EXECUTION COPY
INDEMNITY, SUBROGATION and CONTRIBUTION AGREEMENT
dated as of October 17, 1997, among J. CREW OPERATING
CORP., a Delaware corporation (the "Borrower") and a
wholly-owned subsidiary of J. CREW GROUP, INC., a New
York corporation ("Holdings"), each subsidiary of the
Borrower listed on Schedule I hereto (the
"Guarantors") 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"), Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation, as syndication agent, and Chase, as administrative
agent for the Lenders (in such capacity, the "Administrative
Agent"), 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 (b) the
Guarantee Agreement dated as of October 17, 1997, among the
Guarantors, Holdings and the Collateral Agent (as amended,
supplemented or otherwise modified from time to time, the
"Guarantee Agreement"). Capitalized terms used herein and not
defined herein shall have the meanings assigned to such terms in
the Credit Agreement.
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. The Guarantors have agreed to guarantee such
Loans and the other Obligations (as defined in the Guarantee
Agreement) of the Borrower under the Credit Agreement pursuant to
the Guarantee Agreement; certain Guarantors have also granted
Liens on and security interests in certain of their assets to
secure such guarantees pursuant to (a) the Pledge Agreement dated
as of October 17, 1997, among Holdings, the Borrower, the
Guarantors and the Collateral Agent and (b) the Security
Agreement dated as of October 17, 1997, among Holdings, the
Borrower, the Guarantors and the Collateral Agent. The
obligations of the Lenders to make Loans and of the Issuing Bank
to issue Letters of Credit and Acceptances are conditioned on,
among other things, the execution and delivery by the Borrower
and the Guarantors of an agreement in the form hereof.
Accordingly, the Borrower, each Guarantor and the
Collateral Agent agree as follows:
SECTION 1. Indemnity and Subrogation. In addition to
all such rights of indemnity and subrogation as the Guarantors
may have under applicable law (but subject to Section 3), the
Borrower agrees that (a) in the event a payment shall be made by
any Guarantor under the Guarantee Agreement, the Borrower shall
indemnify such Guarantor for the full amount of such payment and
such Guarantor shall be subrogated to the rights of the person to
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whom such payment shall have been made to the extent of such
payment and (b) in the event any assets of any Guarantor shall be
sold pursuant to any Security Document to satisfy a claim of any
Secured Party, the Borrower shall emnify such Guarantor in an
amount equal to the greater of the book value or the fair market
value of the assets so sold.
SECTION 2. Contribution and Subrogation. Each
Guarantor (a "Contributing Guarantor") agrees (subject to Section
3) that, in the event a payment shall be made by any other
Guarantor under the Guarantee Agreement or assets of any other
Guarantor shall be sold pursuant to any Security Document to
satisfy a claim of any Secured Party and such other Guarantor
(the "Claiming Guarantor") shall not have been fully indemnified
by the Borrower as provided in Section 1, the Contributing
Guarantor shall indemnify the Claiming Guarantor in an amount
equal to the amount of such payment or the greater of the book
value or the fair market value of such assets, as the case may
be, in each case multiplied by a fraction of which the numerator
shall be the net worth of the Contributing Guarantor on the date
hereof and the denominator shall be the aggregate net worth of
all the Guarantors on the date hereof (or, in the case of any
Guarantor becoming a party hereto pursuant to Section 12, the
date of the Supplement hereto executed and delivered by such
Guarantor). Any Contributing Guarantor making any payment to a
Claiming Guarantor pursuant to this Section 2 shall be subrogated
to the rights of such Claiming Guarantor under Section 1 to the
extent of such payment.
SECTION 3. Subordination. Notwithstanding any provision
of this Agreement to the contrary, all rights of the Guarantors
under Sections 1 and 2 and all other rights of indemnity,
contribution or subrogation under applicable law or otherwise
shall be fully subordinated to the indefeasible payment in full
in cash of the Obligations. No failure on the part of the
Borrower or any Guarantor to make the payments required by
Sections 1 and 2 (or any other payments required under applicable
law or otherwise) shall in any respect limit the obligations and
liabilities of any Guarantor with respect to its obligations
hereunder, and each Guarantor shall remain liable for the full
amount of the obligations of such Guarantor hereunder.
SECTION 4. Termination. This Agreement shall survive
and be in full force and effect so long as any Obligation is
outstanding and has not been indefeasible paid in full in cash,
and so long as the LC and Acceptance Exposure has not been
reduced to zero or any of the Commitments under the Credit
Agreement have not been terminated, and shall continue to be
effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any Guaranteed Obligation is
rescinded or must otherwise be restored by any Secured Creditor
or any Guarantor upon the bankruptcy or reorganization of the
Borrower, any Guarantor or otherwise.
SECTION 5. Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
SECTION 6. No Waiver; Amendment. (a) No failure on the
part of the Collateral Agent or any Guarantor to exercise, and no
delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy by the Collateral
Agent or any Guarantor preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. All
remedies hereunder are cumulative and are not exclusive of any
other remedies provided by law. None of the Collateral
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Agent and the Guarantors shall be deemed to have waived any
rights hereunder unless such waiver shall be in writing and
signed by such parties.
(b) Neither this Agreement nor any provision hereof
may be waived, amended or modified except pursuant to a written
agreement entered into between the Borrower, the Guarantors and
the Collateral Agent, with the prior written consent of the
Required Lenders (except as otherwise provided in the Credit
Agreement).
SECTION 7. Notices. All communications and notices
hereunder shall be in writing and given as provided in the Guarantee
Agreement and addressed as specified therein.
SECTION 8. Binding 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 the parties that are contained in this Agreement
shall bind and inure to the benefit of their respective
successors and assigns. Neither the Borrower nor any Guarantor
may assign or transfer any of its rights or obligations hereunder
(and any such attempted assignment or transfer shall be void)
without the prior written consent of the Required Lenders.
Notwithstanding the foregoing, at the time any Guarantor is
released from its obligations under the Guarantee Agreement in
accordance with such Guarantee Agreement and the Credit
Agreement, such Guarantor will cease to have any rights or
obligations under this Agreement.
SECTION 9. Survival of Agreement; Severability. (a)
All covenants and agreements made by the Borrower and each
Guarantor herein shall be considered to have been relied upon by
the Collateral Agent, the other Secured Parties and each
Guarantor and shall survive the making by the Lenders of the
Loans and the issuance of the Letters of Credit and Acceptance by
the Issuing Bank, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loans or
any other fee or amount payable under the Credit Agreement or
this Agreement or under any of the other Loan Documents is
outstanding and unpaid or the LC and Acceptance Exposure does not
equal zero and as long as the Commitments have not been
terminated.
(b) In case any one or more of the provisions
contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, no 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 shall not in any way be affected or impaired thereby. 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.
SECTION 10. Counterparts. This Agreement may be
executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a
single contract. This Agreement shall be effective with respect
to any Guarantor when a counterpart bearing the signature of such
Guarantor shall have been delivered to the Collateral Agent.
Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a
manually signed counterpart of this Agreement.
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SECTION 11. Additional Guarantors. Pursuant to Section
5.12 of the Credit Agreement, each Subsidiary of the Borrower which
is also a Subsidiary Loan Party that was not in existence or not
such a Subsidiary on the date of the Credit Agreement or was an
Inactive Subsidiary is required to enter into the Guarantee
Agreement as a Guarantor upon becoming such a Subsidiary (or upon
ceasing to be an Inactive Subsidiary). Upon execution and
delivery after the date hereof by the Collateral Agent and such
Subsidiary of an instrument in the form of Annex 1 hereto, such
Subsidiary shall become a Guarantor hereunder with effect from
and after the date of such execution and delivery. The execution
and delivery of any such instrument shall not require the consent
of any other Guarantor hereunder. The rights and obligations of
each Guarantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Guarantor as a party to
this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers as of
the date first appearing above.
J. CREW OPERATING CORP.,
by
----------------------------
Name:
Title:
EACH OF THE SUBSIDIARIES
LISTED ON SCHEDULE I HERETO,
as a Guarantor,
by
----------------------------
Name:
Title: Authorized Officer
THE CHASE MANHATTAN BANK, as
Collateral Agent,
by
----------------------------
Name:
Title:
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SCHEDULE I
to the Indemnity Subrogation
and Contribution Agreement
Guarantors
Name
Address
Annex 1 to
the Indemnity, Subrogation and
Contribution Agreement
SUPPLEMENT NO. dated as of [ ], to the Indemnity,
Subrogation and Contribution Agreement dated as of
October 17, 1997, (as the same may be amended,
supplemented or otherwise modified from time to time,
the "Indemnity, Subrogation and Contribution
Agreement"), among J. CREW OPERATING CORP., a Delaware
corporation (the "Borrower") and wholly-owned
subsidiary of J. CREW GROUP, INC., a New York
corporation ("Holdings"), each subsidiary of the
Borrower listed on Schedule I thereto (the
"Guarantors"), and THE CHASE MANHATTAN BANK, a New
York banking corporation ("Chase"), as collateral
agent (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"), Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation, as syndication agent, and Chase, as administrative
agent for the Lenders (in such capacity, the "Administrative
Agent"), 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 (b) the
Guarantee Agreement dated as of October 17, 1997, among the
Guarantors, Holdings and the Collateral Agent (as amended,
supplemented or otherwise modified from time to time, the
"Guarantee Agreement").
B. Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in
the Indemnity, Subrogation and Contribution Agreement and the
Credit Agreement.
C. The Borrower and the Guarantors have entered into
the Indemnity, Subrogation and Contribution 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 which is
also a Subsidiary Loan Party that was not in existence or not
such a Subsidiary on the date of the Credit Agreement or was an
Inactive Subsidiary is required to enter into the Guarantee
Agreement as a Guarantor upon becoming such a Subsidiary (or upon
ceasing to be an Inactive Subsidiary). Section 11 of the
Indemnity, Subrogation and Contribution Agreement provides that
such additional Subsidiaries of the Borrower may become
Guarantors under the Indemnity, Subrogation and Contribution
Agreement by execution and delivery of an instrument in the form
of this Supplement. The undersigned Subsidiary of the Borrower
(the "New Guarantor") is executing this Supplement in accordance
with the requirements of the Credit Agreement to become a
Guarantor under the Indemnity, Subrogation and Contribution
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
Guarantor agree as follows:
SECTION 1. In accordance with Section 11 of the
Indemnity, Subrogation and Contribution Agreement, the New
Guarantor by its signature below becomes a Guarantor under the
Indemnity, Subrogation and Contribution Agreement with effect
from and after the date of execution and delivery of this
Agreement in accordance with Section 3 hereof and the New
Guarantor hereby agrees to all the terms and provisions of the
Indemnity, Subrogation and Contribution Agreement applicable to
it as a Guarantor thereunder. Each reference to a "Guarantor" in
the Indemnity, Subrogation and Contribution Agreement shall be
deemed to include the New Guarantor. The Indemnity, Subrogation
and Contribution Agreement is hereby incorporated herein by
reference.
SECTION 2. The New Guarantor 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 (and by different parties hereto on different
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 Guarantor 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. Except as expressly supplemented hereby,
the Indemnity, Subrogation and Contribution Agreement shall
remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
SECTION 6. 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 Indemnity, Subrogation and
Contribution Agreement shall not in any 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.
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SECTION 7. All communications and notices hereunder shall
be in writing and given as provided in Section 7 of the Indemnity,
Subrogation and Contribution Agreement. All communications and
notices hereunder to the New Guarantor shall be given to it at
the address set forth under its signature.
SECTION 8. The New Guarantor 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 Guarantor and the
Collateral Agent have duly executed this Supplement to the
Indemnity, Subrogation and Contribution Agreement as of the day
and year first above written.
[Name Of New Guarantor],
by
----------------------------
Name:
Title:
Address:
THE CHASE MANHATTAN BANK,
as Collateral
Agent,
by
----------------------------
Name:
Title:
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