EXECUTION COPY
PLEDGE AGREEMENT dated as of October 17, 1997, among
J. CREW OPERATING CORP., a Delaware corporation (the
"Borrower"), J. CREW GROUP, INC., a New York
corporation ("Holdings"), each subsidiary of the
Borrower listed on Schedule I hereto (each such
subsidiary individually a "Subsidiary Pledgor" and,
collectively, the "Subsidiary Pledgors"; the Borrower,
Holdings and the Subsidiary Pledgors are referred to
collectively herein as the "Pledgors") and THE CHASE
MANHATTAN BANK, a New York banking corporation
("Chase"), as collateral agent (in such capacity, the
"Collateral Agent"), for the Secured Parties (as
defined in the Credit Agreement referred to below).
Reference is made to (a) the Credit Agreement dated as
of October 17, 1997 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among the
Borrower, Holdings, the lenders from time to time party thereto
(the "Lenders"), Chase, as administrative agent (in such
capacity, the "Administrative Agent") for the Lenders, Collateral
Agent and, with respect to Letters of Credit and Acceptances
issued under the Credit Agreement, as issuing bank (in such
capacity, the "Issuing Bank"), and ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Securities Corporation, as syndication agent, and (b) the
Guarantee Agreement dated as of October 17, 1997 (as amended,
supplemented or otherwise modified from time to time, the
"Guarantee Agreement"), among the Subsidiary Pledgors, Holdings
and the Collateral Agent.
The Lenders have agreed to make Loans to the Borrower
and the Issuing Bank has agreed to issue Letters of Credit and
Acceptances for the account of the Borrower, pursuant to, and
upon the terms and subject to the conditions specified in, the
Credit Agreement. Holdings and the Subsidiary Pledgors have
agreed to guarantee, among other things, all the obligations of
the Borrower under the Credit Agreement. The obligations of the
Lenders to make Loans and of the Issuing Bank to issue Letters of
Credit and Acceptances are conditioned upon, among other things,
the execution and delivery by the Pledgors of a Pledge Agreement
in the form hereof to secure (a) the due and punctual payment of
(i) the principal of and premium, if any, and interest (including
interest accruing during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless
of whether allowed or allowable in such proceeding) on the Loans,
when and as due, whether at maturity, by acceleration, upon one
or more dates set for prepayment or otherwise, (ii) each payment
required to be made by the Borrower under the Credit Agreement in
respect of any Letter of Credit or any Acceptance, when and as
due, including payments in respect of reimbursement of
disbursements made by the Issuing Bank with respect thereto,
interest thereon and obligations to provide, under certain
circumstances, cash collateral in connection therewith and (iii)
all other monetary obligations, including fees, costs, expenses
and indemnities, whether primary, secondary, direct, contingent,
fixed or otherwise (including monetary obligations incurred
during the pendency of any bankruptcy, insolvency, receivership
or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Loan Parties to the Secured
Parties under the Credit Agreement and the other Loan Documents,
(b) the due and punctual performance of all covenants,
agreements, obligations
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and liabilities of the Loan Parties under or pursuant to the
Credit Agreement, this Agreement and the other Loan Documents and
(c) unless otherwise agreed to in writing by the applicable
Lender party thereto, the due and punctual payment and
performance of all obligations of the Borrower under each Hedging
Agreement entered into with any counterparty that was a Lender at
the time such Hedging Agreement was entered into (all the
monetary and other obligations described in the preceding clauses
(a) through (c) being collectively called the "Obligations").
Capitalized terms used herein and not defined herein shall have
meanings assigned to such terms in the Credit Agreement.
Accordingly, the Pledgors and the Collateral Agent, on
behalf of itself and each Secured Party (and each of their
respective successors or assigns), hereby agree as follows:
SECTION 1. Pledge. As security for the payment and
performance, as the case may be, in full of the Obligations, each
Pledgor hereby pledges and grants to the Collateral Agent, its
successors and assigns, for the ratable benefit of the Secured
Parties, a security interest in all of such Pledgor's right,
title and interest in, to and under (a) the shares of capital
stock owned by it and listed on Schedule II hereto and any shares
of capital stock of the Borrower or any Subsidiary obtained in
the future by such Pledgor and the certificates representing all
such shares (the "Pledged Stock"); provided that the Pledged
Stock shall not include (i) more than 65% of the issued and
outstanding shares of stock of any Foreign Subsidiary or (ii) to
the extent that applicable law requires that a Subsidiary of such
Pledgor issue directors' qualifying shares, such qualifying
shares; (b)(i) the debt securities listed opposite the name of
such Pledgor on Schedule II hereto, (ii) any debt securities in
the future issued to such Pledgor and (iii) the promissory notes
and any other instruments evidencing such debt securities (the
"Pledged Debt Securities"); (c) all other property that may be
delivered to and held by the Collateral Agent pursuant to the
terms hereof; (d) subject to Section 5, all payments of principal
or interest, dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed, in
respect of, in exchange for or upon the conversion of the
securities referred to in clauses (a) and (b) above; (e) subject
to Section 5, all rights and privileges of the Pledgor with
respect to the securities and other property referred to in
clauses (a), (b), (c) and (d) above; and (f) all proceeds of any
of the foregoing (the items referred to in clauses (a) through
(f) above being collectively referred to as the "Collateral").
Upon delivery to the Collateral Agent, (a) any Pledged Stock,
Pledged Debt Securities or other securities now or hereafter
included in the Collateral (the "Pledged Securities") shall be
accompanied by stock powers duly executed in blank or other
instruments of transfer satisfactory to the Collateral Agent and
by such other instruments and documents as the Collateral Agent
may reasonably request and (b) all other property comprising part
of the Collateral shall be accompanied by proper instruments of
assignment duly executed by the applicable Pledgor and such other
instruments or documents as the Collateral Agent may reasonably
request. Each delivery of Pledged Securities shall be accompanied
by a schedule describing the securities theretofore and then
being pledged hereunder, which schedule shall be attached hereto
as Schedule II and made a part hereof. Each schedule so delivered
shall supersede any prior schedules so delivered.
TO HAVE AND TO HOLD the Collateral, together with all
right, title, interest, powers, privileges and preferences
pertaining or incidental thereto, unto the Collateral Agent, its
successors and assigns, for the ratable benefit of the Secured
Parties, forever; subject, however, to the terms, covenants and
conditions hereinafter set forth.
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SECTION 2. Delivery of the Collateral. (a) Each
Pledgor agrees promptly to deliver or cause to be delivered to
the Collateral Agent any and all Pledged Securities, and any and
all certificates or other instruments or documents representing
the Collateral.
(b) Each Pledgor will cause any indebtedness for
borrowed money (other than indebtedness evidenced by a Purchase
Money Note) owed to such Pledgor by any Person to be evidenced by
a duly executed promissory note that is pledged and delivered to
the Collateral Agent pursuant to the terms hereof.
SECTION 3. Representations, Warranties and Covenants.
Each Pledgor hereby represents, warrants and covenants, as to
itself and the Collateral pledged by it hereunder, to and with
the Collateral Agent that:
(a) the Pledged Stock represents that percentage
as set forth on Schedule II of the issued and outstanding
shares of each class of the capital stock of the issuer
with respect thereto;
(b) except for the security interest granted
hereunder, the Pledgor (i) is and will at all times
continue to be the direct owner, beneficially and of
record, of the Pledged Securities indicated on Schedule II,
(ii) holds the same free and clear of all Liens, (iii) will
make no assignment, pledge, hypothecation or transfer of,
or create or permit to exist any security interest in or
other Lien on, the Collateral, other than pursuant hereto,
and (iv) subject to Section 5, will cause any and all
Collateral, whether for value paid by the Pledgor or
otherwise, to be forthwith deposited with the Collateral
Agent and pledged or assigned hereunder;
(c) the Pledgor (i) has the power and authority
to pledge the Collateral in the manner hereby done or
contemplated and (ii) will defend its title or interest
thereto or therein against any and all Liens (other than
the Lien created by this Agreement), however arising, of
all persons whomsoever;
(d) no consent of any other person (including
stockholders or creditors of any Pledgor) and no consent or
approval of any Governmental Authority or any securities
exchange was or is necessary to the validity of the pledge
effected hereby;
(e) by virtue of the execution and delivery by
the Pledgors of this Agreement, when the Pledged
Securities, certificates or other documents representing or
evidencing the Collateral are delivered to the Collateral
Agent in accordance with this Agreement, the Collateral
Agent will obtain a valid and perfected first lien upon and
security interest in such Pledged Securities as security
for the payment and performance of the Obligations;
(f) the pledge effected hereby is effective to
vest in the Collateral Agent, on behalf of the Secured
Parties, the rights of the Collateral Agent in the
Collateral as set forth herein;
(g) all of the Pledged Stock has been duly authorized
and validly issued and is fully paid and nonassessable;
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(h) all information set forth herein relating to the
Pledged Stock is accurate and complete in all material respects
as of the date hereof; and
(i) the pledge of the Pledged Stock pursuant to
this Agreement does not violate Regulation G, T, U or X of
the Federal Reserve Board or any successor thereto as of
the date hereof.
SECTION 4. Registration in Nominee Name;
Denominations. The Collateral Agent, on behalf of the Secured
Parties, shall have the right (in its sole and absolute
discretion) to hold the Pledged Securities in its own name as
pledgee, the name of its nominee (as pledgee or as sub-agent) or
the name of the Pledgors, endorsed or assigned in blank or in
favor of the Collateral Agent. Each Pledgor will promptly give to
the Collateral Agent copies of any notices or other
communications received by it with respect to Pledged Securities
registered in the name of such Pledgor. The Collateral Agent
shall at all times have the right to exchange the certificates
representing Pledged Securities for certificates of smaller or
larger denominations for any purpose consistent with this
Agreement.
SECTION 5. Voting Rights; Dividends and Interest, etc.
(a) Unless and until an Event of Default shall have occurred and
be continuing:
(i) Each Pledgor shall be entitled to exercise
any and all voting and/or other consensual rights and
powers inuring to an owner of Pledged Securities or any
part thereof for any purpose consistent with the terms of
this Agreement, the Credit Agreement and the other Loan
Documents; provided, however, that such Pledgor will not be
entitled to exercise any such right if the result thereof
could reasonably be expected to materially and adversely
affect the rights inuring to a holder of the Pledged
Securities or the rights and remedies of any of the Secured
Parties under this Agreement or the Credit Agreement or any
other Loan Document or the ability of the Secured Parties
to exercise the same.
(ii) The Collateral Agent shall execute and
deliver to each Pledgor, or cause to be executed and
delivered to each Pledgor, all such proxies, powers of
attorney and other instruments as such Pledgor may
reasonably request for the purpose of enabling such Pledgor
to exercise the voting and/or consensual rights and powers
it is entitled to exercise pursuant to subparagraph (i)
above and to receive the cash dividends it is entitled to
receive pursuant to subparagraph (iii) below.
(iii) Each Pledgor shall be entitled to receive and
retain any and all cash dividends, interest and principal
paid on the Pledged Securities to the extent and only to
the extent that such cash dividends, interest and principal
are permitted by, and otherwise paid in accordance with,
the terms and conditions of the Credit Agreement, the other
Loan Documents and applicable laws. All noncash dividends,
interest and principal, and all dividends, interest and
principal paid or payable in cash or otherwise in
connection with a partial or total liquidation or
dissolution, return of capital, capital surplus or paid-in
surplus, and all other distributions (other than
distributions referred to in the preceding sentence) made
on or in respect of the Pledged Securities, whether paid or
payable in cash or otherwise, whether resulting from a
subdivision, combination or reclassification of the
outstanding capital stock of the issuer of any Pledged
Securities or received in exchange for Pledged Securities
or any part thereof, or in redemption thereof, or as a
result of any
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merger, consolidation, acquisition or other exchange of
assets to which such issuer may be a party or otherwise,
shall be and become part of the Collateral, and, if
received by any Pledgor, shall not be commingled by such
Pledgor with any of its other funds or property but shall
be held separate and apart therefrom, shall be held in
trust for the benefit of the Collateral Agent and shall be
forthwith delivered to the Collateral Agent in the same
form as so received (with any necessary endorsement).
(b) Upon the occurrence and during the continuance of
an Event of Default, all rights of any Pledgor to dividends,
interest or principal that such Pledgor is authorized to receive
pursuant to paragraph (a)(iii) above shall cease, and all such
rights shall thereupon become vested in the Collateral Agent,
which shall subject to the provisions of this paragraph (b) have
the sole and exclusive right and authority to receive and retain
such dividends, interest or principal. All dividends, interest or
principal received by the Pledgor contrary to the provisions of
this Section 5 shall be held in trust for the benefit of the
Collateral Agent, shall be segregated from other property or
funds of such Pledgor and shall be forthwith delivered to the
Collateral Agent upon demand in the same form as so received
(with any necessary endorsement). Any and all money and other
property paid over to or received by the Collateral Agent
pursuant to the provisions of this paragraph (b) shall be
retained by the Collateral Agent in an account to be established
by the Collateral Agent upon receipt of such money or other
property and shall be applied in accordance with the provisions
of Section 7. After all Events of Default have been cured or
waived, the Collateral Agent shall promptly repay to each Pledgor
all cash dividends, interest or principal (without interest),
that such Pledgor would otherwise be permitted to retain pursuant
to the terms of paragraph (a)(iii) above and which remain in such
account.
(c) Upon the occurrence and during the continuance of
an Event of Default, all rights of any Pledgor to exercise the
voting and consensual rights and powers it is entitled to
exercise pursuant to paragraph (a)(i) of this Section 5, and the
obligations of the Collateral Agent under paragraph (a)(ii) of
this Section 5, shall cease, and all such rights shall thereupon
become vested in the Collateral Agent, which shall have the sole
and exclusive right and authority to exercise such voting and
consensual rights and powers, provided that, unless otherwise
directed by the Required Lenders, the Collateral Agent shall have
the right from time to time following and during the continuance
of an Event of Default to permit the Pledgors to exercise such
rights. After all Events of Default have been cured or waived,
such Pledgor will have the right to exercise the voting and
consensual rights and powers that it would otherwise be entitled
to exercise pursuant to the terms of paragraph (a)(i) above.
SECTION 6. Remedies upon Default. Upon the occurrence
and during the continuance of an Event of Default, subject to
applicable regulatory and legal requirements, the Collateral
Agent may sell the Collateral, or any part thereof, at public or
private sale or at any broker's board or on any securities
exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate. The Collateral Agent
shall be authorized at any such sale (if it deems it advisable to
do so) to restrict the prospective bidders or purchasers to
persons who will represent and agree that they are purchasing the
Collateral for their own account for investment and not with a
view to the distribution or sale thereof, and upon consummation
of any such sale the Collateral Agent shall have the right to
assign, transfer and deliver to the purchaser or purchasers
thereof the Collateral so sold. Each such purchaser at any such
sale shall hold the property sold absolutely free from any claim
or right on the part of any Pledgor, and, to the extent permitted
by applicable law, the Pledgors hereby waive all rights of
redemption, stay,
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valuation and appraisal any Pledgor now has or may at any time in
the future have under any rule of law or statute now existing or
hereafter enacted.
The Collateral Agent shall give a Pledgor 10 days'
prior written notice (which each Pledgor agrees is reasonable
notice within the meaning of Section 9-504(3) of the Uniform
Commercial Code as in effect in the State of New York or its
equivalent in other jurisdictions) of the Collateral Agent's
intention to make any sale of such Pledgor's Collateral. Such
notice, in the case of a public sale, shall state the time and
place for such sale and, in the case of a sale at a broker's
board or on a securities exchange, shall state the board or
exchange at which such sale is to be made and the day on which
the Collateral, or portion thereof, will first be offered for
sale at such board or exchange. Any such public sale shall be
held at such time or times within ordinary business hours and at
such place or places as the Collateral Agent may fix and state in
the notice of such sale. At any such sale, the Collateral, or
portion thereof, to be sold may be sold in one lot as an entirety
or in separate parcels, as the Collateral Agent may (in its sole
and absolute discretion) determine. The Collateral Agent shall
not be obligated to make any sale of any Collateral if it shall
determine not to do so, regardless of the fact that notice of
sale of such Collateral shall have been given. The Collateral
Agent may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time
by announcement at the time and place fixed for sale, and such
sale may, without further notice, be made at the time and place
to which the same was so adjourned. In case any sale of all or
any part of the Collateral is made on credit or for future
delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid in full by the
purchaser or purchasers thereof, but the Collateral Agent shall
not incur any liability in case any such purchaser or purchasers
shall fail to take up and pay for the Collateral so sold and, in
case of any such failure, such Collateral may be sold again upon
like notice. At any public (or, to the extent permitted by
applicable law, private) sale made pursuant to this Section 6,
any Secured Party may bid for or purchase, free from any right of
redemption, stay or appraisal on the part of any Pledgor (all
said rights being also hereby waived and released), the
Collateral or any part thereof offered for sale and may make
payment on account thereof by using any claim then due and
payable to it from such Pledgor as a credit against the purchase
price, and it may, upon compliance with the terms of sale, hold,
retain and dispose of such property without further
accountability to such Pledgor therefor. For purposes hereof, (a)
a written agreement to purchase the Collateral or any portion
thereof shall be treated as a sale thereof, (b) the Collateral
Agent shall be free to carry out such sale pursuant to such
agreement and (c) such Pledgor shall not be entitled to the
return of the Collateral or any portion thereof subject thereto,
notwithstanding the fact that after the Collateral Agent shall
have entered into such an agreement all Events of Default shall
have been remedied and the Obligations paid in full. As an
alternative to exercising the power of sale herein conferred upon
it, the Collateral Agent may proceed by a suit or suits at law or
in equity to foreclose upon the Collateral and to sell the
Collateral or any portion thereof pursuant to a judgment or
decree of a court or courts having competent jurisdiction or
pursuant to a proceeding by a court-appointed receiver.
SECTION 7. Application of Proceeds of Sale. The
proceeds of any sale of Collateral pursuant to Section 6, as well
as any Collateral consisting of cash, shall be applied by the
Collateral Agent as follows:
FIRST, to the payment of all costs and expenses
incurred by the Collateral Agent in connection with such
sale or otherwise in connection with this Agreement, any
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other Loan Document or any of the Obligations, including
all court costs and the reasonable fees and expenses of its
agents and legal counsel, the repayment of all advances
made by the Collateral Agent hereunder or under any other
Loan Document on behalf of any Pledgor and any other costs
or expenses incurred in connection with the exercise of any
right or remedy hereunder or under any other Loan Document;
SECOND, to the payment in full of the Obligations
(the amounts so applied to be distributed among the Secured
Parties pro rata in accordance with the amounts of the
Obligations owed to them on the date of any such
distribution); and
THIRD, to the Pledgors, their successors or
assigns, or as a court of competent jurisdiction may
otherwise direct.
The Collateral Agent shall have absolute discretion as
to the time of application of any such proceeds, moneys or
balances in accordance with this Agreement. Upon any sale of the
Collateral by the Collateral Agent (including pursuant to a power
of sale granted by statute or under a judicial proceeding), the
receipt of the purchase money by the Collateral Agent or of the
officer making the sale shall be a sufficient discharge to the
purchaser or purchasers of the Collateral so sold and such
purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the
Collateral Agent or such officer or be answerable in any way for
the misapplication thereof.
SECTION 8. Reimbursement of Collateral Agent. (a) Each
Pledgor agrees to pay upon demand to the Collateral Agent the
amount of any and all reasonable expenses, including the
reasonable fees, other charges and disbursements of its counsel
and of any experts or agents, that the Collateral Agent may incur
in connection with (i) the administration of this Agreement, (ii)
the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Collateral in accordance
with the terms hereof, (iii) the exercise or enforcement of any
of the rights of the Collateral Agent hereunder or (iv) the
failure by such Pledgor to perform or observe any of the
provisions hereof applicable to it.
(b) Without limitation of its indemnification
obligations under the other Loan Documents, each Pledgor agrees
to indemnify the Indemnitees (as defined in Section 9.03 of the
Credit Agreement) against, and hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and
related expenses, including reasonable counsel fees, other
charges and disbursements, incurred by or asserted against any
Indemnitee arising out of, in any way connected with, or as a
result of (i) the execution or delivery of this Agreement or any
other Loan Document or any agreement or instrument contemplated
hereby or thereby, the performance by the parties hereto of their
respective obligations thereunder or the consummation of the
Transactions and the other transactions contemplated thereby or
(ii) any claim, litigation, investigation or proceeding relating
to any of the foregoing, whether or not any Indemnitee is a party
thereto, provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses resulted from the gross
negligence or wilful misconduct of such Indemnitee.
(c) Any amounts payable as provided hereunder shall be
additional Obligations secured hereby and by the other Security
Documents. The provisions of this Section 8 shall remain
operative and in full force and effect regardless of the
termination of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of the
Obligations,
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the invalidity or unenforceability of any term or provision of
this Agreement or any other Loan Document or any investigation
made by or on behalf of the Collateral Agent or any other Secured
Party. All amounts due under this Section 8 shall be payable on
written demand therefor and shall bear interest at the rate
specified in Section 2.13(a) of the Credit Agreement.
SECTION 9. Collateral Agent Appointed
Attorney-in-Fact. Each Pledgor hereby appoints the Collateral
Agent the attorney-in-fact of such Pledgor for the purpose of
carrying out the provisions of this Agreement and taking any
action and executing any instrument that the Collateral Agent may
in its reasonable judgment deem necessary or advisable to
accomplish the purposes hereof, which appointment is irrevocable
and coupled with an interest. Without limiting the generality of
the foregoing, the Collateral Agent shall have the right, upon
the occurrence and during the continuance of an Event of Default,
with full power of substitution either in the Collateral Agent's
name or in the name of such Pledgor, to ask for, demand, ▇▇▇ for,
collect, receive and give acquittance for any and all moneys due
or to become due under and by virtue of any Collateral, to
endorse checks, drafts, orders and other instruments for the
payment of money payable to the Pledgor representing any interest
or dividend or other distribution payable in respect of the
Collateral or any part thereof or on account thereof and to give
full discharge for the same, to settle, compromise, prosecute or
defend any action, claim or proceeding with respect thereto, and
to sell, assign, endorse, pledge, transfer and to make any
agreement respecting, or otherwise deal with, the same; provided,
however, that nothing herein contained shall be construed as
requiring or obligating the Collateral Agent to make any
commitment or to make any inquiry as to the nature or sufficiency
of any payment received by the Collateral Agent, or to present or
file any claim or notice, or to take any action with respect to
the Collateral or any part thereof or the moneys due or to become
due in respect thereof or any property covered thereby. The
Collateral Agent and the other Secured Parties shall be
accountable only for amounts actually received as a result of the
exercise of the powers granted to them herein, and neither they
nor their officers, directors, employees or agents shall be
responsible to any Pledgor for any act or failure to act
hereunder, except for their own gross negligence or wilful
misconduct.
SECTION 10. Waivers; Amendment. (a) No failure or
delay of the Collateral Agent in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of
the Collateral Agent hereunder and of the other Secured Parties
under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise
have. No waiver of any provisions of this Agreement or consent to
any departure by any Pledgor therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b)
below, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No
notice or demand on any Pledgor in any case shall entitle such
Pledgor to any other or further notice or demand in similar or
other circumstances.
(b) Neither this Agreement nor any provision hereof
may be waived, amended or modified except pursuant to a written
agreement entered into between the Collateral Agent and
the respective Pledgor or Pledgors with respect to which such
waiver, amendment or modification is to apply, subject to any
consent required in accordance with Section 9.02 of the Credit
Agreement.
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SECTION 11. Securities Act, etc. In view of the
position of the Pledgors in relation to the Pledged Securities,
or because of other current or future circumstances, a question
may arise under the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder (the "Securities
Act") with respect to any disposition of the Pledged Securities
permitted hereunder. Each Pledgor understands that compliance
with the Securities Act might very strictly limit the course of
conduct of the Collateral Agent if the Collateral Agent were to
attempt to dispose of all or any part of the Pledged Securities,
and might also limit the extent to which or the manner in which
any subsequent transferee of any Pledged Securities could dispose
of the same. Similarly, there may be other legal restrictions or
limitations affecting the Collateral Agent in any attempt to
dispose of all or part of the Pledged Securities under applicable
Blue Sky or other state securities laws. Each Pledgor recognizes
that in light of such restrictions and limitations the Collateral
Agent may, with respect to any sale of the Pledged Securities,
limit the purchasers to those who will agree, among other things,
to acquire such Pledged Securities for their own account, for
investment, and not with a view to the distribution or resale
thereof. Each Pledgor acknowledges and agrees that in light of
such restrictions and limitations, the Collateral Agent, in its
sole and absolute discretion, (a) may proceed to make such a sale
whether or not a registration statement for the purpose of
registering such Pledged Securities or part thereof shall have
been filed under the Securities Act and (b) may approach and
negotiate with a single potential purchaser to effect such sale,
in either case in accordance with a valid exemption from
registration under the Securities Act. Each Pledgor acknowledges
and agrees that any such sale might result in prices and other
terms less favorable to the seller than if such sale were a
public sale without such restrictions. In the event of any such
sale, the Collateral Agent shall incur no responsibility or
liability for selling all or any part of the Pledged Securities
at a price that the Collateral Agent, in its sole and absolute
discretion, may in good ▇▇▇▇▇ ▇▇▇▇ reasonable under the
circumstances, notwithstanding the possibility that a
substantially higher price might have been realized if the sale
were deferred until after registration as aforesaid or if more
than a single purchaser were approached. The provisions of this
Section 11 will apply notwithstanding the existence of a public
or private market upon which the quotations or sales prices may
exceed substantially the price at which the Collateral Agent
sells.
SECTION 12. Registration, etc. Each Pledgor agrees
that, upon the occurrence and during the continuance of an Event
of Default hereunder, if for any reason the Collateral Agent
desires to sell any of the Pledged Securities of the Borrower at
a public sale, it will, at any time and from time to time, upon
the written request of the Collateral Agent, use its reasonable
best efforts to take or to cause the issuer of such Pledged
Securities to take such action and prepare, distribute and/or
file such documents, as are required or advisable in the
reasonable opinion of counsel for the Collateral Agent to permit
the public sale of such Pledged Securities. Each Pledgor further
agrees to indemnify, defend and hold harmless the Collateral
Agent, each other Secured Party, any underwriter and their
respective officers, directors, affiliates and controlling
persons from and against all loss, liability, expenses, costs of
counsel (including, without limitation, reasonable fees and
expenses to the Collateral Agent of legal counsel), and claims
(including the costs of investigation) that they may incur
insofar as such loss, liability, expense or claim arises out of
or is based upon any alleged untrue statement of a material fact
contained in any prospectus (or any amendment or supplement
thereto) or in any notification or offering circular, or arises
out of or is based upon any alleged omission to state a material
fact required to be stated therein or necessary to make the
statements in any thereof not misleading, except insofar as the
same may have been caused by any untrue statement or omission
based
9
upon information furnished in writing to such Pledgor or the
issuer of such Pledged Securities by the Collateral Agent or any
other Secured Party expressly for use therein. Each Pledgor
further agrees, upon such written request referred to above, to
use its reasonable best efforts to qualify, file or register, or
cause the issuer of such Pledged Securities to qualify, file or
register, any of the Pledged Securities under the Blue Sky or
other securities laws of such states as may be requested by the
Collateral Agent and keep effective, or cause to be kept
effective, all such qualifications, filings or registrations.
Each Pledgor will bear all costs and expenses of carrying out its
obligations under this Section 12. Each Pledgor acknowledges that
there is no adequate remedy at law for failure by it to comply
with the provisions of this Section 12 and that such failure
would not be adequately compensable in damages, and therefore
agrees that its agreements contained in this Section 12 may be
specifically enforced.
SECTION 13. Security Interest Absolute. All rights of
the Collateral Agent hereunder, the grant of a security interest
in the Collateral and all obligations of each Pledgor hereunder,
shall be absolute and unconditional irrespective of (a) any lack
of validity or enforceability of the Credit Agreement, any other
Loan Document, any agreement with respect to any of the
Obligations or any other agreement or instrument relating to any
of the foregoing, (b) any change in the time, manner or place of
payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent
to any departure from the Credit Agreement, any other Loan
Document or any other agreement or instrument relating to any of
the foregoing, (c) any exchange, release or nonperfection of any
other collateral, or any release or amendment or waiver of or
consent to or departure from any guaranty, for all or any of the
Obligations or (d) any other circumstance that might otherwise
constitute a defense available to, or a discharge of, any Pledgor
in respect of the Obligations or in respect of this Agreement
(other than the indefeasible payment in full of all the
Obligations).
SECTION 14. Termination or Release. (a) This Agreement
and the security interests granted hereby shall terminate when
all the Obligations have been indefeasibly paid in full and the
Lenders have no further commitment to lend under the Credit
Agreement, the LC and Acceptance Exposure has been reduced to
zero and the Issuing Bank has no further obligation to issue
Letters of Credit or Acceptances under the Credit Agreement.
(b) Upon any sale or other transfer by any Pledgor of
any Collateral that is permitted under the Credit Agreement to
any person that is not a Pledgor, or, upon the effectiveness of
any written consent to the release of the security interest
granted hereby in any Collateral pursuant to Section 9.02(b) of
the Credit Agreement, the security interest in such Collateral
shall be automatically released.
(c) In connection with any termination or release
pursuant to paragraph (a) or (b), the Collateral Agent shall
execute and deliver to any Pledgor, at such Pledgor's expense,
all documents that such Pledgor shall reasonably request to
evidence such termination or release. Any execution and delivery
of documents pursuant to this Section 14 shall be without
recourse to or warranty by the Collateral Agent.
SECTION 15. Notices. All communications and notices
hereunder shall be in writing and given as provided in Section
9.01 of the Credit Agreement. All communications and notices
hereunder to any Subsidiary Pledgor shall be given to it at the
address for notices set forth on Schedule I.
10
SECTION 16. Further Assurances. Each Pledgor agrees to
do such further acts and things, and to execute and deliver such
additional conveyances, assignments, agreements and instruments,
as the Collateral Agent may at any time reasonably request in
connection with the administration and enforcement of this
Agreement or with respect to the Collateral or any part thereof
or in order better to assure and confirm unto the Collateral
Agent its rights and remedies hereunder.
SECTION 17. Binding Effect; Several Agreement;
Assignments. Whenever in this Agreement any of the parties hereto
is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of any Pledgor that are contained
in this Agreement shall bind and inure to the benefit of its
successors and assigns. This Agreement shall become effective as
to any Pledgor when a counterpart hereof executed on behalf of
such Pledgor shall have been delivered to the Collateral Agent
and a counterpart hereof shall have been executed on behalf of
the Collateral Agent, and thereafter shall be binding upon such
Pledgor and the Collateral Agent and their respective successors
and assigns, and shall inure to the benefit of such Pledgor, the
Collateral Agent and the other Secured Parties, and their
respective successors and assigns, except that no Pledgor shall
have the right to assign its rights or obligations hereunder or
any interest herein or in the Collateral (and any such attempted
assignment shall be void), except as expressly contemplated by
this Agreement or the other Loan Documents. If all of the capital
stock of a Pledgor is sold, transferred or otherwise disposed of
to a person that is not an Affiliate of the Borrower pursuant to
a transaction permitted by Section 6.05 of the Credit Agreement,
such Pledgor shall be released from its obligations under this
Agreement without further action. This Agreement shall be
construed as a separate agreement with respect to each Pledgor
and may be amended, modified, supplemented, waived or released
with respect to any Pledgor without the approval of any other
Pledgor and without affecting the obligations of any other
Pledgor hereunder
SECTION 18. Survival of Agreement; Severability. (a)
All covenants, agreements, representations and warranties made by
each Pledgor herein and in the certificates or other instruments
prepared or delivered in connection with or pursuant to this
Agreement or any other Loan Document shall be considered to have
been relied upon by the Collateral Agent and the other Secured
Parties and shall survive the making by the Lenders of the Loans
and the issuance of the Letters of Credit and Acceptances by the
Issuing Bank, regardless of any investigation made by the Secured
Parties or on their behalf, and shall continue in full force and
effect as long as the principal of or any accrued interest on any
Loan or any other fee or amount payable under this Agreement or
any other Loan Document is outstanding and unpaid or the LC and
Acceptance Exposure does not equal zero and as long as the
Commitments and the Revolving Commitments have not been
terminated.
(b) In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby (it being
understood that the invalidity of a particular provision in a
particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The
parties shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid
provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable
provisions.
11
SECTION 19. Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
SECTION 20. Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall
constitute an original, but all of which, when taken together,
shall constitute a single contract, and shall become effective as
provided in Section 17. Delivery of an executed counterpart of a
signature page to this Agreement by facsimile transmission shall
be as effective as delivery of a manually executed counterpart of
this Agreement.
SECTION 21. Rules of Interpretation. The rules of
interpretation specified in Section 1.03 of the Credit Agreement
shall be applicable to this Agreement. Section headings used
herein are for convenience of reference only, are not part of
this Agreement and are not to affect the construction of, or to
be taken into consideration in interpreting this Agreement.
SECTION 22. Jurisdiction; Consent to Service of
Process. (a) Each Pledgor hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or Federal court of the
United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement or the other Loan
Documents, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably and unconditionally
agrees that, to the extent permitted by applicable law, all
claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted
by law, in such Federal court. Each of the parties hereto agrees
that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law. Nothing in
this Agreement shall affect any right that the Collateral Agent
or any other Secured Party may otherwise have to bring any action
or proceeding relating to this Agreement or the other Loan
Documents against any Pledgor or its properties in the courts of
any jurisdiction.
(b) Each Pledgor hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and
effectively do so, any objection that it may now or hereafter
have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan
Documents in any New York State or Federal court. Each of the
parties hereto hereby irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents
to service of process in the manner provided for notices in
Section 15. Nothing in this Agreement will affect the right of
any party to this Agreement to serve process in any other manner
permitted by law.
SECTION 23. Waiver Of Jury Trial. EACH PARTY HERETO
HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
12
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION.
SECTION 24. Additional Pledgors. Pursuant to Section
5.12 of the Credit Agreement, each Subsidiary of the Borrower
that was not in existence or not a Subsidiary on the date of the
Credit Agreement or was an Inactive Subsidiary is required to
enter in this Agreement as a Subsidiary Pledgor upon becoming a
Subsidiary (or upon ceasing to be an Inactive Subsidiary) if such
Subsidiary is a Subsidiary Loan Party and owns or possesses
property of a type that would be considered Collateral hereunder.
Upon execution and delivery by the Collateral Agent and any such
Subsidiary of an instrument in the form of Annex 1, such
Subsidiary shall become a Subsidiary Pledgor hereunder with
effect from and after the date of such execution and delivery.
The execution and delivery of such instrument shall not require
the consent of any other Pledgor hereunder. The rights and
obligations of each Pledgor hereunder shall remain in full force
and effect notwithstanding the addition of any new Subsidiary
Pledgor as a party to this Agreement.
13
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the day and year first above
written.
J CREW OPERATING CORP.,
by /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Name:
Title:
J CREW GROUP, INC.,
by /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Name:
Title:
THE SUBSIDIARY PLEDGORS LISTED ON
SCHEDULE I HERETO,
by /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Name:
Title: Authorized Officer
THE CHASE MANHATTAN BANK, as
Collateral Agent,
by /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Name:
Title:
14
Schedule I to the
Pledge Agreement
SUBSIDIARY PLEDGORS
Name Address
---- -------
Schedule II to the
Pledge Agreement
CAPITAL STOCK
Number of Registered Number and Percentage
Issuer Certificate Owner Class of Shares of Shares
------ ----------- ---------- --------------- ----------
DEBT SECURITIES
Issuer Principal Amount Date of Note Maturity Date
------ ---------------- ------------ -------------
Annex 1 to the
Pledge Agreement
SUPPLEMENT NO. dated as of , to the PLEDGE AGREEMENT
dated as of October 17, 1997, among J. CREW OPERATING
CORP., a Delaware corporation (the "Borrower"), J.
CREW GROUP, INC., a New York corporation ("Holdings"),
and each subsidiary of the Borrower listed on Schedule
I thereto (each such subsidiary individually a
"Subsidiary Pledgor" and, collectively, the
"Subsidiary Pledgors"; the Borrower, Holdings and
Subsidiary Pledgors are referred to collectively
herein as the "Pledgors") and THE CHASE MANHATTAN
BANK, a New York banking corporation ("Chase"), as
collateral agent, (in such capacity, the "Collateral
Agent"), for the Secured Parties (as defined in the
Credit Agreement referred to below)
A. Reference is made to (a) the Credit Agreement dated
as of October 17, 1997 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among the
Borrower, Holdings, the lenders from time to time party thereto
(the "Lenders"), Chase, as administrative agent (in such
capacity, the "Administrative Agent") for the Lenders, Collateral
Agent and, with respect to Letters of Credit and Acceptances
issued under the Credit Agreement as issuing bank (in such
capacity, the "Issuing Bank"), ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Securities Corporation, as syndication agent, and (b) the
Guarantee Agreement dated as of October 17, 1997 (as amended,
supplemented or otherwise modified from time to time, the
"Guarantee Agreement"), among the Subsidiary Pledgors, Holdings
and the Collateral Agent.
B. Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in
the Credit Agreement.
C. The Pledgors have entered into the Pledge Agreement
in order to induce the Lenders to make Loans and the Issuing Bank
to issue Letters of Credit and Acceptances. Pursuant to Section
5.12 of the Credit Agreement, each Subsidiary of the Borrower
that was not in existence or not a Subsidiary on the date of the
Credit Agreement or was an Inactive Subsidiary is required to
enter into the Pledge Agreement as a Subsidiary Pledgor upon
becoming a Subsidiary (or upon ceasing to be an Inactive
Subsidiary) if such Subsidiary is also a Subsidiary Loan Party
and owns or possesses property of a type that would be considered
Collateral under the Pledge Agreement. Section 24 of the Pledge
Agreement provides that such Subsidiaries may become Subsidiary
Pledgors under the Pledge Agreement by execution and delivery of
an instrument in the form of this Supplement. The undersigned
Subsidiary (the "New Pledgor") is executing this Supplement in
accordance with the requirements of the Credit Agreement to
become a Subsidiary Pledgor under the Pledge Agreement in order
to induce the Lenders to make additional Loans and the Issuing
Bank to issue additional Letters of Credit and Acceptances and as
consideration for Loans previously made and Letters of Credit and
Acceptances previously issued.
Accordingly, the Collateral Agent and the New Pledgor
agree as
follows:
SECTION 1. In accordance with Section 24 of the Pledge
Agreement, the New Pledgor by its signature below becomes a
Pledgor under the Pledge Agreement with effect from and after the
date of execution and delivery of this Agreement in accordance
with Section 3 hereof and the New Pledgor hereby agrees (a) to
all the terms and provisions of the Pledge Agreement applicable
to it as a Pledgor thereunder and (b) represents and warrants
that the representations and warranties made by it as a Pledgor
thereunder are true and correct on and as of the date hereof. In
furtherance of the foregoing, the New Pledgor, as security for
the payment and performance in full of the Obligations (as
defined in the Pledge Agreement), does hereby create and grant to
the Collateral Agent, its successors and assigns, for the benefit
of the Secured Parties, their successors and assigns, a security
interest in and lien on all of the New Pledgor's right, title and
interest in and to the Collateral (as defined in the Pledge
Agreement) of the New Pledgor. Each reference to a "Subsidiary
Pledgor" or a "Pledgor" in the Pledge Agreement shall be deemed
to include the New Pledgor. The Pledge Agreement is hereby
incorporated herein by reference.
SECTION 2. The New Pledgor represents and warrants to
the Collateral Agent and the other Secured Parties that this
Supplement has been duly authorized, executed and delivered by it
and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in
counterparts, each of which shall constitute an original, but all
of which when taken together shall constitute a single contract.
This Supplement shall become effective when the Collateral Agent
shall have received counterparts of this Supplement that, when
taken together, bear the signatures of the New Pledgor and the
Collateral Agent. Delivery of an executed signature
page to this Supplement by facsimile transmission shall be as
effective as delivery of a manually signed counterpart of this
Supplement.
SECTION 4. The New Pledgor hereby represents and
warrants that set forth on Schedule I attached hereto is a true
and correct schedule of all its Pledged Securities.
SECTION 5. Except as expressly supplemented hereby,
the Pledge Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
SECTION 7. In case any one or more of the provisions
contained in this Supplement should be held invalid, illegal or
unenforceable in any respect, neither party hereto shall be
required to comply with such provision for so long as such
provision is held to be invalid, illegal or unenforceable, but
the validity, legality and enforceability of the remaining
provisions contained herein and in the Pledge Agreement shall not
in any
2
way be affected or impaired. The parties hereto shall endeavor in
good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the
invalid, illegal or unenforceable provisions.
SECTION 8. All communications and notices hereunder
shall be in writing and given as provided in Section 15 of the
Pledge Agreement. All communications and notices hereunder to the
New Pledgor shall be given to it at the address set forth under
its signature hereto.
SECTION 9. The New Pledgor agrees to reimburse the
Collateral Agent for its reasonable out-of-pocket expenses in
connection with this Supplement, including the reasonable fees,
other charges and disbursements of counsel for the Collateral
Agent.
IN WITNESS WHEREOF, the New Pledgor and the Collateral
Agent have duly executed this Supplement to the Pledge Agreement
as of the day and year first above written.
[Name of New Pledgor],
by ____________________________
Name:
Title:
Address:
THE CHASE MANHATTAN BANK, as
Collateral Agent,
by ____________________________
Name:
Title:
3
Schedule I to
Supplement No.
to the Pledge Agreement
Pledged Securities of the New Pledgor
-------------------------------------
CAPITAL STOCK
Number of Registered Number and Percentage
Issuer Certificate Owner Class of Shares of Shares
------ ----------- ---------- --------------- ----------
DEBT SECURITIES
Issuer Principal Amount Date of Note Maturity Date
------ ---------------- ------------ -------------
