2.3) and said purchaser
desires to acquire all or substantially all of the issued and
outstanding Common Shares (or all or
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substantially all of the assets of the Company) upon such terms
and conditions as agreed to with the TPG Holders, each other
Stockholder agrees to sell all of its Common Shares to said
purchaser (or to vote such Common Shares in favor of any merger
or other transaction which would effect a sale of such Common
Shares (or all or substantially all of the assets of the Company)
provided that nothing herein shall in any way constrain, limit or
affect the ability, if any, of any Stockholder to vote its
Preferred Shares in such Stockholder's discretion in accordance
with the terms thereof in connection with any such merger or
other transaction) at the same price per Common Share and
pursuant to the same terms and conditions with respect to payment
for the Common Shares as agreed to by the TPG Holders. For
purposes of this Section 2.5(a), but only with respect to a sale
of Common Shares, "substantially all" shall mean at least 80% of
the Common Shares then owned by the TPG Holders. In all other
circumstances, "substantially all" shall be interpreted within
the meaning of the New York Business Corporation Law. In such
case, the TPG Holders shall give written notice of such sale to
the other Stockholders at least 30 days prior to the consummation
of such sale, setting forth (i) the consideration to be received
by the Stockholders, (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 and shall cause the
terms of any such transaction not to expose such other
Stockholders to joint and several liability as a selling
stockholder in such transaction.
(b) Tag Along Rights. (i) Subject to paragraph (v) of
this Section 2.5(b), if a TPG Holder proposes to transfer any
Common Shares, Series A Preferred Stock or Series B Preferred
Stock to a purchaser (including the Company or any of its
subsidiaries) other than a Permitted Transferee (which for
purposes of this Section 2.5(b) only, in the case of the TPG
Holders, shall not include the Company or any of its
subsidiaries) of such TPG Holder, such TPG Holder (hereinafter
referred to as a "Selling TPG Stockholder") shall give written
notice (a "Transfer Notice") of such proposed transfer to the
Stockholders other than the TPG Holders (the "Other
Stockholders") at least 30 days prior to the consummation of such
proposed transfer, setting forth for each class of Shares (A) the
number of Shares offered, if any, (B) the consideration to be
received for such Shares by such Selling TPG Stockholder, (C) the
identity of the purchaser, (D) any other material items and
conditions of the proposed transfer (including a representation
that if one or more Other Stockholders elect to sell Shares
pursuant to this Section 2.5, such Selling TPG Stockholder shall
use reasonable efforts to cause any transaction to be on terms
which do not expose such Other Stockholders to joint and several
liability as a selling stockholder in such transaction), (E) the
date of the proposed transfer and (F) that each such Other
Stockholder shall have the right to elect to sell up to the sum
of its Pro Rata Portion plus its Excess Pro Rata Portion (as
defined in Section 2.5(b)(iii) below) of such Shares.
(ii) Subject to paragraph (iv) of this Section 2.5(b),
upon delivery of a Transfer Notice, each Other Stockholder may
elect to sell up to the sum of (A) the Pro Rata Portion (as
defined in paragraph (iii) of this Section 2.5(b)) and (B) the
Excess Pro Rata Portion of its Shares of the same class and
series proposed to be sold by the Selling TPG Stockholder, at the
same price per Share of the same class and series and pursuant to
the same terms and conditions with respect to payment for the
Shares of the same class and series as agreed to by the Selling
TPG Stockholder, by sending written notice to the Selling TPG
Stockholder within 15 days of the date of the Transfer Notice,
indicating its election to sell up to the sum of the Pro Rata
Portion plus
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the Excess Pro Rata Portion of its Shares of the same class and
series in the same transaction. Following such 15 day period, the
Selling TPG Stockholder and each Other Stockholder, concurrently
with the Selling TPG Stockholder, shall be permitted to sell to
the purchaser on the terms and conditions set forth in the
Transfer Notice the sum of (x) the Pro Rata Portion and (y) the
Excess Pro Rata Portion of its Shares.
(iii) For purposes of this Agreement, "Pro Rata
Portion" shall mean, with respect to Common Shares or Preferred
Shares, as the case may be, held by a Stockholder, a number equal
to the product of (A) the total number of such shares then owned
by such Stockholder and (B) a fraction, the numerator of which
shall be the total number of such shares proposed to be sold to a
purchaser as set forth in a Transfer Notice or initially proposed
to be registered by the Selling TPG 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 TPG Stockholder). For
purposes of this Agreement, "Excess Pro Rata Portion" shall mean,
with respect to Common Shares or Preferred Shares, as the case
may be, held by a Stockholder, 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 Common Shares (when calculating "Excess Pro
Rata Portion" with respect to the Common Shares of a Stockholder)
or the Preferred Shares (when calculating "Excess Pro Rata
Portion" with respect to the Preferred Shares of a Stockholder),
as the case may be, of all of the Other Stockholders that have
elected to exercise in full their rights to sell their Pro Rata
Portion of Common Shares or Preferred Shares, as the case may be,
and (2) the Selling TPG Stockholder's Pro Rata Portion of Common
Shares (when calculating "Excess Pro Rata Portion" with respect
to the Common Shares of a Stockholder) or the Preferred Shares
(when calculating "Excess Pro Rata Portion" with respect to the
Preferred Shares of a Stockholder) (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 Common Shares (when
calculating "Excess Pro Rata Portion" with respect to the Common
Shares of a Stockholder) or the Preferred Shares (when
calculating "Excess Pro Rata Portion" with respect to the
Preferred Shares of a Stockholder), as the case may be, proposed
to be sold to a purchaser as set forth in a Transfer Notice or
initially proposed to be registered by the Selling TPG
Stockholder, as the case may be, less the amount of Elected
Shares.
(iv) Notwithstanding anything to the contrary
contained herein but subject to the last sentence of Section
2.5(b)(ii), if a Selling TPG Stockholder proposes to transfer
both Common Shares and Preferred Shares in the same transaction
or in related transactions, each Other Stockholder electing to
sell Shares pursuant to this Section 2.5(b) shall be required to
sell both Common Shares and Preferred Shares (of the same series)
proposed to be sold by the Selling TPG Stockholder. In such
event, the number of Preferred Shares which each Other
Stockholder may sell or transfer pursuant to this Section 2.5(b)
shall be up to its applicable Pro Rata Portion plus its Excess
Pro Rata Portion of such shares, and the number of Common Shares
which such Other Stockholder shall be required to sell or
transfer in such transaction or transactions shall be exactly the
product (rounded to the nearest whole number) of (A) the total
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number of Preferred Shares to be sold or transferred by such
Other Stockholder determined in accordance with this Section
2.5(b)(iv) and (B) a fraction, of which the numerator shall be
the number of Common Shares proposed to be sold by the Selling
TPG Stockholder and the denominator shall be the number of
Preferred Shares proposed to be sold by the Selling TPG
Stockholder; provided that if the Selling TPG Stockholder
proposes to sell shares of both Series A Preferred Stock and
Series B Preferred Stock in the same transaction or in related
transactions, the ratio of the number of shares of Series A
Preferred Stock to the number of shares of Series B Preferred
Stock subject to election by each Other Stockholder must be
equivalent to the ratio of the number of shares of Series A
Preferred Stock to the number of shares of Series B Preferred
Stock proposed to be sold by such Selling TPG Stockholder in such
transaction or transactions.
(v) Notwithstanding anything to the contrary contained
herein, the provisions of this Section 2.5(b) shall not apply to
(A) any sale or transfer by the TPG Holders of Common Shares
unless and until the TPG Holders, 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
Shares representing 7.5% of the Common Shares owned by the TPG
Holders on the date hereof or (B) any sale or transfer by the TPG
Holders of Preferred Shares unless and until the TPG Holders,
after giving effect to the proposed sale or transfer, shall have
sold or transferred in the aggregate, other than to Permitted
Transferees, shares of Preferred Shares representing 7.5% of the
Preferred Shares owned by the TPG Holders on the date hereof.
(c) Piggyback Registration Rights.
(i) Notice to Stockholders. If the Company
determines that it will file a registration statement under the
Securities Act, other than a Form X-0, Xxxx X-0 or any similar
form under the Securities Act, for an offering which includes
Common Shares held by a TPG Holder on the date hereof (a
"Registering Stockholder"), then the Company shall give prompt
written notice to each of the Other Stockholders 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 Common Shares from any of
the Other Stockholders, then the Company shall include in the
same registration statement the number of additional Common
Shares to be sold by each Other Stockholder as shall have been
specified in its request; provided, however, that each Other
Stockholder shall not be permitted to register more than a Pro
Rata Portion (as defined in Section 2.5(b)(iii), substituting
"Registering Stockholder" for "Selling TPG Stockholder") of its
Common Shares; and provided further, that the Company shall not
be required to register any Common Shares which can be sold or
transferred without registration pursuant to Rule 144(k) under
the Securities Act. The Company shall bear all costs of preparing
and filing the registration statement (but shall not be
responsible for underwriting discounts or fees or similar costs
or expenses, or fees or expenses of counsel to any selling
stockholder), and shall indemnify and hold harmless, pursuant to
customary and reasonable indemnification and contribution
provisions to be entered into by the Company at the
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time of filing of the registration statement, the seller of any
Common Shares 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 2.5(c) at any time prior to such filing.
(ii) Allocation. If the managing underwriter
shall inform the Company (or the person requesting such
registration) in writing that the number of Common Shares
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 the Company (or, if the offering is
not for the Company's account, such person), then the Company
shall include in such registration such number of Common Shares
which the Company (or such person) is so advised can be sold in
(or during the time of) such offering. All Stockholders proposing
to sell Common Shares shall share pro rata in the number of
Common Shares to be excluded from such offering, such sharing to
be based on the respective numbers of Common Shares as to which
registration has been requested by such Stockholders.
(iii) Permitted Transfer. Notwithstanding
anything to the contrary contained herein, sales of Common Shares
pursuant to a registration statement filed by the Company may be
made without compliance with any other provision of this Article
II other than this Section 2.5(c).
ARTICLE III
-----------
Legends on Share Certificates
-----------------------------
3.1 The certificates representing the Shares shall
include an endorsement typed conspicuously thereon of the
following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO
REGISTRATION OF TRANSFER OF SUCH SECURITIES WILL BE MADE ON THE
BOOKS OF THE ISSUER UNLESS SUCH TRANSFER IS MADE IN CONNECTION
WITH AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR
PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
SUCH ACT OR SUCH ACT DOES NOT APPLY.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH IN A STOCKHOLDERS'
AGREEMENT DATED AS OF OCTOBER 17, 1997 AS THE SAME MAY BE AMENDED
FROM TIME TO TIME, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
EXECUTIVE OFFICES OF THE ISSUER. NO REGISTRATION OF TRANSFER OF
SUCH SECURITIES WILL BE MADE ON THE BOOKS OF THE ISSUER UNLESS
AND UNTIL SUCH RESTRICTIONS SHALL HAVE BEEN COMPLIED WITH."
10
In the event that any Shares shall cease to be
Restricted Shares (as hereinafter defined), the Company shall,
upon the written request of the holder thereof, issue to such
holder a new certificate representing such Shares without the
first paragraph of the legend required by this Section 3.1. In
the event that any Shares shall cease to be subject to the
restrictions on transfer set forth in this Agreement, the Company
shall, upon the request of the holder thereof, issue to such
holder a new certificate representing such Shares without the
second paragraph of the legend required by Section 3.1.
"Restricted Shares" shall mean all Shares other than
(a) Shares that have been registered under a registration
statement pursuant to the Securities Act and sold thereunder, (b)
Shares with respect to which a sale or other disposition has been
made in reliance on and in accordance with Rule 144 (or any
successor provision) under the Securities Act, or (c) Shares with
respect to which the holder thereof shall have delivered to the
Company either (i) an opinion, in form and substance satisfactory
to the Company, of counsel, who shall be satisfactory to the
Company, or (ii) a "no action" letter from the Securities and
Exchange Commission, to the effect that subsequent transfers of
such Shares may be effected without registration under the
Securities Act.
3.2 All certificates for Shares representing
Restricted Shares hereafter issued, whether upon transfer or
original issue, shall be endorsed with a like legend.
3.3 Upon the exercise of any option to purchase
described herein, the certificates representing the Shares
purchased shall be delivered to the Secretary of the Company and
properly endorsed for transfer on the stock books of the Company.
ARTICLE IV
----------
Covenants
---------
4.1 Financial Information. During the term of this
Agreement, the Company shall, at its expense, provide to each
Stockholder signatory hereto at the date hereof, promptly
following the final preparation thereof, copies of consolidated
annual, quarterly and monthly financial statements of the Company
and its subsidiaries, such statements to include such type of
information as is required to be provided to the bank lenders
pursuant to the Credit Agreement, dated as of October 17, 1997,
by and among such lenders, the Company and J. Crew Operating
Corp., a wholly owned subsidiary of the Company, as in effect on
the date hereof. The rights provided by this Section 4.1 may not
be transferred or assigned to any other person without the
consent of the Company and TPG II, and shall be subject as to
each Stockholder to the provision by such Stockholder of
customary confidentiality undertakings.
4.2 Affiliate Transactions. The Company shall not, and
shall not permit any of its subsidiaries to, enter into any
transaction with any affiliate of the Company (other than a
majority owned subsidiary of the Company; provided that neither
the TPG Holders nor any affiliate of the TPG Holders (other than
the Company and its subsidiaries) has any equity interest in such
subsidiary other than through their ownership of Shares), except
upon fair and reasonable terms no less favorable to the Company
or such subsidiaries than would be obtainable in a
11
comparable arm's length transaction, unless the Company shall
obtain the written consent of a majority of the independent
directors of the Company or of the holders of a majority, by
voting power, of the outstanding Shares (excluding such affiliate
and its Shares and the Shares of its affiliates) entitled to vote
at a meeting of Stockholders; provided, that agreements in effect
on the date hereof (but excluding subsequent modifications) shall
be deemed not to violate this provision.
4.3 Restrictive Covenants. In addition to any
requirements imposed by the governing instruments of the
Preferred Shares, the Company shall not take any action requiring
the consent of holders of Preferred Shares pursuant to Section
3(a) of each of the designations of the Series A Preferred Stock
and the Series B Preferred Stock contained in Article Fifth of
the Company's Restated Certificate of Incorporation without also
obtaining the consent, in writing, of each Stockholder that (i)
owns Preferred Shares on the date hereof and (ii) has not sold,
transferred or otherwise disposed of any of such Preferred
Shares, except to Permitted Transferees which have not sold,
transferred or otherwise disposed of any of such Preferred
Shares.
4.4 Exchange of Shares. The Stockholders will use all
reasonable efforts to cause the Board of Directors of the Company
to authorize the exchange of (a) Shares held by any Stockholder
subject to the Bank Holding Company Act of 1956, as amended (the
"BHCA"), to the extent necessary, for substantially equivalent
shares with diminished voting rights, to permit the ownership of
such Shares by such Stockholder to comply with the requirements
of Section 4(c)(6) or 4(c)(7) of the BHCA and (b) shares of
Series A Preferred Stock held by any Stockholder for shares of
Series B Preferred Stock, or shares of Series B Preferred Stock
held by any Stockholder for shares of Series A Preferred Stock,
to the extent necessary to permit such Stockholder to sell on a
timely basis the applicable series of shares of its Preferred
Stock pursuant to Section 2.5(b).
ARTICLE V
---------
Additional Parties
------------------
Notwithstanding the provisions of Section 6.3,
additional Stockholders may be added to and be bound by this
Agreement upon the signing and delivery of a counterpart of this
Agreement by the Company and the acceptance thereof by such
additional Stockholders, provided that any Permitted Transferee
of a TPG Holder that is an affiliate of such TPG Holder shall, by
signing and delivering such a counterpart of this Agreement,
become a TPG Holder under this Agreement. Promptly after signing
and delivering such a counterpart of this Agreement, the Company
will deliver a conformed copy thereof to the Stockholders.
ARTICLE VI
----------
Miscellaneous Provisions
------------------------
6.1 Specific Performance. The parties hereby declare
and acknowledge that it is impossible to measure in money the
damages which will accrue to any party hereto or to a
12
representative of a Stockholder by reason of a failure to perform
any of the obligations under this Agreement. Therefore, if any
party hereto or the representative of a Stockholder shall
institute any action or proceeding to enforce the provisions
hereof, the person against whom such action or proceeding is
brought hereby waives the claim or defense that such party or
such representative has an adequate remedy at law, and such
person shall not urge in any such action or proceeding the claim
or defense that such party or such representative has an adequate
remedy at law. The parties hereto agree that this Agreement shall
be specifically enforceable.
6.2 Notices. Any and all notices, designations,
offers, acceptances or other communications provided for herein
shall be given in writing by registered or certified mail, which
shall be addressed, in the case of the Company, to its principal
office, and, in the case of any Stockholder, to such
Stockholder's address appearing on the stock books of the Company
or to such other address as may be designated by such Stockholder
in writing to the Company.
6.3 Entire Agreement. This Agreement constitutes the
only agreement between the parties hereto respecting restrictions
on the transferability of the Shares and supersedes all prior
agreements, expressed or implied, between the parties.
6.4 Governing Law. The validity, construction and
performance of this Agreement shall be governed by the laws of
the State of New York without giving effect to principles of
conflicts of laws except Section 5-1401 of the General
Obligations Law of the State of New York.
6.5 Binding Effect. This Agreement shall be binding
upon and inure to the benefit of the parties hereto, and their
successors and assigns.
6.6 Severability. If any portion of this Agreement
shall be declared void or unenforceable by any court or
administrative body of competent jurisdiction, such portion shall
be deemed severable from the remainder of this Agreement, which
shall continue in all respects valid and enforceable.
6.7 Amendment and Waiver. Any amendment of this
Agreement or any waiver of any provision hereof to be effective
shall be in writing and signed by all of the parties hereto. The
addition of a Transferee of Shares or a recipient of any Shares
as a party hereto pursuant to Article V hereof shall not
constitute an amendment hereto and need be signed only by the
Company and such Transferee or recipient. Any failure by any
party at any time to enforce any of the provisions of this
Agreement shall not be construed a waiver of such provision or
any other provisions hereof.
6.8 Termination. This Agreement shall terminate on the
earliest of (a) the date on which more than 50% of the issued and
outstanding Shares at such date shall have been registered and
sold pursuant to one or more registration statements filed under
the Securities Act, (b) the date on which the shares of capital
stock of the Company held by the TPG Holders represent, in the
aggregate, less than thirty-five percent (35%) of the total
voting power of the Company's capital stock, (c) in connection
with the underwritten initial public offering by the Company of
any Shares, the date on or after the consummation of such
offering on which the
13
holders of a majority of the outstanding Common Shares shall have
agreed, by 30 days' prior written notice to each of the parties
to this Agreement and to each party who becomes a party to this
Agreement, to terminate this Agreement, and (d) the tenth
anniversary of the date hereof; provided, however, that (i) the
rights, if any, of any Stockholder set forth in Section 2.5(b)
(with respect to Common Shares held by such Stockholder) of this
Agreement shall survive any such termination as to such
Stockholder until the Common Shares held by such Stockholder can
be sold pursuant to Rule 144(k) under the Securities Act (or any
successor provision) and (ii) the rights, if any, of Stockholders
set forth in Section 2.5(b) (with respect to Preferred Shares),
2.5(c) and 4.3 of this Agreement shall survive any such
termination.
6.9 Counterparts. This Agreement may be signed by each
party hereto upon a separate copy of this Agreement in which
event all of said copies shall constitute a single counterpart of
this Agreement. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and it
shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
Each Stockholder in agreement with the foregoing
should sign the form of acceptance in the space provided for such
Stockholder's signature on this copy of this Agreement delivered
to such Stockholder. This Agreement will become a binding
agreement among such Stockholders and the Company when signed by
the Company and so accepted by such Stockholders.
14
The foregoing Stockholders' Agreement is hereby
accepted as of the day and year first above written.
J. CREW GROUP, INC.
By: /s/ Xxxxxxx X. XxXxxx
---------------------------------
Name: Xxxxxxx X. XxXxxx
Title: Vice President - Finance
[remainder of page intentionally left blank]
S-1
Stockholders:
TPG PARTNERS II, L.P.
By: TPG GenPar II, L.P.
By: TPG Advisors II, Inc.
By: /s/ Xxxxxxxx X. Xxxxxx
---------------------------------
Name:
Title:
TPG PARALLEL II, L.P.
By: TPG GenPar II, L.P.
By: TPG Advisors II, Inc.
By: /s/ Xxxxxxxx X. Xxxxxx
---------------------------------
Name:
Title:
TPG INVESTORS II, L.P.
By: TPG GenPar II, L.P.
By: TPG Advisors II, Inc.
By: /s/ Xxxxxxxx X. Xxxxxx
---------------------------------
Name:
Title:
S-2
BANCBOSTON INVESTMENTS, INC.
By: /s/ Xxxx X. XxXxxxx
---------------------------------
Name: Xxxx X. XxXxxxx
Title: Managing Director
[remainder of page intentionally left blank]
S-3
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxxx, Xx.
---------------------------------
Name: Xxxxxx X. Xxxxxxxxxx, Xx.
Title: Senior Vice President and
Department Operations Manager
[remainder of page intentionally left blank]
X-0
XXX/XXXXXXXX XXXXXXXXX PARTNERS, L.P.
By: TCW Asset Management Company
By: /s/
---------------------------------
Name: Xxxx X. Xxxxxxx
Title: Senior Vice President
By: /s/
---------------------------------
Name: Xxxx-Xxxx Xxxxxx
Title: Managing Director
TCW/CRESCENT MEZZANINE TRUST
By: TCW Asset Management Company
By: /s/
---------------------------------
Name: Xxxx X. Xxxxxxx
Title: Senior Vice President
By: /s/
---------------------------------
Name: Xxxx-Xxxx Xxxxxx
Title: Managing Director
TCW/CRESCENT MEZZANINE INVESTMENT
PARTNERS, L.P.
By: TCW Asset Management Company
By: /s/
---------------------------------
Name: Xxxx X. Xxxxxxx
Title: Senior Vice President
By: /s/
---------------------------------
Name: Xxxx-Xxxx Xxxxxx
Title: Managing Director
S-5
CRESCENT/MACH I PARTNERS, L.P.
By: TCW Asset Management Company
By: /s/
---------------------------------
Name: Xxxx X. Xxxxxxx
Title: Senior Vice President
By: /s/
---------------------------------
Name: Xxxx-Xxxx Xxxxxx
Title: Managing Director
TCW SHARED OPPORTUNITY FUND II, L.P.
By: TCW Asset Management Company
By: /s/
---------------------------------
Name: Xxxx X. Xxxxxxx
Title: Senior Vice President
By: /s/
---------------------------------
Name: Xxxx-Xxxx Xxxxxx
Title: Managing Director
S-6
DLJ FUND INVESTMENT PARTNERS II, L.P.
By: DLJ LBO Plans Management Corporation
By: /s/
---------------------------------
Name: Xxx Xxxxx
Title: Vice President
XXX XXXXXX
By: DLJ LBO Plans Management Corporation
as Attorney-in Fact
By: /s/
---------------------------------
Name: Xxx Xxxxx
Title: Vice President
XXXX XXXXXXX
By: DLJ LBO Plans Management Corporation
as Attorney-in Fact
By: /s/
---------------------------------
Name: Xxx Xxxxx
Title: Vice President
XXXXXXX XXXXXXXXX
By: DLJ LBO Plans Management Corporation
as Attorney-in Fact
By: /s/
---------------------------------
Name: Xxx Xxxxx
Title: Vice President
S-7
XXXXXXX XXXX
By: DLJ LBO Plans Management Corporation
as Attorney-in Fact
By: /s/
---------------------------------
Name: Xxx Xxxxx
Title: Vice President
DLJ CAPITAL CORPORATION
By: DLJ LBO Plans Management Corporation
as Attorney-in Fact
By: /s/
---------------------------------
Name: Xxx Xxxxx
Title: Vice President
XXXXXXX XXXXXXX
By: DLJ LBO Plans Management Corporation
as Attorney-in Fact
By: /s/
---------------------------------
Name: Xxx Xxxxx
Title: Vice President
XXXXX XXXXXXX
By: DLJ LBO Plans Management Corporation
as Attorney-in Fact
By: /s/
---------------------------------
Name: Xxx Xxxxx
Title: Vice President
S-8
XXXX XXXXXXXX
By: DLJ LBO Plans Management Corporation
as Attorney-in Fact
By: /s/
---------------------------------
Name: Xxx Xxxxx
Title: Vice President
XXX XXXXX
By: DLJ LBO Plans Management Corporation
as Attorney-in Fact
By: /s/
---------------------------------
Name: Xxx Xxxxx
Title: Vice President
XXXXX HONOUR
By: DLJ LBO Plans Management Corporation
as Attorney-in Fact
By: /s/
---------------------------------
Name: Xxx Xxxxx
Title: Vice President
XXXXXXXXX XXXXXX
By: DLJ LBO Plans Management Corporation
as Attorney-in Fact
By: /s/
---------------------------------
Name: Xxx Xxxxx
Title: Vice President
S-9
XXXX XXXXXXX
By: DLJ LBO Plans Management Corporation
as Attorney-in Fact
By: /s/
---------------------------------
Name: Xxx Xxxxx
Title: Vice President
XXXXX XXXXX
By: DLJ LBO Plans Management Corporation
as Attorney-in Fact
By: /s/
---------------------------------
Name: Xxx Xxxxx
Title: Vice President
XXXXX XXXXXX
By: DLJ LBO Plans Management Corporation
as Attorney-in Fact
By: /s/
---------------------------------
Name: Xxx Xxxxx
Title: Vice President
XXXXX HONOUR
By: DLJ LBO Plans Management Corporation
as Attorney-in Fact
By: /s/
---------------------------------
Name: Xxx Xxxxx
Title: Vice President
S-10
FARALLON CAPITAL PARTNERS, L.P.
By: Farallon Partners, L.L.C.
its General Partner
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Managing Member
FARALLON CAPITAL INSTITUTIONAL PARTNERS, L.P.
By: Farallon Partners, L.L.C.
its General Partner
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name:
Title:
FARALLON CAPITAL INSTITUTIONAL PARTNERS II, L.P.
By: Farallon Partners, L.L.C.
its General Partner
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name:
Title:
S-11
XXXX XXXX
By: /s/ Xxxx Xxxx
---------------------------------
Name: Xxxx Xxxx
Title:
[remainder of page intentionally left blank]
S-12
FARALLON CAPITAL INSTITUTIONAL PARTNERS III, L.P.
By: Farallon Partners, L.L.C.
its General Partner
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name:
Title:
RR CAPITAL PARTNERS, L.P.
By: Farallon Partners, L.L.C.
its General Partner
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name:
Title:
S-13
Schedule 1.4
------------
Stockholder Common Shares Owned
----------- -------------------
TPG Partners II, L.P. 31,566.779
TPG Parallel II, L.P. 2,154.198
TPG Investors II, L.P. 3,292.740
BancBoston Investments, Inc. 2,062.500
General Electric Capital Corporation 1,948.090
TCW/Crescent Mezzanine Partners, L.P. 2,323.141
TCW/Crescent Mezzanine Trust 707.128
TCW/Crescent Mezzanine Investment Partners, L.P. 63.481
Crescent/Mach I Partners, L.P. 171.875
TCW Shared Opportunity Fund II, L.P. 171.875
DLJ Fund Investment Partners II, L.P. 527.745
Xxx Xxxxxx 25.943
Xxxx Xxxxxxx 25.943
Xxxxxxx Xxxxxxxxx 25.943
Xxxxxxx Xxxx 13.342
Xxxxx Honour 4.447
Xxxxxxx Xxxxxxx 20.013
Xxxxx Xxxxxxx 20.013
Xxxx Xxxxxxxx 20.013
Xxx Xxxxx 19.272
Xxxxxxxxx Xxxxxx 13.342
Xxxx Xxxxxxx 10.377
Xxxxx Xxxxx 2.965
Xxxxx Xxxxxx 10.377
DLJ Capital Corporation 1.482
Farallon Capital Partners, L.P. 742.500
Farallon Capital Institutional Partners, L.P. 577.500
Farallon Capital Institutional Partners II, L.P. 198.000
Farallon Capital Institutional Partners III, L.P. 66.000
RR Capital Partners, L.P. 66.000
Xxxx Xxxx 129.094
Xxxxx Xxxxx 8,017.883
Stockholder Preferred Shares Owned
----------- ----------------------
TPG Partners II, L.P. 63,424.117
TPG Parallel II, L.P. 4,328.225
TPG Investors II, L.P. 6,615.789
BancBoston Investments, Inc. 12,187.500
General Electric Capital Corporation 3,914.112
TCW/Crescent Mezzanine Partners, L.P. 13,727.651
TCW/Crescent Mezzanine Trust 4,178.481
TCW/Crescent Mezzanine Investment Partners, L.P. 375.118
Crescent/Mach I Partners, L.P. 1,015.625
TCW Shared Opportunity Fund II, L.P. 1,015.625
DLJ Fund Investment Partners II, L.P. 1,060.347
Xxx Xxxxxx 52.124
Xxxx Xxxxxxx 52.124
Xxxxxxx Xxxxxxxxx 52.124
Xxxxxxx Xxxx 26.807
DLJ Capital Corporation 2.979
Xxxxx Honour 8.936
Xxxxxxx Xxxxxxx 40.210
Xxxxx Xxxxxxx 40.210
Xxxx Xxxxxxxx 40.210
Xxx Xxxxx 38.721
Xxxxxxxxx Xxxxxx 26.807
Xxxx Xxxxxxx 20.850
Xxxxx Xxxxx 5.957
Xxxxx Xxxxxx 20.850
Farallon Capital Partners, L.P. 4,387.500
Farallon Capital Institutional Partners, L.P. 3,412.500
Farallon Capital Institutional Partners II, L.P. 1,170.000
Farallon Capital Institutional Partners III, L.P. 390.000
RR Capital Partners, L.P. 390.000
Xxxxx Xxxxx 2,978.505
