**Exhibit 10.2**

 

STOCK OPTION GRANT AGREEMENT

 

THISAGREEMENT, made as of this 12th day of May, 2004, between J.CREWGROUP, INC. (the “Company”) and Jeffrey A. Pfeifle (the “Participant”).

 

WHEREAS, theCompany has adopted and maintains the J.Crew Group, Inc. 2003 Equity IncentivePlan (the “Plan”) to promote the interests of the Company and itsstockholders by providing the Company’s key employees and others with anappropriate incentive to encourage them to continue in the employ of theCompany and to improve the growth and profitability of the Company;

 

WHEREAS, thePlan provides for the Grant to Participants in the Plan of Non-Qualified StockOptions to purchase shares of Common Stock of the Company;

 

NOW,THEREFORE, in consideration of the premises and the mutual covenantshereinafter set forth, the parties hereto hereby agree as follows:

 

1.               Grantof Options.  Pursuant to, andsubject to, the terms and conditions set forth herein and in the Plan, theCompany hereby Grants to the Participant the following NON-QUALIFIED STOCKOPTIONS (collectively, the “Options”):

 

(a)          PremiumOption Tranche 1.  An Option withrespect to 111,585 shares of Common Stock of the Company (the “PremiumOption Tranche 1”); and

 

(b)         PremiumOption Tranche 2.  An Option withrespect to 111,585 shares of Common Stock of the Company (the “PremiumOption Tranche 2” and together with the Premium Option Tranche 1, the “PremiumOptions”).

 

2.               GrantDate.  The Grant Date of the Optionshereby granted is March 26, 2004.

 

3.               Incorporationof the Plan.   Except as otherwiseprovided herein, all terms, conditions and restrictions of the Plan areincorporated herein and made part hereof as if stated herein.  Notwithstanding anything to the contrary inthe Plan, if there is any conflict between the terms and conditions of the Planand this Agreement, the terms and conditions of this Agreement, as interpretedby the Committee, shall govern.  Unlessotherwise indicated herein, all capitalized terms used herein shall have themeanings given to such terms in the Plan.

 

4.               ExercisePrice.  The Exercise Price of eachshare underlying the Options are as follows:

 

(a)          PremiumOption Tranche 1.  $15.00 per share;and

 

(b)         PremiumOption Tranche 2.  $25.00 per share.

 

5.               VestingDate.  The Options shall become exercisableas follows:  25% of the shares of CommonStock underlying each Option shall vest on February 1, 2005, 25% of theshares of Common Stock underlying each Option shall vest on February 1,2006, 25% of the shares of Common Stock underlying each Option shall vest onFebruary 1, 2007, and 25% of the shares of Common Stock underlying eachOption shall vest on February 1, 2008; provided that the Participantremains continuously Employed by the Company through each such applicableVesting Date.  Notwithstanding theforegoing, (A) in the event that (x) the Company terminates the Participant’sEmployment without Cause (as defined in and pursuant to the EmploymentAgreement, dated as of January 24, 2003, between the Company, J. CrewOperating Corp., and the Participant (the “Employment Agreement”)), theParticipant terminates his Employment for Good Reason (as defined in andpursuant to the Employment Agreement) or the Participant’s Employmentterminates as a result of the Company’s providing notice to the Participant ofits intent not to renew the Employment Period (as defined in the EmploymentAgreement) prior to the consummation of a Change in Control or (y) theParticipant’s Employment is terminated on account of the Participant’s death orDisability (as defined in and pursuant to the Employment Agreement) at any timeduring the Employment Period, the portion of each of the Options that wouldhave become vested and exercisable on the next succeeding Vesting Date shallvest and become immediately exercisable and any remaining portion of theOptions that has not become vested and exercisable shall immediately expire andbe forfeited, (B) in the event that, within the two**-**year period following the consummation of a Change in Controlor within six months prior to a Change in Control if such termination is incontemplation of the Change in Control, the Company terminates theParticipant’s Employment without Cause, the Participant terminates hisEmployment for Good Reason or the Participant’s Employment terminates as aresult of the Company’s providing notice to the Participant of its intent notto renew the Employment Period, all shares of Common Stock underlying theOptions shall become immediately

 

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vested andexercisable; and (C) if the Participant’s Employment terminates for any otherreason, any portion of the Options which has not become exercisable on suchDate of Termination (as defined in the Employment Agreement) shall immediatelyexpire and be forfeited.

 

6.               ExpirationDate.  Subject to the provisions ofthe Plan and this Agreement, with respect to the Options (or any portionsthereof) which have not become exercisable, the Options shall expire on thedate the Participant’s Employment is terminated for any reason, and withrespect to any Options (or any portions thereof) which have become exercisable,the Options shall expire on the earlier of (A) the tenth anniversary of theGrant Date, (B) the commencement of business on the date the Participant’sEmployment is terminated for Cause, (C) ninety days after the Participant’sEmployment is terminated by the Participant without Good Reason, or (D) thesecond anniversary of the date the Participant’s Employment is terminated (x)on account of the Participant’s death or Disability,  (y) by the Company without Cause, or (z) by the Participant forGood Reason.

 

7.               Delaysor Omissions.  No delay or omissionto exercise any right, power, or remedy accruing to any party hereto upon anybreach or default of any party under this Agreement, shall impair any suchright, power or remedy of such party nor shall it be construed to be a waiverof any such breach or default, or an acquiescence therein, or of or in anysimilar breach or default thereafter occurring nor shall any waiver of anysingle breach or default be deemed a waiver of any other breach or defaulttheretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on thepart of any party of any breach or default under this Agreement, or any waiveron the part of any party or any provisions or conditions of this Agreement,shall be in writing and shall be effective only to the extent specifically setforth in such writing.

 

8.               Limitationon Transfer.  During the lifetime ofthe Participant, the Options shall be exercisable only by the Participant.  The Options shall not be assignable ortransferable otherwise than by will or by the laws of descent anddistribution.  Notwithstanding theforegoing, the Participant may request authorization from the Committee toassign the Participant’s rights with respect to the Options granted herein to atrust or custodianship, the beneficiaries of which may include only theParticipant, the Participant’s spouse or the Participant’s lineal descendants(by blood or adoption), and, if the Committee grants such authorization, theParticipant may assign the Participant’s rights accordingly.  In the event of any such assignment, suchtrust or custodianship, or in the event of the Participant’s death, his beneficiariesor estate, shall be subject to all the restrictions, obligations, andresponsibilities as apply to the Participant under the Plan and this Agreementand shall be entitled to all the rights of the Participant under the Plan.  All shares of Common Stock obtained pursuantto the Option granted herein shall not be transferred except as provided in thePlan and, where applicable, the Stockholders’ Agreement.  In the event of any purported Transfer ofany portion of the Options in violation of the provisions of the Plan and thisAgreement, such purported Transfer shall, to the extent permitted by applicablelaw, be void and of no effect.

 

9.               Integration.  This Agreement, the Plan and theStockholders’ Agreement contain the entire understanding of the parties withrespect to its subject matter.  Thereare no restrictions, agreements, promises, representations, warranties,covenants or undertakings with respect to the subject matter hereof other thanthose expressly set forth herein, in the Plan, the Employment Agreement and theStockholders’ Agreement.  ThisAgreement, the Plan and the Stockholders’ Agreement supersede all prioragreements and understandings between the parties with respect to its subjectmatter.

 

10.         Counterparts.  This Agreement may be executed in two ormore counterparts, each of which shall be deemed an original, but all of whichshall constitute one and the same instrument.

 

11.         GoverningLaw.  This Agreement shall begoverned by and construed and enforced in accordance with the laws of the Stateof NEW YORK, without regard to the provisions governing conflict of laws.

 

12.         ParticipantAcknowledgment.  The Participanthereby acknowledges receipt of a copy of the Plan.  The Participant hereby acknowledges that all decisions,determinations and interpretations of the Committee in respect of the Plan,this Agreement and the Options shall be final and conclusive.

 

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IN WITNESSWHEREOF, the Company has caused this Agreement to be duly executed by its dulyauthorized officer and said Participant has hereunto signed this Agreement on theParticipant’s own behalf, thereby representing that the Participant hascarefully read and understands this Agreement and the Plan as of the day andyear first written above.

 

 
|   | J.CREW  GROUP, INC.                       |
|--------|-------------------------------------------|
|   |                                      |
|   |                                      |
|   |   /s/  Amanda Bokman            |   |
|   | By:  Amanda  Bokman             |   |
|   | Title:  Chief Financial Officer      |   |
|   |                                      |   |
|   |                                      |   |
|   |    /s/  Jeffrey A. Pfeifle |   |
|   | Jeffrey A.  Pfeifle                       |   |

 

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