As filed with the Securities and Exchange Commission on May [__], 2001
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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J. Crew Group, Inc.
(Exact Name of Registrant as Specified in Its Charter)
New York 22-2894486
(State or Other Jurisdiction of (I.R.S. Employer Identification
Incorporation or Organization) Number)
770 Broadway
New York, NY 10003
(Address of Registrant's Principal Executive Offices)
J. Crew Group, Inc. 1997 Stock Option Plan
(Full Title of the Plan)
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Barbara K. Eisenberg, Esq.
Senior Vice President, General Counsel and Corporate Secretary
770 Broadway
New York, NY 10003
212-209-2500
(Name, Address, and Telephone Number, Including Area Code,
of Agent for Service)
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CALCULATION OF REGISTRATION FEE
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Proposed
Maximum Proposed
Offering Maximum Amount Of
Title Of Securities Amount To Be Price Per Aggregate Registration
To Be Registered Registered (1) Share (2) Offering Price Fee
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J. Crew Group, Inc. Common Stock, 1,910,000 shares $9.15 $17,476,500 $4,363.13
par value $.01 per share
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(1) Together with an indeterminate number of shares that may be necessary to
adjust the number of shares reserved for issuance pursuant to the J. Crew
Group, Inc. 1997 Stock Option Plan as the result of a stock split, stock
dividend or similar adjustment of the outstanding common stock of J. Crew
Group, Inc.
(2) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457(h) under the Securities Act of 1933, as amended (the
"Securities Act"), based on a weighted average of the exercise prices of
outstanding options.
Part II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following information shall be deemed to be incorporated by
reference into this Registration Statement and to be a part hereof from the date
of filing of such documents:
(i) the Annual Report on Form 10-K of J. Crew Group, Inc. (the
"Company" or the "Registrant") for the fiscal year ended February
3, 2001, filed with the Securities and Exchange Commission (the
"Commission") on April 27, 2001; and
(ii) all documents filed by J. Crew pursuant to Section 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), subsequent to the date of this Registration
Statement and prior to the termination of the offering of shares
offered hereby.
Any statement contained in a document incorporated or deemed to be incorporated
herein by reference, or contained in this Registration Statement, shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained in any subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities.
The securities being offered hereby are shares of common stock, par
value $.01 per share, of the Company. As of the date hereof, the charter of the
Company authorizes the Company to issue capital stock consisting of 100,000,000
shares of common stock, $.01 par value ("Common Stock"), 1,000,000 shares of
Series A cumulative preferred stock, par value $.01 per share ("Series A
Preferred Stock"), and 1,000,000 shares of Series B cumulative preferred stock,
par value $.01 per share ("Series B Preferred Stock"), the terms, provisions and
preferences of which may be designated from time to time by the Board of
Directors of the Company (the "Board").
Common Stock.
The Company and the holders of its Common Stock as of the date hereof
have entered into a shareholders' agreement dated as of October 17, 1997, as
amended (the "Shareholders' Agreement"). Among other things, the Shareholders'
Agreement (i) imposes certain restrictions on the transfer of shares of Common
Stock and (ii) gives such holders registration rights under certain
circumstances. Prior to the existence of a public market for the Common Stock,
purchasers of shares of Common Stock offered hereby will also be required to
enter into a shareholders' agreement with the Company and the Company's majority
shareholder, TPG Partners II, L.P., a Delaware partnership ("TPG"), and certain
affiliates of TPG, that (i) imposes substantial restrictions on the transfer of
shares of Common Stock and (ii) gives the Company certain rights to purchase the
Common Stock upon the termination of the employment with the Company and its
affiliates of such purchaser.
Holders of Common Stock are entitled to one vote for each share held on
all matters submitted to a vote of stockholders and do not have cumulative
voting rights. Accordingly, TPG and certain of its affiliates or partners may
elect a majority of the directors standing for election. In addition, pursuant
to the Shareholders' Agreement, Ms. Woods, Chairman of the Board, has the right
(subject to certain minimum stock ownership requirements) to serve on the Board
and to appoint one additional director (and any successors to such director) to
the Board. The Board is comprised of nine members.
Holders of Common Stock are entitled to receive ratably such dividends,
if any, as may be declared by the Board out of funds legally available therefor,
subject to any preferential dividend rights of outstanding preferred stock. Upon
the liquidation, dissolution or winding up of the Company, the holders of Common
Stock are entitled to receive ratably the net assets of the Company available
after the payment of all debts and other liabilities, subject to the prior
rights of any outstanding preferred stock. Holders of the Common Stock have no
preemptive, subscription, redemption or conversion rights. The outstanding
shares of Common Stock are, and the shares offered by the Company hereby will
be, when issued and paid for, validly issued, fully paid and nonassessable. The
rights, preferences and privileges of holders of Common Stock are subject to,
and may be adversely affected by, the rights of the holders of shares of any
series of preferred stock that the Company may designate and issue in the
future.
Preferred Stock.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
The Restated Certificate of Incorporation of the Company provides that
no director, past or present, shall have personal liability to the corporation
or its shareholders for damages for any breach of duty in his or her capacity as
director, other than liability imposed under the New York Business Corporation
Law.
In its By-Laws, the Company indemnifies any person from liability
arising out of service, at the request of the Company, to any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise in
any capacity, unless such person's acts were committed in bad faith.
The Company has in place a directors' and officers' liability insurance
policy.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
The following documents are filed with or incorporated by reference
into this Registration Statement (numbering corresponds to Exhibit Table in Item
601 of Regulation S-K):
4.1 Restated Certificate of Incorporation of J. Crew Group, Inc. dated
October 17, 1997 (incorporated by reference to Exhibit 3.1 to the Company's
Registration Statement on Form S-4 filed December 16, 1997).
4.2 J. Crew Group, Inc. By-Laws (incorporated by reference to Exhibit
3.2 to the Company's Annual Report on Form 10-K filed April 27, 2001).
4.3 J. Crew Group, Inc. 1997 Stock Option Plan, as amended.
5.1 Opinion of the law firm of Cleary, Gottlieb, Steen and Hamilton
regarding the validity of securities being registered.
23.1 Consent of KPMG LLP, Independent Auditors.
23.2 Consent of Cleary, Gottlieb, Steen and Hamilton (included in
Exhibit 5.1)
24.1 Power of Attorney (included on signature page).
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the Registrant pursuant to
Section 13 or 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Exchange Act (and, where applicable, each filing of the employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the city of New York, state of New York, on this 30th day of
April, 2001.
J. CREW GROUP, INC.
/s/ Mark A. Sarvary
-----------------------------------
By: Mark A. Sarvary
Director, Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below on this Registration
Statement hereby constitutes and appoints Mark A. Sarvary, Scott M. Rosen and
Barbara K. Eisenberg, and each of them, with full power to act without the
other, his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities (unless revoked in writing) to sign any and
all amendments (including post-effective amendments thereto) to this
Registration Statement to which this power of attorney is attached, and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting to such
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as full to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that such
attorneys-in-fact and agents or any of them, or their or his or her substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following persons in the
capacities indicated, on the 30th day of April, 2001.
Signature Title
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/s/ Emily Woods Director, Chairman of the Board
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Emily Woods
/s/ Mark A. Sarvary Director, Chief Executive Officer
- --------------------------------------- (Principal Executive Officer)
Mark A. Sarvary
/s/ David Bonderman Director
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David Bonderman
/s/ Richard W. Boyce Director
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Richard W. Boyce
/s/ Gregory D. Brenneman Director
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Gregory D. Brenneman
/s/ John W. Burden, III Director
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John W. Burden, III
/s/ James G. Coulter Director
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James G. Coulter
/s/ Brian T. Swette Director
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Brian T. Swette
/s/ Josh S. Weston Director
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Josh S. Weston
/s/ Scott M. Rosen Executive Vice President, Chief Financial Officer
- --------------------------------------- (Principal Financial Officer)
Scott M. Rosen
/s/ Nicholas Lamberti Vice President - Corporate Controller
- --------------------------------------- (Principal Accounting Officer)
Nicholas Lamberti
EXHIBIT INDEX
Exhibit
No. Description Method of Filing Page
- ------- ----------- ---------------- ----
4.1 Restated Certificate of Incorporation Incorporated by reference to --
of J. Crew Group, Inc. dated October Exhibit 3.1 to the Company's
17, 1997 Registration Statement on Form
S-4 filed December 16, 1997
4.2 J. Crew Group, Inc. By-Laws, as amended Incorporated by reference to --
on June 1, 1998, and on January 27, 2000 Exhibit 3.2 to the Company's
Annual Report on Form 10-K filed
April 27, 2001
4.3 J. Crew Group, Inc. 1997 Stock Option Filed herewith 9
Plan, as amended
5.1 Opinion of the law firm of Cleary, Filed herewith 33
Gottlieb, Steen and Hamilton regarding
the validity of securities being
registered
23.1 Consent of KPMG LLP, Independent Filed herewith 35
Auditors
23.2 Consent of Cleary, Gottlieb, Steen and Filed herewith --
Hamilton (included in Exhibit 5.1)
24.1 Power of Attorney (included on Filed herewith --
signature page)
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 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 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,
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:
(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 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.
(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).
(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.
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 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 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 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 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
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
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 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.
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:
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
FIRST INSTRUMENT OF AMENDMENT
-----------------------------
WHEREAS, J. Crew Group, Inc. (the "Company") maintains the J. Crew
Group, Inc. 1997 Stock Option Plan (the "Plan");
WHEREAS, Section 4.12 of the Plan provides that the Plan may be amended
by the Committee at any time, with exceptions not here material;
WHEREAS, the Committee wishes to amend the Plan to reduce the number of
shares of Common Stock reserved for issuance upon exercise of options awarded
under the Plan and to change the Multiple under the Plan for determining Fair
Market Value of the shares of Common Stock prior to a Public Market;
WHEREAS, all defined terms used herein shall have the meaning set forth
in the Plan unless specifically defined herein;
NOW, THEREFORE, the Plan is hereby amended as follows.
1. The reference to "7388 shares of Common Stock" in the first sentence
of Section 4 of the Plan shall be replaced with a reference to " 4744 shares of
Common Stock".
2. The Multiple as defined in Section 2(q) of the Plan shall be changed
from ten (10) to nine (9).
April 1, 1998
SECOND INSTRUMENT OF AMENDMENT
------------------------------
WHEREAS, J. Crew Group, Inc. (the "Company") maintains the J. Crew
Group, Inc. 1997 Stock Option Plan (the "Plan");
WHEREAS, Section 4.12 of the Plan provides that the Plan may be amended
by the Committee at any time, with exceptions not here material;
WHEREAS, the Committee wishes to amend the Plan to increase the number
of shares of Common Stock reserved for issuance upon exercise of options awarded
under the Plan;
WHEREAS, all defined terms used herein shall have the meaning set forth
in the Plan unless specifically defined herein;
NOW, THEREFORE, the Plan is hereby amended as follows.
1. The reference to "4744 shares of Common Stock" in the first sentence
of Section 4 of the Plan shall be replaced with a reference to "5500 shares of
Common Stock".
June 1, 1998
THIRD INSTRUMENT OF AMENDMENT
-----------------------------
WHEREAS, J. Crew Group, Inc. (the "Company") maintains the J. Crew
Group, Inc. 1997 Stock Option Plan (the "Plan");
WHEREAS, Section 4.12 of the Plan provides that the Plan may be amended
by the Committee at any time, with exceptions not here material;
WHEREAS, the Committee wishes to amend the Plan to increase the number
of shares of common stock reserved for issuance upon exercise of options awarded
under the Plan'
WHEREAS, all defined terms used herein shall have the meaning set forth
in the Plan unless specifically defined herein;
NOW, THEREFORE, the Plan is hereby amended as follows.
1. The reference to "5500 shares of Common Stock" in the first sentence
of Section 4 of the Plan shall be replaced with a reference to "6924 shares of
Common Stock".
September 17, 1998
FOURTH INSTRUMENT OF AMENDMENT
------------------------------
WHEREAS, J. Crew Group, Inc. (the "Company") maintains the J. Crew
Group, Inc. 1997 Stock Option Plan (the "Plan");
WHEREAS, Section 4.12 of the Plan provides that the Plan may be amended
by the Committee at any time, with exceptions not here material;
WHEREAS, the Committee wishes to amend the Plan, subject to shareholder
approval, to increase the number of shares of common stock reserved for issuance
upon exercise of options awarded under the Plan;
WHEREAS, all defined terms used herein shall have the meaning set forth
in the Plan unless specifically defined herein;
NOW, THEREFORE, the Plan is hereby amended, subject to shareholder
approval, as follows:
1. The reference to "6,924 shares of Common Stock" in the first
sentence of Section 4 of the Plan shall be replaced with a reference to
"1,810,000 shares of Common Stock", which also reflects the adjustment for the
stock dividend declared on April 13, 1999.
April 13, 1999
FIFTH INSTRUMENT OF AMENDMENT
-----------------------------
WHEREAS, J. Crew Group, Inc. (the "Company") maintains the J. Crew
Group, Inc. 1997 Stock Option Plan (the "Plan");
WHEREAS, Section 4.12 of the Plan provides that the Plan may be amended
by the Committee at any time, with exceptions not here material;
WHEREAS, the Committee wishes to amend the Plan, subject to shareholder
approval, to increase the number of shares of common stock reserved for issuance
upon exercise of options awarded under the Plan;
WHEREAS, all defined terms used herein shall have the meaning set forth
in the Plan unless specifically defined herein;
NOW, THEREFORE, the Plan is hereby amended, subject to shareholder
approval, as follows:
1. The reference to "1,810,000 shares of Common Stock" in the first
sentence of Section 4 of the Plan shall be replaced with a reference to
"1,910,000 shares of Common Stock".
July 24, 2000
Exhibit 5.1
[Cleary, Gottlieb, Steen and Hamilton letterhead]
May 10, 2001
J. Crew Group, Inc.
770 Broadway
New York, NY 10003
Dear Sirs:
J. Crew Group, Inc., a New York corporation (the "Company"),
has requested our opinion in connection with a Registration Statement on Form
S-8 (the "Registration Statement") to be filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Act"), on May 10, 2001. The Company shall register on the Registration
Statement an aggregate of 1,910,000 of its common stock (the "Shares"), par
value $0.01 per share, issuable upon exercise of stock options granted under the
Company's 1997 Stock Option Plan (the "Plan").
We have examined and are relying on originals, or copies
certified or otherwise identified to our satisfaction of such corporate records,
documents, certificates, agreements or other instruments and representations of
public officials, officers and representatives of the Company and such other
persons, and have made such other inquiries, all as we deemed necessary to
enable us to render the opinions expressed below. We have further received a
letter dated May 10, 2001, from Barbara Eisenberg, General Counsel of the
Company, representing to us that the Company has available for issuance a
sufficient number of authorized Shares to deliver 1,910,000 Shares pursuant to
the exercise of options under the Plan, and are relying on such representation
to render the opinions expressed below.
Based on the foregoing, we are of the opinion that the Shares
of the Company issuable pursuant to the Plan are duly authorized and, when
issued in accordance with the terms of the Plan, will be validly issued, fully
paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement. By giving such consent, we do not admit that we
are experts with respect to any part of the Registration Statement, including
this exhibit, within the meaning of the term "expert" as used in the Act or the
rule and regulations of the Commission promulgated thereunder.
Very truly yours,
CLEARY, GOTTLIEB, STEEN & HAMILTON
By: /s/ Arthur H. Kohn
---------------------------------
Arthur H. Kohn
The Board of Directors J. Crew Group, Inc.: We consent to incorporation by reference in the registration statement (No. 333-xxxx) on Form S-8 of J. Crew, Group Inc. of our report dated March 30, 2001, relating to the consolidated balance sheets of J. Crew Group, Inc and subsidiaries as of February 3, 2001 and January 29, 2000, and the related consolidated statements of operations, cash flows, and changes in stockholders' deficit for each of the years in the three-year period ended February 3, 2001, and the related schedule, which report appears in the February 3, 2001 annual report on Form 10-K of J. Crew Group, Inc. /s/ KPGM LLP New York, New York April 27, 2001