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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934*
J.Crew Group, Inc.
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(Name of Issuer)
Common Stock, par value $0.01 per share
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(Title of Class of Securities)
46612H402
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(CUSIP Number)
Millard S. Drexler
J. Crew Group, Inc.
770 Broadway
New York, NY 10003
(212) 209-2500
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
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June 27, 2006
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(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or
240.13d-1(g), check the following box: [ ]
NOTE: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Rule 240.13d-7
for other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of
the Act (however, see the Notes).
SCHEDULE 13D
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CUSIP No. 46612H402 Page 2 of 8 pages
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1 NAMES OF REPORTING PERSONS
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I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
Millard S. Drexler I.R.S. #
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(See Instructions) (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (See Instructions)
OO
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- ----------------------- ----------- --------------------------------------------
7 SOLE VOTING POWER
6,059,898
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8 SHARED VOTING POWER
NUMBER OF SHARES
BENEFICIALLY OWNED 508,194
BY EACH REPORTING ----------- --------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
6,059,898
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10 SHARED DISPOSITIVE POWER
508,194
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,018,092
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions) [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
12.0%
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14 TYPE OF REPORTING PERSON (See Instructions)
IN
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Item 1. Security and Issuer.
This statement on Schedule 13D relates to the Common Stock, par value $0.01
per share (the "Common Stock") of J.Crew Group, Inc. (the "Company"). The
address of the principal executive offices of the Company is 770 Broadway, New
York, NY 10003.
Item 2. Identity and Background.
(a) Millard S. Drexler (the "Reporting Person")
(b) c/o J.Crew Group, Inc.
770 Broadway
New York, NY 10003
(c) The Reporting Person is the Chief Executive Officer and Chairman of the
Board of Directors of the Company. The Company is an apparel and accessories
retailer. The Company's address is set forth in Item 2(b) and is incorporated
herein by reference.
(d) The Reporting Person, during the last five years, has not been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) The Reporting Person, during the last five years, has not been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
(f) The Reporting Person is a United States citizen.
Item 3. Source and Amount of Funds or Other Consideration.
Prior to the initial public offering of the Company, which closed on July
3, 2006 (the "IPO"), the Reporting Person (a) owned 2,335,557 shares of Common
Stock, of which (i) 552,117 shares were acquired upon the exercise of stock
options that were issued to the Reporting Person pursuant to the Company's stock
option plans, (ii) 1,783,440 shares were granted under the Company's equity
incentive plan, 649,934 shares of which are unvested restricted shares, and
(iii) 508,194 shares were transferred to the MSD GRAT, a trust of which the
Reporting Person is a trustee and shares voting and dispositive power (the
"Trust"); and (b) was granted options to purchase 1,402,057 shares that are
exercisable within the next sixty days. The Reporting Person paid (a) $800,000
for the purchase of 1,404,040 Shares (as defined below in Item 6) purchased
pursuant to the terms of a Services Agreement between the Company and the
Reporting Person, dated in January 24, 2003 (the "Services Agreement"), (b)
$200,000 for the grant of an option to exercise up to 1,080,032 shares of Common
Stock pursuant to the terms of the Services Agreement and (c) $1,945,159.40 in
connection with the exercise of stock options.
Page 3 of 8 Pages
In addition, the Reporting Person holds a 97.5% membership interest in MDJC
LLC ("MDJC"), an entity controlled by the Reporting Person, which in turn owns a
50% membership interest in TPG-MD Investment, LLC ("TPG-MD"), an entity that is
jointly owned by Texas Pacific Group, a private investment group, and MDJC LLC.
Pursuant to a credit agreement with the Company, TPG-MD acquired in the
aggregate $20 million principal amount of 5.0% Notes Payable due 2008 of J.Crew
Operating Corp., a wholly owned subsidiary of the Company, which the Reporting
Person, acting through MDJC and TPG-MD, converted into shares of Common Stock of
the Company at a conversion price of $3.52 per share (including accrued and
unpaid interest thereon of $3.6 million) (the "Note Conversion"). Pursuant to
the Note Conversion, which took place on July 3, 2006, the Reporting Person
received 3,280,478 shares of Common Stock of the Company (the "Note Shares").
The Note Shares were acquired within the last sixty days.
All of the funds required to acquire the shares of Common Stock
beneficially owned by the Reporting Person were obtained from the personal funds
of the Reporting Person.
Item 4. Purpose of Transaction.
Pursuant to (i) an Agreement, dated June 7, 2006, by and among the
representatives of the several underwriters of the IPO and the Reporting Person
and (ii) an Agreement, dated June 7, 2006, by and among the representatives of
the several underwriters of the IPO and the Trust (together, the "Lock-up
Agreements"), without the prior written consent of the representatives on behalf
of the underwriters, the Reporting Person has agreed that he will not offer,
sell, contract to sell, pledge, grant any option to purchase, make any short
sale or otherwise dispose of any shares of Common Stock, or any options or
warrants to purchase any shares of Common Stock, or any securities convertible
into, exchangeable for or that represent the right to receive shares of Common
Stock of the Company, whether now owned or hereinafter acquired, owned directly
by the Reporting Person (including holding as a custodian) or with respect to
which the Reporting Person has beneficial ownership within the rules and
regulations of the SEC for a period of 180 days after June 27, 2006, subject to
specified exceptions. A copy of the Lock-up Agreements are attached hereto as
Exhibit A and Exhibit B, respectively.
Except as set forth in this statement, the Reporting Person has no plans or
proposals that relate to or would result in: (a) the acquisition of additional
securities of the Company, or the disposition of securities of the Company; (b)
an extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Company or any of its subsidiaries; (c) a sale or
transfer of a material amount of assets of the Company or any of its
subsidiaries; (d) any change in the present Board of Directors or management of
the Company, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board; (e) any material
change in the present capitalization or dividend policy of the Company; (f) any
other material change in the Company's business or corporate structure; (g)
changes in the Company's charter, bylaws or instruments corresponding thereto or
other actions which may impede the acquisition of control of the Company by any
person; (h) causing a class of securities
Page 4 of 8 Pages
of the Company to be delisted from a national securities exchange or to cease to
be authorized to be quoted in an inter-dealer quotation system of a registered
national securities association; (i) a class of equity securities of the Company
becoming eligible for termination of registration pursuant to Section 12(g)(4)
of the Exchange Act; or (j) any action similar to any of those enumerated above.
The information required by Item 4 not otherwise provided herein is set
forth in Item 3 and is incorporated herein by reference.
Item 5. Interest in Securities of the Issuer.
(a) As of June 27, 2006, and after giving effect to the Note Conversion,
the Reporting Person may be deemed to beneficially own 7,018,092 shares of
Common Stock, representing 12.1% of the outstanding Common Stock, based on the
56,921,000 shares of Common Stock outstanding on June 27, 2006, as represented
by the Company in its Registration Statement on Form S-1 (File No. 333-127628),
as amended, and as declared effective on June 27, 2006 (the "Registration
Statement").
(b) The information required by Item 4(b) not otherwise provided herein is
set forth in Rows 7 - 10 of the cover page for the Reporting Person and is
incorporated herein by reference. The Reporting Person shares the power to vote
or to direct the vote and to dispose or to direct the disposition of the 508,194
shares of Common Stock owned by the Trust with his spouse, Peggy Fishman Drexler
("Mrs. Drexler").
Mrs. Drexler is a self-employed research psychologist/author. Her business
address is care of the Company. The Company's address is set forth in Item 2(b)
and is incorporated herein by reference. Mrs. Drexler, during the last five
years, has not been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors). During the last five years, Mrs. Drexler
has not been a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction and as a result of such proceeding was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws. Mrs. Drexler is a United
States citizen.
(c) The information required by Item 5(c) is set forth in the second
paragraph of Item 3 and is incorporated herein by reference.
(d) Mrs. Drexler has the right to receive half of the proceeds from any
dividend or sale of the Reporting Person's Common Stock under the community
property law of the State of California.
(e) Not applicable.
Page 5 of 8 Pages
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
The Reporting Person entered into an amended and restated employment
agreement with the Company, dated October 20, 2005 (the "Employment Agreement"),
a copy of which is incorporated herein by reference as Exhibit C. Under the
terms of the Employment Agreement, if the Company terminates the employment of
the Reporting Person without "cause" or the Reporting Person terminates his
employment for "good reason" (each as defined in the employment agreement), the
Reporting Person will be entitled to receive, among other things, the
accelerated vesting of any unvested restricted shares and/or unvested stock
options as provided for in any applicable grant agreement.
The Reporting Person entered into a Stockholders' Agreement, dated January
24, 2003, with the Company and TPG Partners II, L.P. ("TPG Partners"), relating
to the shares of Common Stock owned, directly or indirectly, by him and any
other shares of Common Stock that the Reporting Person may subsequently acquire
(the "Shares"), a copy of which is incorporated herein by reference as Exhibit D
(the "Stockholders Agreement"). Under the terms of the Stockholders Agreement
that survived the consummation of the IPO: (i) the Reporting Person has the
right (a) to include the Shares in any registered offering of Common Stock that
includes shares of Common Stock held by TPG Partners and (b) one year after the
consummation of the IPO, to require the Company to register the Shares under the
Securities Exchange Act of 1934, as amended; (ii) if a third party acquires all
or substantially all of the Company's shares and TPG Partners intends to
transfer its shares to such purchaser (a "Sale Transaction"), TPG Partners may
require the Reporting Person to transfer the Shares; and (iii) the Reporting
Person has the right to transfer the Shares in a Sale Transaction.
It is expected that Amendment No. 1 to Stockholders Agreement, by and among
the Company, TPG Partners, TPG Parallel II, L.P., TPG Investors II, L.P. and TPG
1999 Equity II, L.P., the form of which is attached hereto as Exhibit E (the
"Amended Stockholders Agreement") will be entered into by the parties thereto in
the near future. Under the terms of the Amended Stockholders Agreement, (i) TPG
Parallel II, L.P., TPG Investors II, L.P. and TPG 1999 Equity II, L.P. shall be
added as parties to the Stockholders Agreement, and all references to "TPG
Partners II, L.P." and the "Majority Stockholder" in the Stockholders Agreement
shall be deemed to include collectively TPG Partners, TPG Parallel II, L.P., TPG
Investors II, L.P. and TPG 1999 Equity II, L.P.; (ii) the termination provision
shall be amended such that Section 3 and Section 5 of the Stockholders Agreement
will terminate if (a) in the written opinion of counsel to the Company, all of
the Shares then owned by the Reporting Person could be sold in any 90-day period
pursuant to Rule 144 (without giving effect to the provisions of Rule 144(k)) or
(b) all of the Shares held by the Reporting Person have been sold in a
registration pursuant to the Securities Act of 1933, as amended, or pursuant to
Rule 144; (iii) in the event that a proposed offering by the Reporting Person is
underwritten, the Company may ratably reduce the number of shares the Reporting
Person and any other selling stockholder may sell in such offering to the extent
that the underwriter informs the Company in writing that the number of shares of
Common Stock requested to be included in such registration exceeds the number
which can be sold in such offering
Page 6 of 8 Pages
within a price range acceptable to the Reporting Person; and (iv) the Company
shall bear all costs of preparing and filing the registration statement, and
shall indemnify and hold harmless, to the extent customary and reasonable, the
seller of any shares of Common Stock covered by such registration statement.
The information required by Item 6 not otherwise provided herein is set
forth in Item 5(d) and is incorporated herein by reference.
Item 7. Material to Be Filed as Exhibits.
Exhibit A Agreement, dated June 7, 2006, by and among the
Reporting Person and the representatives of the
several underwriters named therein
Exhibit B Agreement, dated June 7, 2006, by and among the Trust
and the representatives of the several underwriters
named therein
Exhibit C Employment Agreement, dated October 20, 2005,
between the Company and the Reporting Person
(incorporated by reference to Exhibit 10.1 to the
Company's Current Report on Form 8-K filed on October
21, 2005)
Exhibit D Stockholders' Agreement, dated January 24, 2003,
among the Company, the Reporting Person and TPG
Partners II, L.P. (incorporated by reference to
Exhibit 4.1 to the Company's Current Report on Form
8-K filed on February 3, 2003)
Exhibit E Form of Amendment No. 1 to Stockholders Agreement, by
and among J. Crew Group, Inc., the Reporting Person
and each of TPG Partners II, L.P., TPG Parallel II,
L.P., TPG Investors II, L.P. and TPG 1999 Equity II,
L.P. (incorporated by reference to Exhibit 4.5(b) to
the Company's Registration Statement on Form S-1/A
filed on June 22, 2006)
Page 7 of 8 Pages
SIGNATURES
After reasonable inquiry and to the best of our knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.
Dated: July 6, 2006
/s/ Millard S. Drexler
------------------------------------
Millard S. Drexler
Exhibit A
J. Crew Group, Inc.
Lock-Up Agreement
June 7, 2006
Goldman, Sachs & Co.,
Bear, Stearns & Co. Inc.,
As representatives of the several Underwriters
named in Schedule I to the Underwriting Agreement (as defined below)
c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
and
Bear, Stearns & Co. Inc.,
383 Madison Avenue
New York, NY 10179
Re: J. Crew Group, Inc. - Lock-Up Agreement
Ladies and Gentlemen:
The undersigned understands that you, as representatives (the
"Representatives"), propose to enter into an Underwriting Agreement (the
"Underwriting Agreement") on behalf of the several Underwriters named in
Schedule I to such agreement (collectively, the "Underwriters"), with J. Crew
Group, Inc., a Delaware corporation (the "Company"), providing for a public
offering of the Common Stock of the Company (the "Shares") pursuant to a
Registration Statement on Form S-1 to be filed with the Securities and Exchange
Commission (the "SEC").
In consideration of the agreement by the Underwriters to offer and sell the
Shares, and of other good and valuable consideration the receipt and sufficiency
of which is hereby acknowledged, the undersigned agrees that, during the period
specified in the following paragraph (the "Lock-Up Period"), the undersigned
will not offer, sell, contract to sell, pledge, grant any option to purchase,
make any short sale or otherwise dispose of any shares of Common Stock of the
Company, or any options or warrants to purchase any shares of Common Stock of
the Company, or any securities convertible into, exchangeable for or that
represent the right to receive shares of Common Stock of the Company, whether
now owned or hereinafter acquired, owned directly by the undersigned (including
holding as a custodian) or with respect to which the undersigned has beneficial
ownership within the rules and regulations of the SEC (collectively the
"Undersigned's Shares"). The foregoing restriction is expressly agreed to
preclude the undersigned from engaging in any hedging or other transaction which
is designed to or which reasonably could be expected to lead to or result in a
sale or disposition of the Undersigned's Shares even if such Shares would be
disposed of by someone other than the
undersigned. Such prohibited hedging or other transactions would include without
limitation any short sale or any purchase, sale or grant of any right (including
without limitation any put or call option) with respect to any of the
Undersigned's Shares or with respect to any security that includes, relates to,
or derives any significant part of its value from such Shares.
The initial Lock-Up Period will commence on the date of this Lock-Up
Agreement and continue for 180 days after the public offering date set forth on
the final prospectus used to sell the Shares (the "Public Offering Date")
pursuant to the Underwriting Agreement; provided, however, that if (1) during
the last 17 days of the initial Lock-Up Period, the Company releases earnings
results or announces material news or a material event or (2) prior to the
expiration of the initial Lock-Up Period, the Company announces that it will
release earnings results during the 15-day period following the last day of the
initial Lock-Up Period, then in each case the Lock-Up Period will be
automatically extended until the expiration of the 18-day period beginning on
the date of release of the earnings results or the announcement of the material
news or material event, as applicable, unless Goldman, Sachs & Co. and Bear,
Stearns & Co. Inc. waive, in writing, such extension.
The undersigned hereby acknowledges that the Company has agreed in the
Underwriting Agreement to provide written notice of any event that would result
in an extension of the Lock-Up Period pursuant to the previous paragraph to the
undersigned (in accordance with Section 12 of the Underwriting Agreement) and
agrees that any such notice properly delivered will be deemed to have been given
to, and received by, the undersigned. The undersigned hereby further agrees
that, prior to engaging in any transaction or taking any other action that is
subject to the terms of this Lock-Up Agreement during the period from the date
of this Lock-Up Agreement to and including the 34th day following the expiration
of the initial Lock-Up Period, it will give notice thereof to the Company and
will not consummate such transaction or take any such action unless it has
received written confirmation from the Company that the Lock-Up Period (as such
may have been extended pursuant to the previous paragraph) has expired.
Notwithstanding the foregoing, the undersigned may (A) transfer the
Undersigned's Shares (i) as a bona fide gift or gifts, provided that the donee
or donees thereof agree to be bound in writing by the restrictions set forth
herein, (ii) to any trust for the direct or indirect benefit of the undersigned
or the immediate family of the undersigned, provided that the trustee of the
trust agrees to be bound in writing by the restrictions set forth herein, and
provided further that any such transfer shall not involve a disposition for
value, or (iii) with the prior written consent of Goldman, Sachs & Co. and Bear
Stearns & Co. Inc. on behalf of the Underwriters and (B) exercise any options or
other rights granted under the Amended and Restated J. Crew Group, Inc. 1997
Stock Option Plan, the J. Crew Group, Inc. 2003 Equity Incentive Plan, or the
2005 Equity Incentive Plan, each as amended, modified or supplemented from time
to time (collectively, the "Benefit Plans"), and outstanding on the date hereof,
provided that the shares of Common Stock of the Company received by the
undersigned pursuant to his, her or its exercise of such options or other rights
granted under any Benefit Plan shall remain subject to the terms of this Lock-Up
Agreement. For purposes of this Lock-Up Agreement, "immediate family" shall mean
any relationship by blood, marriage or adoption, not more remote than first
cousin. In addition, notwithstanding the foregoing, if the undersigned is a
corporation, the corporation may transfer the capital stock of the Company to
any wholly-owned subsidiary of such corporation; provided, however, that in any
such case, it shall be a condition to the transfer that the transferee execute
- 2 -
an agreement stating that the transferee is receiving and holding such capital
stock subject to the provisions of this Agreement and there shall be no further
transfer of such capital stock except in accordance with this Agreement, and
provided further that any such transfer shall not involve a disposition for
value. The undersigned now has, and, except as contemplated by clause (i), (ii),
or (iii) above, for the duration of this Lock-Up Agreement will have, good and
marketable title to the Undersigned's Shares, free and clear of all liens,
encumbrances, and claims whatsoever. The undersigned also agrees and consents to
the entry of stop transfer instructions with the Company's transfer agent and
registrar against the transfer of the Undersigned's Shares except in compliance
with the foregoing restrictions.
The undersigned understands that the Company and the Underwriters are
relying upon this Lock-Up Agreement in proceeding toward consummation of the
offering. The undersigned further understands that this Lock-Up Agreement is
irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors, and assigns.
Very truly yours,
/s/ Millard S. Drexler
-------------------------------------
Millard S. Drexler
- 3 -
Exhibit B
J. Crew Group, Inc.
Lock-Up Agreement
June 7, 2006
Goldman, Sachs & Co.,
Bear, Stearns & Co. Inc.,
As representatives of the several Underwriters
named in Schedule I to the Underwriting Agreement (as defined below)
c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
and
Bear, Stearns & Co. Inc.,
383 Madison Avenue
New York, NY 10179
Re: J. Crew Group, Inc. - Lock-Up Agreement
Ladies and Gentlemen:
The undersigned understands that you, as representatives (the
"Representatives"), propose to enter into an Underwriting Agreement (the
"Underwriting Agreement") on behalf of the several Underwriters named in
Schedule I to such agreement (collectively, the "Underwriters"), with J. Crew
Group, Inc., a Delaware corporation (the "Company"), providing for a public
offering of the Common Stock of the Company (the "Shares") pursuant to a
Registration Statement on Form S-1 to be filed with the Securities and Exchange
Commission (the "SEC").
In consideration of the agreement by the Underwriters to offer and sell the
Shares, and of other good and valuable consideration the receipt and sufficiency
of which is hereby acknowledged, the undersigned agrees that, during the period
specified in the following paragraph (the "Lock-Up Period"), the undersigned
will not offer, sell, contract to sell, pledge, grant any option to purchase,
make any short sale or otherwise dispose of any shares of Common Stock of the
Company, or any options or warrants to purchase any shares of Common Stock of
the Company, or any securities convertible into, exchangeable for or that
represent the right to receive shares of Common Stock of the Company, whether
now owned or hereinafter acquired, owned directly by the undersigned (including
holding as a custodian) or with respect to which the undersigned has beneficial
ownership within the rules and regulations of the SEC (collectively the
"Undersigned's Shares"). The foregoing restriction is expressly agreed to
preclude the undersigned from engaging in any hedging or other transaction which
is designed to or which reasonably could be expected to lead to or result in a
sale or disposition of the Undersigned's Shares even if such Shares would be
disposed of by someone other than the
undersigned. Such prohibited hedging or other transactions would include without
limitation any short sale or any purchase, sale or grant of any right (including
without limitation any put or call option) with respect to any of the
Undersigned's Shares or with respect to any security that includes, relates to,
or derives any significant part of its value from such Shares.
The initial Lock-Up Period will commence on the date of this Lock-Up
Agreement and continue for 180 days after the public offering date set forth on
the final prospectus used to sell the Shares (the "Public Offering Date")
pursuant to the Underwriting Agreement; provided, however, that if (1) during
the last 17 days of the initial Lock-Up Period, the Company releases earnings
results or announces material news or a material event or (2) prior to the
expiration of the initial Lock-Up Period, the Company announces that it will
release earnings results during the 15-day period following the last day of the
initial Lock-Up Period, then in each case the Lock-Up Period will be
automatically extended until the expiration of the 18-day period beginning on
the date of release of the earnings results or the announcement of the material
news or material event, as applicable, unless Goldman, Sachs & Co. and Bear,
Stearns & Co. Inc. waive, in writing, such extension.
The undersigned hereby acknowledges that the Company has agreed in the
Underwriting Agreement to provide written notice of any event that would result
in an extension of the Lock-Up Period pursuant to the previous paragraph to the
undersigned (in accordance with Section 12 of the Underwriting Agreement) and
agrees that any such notice properly delivered will be deemed to have been given
to, and received by, the undersigned. The undersigned hereby further agrees
that, prior to engaging in any transaction or taking any other action that is
subject to the terms of this Lock-Up Agreement during the period from the date
of this Lock-Up Agreement to and including the 34th day following the expiration
of the initial Lock-Up Period, it will give notice thereof to the Company and
will not consummate such transaction or take any such action unless it has
received written confirmation from the Company that the Lock-Up Period (as such
may have been extended pursuant to the previous paragraph) has expired.
Notwithstanding the foregoing, the undersigned may (A) transfer the
Undersigned's Shares (i) as a bona fide gift or gifts, provided that the donee
or donees thereof agree to be bound in writing by the restrictions set forth
herein, (ii) to any trust for the direct or indirect benefit of the undersigned
or the immediate family of the undersigned, provided that the trustee of the
trust agrees to be bound in writing by the restrictions set forth herein, and
provided further that any such transfer shall not involve a disposition for
value, or (iii) with the prior written consent of Goldman, Sachs & Co. and Bear
Stearns & Co. Inc. on behalf of the Underwriters and (B) exercise any options or
other rights granted under the Amended and Restated J. Crew Group, Inc. 1997
Stock Option Plan, the J. Crew Group, Inc. 2003 Equity Incentive Plan, or the
2005 Equity Incentive Plan, each as amended, modified or supplemented from time
to time (collectively, the "Benefit Plans"), and outstanding on the date hereof,
provided that the shares of Common Stock of the Company received by the
undersigned pursuant to his, her or its exercise of such options or other rights
granted under any Benefit Plan shall remain subject to the terms of this Lock-Up
Agreement. For purposes of this Lock-Up Agreement, "immediate family" shall mean
any relationship by blood, marriage or adoption, not more remote than first
cousin. In addition, notwithstanding the foregoing, if the undersigned is a
corporation, the corporation may transfer the capital stock of the Company to
any wholly-owned subsidiary of such corporation; provided, however, that in any
such case, it shall be a condition to the transfer that the transferee execute
- 2 -
an agreement stating that the transferee is receiving and holding such capital
stock subject to the provisions of this Agreement and there shall be no further
transfer of such capital stock except in accordance with this Agreement, and
provided further that any such transfer shall not involve a disposition for
value. The undersigned now has, and, except as contemplated by clause (i), (ii),
or (iii) above, for the duration of this Lock-Up Agreement will have, good and
marketable title to the Undersigned's Shares, free and clear of all liens,
encumbrances, and claims whatsoever. The undersigned also agrees and consents to
the entry of stop transfer instructions with the Company's transfer agent and
registrar against the transfer of the Undersigned's Shares except in compliance
with the foregoing restrictions.
The undersigned understands that the Company and the Underwriters are
relying upon this Lock-Up Agreement in proceeding toward consummation of the
offering. The undersigned further understands that this Lock-Up Agreement is
irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors, and assigns.
Very truly yours,
MSD GRAT A
By: /s/ Millard S. Drexler
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Millard S. Drexler, Trustee
By: /s/ Peggy F. Drexler
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Peggy F. Drexler, Trustee
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