jcg-8k_20191202.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 2, 2019

 

J.Crew Group, Inc.

(Exact name of registrant as specified in its charter)

 

Commission File Number: 333-175075

 

Delaware

 

22-2894486

(State or other jurisdiction
of incorporation)

 

(IRS Employer
Identification No.)

225 Liberty Street

New York, New York 10281

(Address of principal executive offices, including zip code)

(212) 209-2500

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

None

 

N/A

 

N/A

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.      

 

 

 

 

 


Item 1.01. Entry Into a Material Definitive Agreement.

On December 2, 2019, Chinos Holdings, Inc. (“Parent”), the ultimate parent of J. Crew Group, Inc. (the “Company”), and certain of Parent’s subsidiaries (collectively, the “J.Crew Parties”) entered into an agreement (the “Transaction Support Agreement”) relating to a series of transactions (together, the “Transactions”) with (i) certain holders (such holders, the “Ad Hoc Creditors”) of over a majority of term loans (the “Term Loans”) under that certain Amended and Restated Credit Agreement, dated March 5, 2014, among certain J.Crew Parties, the lenders party thereto, and Wilmington Savings Fund Society, FSB as successor administrative agent (the “Term Loan Agreement”) and (ii) TPG Chinos, L.P., TPG Chinos Co-Invest, L.P., Green Equity Investors V, L.P., Green Equity Investors Side V, L.P. and LGP Chino Coinvest LLC (collectively, the “Sponsors”).

The Transaction Support Agreement contemplates the J.Crew Parties conducting a series of transactions, including, among other things:

 

the formation by Parent of a Delaware limited liability company ("Chinos SPV"), to be operated and managed pursuant to an operating agreement;

 

the consummation of a series of transactions (the “Separation Transactions”) reorganizing the corporate structure of Parent and its subsidiaries and separating the Company’s J.Crew and Madewell businesses, including, among other things:

 

o

the distribution of the entities operating the Madewell business to Parent, the contribution by Parent of the entities holding and operating the J.Crew business to a newly formed subsidiary (“J.Crew NewCo”) such that, after such distribution and contribution, (i) the only remaining business of Parent would be the Madewell business and (ii) the J.Crew business would be operated by J.Crew NewCo and its subsidiaries (in connection with the Separation Transactions, Parent would be renamed Madewell Group, Inc. and is referred to herein for periods following the Transactions as “Madewell Group”);

 

o

the distribution of (i) all of the voting common stock of J.Crew NewCo to the common stockholders of Parent and (ii) non-voting common stock J.Crew NewCo to certain executives of the Company;

 

o

the merger of J.Crew Newco and Madewell Group into separate merger subsidiaries of Chinos SPV;

 

o

the conversion of outstanding shares of series A preferred stock issued by Parent (the "Series A Preferred Stock") and Series B Preferred Stock of Parent ("Series B Preferred Stock") into shares of new Series C preferred issued by Chinos SPV; and

 

o

the conversion of outstanding common and restricted stock of Madewell Group not held by Chinos SPV into common units of Chinos SPV (the “New SPV Common Units”) and restricted common units of Chinos SPV, respectively.

Immediately after these Separation Transactions have occurred, and immediately prior to the closing of the Madewell IPO (defined below), each of J.Crew Newco and Madewell Group would be direct, wholly owned subsidiaries of Chinos SPV (other than, with respect to J.Crew Newco, the non-voting common stock distributed to certain executives of the Company).

 

The exchange (the "Term Loan Exchange") of a portion of outstanding Term Loans (the "Exchanged Term Loans") for (i) new A-1 senior secured notes (the "New SPV A-1 Senior Secured Notes") issued by Chinos SPV and, (ii) with respect to any Exchanged Terms Loans for which valid joinders to the Transaction Support Agreement are executed and delivered to the Company by December 10, 2019, New SPV Common Units.

 

The purchase by the Sponsors, their affiliates or their designees of (i) New SPV A-1 Senior Secured Notes and new A-2 senior secured notes issued by Chinos SPV (the "New SPV A-2 Senior Secured Notes") and (ii) New SPV Common Units.

 

The formation by Chinos SPV of a subsidiary ("BD Holdco") whose sole purpose is to hold new Series B preferred units issued by Chinos SPV ("New SPV Series B Preferred Units") and new Series D preferred units issued by Chinos SPV ("New SPV Series D Preferred Units") as collateral support for the 13.00% senior secured notes due 2021 (the "IPCo Notes").

 

The entry into a contribution agreement, pursuant to which BD Holdco will contribute all of the cash distributions it receives in respect of the New Series B Preferred Units and New Series D Preferred Units held by it to Brand, if and when received, until such time that the New Series B Preferred Units and New Series D Preferred Units are paid in full or the IPCo Notes are paid in full.

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The adoption by Parent of amended certificates of designation with respect to the Series A Preferred Stock and Series B Preferred Stock to facilitate the Transactions.

 

The entry into supplemental indentures to the indentures for the IPCo Notes to effectuate the Transactions.

 

The adoption of a registration rights agreement with respect to the equity of Madewell Group held by Chinos SPV.

 

After and contingent upon the occurrence of the closing of the Transactions, the funding of cash in an amount equal to the remaining interest payments on the IPCo Notes as of the closing date of the Transactions (including any accrued and unpaid interest) into a restricted cash account held by the Company, subject to a perfected, first priority lien and account control agreement.

 

The pledge and perfection of J.Crew NewCo's equity and Madewell Group equity held by Chinos SPV for the benefit of the holders of New SPV A-1 Secured Notes and New SPV A-2 Secured Notes.

 

The initial public offering of the common stock of Madewell Group and the use of proceeds thereof to facilitate the Transactions, including (i) the repayment of Term Loans and (ii) the repayment in full and termination of all obligations under the Company's existing asset-backed loan facility governed by that certain Credit Agreement, dated March 7, 2011 among certain J.Crew Parties, the lenders party thereto and Bank of America, N.A. as administrative agent.

 

The entry by (i) J.Crew NewCo into a new asset-based revolving credit facility and (ii) Madewell Group into a new term loan facility and a new asset-based revolving credit facility.

 

The entry by Chinos SPV, Parent and certain of its direct and indirect subsidiaries into a release agreement (the "Release Agreement") with the other parties to the Transaction Support Agreement whereby all parties agree to the mutual and consensual release between the parties to the Release Agreement of certain claims, as of the closing date of the Transactions.

 

The entry by J.Crew Newco and Madewell Group into a transition services agreement and other related agreements, including a separation and distribution agreement, a tax matters agreement and an employee matters agreement, pursuant to which J.Crew NewCo and its subsidiaries operating the J.Crew business will continue to provide Madewell Group with certain administrative capabilities for specified periods of time following the Transactions.

Each of the Transactions is on terms and conditions as set forth in the Transaction Support Agreement and the exhibits thereto. The closing of each of the Transactions, including the Madewell IPO, is conditioned upon the closing of the other Transactions and will be deemed to occur contemporaneously. The Transaction Support Agreement contains certain representations, warranties and other agreements by the J.Crew Parties, the Ad Hoc Creditors and the Sponsors. The parties’ obligations thereunder are subject to various conditions and termination provisions as set forth therein. The Transaction Support Agreement terminates if the Transactions, including the Madewell IPO, have not closed by March 18, 2020. Accordingly, there can be no assurance if or when the J.Crew Parties will consummate the transactions contemplated by the Transaction Support Agreement. In connection with the Transaction Support Agreement, the Ad Hoc Creditors will be indemnified on the terms set forth therein, and will also receive customary consideration, such as reimbursement of counsel expenses.

The foregoing description of the Transaction Support Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Transaction Support Agreement, a copy of which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.

Item 7.01. Regulation FD Disclosure.

The Company is filing as Exhibit 99.1 a presentation made by the Company to the holders of the Term Loans in connection with the Term Loan Exchange. The information contained under Item 7.01 in this Current Report on Form 8-K (this “Report”), including Exhibit 99.1, is being furnished and, as a result, such information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

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Forward-Looking Statements

Certain statements herein and in the exhibits attached hereto, are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the J.Crew Parties’ current expectations or beliefs concerning future events, and actual results of operations may differ materially from historical results or current expectations. Any such forward-looking statements are subject to various risks and uncertainties, including the announced Transactions including risks that the Transactions may not be consummated on the terms set forth in the Transaction Support Agreement or in the time frame anticipated or at all, or, if the Transactions are consummated, risks that the anticipated benefits of the Transactions may not be achieved, the Company’s substantial indebtedness, its substantial lease obligations, its ability to anticipate and timely respond to changes in trends and consumer preferences, the strength of the global economy, competitive market conditions, its ability to attract and retain key personnel, its ability to successfully develop, launch and grow its newer concepts and execute on strategic initiatives, product offerings, sales channels and businesses, its ability to implement its growth strategy, material disruption to its information systems, compromises to its data security, its ability to maintain the value of its brands and protect its trademarks, its ability to implement its real estate strategy, changes in demographic patterns, adverse or unseasonable weather or other interruptions in its foreign sourcing, customer call, order fulfillment or distribution operations, increases in the demand for or prices of raw materials used to manufacture its products, trade restrictions or disruptions, if the Transactions are not consummated, the Company’s continued exploration of strategic alternatives to maximize the value of the Company and the risk that such exploration may not lead to a successful transaction and other factors which are set forth in the section entitled “Risk Factors” and elsewhere in the Company’s Annual Report on Form 10-K and in all filings with the SEC made subsequent to the filing of the Form 10-K. Because of the factors described above and the inherent uncertainty of predicting future events, the Company cautions you against relying on forward-looking statements. The Company does not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits:

Exhibit
No.

  

Description

 

 

 

10.1*

 

Transaction Support Agreement

99.1

 

Lender Presentation

* Certain schedules and exhibits to this agreement have been omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished as a supplement to the SEC upon request.

 

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

 

 

J.CREW GROUP, INC.

 

 

 

 

Date: December 2, 2019

 

By:

 

/s/ VINCENT ZANNA

 

 

 

 

Vincent Zanna

 

 

 

 

Chief Financial Officer and Treasurer

 

 

5

jcg-ex101_240.htm

Exhibit 10.1

EXECUTION VERSION

TRANSACTION SUPPORT AGREEMENT

This TRANSACTION SUPPORT AGREEMENT (as amended, supplemented, or otherwise modified from time to time, this “Agreement”) dated December 2, 2019, is entered into by and among:

 

(a)

Chinos Holdings, Inc. (“Holdings”), Chinos Intermediate Holdings A, Inc. (“Chinos A”), Chinos Intermediate Holdings B, Inc. (“Chinos B”), J. Crew Group, Inc. (“Group, Inc.”), J. Crew Operating Corp., and J. Crew Inc. (collectively, the “Company”), each, a Delaware corporation or limited liability company, as applicable;

 

(b)

the undersigned beneficial holders, or investment advisors or managers for the account of beneficial holders (such undersigned parties, collectively, the “Initial Consenting Support Parties”), of:

 

i.

term loans (the “Term Loans”) under the Amended and Restated Credit Agreement, dated March 5, 2014 (as amended, the “Term Loan Agreement”), among Group, Inc., Chinos B, the lenders party thereto (the “Term Lenders”), and Wilmington Savings Fund Society, FSB as successor administrative agent;

 

ii.

13.00% Senior Secured Notes due 2021 (the “IPCo Exchange Notes”) and 13.00% Senior Secured New Money Notes due 2021 (the “IPCo Private Placement Notes” and together with the IPCo Exchange Notes, the “IPCo Notes”) issued by J.Crew Brand Corp. and J. Crew Brand, LLC (“Brand”) under the two Indentures dated July 13, 2017 (the “IPCo Indentures”) to which U.S. Bank National Association acts as collateral agents and indenture trustees (the “IPCo Trustees”) for holders of IPCo Notes (the “IPCo Noteholders”);

 

iii.

Series A Preferred Stock issued by Holdings (the “Series A Preferred Stock”); and/or

 

iv.

common stock issued by Holdings (the “Common Stock”); and

 

(c)

TPG Chinos, L.P. and TPG Chinos Co-Invest, L.P. (together, “TPG”); and Green Equity Investors V, L.P., Green Equity Investors Side V, L.P., LGP Chino Coinvest LLC (collectively, “LGP” and together with TPG, the “Sponsors”), in their respective capacities as Term Lenders, holders of Series B Preferred Stock issued by Holdings (the “Series B Preferred Stock”), and holders of Common Stock, as applicable.

The Company, each Consenting Support Party (as defined below), and each Sponsor are collectively referred to herein as the “Parties” and each, individually as a “Party”.  

WHEREAS, the Parties have agreed to consummate, support, and consent to (as applicable) a series of transactions (the “Transaction”) on the Closing Date (as defined below)

1

 


 

on the terms set forth in the term sheet attached hereto as Exhibit A (the “Transaction Term Sheet”) involving, among other things:

 

(a)

formation of Chinos SPV LLC (“Chinos SPV”), a limited liability company, to be operated and managed pursuant to an operating agreement in the form attached hereto as Exhibit B (the “SPV Operating Agreement”);

 

(b)

an exchange (the “Term Loan Exchange”) of a portion of outstanding Term Loans (the “Exchanged Term Loans”) for (i) new A-1 senior secured notes1 (the “New SPV A-1 Senior Secured Notes”) which will be governed by an indenture consistent with the term sheet attached hereto as Exhibit C (such term sheet, the “SPV A-Notes Term Sheet” and such indenture, the “A-1 Indenture”) and issued by Chinos SPV pursuant to the Master Assignment and Assumption Agreement in the form attached hereto as Exhibit D (the “Exchange Agreement”) and secured in accordance with the terms of the SPV Security Documents and (ii) with respect to Term Lenders that have executed this Agreement or a valid Joinder Agreement (as defined below) by December 10, 2019 (as such period may be extended by agreement of the Company, the Initial Consenting Support Parties, and the Sponsors as provided herein) in accordance with this Agreement, TSA Exchange Equity (as defined below) issued pursuant to an equity subscription agreement in the form attached hereto as Exhibit E (the “SPV Subscription Agreement”);

 

(c)

the purchase by the Sponsors, their affiliates, or their designees (collectively, the “Commitment Parties”) on a several and not joint basis of New SPV A-1 Senior Secured Notes, new A-2 senior secured notes (the “New SPV A-2 Senior Secured Notes”) issued by Chinos SPV that will be governed by an indenture consistent with the SPV A-Notes Term Sheet (such indenture, the “A-2 Indenture”), and new common units issued by Chinos SPV (the “New SPV Common Units”) to be allocated between and among the Sponsors in their sole discretion, in each case on the terms set forth in note purchase and equity subscription agreements (collectively, the “New Money Documents”) consistent with the Transaction Term Sheet, the A-1 Indenture, the A-2 Indenture, the SPV Operating Agreement, the Exchange Agreement, and the SPV Security Documents and otherwise reasonable acceptable to the Sponsors;

 

(d)

the conversion of each share of issued and outstanding (i) Series A Preferred Stock and Series B Preferred Stock into new Series C preferred units (the “New SPV C Preferred Units”) issued by Chinos SPV and (ii) Common Stock into New SPV Common Units, in each case in accordance with the merger agreement in the form attached hereto as Exhibit F (the “Merger Agreement”), and the SPV Operating Agreement;

 

1

The Exchanged Term Loans may be exchanged into an instrument other than notes with the written consent of the Company, the Requisite Affected Parties, and the Sponsors.

2

 


 

 

(e)

(i) the formation by Chinos SPV of a limited liability company and wholly owned subsidiary (such subsidiary, “BD HoldCo”) pursuant to an operating agreement in the form attached hereto as Exhibit G (the “BD HoldCo Operating Agreement”), (ii) the issuance of new Series B preferred units (the “New SPV B Preferred Units”) and new Series D preferred units (the “New SPV D Preferred Units”) by Chinos SPV to BD HoldCo on terms consistent with the Transaction Term Sheet and the SPV Operating Agreement, (iii) the entry into a contribution agreement in the form attached hereto as Exhibit H providing for certain contributions from BD HoldCo to Brand for repayment of the IPCo Notes (the “Contribution Agreement”), and (iv) a secured guarantee by BD HoldCo of the IPCo Notes and entry into supplemental IPCo Indentures pursuant to which, among other things, upon a default under the IPCo Indentures, the IPCo Trustees may exercise remedies with respect to the New SPV B Preferred Units and New SPV D Preferred Units then held by BD HoldCo for the benefit of the IPCo Noteholders in satisfaction of such guarantee;

 

(f)

the adoption by Holdings of amended certificates of designation with respect to the Series A Preferred Stock and Series B Preferred Stock, in the forms attached hereto as Exhibit I-1 and Exhibit I-2 (the “Amended Series A Certificate of Designation” and the “Amended Series B Certificate of Designation,” respectively, and together the “Amended Certificates of Designation”), to facilitate the Transactions;

 

(g)

the consummation of a series of transactions resulting in (i) the legal and business separation of Holdings from the remainder of the Company (the separated Holdings being “Madewell NewCo” and the remaining Company being “J.Crew NewCo”) in accordance with the transaction steps memorandum (the “Separation Transactions”), (ii) the contribution of J.Crew NewCo’s voting common stock and any remaining Madewell NewCo equity to Chinos SPV in accordance with the Separation Transactions, and (iii) the adoption of a registration rights agreement, in the form attached hereto as Exhibit J (the “SPV Registration Rights Agreement”), for the benefit of Chinos SPV with respect to the equity of Madewell Newco held by Chinos SPV;

 

(h)

the adoption of (i) an investors’ rights agreement as to the equity of Madewell NewCo held by Chinos SPV, in the form attached hereto as Exhibit K-1 and (ii) an investors’ rights agreements as to the equity of J.Crew NewCo held by Chinos SPV, in the form attached hereto as Exhibit K-2 ((i) and (ii) together, the “Investors’ Rights Agreements”);

 

(i)

the entry into supplemental indentures to the IPCo Indentures (together, the “IPCo Supplemental Indentures”) to effectuate the Separation Transactions, to effectuate any other transactions contemplated by the Transaction and transferring the call right to holders of the New SPV A-1 Senior Secured Notes;

 

(j)

after and contingent upon the occurrence of the Separation Transactions and Closing, the funding of cash in an amount equal to remaining interest payments

3

 


 

 

on the IPCo Notes as of the Closing Date (including, for the avoidance of doubt, any accrued and unpaid interest), into the Company as a prepayment of license fees owed by J.Crew Inc. to J.Crew Domestic Brand, LLC, and ultimately to a restricted cash account (the “Restricted Cash Account”) held by Brand, subject to a perfected, first priority lien and account control agreement in favor of the IPCo Trustees for the benefit of IPCo Noteholders (the “Account Control Agreement”), with cash therein released for the purpose of funding any payment due under the IPCo Indentures in connection with an interest payment, payment of principal, redemption price or otherwise;

 

(k)

the pledge and perfection of J.Crew NewCo’s voting common stock and any remaining Madewell NewCo equity for the benefit of the SPV Noteholders (as defined below) on the terms set forth in the SPV Security Documents;

 

(l)

the public offering of certain equity of Madewell NewCo (the “Madewell IPO”), as set forth in the Registration Statement on Form S-1 filed in connection with the Madewell IPO and amended from time to time (the “Madewell S-1”);

 

(m)

the termination of, repayment in full of all non-contingent obligations (other than the principal amount of Exchanged Term Loans) then due under, and the release of all liens and guarantees in respect of, each of the Term Loan Agreement and the Credit Agreement, dated March 7, 2011 among Group, Inc, Chinos B, the lenders party thereto and Bank of America, N.A. as administrative agent and issuer (as amended from time to time, the “Existing ABL”);

 

(n)

the entry by Madewell NewCo into an asset-based revolving credit facility and term loan facility (the “New Madewell Credit Facilities”) and by J.Crew NewCo into an asset-based revolving credit facility (the “New J.Crew Credit Facilities”), of which a to be specified amount will be drawn on the Closing Date in furtherance of the Transaction; and

 

(o)

the mutual and consensual release between the Parties of certain claims, as of the Closing Date and pursuant to a release agreement in the form attached hereto as Exhibit L (the “Release Agreement”).

NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, on a several but not joint basis, agree as follows:

1.Certain Definitions.

As used in this Agreement, the following terms have the following meanings:

(a)Additional Series A Senior Secured Notes Net Proceeds” means cash proceeds generated as a result of any “new money” issuance of any New SPV A-1 Senior Secured Notes or New SPV A-2 Senior Secured Notes (other than the Commitments); provided that any New SPV A-1 Senior Secured Notes or New SPV A-2 Senior Secured Notes issued

4

 


 

pursuant to such “new money” issuance shall be on the same terms and conditions as the New SPV A-1 Senior Secured Notes or New SPV A-2 Senior Secured Notes otherwise issued pursuant to the Transaction, as applicable.

(b)Alternative Transaction” means any reorganization, merger, consolidation, tender offer, exchange offer, business combination, joint venture, partnership, sale of a material portion of assets, financing (debt or equity), recapitalization or restructuring of the Company, other than the Transaction.

(c)Anchorage Related Fund” means any fund managed, advised or sub-advised by Anchorage Capital Group, L.L.C. or its affiliates.

(d)Automatic Termination Event” means:

(i)the entry of an order, judgment or decree adjudicating the Company or any of its subsidiaries bankrupt or insolvent, including the entry of any order for relief with respect to the Company or any of its subsidiaries under title 11 of the United States Code,

(ii)the filing or commencement of any proceeding relating to the Company or any of its subsidiaries under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction,

(iii)the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of the Company or any of its subsidiaries or of any substantial part of their property,

(iv)the making by the Company or any of its subsidiaries of an assignment for the benefit of creditors or the admission by the Company or any of its subsidiaries in writing of its inability to pay its debts generally as they become due,  

(v)the taking of any corporate action by the Company or any of its subsidiaries in furtherance of any action described in the foregoing clauses (i)-(iv), or

(vi)the occurrence of the Closing.

(e)Closing” means the consummation of the Transaction, and the other transactions contemplated by this Agreement and the Definitive Documents.

(f)Closing Date” means the date that is three business days after the IPO Pricing Date, or such other date as will be mutually agreed to by the Company, the Requisite Consenting Support Parties, and the Sponsors.  

(g)Consented Claims” means, in the aggregate, the principal amount of all Term Loans held by the applicable Consenting Support Parties, the principal amount of all IPCo Notes held by the applicable Consenting Support Parties, and the outstanding amount of all Series A Preferred Stock held by the applicable Consenting Support Parties.

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(h)Consenting IPCo Noteholders” means, collectively, the Consenting Support Parties that hold IPCo Notes.

(i)Consenting Series A Holders” means, collectively, the Consenting Support Parties that hold Series A Preferred Stock.

(j)Consenting Support Group” means any subset of the Consenting Support Parties that includes funds sponsored, managed, advised or sub-advised by the same sponsor, investment advisor, or manager or affiliated sponsors, investment advisors, or managers.

(k)Consenting Support Parties” means, collectively, the Initial Consenting Support Parties and the Subsequent Consenting Support Parties.

(l)Consenting Term Lenders” means, collectively, the Consenting Support Parties that hold Term Loans.

(m)Definitive Documents” means the SPV Operating Agreement, the A-1 Indenture, the Exchange Agreement, the SPV Subscription Agreement, the SPV Security Documents, the A-2 Indenture, the New Money Documents, the Merger Agreement, the Amended Certificates of Designation, the IPCo Security Documents, any agreement memorializing the Separation Transactions (including, without limitation, the separation agreement attached hereto as Exhibit M-1, the transition services agreement attached hereto as Exhibit M-2 (including all schedules thereto), the employee matters agreement attached hereto as Exhibit M-3, or the tax matters agreement attached hereto as Exhibit M-4), the SPV Registration Rights Agreement, the Investors’ Rights Agreements, the IPCo Supplemental Indentures, the Account Control Agreement, the payoff documentation in respect of each of the Term Loans and the Existing ABL, the definitive credit agreements and related loan documentation in respect of each of the New Madewell Credit Facilities and the New J.Crew Credit Facilities, the BD HoldCo Operating Agreement, the Contribution Agreement, the Release Agreement, and any other documents directly related to any of the foregoing, in each case consistent with this Agreement and the exhibits attached hereto and otherwise in form and substance reasonably satisfactory to the Company, the Requisite Affected Parties, and the Sponsors, except as otherwise contemplated in Section 5(d).

(n)DK Related Fund” means any fund sponsored, managed, advised, or sub-advised by Davidson Kempner Capital Management LP or its affiliates.

(o)GSO Related Fund” means any fund sponsored, managed, advised or sub-advised by GSO Capital Partners LP or its affiliates.

(p)IPCo Noteholders” means, collectively, the holders of the IPCo Notes.

(q)IPCo Security Documents” means the collateral agreement, security agreements, pledge agreements, collateral assignments and mortgages, and any supplements or other related instruments and documents in connection with the liens under the IPCo Supplemental Indentures, in each case to be dated the Closing Date.

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(r)IPO Pricing Date” means the date upon which shares of the Madewell IPO are priced and offered to the public.

(s)Material Adverse Effect” means any change, effect, event, or occurrence occurring after the Support Effective Date, individually or in the aggregate, that has had or would reasonably be expected to have a material and adverse effect on (i) the business, assets, liabilities, finances, properties, results of operations or condition (financial or otherwise) of Holdings and its subsidiaries, taken as a whole, or (ii) the ability of Holdings and its subsidiaries, taken as a whole, to perform their respective obligations under, or to consummate the transactions contemplated by, the Definitive Documents (including the Transaction); provided, that none of the following either alone or in combination, will constitute, or be considered in determining whether there has been, a Material Adverse Effect: (A) any change in the United States or foreign economies or securities or financial markets in general or that generally affects any industry in which the Company operates; (B) any change arising in connection with earthquakes, hostilities, acts of war, sabotage or terrorism or military actions or any escalation or material worsening of any such hostilities, acts of war, sabotage or terrorism or military actions; (C) any changes in applicable laws or accounting rules; (D) resulting from the commencement of soliciting participation for the Term Loan Exchange, or actions taken in connection with the Transaction and made in compliance with this Agreement, including the filing and prosecution of litigation in connection with a claim, absent any subsequent material adverse ruling or judgment, arising therefrom or related thereto; (E) any change resulting from the public announcement of this Agreement, compliance with terms of this Agreement or the consummation of the transactions contemplated hereby; (F) any change resulting from any act or omission of any of the Company taken with the prior written consent of the Requisite Consenting Support Parties; or (G) any failure by Holdings or any of its subsidiaries to meet any projections, estimates or forecasts (financial, operational or otherwise) for any period, or any changes in credit ratings of or with respect to Holdings or any of its subsidiaries, as applicable, or any of their indebtedness or securities (it being understood that the facts or occurrences giving rise or contributing to such failure, to the extent not otherwise excluded by another clause of this definition, may be taken into account in determining whether there has been a Material Adverse Effect); provided, that for the exceptions set forth in (A), (B), and (C) shall not apply to the extent that it is disproportionately adverse to Holdings and its subsidiaries, taken as a whole, as compared to other companies in the industries in which Holdings and its subsidiaries operate.

(t)Milbank” means Milbank LLP.

(u)Person” means an individual, firm, corporation (including any non-profit corporation), partnership, limited liability company, joint venture, association, trust, Governmental Entity, or other entity or organization; provided that “Governmental Entity” for these purposes means the United States and any State (including the District of Columbia and Puerto Rico), Commonwealth, District, Territory, municipality (including a political subdivision or public agency or instrumentality of a State), foreign state, or a department, agency, or instrumentality of the foregoing.

(v)Required Exchange Amount” means (i) the Transaction Threshold Amount minus (ii) the amount of cash proceeds generated as a result of the Transaction, including such cash proceeds from the Commitments but excluding any Additional Series A

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Senior Secured Note Net Proceeds; provided, that the Required Exchange Amount may not exceed $420 million without the written consent of the Company, the Requisite Affected Parties, and the Sponsors.  

(w)Requisite Affected Parties” means, with respect to any Definitive Document, provision of this Agreement, or provision of any exhibit to this Agreement that affects, directly or indirectly:

(i)the Consenting Term Lenders or the treatment of the Term Loans, then the Consenting Term Lenders holding, in the aggregate, at least 66-2/3% of the Term Loans held by all Consenting Term Lenders as of the date of any action taken or consent provided by the Requisite Consenting Term Lenders pursuant to this Agreement; provided that such majority must include two or more unaffiliated Consenting Support Groups, each holding, in the aggregate, at least $50 million in principal amount of Term Loans;

(ii)the Consenting IPCo Noteholders or the treatment of the IPCo Notes, then the Consenting IPCo Noteholders holding, in the aggregate, at least a majority of the IPCo Notes held by all Consenting IPCo Noteholders as of the date of any action taken or consent provided by the Requisite Consenting IPCo Noteholders pursuant to this Agreement; provided that such majority must include two or more unaffiliated Consenting Support Groups, each holding, in the aggregate, at least $50 million in principal amount of IPCo Notes; and

(iii)the Consenting Series A Holders or the treatment of the Series A Preferred Stock, then the Consenting Series A Holders holding, in the aggregate, at least a majority of the Series A Preferred Stock held by all Consenting Series A Holders as of the date of any action taken or consent provided by the Requisite Consenting Series A Holders pursuant to this Agreement; provided that such majority must include two or more unaffiliated Consenting Support Groups, each holding, in the aggregate, at least $25 million of outstanding Series A Preferred Stock;

provided that, with respect to any Definitive Document, provision of this Agreement, or provision of any exhibit to this Agreement that is not included in the foregoing clauses (i)-(iii), Requisite Affected Parties means the Requisite Consenting Support Parties.

(x)Requisite Consenting Support Parties” means Consenting Support Parties holding, in the aggregate, at least a majority of the Consented Claims held by all Consenting Support Parties as of the date of any action taken or consent provided by the Requisite Consenting Support Parties pursuant to this Agreement; provided that the Requisite Consenting Support Parties must include two or more unaffiliated Consenting Support Groups, each holding, in the aggregate, at least $50 million of Consented Claims.

(y)SPV Noteholders” means, collectively, holders of the New SPV A-1 Senior Secured Notes and the New SPV A-2 Senior Secured Notes.

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(z)SPV Securities” means, collectively, the New SPV A-1 Secured Notes, the New SPV A-2 Secured Notes, the New SPV B Preferred Units, the New SPV C Preferred Units, the New SPV D Preferred Units, and the New SPV Common Units.

(aa)SPV Security Documents” means the collateral agreement, security agreements, pledge agreements, collateral assignments and mortgages, intercreditor agreements, and other related instruments and documents in connection with the liens in favor of the New SPV A-1 Senior Secured Notes and New SPV A-2 Senior Secured Notes, in each case to be dated the Closing Date.

(bb)Subsequent Consenting Support Party” means any Person that executes a Joinder Agreement in accordance with the terms of this Agreement.

(cc)Support Effective Date” means the date on which counterpart signature pages to this Agreement have been executed and delivered by (i) the Company, (ii) the Initial Consenting Support Parties, and (iii) the Sponsors.

(dd)Support Period” means the period commencing on the Support Effective Date and ending on the earlier of (i) the date on which this Agreement is terminated in accordance with Section 7 hereof and (ii) the Closing Date.

(ee)SEC” means the United States Securities and Exchange Commission.

(ff)Securities Act” means the Securities Act of 1933, as amended.

(gg)TSA Exchange Equity” means New SPV Common Units provided to Consenting Support Parties as of December 10, 2019 (as such date may be extended by agreement of the Company, the Initial Consenting Support Parties, and the Sponsors) participating in the Term Loan Exchange in accordance with this Agreement, in an amount equal to the pro rata portion (the numerator being the total aggregate New SPV A-1 Senior Secured Notes issued in respect of Exchanged Term Loans as of the Closing Date and the denominator being the sum of the New A-1 Senior Secured Notes and the New SPV A-2 Senior Secured Notes issued as of the Closing Date) of 10.0% - 22.5% of the aggregate New SPV Common Units as of the Closing Date based on the table below:

Madewell LTV (as calculated in the SPV A-Notes Term Sheet)2

New SPV Common Units

61%

22.5%

57%

20.0%

51%

17.5%

45%

15.0%

40%

12.5%

35% and below

10.5%

 

2

Applicable levels to be interpolated linearly and rounded to the nearest 12.5 bps increment.

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Consenting Support Parties entitled to receive the TSA Exchange Equity will receive such party’s TSA Exchange Equity Allocation of the TSA Exchange Equity.

(hh)TSA Exchange Equity Allocation” means each Consenting Support Party’s pro rata share of the TSA Exchange Equity, the numerator being such party’s holdings of Exchanged Term Loans on the Closing Date and the denominator being the aggregate amount of Exchanged Term Loans held by Consenting Support Parties entitled to receive the TSA Exchange Equity on the Closing Date.

(ii)Weil” means Weil, Gotshal and Manges LLP, counsel to the Company.

2.[Reserved.]

3.Commencement and Closing Date.

Section 3.01Commencement.  On or before March 2, 2020 (the “Commencement Date”), the Company will (a) subject to Section 7.03, commence marketing of the Madewell IPO (the “IPO Marketing Period”) and (b) commence solicitation of signature pages to the Exchange Agreement for a period ending at least one business day before the IPO Pricing Date (the “Term Loan Participation Period”).

Section 3.02[Reserved.]

Section 3.03Period Modifications.  The Company may fix, determine the duration of, modify, adjust, or extend each of: (a) the IPO Marketing Period in its sole discretion and (b) the Term Loan Participation Period with the consent of the Initial Consenting Support Parties and the Sponsors (such consent not to be unreasonably withheld, conditioned, or delayed); provided that (a) the Company will consummate the Closing as soon as practicable after the IPO Pricing Date and (b) the Closing Date will be no later than the Outside Date (as defined below).

Section 3.04Closing and Location.  The Closing will take place on the Closing Date at the offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, NY 10153, or such other place as will be mutually agreed to by the Company, the Requisite Consenting Support Parties, and the Sponsors.

Section 3.05Consummation of Closing.

(a)Consummation of the Closing will be subject to the following conditions: (i) the sum of (A) the cash proceeds from the Transaction plus (B) the amount of Exchanged Term Loans is greater than or equal to: (w) all non-contingent amounts then due under the Existing ABL, (x) all non-contingent amounts then due under the Term Loan Agreement, (y) all fees and expenses incurred in connection with the Transaction, and (z) after and contingent upon the occurrence of the Separation Transactions, funding the Restricted Cash Account (the sum of (w) through (z), collectively, the “Transaction Threshold Amount”) and (ii) the “Transaction Thresholds” set forth in the Transaction Term Sheet are satisfied.

(b)All acts, deliveries and confirmations comprising the Closing, regardless of chronological sequence, will be deemed to occur contemporaneously and simultaneously upon

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the occurrence of the last act, delivery or confirmation of the Closing and none of such acts, deliveries or confirmations will be effective unless and until the last of same will have occurred.

4.Additional Agreements of the Consenting Support Parties.  

Section 4.01Support.  In addition to the obligations of Consenting Support Parties set forth in Section 3.01, each Consenting Support Party also agrees during the Support Period to use commercially reasonable efforts to do all things in furtherance of the Transaction, including: (a) subject to Section 7 hereof, irrevocably consent and exchange Term Loans pursuant to the Exchange Agreement before the expiration of the Term Loan Participation Period in an amount equal to its pro rata share (calculated as a fraction (expressed as a percentage), the numerator of which is the outstanding principal of amount of Term Loans held by such Term Lender on the relevant date of determination and the denominator of which is the outstanding principal amount of Term Loans held by all Term Lenders on the relevant date of determination) of the Required Exchange Amount, (b) provide their consent and vote in favor of the merger pursuant to the Merger Agreement and the Amended Series A Certificate of Designation and the waiver of any appraisal rights, (c) work in good faith with the Company and the Sponsors on tax treatment satisfactory to the Company and the Sponsors, (d) complete, enter into, and effectuate the Definitive Documents within the timeframes contemplated herein, which will be in form consistent with this Agreement and the exhibits attached hereto and otherwise in form and substance reasonably satisfactory to the Company, the Requisite Affected Parties, and the Sponsors, except as otherwise contemplated in Section 5(d), (e) act in good faith consistent with this Agreement, including executing amendments to the Term Loan Agreement reasonably necessary to permit or give effect to the Transactions, and (f) refrain from directly or indirectly taking any action that would be inconsistent with this Agreement or interfere with the Transaction.  

Section 4.02Transfers.  Each Consenting Support Party agrees that during the Support Period, it shall not sell, assign, transfer, or otherwise dispose of (“Transfer”), directly or indirectly, any of the Term Loans, IPCo Notes, Series A Preferred Stock, Common Stock, option thereon, or right or interest therein or any other claims against or interests in the Company (collectively, the “Claims and Interests”) (including grant any proxies, deposit any Term Loans, IPCo Notes, Series A Preferred Stock, Common Stock, or other claims against or interests in the Company into a voting trust or entry into a voting agreement with respect to such Term Loans, IPCo Notes, Series A Preferred Stock, Common Stock, or Claims and Interests), and any purported Transfer shall be void and without effect unless the transferee thereof (a) is an Initial Consenting Support Party, (b) is an Anchorage Related Fund, a DK Related Fund, or a GSO Related Fund, provided that such transferee shall be deemed to become an Initial Consenting Support Party and to be bound by all of the terms of this Agreement applicable to Initial Consenting Support Parties (which obligations may be enforced against such transferee by the Parties), or (c) before such Transfer, agrees in writing for the benefit of the Parties to (x) become a Consenting Support Party and to be bound by all of the terms of this Agreement applicable to Consenting Support Parties (including with respect to any and all Claims and Interests it already may hold against or in the Company before such Transfer) by executing a joinder agreement in the form attached hereto as Exhibit 1 (a “Joinder Agreement”) and (y) be bound by the Release Agreement by executing a joinder to the Release Agreement in the form attached thereto, and delivering an executed copy of each within two business days following such execution, to Weil

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and Milbank, in which event (x) the transferee shall be deemed to be a Subsequent Consenting Support Party hereunder to the extent of such transferred rights and obligations and (y) the transferor shall be deemed to relinquish certain of its rights (and be released from certain of its obligations) under this Agreement to the extent of such transferred rights and obligations.  Each Consenting Support Party agrees that any Transfer of any Term Loans, IPCo Notes, Series A Preferred Stock, Common Stock, or Claim and Interest that does not comply with the terms and procedures set forth herein shall be deemed void ab initio, and each other Party shall have the right to enforce the voiding of such Transfer.  

Notwithstanding anything to the contrary in this Agreement, (i) a Consenting Support Party may Transfer Term Loans, IPCo Notes, Series A Preferred Stock, Common Stock, or Claims and Interests to an entity that is acting in its capacity as a Qualified Marketmaker (as defined below) without the requirement that the Qualified Marketmaker be or become an entity identified in Section 4.02(a) or (b) hereof (a “Permitted Transferee”) or a Subsequent Consenting Support Party; provided that the Qualified Marketmaker subsequently Transfers the right, title or interest to such Term Loans, IPCo Notes, Series A Preferred Stock, Common Stock, or Claims and Interests to a transferee that is a Permitted Transferee or becomes a Subsequent Consenting Support Party as provided herein and the Transfer documentation between the transferor and such Qualified Marketmaker shall contain a requirement that provides for such; provided, further, that if a Consenting Support Party is acting in its capacity as a Qualified Marketmaker, it may Transfer any Term Loans, IPCo Notes, Series A Preferred Stock, Common Stock, or Claims and Interests that it acquires from a holder of such Term Loans, IPCo Notes, Series A Preferred Stock, Common Stock, or Claims and Interests that is not a Consenting Support Party without the requirement that the transferee be a Permitted Transferee or become a Subsequent Consenting Support Party. 

Notwithstanding the foregoing, if at the time of a proposed Transfer of any Term Loans, IPCo Notes, Series A Preferred Stock, Common Stock, or Claims and Interests to a Qualified Marketmaker, such claims or interests (x) may be voted or consent solicited with respect to a Transaction, then the proposed transferor must first vote or consent such claims or interests in accordance with Section 4.01, or (y) have not yet been and may yet be voted or consent solicited with respect to a Transaction and such Qualified Marketmaker does not Transfer such claims to a Permitted Transferee or a Subsequent Consenting Support Party before the third business day before the expiration of an applicable voting or consent deadline (such date, the “Qualified Marketmaker Joinder Date”), such Qualified Marketmaker shall be required to (and the Transfer documentation to the Qualified Marketmaker shall have provided that it shall), on the first business day immediately after the Qualified Marketmaker Joinder Date, become a Subsequent Consenting Support Party with respect to such claims or interests in accordance with the terms hereof; provided, further, that the Qualified Marketmaker shall automatically, and without further notice or action, no longer be a Subsequent Consenting Support Party with respect to such claim or interest at such time that the transferee becomes a Permitted Transferee or Subsequent Consenting Support Party in accordance with this agreement. 

For these purposes, “Qualified Marketmaker” means an entity that (x) holds itself out to the market as standing ready in the ordinary course of business to purchase from and sell to customers Term Loans, IPCo Notes, Series A Preferred Stock, Common Stock, or Claims and Interests, or enter with customers into long and/or short positions in Term Loans, IPCo Notes,

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Series A Preferred Stock, Common Stock, or Claims and Interests, in its capacity as a dealer or market maker in such Term Loans, IPCo Notes, Series A Preferred Stock, Common Stock, or Claims and Interests; and (y) is in fact regularly in the business of making a market in claims, interest and/or securities of issuers or borrowers.

Section 4.03Additional Claims or Interests.  If any Consenting Support Party acquires additional claims against or interests in the Company, including any Term Loans, IPCo Notes, Series A Preferred Stock, or Common Stock, then each such Consenting Support Party will promptly notify Weil and Milbank, and each such Consenting Support Party agrees that the acquired claims or interests will be subject to this Agreement (other than with respect to any Term Loans, IPCo Notes, Series A Preferred Stock, Common Stock, or Claims and Interests acquired by such Consenting Support Party in its capacity as Qualified Marketmaker).

Section 4.04Forbearance.  The Consenting Support Parties agree to forbear during the Support Period from the exercise of (or to direct an agent or trustee to exercise) any and all rights and remedies in contravention of this Agreement, whether at law, in equity, by agreement or otherwise, which are or become available to them in respect of the Term Loans, IPCo Notes, Series A Preferred Stock, Common Stock, or any other Claims and Interests.  Additionally, during the Support Period, the Consenting Support Parties agree not to support, join, or otherwise assist any Person in litigation against the Company in connection with the Transaction, the Term Loans, the IPCo Notes, the Series A Preferred Stock, the Common Stock, or any other Claims and Interests; provided, that the foregoing will not limit any of the Consenting Support Parties’ rights to enforce any rights under this Agreement.  

5.Additional Agreements of the Company.

In addition to the obligations of the Company set forth in Section 3.01 and Section 3.03 of this Agreement, the Company also agrees (subject to Section 7.03) during the Support Period to use commercially reasonable efforts to do all things in furtherance of the Transaction, including:

 

(a)

to (i) form Chinos SPV and BD HoldCo and cause Chinos SPV and BD HoldCo to adopt the SPV Operating Agreement and the BD HoldCo Operating Agreement, respectively, (ii) adopt and file the Amended Certificates of Designation, (iii) establish the Restricted Cash Account, (iv) within one business day after the IPO Pricing Date (or such earlier date as the Company may reasonably know), inform the Consenting Support Parties and the Sponsors of whether the Transaction Threshold Amount will be satisfied as of the IPO Pricing Date, (v) work in good faith with the Sponsors and the Initial Consenting Support Parties on tax treatment satisfactory to the Sponsors and any Initial Consenting Support Party, (vi) obtain any required regulatory or third-party approvals for the Transaction, (vii) complete, enter into, and effectuate the Definitive Documents within the timeframes contemplated herein, which will be in form consistent with this Agreement and the exhibits attached hereto and otherwise in form and substance reasonably satisfactory to the Company, the Requisite Affected Parties, and the Sponsors, except as otherwise contemplated in Section 5(d), (viii) act in good faith consistent with this Agreement, (ix) not negotiate, propose, pursue, or support an Alternative Transaction with any holder of Term Loans, Series A

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Preferred Stock, IPCo Notes, or Common Stock (as may be known by the Company); provided that the Company may negotiate, propose, pursue, or support an Alternative Transaction with any other Person and shall provide a copy of any written proposal received by the Company after the date hereof with respect to an Alternative Transaction (any such proposal, an “Alternative Transaction Proposal”) to the advisors to the Initial Consenting Support Parties on a confidential, “professional eyes only” basis on or within one business day of such Alternative Transaction Proposal being received by the Company or its advisors, (x) inform the Consenting Support Parties of any determination by the board of the Company not to pursue the Madewell IPO, (xi) upon reasonable request of the advisors to the Initial Consenting Support Parties (not to exceed one request per week), promptly provide the advisors to the Initial Consenting Support Parties with a status update with respect to the Madewell IPO process, in each case on a confidential and “professional eyes only” basis, and (xii) not directly or indirectly take any action that would be inconsistent with this Agreement or interfere with the Transaction;

 

(b)

obtain consents to and votes in favor of the merger from as many holders of Common Stock and Series A Preferred Stock to the Merger Agreement or Amended Series A Certificate of Designation, as applicable, as may be reasonably practicable under the circumstances (in the Company’s sole discretion);

 

(c)

confer with the Initial Consenting Support Parties and their representatives, as reasonably requested, to report on operational matters and the general status of ongoing operations.  Notwithstanding the foregoing, the Company will, except as expressly contemplated by this Agreement or with the prior written consent of the Requisite Consenting Support Parties and, subject to applicable law, use all commercially reasonable efforts consistent with the Transaction to (i) continue operating its businesses consistent with past practice and in compliance with all applicable laws, rules, and regulations and (ii) preserve the relationships with the current customers, distributors, suppliers, vendors and others having business dealings with the Company;

 

(d)

not make, or allow to be made, any amendment, modification, supplement or waiver to or other alteration to any of the Definitive Documents except for any modifications that (i) are procedural, technical or conforming in nature, in each case to the extent not materially adverse to any Consenting Support Party or Sponsor, (ii) permitted by Section 3.03 of this Agreement, or (iii) to which the Requisite Consenting Support Parties and Sponsors have consented to in writing;

 

(e)

(i) complete or deliver to the respective collateral agents all filings and recordings and take all other similar actions that are required in connection with the perfection of the security interests contemplated by the SPV Security Documents and the IPCo Security Documents, and (ii) take all actions necessary to maintain in full force and effect such security interests;

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(f)

promptly upon the request of the Requisite Affected Parties or the Commitment Parties, use commercially reasonable efforts to obtain a credit rating with respect to the New SPV A-1 Senior Secured Notes from a nationally recognized rating agency; and

 

(g)

take all necessary actions to (i) solicit consents from the holders of the IPCo Notes to execute the IPCo Supplemental Indentures and (ii) subject to the receipt thereof, cause Brand to execute the IPCo Supplemental Indentures to, among other things, transfer the call right under the IPCo Indentures to the holders of the New SPV A-1 Senior Secured Notes (other than the Issuer and its affiliates, including the Sponsors) under substantially the same terms and conditions set forth in the Call Right Agreement, dated July 13, 2017, among Wilmington Savings Fund Society, FSB and U.S. Bank National Association.

6.Agreements of the Sponsors.  

Section 6.01The Sponsors severally (and not jointly) agree during the Support Period to use commercially reasonable efforts to do all things in furtherance of the Transaction, including (i) subject to Section 7 hereof, irrevocably consent and exchange Term Loans pursuant to the Exchange Agreement before the expiration of the Term Loan Participation Period in an amount equal to its pro rata share (calculated as a fraction (expressed as a percentage), the numerator of which is the outstanding principal of amount of Term Loans held by such Term Lender on the relevant date of determination and the denominator of which is the outstanding principal amount of Term Loans held by all Term Lenders on the relevant date of determination) of the Required Exchange Amount, (ii) consent to and vote in favor of the merger pursuant to the Merger Agreement and the Amended Series B Certificate of Designation, (iii) work in good faith with the Company and the Initial Consenting Support Parties on tax treatment satisfactory to the Company and the Initial Consenting Support Parties, (iv) complete, enter into, and effectuate the Definitive Documents within the timeframes contemplated herein, which will be in form consistent with this Agreement and the exhibits attached hereto and otherwise in form and substance reasonably satisfactory to the Company, the Requisite Affected Parties, and the Sponsors, except as otherwise contemplated in Section 5(d), (v) act in good faith consistent with this Agreement, and (vi) refrain from directly or indirectly taking any action that would be inconsistent with this Agreement or interfere with the Transaction.

Section 6.02The Commitment Parties severally (and not jointly) commit (the “Commitment”) to acquire up to $150 million of New SPV A-1 Senior Secured Notes or New A-2 Senior Secured Notes, and New SPV Common Stock, subject to negotiation of definitive documentation (including the New Money Documents) agreed among the Company, the Requisite Affected Parties, and the Sponsors, and the Definitive Documents being in form reasonably satisfactory to the Sponsors.  The Commitment shall be subject to, and be funded contemporaneously with, the Closing.

7.Termination of Agreement.

Section 7.01Generally.  This Agreement will automatically terminate upon (a) the occurrence of an Automatic Termination Event, or (b) the receipt of written notice, delivered in

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accordance with Section 21 hereof, from (x) the Requisite Consenting Support Parties to the other Parties at any time after the occurrence of any Creditor Termination Event (as defined below), (y) the Company (which for the avoidance of doubt, may be delivered by Chinos A on behalf of the Company) to the other Parties at any time after the occurrence of any Company Termination Event (as defined below), or (z) the Sponsors to the other Parties at any time after the occurrence of any Sponsor Termination Event (as defined below).  

Each of the dates in this Section 7 may be extended by mutual agreement (which may be evidenced by e-mail confirmation) among the Company, the Requisite Consenting Support Parties, and the Sponsors; provided that through February 24, 2020, the Commencement Date and the Outside Date (as defined below) may be extended to April 14, 2020 and April 30, 2020, respectively, by mutual agreement (which may be evidenced by e-mail confirmation) among the Company, Initial Consenting Support Parties holding a majority of the Consented Claims held by all Initial Consenting Support Parties, and the Sponsors.

Section 7.02A “Creditor Termination Event” will mean any of the following:

(a)the Commencement Date has not occurred by 11:59 p.m. (Eastern Time) on March 2, 2020;

(b)the Company has informed the Consenting Support Parties that (i) the Transaction Threshold Amount will not be satisfied as of the IPO Pricing Date or (ii) the Closing cannot be consummated by the Outside Date;

(c)the Closing has not occurred by 11:59 p.m. (Eastern Time) on March 18, 2020 (the “Outside Date”);  

(d)the Company determines in its sole discretion not to pursue a Madewell IPO before the Outside Date;

(e)the Company breaches its obligations under Section 5(d) of this Agreement;

(f)the occurrence of any Material Adverse Effect;

(g)the termination of the New Money Documents;

(h)the termination of the Exchange Agreement;

(i)the material breach by the Company or Sponsors, as applicable, of (i) any covenant contained in this Agreement or (ii) in any respect, any other obligations of the Company or Sponsors, as applicable, set forth in this Agreement, which breach remains uncured after 10 business days after receiving notice from the Requisite Consenting Support Parties;

(j)the representations or warranties made by the Company will have been untrue in any material respect when made or will have become untrue in any material respect;

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(k)the representations or warranties made by the Sponsors in Section 9.01 will have been untrue in any material respect when made or will have become untrue in any material respect;

(l)the Sponsors no longer collectively beneficially own or control at least 66% in the aggregate amount of each of the Series B Preferred Stock and Common Stock;

(m)the Sponsors have not tendered participation for the Term Loan Exchange in accordance with the Exchange Agreement by the expiration of the Term Loan Participation Period;

(n)the Company proposes or supports an Alternative Transaction (other than as permitted in Section 5(a)(ix)) or publicly announces its intention to pursue an Alternative Transaction; or

(o)the issuance by any governmental authority, including any regulatory authority or court of competent jurisdiction, of any ruling, judgment or order enjoining the consummation of or rendering illegal the Transaction, and such ruling, judgment or order has not been reversed or vacated by the IPO Pricing Date.

Section 7.03A “Company Termination Event” will mean any of the following:

(a)the Consenting Support Parties or the Sponsors have not tendered participation for the Term Loan Exchange in accordance with the Exchange Agreement by expiration of the Term Loan Participation Period;

(b)the Closing has not occurred by 11:59 p.m. (Eastern Time) on the Outside Date;

(c)the Company has informed the Consenting Support Parties or the Sponsors that (i) the Transaction Threshold Amount will not be satisfied as of the IPO Pricing Date or (ii) the Closing cannot be consummated by the Outside Date;

(d)the Company determines in its sole discretion not to pursue a Madewell IPO before the Outside Date;

(e)the termination of the New Money Documents;

(f)the termination of the Exchange Agreement;

(g)the material breach by one or more of the Consenting Support Parties of any of the representations, warranties, covenants, or other obligations of such Consenting Support Party set forth in this Agreement (including the representations and warranties made by such parties will have been untrue in any material respect when made or will have become untrue in any material respect) and the non-breaching Consenting Support Parties no longer collectively beneficially own or control at least:

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(i)50% in the aggregate principal amount of the Term Loans outstanding under the Term Loan Agreement;

(ii)45% in the aggregate principal amount of the IPCo Exchange Notes outstanding under the IPCo Exchange Indenture;

(iii)75% of the aggregate principal amount of the IPCo Private Placement Notes outstanding under the IPCo Private Placement Indenture; or

(iv)50% in the aggregate amount of the Series A Preferred Stock;

(h)the material breach by the Sponsors of (i) any covenant contained in this Agreement or (ii) in any respect, any other obligations of the Sponsors set forth in this Agreement, which breach remains uncured after 10 business days after receiving notice from the Company;

(i)the representations or warranties made by the Sponsors in Section 9.01 will have been untrue in any material respect when made or will have become untrue in any material respect;

(j)the Sponsors no longer collectively beneficially own or control at least 66% in the aggregate amount of each of the Series B Preferred Stock and Common Stock;

(k)the board of directors, board of managers, or such similar governing body of the Company reasonably determines in good faith after consultation with outside counsel that continued performance under this Agreement would be inconsistent with the exercise of its fiduciary duties under applicable law; or

(l)the issuance by any governmental authority, including any regulatory authority or court of competent jurisdiction, of any ruling, judgment or order enjoining the consummation of or rendering illegal the Transaction, and such ruling, judgment or order has not been reversed or vacated by the IPO Pricing Date.

Section 7.04A “Sponsor Termination Event” means any of the following:

(a)the Commencement Date has not occurred by 11:59 p.m. (Eastern Time) on March 2, 2020;

(b)the Consenting Support Parties have not tendered participation for the Term Loan Exchange in accordance with the Exchange Agreement by expiration of the Term Loan Participation Period;

(c)the Company has informed the Sponsors that (i) the Transaction Threshold Amount will not be satisfied as of the IPO Pricing Date or (ii) the Closing cannot be consummated by the Outside Date;

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(d)the Closing has not occurred by 11:59 p.m. (Eastern Time) on the Outside Date;

(e)the Company determines in its sole discretion not to pursue a Madewell IPO before the Outside Date;

(f)the Company breaches its obligations under Section 5(d) of this Agreement;

(g)the occurrence of any Material Adverse Effect;

(h)the termination of the New Money Documents, other than as a result of a breach by the Commitment Parties;

(i)the termination of the Exchange Agreement;

(j)the representations or warranties made by the Company will have been untrue in any material respect when made or will have become untrue in any material respect;

(k)the material breach by the Company of (i) any covenant contained in this Agreement or (ii) in any respect, any other obligations of the Company set forth in this Agreement, in either case which breach remains uncured after 10 business days after receiving notice from the Sponsors;

(l)the material breach by one or more of the Consenting Support Parties of any of the representations, warranties, covenants, or other obligations of such Consenting Support Party set forth in this Agreement (including the representations and warranties made by such parties will have been untrue in any material respect when made or will have become untrue in any material respect) and the non-breaching Consenting Support Parties no longer collectively beneficially own or control at least:

(i)50% in the aggregate principal amount of the Term Loans outstanding under the Term Loan Agreement;

(ii)45% in the aggregate principal amount of the IPCo Exchange Notes outstanding under the IPCo Exchange Indenture;

(iii)75% of the aggregate principal amount of the IPCo Private Placement Notes outstanding under the IPCo Private Placement Indenture; or

(iv)50% in the aggregate amount of the Series A Preferred Stock;

(m)the Company proposes or supports an Alternative Transaction (other than as permitted in Section 5(a)(ix)) or publicly announces its intention to pursue an Alternative Transaction; or

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(n)the issuance by any governmental authority, including any regulatory authority or court of competent jurisdiction, of any ruling, judgment or order enjoining the consummation of or rendering illegal the Transaction, and such ruling, judgment or order has not been reversed or vacated by the IPO Pricing Date.

Section 7.05Mutual Termination. This Agreement may be terminated by mutual agreement of the Company, Sponsors, and the Consenting Support Parties upon the receipt of written notice delivered in accordance with Section 21 hereof.

Section 7.06Effect of Termination.  Upon the termination of this Agreement in accordance with Section 7 hereof, this Agreement will forthwith become void and of no further force or effect and each Party will, except as provided otherwise in this Agreement, be immediately released from its liabilities, obligations, commitments, undertakings and agreements under or related to this Agreement and will have all the rights and remedies that it would have had and will be entitled to take all actions, whether with respect to the Transaction or otherwise, that it would have been entitled to take had it not entered into this Agreement, including all rights and remedies available to it under applicable law, the Term Loan Agreement, the IPCo Indentures, the certificate of designation for the Series A Preferred Stock and Series B Preferred Stock, and any ancillary documents or agreements thereto; provided, that in no event will any such termination relieve a Party from liability for its breach or non-performance of its obligations hereunder before the date of such termination.  Upon any termination of this Agreement, other than in connection with the consummating of the Closing, each Consenting Support Party and the Sponsors will be deemed to have automatically revoked and withdrawn its participation in and consent with respect to the Term Loan Exchange (including the Exchange Agreement), its consent with respect to the Merger Agreement, and its consent with respect to the Amended Certificates of Designation, and revoked and withdrawn its consents given to convert any of its existing equity interests, each as applicable, without any further action and irrespective of the expiration or availability of any “withdrawal period” or similar restriction, whereupon any such consents will be deemed, for all purposes, to be null and void ab initio and will not be considered or otherwise used in any manner by the Parties in connection with the Transaction and this Agreement, and the Company agrees not to accept any such consents and to take all action necessary or reasonably required to allow the Consenting Support Parties or Sponsors to arrange with their custodian and brokers to effectuate the withdrawal of such consents, including the reopening or extension of any withdrawal or similar periods.

Section 7.07Settlement.  This Agreement and the Definitive Documents are part of a proposed settlement of a dispute among certain of the Parties.  If the Closing does not occur, nothing herein will be construed as a waiver by any Party of any or all of such Party’s rights and the Parties expressly reserve any and all of their respective rights.  Pursuant to Federal Rule of Evidence 408 and any other applicable rules of evidence, this Agreement and all negotiations relating hereto will not be admissible into evidence in any proceeding other than a proceeding to enforce its terms.

8.Additional Documents.

Section 8.01Each of the Consenting Support Parties and Sponsors hereby covenants and agrees to deliver to the Company (or its agent), on or before the Closing Date, a fully

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completed and duly executed copy of the applicable U.S. federal income tax certifications, (generally, a United States Internal Revenue Service Form W-9 (or successor applicable form) in the case of a person that is a “United States person” within the meaning of Section 7701(a)(30) of the Code or an applicable United States Internal Revenue Service Form W-8 (or successor applicable form) in the case of a person that is not a “United States person” (within the meaning of Section 7701(a)(30) of the Code)).  Each of the Consenting Support Parties and Sponsors hereby acknowledges that a failure to deliver the applicable U.S. federal income tax certifications as set forth in this Section 8.01 may result in U.S. federal withholding tax on payments in respect of their SPV Securities, and the amount of any such withholding tax shall reduce the amount otherwise payable to such Party.

Section 8.02Each Party hereby covenants and agrees to cooperate with each other in good faith in connection with, and will exercise commercially reasonable efforts with respect to, the negotiation, drafting and execution and delivery of the Definitive Documents.  In the case of any conflict or inconsistency between the Transaction Term Sheet and any form of or term sheet for a Definitive Document attached as an exhibit hereto, the terms of the Transaction Term Sheet shall control.

9.Representations and Warranties.

Section 9.01Each Party, severally (and not jointly), represents and warrants to the other Parties that the following statements are true, correct and complete as of the date hereof and solely as to itself:

(a)such Party is validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, and has all requisite corporate, partnership, limited liability company or similar authority to enter into this Agreement and carry out the transactions contemplated hereby and perform its obligations contemplated hereunder; and the execution and delivery of this Agreement and the performance of such Party’s obligations hereunder have been duly authorized by all necessary corporate, limited liability company, partnership or other similar action on its part;

(b)assuming the Consenting Support Parties consent to the transactions contemplated in this Agreement, the execution, delivery and performance by such Party of this Agreement does not and will not (i) violate any provision of law, rule or regulation applicable to it or any of its subsidiaries or its charter or bylaws (or other similar governing documents) or those of any of its subsidiaries, or (ii) in the case of the Consenting Support Parties, conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any material contractual obligation to which it or any of its subsidiaries is a party, and (iii) in the case of the Company and the Sponsors, conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any contractual obligation to which it or any of its subsidiaries is a party, except, in the case of this clause (iii), for any such conflict, breach or default as would not reasonably be expected to result in a Material Adverse Effect;

(c)the execution, delivery and performance by such Party of this Agreement does not and will not require any registration or filing with, consent or approval of, or notice to,

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or other action to, with or by, any federal, state or governmental authority or regulatory body, except such filings as may be necessary or required for disclosure by the SEC; and

(d)this Agreement is the legally valid and binding obligation of such Party, enforceable in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability or a ruling of a court (the “Enforceability Exceptions”).

Section 9.02Each Consenting Support Party severally (and not jointly), represents and warrants to the other Parties that, as of the date hereof, such Consenting Support Party (a) is not a Qualified Marketmaker, (b) (i) is the beneficial owner of the Term Loans, IPCo Notes, Series A Preferred Stock, or Common Stock set forth below its name on the signature page hereof or (ii) has, with respect to the beneficial owners of such Term Loans, IPCo Notes, Series A Preferred Stock, or Common Stock (x) sole investment or voting discretion with respect to such Term Loans, IPCo Notes, Series A Preferred Stock, or Common Stock, (y) full power and authority to vote on and consent to matters concerning such Term Loans, IPCo Notes, Series A Preferred Stock, or Common Stock to exchange, assign, or transfer such Term Loans, IPCo Notes, Series A Preferred Stock, or Common Stock, and (z) full power and authority to bind or act on the behalf of, such beneficial owners.

Section 9.03The Company and its subsidiaries severally (and not jointly) each represent and warrant to the other Parties that the following statements are true, correct and complete as of the date hereof:

(a)the Company is currently not engaged in any discussions, negotiations, or other arrangements with respect to any Alternative Transaction with any Person that (to the Company’s knowledge) holds any Term Loans, IPCo Notes, Series A Preferred Stock, or Common Stock;

(b)neither the Company nor any of its subsidiaries nor to the knowledge of the Company and its subsidiaries, any director, officer, agent, or employee of the Company or any of the Company’s subsidiaries is aware of or has taken any action, directly or indirectly, that would result in a violation by such persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the “FCPA”) the UK Bribery Act of 2010, as amended from time to time, including, without limitation, making use of the mails or any means of instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign office, in contravention of the FCPA, and the Company and its subsidiaries and affiliates have conducted their businesses in compliance with the FCPA and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith;

(c)the operations of the Company and its subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting

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requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the best knowledge of the Company, threatened;

(d)neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any director, officer, agent, or employee of the Company or any of its subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department, the U.S. Department of Commerce, the U.S. Department of State, the United Nations Security Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions authority (collectively, “Sanctions”), nor is the Company or any of its subsidiaries located, organized or resident in a country or territory that is the subject of Sanctions. Proceeds of the any SPV Securities will not be contributed or otherwise made available to any subsidiary, joint venture partner or other person, (i) to fund any activities of or business with any person that, at the time of such funding, is the subject of Sanctions, or is in Burma/Myanmar, Cuba, Iran, Libya, North Korea, Sudan or in any other country or territory, that, at the time of such funding, is the subject of Sanctions, or (ii) in any other manner that will result in a violation by any person of Sanctions;

(e)Group, Inc. maintains a system of internal control over financial reporting (as such term is defined in Rule 13a-15(f) of the Exchange Act) that complies with the requirements of the Exchange Act and has been designed by Group, Inc.’s principal executive officer and principal financial officer, or under their supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Group, Inc.’s internal control over financial reporting is effective and Group, Inc. is not aware of any material weaknesses in its internal control over financial reporting;

(f)the SPV Securities will (i) qualify for and be issued pursuant to and in compliance with the exemption from registration under the Securities Act, provided by Section 4(a)(2) thereunder, and (ii) be issued and granted in compliance with all applicable securities laws and other applicable laws;

(g)each of the SPV Securities will be duly authorized and, when issued in accordance with the terms of the SPV Operating Agreement will be validly issued, fully paid and non-assessable, and none of the SPV Securities will be subject to any preemptive, participation, rights of first refusal or other similar rights unless set forth in the SPV Operating Agreement;

(h)the Company has filed or furnished, as applicable, all forms, filings, registrations, submissions, statements, certifications, the Company’s reports and documents that would be required to be filed or furnished by it with the SEC under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”) to the extent required under the IPCo Indentures (the SEC filings through the date hereof, including any amendments thereto, the “Company Reports”).  As of their respective dates (or, if amended prior to the date hereof, as of the date of

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such amendment), the Company Reports taken as a whole, did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading;

(i)the Madewell S-1 and any amendments or supplements thereto do not and will not, as of the commencement of marketing of the Madewell IPO, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;

(j)each of the New SPV Senior Secured Notes, the A-1 Indenture, and the A-2 Indenture has been or will be duly authorized by the governing body of Chinos SPV and will be a valid and legally binding obligation of Chinos SPV and any guarantors thereunder, enforceable in accordance with their terms, except that enforcement may be subject to the Enforceability Exceptions; and

(k)the Company’s consolidated financial statements (including, in each case, any notes thereto) contained in the Company Reports were prepared (i) in accordance with generally accepted accounting principles in the United States of America (“GAAP”) applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto or, in the case of interim consolidated financial statements, where information and footnotes contained in such financial statements are not required under the rules of the SEC to be in compliance with GAAP) and (ii) in compliance, as of their respective dates of filing with the SEC, in all material respects with applicable accounting requirements with the published rules and regulations of the SEC with respect thereto if the Company were required to file such reports, and in each case such consolidated financial statements fairly presented, in all material respects, the consolidated financial position, results of operations, changes in stockholder’s equity and cash flows of the Company as of the respective dates thereof and for the respective periods covered thereby (subject, in the case of unaudited statements, to normal year-end adjustments).

Section 9.04The Sponsors severally (and not jointly) each represent and warrant to the other Parties that they are currently not engaged in any discussions, negotiations, or other arrangements with respect to any Alternative Transaction with any Person that (to the Sponsors’ knowledge) holds any Term Loans, IPCo Notes, Series A Preferred Stock, or Common Stock.

Section 9.05Each Party (other than the Company) represents and warrants to the other Parties that no Party is relying on any diligence or recommendation from any advisor to the Company, including Weil, Lazard Frères & Co. LLC, and Deloitte Tax LLP, in executing this Agreement or pursuing the Transaction.

10.Disclosure; Publicity.

Section 10.01On the Support Effective Date, the Company will disseminate a press release disclosing the existence of this Agreement and the terms hereof.  If the Company fails to make the foregoing disclosures in compliance with the terms specified herein, any Initial

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Consenting Support Party may publicly disclose the foregoing, including this Agreement, and all of its exhibits and schedules (subject to the redactions called for by this Section 10 hereof), and the Company hereby waives any claims against the Initial Consenting Support Parties arising as a result of such disclosure by an Initial Consenting Support Party in compliance with this Agreement.  

Section 10.02The Company will submit drafts to Milbank of any press releases, public documents, and any and all filings with the SEC that constitute disclosure of the existence or terms of this Agreement or any amendment to the terms of this Agreement at least two business days before making any such disclosure (if practicable, and if two business days before is not practicable, then as soon as practicable but in no event less than 24 hours before making any such disclosure), and will afford them a reasonable opportunity to comment on such documents and disclosures and will incorporate any such reasonable comments in good faith.  Except as required by law or otherwise permitted under the terms of any other agreement between the Company and any Consenting Support Party, no Party or its advisors will disclose to any person (including, for the avoidance of doubt, any other Consenting Support Party), other than advisors to the Company, the principal amount or percentage of any Term Loans, IPCo Notes, Series A Preferred Stock, Common Stock, or any other securities of the Company held by any Consenting Support Party, in each case, without such Consenting Support Party’s prior written consent; provided, that (a) if such disclosure is required by law, subpoena, or other legal process or regulation, the disclosing Party will afford the relevant Consenting Support Party a reasonable opportunity to review and comment in advance of such disclosure and will take all reasonable measures to limit such disclosure and (b) the foregoing will not prohibit the disclosure of the aggregate percentage or aggregate principal amount of Term Loans, IPCo Notes, Series A Preferred Stock, Series B Preferred Stock, or Common Stock held by all the Consenting Support Parties collectively.  Notwithstanding the provisions in this Section 10, any Party hereto may disclose, if consented to in writing by a Consenting Support Party, such Consenting Support Party’s individual holdings.

11.Amendments and Waivers.

Except as otherwise expressly set forth herein, (a) this Agreement and the form of joinder agreement attached as Exhibit 1 may not be waived, modified, amended or supplemented except in a writing signed by the Company, the Requisite Consenting Support Parties, and the Sponsors; and (b) any change, modification, or amendment to the Transaction Term Sheet or the forms of or term sheets for the Definitive Documents may not be made without the written consent of the Company, the Requisite Affected Parties, and the Sponsors, other than as contemplated by Section 5(d) of this Agreement.  No waiver, modification, amendment, or supplement to this Agreement, including any exhibits hereto, that is disproportionately adverse to any Consenting Support Party as compared to similarly situated Consenting Support Parties shall be binding upon such Consenting Support Party unless such Consenting Support Party has consented in writing to such waiver, modification, amendment or supplement.

12.Effectiveness.

This Agreement will become effective and binding on the Parties on the date of the Support Effective Date; provided, that, signature pages executed by Consenting Support Parties will be

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delivered to (a) other Consenting Support Parties in a redacted form that removes such Consenting Support Party’s holdings of the Term Loans, IPCo Notes, Series A Preferred Stock, Series B Preferred Stock, and Common Stock and (b) the Company, the Sponsors, Weil, and Milbank in an unredacted form (to be held by Weil and Milbank on a professionals’ eyes only basis).  

13.GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL.

THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF LAW PROVISIONS WHICH WOULD REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER JURISDICTION.  BY ITS EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ANY LEGAL ACTION, SUIT OR PROCEEDING AGAINST IT WITH RESPECT TO ANY MATTER UNDER OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT RENDERED IN ANY SUCH ACTION, SUIT OR PROCEEDING, MAY BE BROUGHT IN ANY FEDERAL OR STATE COURT IN THE BOROUGH OF MANHATTAN, THE CITY OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HEREBY IRREVOCABLY ACCEPTS AND SUBMITS ITSELF TO THE NONEXCLUSIVE JURISDICTION OF EACH SUCH COURT, GENERALLY AND UNCONDITIONALLY, WITH RESPECT TO ANY SUCH ACTION, SUIT OR PROCEEDING.  EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.  

14.Specific Performance/Remedies.

It is understood and agreed by the Parties that money damages would not be a sufficient remedy for any breach of this Agreement by any Party and each non-breaching Party will be entitled to specific performance and injunctive or other equitable relief (including attorneys fees and costs) as a remedy of any such breach, without the necessity of proving the inadequacy of money damages as a remedy.  

15.Survival.

Notwithstanding the termination of this Agreement pursuant to Section 7 hereof, Sections 7.06, 10, and 13–23, 25, and 26 will survive such termination and will continue in full force and effect for the benefit of the Parties in accordance with the terms hereof; provided, however, that any liability of a Party for failure to comply with the terms of this Agreement will survive such termination.

16.Headings.

The headings of the sections, paragraphs and subsections of this Agreement are inserted for convenience only and will not affect the interpretation hereof or, for any purpose, be deemed a part of this Agreement.

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17.Successors and Assigns; Severability; Several Obligations.

This Agreement is intended to bind and inure to the benefit of the Parties and their respective successors and permitted assigns.  If any provision of this Agreement, or the application of any such provision to any person or circumstance, will be held invalid or unenforceable in whole or in part, such invalidity or unenforceability will attach only to such provision or part thereof and the remaining part of such provision hereof and this Agreement will continue in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party.  Upon any such determination of invalidity, the Parties will negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.  The agreements, representations and obligations of the Parties are, in all respects, ratable and several and neither joint nor joint and several.

18.No Third-Party Beneficiaries.

Unless expressly stated herein, this Agreement will be solely for the benefit of the Parties and no other person or entity will be a third-party beneficiary hereof.

19.Prior Negotiations; Entire Agreement.

This Agreement, including the exhibits and schedules hereto, constitutes the entire agreement of the Parties, and supersedes all other prior negotiations, with respect to the subject matter hereof, except that the Parties acknowledge that any confidentiality agreements heretofore executed between the Company and each Initial Consenting Support Party (or any advisor thereto) will continue in full force and effect in accordance with the terms thereof.

20.Counterparts.

This Agreement may be executed in several counterparts, each of which will be deemed to be an original, and all of which together will be deemed to be one and the same agreement.  Execution copies of this Agreement may be delivered by electronic mail, which will be deemed to be an original for the purposes of this paragraph.

21.Notices.

All notices hereunder will be deemed given if in writing and delivered, if contemporaneously sent by electronic mail, courier or by registered or certified mail (return receipt requested) to the following addresses and electronic mail addresses:

 

(1)If to the Company, to:

 

 

 

Chinos A

225 Liberty Street

New York, New York 10281

 

Attention:

Maria Di Lorenzo, Esq. (Maria.DiLorenzo@JCrew.com)

 

 

 

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with a copy (which will not constitute notice) to:

 

 

 

Weil, Gotshal & Manges LLP

 

767 Fifth Avenue

 

New York, New York 10153

 

Attention:

Michael Aiello (Michael.Aiello@weil.com)

Ray C. Schrock, P.C. (Ray.Schrock@weil.com)

Alexander Lynch, Esq. (Alexander.Lynch@weil.com)

Ryan Preston Dahl, Esq. (Ryan.Dahl@weil.com)

 

 

 

 

(2)If to a Consenting Support Party, to the addresses or electronic mail addresses set forth below the Consenting Support Party’s signature, with a copy (which will not constitute notice) to:

 

 

 

Milbank LLP
55 Hudson Yards
New York, New York 10001
Fax: (212) 806-6006

 

Attention:

Dennis F. Dunne, Esq. (ddunne@milbank.com)

Samuel A. Khalil, Esq. (skhalil@milbank.com)

Matthew Brod, Esq. (mbrod@milbank.com)

 

 

(3)If to the Sponsors, to:

 

 

 

 

TPG Capital, L.P.

301 Commerce Street

Suite 3300

Fort Worth, Texas  76102

 

Attention:

Adam Fliss (afliss@tpg.com)

 

 

-and-

 

 

 

Leonard Green & Partners, L.P.

 

11111 Santa Monica Boulevard

Suite 2000

 

Los Angeles, California 90025

 

Attention:

Todd Purdy (purdy@leonardgreen.com)

 

 

 

Any notice given by delivery, mail, or courier will be effective when received.  Any notice given by electronic mail will be effective upon confirmation of transmission.

22.Reservation of Rights; No Admission.

Except as expressly provided in this Agreement, nothing herein is intended to, or does, in any manner waive, limit, impair, or restrict the ability of each of the Parties (i) to protect and preserve its rights, remedies and interests, including its claims against any of the other Parties (or their respective affiliates or subsidiaries), (ii) purchase, sell, or enter into any transactions in

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connection with the Madewell IPO or the Term Loans, IPCo Notes, Series A Preferred Stock, Series B Preferred Stock, or Common Stock, (iii) enforce any right under the Term Loan Agreement or Term Loan Exchange Agreement, subject to the terms hereof, (iv) consult with other Consenting Support Parties, other holders of Term Loans, IPCo Notes, Series A Preferred Stock, Series B Preferred Stock, or Common Stock, or any other Party regarding the Transaction (and not any other Alternative Transaction), or (v) enforce any right, remedy, condition, consent or approval requirement under this Agreement or in any of the Definitive Documents.  Without limiting the foregoing, if this Agreement is terminated in accordance with its terms for any reason (other than consummation of the Transaction), the Parties each fully and expressly reserve any and all of their respective rights, remedies, claims, defenses and interests, subject to Sections 7 and 14 in the case of any claim for breach of this Agreement arising before termination.  Each of the Parties denies any and all wrongdoing or liability of any kind and does not concede any infirmity in the claims or defenses which it has asserted or could assert.

23.Relationship among Parties.

It is understood and agreed that no Consenting Support Party has any duty of trust or confidence in any kind or form with any other Consenting Support Party, and, except as expressly provided in this Agreement, there are no commitments between them.  In this regard, it is understood and agreed that any Consenting Support Party may acquire Term Loans, IPCo Notes, Series A Preferred Stock, Series B Preferred Stock, Common Stock, or other debt or equity securities of the Company without the consent of the Company or any other Consenting Support Party, subject to applicable securities laws and the terms of this Agreement; provided, that, no Consenting Support Party will have any responsibility for any such acquisition to any other entity by virtue of this Agreement.  

24.No Solicitation; Representation by Counsel; Adequate Information.

Section 24.01This Agreement is not and will not be deemed to be a solicitation to tender or exchange any of the Term Loans, IPCo Notes, Series A Preferred Stock, Series B Preferred Stock, or Common Stock.  Each Party acknowledges that it has had an opportunity to receive information from the Company and that it has been represented by counsel in connection with this Agreement and the transactions contemplated hereby.  Accordingly, any rule of law or any legal decision that would provide any Party with a defense to the enforcement of the terms of this Agreement against such Party based upon lack of legal counsel will have no application and is expressly waived.

Section 24.02Although none of the Parties intends that this Agreement should constitute, and they each believe it does not constitute, an offering of securities, each Consenting Support Party acknowledges, agrees, and represents to the other Parties that it (a) is an “accredited investor” as such term is defined in Rule 501(a) of the Securities Act, (b) is a “qualified institutional buyer” as such term is defined in Rule 144A of the Securities Act, (c) understands that the securities to be acquired by it pursuant to the Transaction have not been registered under the Securities Act and that such securities are being offered and sold pursuant to an exemption from registration contained in the Securities Act, based in part upon such Consenting Support Party’s representations contained in this Agreement and cannot be sold unless subsequently registered under the Securities Act or an exemption from registration is

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available, and (d) has such knowledge and experience in financial and business matters that such Consenting Support Party is capable of evaluating the merits and risks of the securities to be acquired by it pursuant to the Transaction and understands and is able to bear any economic risks with such investment.

Section 24.03Each Consenting Support Party acknowledges that it is acquiring any SPV Securities for investment purposes and solely for its own account, or for the accounts of the beneficial owners for whom it acts as investment advisor or manager, and not with a view to, or for resale of such securities in violation of the Securities Act.  Such Consenting Support Party will not resell, transfer, assign or distribute the SPV Securities acquired by it pursuant hereto except in compliance with the registration requirements of the Securities Act or pursuant to an available exemption therefrom.  The financial situation of such Consenting Support Party (and each beneficial owner for whom it acts as investment advisor or manager) is such that it can afford to bear the economic risk of holding any SPV Securities.  Such Consenting Support Party (and each beneficial owner for whom it acts as investment advisor or manager) can afford to suffer the complete loss of its investment in any SPV Securities.  The knowledge and experience of such Consenting Support Party in financial and business matters is such that it, together with the assistance of its advisors, is capable of evaluating the merits and risks of the investment in any SPV Securities.  Such Consenting Support Party acknowledges that (a) the offer of the SPV Securities have not been registered under the Securities Act; (b) the offer of the SPV Securities is intended to be exempt from registration under the Securities Act pursuant to Section 4(a)(2) of the Securities Act; and (c) there is no established market for the SPV Securities and there may not be any public market for such securities in the future.

25.Indemnification and Contribution

Section 25.01Indemnification Obligations.  The Company (the “Indemnifying Party”) shall indemnify and hold harmless each other Party and its affiliates, equity holders, members, partners, general partners, managers and its and their respective representatives and controlling persons (each, an “Indemnified Person”) from and against any and all losses, claims, damages, liabilities and costs and expenses arising out of or in any way related to a claim, suit or other litigation asserted by a third-party, whether currently outstanding or arising after the date hereof (collectively, “Losses”), that any such Indemnified Person may incur or to which any such Indemnified Person may become subject, arising out of or in connection with this Agreement and the transactions contemplated hereby and thereby, including, without limitation, the Transaction and the transactions described in the preamble to this Agreement, or any claim, challenge, litigation, investigation or proceeding relating to any of the foregoing, regardless of whether any Indemnified Person is a party thereto, whether or not such proceedings are brought by the Company, the Sponsors, their respective equity holders, affiliates, creditors or any other Person, and reimburse each Indemnified Person upon demand for reasonable documented (with such documentation subject to redaction to preserve attorney client and work product privileges) legal or other third-party expenses incurred in connection with investigating, preparing to defend or defending, or providing evidence in or preparing to serve or serving as a witness with respect to, any lawsuit, investigation, claim or other proceeding relating to any of the foregoing (including in connection with the enforcement of the indemnification obligations set forth herein), irrespective of whether or not the transactions contemplated by this Agreement, or the Transaction are consummated or whether or not this Agreement is terminated; provided, that the

30

 


 

foregoing indemnity will not, as to any Indemnified Person, apply to Losses to the extent they are found by a final, non-appealable judgment of a court of competent jurisdiction to arise from the bad faith, willful misconduct, or gross negligence of such Indemnified Person.

Section 25.02Indemnification Procedure. Promptly after receipt by an Indemnified Person of notice of the commencement of any claim, challenge, litigation, investigation or proceeding (an “Indemnified Claim”), such Indemnified Person will, if a claim is to be made hereunder against the Indemnifying Party in respect thereof, notify the Indemnifying Party in writing of the commencement thereof; provided, that (a) the omission to so notify the Indemnifying Party will not relieve the Indemnifying Party from any liability that it may have hereunder except to the extent it has been materially prejudiced by such failure and (b) the omission to so notify the Indemnifying Party will not relieve the Indemnifying Party from any liability that it may have to such Indemnified Person otherwise than on account of this Section 25.  In case any such Indemnified Claims are brought against any Indemnified Person and it notifies the Indemnifying Party of the commencement thereof, the Indemnifying Party will be entitled to participate therein, and, at its election by providing written notice to such Indemnified Person, the Indemnifying Party will be entitled to assume the defense thereof, with counsel reasonably acceptable to such Indemnified Person; provided, that if the parties (including any impleaded parties) to any such Indemnified Claims include both such Indemnified Person and the Indemnifying Party and based on advice of such Indemnified Person’s counsel there are legal defenses available to such Indemnified Person that are different from or additional to those available to the Indemnifying Party, such Indemnified Person shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such Indemnified Claims. Upon receipt of notice from the Indemnifying Party to such Indemnified Person of its election to so assume the defense of such Indemnified Claims with counsel reasonably acceptable to the Indemnified Person, the Indemnifying Party shall not be liable to such Indemnified Person for expenses incurred by such Indemnified Person in connection with the defense thereof or participation therein (other than reasonable costs of investigation) unless (i) such Indemnified Person shall have employed separate counsel (in addition to any local counsel) in connection with the assertion of legal defenses in accordance with the proviso to the immediately preceding sentence (it being understood, however, that the Indemnifying Party shall not be liable for the expenses of more than one separate counsel representing the Indemnified Persons who are parties to such Indemnified Claims (in addition to one local counsel in each jurisdiction in which local counsel is required)), (ii) the Indemnifying Party shall not have employed counsel reasonably acceptable to such Indemnified Person to represent such Indemnified Person within a reasonable time after the Indemnifying Party has received notice of commencement of the Indemnified Claims from, or delivered on behalf of, the Indemnified Person, (iii) after the Indemnifying Party assumes the defense of the Indemnified Claims, the Indemnified Person determines in good faith that the Indemnifying Party has failed or is failing to defend such claim and provides written notice of such determination and the basis for such determination, and such failure is not reasonably cured within ten (10) business days of receipt of such notice, or (iv) the Indemnifying Party shall have authorized in writing the employment of counsel for such Indemnified Person.

Section 25.03Settlement of Indemnified Claims. In connection with any Indemnified Claim for which an Indemnified Person is assuming the defense in accordance with this Section 25, the Indemnifying Party shall not be liable for any settlement of any Indemnified Claims

31

 


 

effected by such Indemnified Person without the written consent of the Indemnifying Party (which consent shall not be unreasonably withheld, conditioned or delayed). If any settlement of any Indemnified Claims is consummated with the written consent of the Indemnifying Party or if there is a final judgment for the plaintiff in any such Indemnified Claims, the Indemnifying Party agrees to indemnify and hold harmless each Indemnified Person from and against any and all Losses by reason of such settlement or judgment to the extent such Losses are otherwise subject to indemnification by the Indemnifying Party hereunder in accordance with, and subject to the limitations of, this Section 25. The Indemnifying Party shall not, without the prior written consent of an Indemnified Person (which consent shall be granted or withheld, conditioned or delayed in the Indemnified Person’s sole discretion), effect any settlement of any pending or threatened Indemnified Claims in respect of which indemnity or contribution has been sought hereunder by such Indemnified Person unless (i) such settlement includes an unconditional release of such Indemnified Person in form and substance satisfactory to such Indemnified Person from all liability on the claims that are the subject matter of such Indemnified Claims and (ii) such settlement does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person.

Section 25.04Contribution. If for any reason the foregoing indemnification is unavailable to any Indemnified Person or insufficient to hold it harmless from Losses that are subject to indemnification pursuant to Section 25.01, then the Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Person as a result of such Loss in such proportion as is appropriate to reflect not only the relative benefits received by the Indemnifying Party, on the one hand, and such Indemnified Person, on the other hand, but also the relative fault of the Indemnifying Party, on the one hand, and such Indemnified Person, on the other hand, as well as any relevant equitable considerations.  The Indemnifying Party also agrees that no Indemnified Person shall have any liability based on its comparative or contributory negligence or otherwise to the Indemnifying Party, any Person asserting claims on behalf of or in right of any of the Indemnifying Party, or any other Person in connection with an Indemnified Claim.

26.Fees and Expenses.

Except as set forth in the proviso to this sentence, each Party is responsible for its own fees and expenses (including the fees and expenses of counsel, financial consultants, investment bankers and accountants) in connection with the entry into this Agreement and the transactions contemplated hereby; provided that the Company shall pay or cause to be paid the reasonable and documented fees and expenses of (a) the counsel to the Initial Consenting Support Parties in accordance with that letter agreement, dated July 10, 2019, between Chinos A and Milbank, (b) financial advisors to the Initial Consenting Support Parties in accordance with that letter agreement dated June 17, 2019 between Chinos A, PJT Partners LP, and Milbank, and (c) the counsel to the Sponsors to the extent required under any management services or similar agreements, including the Amended and Restated Management Services Agreement dated July 13, 2017 between Holdings, Group, Chinos Intermediate, Inc., and Chinos B and the Management Services Agreement dated July 13, 2017 between Group, Chinos Intermediate, Inc., Chinos B, TPG, and LGP (provided that nothing in this Section 26 shall be deemed a waiver of the Sponsors’ right to payment of any other amounts under any management services or similar agreement).

32

 


 

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed and delivered by their respective duly authorized officers, solely in their respective capacity as officers of the undersigned and not in any other capacity, as of the date first set forth above.

 

 

 

Chinos Holdings, Inc.

 

 

 

 

 

 

 

By:

/s/ Vincent Zanna

 

 

 

Name: Vincent Zanna

 

 

Title: SVP, Finance and Treasurer

 

 

 

Chinos Intermediate Holdings A, Inc.

 

 

 

 

 

 

 

By:

/s/ Vincent Zanna

 

 

 

Name: Vincent Zanna

 

 

Title: SVP, Finance and Treasurer

 

 

 

Chinos Intermediate Holdings B, Inc.

 

 

 

 

 

 

 

By:

/s/ Vincent Zanna

 

 

 

Name: Vincent Zanna

 

 

Title: SVP, Finance and Treasurer

 

 

J.CREW GROUp, INC.

 

 

 

 

 

 

 

By:

/s/ Vincent Zanna

 

 

 

Name: Vincent Zanna

 

 

Title: SVP, Finance and Treasurer

 

 

 

 

 

J. CREW Operating Corp.

 

 

 

 

 

 

 

By:

/s/ Vincent Zanna

 

 

 

Name: Vincent Zanna

 

 

Title: SVP, Finance and Treasurer

 

 


[Signature Page to Transaction Support Agreement]

 


 

 

J. CREW inc.

 

 

 

 

 

 

 

By:

/s/ Vincent Zanna

 

 

 

Name: Vincent Zanna

 

 

Title: SVP, Finance and Treasurer

 

 

 

[Signature Page to Transaction Support Agreement]

 


 

TPG CHINOS, L.P.

 

By:  TPG Advisors VI, Inc.,

its General Partner

 

By: /s/ Michael LaGatta ____________

Name: Michael LaGatta
Title:  Vice President

 

 

TPG CHINOS CO-INVEST, L.P.

 

By: TPG Advisors VI, Inc.,

its General Partner

 

By: /s/ Michael LaGatta _____________                             Name: Michael LaGatta
Title: Vice President

 

 

 

 

[Signature Page to Transaction Support Agreement]

 


 

GREEN EQUITY INVESTORS V, L.P.

By: GEI CAPITAL V, LLC, its General Partner

By:_/s/ Andrew Goldberg_________________
Name: Andrew Goldberg
Title: General Counsel

 

 

GREEN EQUITY INVESTORS SIDE V, L.P.

By: GEI CAPITAL V, LLC, its General Partner

By: _/s/ Andrew Goldberg_________________
Name: Andrew Goldberg
Title: General Counsel

 

 

LGP CHINO COINVEST LLC

By: Leonard Green & Partners, L.P., its Manager
By: LGP Management, Inc., its general partner

 

By: _/s/ Andrew Goldberg_________________
Name:  Andrew Goldberg
Title: General Counsel

 

 

 

 

[Signature Page to Transaction Support Agreement]

 


 

Anchorage Capital Group, L.L.C., on behalf of certain funds managed or advised by it or its affiliates

 

[Remainder of signature page redacted]

 

 


 

Davidson Kempner Capital Management LP, on behalf of certain of its affiliated funds and accounts

 

[Remainder of signature page redacted]

 


 


 

GSO CAPITAL PARTNERS LP, on behalf of funds managed or advised by it or its affiliates

 

[Remainder of signature page redacted]

 

 

 

 

 


 

 


 

 

Table of Exhibits

 

Exhibit

Document

1

Joinder

A

Transaction Term Sheet

B

SPV Operating Agreement

C

SPV A-Notes Term Sheet

D

Master Assignment and Assumption Agreement

E

SPV Subscription Agreement

F

Merger Agreement

G

BD Holdco Operating Agreement

H

Contribution Agreement

I-1

Amended Series A Certificate of Designation

I-2

Amended Series B Certificate of Designation

J

SPV Registration Rights Agreement

K-1

Madewell Investors’ Rights Agreement

K-2

J.Crew Investors’ Rights Agreement

L

Release Agreement

M-1

Separation Agreement

M-2

Transition Services Agreement

M-3

Employee Matters Agreement

M-4

Tax Matters Agreement

 

 


 

 

 


 

Exhibit 1

 

Joinder

 


 

FORM OF JOINDER AGREEMENT FOR CONSENTING SUPPORT PARTIES

This Joinder Agreement to the Transaction Support Agreement, dated as of [_______], 2019 (as amended, supplemented or otherwise modified from time to time, the “Agreement”), by and among the Company and the Consenting Support Parties, each as defined in the Agreement, is executed and delivered by ________________________________ (the “Joining Party”) as of ______________, 20__.  Each capitalized term used herein but not otherwise defined shall have the meaning set forth in the Agreement.

1.Agreement to be Bound.  The Joining Party hereby agrees to be bound by all of the terms of the Agreement, a copy of which is attached to this Joinder Agreement as Annex I (as the same has been or may be hereafter amended, restated or otherwise modified from time to time in accordance with the provisions hereof).  The Joining Party shall hereafter be deemed to be a “Consenting Support Party” and a “Party” for all purposes under the Agreement and with respect to any and all Claims held by such Joining Party.

2.Representations and Warranties.  With respect to the aggregate principal amount of Claims and Interests set forth below its name on the signature page hereto, the Joining Party hereby makes the representations and warranties of the Consenting Support Parties, as set forth in Section 9 of the Agreement to each other Party to the Agreement.

3.Governing Law.  This Joinder Agreement shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to any conflict of laws provisions which would require the application of the law of any other jurisdiction.

 

[Signature Page Follows]


 


 

IN WITNESS WHEREOF, the Joining Party has caused this Joinder to be executed as of the date first written above.

[JOINING PARTY]

 

 

 

 

 

By:

Name:

Title:

Principal Amount of the Term Loans: $_____________Principal Amount of the IPCo Notes: $_____________Amount of Series A Preferred Stock: _______________Amount of Series B Preferred Stock: _______________Amount of Common Stock: _______________

 

 

Notice Address:

 

 

 

 

 

 

 

 

Fax:

Attention:

 

 

Email:

 

 

 

 

 

 

Acknowledged:

 

 

 

 

 

CHINOS INTERMEDIATE HOLDINGS A, INC.
(on behalf of the Company)

 

 

 

 

 

By:

Name:

Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Exhibit A

 

Transaction Term Sheet

 

 

 

 

 

 


 

 

(1)

Cash repayment of term loan, up to 100% of claim, equal to (a) the sum of (i) Madewell IPO and debt financing proceeds, (ii) $50mm of borrowings under the new J. Crew ABL, and (iii) $150mm sponsor new money investment less (b) the sum of (i) repayment of existing ABL, (ii) funding of the Restricted Cash Amount, and (iii) payment of transaction costs, including fees and cash taxes. Cash received pro rata calculated based on all term loan claims, regardless of consent, with the exception of the impact of over-subscribing term loan lenders. All accrued interest will be paid in cash.

 

(2)

The “Restricted Cash Amount” means the gross amount of all future interest payments, including accrued amounts, through maturity of the IPCo Notes as of the transaction closing date.

 

(3)

To the extent cash sources are sufficient to repay 100% of the term loan claim then borrowings under the new J. Crew ABL shall be reduced to zero prior to any reduction to the $150mm sponsor new money investment.

 

(4)

Chinos SPV common equity will be allocated to parties who execute the RSA prior to December 10th as well as to the Sponsor(s) to the extent set forth in the Transaction Support Agreement.

 

(5)

Plus such additional amount, if any, of Chinos SPV common equity as determined by (and allocated among) the Sponsors (the “Additional A-2 Equity”); provided that the Additional A-2 Equity, if any, together with any additional Chinos SPV common equity that may be issued as anti-dilution protection to the holders identified in clause (i), shall not (i) result in any person that is a Consenting Support Party that receives Chinos SPV common equity in exchange for Term Loans or Common Stock receiving less (on an actual or percentage basis) SPV common equity than such person would receive but for the Additional A-2 Equity issuance or (ii) have any adverse economic, tax, or other effect on any Consenting Support Party, as determined by the Initial Consenting Support Parties in their sole discretion.  If the Sponsors intend to cause Chinos SPV to issue Additional A-2 Equity, at least 14 business days prior to the consummation of the transactions related thereto, the Sponsors shall identify in writing to each Consenting Support Party the precise manner in which it intends to issue such Additional A-2 Equity and accomplish the result specified in clause (i) so that each Consenting Support Party can determine whether it will be adversely impacted (such notice, an “Additional A-2 Equity Notice” and the 14 business day period following delivery of such notice, an “Additional A-2 Equity Notice Period”).  No Additional A-2 Equity shall be issued unless each Initial Consenting Support Party (a) provides the Sponsors written notice approving such issuance or (b) fails to object by the expiration of the Additional A-2 Equity Notice Period.

 

 

 

 

 

 

 

 

 

 

1

 

Term Sheet

 

 


 

Term Sheet

 

 

2

 


 


 

3

 

 

(1)

Calculated per Exhibit B to the LLC Agreement. For the avoidance of doubt, New Series A PIK accretion cannot exceed the amount that would accrue through the Series A maturity date.

 

(2)

Calculated per the definition of Madewell LTV as detailed in the SPV A-Notes Term Sheet.

 

(3)

Calculated per the definition of Madewell LTV as detailed in the SPV A-Notes Term Sheet, provided that the amount in clause (a)(i) of such definition includes the sum of the then outstanding principal amount (including all accrued and unpaid interest) of the New Series A-1 Notes, New Series A-2 Notes, New Series B Preferred Equity, New Series C Preferred Equity, and New Series D Preferred Equity, divided by the Madewell Collateral Percentage.

 

 

 

 

 

 

Term Sheet

 


 


 

4

 

 

(1)

As defined in the SPV A-Notes Term Sheet and Exhibit B to the LLC Agreement for New Series A-1 and New Series C, respectively.

 

 

 

>

Coupon and Equity levels tied to Madewell LTV(1) calculated at transaction close

 

Madewell LTV thresholds defined for New Series A-1 and New Series C, respectively

 

>

Applicable levels to be interpolated linearly and rounded to the nearest 0.125% increment

 

 

 

 

 

 

Term Sheet
LTV Grid

 

 

(1)

Calculated per Exhibit B to the LLC Agreement. For the avoidance of doubt, New Series A PIK accretion cannot exceed the amount that would accrue through the Series A maturity date.

 

(2)

Calculated per the definition of Madewell LTV as detailed in the SPV A-Notes Term Sheet.

 

(3)

Calculated per the definition of Madewell LTV as detailed in the SPV A-Notes Term Sheet, provided that the amount in clause (a)(i) of such definition includes the sum of the then outstanding principal amount (including all accrued and unpaid interest) of the New Series A-1 Notes, New Series A-2 Notes, New Series B Preferred Equity, New Series C Preferred Equity, and New Series D Preferred Equity, divided by the Madewell Collateral Percentage.

 

 

 

 

 

 

3

 


 

 


 

Exhibit B

 

SPV Operating Agreement

 

 

 


 

 

 

 

 

 

 

LIMITED LIABILITY COMPANY AGREEMENT

OF

[CHINOS SPV] LLC,

A DELAWARE LIMITED LIABILITY COMPANY

 

THE LIMITED LIABILITY COMPANY UNITS ISSUED IN ACCORDANCE WITH AND REPRESENTED BY THIS LIMITED LIABILITY COMPANY AGREEMENT HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, THE DELAWARE SECURITIES ACT OR UNDER SIMILAR LAWS OR ACTS OF OTHER STATES IN RELIANCE UPON THE INAPPLICABILITY OF SUCH LAWS UNDER THE CIRCUMSTANCES AND/OR EXEMPTIONS UNDER THOSE ACTS.  THESE UNITS ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER: (A) THIS LIMITED LIABILITY COMPANY AGREEMENT; AND (B) THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.

 

 

DATED AS OF [●], 2020

 

 

44670.00001


TABLE OF CONTENTS

 

Article I.

DEFINITIONS

 

Section 1.1.

Certain Definitions3

 

Section 1.2.

Other Definitional Provisions15

 

Article II.

ORGANIZATION, PURPOSE AND POWERS

 

Section 2.1.

Name16

 

Section 2.2.

Certificate of Formation16

 

Section 2.3.

Purpose16

 

Section 2.4.

Powers16

 

Section 2.5.

Principal Office16

 

Section 2.6.

Registered Office16

 

Section 2.7.

Registered Agent16

 

Section 2.8.

Qualification in Other Jurisdictions16

 

Section 2.9.

Term17

 

Section 2.10.

Limited Liability17

 

Article III.

CAPITALIZATION AND CAPITAL CONTRIBUTIONS

 

Section 3.1.

Initial Capital Contributions17

 

Section 3.2.

Additional Contributions17

 

Section 3.3.

Capital Accounts17

 

Section 3.4.

Units18

 

Section 3.5.

Certain Payments18

 

Article IV.

MEMBERS; VOTING; approval rights

 

Section 4.1.

Members19

 

Section 4.2.

Consent19

 

Section 4.3.

Meetings19

 

Section 4.4.

Action by Members Without a Meeting19

 

Section 4.5.

Admission of Additional Members20

 

Section 4.6.

Voting Rights20

 

Section 4.7.

No Management or Dissent Rights20

 

Section 4.8.

Bankruptcy of a Member20

 

Section 4.9.

Member Approval Rights20

 

Section 4.10.

Member Withdrawals21

 

i


TABLE OF CONTENTS

(continued)

 

Article V.

TRANSFER OF COMPANY INTERESTS

 

Section 5.1.

Prohibited and Permitted Transfers22

 

Section 5.2.

Tag-Along Rights24

 

Section 5.3.

Liquidity Right26

 

Section 5.4.

Sponsor Sales27

 

Section 5.5.

Call Rights and Forfeiture27

 

Article VI.

MANAGEMENT AND OPERATION OF THE COMPANY

 

Section 6.1.

Board of Managers30

 

Section 6.2.

Officers32

 

Section 6.3.

Independent Manager Approval Rights33

 

Section 6.4.

BD Holdco33

 

Section 6.5.

Determinations of Madewell LTV34

 

Article VII.

ALLOCATIONS AND OTHER TAX MATTERS

 

Section 7.1.

General Application34

 

Section 7.2.

General Allocations35

 

Section 7.3.

Special Allocations35

 

Section 7.4.

Allocation of Nonrecourse Liabilities37

 

Section 7.5.

Other Allocation Rules37

 

Section 7.6.

Tax Matters Representative40

 

Section 7.7.

Series B and Series D Treatment41

 

Section 7.8.

Sales of Madewell Shares or J.Crew Shares41

 

Article VIII.

DISTRIBUTIONS

 

Section 8.1.

Order of Distributions41

 

Section 8.2.

Distributions-in-Kind42

 

Section 8.3.

Tax Distributions42

 

Section 8.4.

Company Expenses43

 

Article IX.

BOOKS AND RECORDS; REPORTS

 

Section 9.1.

Books and Records43

 

Section 9.2.

Access to Information43

 

Section 9.3.

Tax Reports43

 

Section 9.4.

Fiscal Year43

 

ii


TABLE OF CONTENTS

(continued)

 

Section 9.5.

Non-Disclosure44

 

Article X.

DISSOLUTION AND LIQUIDATION

 

Section 10.1.

Dissolution44

 

Section 10.2.

Liquidation44

 

Section 10.3.

Final Allocation45

 

Article XI.

INDEMNIFICATION45

 

Section 11.1.

Right to Indemnification of Managers and Officers

 

Section 11.2.

Prepayment of Expenses45

 

Section 11.3.

Claims by Manager and Officers45

 

Section 11.4.

Indemnification of Employees and Agents46

 

Section 11.5.

Advancement of Expenses of Employees and Agents46

 

Section 11.6.

Non-Exclusivity of Rights; Primary Obligation46

 

Section 11.7.

Insurance47

 

Section 11.8.

Waiver of Business Opportunities Doctrine47

 

Section 11.9.

Waiver of Fiduciary Duties47

 

Section 11.10.

Amendment or Repeal48

 

Article XII.

MISCELLANEOUS

 

Section 12.1.

Amendments49

 

Section 12.2.

Specific Performance49

 

Section 12.3.

Dispute Resolution50

 

Section 12.4.

Entire Agreement; Waivers52

 

Section 12.5.

Governing Law52

 

Section 12.6.

Notices53

 

Section 12.7.

Representations of the Members53

 

Section 12.8.

Severability54

 

Section 12.9.

Binding Effect; Assignment54

 

Section 12.10.

Non-Recourse54

 

Section 12.11.

Counterparts54

 

Section 12.12.

Legal Counsel Relationships54

 

 

 

iii


 

LIMITED LIABILITY COMPANY AGREEMENT

OF

[CHINOS SPV] LLC

This LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) of [Chinos SPV] LLC, a Delaware limited liability company (the “Company”) is entered into, and shall be effective, as of [●], 2020, by and among: (i) the Company, (ii) the Series B Member, (iii) the Series C Members, (iv) the Series D Member, (v) the Common Members, and (vi) such Persons as, from time to time hereafter become members of the Company pursuant to the terms hereof (together with each of the Series B Member, Series C Members, Series D Member, and Common Members, and any Person admitted as an additional or substitute member of the Company pursuant to the provisions of this Agreement, each, a “Member” and, collectively, the “Members” and together with the Company, each, a “Party” and, together, the “Parties”) and in accordance with the Delaware Limited Liability Company Act (6 Del.C. § 18-101, et seq.), as amended from time to time (the “Act”).

WHEREAS, pursuant to that certain Agreement and Plan of Merger (the “Merger Agreement”), dated as of [●], 2020, by and among the Company, Chinos Holdings, Inc., a Delaware corporation (“Chinos”), [J.Crew Newco], a Delaware corporation (“J.Crew”), [Merger Sub 1], a Delaware limited liability company and wholly-owned subsidiary of the Company (“Merger Sub 1”) and [Merger Sub 2], a Delaware limited liability company and wholly-owned subsidiary of the Company (“Merger Sub 2”), Chinos consummated a series of transactions resulting in the legal and business separation of J.Crew from Chinos and other affiliated entities (collectively, the “Separation Transactions”);

WHEREAS, in connection with the Separation Transactions and other the transactions contemplated by the Merger Agreement:

(a)Merger Sub 1 merged with and into Chinos with Chinos surviving, pursuant to which the rights, titles and interests of: (i) each membership interest in Merger Sub 1 held by the Company was converted into common stock of Chinos (“Madewell Shares”); (ii) each share of common stock of Chinos was converted into Common Units; and (iii) each share of Series A Preferred Stock of Chinos and Series B Preferred Stock of Chinos was converted into Series C Units (collectively, the “Chinos Merger”);

(b)Merger Sub 2 merged with and into J.Crew with J.Crew surviving, pursuant to which the rights, titles and interests of: (i) each membership interest in Merger Sub 2 held by the Company was converted into voting common stock of J.Crew, (ii) each share of voting common stock of J.Crew was converted into Common Units, and (iii) each share of non-voting common stock of J.Crew remained outstanding in accordance with its terms (the “J. Crew Merger”); and

(c)as a result of the Chinos Merger and J.Crew Merger, Chinos and J.Crew (other than certain non-voting common shares) became wholly-owned Subsidiaries of the Company;

 


 

WHEREAS, the lenders party (the “Term Lenders”) to that certain Amended and Restated Credit Agreement, dated March 5, 2014 (as amended, the “Term Loan Agreement”), by and among Chinos Intermediate Holdings B, Inc., the Term Lenders and Wilmington Savings Fund Society, FSB as successor administrative agent, have entered into a master assumption and assignment agreement dated as of the date hereof (the “Exchange Agreement”), pursuant to which certain Term Lenders parties thereto exchanged a portion of the term loans under the Term Loan Agreement (the “Exchanged Term Loan”) for (a) Series A-1 Senior Secured Notes due 2025 (the “Series A-1 Notes”) issued by the Company under an indenture dated as of the date hereof (the “Series A-1 Indenture”), and (b) Common Units (the “Term Loan Exchange”);

WHEREAS, immediately following the Term Loan Exchange, the Company contributed, transferred and assigned to Chinos, and Chinos accepted, the Company’s rights, titles and interests in and to the Exchanged Term Loan for cancellation;

WHEREAS, TPG Chinos, L.P. and TPG Chinos Co-Invest, L.P. (together, “TPG”), and Green Equity Investors V, L.P., Green Equity Investors Side V, L.P., LGP Chino Coinvest LLC (collectively, “LGP”), have each entered into a Subscription Agreement, dated as of the date hereof (each, a “Subscription Agreement” and, collectively, the “Subscription Agreements”), pursuant to which each of TPG and LPG are purchasing (a) Series A-1 Notes, (b) Series A-2 Senior Secured Notes due 2025 (the “Series A-2 Notes”) issued by the Company under an indenture dated as of the date hereof, and (c) Common Units;

WHEREAS, the Company has issued to [BD Holdco], a Delaware limited liability company and wholly-owned Subsidiary of the Company (“BD Holdco”), the Series B Units and Series D Units;

WHEREAS, BD Holdco and J.Crew Brand, LLC (“Brand”) have entered into that certain contribution agreement, dated as of the date hereof (the “Contribution Agreement”) providing for BD Holdco to contribute to Brand any distributions made to BD Holdco as the Holder of Series B Units and Series D Units;

WHEREAS, in connection with the consummation of the transactions contemplated by the Merger Agreement, including the Separation Transactions, the Chinos Merger and the J.Crew Merger, the Exchange Agreement, the Subscription Agreements and the Contribution Agreement (collectively, the “Transaction Agreements”) and simultaneously with the Closing, the Company and the Members wish to set forth certain rights and obligations of each Member and provide for the governance of the Company, in each case, in accordance with and pursuant to the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the mutual promises made herein, the sufficiency of which is hereby acknowledged, the Parties agree as follows:

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Article I

DEFINITIONS

Section 1.1.Certain Definitions.  For purposes of this Agreement, the following terms shall have the following meanings:

Act” shall have the meaning set forth in the preamble to this Agreement.

Adjusted Capital Account Deficit means, with respect to any Member, the deficit balance, if any, in such Member’s Capital Account as of the end of the relevant fiscal year, after giving effect to the following adjustments:

(a)

Credit to such Capital Account any amounts which such Member is obligated to restore pursuant to any provision of this Agreement or is deemed obligated to restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and

(b)

Debit to such Capital Account the items described in Regulations Sections 1.704‑1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6).

The foregoing definition of “Adjusted Capital Account Deficit” is intended to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

Adverse Person” means Persons listed on Schedule 1 attached hereto, which may be updated by the Board of Managers from time to time in good faith to include any Person who, either directly or through an Affiliate, is actively engaged in a Competitive Business, which updates shall not constitute an amendment of this Agreement.

Affiliate” means (a) with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such first Person or (b) any spouse, child, grandchild, parent, grandparent or sibling of a Holder or a trust or other entity for their benefit; provided, however, that, with respect to the Sponsor Members, portfolio companies of a private equity fund shall not be considered Affiliates of such private equity fund or such Sponsor Members.  For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”) means, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.  

Agreement” shall have the meaning set forth in the preamble to this Agreement.

Amended Tag-Along Notice” shall have the meaning set forth in Section 5.2(d).

Applicable Federal Rate” means the interest rate specified for debt instruments of equivalent terms pursuant to Code Section 1274(d)(1).

Arbitration” shall have the meaning set forth in Section 12.3(a).

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Arbitrator” shall have the meaning set forth in Section 12.3(d).

Award” shall have the meaning set forth in Section 12.3(g).

Bad Leaver Price” shall have the meaning set forth in Section 5.5(c).

BD Holdco” shall have the meaning set forth in the preamble to this Agreement.

Board of Managers” or “Board” means the board of managers of the Company.

Brand” shall have the meaning set forth in the preamble to this Agreement.

Business Day” means any day other than (a) a Saturday, Sunday or federal holiday or (b) a day on which commercial banks in New York, New York are authorized or required to be closed.

Business Opportunities Exempt Parties” shall have the meaning set forth in Section 11.8.

Capital Account” shall have the meaning set forth in Section 3.3.

Capital Contributions” means with respect to any Member, the sum of the amount of cash and the Gross Asset Value (on the date contributed) of any property (other than money) contributed to the Company by such Member (or its predecessors in interest) with respect to the Units held by such Member.

Cause” with respect to Units held by Management Members, means (a) in the case of any Management Member who is party to an employment, severance-benefit, change in control or similar agreement that contains a definition of “Cause,” the definition set forth in such agreement shall apply with respect to such Management Member under this Agreement during the term of such agreement, and (b) in the case of any other Management Member, (i) a material breach by the Management Member of his or her service agreement with the Company or an Affiliate of the Company, any equity grant agreement, or any material policy of the Company or its Affiliates generally applicable to similarly situated service providers of the Company or its Affiliates, (ii) the failure by the Management Member to reasonably and substantially perform his or her duties to the Company or any of its Affiliates, which failure is materially damaging to the financial condition or reputation of the Company or its Affiliates, (iii) the Management Member’s willful misconduct or gross negligence which is injurious to the Company or an Affiliate of the Company, or (iv) the indictment of the Management Member for a felony or other serious crime involving moral turpitude.  In the case of clauses (i) and (ii) above, the Company shall permit the Management Member no less than 30 days to cure such breach or failure if reasonably susceptible to cure.  For the avoidance of doubt, if a Management Member is party to an employment, severance-benefit, change in control or similar agreement that contains a definition of “Cause,” the determination as to whether Cause exists, and any procedures (including any due process rights) that are required to be followed prior to a termination for Cause, shall be made in accordance with the terms of such agreement.

Chinos” shall have the meaning set forth in the Recitals.

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Chinos Merger” shall have the meaning set forth in the Recitals.

Closing” shall have the meaning set forth in the Merger Agreement.

Code” means the Internal Revenue Code of 1986, as amended.

Common Member” means each Person admitted to the Company as a Common Member with respect to the Common Units held by such Person, and any other Person admitted as an additional Member or substitute Common Member with respect to any Common Units; provided, however, that, in each case, such Person’s name is added from time to time to Exhibit A hereto as a Common Member.

Common Units” shall have the meaning set forth in Section 3.4(a).

Company” shall have the meaning set forth in the preamble to this Agreement.

Company Expensesmeans any and all expenses, costs and liabilities incurred by or on behalf of the Company in the ordinary conduct of the business of the Company in accordance with the provisions hereof, including: (a) all routine administrative and overhead expenses, including fees of auditors, attorneys and other professionals, expenses incurred by the Tax Matters Representative, and expenses associated with the maintenance of books and records and communications with Members; (b) all expenses incurred in connection with any litigation and the amount of any judgment or settlement paid in connection therewith; (c) all expenses for indemnity or contribution payable by the Company pursuant to Article XI; (d) all expenses incurred in connection with any indebtedness; and (e) all expenses incurred in connection with dissolution and liquidation.

Company Minimum Gain” has the same meaning as “partnership minimum gain” set forth in Regulations Sections 1.704-2(b)(2) and 1.704-2(d).

Company Subsidiaries” means any business entity of which the Company and/or any of its subsidiaries directly or indirectly owns at such time more than 50% of the outstanding voting equity interests of such entity.

Compete” means, with respect to a Management Member, the breach by such Management Member of any non-competition or non-solicitation covenant or a material breach of any confidentiality, non-disclosure or other similar covenant made by such Management Member in favor of the Company or any Company Subsidiary, and “Competes”, “Competed” and “Competition” will each have a correlative meaning.

Competitive Business” means (a) any business engaged in the design, contract for manufacture, marketing and sale of women’s and men’s apparel, shoes and accessories under the Madewell or J.Crew brand name, through retail stores, website and e-commerce platform and through select partners, and (b) any other business engaged in by the Company or the Company Subsidiaries, including Chinos and J.Crew, as of the date of determination.

Confidential Information” means all information, in any form or medium, that relates to the business, operations, affairs, financial arrangements, products, services, research or

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development of the Company or any Company Subsidiary, and its and their suppliers, customers or advertisers, including: (a) compilations of data (whether in whole or in part) and all analyses, processes, methods, techniques, systems, formulae, research, records, reports, manuals, documentation and models relating thereto, (b) computer software, documentation and databases (whether existing or in various stages of research and development), (c) identities of and information about the Company’s and Company Subsidiaries’ suppliers, customers and advertisers and their confidential information, (d) inventions, designs, developments, devices, methods and processes (whether or not reduced to practice), (e) internal business information, including, without limitation, information relating to strategic and staffing plans and practices (including information with respect to potential acquisition targets), marketing, promotional and sales plans, practices or programs, training practices and programs, cost and pricing structure, and accounting and business methods, (f) all copyrightable works, and (g) all similar or related information. Notwithstanding the immediately foregoing sentence, the term “Confidential Information” shall not include information with respect to the Company or any Company Subsidiaries that (i) becomes generally available to the public, other than as a result of disclosure by a Member in violation of this Agreement or any other agreement between the Company or Company Subsidiaries and such Member, (ii) becomes available to such Member on a non-confidential basis from a source other than the Company or Company Subsidiaries, which is not known to be subject to or bound by a contractual, legal or fiduciary obligation of confidentiality to the Company, any Company Subsidiaries or another Person with respect to such information, (iii) the Company agrees in writing that such information may be disclosed, or (iv) is required to be disclosed (A) by law or (B) in response to (x) any subpoena, (y) other legal process or (z) any regulatory or other governmental authority’s investigative demand; provided, however, that, any such disclosures shall be made only to the Person to whom the disclosure is required as set forth above in this clause (iv) and (unless legally prohibited by any law, regulation or court order) after prompt written notice to the Company of the required disclosure.  Information shall not be deemed to be excluded from the meaning of “Confidential Information” merely because individual portions or components of such information are publicly known or available.  If Confidential Information is to be disclosed pursuant to clause (iv) above, the disclosing Member agrees to cooperate with the Company (at the Company’s expense), if the Company should seek to prevent such disclosure or obtain an order or other reliable assurance that confidential treatment shall be accorded to designated portions of the Confidential Information.

Contribution Agreement” shall have the meaning set forth in the Recitals.

Cost” means, (a) with respect to any Restricted Common Units or Common Units that were converted from shares of common stock of Chinos pursuant to the Chinos Merger that were previously subject to vesting restrictions, $0, and (b) with respect to all other Common Units, the price paid for the shares of common stock of Chinos that were converted to such Common Units pursuant to the Chinos Merger.

Default Manager” shall have the meaning set forth in Section 6.1(c).

Depreciation” means, for each fiscal year, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable for U.S. federal income tax purposes with respect to an asset for such fiscal year, except that (a) with respect to any asset the Gross Asset Value of which differs from its adjusted tax basis for U.S. federal income tax purposes at

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the beginning of such fiscal year and which difference is being eliminated by use of the “remedial allocation method” as defined by Regulations Section 1.704-3(d), Depreciation for such fiscal year shall be the amount of book basis recovered for such fiscal year under the rules prescribed by Regulations Section 1.704-3(d)(2), and (b) with respect to any other asset the Gross Asset Value of which differs from its adjusted tax basis for U.S. federal income tax purposes at the beginning of such fiscal year, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the U.S. federal income tax depreciation, amortization, or other cost recovery deduction for such fiscal year bears to such beginning adjusted tax basis; provided, that, if the adjusted tax basis for U.S. federal income tax purposes of an asset at the beginning of such fiscal year is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Board of Managers.

Disability” means, with respect to any Management Member holding Units, (a) in the case of any Management Member who is a party to an employment or severance-benefit agreement that contains a definition of “Disability,” the definition set forth in such agreement will apply with respect to such Management Member under this Agreement during the term of such agreement, and (b) in the case of any other Management Member, a disability that would entitle a Management Member to long-term disability benefits under the Company’s long-term disability plan in which the Management Member participates.  Notwithstanding the foregoing, in any case in which a benefit that constitutes or includes “nonqualified deferred compensation” subject to Section 409A of the Code would be payable by reason of Disability, the term “Disability” will mean a disability described in Treas. Regs. Section 1.409A-3(i)(4)(i)(A).

Dispute” shall have the meaning set forth in Section 12.3(a).

Distribution-in-Kind” shall have the meaning set forth in Section 8.2, and “Distributed-in-Kind” shall have a correlative meaning.

DRAA” shall have the meaning set forth in Section 12.3(a).

Equity Securities” means all forms of equity securities in the Company, its Subsidiaries or their successors (including, without limitation, Units), all equity or debt securities convertible into or exchangeable for equity securities in the Company, its Subsidiaries or their successors, and all options, warrants, and other rights to purchase or otherwise acquire equity securities, or securities convertible into or exchangeable for equity securities, from the Company, its Subsidiaries or their successors.

ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as amended.

Exchange Agreement” shall have the meaning set forth in the Recitals.

Exchanged Term Loan” shall have the meaning set forth in the Recitals.

Financial Statements” means either (a) the unaudited consolidated quarterly financial reports of the Company and its consolidated subsidiaries for the first three fiscal quarters of each year, or (b) audited consolidated annual financial reports of the Company and its consolidated

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subsidiaries (or, if the Board of Managers elects not to cause such financial reports to be audited, unaudited consolidated annual financial reports of the Company and its consolidated subsidiaries).

Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis for federal income tax purposes, except as follows:

(a)

the Gross Asset Value of any asset contributed by a Member to the Company is the gross fair market value of such asset as reasonably determined in good faith by the Board of Managers at the time of contribution;

(b)

the Gross Asset Value of all Company assets shall be adjusted to equal their respective gross fair market values, as reasonably determined in good faith by the Board of Managers, as of the following times: (i) the acquisition of any additional interest in the Company by any new or existing Member in exchange for more than a de minimis Capital Contribution; (ii) the distribution by the Company to the Member of more than a de minimis amount of property as consideration for an interest in the Company; (iii) the grant of Common Units (other than a de minimis interest); and (iv) the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); provided, however, that, the adjustments pursuant to clauses (i), (ii), (iii) and (iv) above shall be made only if the Board of Managers reasonably determines in good faith that such adjustments are necessary or appropriate to reflect the relative economic interests of the Members in the Company;

(c)

the Gross Asset Value of any Company asset distributed to any Member shall be adjusted to equal the gross fair market value of such asset on the date of distribution as reasonably determined in good faith by the Board of Managers; and

(d)

the Gross Asset Value of the Company’s assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) and subparagraph (f) of the definition of “Net Income” and “Net Loss” herein or Section 7.3(f); provided, however, that, Gross Asset Values shall not be adjusted pursuant to this subparagraph (d) to the extent the Board of Managers reasonably determines in good faith that an adjustment pursuant to subparagraph (b) hereof is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subparagraph (d).

If the Gross Asset Value of a Company asset has been reasonably determined in good faith or adjusted pursuant to clause (a), (b), or (d) above, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Net Income or Net Loss.

Holder” means any Member that is a holder of Units and any successor Member that is a holder of Units as a result of a Transfer permitted hereunder.

Indemnified Person” shall have the meaning set forth in Section 11.1.

Indemnity Obligations” shall have the meaning set forth in Section 11.6.

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Investor Parties” shall have the meaning set forth in Section 11.6.

IPCo Noteholders” means the holders of the IPCo Notes.

IPCo Notes” means the 13.00% Senior Secured Notes due 2021 and the 13.00% Senior Secured New Money Notes due 2021 issued by J.Crew Brand Corp., an indirect wholly-owned subsidiary of the Company, and Brand, under the two indentures dated July 13, 2017.

J.Crew” shall have the meaning set forth in the Recitals.

J.Crew Merger” shall have the meaning set forth in the Recitals.

J.Crew Shares” means the shares of capital stock of J.Crew.

Lender Members” means each Term Lender admitted to the Company as a Common Member with respect to the Common Units held by such Term Lender, and any transferee of any of their Common Units in a Transfer permitted hereunder.

LGP” shall have the meaning set forth in the Recitals.

LGP Member” means, collectively, LGP, and any transferee of any of their Units in a Transfer permitted hereunder.

Madewell LTV” shall have the meaning set forth in Exhibit B hereto.

Madewell Shares” shall have the meaning set forth in the Recitals.

Major Series C Holder” means a Holder of at least [20]% in interest of the outstanding Series C Units, excluding the Sponsor Members and their Affiliates.

Management Call Group” shall have the meaning set forth in Section 5.5(a).

Management Call Notice” shall have the meaning set forth in Section 5.5(d).

Management Call Option” shall have the meaning set forth in Section 5.5(a).

Management Closing” shall have the meaning set forth in Section 5.5(g).

Management Member” means each Person admitted to the Company as a Management Member with respect to Units held by such Person, and any other Person admitted as an additional or substitute Management Member; provided, however, that, in each case, such Person’s name shall be added from time to time to Exhibit A hereto as a Management Member; provided, further, that, each Management Member must be an individual that is a current or former employee, officer or director of, or provide consulting services to or for the benefit of, the Company or the Company Subsidiaries at the time of such Management Member’s admission to the Company.

Manager” means each individual appointed to the Board of Managers in the manner provided in this Agreement, in their capacities as managers of the Company.  A Manager is

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hereby designated as a “manager” of the Company within the meaning of Section 18‑101(10) of the Act.

Management Units” means, with respect to a Management Member (or a Person to whom any Management Units were originally issued at the request of such Management Member) or direct or indirect Permitted Transferee of a Management Member (or any such Person to whom any Management Units were originally issued at the request of such Management Member), all of the Common Units and Restricted Common Units held by such Management Member, Person or Permitted Transferee, as applicable.

Member Nonrecourse Debt” shall have the same meaning as the term “partner nonrecourse debt” set forth in Regulations Section 1.704-2(b)(4).

Member Nonrecourse Debt Minimum Gain” means an amount, with respect to each Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if the Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Regulations Section 1.704-2(i)(3).

Members” shall have the meaning set forth in the recitals to this Agreement, and includes any Person admitted as an additional or substitute member of the Company pursuant to the provisions of this Agreement, each in its capacity as a member of the Company.

Merger Sub 1” shall have the meaning set forth in the Recitals.

Merger Sub 2” shall have the meaning set forth in the Recitals.

Merger Agreement” shall have the meaning set forth in the Recitals.

Net Income” and “Net Loss” means, for each fiscal year or other period, an amount equal to the Company’s taxable income or loss for such fiscal year or period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss) with the following adjustments:

(a)

any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Net Income or Net Loss pursuant to this paragraph shall be added to such taxable income or loss;

(b)

any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-(1)(b)(2)(iv)(i), and not otherwise taken into account in computing Net Income or Net Loss pursuant to this paragraph, shall be subtracted from such taxable income or loss;

(c)

in the event the Gross Asset Value of any Company asset is adjusted pursuant to subdivisions (b) or (c) of the definition of “Gross Asset Value” herein, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Net Income or Net Loss;

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(d)

gain or loss resulting from any disposition of Company property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value;

(e)

in lieu of depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such fiscal year, computed in accordance with the definition of “Depreciation” herein;

(f)

to the extent an adjustment to the adjusted tax basis of any asset of the Company pursuant to Code Section 734(b) is required pursuant to Regulations Section 1.704‑1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Member’s interest in the Company or pursuant to Code Section 743(b) is required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) to be taken into account in determining Capital Accounts, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset) from the disposition of the asset and shall be taken into account for purposes of computing Net Income or Net Loss; and

(g)

any items which are specially allocated pursuant to the provisions of Section 7.3 shall not be taken into account in computing Net Income or Net Loss.

Nonrecourse Deductions” shall have the meaning set forth in Regulations Section 1.704‑2(b)(1) and 1.704‑2(c).

Nonrecourse Liability” shall have the meaning set forth in Regulations Section 1.752-1(a)(2).

Officers” shall have the meaning set forth in Section 6.2(a).

Original Issue Price” means the original issuance price of a Unit as reflected in the books and records of the Company.  For the avoidance of doubt, the original issue price of any Unit may be different depending on when such Units were issued.

Party” shall have the meaning set forth in the preamble to this Agreement.

Permitted Series A-1 Madewell LTV” shall have the meaning set forth in Exhibit B hereto.

Permitted Series C Madewell LTV” shall have the meaning set forth in Exhibit B hereto.

Permitted Transfer” shall have the meaning set forth in Section 5.1(b).

Permitted Transferee” means any person who shall have acquired and who shall hold Units pursuant to a Permitted Transfer.

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Person” means a natural person, corporation, partnership, limited liability company, trust, joint venture, governmental entity or other entity, association or group.

Proceeding” shall have the meaning set forth in Section 11.1.

Prohibited Asset” means (a) an equity interest in a "partnership," grantor trust or entity that is disregarded as separate from its owner (other than BD Holdco), in each case for U.S. federal, state or local income tax purposes, (b) a residual interest in a "REMIC" (as such term is defined in the Code), and (c) a "United States real property interest" (as such term is defined in the Code), including an equity interest in a United States real property holding corporation.

Regulations” means the Income Tax Regulations promulgated under the Code, as amended from time to time.

Replacement Arbitrator” shall have the meaning set forth in Section 12.3(d).

Restricted Common Units” means Common Units that are unvested as of the time of determination.

Retirement” means retirement from active employment with the Company or an Affiliate of the Company after age 65, or after age 55 and completion of at least 5 years of employment with the Company or an Affiliate of the Company, as applicable.

Securities Act” means the Securities Act of 1933, as amended.

Separation Transactions” shall have the meaning set forth in the Recitals.

Series A-1 Majority” shall have the meaning set forth in Section 6.1(c).

Series A Notes” means the Series A-1 Notes and the Series A-2 Notes.

Series A-1 Notes” shall have the meaning set forth in the Recitals.

Series A-2 Notes” shall have the meaning set forth in the Recitals.

Series B Member” means BD Holdco, for so long as it holds Series B Units.

Series B Preference” means, at any time of determination, an amount equal to (a) $[●], less (b) the aggregate amount of any prior distributions pursuant to Section 8.1(a)(i) in respect of the Series B Units (but not below zero).

Series B Units” shall have the meaning set forth in Section 3.4.

Series C Member” means each Person admitted to the Company as a Series C Member with respect to the Series C Units held by such Person or a transferee of any of the Series C Units in a Transfer permitted hereunder; provided, however, that, in each case, such Person’s name is added from time to time to Exhibit A hereto as a Series C Member.

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Series C Preferred Return Rate” means [●]%; provided, that, such rate shall be increased to [●]% on the third anniversary of the Closing, and incrementally increased by 0.05% each successive six-month period thereafter.

Series C Preference” means, at any time of determination, an amount per Series C Unit equal to (a) the Original Issue Price of such Series C Unit, less (b) the aggregate amount of any prior distributions pursuant to Section 8.1(a)(iii) in respect of such Series C Unit (but not below zero).

Series C Preferred Return” means, at any time of determination, an amount per Series C Unit equal to (a) the Series C Preferred Return Rate per annum, compounded daily, of the Series C Preference of such Series C Unit, less (b) the aggregate amount of any prior distributions pursuant to Section 8.1(a)(i) in respect of such Series C Unit (but not below zero).

Series C Units” shall have the meaning set forth in Section 3.4(a).

Series D Member” means BD Holdco, for so long as it holds Series D Units.

Series D Preference” means, at any time of determination, an amount equal to (a) $[●], less (b) the aggregate amount of any prior distributions pursuant to Section 8.1(a)(iv) in respect of the Series D Units (but not below zero).

Series D Units” shall have the meaning set forth in Section 3.4.

Sponsor Liquidity Right” shall have the meaning set forth in Section 5.3(b).

Sponsor Managers” shall have the meaning set forth in Section 6.1(b)(i).

Sponsor Members” means, collectively, the TPG Member and the LGP Member.

Sponsor Sale” shall have the meaning set forth in Section 5.4.

Subscription Agreement” shall have the meaning set forth in the Recitals.

Tag-Along Notice” shall have the meaning set forth in Section 5.2(d).

Tag-Along Response Notice” shall have the meaning set forth in Section 5.2(d).

Tag-Along Transferee” means a Person to which a Sponsor Member Transfers any of the Common Units held by such Sponsor Member in a Tag Sale.

Tag Sale” means a Transfer by any Sponsor Member of any Common Units held by such Sponsor Member which results in the Sponsor Members ceasing to own, in the aggregate, directly or indirectly, beneficially and of record, at least a majority of the aggregate Common Units

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Tax Distribution Member” shall mean each Member set forth on Exhibit C.3

Tax Matters Representative” shall have the meaning set forth in Section 7.6(a).

Temporary Investments” means (a) cash or cash equivalents, (b) marketable direct obligations issued or unconditionally guaranteed by the United States, or issued by any agency thereof, maturing within one year from the date of acquisition thereof, (c) money market instruments, commercial paper or other short term debt obligations having at the date of purchase by the Company the highest or second highest rating obtainable from either Standard & Poor’s Ratings Services or Moody’s Investors Services, Inc., or their respective successors, (d) interest bearing accounts at a registered broker-dealer, (e) money market mutual funds, (f) certificates of deposit maturing within one year from the date of acquisition thereof issued by commercial banks incorporated under the laws of the United States or any state thereof or the District of Columbia, each having at the date of acquisition by the Company combined capital and surplus of not less than $500 million, (g) overnight repurchase agreements with primary Federal Reserve Bank dealers collateralized by direct U.S. Government obligations or (h) pooled investment funds or accounts that invest only in investments other than securities or instruments of the type described in clauses (a) through (d) of this definition.

Term Lenders” shall have the meaning set forth in the Recitals.

Term Loan Agreement” shall have the meaning set forth in the Recitals.

Term Loan Exchange” shall have the meaning set forth in the Recitals.

TPG” shall have the meaning set forth in the Recitals.

TPG Member” means, collectively, TPG, and any transferee of any of their Units in a Transfer permitted hereunder.

Transaction Agreements” shall have the meaning set forth in the Recitals.

Transfer” means, with respect to any Units, (a) when used as a verb, to sell, assign, dispose of, exchange, pledge, encumber, hypothecate or otherwise transfer such Units or any participation, rights or interest therein, whether directly or indirectly, whether voluntary or involuntary, by operation of law or otherwise, or agree or commit to do any of the foregoing and (b) when used as a noun, a direct or indirect sale, assignment, disposition, exchange, pledge, encumbrance, hypothecation, or other transfer of such Units or any participation, rights or interest therein, in each case whether directly or indirectly, whether voluntary or involuntary, by operation of law or otherwise, or any agreement or commitment to do any of the foregoing.

Units” means each Series B Unit, Series C Unit, Series D Unit, Common Unit and any other class of membership interests in the Company and which may from time to time be outstanding.

 

3

Note to Draft:  Exhibit C to list the Members who hold Series A-1 Notes and Series A-2 Notes at Closing.

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Voting Majority” shall have the meaning set forth in Section 4.2.

Voting Members” shall have the meaning set forth in Section 4.2.

Section 1.2.Other Definitional Provisions.  Unless otherwise expressly provided, for purposes of this Agreement, the following rules of interpretation shall apply:

(a)Calculation of Time Period.  When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded.  If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day.

(b)Dollars.  Any reference in this Agreement to $ shall mean U.S. dollars.

(c)Exhibits/Schedules.  The Exhibits and Schedules to this Agreement are hereby incorporated and made a part hereof and are an integral part of this Agreement.  All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein.  Any capitalized terms used in any Schedule or Exhibit annexed hereto or referred to herein but not otherwise defined in such Schedule or Exhibit shall be defined as set forth in this Agreement.

(d)Gender and Number.  Any reference in this Agreement to gender shall include all genders, and words imparting the singular number only shall include the plural and vice versa.

(e)Headings.  The provision of a Table of Contents, the division of this Agreement into Articles, Sections and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement.  All references in this Agreement to any “Section” are to the corresponding Section of this Agreement unless otherwise specified.

(f)Herein.  The words such as “herein,” “hereinafter,” “hereof,” and “hereunder” refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires.

(g)Including.  The word “including” or any variation thereof means “including, without limitation” and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it.

(h)Joint Drafting.  The Parties have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement.

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Article II

ORGANIZATION, PURPOSE AND POWERS

Section 2.1.Name.  The name of the Company is [Chinos SPV] LLC.

Section 2.2.Certificate of Formation.  The Company was formed under the Act by the filing of the Certificate of Formation of the Company with the Secretary of State of the State of Delaware.

Section 2.3.Purpose.  The Company is formed for the purpose of, and the nature of the business to be conducted and promoted by the Company is, (a) holding and disposing of equity securities of Chinos and J.Crew (and derivatives thereof) and engaging in any and all lawful activities reasonably necessary, appropriate, proper, advisable, convenient, incidental or ancillary thereto, including exercising of the rights and powers provided for in this Agreement or any Transaction Agreement, for the furtherance of the purposes and business described herein and for the protection and benefit of the Company, and (b) issuing the Series A-1 Notes, Series A-2 Notes and any Equity Securities of the Company.

Section 2.4.Powers.  Subject to the limitations otherwise provided for herein, including those set forth in Section 7.5(f)(iv), the Company shall have the power to do any and all acts reasonably necessary, appropriate, proper, advisable, incidental or convenient to or for the furtherance of the purpose and business described herein and for the protection and benefit of the Company.

Section 2.5.Principal Office.  The principal place of business and office of the Company shall be located at, and the Company’s business shall be conducted from, such place or places as may hereafter be determined by the Board of Managers.

Section 2.6.Registered Office.  The address of the registered office of the Company in the State of Delaware is c/o Corporation Service Company, 251 Little Falls Drive, Wilmington, Delaware 19808.

Section 2.7.Registered Agent.  The name and address of the registered agent of the Company for service of process on the Company in the State of Delaware are Corporation Service Company, 251 Little Falls Drive, Wilmington, Delaware 19808.

Section 2.8.Qualification in Other Jurisdictions.  The Board of Managers shall authorize the Company to be registered or qualified under its own name or under an assumed or fictitious name pursuant to a foreign limited liability company statute or similar laws in any jurisdictions in which the Company owns property or transacts business if such registration or qualification is necessary to protect the limited liability of the Members or to permit the Company lawfully to own property or transact business in such jurisdiction.  Any Officer authorized in accordance with the foregoing sentence shall execute, deliver and file any certificates (and any amendments and/or restatements thereof) necessary for the Company to register or qualify as provided in the foregoing sentence.

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Section 2.9.Term.  The term of the Company commenced on the date of filing of the Certificate of Formation of the Company on [], 2020 in accordance with the Act and shall continue until dissolution of the Company in accordance with Article X of this Agreement.

Section 2.10.Limited Liability.  Except as otherwise expressly provided by the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and none of the Members, Managers, Officers, employees or agents of the Company (including a Person having more than one such capacity) shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of acting in such capacity.

Article III

CAPITALIZATION AND CAPITAL CONTRIBUTIONS

Section 3.1.Initial Capital Contributions.  The Members and their respective Capital Accounts and Units as of the date hereof (after giving effect to the transactions contemplated by the Transaction Agreements) are as set forth on Exhibit A attached hereto.

Section 3.2.Additional Contributions.  No Member is required, under any circumstances, to make any additional Capital Contributions to the Company.  The provisions of this Agreement, including this Section 3.2, are intended to benefit the Members and, to the fullest extent permitted by law, shall not be construed as conferring any benefit upon any creditor of the Company (and no such creditor of the Company shall be a third-party beneficiary of this Agreement) and the Members shall not have any duty or obligation to any creditor of the Company to make any contribution to the Company or to issue any call for capital pursuant to this Agreement.

Section 3.3.Capital Accounts.  With respect to each Member, a capital account shall be maintained on the books of the Company in accordance with Regulations Section 1.704-1(b)(2)(iv) (a “Capital Account”).  Each Capital Account shall be adjusted to reflect such Member’s share of allocations and distributions as provided in Articles VII, VIII, and X of this Agreement, and any additional Capital Contributions to the Company or withdrawals of capital from the Company, including, in such adjustments, the consequences of liabilities assumed, or which are secured by property contributed or distributed, and taking into account Code Section 752(c) and any other applicable provision of the Code and related Regulations.  Such Capital Account maintenance provisions, together with the other provisions of this Agreement are intended to and shall further be interpreted and adjusted to comply with the Regulations under Code Section 704(b), and in particular with Regulations Section 1.704-1(b), as determined in good faith by the Board of Managers.  Members will have no obligation to restore any negative balance in their respective Capital Account at any time during the term of the Company or upon dissolution and liquidation.  Except as otherwise provided in the Regulations, a transferee of all or a portion of a Member’s Units shall succeed to the Capital Account of the transferor to the extent allocable to the transferred Units.

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Section 3.4.Units.

(a)Units Generally.  Each Member’s limited liability company interests in the Company shall be represented by Units.  The total number of Units that the Company shall have authority to issue is [] Units, classified as:

(i)[●] Series B Units (the “Series B Units”);

(ii)[●] Series C Units (the “Series C Units”);

(iii)[●] Series D Units (the “Series D Units”); and

(iv)[] Common Units (“Common Units”).

The number of Units issued to each Member in respect of such Member’s Capital Account on the date hereof (after giving effect to the transactions contemplated by the Subscription Agreements, the Contribution Agreement and the Exchange Agreement) is set forth opposite their respective names on Exhibit A attached hereto.  The Units do not need to be certificated.  

(b)Additional Units.  Subject to Section 4.9(b)(i), the Board of Managers may (i) increase the total number of Units that the Company shall have authority to issue, (ii) authorize, create and issue Units of different classes (which may be existing classes or new classes), (iii) admit Persons as Members in exchange for such contributions to capital or such other consideration (including past or future services), and (iv) amend this Agreement to create new classes of Units or reflect any rights of such additional Members, in each case, on such terms and conditions as the Board of Managers deems appropriate.  Promptly following the issuance of Units the Board of Managers shall cause the books and records of the Company and Exhibit A attached hereto to be amended, which shall not constitute an amendment of this Agreement, to reflect the number and classes of Units issued and, in the case of Units issued other than in connection with the performance of services for the Company, the capital contribution per Unit.  Upon issuance of the Units as provided in this Agreement, the Units shall be deemed to be duly authorized, validly issued, fully paid and nonassessable.

Section 3.5.Certain Payments.  Under the Act, a member of a limited liability company may, under certain circumstances, be required to return amounts previously distributed to such member.  It is the intent of the Members that no distribution to any Member pursuant to Article VIII or Article X shall be deemed to constitute money or other property paid or distributed in violation of the Act, and the Members agree that each such distribution shall constitute a compromise of the Members within the meaning of Section 18‑502(b) of the Act, and, to the fullest extent permitted by law, the Member receiving such distribution shall not be required to return to any Person any such money or property, except as otherwise expressly set forth herein.  If, however, any court of competent jurisdiction holds that, notwithstanding the provisions of this Agreement, any Member is obligated to make any such payment, such obligation shall be the obligation of such Member and not of the other Members, and, when funded, shall constitute a Capital Contribution to the Company by such Member.

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Article IV

MEMBERS; VOTING; approval rights

Section 4.1.Members.  The name and the mailing address of each Member is set forth below his, her or its name on Exhibit A attached hereto, which Exhibit A shall be amended from time to time in accordance with this Agreement to reflect the addition, substitution, withdrawal or resignation of any Member as permitted under the terms of this Agreement.

Section 4.2.Consent.  Unless otherwise expressly provided herein, the consent of the Members for purposes of this Agreement may be obtained:

(a)at any meeting of the Common Members (collectively, the “Voting Members”); provided, that, Holders of a majority in interest of the outstanding Common Units (collectively, a “Voting Majority”) are present at such meeting and that a Voting Majority votes in favor of the matter being voted upon, or

(b)by the written consent of a Voting Majority; provided, that, the Company shall provide prompt written notice of any action taken by written consent of a Voting Majority to all Voting Members that did not execute such consent.

Section 4.3.Meetings.  Any matter requiring the approval or consent of the Voting Members pursuant to this Agreement may be considered at a meeting of the Voting Members held not less than 24 hours after notification thereof shall have been given by the Board of Managers to the Voting Members.  Such notification may be given by the Board of Managers, in its discretion, at any time.  Any such notification shall state briefly the purpose, time and place of the meeting.  All such meetings shall be held within or outside the State of the Company’s principal place of business at such reasonable place as the Board of Managers shall designate and during normal business hours.  To the fullest extent permitted by applicable law, any meeting may be held by conference telephone or similar communication equipment so long as all Voting Members participating in the meeting can hear one another, and all Voting Members participating by telephone or similar communication equipment shall be deemed to be present in person at the meeting.  Any Voting Member may waive such notice by executing a written waiver.  Attendance at a meeting of Voting Members is deemed to be a waiver of notice.  A Voting Member may act in person or by written proxy at any meeting of the Voting Members.

Section 4.4.Action by Members Without a Meeting.  Any action required or permitted to be taken at a meeting of Members may be taken without a meeting (or notice) if the action is evidenced by one or more written consents describing the action to be taken by the Voting Members that are signed by a Voting Majority.  Action taken under this Section 4.4 is effective when the requisite number of Voting Members required to approve such action have signed the consent, unless the consent specifies a different effective date.  The record date for determining the Voting Members entitled to take action without a meeting is the date the first Voting Member signs and delivers to the Company a written consent.  An electronic mail or similar transmission by a Voting Member, or other electronic reproduction of a writing signed by a Voting Member, shall be regarded as signed by the Voting Member for purposes of this Section 4.4.

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Section 4.5.Admission of Additional Members.  Subject to Article V and Section 7.5(d)(ii), one or more additional or substitute members of the Company may be admitted to the Company as a Member with the approval of the Board of Managers.  Subject to the foregoing sentence, any additional or substitute member shall be admitted to the Company as a Member upon his, her or its execution of a counterpart signature page to this Agreement.  If a Member Transfers all of his, her or its limited liability company interest in the Company pursuant to the terms of this Agreement, such admission shall be deemed effective immediately prior to such Transfer and, immediately following such admission, the transferor Member shall cease to be a Member.

Section 4.6.Voting Rights.  Each Voting Member shall have the right to one vote per full Common Unit, as applicable, held by him, her or it.

Section 4.7.No Management or Dissent Rights.  Except as set forth herein or otherwise required by law, no Member shall have any right to take part in the management or operation of the Company other than through the Managers appointed by the Members having the right to designate Managers to the Board of Managers.  No Member shall, without the prior written approval of the Board of Managers, take any action on behalf of or in the name of the Company, or enter into any commitment or obligation binding upon the Company, except for actions expressly authorized by the terms of this Agreement.  Members shall not be entitled to any rights to have dissenters rights to compensation or seek appraisal with respect to any transaction, including the merger or consolidation of the Company with any Person.

Section 4.8.Bankruptcy of a Member.  The occurrence of any event set forth in Section 18-304 of the Act with respect to a Member shall not cause a dissolution of the Company, but the rights of such Member to receive distributions shall, on the happening of such an event, devolve on its successor, administrator or other legal representative for the purpose of settling its estate or administering its property, and the Company shall continue as a limited liability company.  The successor or estate of any bankrupt Member described in the preceding sentence shall be liable for all the obligations of such Member.

Section 4.9.Member Approval Rights.

(a)Affiliate Transactions.  Notwithstanding anything in this Agreement to the contrary and subject to Section 6.3, the Company shall not enter into or become a party to any transaction with any Sponsor Member (or any of their respective Affiliates), or amend, modify, or waive any requirements under existing affiliate arrangements or agreements with any Sponsor Member (or any of their respective Affiliates) without the prior written consent of the Holders of the majority in interest of the outstanding (i) Series C Units, excluding all Series C Units held by a Sponsor Member or any of its respective Affiliates, and (ii) Common Units, excluding all Common Units held by a Sponsor Member or any of its respective Affiliates, each voting as a separate class, except for any transaction entered into in connection with the exercise of rights under this Agreement, any Transaction Agreement or any other agreement, arrangement or transaction existing as of the date of this Agreement.

(b)Fundamental Matters.  Notwithstanding anything in this Agreement to the contrary, the following actions by the Company shall require the consent of the Holders of

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66⅔% in interest of the outstanding (x) Common Units, excluding all Common Units held by a Sponsor Member or any of its respective Affiliates, and (y) Series C Units, excluding all Series C Units held by a Sponsor Member or any of its respective Affiliates, each voting as a separate class:

(i)except for any distributions made pursuant to Section 4.10 or Section 5.5, making any distributions to Members in a manner different than as set forth in Article VIII; and

(ii)purchasing or redeeming any Units other than pro rata purchases or redemptions so long as no Units ranking senior to such Units being repurchased or redeemed are outstanding.

(c)Series A-1 Indenture Consents.  For so long as any of the Series C Preferences with respect to any of the Series C Units are greater than zero, and notwithstanding anything in this Agreement to the contrary, the Company shall not (i) take (or permit to be taken), nor shall it permit any of its Restricted Subsidiaries (as defined in the Series A-1 Indenture) to take (or permit to be taken) any action that would be prohibited by Article [●] of the Series A-1 Indenture as in effect as of the Effective Date, or (ii) effect any amendment, waiver, consent, modification or supplement with respect to such Article [●] of the Series A-1 Indenture as in effect as of the Effective Date, in each case, without the prior written consent of a majority in interest, as of any date of determination, of the outstanding Series C Units, excluding, for purposes of such calculation, all Series C Units held as of such date of determination by a Sponsor Member or any Affiliate thereof (the “Series C Majority”); provided, that, for purposes of this Section 4.9(c), and for so long as any of the Series C Preferences with respect to any of the Series C Units are greater than zero, such prohibitions shall remain in effect without regard to whether or not any obligations under the Series A-1 Indenture remain unpaid or unsatisfied and whether or not the Series A-1 Indenture is amended, modified or terminated subsequent to the Effective Date, other than any amendment, waiver, consent, modification or supplement effected in compliance with this this Section 4.9(c).

(d)Priority Issuances.  Notwithstanding anything in this Agreement to the contrary, the Company shall not issue any Equity Securities of the Company ranking pari passu or senior to:

(i)the Series B Units without the consent of the Series B Member;

(ii)the Series C Units without the consent of the Holders of 66⅔% in interest of the outstanding Series C Units;

(iii)the Series D Units without the consent of the Series D Member; or

(iv)the Common without the consent of the Holders of 66⅔% in interest of the outstanding Common Units,

in each case, voting as a separate class.

Section 4.10.Member Withdrawals.

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(a)Required Withdrawal.  If, at any time that the Company is, in the reasonable judgment of the Board of Managers based on the advice of counsel, an “investment company” under the Investment Company Act, a Member may be required to withdraw from the Company at the direction of the Board of Managers, in whole or in part, based upon advice of duly qualified counsel reasonably selected by the Board of Managers, if in the reasonable judgment of the Board of Managers based on the advice of such counsel:

(i)such Member is determined at any time not to be a “qualified institutional buyer” (as defined under Rule 144A under the Securities Act) that is not a broker-dealer which owns and invests on a discretionary basis less than U.S.$25,000,000 in securities of issuers that are not affiliated persons of the dealer and is not a plan referred to in paragraph (a)(1)(i)(D) or (a)(1)(i)(E) of Rule 144A under the Securities Act or a trust fund referred to in paragraph (a)(1)(i)(F) of Rule 144A under the Securities Act that holds the assets of such a plan, if investment decisions with respect to the plan are made by beneficiaries of the plan; or

(ii)such Member is determined at any time not to be a “qualified purchaser” for purposes of Section 3(c)(7) of the U.S. Investment Company Act of 1940, as amended (the “Investment Company Act”), or an entity owned exclusively by “qualified purchasers.

(b)Entitlement.  Upon effectiveness of such withdrawal, the withdrawing Member shall cease to be a Member to the extent of such withdrawal.  Unless such withdrawing Member becomes a Member in violation of Section 5.1(a) or has violated any representations made by such withdrawing Member to the Company, the withdrawing Member shall be entitled to receive within 90 days after the date of such withdrawal an amount equal to the amount such Member would be entitled to receive under Section 10.2 if the Company had been liquated for cash on such date (with the Company’s assets being deemed to be sold at their fair market values, as determined in good faith by the Board of Managers as of such date).

(c)Consideration.  Any distribution or payment to a withdrawing Member pursuant to Section 4.10(b) may, in the sole discretion of the Board of Managers, be made in cash, or in the form of a Distribution-in-Kind of Madewell Shares or J.Crew Shares, or any combination thereof.

Article V

TRANSFER OF COMPANY INTERESTS

Section 5.1.Prohibited and Permitted Transfers.

(a)Prohibited Transfers.  No Member shall Transfer all or any Units (or any beneficial interests therein) if such Transfer would:

(i)result in a Transfer to any Person (1) who is not a “qualified institutional buyer” (as defined under Rule 144A under the Securities Act) that is not a broker-dealer which owns and invests on a discretionary basis less than U.S.$25,000,000 in securities of issuers that are not affiliated persons of the dealer and is not a plan referred to in paragraph (a)(1)(i)(D) or (a)(1)(i)(E) of Rule 144A under the Securities Act or a trust fund referred to in

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paragraph (a)(1)(i)(F) of Rule 144A under the Securities Act that holds the assets of such a plan, if investment decisions with respect to the plan are made by beneficiaries of the plan, (2) who is not a “qualified purchaser” for purposes of Section 3(c)(7) of the Investment Company Act, an entity owned exclusively by “qualified purchasers”, or (3) whose ownership of Units could result in the Company being an “investment company” under the Investment Company Act;

(ii)result in a Transfer to any Person who lacks the requisite legal power or capacity to own such interest; or

(iii)result in a Transfer to an Adverse Person;

(iv)subject the Company to the reporting requirements of the Securities Exchange Act of 1934, as amended, or is prohibited by the Securities Act or any comparable provision under state or provincial law;

(v)cause the Company to lose its status as a partnership for federal income tax purposes or cause the Company to be classified as a “publicly traded partnership” within the meaning of Code Section 7704 and the Regulations promulgated thereunder;

(vi)cause the Managers (or other persons responsible for the investment and operating of the Company’s assets) to become a fiduciary with respect to any existing or contemplated Member, pursuant to ERISA or the applicable provisions of any similar law;

(vii)result in a violation of any then applicable federal or state securities laws or rules and regulations, any state securities commission or any other governmental authority with jurisdiction over such Transfer; or

(viii)result in the termination of the existence or qualification of the Company under the laws of the jurisdiction of its formation.

(b)Permitted Transfers.  Subject to Section 5.1(a) and Section 5.1(e), any Member may Transfer all or any of his, her or its Units to any other Person (each a “Permitted Transfer”) and such transferee shall receive and hold such Units subject to the provisions of this Agreement in the same manner as the transferor: provided, that,

(i)any Transfer of Units shall, to the fullest extent permitted by law, be null and void unless the transferee executes and delivers to the Company (A) the representations and warranties approved and required by the Board of Managers in connection with such Transfer, and (B) such other documents or instruments as the Board determines are necessary or appropriate to effect such Person’s admission as a Member;

(ii)no such Transfer shall be effective until the Holders of beneficial interests of such transferee shall have delivered to the Company a written acknowledgement and agreement in form and substance reasonably satisfactory to the Company that they will not Transfer any such beneficial interests or permit such transferee to issue any such beneficial interests except to the extent such Transfer or issuance (treating such issuance as a Transfer by such Holders) would be permitted under Section 5.1(a) if the beneficial interests were Units; and

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(iii)if requested by the Board of Managers, the transferring Member shall pay the Company’s reasonable out of pocket expenses incurred in connection with such Transfer, including the fees and expenses of counsel.

(c)Transfers in Violation of Agreement.  Any Transfer or attempted Transfer in violation of Section 5.1(a) shall, to the fullest extent permitted by law, be null and void and of no force and effect whatsoever, and the Company shall not record such purported Transfer on its books or treat any purported transferee as the owner of any Units subject to such purported Transfer.

(d)Registration and Transfer of Units.  By acceptance of the Transfer of any Units in compliance with Section 5.1(b), each transferee of a Unit (including any nominee holder or an agent or representative acquiring such Unit for the account of another Person):

(i)shall be admitted to the Company as a Member with respect to the Units so transferred to such Person when any such Transfer or admission is reflected in the books and records of the Company;

(ii)shall become the record holder of the Units so Transferred;

(iii)shall become bound by the terms of this Agreement upon admission to the Company as a Member pursuant to clause (b) above, with or without execution of this Agreement by such Person;

(iv)represents that the transferee has the capacity, power and authority to enter into this Agreement and such Transfer is in compliance with Section 5.1(a); and

(v)makes the consents, acknowledgements and waivers contained in this Agreement, all with or without execution of this Agreement by such Person.

(e)Additional Restrictions.  Notwithstanding anything to the contrary in this Agreement, (i) subject to Section 5.2, no Sponsor Member or Affiliate thereof may Transfer Common Units (other than to another Affiliate of such Sponsor Member) if such Transfer would result in the Sponsor Members ceasing to own, in the aggregate, directly or indirectly, beneficially and of record, at least a majority of the aggregate Common Units, and (ii) the Series B Member and the Series D Member may not Transfer any Series B Units or Series D Units, respectively, to any other Person, other than any Transfer or other exercise of remedies in respect of the Series B Units or Series D Units by the IPCo Noteholders or the trustee of any IPCo Notes in accordance with the terms of the applicable indenture.

Section 5.2.Tag-Along Rights.

(a)Tag Sale.

(i)If, at any time, a Sponsor Member or its Affiliate, directly or indirectly proposes to Transfer (a “Transferring Member”), to any Person or Persons (other than an Affiliate or Affiliates of such Transferring Member), any of the Common Units held by such Transferring Member, then, subject to the other provisions of this Section 5.2, each other

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Member holding Common Units shall be entitled to Transfer a percentage of the Common Units held by such Member equal to the percentage of Common Units owned by the Transferring Member that the Transferring Member is so Transferring in such Tag Sale; provided, however, that, each other Member holding Common Units may elect to Transfer in any such Tag Sale, a lesser number of Units than such other Member holding Common Units is entitled to Transfer pursuant to this Section 5.2.

(ii)Notwithstanding the foregoing, with respect to any Tag Sale (and after giving effect to Section 5.2(a)(i)), if the number of Common Units required to be Transferred pursuant to this Section 5.2 exceeds the number of Common Units that the Tag-Along Transferee is willing to purchase pursuant to such Tag Sale, then the number of Units each Tagging Member is permitted to Transfer pursuant to this Section 5.2 shall be reduced pro rata until the aggregate number of Common Units required to be sold does not exceed the number of Common Units such Tag-Along Transferee is willing to purchase pursuant to such Tag Sale.  Subject to this Section 5.2, with respect to any Tag Sale, each Tagging Member shall Transfer such Common Units on the same terms and conditions applicable to, and, taking into account any adjustment required as a result of distributions made pursuant to Section 8.3, for the same type of consideration payable to, the Transferring Member.

(b)Terms of Sale.  In connection with any Tag Sale, each Tagging Member shall execute such documents, and make such representations, warranties, covenants and indemnities, as are executed and made by the Transferring Member with respect to the Company and shall take all necessary or desirable actions in connection with the consummation of such Tag Sale as reasonably requested by the Transferring Member.  Any indemnification or other obligations assumed in connection with any Tag Sale shall be several and not joint and shall be allocated among the Transferring Member and Tagging Members in the same proportion as the aggregate consideration payable in such Tag Sale is allocated pursuant to Section 5.2(a), other than with respect to representations made individually by the Transferring Member and each Tagging Member (including representations as to title or authority or representations qualified by the individual knowledge of the party making such representation), for which such Member shall be solely liable.  Notwithstanding the foregoing, no Member will be required to (i) indemnify the buyer or any other Person in connection with any Transfer of such Member’s Common Units under this Section 5.2 for an amount in excess of the proceeds such Member receives in such Transfer for its Common Units, or (ii) enter into any non-competition, non-interference and/or non-solicitation agreements or any other restrictive covenants in connection with such Tag Sale.

(c)Rejection of Tagged Units.  Notwithstanding anything contained in this Section 5.2 to the contrary, if the Tag-Along Transferee is unwilling to purchase any of the Common Units that a Tagging Member has elected to Transfer (in accordance with Section 5.2(a) and Section 5.2(d)) in connection with a Tag Sale, the Transferring Member may not consummate such Tag Sale unless the Transferring Member purchases from such Tagging Member such Tagging Member’s Common Units participating in such Tag Sale for consideration equal to the consideration such Tagging Member would have been entitled to pursuant to Section 5.2(a), either prior to or in connection with the closing of such Tag Sale, in which case such Tagging Member must transfer such Common Units to the Transferring Member pursuant to purchase documentation with terms substantially similar to those such Tagging Member would have been subject to if such Tagging Member had transferred such

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Tagging Member’s Common Units directly to the Tag-Along Transferee in connection with the Tag Sale.

(d)Tag-Along Notice.  In the event of any Tag Sale, the Transferring Member shall promptly give to the Company written notice of such Tag Sale (the “Tag-Along Notice”), and the Company shall then promptly give to each of the other Members holding Common Units, as appropriate, the Tag-Along Notice, and from the date of such Member’s receipt of the Tag-Along Notice, each such Member shall have the right, exercisable by written notice (the “Tag-Along Response Notice”) within ten Business Days following such Member’s receipt of the Tag-Along Notice, to notify the Transferring Member of such Member’s waiver or election to participate in such Tag Sale and the maximum number of Common Units such Member is willing to transfer or sell in such Tag Sale, as appropriate.  If, pursuant to the preceding sentence, a Member holding Common Units elects to participate in a Tag Sale (each such electing Member, a “Tagging Member”), the Transferring Member shall include in the Tag Sale the appropriate number of Common Units held by such Tagging Member in accordance with this Section 5.2.  With respect to any Tag Sale, if the terms and conditions set forth in the Tag-Along Notice are thereafter amended in any material respect, the Transferring Member shall give written notice (an “Amended Tag-Along Notice”) of the amended terms and conditions of such Tag Sale to each Tagging Member and in such event, each Tagging Member shall have five Business Days following receipt of such notice to notify the Transferring Member of its election to (i) continue to participate in such Tag Sale upon the amended terms and conditions, or (ii) not participate in such Tag Sale.  If any applicable Member holding Common Units fails to elect to participate in any Tag Sale following receipt of a Tag-Along Notice or an Amended Tag-Along Notice within the applicable time periods specified in this Section 5.2, such Member shall be deemed to have elected not to participate in, and shall have waived any right to participate in, such Tag Sale.  With respect to any Tag Sale, each Tag-Along Notice and Amended Tag-Along Notice shall set forth (w) the name and address of the Tag-Along Transferee, (x) the proposed amount and form of consideration and terms and conditions of payment offered by the Tag-Along Transferee, (y) all other material terms of the proposed Tag Sale, including the expected closing date thereof, and (z) in the case of the Tag-Along Notice, an offer to the other Members holding Common Units to participate in such Tag Sale in accordance with this Section 5.2.

Section 5.3.Liquidity Right.

(a)Series A Liquidity Rights.  For such time as the Default Manager is serving in such capacity, the Default Manager shall have the right (the “Series A Liquidity Right”) to cause the Company, on one or more occasions, to (i) dispose of Madewell Shares in accordance with this Section 5.3, (ii) effect a payment-in-kind of Madewell shares to redeem, prepay or otherwise pay amounts owing to holders of the Series A-1 Notes in accordance with the terms of the Series A-1 Indenture, or (iii) effect any combination of the transactions described in clauses (i) and (ii).  For the avoidance of doubt, the Default Manager shall have the right, in its sole discretion, to determine whether to dispose of or effect a payment-in-kind of the Madewell Shares, or any combination of disposal and payment-in-kind of Madewell Shares, pursuant to this Section 5.3(a) in a manner that maximizes the value of such shares for the benefit of the holder of the Series A-1 Notes.

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(b)Sponsor Liquidity Right.  As of any time after 48 months from the date hereof, if the Madewell LTV exceeds the Permitted Series C Madewell LTV, then, so long as the TPG Member holds any Series C Units, the Sponsor Members shall have the right (the “Sponsor Liquidity Right”) to cause the Company, on one or more occasions, to (i) dispose of Madewell Shares in accordance with this Section 5.3, (ii) effect a Distribution-in-Kind to the Members of Madewell Shares in accordance with Section 8.1 and Section 8.2, or (iii) effect any combination of the transactions described in clauses (i) and (ii).  Upon an exercise of a Sponsor Liquidity Right, each of the individuals managing the disposition or Distribution-in-Kind of Madewell Shares on behalf of the Sponsor Members pursuant to the Sponsor Liquidity Right shall be a senior investment professional affiliated with the Sponsor Members.  For the avoidance of doubt, in the event that the Sponsor Managers wish to exercise a Sponsor Liquidity Right during a time period in which the Default Manager has the right to exercise a Series A Liquidity Right, the Sponsor Members shall have the right to exercise such Sponsor Liquidity Right only if the holders of Series A-1 Notes have not sought, or caused to be effectuated, a sale, payment or redemption within the prior rolling 90 day period.

(c)Notice; Actions.  Upon notice by the Default Manager to the other Managers, the Company, the Sponsor Members and the Lender Members of the exercise of the Series A Liquidity Right or Sponsor Liquidity Right, as applicable, the Company shall use reasonable efforts to effect such disposition, payment or distribution as promptly as reasonably practicable.  The Managers shall, and shall require the Company to, take all actions reasonably requested by the Default Manager or Sponsor Liquidity Right, as applicable in connection with effecting a disposal, payment or Distribution-in-Kind pursuant to the exercise of a Series A Liquidity Right or Sponsor Liquidity Right, as applicable.

(d)Limitations.  Notwithstanding the foregoing,

(i)the consideration payable in connection with any disposal of Madewell Shares by the Company pursuant to this Section 5.3 shall be solely for cash consideration; and

(ii)the Company shall have no obligation to dispose of or distribute more than 20% of the total issued and outstanding Madewell Shares (which total, for the avoidance of doubt, shall include Madewell Shares not held by the Company) pursuant to this Section 5.3 in any rolling 90 day period.

Section 5.4.Sponsor Sales.  Each of the Sponsor Members shall not dispose of any Madewell Shares directly or indirectly held by such Sponsor Member (a “Sponsor Sale”) unless and until such time as the Company has disposed of all Madewell Shares then held by it, except for any transaction entered into (a) by the Company for the disposal of Madewell Shares pursuant to this Agreement, or (b) by a Sponsor Member for the disposal of Madewell Shares Distributed-in-Kind to such Sponsor Member.

Section 5.5.Call Rights and Forfeiture.

(a)Call Option.  Except as the Board of Managers may otherwise agree in writing with any Management Member with respect to Management Units held by such

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Management Member (or any Person to whom any Management Units were originally issued at the request of such Management Member) or originally issued to such Management Member (or other Person at the request of such Management Member) but held by one or more direct or indirect Permitted Transferees (collectively, the “Management Call Group”), upon any termination of service by the Company Subsidiaries of any Management Member (whether such termination is by the Company, by such Management Member or otherwise), the Company will have the right to purchase for cash all or any portion of the Management Units held by the Management Call Group on the terms set forth in this Section 5.5 (the “Management Call Option”); provided, that, in lieu of the Company purchasing such Management Units from the Management Member for cash, the purchase may be structured as a redemption by the Company of the Management Units in exchange for Madewell Shares or J.Crew Shares, or any combination thereof, and a repurchase by Madewell or J.Crew, as applicable, of such Madewell Shares or J.Crew Shares, as applicable, in cash on the same basis as otherwise provided in this Section 5.5.

(b)Termination other than for Cause.  If a Management Member’s service is terminated for any reason other than for Cause (including as a result of death, Disability or Retirement), the Board of Managers will have the right, on one or more occasions, at any time up to and including the date that is 90 days following the later to occur of (i) the termination of such Management Member’s service, and (ii) the date that is six months plus one day following the vesting date of the Management Units, to cause the Company to purchase from such Management Call Group, and upon the exercise of such call right each member of such Management Call Group shall sell to the Company all (or a portion, as designated by the Board of Managers) of the Management Units held by such member of the Management Call Group as of the date as of which such call right is exercised at a purchase price equal to the fair market value of the Management Units being sold, as determined in good faith by the Board of Managers in its sole and absolute discretion as of the date such Management Call Notice is delivered, which date shall be no earlier than the date that is six months plus one day following the vesting date of any such Management Units that are to be purchased by the Company pursuant to such exercised call right and shall be no later than the last date on which the Company is permitted to issue a Management Call Notice in respect of such Management Units pursuant to this Section 5.5(b).

(c)Termination for Cause.  If a Management Member’s service is terminated for Cause (or it is determined that such Management Member’s service could have been terminated for Cause at the time such Management Member resigned or his or her service was otherwise terminated), the Board of Managers will have the right, on one or more occasions, at any time up to and including the date that is 180 days following the later to occur of (i) the termination of such Management Member’s service, and (ii) the date that is six months plus one day following the vesting date of the Management Units, to cause the Company to purchase from such Management Member’s Management Call Group, and upon the exercise of such call right, each member of such Management Call Group shall sell to the Company all (or a portion, as designated by the Board of Managers) of the Management Units held by such Management Member’s Management Call Group as of the date as of which such call right is exercised at a purchase price (the “Bad Leaver Price”) equal to the lesser of (x) the fair market value of the Management Units being sold, as determined in good faith by the Board of Managers in its sole and absolute discretion as of the date such Management Call Notice is delivered, which date

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shall be no earlier than the date that is six months plus one day following the vesting date of any such Management Units that are to be purchased by the Company pursuant to such exercised call right and shall be no later than the last date on which the Company is permitted to issue a Management Call Notice in respect of such Management Units pursuant to this Section 5.5(c), and (y) the Cost of such Management Units.  If the Cost of the Management Units to be purchased by the Company pursuant to this Section 5.5(c) is $0, such Management Units shall be forfeited, terminated and cancelled effective as of the date upon which such Management Member’s service was terminated for no consideration without any further action on behalf of the Company or the Management Member.

(d)Violation of Non-Competition Obligations.  If a Management Member’s service is terminated for any reason or if a Management Member resigns his or her service for any reason and, within 12 months of such termination or resignation, such Management Member Competes, the Board of Managers will have the right, on one or more occasions, at any time up to and including the date that is 90 days following the later to occur of (i) the first date on which the Company receives notice that such Management Member Competed, and (ii) the date that is six months plus one day following the vesting date of the Management Units, to cause the Company to purchase from such Management Call Group, and upon the exercise of such call right each member of such Management Call Group shall sell to the Company all (or a portion, as designated by the Board of Managers) of the Management Units held by such member of the Management Call Group as of the date as of which such call right is exercised at a price equal to the Bad Leaver Price.  If the Cost of the Management Units to be purchased by the Company pursuant to this Section 5.5(d) is $0, such Management Units shall be forfeited, terminated and cancelled effective as of the date upon which such Management Member’s service was terminated for no consideration without any further action on behalf of the Company or the Management Member.

(e)Notices.  Any Management Call Option may be exercised by delivery of written notice thereof (the “Management Call Notice”) to all members of the applicable Management Call Group from whom the Company has elected to purchase Management Units no later than the end of the applicable 90 or 180 day period specified in Section 5.5(b), Section 5.5(c) or Section 5.5(d), as applicable.  The Management Call Notice shall state that the Board of Managers has elected and has caused the Company to exercise the Management Call Option, the number of Management Units with respect to which the Management Call Option is being exercised, and the purchase price of such Management Units.

(f)Vesting.  The rights of the Board of Managers to cause the Company to purchase Management Units under this Section 5.5 are in addition to, and do not modify, any vesting requirement that may be included in the terms of any such Management Units.

(g)Closing.  The closing of any purchase and sale of Management Units pursuant to this Section 5.5 (a “Management Closing”) shall occur on the following terms:

(i)A Management Closing shall occur on such date as the Board of Managers shall specify, which date shall not be later than 90 days after the fiscal quarter-end immediately following the date of delivery of the Management Call Notice (provided, that, such time may be extended as necessary to comply with applicable antitrust laws or other applicable

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legal requirements) at the principal office of the Company, or at such other time and location as the parties to such purchase and sale may mutually determine in writing.

(ii)At a Management Closing, the holders of Management Units to be sold shall Transfer the Management Units to the Company, and the Company shall pay to such holder by wire transfer of immediately available funds the purchase price of the Management Units (calculated pursuant to Section 5.5(b), Section 5.5(c) or Section 5.5(d), as applicable) being purchased by the Company.  The Transfer of Management Units and the acceptance of the purchase price for such Management Units by a Person selling such Management Units pursuant to any Management Call Option will be deemed a representation and warranty by such Person that (A) such Person has full right, title and interest in and to such Management Units, (B) such Person has all necessary power and authority and has taken all necessary action to sell such Management Units as contemplated, and (C) such Management Units are free and clear of any and all liens or encumbrances.

(iii)Any payment to a holder of Management Units pursuant to this Section 5.5 may, in the sole discretion of the Board of Managers, be made in cash, or in the form of a Distribution-in-Kind of Madewell Shares or J.Crew Shares, or any combination thereof.

(iv)In the event that the Company has exercised its call right pursuant to this Section 5.5 with respect to Management Units held by (A) a Management Member who (1) Competes within 12 months of such Management Member’s termination of employment or resignation as described in Section 5.5(c), or (2) is determined to have been eligible for termination for Cause, in each case following the Company’s exercise of such call right, or (B) one or more members of such Management Member’s Management Call Group that held Management Units, such Management Member or such members of such Management Member’s Management Call Group shall to deliver to the Company, within five days following notice from the Company that such amount is due, an amount equal to the product of (1) the number of Management Units purchased in connection with the exercise of the call right, multiplied by (2) the excess, if any, of the purchase price paid by the Company for such Management Units over the Bad Leaver Price for such Management Units.

Article VI

MANAGEMENT AND OPERATION OF THE COMPANY

Section 6.1.Board of Managers.

(a)Management.  In accordance with Section 18-402 of the Act, management of the Company shall be vested in the Board of Managers consisting of one or more Managers appointed in the manner provided in this Agreement.  A Manager is not required to hold Units in order to serve as a Manager.  The Board of Managers shall have the power to do any and all lawful acts necessary or convenient to or for the furtherance of the purposes of the Company set forth in this Agreement, including causing the Company to sell, exchange or otherwise dispose of any or all of the assets of the Company in a single transaction or a series of related transactions and the giving or withholding of any consent or the exercising or not exercising of any rights held by the Company with respect to any Company Subsidiary.

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(b)Number, Appointment.  The Board of Managers shall consist of three Managers, except that at any time that a Default Manager has been appointed pursuant to Section 6.1(c) the Board of Managers shall consist of four Managers.  Appointments made pursuant to this Section 6.1 shall be evidenced by an instrument in writing signed by the party or parties entitled to make such appointments, and delivered to the Company.  Each Manager shall hold office until his or her successor is appointed and qualified or until his or her earlier resignation, removal or death.  The Board of Managers shall consist of the following Managers:

(i)two Managers designated by the Sponsor Members (the “Sponsor Managers”); and

(ii)one Manager (the “Independent Manager”), as set forth on Schedule 2 attached hereto, who is an individual not employed or affiliated with the Sponsor Members or the Company or any of its Subsidiaries, to be appointed by the Major Series C Holders.  If, at any time, there are no Major Series C Holders, the Independent Manager shall be appointed by the Series C Majority.

(c)Default Manager.  As of the last day of each fiscal quarter beginning 33 months from the date hereof, if the Madewell LTV exceeds the Permitted Series A-1 Madewell LTV, then, so long as the Lender Members hold any Series A-1 Notes, the number of Managers constituting the Board of Managers shall automatically be increased by one and the holders of a majority in interest of the outstanding Series A-1 Notes, excluding the Sponsor Members and their Affiliates (the “Series A-1 Majority”), shall be entitled to determine how such newly created Manager is appointed, including in accordance with applicable provisions of the Series A-1 Indenture (the “Default Manager”).  The Series A-1 Majority shall be entitled to appoint the Default Manager to the Board of Managers until the Madewell LTV ceases to exceed the Permitted Series A-1 Madewell LTV.  At such time that the Madewell LTV is determined in good faith by the Board of Managers in accordance with Section 6.5 to cease to exceed the Permitted Series A-1 Madewell LTV, the Lender Members will cause the Default Manager to immediately resign and the number of Managers constituting the Board of Managers shall automatically be decreased by one.  The Company shall, in accordance with Section 11.1, indemnify and hold harmless the Default Manager against any and all loss, liability, claim, damage or expense incurred without negligence or willful misconduct by the Default Manager, arising out of or in connection with the duties and responsibilities of the Default Manager and pay all reasonable and documented out-of-pocket fees, expenses and reimbursement of expenses (including all fees and expenses of advisors retained by the Default Manager but excluding any discounts or commissions in respect of any underwriters, who shall be retained by the Company as needed) related to serving as Default Manager; provided, the foregoing shall in no way limit the reimbursement obligations of Madewell under the Registration Rights Agreement, and there shall be no duplication of recovery by the Default Manager to the extent the Company arranges for any amounts that are reimbursable pursuant to this Section 6.1(c) to be paid or reimbursed directly to the Default Manager pursuant to the Registration Rights Agreement.

(d)Resignation; Removal; Replacement.  Managers may resign at any time.  Managers may be removed at any time for any reason or no reason upon the written direction of the Member(s) that appointed such Manager pursuant to this Section 6.1, effective upon the delivery of such written direction by the removing Member(s) to the Company.  For the

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avoidance of doubt, the removal of the Independent Manager shall be effective upon the written direction of the Major Series C Holders or, if there are no Major Series C Holders, the Series C Majority.

(e)Action by Board of Managers.  Any action required or permitted to be taken by the Board of Managers shall be taken by written consent of the Board of Managers in accordance with this Section 6.1(e), without a meeting of the Board of Managers.  Any action taken by the Board of Managers shall be evidenced by one or more written consents describing the action to be taken by the Board of Managers that are signed by the Managers entitled to vote on such matter.  Unless otherwise provided by this Agreement, action taken under this Section 6.1(e) is effective when a majority of the Managers have signed the consent, unless the consent specifies a different effective date.  Notwithstanding the foregoing, any action proposed to be taken by written consent shall be delivered to each Manager at least 72 hours prior to the execution and effectiveness of such action by written consent.  An electronic mail or similar transmission by a Manager, or other electronic reproduction of a writing signed by a Manager, shall be regarded as signed by the Manager for purposes of this Section 6.1(e).  For purposes of this Agreement, each Manager shall have one vote on each matter submitted to a vote of the Board of Managers and a “majority of the Managers” or similar means the Managers holding a majority of the votes of all of the Managers entitled to be cast hereunder.

(f)Board Committees.  The Board of Managers may, from time to time, establish one or more committees of the Board of Managers, each of which shall be comprised of one or more Managers. The Managers shall be entitled to serve on any committee at his or her election.

(g)

Quorum.  A quorum for the transaction of business by the Board of Managers at any meeting of the Board of Managers shall require (i) the presence of a majority of the Managers then serving on the Board, and (ii) the presence of the Independent Manager.  If a quorum shall not be present at any meeting of the Board of Managers, the Managers present at such meeting may adjourn the meeting from time to time, with notice of the time and place of the adjourned meeting provided to any Manager who is not in attendance at the meeting, until a quorum shall be present.  If a meeting is duly called by a majority of the Managers then serving on the Board, and such meeting is adjourned for failure to meet quorum requirements due to the absence of the Independent Manager at two consecutive duly called meetings, quorum for such reconvened meeting shall not require the presence of the Independent Manager.

Section 6.2.Officers.

(a)Appointment of Officers.  The Board of Managers may appoint individuals as officers (“Officers”) of the Company, which may include such Officers (such as any number of Vice Presidents) as the Board of Managers deems advisable.  No Officer need be a Member or a Manager.  An individual can be appointed to more than one office.

(b)Duties of Officers Generally.  Under the direction of and, at all times, subject to the authority of the Board of Managers, the Officers shall have full and complete discretion to manage and control the day-to-day business, operations and affairs of the Company in the ordinary course of its business, to make all decisions affecting the day-to-day business,

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operations and affairs of the Company in the ordinary course of its business and to take all such actions as he or she deems necessary or appropriate to accomplish the foregoing.  Each Officer shall have such individual powers and duties as may be prescribed by the Board of Managers or this Agreement.

(c)Authority of Officers.  Subject to Section 6.2(b), any Officer of the Company shall have the right, power and authority to transact business in the name of the Company or to execute agreements on behalf of the Company, with respect to those agreements which are commonly signed by such equivalent officers of a limited liability company organized under the laws of the State of Delaware.  With respect to all matters within the ordinary course of business of the Company, third parties dealing with the Company may rely conclusively upon any certificate of any Officer to the effect that such Officer is acting on behalf of the Company.

(d)Removal, Resignation and Filling of Vacancy of Officers.  The Board of Managers may remove any Officer, for any reason or for no reason, at any time.  Any Officer may resign at any time by giving written notice to the Board of Managers, and such resignation shall take effect at the date of the receipt of that notice or any later time specified in that notice; provided, however, that, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective.  Any such resignation shall be without prejudice to the rights, if any, of the Company or such Officer under this Agreement.  A vacancy in any office because of death, resignation, removal or otherwise shall be filled in the manner prescribed in this Agreement for regular appointments to that office.

(e)Compensation of Officers.  The Officers shall be entitled to receive compensation from the Company as determined in good faith by the Board of Managers or the compensation committee thereof.

Section 6.3.Independent Manager Approval Rights.  The Board of Managers shall not approve, without the affirmative vote of the Independent Manager, any action that would cause or permit the Company to:

(a)voluntarily dissolve, wind up or file for bankruptcy;

(b)agree to take or not take any action which is inconsistent with the Company being a holding entity in respect of equity securities of Chinos and J.Crew; or

(c)enter into or become a party to any transaction with any Sponsor Member (or any of their respective Affiliates), or amend, modify, or waive any requirements under existing affiliate arrangements or agreements with any Sponsor Member (or any of their respective Affiliates) except for any transaction entered into in connection with the exercise of rights under this Agreement, any Transaction Agreement or any other agreement, arrangement or transaction existing as of the date of this Agreement.

Section 6.4.BD Holdco.

(a)For so long as the IPCo Notes remain outstanding, the Board of Managers shall designate the Independent Manager to act as the sole manager of BD Holdco; provided, that, the Independent Manager, in its capacity as the manager of BD Holdco, shall not, except as

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expressly required by the IPCo Notes and the terms of their applicable indenture, without the prior written consent of the Sponsor Managers, approve or take any action that would cause or permit BD Holdco to:

(i)take or not take any action which is inconsistent with the corporate purpose as set forth in the BD Holdco limited liability company agreement;

(ii)amend, modify or waive the Contribution Agreement or any requirements or provisions thereunder, or otherwise enter into, amend, modify or waive any arrangements or agreements with any Person;

(iii)authorize, issue, sell or enter into any contract to issue, sell any debt or equity securities of BD Holdco;

(iv)Transfer, sell, assign, license or otherwise encumber the assets of BD Holdco;

(v)make any decision with respect to the tax status of BD Holdco; or

(vi)enter into any agreement to do any of the foregoing.

(b)If the Independent Manager, in its capacity as the manager of BD Holdco, approves or takes any action that would cause or permit BD Holdco to take any of the actions set forth in Section 6.4(a), such action shall not be valid to the fullest extent permitted by law.

(c)Upon repayment of the IPCo Notes in full, the Board of Managers shall, in its sole and absolute discretion, designate a Person other than the Independent Manager to act as the sole manager of BD Holdco.

Section 6.5.Determinations of Madewell LTV.  At any time that the Board of Managers approves any Financial Statements, the Board of Managers shall also, in consultation with the Company’s accounting and financial advisors, provide a determination of the Madewell LTV.  The Board shall use commercially reasonable efforts to consult with the Lender Members regarding such determination of Madewell LTV; provided, that, any such determination will be made by the Board in its sole discretion.  Any determination shall require the affirmative vote of the Independent Manager, and the Default Manager shall be excluded from participating in such determination.

Article VII

ALLOCATIONS AND OTHER TAX MATTERS

Section 7.1.General Application.  The rules set forth below in this Article VII shall apply for the purposes of determining each Member’s general allocable share of the items of income, gain, loss or expense of the Company comprising Net Income or Net Loss for each fiscal year, determining special allocations of other items of income, gain, loss and expense, and adjusting the balance of each Member’s Capital Account to reflect the aforementioned general

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and special allocations.  For each fiscal year, the special allocations in Section 7.3 shall be made immediately prior to the general allocations of Section 7.2.

Section 7.2.General Allocations.

(a)Generally.  The Net Income or Net Losses of the Company for any fiscal year shall be allocated among the Persons who were Members during such fiscal year in a manner that will, as nearly as possible, cause the Capital Account balance of each Member at the end of such fiscal year to equal the excess (which may be negative) of:

(i)the hypothetical distribution (if any) that such Member would receive if, on the last day of the fiscal year: (A) all Company assets, including cash, were sold for cash equal to their Gross Asset Values, taking into account any adjustments thereto for such fiscal year; (B) all Company liabilities were satisfied in cash according to their terms (limited, with respect to each Nonrecourse Liability, to the Gross Asset Value of the assets securing such liability); and (C) the net proceeds thereof (after satisfaction of such liabilities) were distributed in full pursuant to Section 8.1(a), over

(ii)the sum of: (A) the amount, if any, which such Member is obligated to contribute to the capital of the Company, (B) such Member’s share of the Company Minimum Gain determined pursuant to Regulations Section 1.704-2(g), and (C) such Member’s share of Member Nonrecourse Debt Minimum Gain determined pursuant to Regulations Section 1.704-2(i)(5), all computed immediately prior to the hypothetical sale described in Section 7.2(a)(i).

(b)Net Income and Net Loss.  For the avoidance of doubt, allocations under Section 7.2(a) will be allocations of Net Income and Net Loss and not individual items of gross income, gain, deduction or loss.

(c)Loss Limitation.  Notwithstanding anything to the contrary in this Section 7.2, the amount of items of expense and loss comprising Net Loss of the Company allocated pursuant to this Section 7.2 to any Member shall not exceed the maximum amount of such items that can be so allocated without causing such Member to have an Adjusted Capital Account Deficit at the end of any fiscal year.  The portion of Net Loss in excess of the limitation set forth in this Section 7.2(a)(ii) shall be allocated first, to Members who would not have an Adjusted Capital Account Deficit, pro rata, in proportion to their Capital Account balances, adjusted as provided in clauses (a) and (b) of the definition of Adjusted Capital Account Deficit, until no Member would be entitled to any further allocation, and thereafter, to all Members, pro rata, in proportion to the aggregate number of Units held by such Member relative to the aggregate number of Units held by all Members of the Company holding Units.

Section 7.3.Special Allocations.  The following special allocations shall be made in the following order:

(a)Minimum Gain Chargeback.  In the event that there is a net decrease during a fiscal year in either Company Minimum Gain or Member Nonrecourse Debt Minimum Gain, then notwithstanding any other provision of this Article VII, each Member shall receive

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such special allocations of items of Company income and gain as are required in order to conform to Regulations Section 1.704-2.

(b)Qualified Income Offset.  Subject to Section 7.3(a), but notwithstanding any other provision of this Article VII, items of income and gain shall be specially allocated to the Members in a manner that complies with the “qualified income offset” requirement of Regulations Section 1.704-1(b)(2)(ii)(d)(3).

(c)Deficit Capital Accounts Generally.  In the event that a Member has a deficit Capital Account balance at the end of any fiscal year which is in excess of the sum of: (i) the amount such Member is then obligated to restore pursuant to this Agreement; and (ii) the amount such Member is then deemed to be obligated to restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), respectively, such Member shall be specially allocated items of income and gain of the Company (consisting of a pro rata portion of each item of income and gain of the Company for such fiscal year in accordance with Regulations Section 1.704-1(b)(2)(ii)(d)) in an amount of such excess as quickly as possible, provided, that, any allocation under this Section 7.3(c) shall be made only if and to the extent that a Member would have a deficit Capital Account balance in excess of such sum after all allocations provided for in this Article VII have been tentatively made as if this Section 7.3(c) were not in this Agreement.

(d)Deductions Attributable to Member Nonrecourse Debt.  Any item of loss or expense of the Company that is attributable to Member Nonrecourse Debt shall be specially allocated to the Members in the manner in which they share the economic risk of loss (as defined in Regulations Section 1.752-2) for such Member Nonrecourse Debt.

(e)Allocation of Nonrecourse Deductions.  Each Nonrecourse Deduction of the Company shall be specially allocated among the Members pro rata to their relative ownership of Units.

(f)Section 754 Adjustments.

(i)To the extent an adjustment to the adjusted tax basis of any asset of the Company pursuant to Code Section 734(b) or Section 743(b) is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) or Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as the result of a distribution to a Member in complete liquidation of such Member’s interest in the Company, the amount of such adjustment to Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members in accordance with their interests in the Company in the event Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Member to whom such distribution was made in the event Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.

(ii)The amounts of any income, gain, loss or deduction of the Company available to be specially allocated pursuant to this Section 7.3 shall be determined by applying rules analogous to those set forth in subparagraphs (a) through (f) of the definitions of Net Income and Net Loss.

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Section 7.4.Allocation of Nonrecourse Liabilities.  For purposes of determining each Member’s share of Nonrecourse Liabilities, if any, of the Company in accordance with Regulations Section 1.752-3(a)(3), the Members’ interests in the Company’s profits shall be determined in the same manner as prescribed by Section 7.3(e).

Section 7.5.Other Allocation Rules.

(a)Tax Allocations; Other Allocation Rules.

(i)Tax Allocations.  Tax allocations of each item of income, gain, loss, or deduction of the Company for federal income tax purposes for each fiscal year or other accounting period of the Company shall be made consistent with and in the same proportion as the corresponding allocations of such items of income, gain, loss or deduction that are made pursuant to Sections 7.2 and 7.3 for such year or period, except that, solely for tax purposes, items of income, expense, gain and loss with respect to assets of the Company reflected hereunder in the Members’ Capital Accounts and on the books of the Company at values that differ from the Company’s adjusted tax basis in such assets shall be allocated among the Members so as to take account of those differences in a manner which will comply with Code Sections 704(b) and 704(c) and the Regulations promulgated thereunder as determined in good faith by the Board of Managers.

(ii)Changes in Members’ Interests.  If during any fiscal year or other accounting period of the Company there is a change in any Member’s interest in the Company, the Board of Managers shall allocate Net Income or Net Loss to the Members in a manner that complies with the provisions of Code Section 706 and the Regulations thereunder; provided, that, if the change is a result of a transfer of Units and the transferor and transferee notify the Company in writing that they desire to allocate Net Income or Net Loss for such fiscal year based on a closing of the books of the Company as of the end of the date of the transfer the Company shall allocate Net Income or Net Loss for such fiscal year between the transferor and the transferee based upon a closing of the books as of the end of such day.

(iii)Credits.  All tax credits of the Company for a fiscal year or other accounting period (or portion thereof, if appropriate) shall be allocated among the Members in accordance with their interests in such items in a manner reasonably determined in good faith by the Board of Managers, consistent with applicable law.

(iv)Depreciation Recapture.  

(A)If the Company recognizes Depreciation Recapture (as defined below) in respect of the sale of any Company asset:

(1)the portion of the gain on such sale that is allocated to a Member pursuant to Section 7.2 or 7.3 shall be treated as consisting of a portion of the Company’s Depreciation Recapture on the sale and a portion of the Company’s remaining gain on such sale under principles consistent with Regulations Section 1.1245-1; and

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(2)if, for federal income tax purposes, the Company recognizes both “unrecaptured Section 1250 gain” (as defined in Code Section 1(h)) and gain treated as ordinary income under Code Section 1250(a) in respect of such sale, the amount treated as Depreciation Recapture under Section 7.5(a)(iv)(A) shall be comprised of a proportionate share of both such types of gain.

(B)For purposes of this Section 7.5(a)(iv)Depreciation Recapture” means the portion of any gain from the disposition of an asset of the Company which, for federal income tax purposes (a) is treated as ordinary income under Code Section 1245, (b) is treated as ordinary income under Code Section 1250, or (c) is “unrecaptured Section 1250 gain” as such term is defined in Code Section 1(h).

(b)Tax Withholding and Payments.

(i)If the Company receives proceeds in respect of which a tax has been withheld, the Company shall be treated as having received cash in an amount equal to the amount of such withheld tax, and, for all purposes of this Agreement each Member shall be treated as having received a distribution under Article VIII equal to the portion of the withholding tax allocable to such Member, as reasonably determined in good faith by the Board of Managers.

(ii)If the Company incurs a tax obligation with respect to the share of income allocated to any Member , any amount which is (A) actually withheld from a distribution that would otherwise have been made to such Member, or (B) paid to the applicable taxing authority in satisfaction of such tax obligation, shall be treated for all purposes under this Agreement as if such amount had been distributed to such Member under Article VIII.

(iii)Taxes withheld or paid pursuant to Sections 7.5(b)(i) or (ii), but which exceed the amount, if any, actually withheld from a distribution which would otherwise have been made to such Member, shall be treated as an advance to such Member.  Amounts treated as advanced to any Member pursuant to this Section 7.5(b)(iii) shall be repaid by such Member to the Company within 30 days after the Board of Managers gives notice to such Member making demand therefor.  Any amounts so advanced and not timely repaid shall bear interest, commencing on the expiration of said 30 day period, compounded monthly on unpaid balances, at an annual rate equal to the Applicable Federal Rate as of such expiration date.  The Company shall collect any unpaid amounts from any distributions by the Company that would otherwise be made to such Member.

(iv)The Company shall not be liable for any excess taxes withheld or paid in respect of any Member’s Units, and, in the event of any such over withholding or overpayment, a Member’s sole recourse shall be to apply for a refund from the appropriate governmental authority.  If the Company or any of its respective Affiliates, or any of their respective shareholders, partners, members, officers, directors, employees, managers and, as determined in good faith by the Board of Managers in its discretion, consultants or agents, becomes liable as a result of any Tax assessments allocable to any Member or a failure to withhold and remit or pay taxes in respect of any Member, then such Member shall, unless

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otherwise agreed by the Board of Managers in writing, to the fullest extent permitted by law, indemnify and hold harmless the Company or any of its respective Affiliates, or any of their respective shareholders, partners, members, officers, directors, employees, managers and, as determined in good faith by the Board of Managers in its discretion, consultants or agents, as the case may be, in respect of all taxes, including interest and penalties, and any expenses incurred in any examination, determination, resolution and payment of such liability.  The provisions contained in this Section 7.5(b) shall survive the termination of the Company, the termination of this Agreement and the Transfer of any Units.

(c)Tax Classification of the Company.  It is intended that the Company be classified as a partnership (or disregarded entity) for United States federal income tax purposes and the Company and its Members shall be prohibited from taking any action that could cause the Company (or any successor) to be treated as other than a partnership for United States federal income tax purposes.

(d)Publicly Traded Partnership.  To ensure that Units are not traded on an established securities market within the meaning of Regulations Section 1.7704-1(b) or readily tradable on a secondary market or the substantial equivalent thereof within the meaning of Regulations Section 1.7704-1(c), notwithstanding anything to the contrary contained in this Agreement:

(i)the Company shall not participate in the establishment of any such market or the inclusion of Units thereon; and

(ii)the Company shall not recognize any Transfer made on any market by (A) redeeming any Units of a Member, or (B) admitting as a Member any transferee pursuant to a Transfer or otherwise recognizing any rights of any transferee, such as a right of such transferee to receive distributions from the Company (directly or indirectly) or to acquire an interest in the capital or profits of the Company.

(e)Other Tax Elections.

(i)Elections by the Company.  Except to the extent inconsistent with any other provision herein, the Board of Managers may make, or refrain from making, in its sole and absolute discretion, any tax election provided under the Code, or any provision of state, local or foreign tax law; provided, however that any change to a material tax election by the Company must be made with the consent of the Independent Manager.  All decisions and other matters concerning the computation and allocation of items of income, gain, loss, deduction and credits among the Members, and accounting procedures not specifically and expressly provided for by the terms of this Agreement, shall be determined in good faith by the Board of Managers.  Any determination made pursuant to this Section 7.5(e) by the Board of Managers shall be conclusive and binding on all Members.

(ii)Election by Members.  In the event any Member makes any tax election that requires the Company to furnish information to such Member to enable such Member to compute its own tax liability, or requires the Company to file any tax return or report with any tax authority, in either case that would not be required in the absence of such election

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made by such Member, the Board of Managers may, as a condition to furnishing such information or filing such return or report, require such Member to pay to the Company any incremental expenses incurred in connection therewith.

(iii)Other Member Obligations.  Promptly upon request, each Member shall provide the Company with any information related to such Member necessary (A) to allow the Company to comply with any tax reporting, tax withholding or tax payment obligations of the Company or (B) to establish the Company’s legal entitlement to an exemption from, or reduction of, withholding or other taxes or similar payments, including tax under Sections 1471 and 1472 of the Code.  A Member who acquires a Unit shall promptly furnish to the Company such information as the Company shall reasonably request to enable it to compute the adjustments required by Section 755 of the Code and the Regulations thereunder.  If any Member fails to provide any of the information (or undertake any of the actions) required under this Section 7.5(e)(iii), the Board of Managers shall have full authority to take any steps as the Board of Managers determines in its sole discretion are necessary or appropriate to mitigate the consequences of such Member’s failure to comply with this Section 7.5(e)(iii) on the Company and the other Members.

(iv)ECI Covenant.  The Company shall hold no assets other than the shares of stock of Chinos and J.Crew, ownership interests in BD Holdco, cash and any other assets incidental thereto.  Notwithstanding anything in this Agreement to the contrary, the Company shall avoid taking any action that could cause the Company to be engaged in a trade or business in the United States within the meaning of Code Section 864 and the Regulations promulgated thereunder.  In addition, the Company will not, directly or indirectly, purchase, acquire or otherwise be treated as the owner of a Prohibited Asset.

Section 7.6.Tax Matters Representative.

(a)Designation.  [●] or its designee is hereby designated as the “partnership representative” or any similar role, as applicable, within the meaning of the Code and applicable U.S. state, local or non-U.S. tax law (the “Tax Matters Representative”).  In such capacity, the Tax Matters Representative shall have all of the rights, authority and power, and shall be subject to all of the regulations of a partnership representative, to the extent provided in the Code and the Regulations and applicable U.S. state, local or non-U.S. tax law.  In all other cases, the Tax Matters Representative shall represent the Company in all tax audits or tax controversy matters to the extent allowed by law.  The Tax Matters Representative shall act at the direction of the Board of Managers and shall provide the Board of Managers with all notices in connection with any tax audit or tax controversy matter, and shall otherwise keep the Board of Managers reasonably informed of the progress thereof. The Board of Managers may remove the Tax Matters Representative at any time. If [●] or its designee ceases to be the Tax Matters Representative for any reason, the Board of Managers shall appoint a new Tax Matters Representative.

(b)Expenses of the Tax Matters Representative.  Out of pocket expenses incurred by the Tax Matters Representative as the Tax Matters Representative, or in a similar capacity as set forth in this Section 7.6, shall be borne by the Company as Company Expenses.  

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Such expenses shall include, without limitation, fees of attorneys and other tax professionals, accountants, appraisers and experts, filing fees and other reasonable out-of-pocket costs.

(c)Effect of Certain Decisions by Tax Matters Representative.  Each Member agrees that any action taken by the Tax Matters Representative in connection with audits of the Company shall be binding upon such Member and each Member further agrees that such Member shall not treat any Company item on such Member’s federal, state, foreign, or other income tax return inconsistently with the treatment of the item on the Company’s return.

Section 7.7.Series B and Series D Treatment.  The Parties agree that the Series B Units and the Series D Units will not be treated as partnership interests under the Code and Regulations promulgated thereunder, and unless required by a “determination” within the meaning of Section 1313(a)(1) of the Code (or a similar or corresponding provision of state or local law), neither the Company nor any of the Members shall take a tax reporting position inconsistent with such intended treatment.

Section 7.8.Sales of Madewell Shares or J.Crew Shares.  Provided that the Members shall have supplied the Company with sufficient information about the Madewell Shares or J.Crew Shares in accordance with Section 7.5(e)(iii), then the Company shall make an “adequate identification” (within the meaning of Treasury Regulations Section 1.1012-1(c)(2)) of which Madewell Shares or J.Crew Shares, as applicable, are sold by the Company, including by causing the separate certification of Madewell Shares and J.Crew Shares if and when any Madewell Shares or J.Crew Shares are issued to the Company.

Article VIII

DISTRIBUTIONS

Section 8.1.Order of Distributions.

(a)Distributions.  Subject to Section 8.3, the Company shall, in the manner prescribed by Section 8.1(b), to the fullest extent permitted by law, including, without limitation, Section 18-607 of the Act, make distributions to Holders as follows:

(i)first, to the Series B Member, until the Series B Preference is reduced to zero;

(ii)next, to the Holders of Series C Units, pro rata in proportion to their Series C Preferred Returns as determined immediately prior to such distribution, until their Series C Preferred Returns are reduced to zero;

(iii)next, to the Holders of Series C Units, pro rata in proportion to their Series C Preferences as determined immediately prior to such distribution, until their Series C Preferences are reduced to zero;

(iv)next, to the Series D Member, until the Series D Preference is reduced to zero; and

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(v)thereafter, to the Holders of Common Units, pro rata in proportion to the number of Common Units held by such Holders.

(b)Timing of Distributions.  Subject to Section 8.3, the Members acknowledge that the Company shall make distributions at such times as designated by the Board of Managers, in its sole discretion, and in accordance with the terms set forth herein; provided, that, the Company shall, subject to Section 8.3, distribute the net proceeds received in connection with the disposition of all or any Madewell Shares or Equity Securities of J.Crew as promptly as reasonably practicable but in any event within 30 days following receipt thereof.

(c)Restricted Distributions.  Any amount that would otherwise be distributed pursuant to Section 8.1(a)(v) to a Holder of a Common Unit that is a Restricted Common Unit at the time of such distribution shall be deposited into a segregated account and paid to such Holder upon the vesting of such Restricted Common Unit; provided, that, if such Restricted Common Unit is forfeited, any amounts  segregated in respect of such Restricted Common Unit may be used for any Company purpose.

Section 8.2.Distributions-in-Kind.  Subject to Section 8.3, the Board is authorized, in its sole discretion, to make distributions to the Members in the form of Equity Securities or other property received or otherwise held by the Company (“Distribution-in-Kind”); provided, however, that, in the event of any such non-cash distribution, such Equity Securities or other property shall be valued at the Gross Asset Value thereof and shall be distributed to the Members in the same proportion that cash received upon the sale of such Equity Securities or other property at such fair market value would have been distributed pursuant to Section 8.1; provided, further, that, the Company shall not make any Distributions-in-Kind to the Series B Member or the Series D Member.

Section 8.3.Tax Distributions.  Subject to the Act and to any restrictions contained in any agreement to which the Company is bound, the Company shall, to the extent of available cash (taking into account the need for any reserves for expected upcoming expenses or other amounts payable by the Company, excluding, for the avoidance of doubt, distributions under Section 8.1), make an annual tax distribution to each Tax Distribution Member and each Management Member (but in the case of a Management Member, only with respect to Management Units held by such Management Member on the date hereof or issued by the Company to such Management Member in the future in connection with services provided by such Management Member to a Subsidiary of the Company) in an amount equal to the product of (i)(A) income or gain allocated to such Member pursuant to this Agreement for such year less (B) cumulative losses allocated to such Member pursuant to this Agreement that have not been taken into account to reduce previous distributions pursuant to this Section 8.3, and (ii) an assumed tax rate of 37.1%; provided, that, any distribution pursuant to this Section 8.3 shall be treated as an advance against future distributions otherwise payable to such Member pursuant to Section 8.1(a) or Section 10.2; provided, further, that, (x) so long as any of the Series A-1 Notes or the Series A-2 Notes are outstanding, the Series B Preference with respect to the Series B Units is greater than zero or the Series D Preference with respect to the Series D Units is greater than zero, aggregate distributions to Tax Distribution Members pursuant to this Section 8.3 from and after the date hereof shall not exceed $15,000,000, and (y) so long as any of the Series C Preferences with respect to any of the Series C Units is greater than zero or the Series D

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Preference with respect to the Series D Units is greater than zero, aggregate distributions to Tax Distribution Members pursuant to this Section 8.3 from and after the date hereof shall not exceed $30,000,000; provided, further, that, if any amount of distributions pursuant to this Section 8.3 is not made due to the application of the limitations in clause (x) or clause (y) of the immediately preceding proviso, such distributions shall roll over and be made as soon as such applicable limitation no longer applies.  If the aggregate distributions calculated for the Members pursuant to this Section 8.3 cannot be made as a result of the limitations in clause (x) or (y) hereof or for any other reason, the amount available to distribute pursuant to this Section 8.3 shall be distributed to the Members pro rata based on their relative shares of the amounts calculated for such Members pursuant to this Section 8.3, including any roll over amounts from prior periods.  

Section 8.4.Company Expenses.  In connection with any distribution under this Article VIII, the Board may cause the Company to establish such reserves as it deems reasonably necessary for Company Expenses and any other contingent or unforeseen Company liabilities. The reserves established shall reduce the amount otherwise distributable to the Members in the proportions that such amount of reserves otherwise was distributable.  At the expiration of such period as shall be deemed reasonably advisable by the Board, the balance plus any earnings thereon shall be distributed to the Members pursuant to Section 8.1(a).  Any amounts reserved pursuant to this Section 8.3 shall be invested by the Company in Temporary Investments as the Board deems appropriate in its discretion.

Article IX

BOOKS AND RECORDS; REPORTS

Section 9.1.Books and Records.  The Officers will keep appropriate books and records with respect to the Company’s business, including all books and records necessary to provide any information, lists and copies of documents required to be provided to Members pursuant to this Agreement.  The books and records of the Company shall be maintained, for financial reporting purposes, as determined in good faith by the Board of Managers.

Section 9.2.Access to Information.  Notwithstanding anything to the contrary in the Act, the Company shall, for so long as any Units are outstanding, furnish to Members and to securities analysts and prospective investors, upon their reasonable written request, only the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

Section 9.3.Tax Reports.  Within 75 days after the end of each fiscal year, the Company shall deliver to each Member (and to each person who was a Member at any time during the preceding fiscal year) such Member’s Schedule K-1 and such other information, if any, with respect to the Company as may be necessary for the preparation of such Member’s federal income tax returns, including a statement showing such Member’s share of the Company’s income, gain or loss, expense and credit for such fiscal year for federal income tax purposes.

Section 9.4.Fiscal Year.  The fiscal year of the Company shall be the twelve-month period ending on December 31 of each calendar year, or such other annual accounting period as may be established by the Board of Managers.  The taxable year of the Company for federal and

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applicable state income tax purposes shall be the same as the Company’s fiscal year unless a different taxable year is required by applicable law.

Section 9.5.Non-Disclosure.  Each Member agrees that it shall not, and shall cause its directors, officers, employees and Affiliates not to, directly or indirectly, disclose, reveal, divulge or communicate to any Person other than authorized officers, directors, managers, employees, members and partners of such Member or use or otherwise exploit for its own benefit or for the benefit of anyone other than such Persons, any Confidential Information.  No Member shall have any obligation to keep confidential (or cause its officers, directors or Affiliates to keep confidential) any Confidential Information if and to the extent disclosure thereof is specifically required by applicable law; provided, however, that, in the event disclosure is required by applicable law, the applicable Member shall, to the extent reasonably possible, provide the Company with prompt notice of such requirement prior to making any disclosure so that the Company may seek an appropriate protective order.  Notwithstanding anything to the contrary contained herein, the Sponsor Members and their respective Affiliates (including any Affiliated investment funds) and transferees may disclose any Confidential Information and other information regarding the Company and its Subsidiaries (i) in connection with their respective normal fundraising, marketing, informational or reporting activities and (ii) to any transferees or potential transferees of Units.

Article X

DISSOLUTION AND LIQUIDATION

Section 10.1.Dissolution.  The Company shall dissolve, and its affairs shall be wound up, upon the first to occur of the following:

(a)the written consent of each of (i) the Board of Managers in compliance with Section 6.3(a), (ii) the Voting Majority, (iii) the Series C Majority, (iv) the Series B Member, and (v) Series D Member, in the case of clauses (ii), (iii), (iv) and (v) each voting as a separate class;

(b)the sale of all of the assets of the Company; or

(c)the entry of a decree of judicial dissolution under Section 18‑802 of the Act.

Section 10.2.Liquidation.  Upon dissolution of the Company, the Board of Managers or, if one is appointed, an authorized liquidating trustee, shall wind up the Company’s affairs.  Upon termination and dissolution of the Company and liquidation of its assets, the Board of Managers or liquidating trustee, as the case may be, shall apply the Company’s assets to the payment of all liabilities owing to creditors in accordance with the applicable law.  The Board of Managers or liquidating trustee, as the case may be, shall set up such reserves as it deems reasonably necessary for any contingent or unforeseen liabilities or obligations of the Company.  Said reserves may be paid by the Board of Managers or liquidating trustee, as the case may be, upon dissolution to a bank or trust company to be held in escrow for the purpose of paying any such contingent or unforeseen liabilities or obligations and, at the expiration of such period or

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occurrence of such events as the Board of Managers or liquidating trustee, as the case may be, may in establishing such reserves deem advisable, such reserves shall be distributed to the Members or their assigns in the manner set forth in Section 8.1(a).

Section 10.3.Final Allocation.  After paying all liabilities to creditors and providing for reserves in accordance with Section 10.2, the Board of Managers or liquidating trustee, as the case may be, shall make a final allocation of all items comprising Net Income and Net Loss to the Members’ Capital Accounts in accordance with Article VII, which allocation shall take into account any unrealized gains and losses with respect to assets to be distributed in kind in accordance with Sections 1.704-1(b)(2)(iv)(e) and 1.704-1(b)(2)(iv)(f) of the Regulations.

Article XI

INDEMNIFICATION

Section 11.1.Right to Indemnification of Managers and Officers.  The Company shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person (an “Indemnified Person”) who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that such person, or a person for whom such person is the legal representative, is or was a Manager or Officer, while a Manager or Officer, is or was serving at the request of the Company as a director, officer, manager, employee or agent of another corporation or of a partnership, joint venture, limited liability company, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, or is or was designated as the Tax Matters Representative, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such Indemnified Person in such Proceeding.  Notwithstanding the preceding sentence, except as otherwise provided in Section 11.3, the Company shall be required to indemnify an Indemnified Person in connection with a Proceeding (or part thereof) commenced by such Indemnified Person only if the commencement of such Proceeding (or part thereof) by the Indemnified Person was authorized in advance by the Board of Managers.

Section 11.2.Prepayment of Expenses.  The Company shall pay the expenses (including attorneys’ fees) incurred by an Indemnified Person in defending any Proceeding in advance of its final disposition, provided, however, that, to the extent required by law, such payment of expenses in advance of the final disposition of the Proceeding shall be made only upon receipt of an undertaking by the Indemnified Person to repay all amounts advanced if it should be ultimately determined that the Indemnified Person is not entitled to be indemnified under this Article XI or otherwise.

Section 11.3.Claims by Manager and Officers.  If a claim for indemnification or advancement of expenses under this Article XI is not paid in full within 30 days after a written claim therefor by the Indemnified Person has been received by the Company, the Indemnified Person may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim.  In any such action the Company shall have the burden of proving that the Indemnified Person is not entitled to the requested indemnification or advancement of expenses under applicable law.

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Section 11.4.Indemnification of Employees and Agents.  The Company may indemnify and advance expenses to any person who was or is made or is threatened to be made or is otherwise involved in any Proceeding by reason of the fact that such person, or a person for whom such person is the legal representative, is or was an employee or agent of the Company or, while an employee or agent of the Company, is or was serving at the request of the Company as a director, officer, manager, employee or agent of another corporation or of a partnership, joint venture, limited liability company, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such person in connection with such Proceeding.  The ultimate determination of entitlement to indemnification of persons who are non-managers or officer employees or agents shall be made in such manner as is determined in good faith by the Board of Managers in its sole discretion.  Notwithstanding the foregoing sentence, the Company shall not be required to indemnify a person in connection with a Proceeding initiated by such person if the Proceeding was not authorized in advance by the Board of Managers.

Section 11.5.Advancement of Expenses of Employees and Agents.  The Company may pay the expenses (including attorneys’ fees) incurred by an employee or agent in defending any Proceeding in advance of its final disposition on such terms and conditions as may be determined in good faith by the Board of Managers.

Section 11.6.Non-Exclusivity of Rights; Primary Obligation.  The rights conferred on any person by this Article XI shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the certificate of formation, this Agreement, any other agreement, vote of the Members or disinterested Managers or otherwise.  The Company hereby agrees (a) that it is the indemnitor of first resort (and that its obligations to an Indemnified Person are primary and any obligation of any other Person (including, for the avoidance of doubt, the Investor Parties) to advance expenses or to provide indemnification for the same expenses or liabilities incurred by an Indemnified Person are secondary), and (b) that it shall be required to advance the full amount of expenses incurred by an Indemnified Person and shall be liable for the full amount of all expenses, judgments, penalties, fines and amounts paid in settlement to the extent legally permitted and as required by the terms of this Agreement (or any other agreement between the Company and an Indemnified Person), without regard to any rights the Indemnified Person may have against any other Person.  Notwithstanding the fact that the Sponsor Members and/or their Affiliates, other than the Company (such Persons, together with their respective heirs, successors and assigns, the “Investor Parties”), may have concurrent liability to an Indemnified Person with respect to the indemnification, reimbursements, advancements or similar payments contemplated by this Article XI (the “Indemnity Obligations”), the Company hereby agrees that in no event shall the Company or any of its Subsidiaries have any right or claim against any of the Investor Parties for contribution or have rights of subrogation against any of the Investor Parties through an Indemnified Person for any payment made by the Company with respect to any Indemnity Obligation.  In addition, the Company hereby agrees that in the event that any of the Investor Parties pay or advance to an Indemnified Person any amount with respect to an Indemnity Obligation, the Company will promptly reimburse such Investor Parties for such payment or advance upon request.  The Investor Parties are express third-party beneficiaries of the terms of this Section 11.6.

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Section 11.7.Insurance.  The Board of Managers may, to the full extent permitted by applicable law as it presently exists, or may hereafter be amended from time to time, authorize an appropriate Officer or Officers to purchase and maintain at the Company’s expense insurance in form, scope and substance satisfactory to the Board of Managers to (a) indemnify the Company for any obligation which it incurs as a result of the indemnification of Managers, Officers and employees under the provisions of this Article XI, and (b) indemnify or insure Managers, Officers and employees against liability in instances in which they may not otherwise be indemnified by the Company under the provisions of this Article XI.

Section 11.8.Waiver of Business Opportunities Doctrine.  To the fullest extent permitted by law, the doctrine of corporate opportunity, or any analogous doctrine, shall not apply to (i) the Sponsor Members, the Sponsor Managers, and their respective Affiliates, or (ii) any other Members or Managers that are not (and whose Affiliates are not) full-time employees or officers of the Company or the Company Subsidiaries (collectively, the “Business Opportunities Exempt Parties”).  The Company renounces any interest or expectancy of the Company in, or in being offered an opportunity to participate in, business opportunities that are from time to time presented to any Business Opportunity Exempt Party.  No Business Opportunity Exempt Party who acquires knowledge of a potential transaction, agreement, arrangement or other matter that may be an opportunity for the Company shall have any duty to communicate or offer such opportunity to the Company, and such Business Opportunity Exempt Party shall not be liable to the Company, the Company Subsidiaries or to its Members for breach of any fiduciary or other duty by reason of the fact that such Business Opportunity Exempt Party pursues or acquires, or directs such opportunity to another Person or does not communicate such opportunity or information to the Company.  The parties hereto expressly acknowledge and agree that the Business Opportunity Exempt Parties and their respective Affiliates will not be prohibited by virtue of their investment in the Company or participation on the Board of Managers from pursuing and engaging in any business ventures or arrangements, including any business ventures or arrangements that are or may be competitive with the Company and the Company Subsidiaries.  In addition, the doctrine of corporate opportunity, or any analogous doctrine, shall not apply to a Member or Manager unless the opportunity involves the Competitive Business.

Section 11.9.Waiver of Fiduciary Duties.

(a)Managers.  Each of the Members acknowledges and agrees that (i) each Manager that is not an employee of the Company or any Company Subsidiary is the designee of the Member(s) that appointed such Manager, is acting, in his or her capacity as a Manager, as a proxy for such Member(s) with respect to the management of the Company and does not have, in his or her capacity as a Manager, any duties (including fiduciary duties) to the Company, any Company Subsidiary or any other Member, nor shall any Member have any such duty, and (ii) each Manager that is not an employee of the Company or any Company subsidiary, in determining whether or not to vote in support of or against any particular decision for which the Board of Managers’ consent is required, may act in and consider the best interest of the Member who designated such Manager and shall not be required to act in or consider the best interests of the Company or the other Members or parties hereto, except to the extent expressly set forth in this Agreement.  Each of the Members agree that any duties to the Company or to any other Member, whether express or implied (including fiduciary duties), of a Manager that is not an

47


 

employee of the Company or any Company Subsidiary, in his or her capacity as such, that would otherwise apply at law or in equity are hereby eliminated to the fullest extent permitted under the Act (including Section 18-1101(c) of the Act) and any other applicable law, and each Member hereby waives all rights to, and releases each Manager that is not an employee of the Company or any Company Subsidiary in his or her capacity as such from any such duties, except to the extent expressly set forth in this Agreement.  Notwithstanding anything to the contrary contained in this Agreement, (A) the foregoing shall not eliminate or limit the obligation of the any Manager to act in compliance with the express terms of this Agreement (other than the foregoing), and (B) the foregoing shall not be deemed to eliminate fiduciary duties of the Independent Manager, in his or her capacity as a Manager, to the Company or the implied contractual covenant of good faith and fair dealing of the Independent Manager, in each case, in connection with any determination by the Independent Manager to provide or withhold consent pursuant Section 10.1(a)(i) or Section 6.3(a).  Except as otherwise expressly provided in this Agreement, nothing contained in this Agreement shall be deemed to constitute any Manager that is not an employee of the Company or the Company Subsidiaries or Member an agent or legal representative of any other Member or to create any fiduciary relationship for any purpose whatsoever, apart from such obligations between the members of a limited liability company as may be created by the Act.

(b)Members.  Each of the Members acknowledges and agrees that the sole duty and responsibility of any Member pursuant to this Agreement, applicable law or otherwise, shall be to act in the interest of such Member, as determined by the applicable Member in its sole discretion, and there shall be no limitations on such Member’s right to act as determined by the Member (in its capacity as such) in its sole discretion, except as otherwise specifically provided herein.  In connection therewith, the Member may take into account only the Member’s best interests and the Member shall not be required to take into account the interest of any other Member or any other Person other than its own.  No Member (in its capacity as such) shall have any fiduciary or other implied duties or responsibilities except those expressly set forth herein, nor shall any fiduciary functions, responsibilities, duties, obligations or any liabilities be read into this Agreement or otherwise exist against such Member.  To the maximum extent permitted by applicable law, no Member (in its capacity as such) shall be a trustee or fiduciary for any other Member or the Company by reason of this Agreement.  To the maximum extent permitted by law, each Member and the Company waive any fiduciary or other express or implied covenant, duty or other obligation of the Member (in its capacity as such) to the other Members, the Company, any Company Subsidiaries or any third party, except for the specific obligations expressly set forth in this Agreement.  To the maximum extent allowed by applicable law, each Member and the Company hereby waive all of the foregoing and all other duties, responsibilities or obligations (fiduciary or otherwise) that might otherwise apply to each.  Notwithstanding anything to the contrary contained in this Agreement, the foregoing shall not eliminate or limit the obligation of the any Member to act in compliance with the express terms of this Agreement (other than the foregoing).  Except as expressly set forth herein, a Member shall not have any authority to act for, or to assume any obligation or responsibility on behalf of, any other Member, the Company or any Company Subsidiary.

Section 11.10.Amendment or Repeal.  Any repeal or modification of the foregoing provisions of this Article XI shall not adversely affect any right or protection hereunder of any Person in respect of any act or omission occurring prior to the time of such repeal or

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modification.  The rights provided hereunder shall inure to the benefit of any Indemnified Person and such Person’s heirs, executors and administrators.

Article XII

MISCELLANEOUS

Section 12.1.Amendments.

(a)General.  Except as otherwise expressly set forth in this Agreement, this Agreement may not be modified, altered, supplemented or amended (by merger, repeal, or otherwise) except pursuant to a written agreement executed and delivered by the TPG Member and the Voting Majority; provided, that, any modification, alteration, supplement or amendment of or to:

(i)this Agreement which adversely affects any class of Units disproportionately to any other class of Units (other than resulting from a difference in holdings of Units or otherwise in connection with or incidental to the Transfer of any Units or the admission of any new Member) shall not be effected without the consent of the Holders of a majority in interest of the outstanding Units of such affected class of Units, voting as a separate class;

(ii)Section 4.9(a) shall require written consent of the Series C Majority, voting as a separate class;

(iii)Section 4.9(b) shall require written consent of the Holders of 66⅔% in interest of the outstanding Series C Units, voting as a separate class;

(iv)Section 4.9(b)(i), Section 6.1(b)(ii), Section 6.1(d), Section 6.3, Section 6.5, Section 11.8, Section 11.9 or this Section 12.1 shall require the written consent of (A) Holders of a majority in interest of the outstanding Series C Units, excluding the Sponsor Members and their Affiliates, and (B) Holders of 80% in interest of the outstanding Common Units; and

(v)Sections 7.5(c) or 7.5(f)(iv) shall require unanimous consent of the Holders of the outstanding Series C Units and the outstanding Common Units.

(b)Additional Units.  Notwithstanding anything to the contrary contained herein, the Board of Managers, in its sole and absolute discretion, may amend Section 8.1 (including the priorities on distributions in respect of the Units thereunder) or any other provision of this Agreement to reflect the terms and conditions of any Equity Securities of the Company issued in accordance with Section 3.4 and Section 4.9(b)(i).

Section 12.2.Specific Performance.  The Parties acknowledge and agree that a breach of this Agreement would cause irreparable damage to the other Parties and that the other Parties will not have an adequate remedy at law.  Therefore, the obligations of the Parties under this Agreement shall be enforceable by a decree of specific performance issued by any court of competent jurisdiction, and appropriate injunctive relief may be applied for and granted in

49


 

connection therewith.  Such remedies shall, however, be cumulative and not exclusive and shall be in addition to any other remedies which any Party may have under this Agreement or otherwise.

Section 12.3.Dispute Resolution.

(a)Delaware Rapid Arbitration.  The Parties agree that any dispute or controversy (whether in contract, tort or statute) arising out of, relating to, or in connection with this Agreement or the negotiation, execution or performance of this agreement or the transactions contemplated hereby (a “Dispute”) shall be arbitrated pursuant to the Delaware Rapid Arbitration Act, 10 Del. C § 5801, et seq. (the “DRAA”). The Parties agree to take all steps necessary or advisable to submit any Dispute that cannot be resolved by the Parties for arbitration under the DRAA (the “Arbitration”) in accordance with this Section 12.3, and each Party represents and warrants that it is not a “consumer” as such term is defined in 6 Del. C. § 2731.  By executing this Agreement, (i) each Party waives, and acknowledges and agrees that it shall be deemed to have waived, any objection to the application of the procedures set forth in the DRAA, (ii) consents to the procedures set forth in the DRAA, and (iii) acknowledges and agrees that it has chosen freely to waive the matters set forth in subsections (b) and (c) of Section 5803 of the DRAA.  IN CONNECTION THEREWITH, EACH PARTY AGREES THAT IT WILL RAISE NO OBJECTION TO THE SUBMISSION OF THE DISPUTE TO ARBITRATION IN ACCORDANCE WITH THIS Section 12.3 AND UNDERSTANDS THAT IT WAIVES ANY RIGHT TO LAY CLAIM TO JURISDICTION IN ANY VENUE AND ANY AND ALL RIGHTS TO HAVE THE DISPUTE DECIDED BY A JURY.

(b)Rules.  The Arbitration shall be conducted in accordance with the Delaware Rapid Arbitration Rules (the “Rules”), as such Rules may be amended or changed from time to time; provided, that, the parties to a Dispute may agree to depart from the Rules by (i) adopting new or different rules to govern the Arbitration, or (ii) modifying or rejecting the application of certain of the Rules.  To be effective, any departure from the Rules shall require the consent of the Arbitrator and shall be in writing and signed by an authorized representative of each such party to the Dispute.

(c)Venue.  The Arbitration shall take place in Wilmington, Delaware, or such other location as the Parties may agree in a signed writing.

(d)Arbitrator.  The Arbitration shall be presided over by one arbitrator (the “Arbitrator”) who shall be appointed by the parties to the Dispute.  In the event that such person fails to accept appointment as Arbitrator for any reason within five days of being notified of such person’s appointment or otherwise becomes unwilling or unable to serve as arbitrator, the parties to the Dispute shall promptly meet and confer to identify a mutually agreeable replacement arbitrator (the “Replacement Arbitrator”). The Replacement Arbitrator shall have qualifications and experience substantially similar to those of the initially appointed arbitrator.  In the event that the parties to the Dispute are unable to agree upon the identity of the Replacement Arbitrator within 45 days of the commencement of the Arbitration, or the Replacement Arbitrator is unable or unwilling to serve, then either party to the Dispute may file a petition with the Delaware Court of Chancery pursuant to Section 5805 of the DRAA.

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(e)Discovery and Subpoenas.  Each of the parties to the Dispute shall, subject to such limitations as the Arbitrator may prescribe, be entitled to collect documents and testimony from each other party to the Dispute, and the Arbitrator shall have the power to administer oaths and compel the production of witnesses and documents.  The Arbitrator shall have the power to issue subpoenas and commissions for the taking of documents and testimony from third parties.

(f)Procedure.  The Arbitrator shall conduct the hearing, administer oaths, and make such rulings as are appropriate to the conduct of the proceedings.  The Arbitrator shall allow each of the parties to the Dispute an opportunity to present evidence and witnesses and to cross examine witnesses presented by any opposing party to the Dispute.

(g)Award.  The arbitral award (the “Award”) shall (i) be rendered within 120 days after the Arbitrator’s acceptance of his or her appointment, (ii) be delivered in writing, (iii) state the reasons for the Award, (iv) be the sole and exclusive final and binding remedy with respect to the Dispute between and among the parties to the Dispute without the possibility of challenge or appeal, which are hereby waived by each of the Parties, and (v) be accompanied by a form of judgment.  The Award shall be deemed an award of the United States, the relationship between the parties to the Dispute shall be deemed commercial in nature, and any Dispute arbitrated pursuant to this Section 12.3 shall be deemed commercial.  The Arbitrator shall have the authority to grant any equitable or legal remedies, including, without limitation, entering preliminary or permanent injunctive relief; provided, however, that, the Arbitrator shall not have the authority to award (and the Parties hereby waive the right to seek an award of) punitive or exemplary damages.

(h)Disclosure.  The Parties agree that, subject to any non-waivable disclosure obligations under federal law, the Arbitration, and all matters relating thereto or arising thereunder, including, without limitation, the existence of the Dispute, the Arbitration and all of its elements (including any pleadings, briefs or other documents submitted or exchanged, any testimony or other oral submissions, any third-party discovery proceedings, including any discovery obtained pursuant thereto, and any decision of the Arbitrator or Award), shall be kept strictly confidential, and each party hereby agrees that such information shall not be disclosed beyond (i) the Arbitrator and necessary support personnel, (ii) the participants in the Arbitration, (iii) those assisting the parties to the Dispute in the preparation or presentation of the Arbitration, (iv) other employees or agents of the parties to the Dispute with a need to know such information, and (v) any third parties that are subpoenaed or otherwise provide discovery in the Arbitration proceedings, only to the extent necessary to obtain such discovery.  In all events, the parties to the Dispute and any third parties participating in the Arbitration proceedings shall treat information pertaining to the Arbitration with the same care that they treat their most valuable proprietary secrets.  In the event that federal law imposes upon any party to the Dispute an obligation to disclose the fact of the Arbitration or the nature of the claims or counterclaims asserted, such parties shall disclose no more than the minimum information required by law after first consulting with and attempting to reach agreement with the opposing parties regarding the scope and content of any such required disclosure.

(i)Costs.  Each party to the Dispute shall bear its own legal fees and costs in connection with the Arbitration; provided, however, that, the losing party shall pay all filing fees,

51


 

fees and expenses of the Arbitrator or other similar costs incurred by the parties to the Dispute in connection with the prosecution of the Arbitration.  

(j)Court Proceedings.  Notwithstanding anything to the contrary in this Agreement, or any statute protecting the confidentiality of the Arbitration and proceedings taken in connection therewith, in the event that any party to the Arbitration is required to defend himself, herself or itself in response to later proceedings instituted by any other party to the Arbitration in any court relating to matters decided in the Arbitration, such party shall be relieved of any obligation to hold confidential the Arbitration and its proceedings in order to submit, confidentially if and to the extent possible, sufficient information to such court to allow it to determine whether the doctrines of res judicata, collateral estoppel, bar by judgment, or other similar doctrines apply to such subsequent proceedings.

(k)Severability.  Notwithstanding anything to the contrary set forth in this Section 12.3, if any amendment to the Act is enacted after the date of this Agreement, and such amendment would render any provision of this Section 12.3 unenforceable thereunder, such provision shall be excluded and the remaining provisions of this Section 12.3 shall be enforced to the fullest extent permitted by law.

Section 12.4.Entire Agreement; Waivers.  This Agreement (including the Schedules and Exhibits hereto) and the Transaction Agreements represent the entire understanding and agreement among the Parties with respect to the subject matter hereof and any provision hereof can be waived only by written instrument making specific reference to this Agreement signed by the Party against whom enforcement of any such waiver is sought.  No action taken pursuant to this Agreement, including any investigation by or on behalf of any Party, shall be deemed to constitute a waiver by the Party taking such action of compliance with any representation, warranty, covenant or agreement contained herein.  The waiver by any Party of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach.  No failure on the part of any Party 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 such right, power or remedy by such Party 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.

Section 12.5.Governing Law.  This Agreement, all questions concerning the construction, interpretation and validity of this Agreement, the rights and obligations of the parties hereto, all claims or causes of action (whether in contract, tort or statute) that may be based upon, arise out of or relate to this Agreement, and the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement or as an inducement to enter this Agreement) shall be governed by and construed and enforced in accordance with the laws of the State of Delaware, including its statutes of limitations, without giving effect to any choice or conflict of law provision or rule (whether in Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than Delaware and without regard to any borrowing statute that would result in the application of the statute of limitations of any other jurisdiction.  In furtherance of the foregoing, the laws of the State of

52


 

Delaware will control even if under such jurisdiction’s choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily or necessarily apply.

Section 12.6.Notices.  All notices and other communications under this Agreement shall be in writing and shall be deemed given: (i) when delivered personally by hand (with written confirmation of receipt), (ii) when sent by email of a PDF transmission (with confirmation of successful transmission), or (iii) one Business Day following the day sent by overnight courier (with written confirmation of receipt), in each case at the following addresses (or to such other address as a Party may have specified by notice given to the other Party pursuant to this provision):

If to the Company, to:

 

TPG Capital, L.P.

301 Commerce Street

Suite 3300

Fort Worth, TX 76102

Attention: Jack Weingart (JWeingart@tpg.com)
Adam Fliss (AFliss@tpg.com)

 

With a copy (which shall not constitute notice) to:

 

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, New York 10153

Attention:Michael Aiello (Michael.Aiello@weil.com)

Ray C. Schrock, P.C. (Ray.Schrock@weil.com)

Alexander Lynch, Esq. (Alexander.Lynch@weil.com)

 

If to any Members, to the address of such Member set forth on Exhibit A hereto.

 

Section 12.7.Representations of the Members.  Each of the Members hereby, severally and not jointly, represents and warrants to the Company and the other Members, as follows:

(a)Authorization.  The execution, delivery and performance of this Agreement by such Member has been duly authorized by all appropriate action on the part of such Member.

(b)Enforceability.  The execution and delivery by such Member of this Agreement will result in legally binding obligations of such Member enforceable against such Member in accordance with the respective terms and provisions hereof, except as may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws of general applicability relating to or affecting creditors’ rights or general equity principles (regardless of whether considered at law or in equity).

(c)No Conflicts.  The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby do not and will not, with notice

53


 

or passage of time or both (i) conflict with or result in a material breach of the terms, conditions, or provisions of, (ii) constitute a material default under or result in a material violation of, (iii) result in the creation of any lien or encumbrance upon the Units or assets, properties or rights of such Member pursuant to, (iv) give any Person the right to modify, terminate or accelerate any liability of, or charge any fee, penalty or similar payment to such Member under, or (v) require any authorization, consent, approval, exemption or other action by or declaration or notice to any Person pursuant to any material contract, agreement or understanding (including, without limitation, any agreement restricting such Member from engaging in any line of business, competing with any Person or in any geographical area, or using or disclosing any information) to which such Member is a party, by which such Member is bound or to which any of such Member’s assets are subject.

Section 12.8.Severability.  If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any law or public policy, all other terms or provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party.  Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the Parties shall negotiate to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

Section 12.9.Binding Effect; Assignment.  This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.  Except as contemplated by Article XI and Section 12.10, nothing in this Agreement shall create or be deemed to create any third-party beneficiary rights in any Person not a Party to this Agreement.  No assignment of this Agreement or of any rights or obligations hereunder may be made by any Party except subject to the terms hereof.  With respect to the Sponsor Members and the Lender Members, no transferee of such Person’s Units (other than a Permitted Transferee) shall be permitted to or shall acquire any rights provided in Section 4.9, Section 5.1(e) or Section 6.1(b) and no Transfer of such rights (other than to a Permitted Transferee) shall be permitted, except for transfers of rights with the prior written consent of the Board.

Section 12.10.Non-Recourse.  No past, present or future manager, director, officer, employee, incorporator, member, partner, stockholder, Affiliate, agent, attorney, authorized person, or representative of any Member shall have any liability for any obligations or liabilities of such Member under this Agreement or for any claim based on, in respect of, or by reason of, the transactions contemplated hereby.

Section 12.11.Counterparts.  This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.

Section 12.12.Legal Counsel Relationships.  The Members acknowledge and agree that Weil, Gotshal & Manges LLP has represented the Company in connection with this Agreement and other transactions related hereto (the “Transactions”).  Except for Weil, Gotshal & Manges LLP’s representation of the Company with respect to the Transactions, in no event shall an

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attorney-client relationship exist between Weil, Gotshal & Manges LLP, on the one hand, and any other Member and/or their Affiliates, on the other hand.  The Members further agree and consent that Weil, Gotshal & Manges LLP shall be permitted to render legal advice and to provide legal services to the Members or the Company from time to time, and each of the Members covenant and agree that such representation of the Members or the Company by such firm from time to time shall not disqualify such firm from providing legal advice and legal services to any other Member, its Affiliates or the Company in matters related or unrelated to this Agreement and the Transactions.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have duly executed this Limited Liability Company Agreement as of the date first written above.

 

COMPANY:

 

[●] LLC

 

 

By:  ________________________________

Name:______________________________

Title:______________________________

 

 

SERIES B MEMBER:

 

[BD HOLDCO]


By:  ________________________________

Name:

Title:

 

 

SERIES C MEMBERS:

 

[●]

By:  ________________________________

Name:

Title:

 

 

SERIES D MEMBER:

 

[BD HOLDCO]


By:  ________________________________

Name:

Title:

 

 

 

 

 


 

 

 

COMMON MEMBERS:

 

[●]

 

 

 

By:  ________________________________

Name:

Title:

 

 

 


 

EXHIBIT B

 

Madewell LTV

 

Madewell LTV” means, at any time of determination, an amount expressed as a percentage equal to:

Company Indebtedness / Madewell Collateral Percentage + Madewell Indebtedness + Madewell Preferred Stock

———————————————

Madewell Enterprise Value

Company Indebtedness” means, at any time of determination, an amount equal to:

 

(a)

if calculating the Madewell LTV for the purposes of determining whether it exceeds the Permitted Series A-1 Madewell LTV under Section 6.1 of the Agreement, the aggregate principal amount of the Series A-1 Notes, plus all accrued but unpaid interest, or

 

(b)

if calculating the Madewell LTV for the purposes of determining whether it exceeds the Permitted Series C Madewell LTV under Section 5.2(b) of the Agreement, the sum of:

 

(i)

the aggregate principal amount of the Series A Notes, plus all accrued but unpaid interest, plus

 

(ii)

the Series B Preference, plus

 

(iii)

the Series C Preferred Return, plus

 

(iv)

the Series C Preference.

Madewell Collateral Percentage” means the number of Madewell Shares held by the Company as of any time of determination, divided by the total number of Madewell Shares on a fully-diluted basis as of such time of determination (calculated to [three] decimal points).

Madewell Enterprise Value” means, the sum of (i)(a) the 20-day volume weighted average price of Madewell Shares, multiplied by (b) the total number of Madewell Shares on a fully-diluted basis as of any time of determination, plus (ii)(a) the sum of the Madewell Indebtedness and the Madewell Preferred Stock, less (b) the amount of unrestricted cash and cash equivalents of Chinos as of such time of determination.

 

 

 

 


 

Madewell Indebtedness” means, at any time of determination without duplication, all indebtedness in respect of borrowed money or evidenced by bonds, notes, debentures or similar instruments, in each case, of Chinos and its subsidiaries.

Madewell Preferred Stock” means, at any time of determination, the amount of the then outstanding liquidation preference of preferred stock issued by Chinos and its Subsidiaries.

Permitted Series A-1 Madewell LTV” means 61%.

Permitted Series C Madewell LTV means, at any time of determination, an amount expressed as a percentage equal to the Madewell LTV; provided, that, for purposes of such calculation of Madewell LTV only,

 

(a)

the “Madewell Enterprise Value” shall be $[●],4

 

(b)

the “Madewell Indebtedness” shall be $[●],5 and

 

(c)

Company Indebtedness shall be calculated,

 

(i)

as though no prior distributions had been made by the Company in respect of the Series B Units or Series C Units, including all accrued Series C Preferred Return as of such time of determination, whether paid or unpaid; and

 

(ii)

as though no prior amounts had been paid by the Company in respect of the Series A Notes, including all accrued interest as of such time of determination (but not beyond the Series A Notes maturity date), whether paid or unpaid.

 

 

 

 

 

 

 

 

 

4

Amount to be fixed at Closing and reflect an enterprise value of Madewell that would result in Madewell LTV of 115%, regardless of Madewell IPO valuation.

5

Amount to be fixed based on the amounts as of Closing.

 


 

Exhibit C

 

SPV A-Notes Term Sheet

 

 


 

[Chinos SPV LLC]
Summary of Principal Terms and Conditions

Series A-1 and Series A-2 Senior Secured Notes due 2025

Set forth below is a summary (this “Term Sheet”) of principal indicative terms of Series A-1 Senior Secured Notes due 2025 (the “Series A-1 Notes”) and Series A-2 Senior Secured Notes due 2025 (the “Series A-2 Notes” and together with the Series A-1 Notes, the “Series A Notes”) to be issued by Chinos SPV LLC (the “Issuer”) in connection with (i) an exchange (the “Exchange”) of up to $420,000,000 principal amount of term loans (the “Term Loans”) outstanding under the Amended and Restated Credit Agreement, dated March 5, 2014, among J. Crew Group, Inc., Chinos Intermediate Holdings B, Inc., the lenders party thereto, and Wilmington Savings Fund Society, FSB as successor administrative agent (the “Term Loan Agreement”) and (ii) a new money purchase by the Sponsor of up to $150,000,000 principal amount of Series A Notes (the “New Money Purchase”). This Term Sheet does not purport to summarize all of the terms of the definitive documentation with respect to the Series A Notes, and reference should be made to the definitive documentation for the final terms of the Exchange, the New Money Purchase and Series A Notes.

Terms of the Issuance

Exchange:

Exchange up to $420,000,000 in aggregate principal amount of Term Loans for a pro rata share of up to $420,000,000 aggregate principal amount of the Series A-1 Notes.

Sponsor New Money:

The Sponsor will invest new money to purchase up to $150,000,000 in aggregate principal amount of Series A Notes.  The allocation between Series A-1 Notes and Series A-2 Notes is at the Sponsor’s discretion, subject to a maximum Madewell LTV (as defined below) through the Series A-1 Notes of 61% on the closing date of the Madewell IPO.

The terms of the Series A-2 Notes will be substantially the same as the terms of the Series A-1 Notes with a maturity date that is the same or later than the maturity date for the Series A-1 Notes, except that the Series A-2 Notes will be secured by a second-priority security interest on the Collateral (as defined below) and the Series A-2 Notes will not have a financial maintenance covenant or other maintenance covenant, such as the Madewell LTV covenant.

Terms of the Series A-1 Notes and Series A-2 Notes

Issuer:

Chinos SPV LLC, a Delaware limited liability company.

Issue Date:

[             ], 2020

Maturity Date:

Series A-1 Notes: [             ], 2025 (5.5 years from the Issue Date)

Series A-2 Notes: [             ], 2025 (5.5 years from the Issue Date)

1

 


 

Interest; Interest Payment Dates:

The Series A Notes will bear interest at an annual PIK rate from 9.0%-14.0%, compounding semi-annually, such rate to be fixed prior to issuance based on the IPO public offer price and on the basis of the table set forth below.  Interest on

the Series A Notes will accrue from the date of issuance (the “Issue Date”) until the date paid in full in cash and will be payable semi-annually in arrears on [        ] and          commencing on [        ], 2020 (each, a “Payment Date”).  Interest on the Series A Notes will be calculated on the basis of a 360-day year of twelve 30-day months.  The Issuer may pay interest by increasing the principal amount of the Series A Notes in an amount equal to the interest due or by issuing new Series A Notes (the “PIK Interest”).

The coupon of the Series A-1 Notes received in consideration for the Exchange will be determined on the following basis:

Madewell LTV through the Series A-1 Notes Series A-1 Notes Coupon 61% 14.0% 57% 13.0% 51% 12.0% 45% 11.0% 40% 10.0% <35% 9.0%

 

The coupon of the Series A-2 Notes will be the same as the Series A-1 Notes.

Guarantees:

None

Ranking:

The Series A Notes will constitute senior secured obligations of the Issuer. The Series A-1 Notes and the Series A-2 Notes will rank pari passu of each other in right of payment. The Series A-1 Notes will be effectively senior to the second-priority security interest securing the Series A-2 Notes to the extent of the value of the Collateral.

Collateral:

The Series A-1 Notes will be secured for the benefit of the holders of the Series A-1 Notes by a first-priority security interest on all assets of the Issuer (the “Collateral”). The Series A-2 Notes will be secured for the benefit of the holders of the Series A-2 Notes by a second-priority security interest on the Collateral.

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Intercreditor:

The lien priority, relative rights and other creditors’ rights issues in respect of the Collateral among the holders of the Series A-1 Notes and the Series A-2 Notes will be set forth in an 1st Lien/2nd Lien intercreditor agreement (the “Intercreditor Agreement”), the terms of which shall include, but not be limited to:

Debt caps: none.

Bankruptcy: 1st lien creditors to have exclusive right to provide a DIP, with ability to “roll up” Series A-1 Notes obligations.

Plan Voting: 2nd lien creditors shall not vote on a plan unless accepted by

the 1st Lien creditors or provides for payment in full, in cash of 1st Lien claims.

Buy-out rights: None.

Standstill Period: 180 days, applicable to the 2nd lien only.

Amendments: Customary restrictions on amendments to Series A-1 and Series A-2 Notes; provided that any such restrictions shall apply to each series of Series A Notes equally.

Adequate protection: 2nd lien creditors will not contest (1) any request by 1st lien creditors for adequate protection or (2) any objection by 1st lien to any motion, relief, action or proceeding based on 1st lien claiming lack of adequate protection. 2nd lien creditors will not seek adequate protection other than in the form of junior replacement liens.

Turnover: Full turnover provision, including any reorganization securities.

Status of Liens/Collateral: 1st lien and 2nd lien creditors agree that the grants of liens constitute two separate and distinct grants of liens and will be separately classified. No other liens or collateral in favor of 2nd lien creditors.

Optional Redemption:

The Issuer may redeem the Series A-1 Notes, in whole or in part, at any time prior to [         ], 2025 at a price equal to 100% of the principal amount of the Series A-1 Notes redeemed plus accrued and unpaid interest, if any, to, but not including, the redemption date. In addition, the Default Manager may effect a Share-Settled Redemption, as described under “Financial Covenant” below.

Following the repayment in full of the Series A-1 Notes, the Issuer may redeem the Series A-2 Notes, in whole or in part, at any time prior to [         ], 2025 at a price equal to 100% of the principal amount of the Series A-2 Notes redeemed plus accrued and unpaid interest, if any, to, but not including, the redemption date.

Asset Sales –  Mandatory Redemption:

 

With respect to each series of Series A Notes, the Issuer shall redeem such portion of such Series A Notes at a price equal to 100% of the principal amount thereof (including accrued interest to, but excluding the date of redemption) in an amount equal to the net proceeds of (i) the common equity (the “Madewell Equity”) of Chinos Holdings, Inc. (“Madewell”) or the common equity of J.Crew Group, Inc. (the “J.Crew Equity”) sold (or otherwise disposed of) and (ii) any dividends, distributions or similar payments made to the Issuer by any of its subsidiaries, in each case, less any Permitted Distributions (as defined below); provided that no Series A-2 Notes shall be redeemed prior to the repayment in full of the Series A-1 Notes.

Change of Control:

Upon the occurrence of a change of control of the Issuer or J.Crew Group, Inc., the Issuer may be required to redeem all applicable Series A Notes at a price equal to 100% of the principal amount thereof (including accrued interest to, but excluding, the date of redemption).

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Restricted Subsidiaries:

All subsidiaries of the Issuer will be Restricted Subsidiaries, except Chinos Holdings, Inc. and its respective subsidiaries and the IPCo Group companies that are currently Unrestricted Subsidiaries under the Term Loan Agreement.  The IPCo Group companies, including a new subsidiary of Chinos Intermediate Holdings A, Inc. that provides credit support for the IPCo Notes, may become Restricted Subsidiaries at the election of J. Crew.

Affirmative  Covenants:

With respect to each series of Series A Notes, the terms of the indenture governing such Series A Notes (each, an “Indenture” and together the “Indentures”) will require the Issuer to, among other things:

(a)pay all amounts owed by it and comply with all its other obligations under the terms of such Series A Notes and such Indenture;

(b)perform, comply with and observe all obligations and agreements to be performed by it set forth in such Indenture and such Series A Notes;

(c)undertake all actions that are necessary to enable the holders of such Series A Notes to exercise and enforce their rights, powers, remedies and privileges under the Collateral;

(d)prepare, give, execute, deliver, file or record any notice, financing statement, continuation statement, public deed, instrument or agreeme