Exhibit 10EE
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement"), dated as of June 6,
2001, by and between TOYS "R" US, INC., a Delaware corporation (the "Company"),
and XXXXXXX XXXXXXXXX ("Xxxxxxxxx").
RECITALS
WHEREAS, pursuant to a Retention Agreement dated as of February 25,
1998 between the Company and Xxxxxxxxx (the "Retention Agreement"), Xxxxxxxxx is
employed by the Company as Chairman of the Board of Directors of the Company
("Chairman"); and
WHEREAS, Xxxxxxxxx desires to retire from his position as Chairman
and all other officer and employee positions, if any, held by Xxxxxxxxx in the
Company and any of its subsidiaries effective as of June 6, 2001 (the
"Retirement Date"); to remain a member of the Board of Directors of the Company;
and to provide consulting services to the Company as the Company may deem
appropriate during the period from the Retirement Date through the third
anniversary of the Retirement Date (the "Consulting Period"); and
WHEREAS, the parties desire to set forth their respective rights and
obligations in respect of Xxxxxxxxx'x retirement and consulting arrangement;
NOW, THEREFORE, in consideration of the covenants and conditions set
forth herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties, intending to be legally
bound, agree as follows:
AGREEMENT
1. Retirement.
(a) Effective as of the Retirement Date, Xxxxxxxxx will retire from
his position as Chairman and all other officer and employee positions, if any
held by Xxxxxxxxx in the Company and any of its subsidiaries. It is agreed by
the parties that, on and as of the Retirement Date, all rights and obligations
of Xxxxxxxxx and the Company with respect to such employment shall terminate,
except for the continuing obligations of both parties under this Agreement.
(i) On the Retirement Date, Xxxxxxxxx will deliver to the Company a
letter of resignation in the form of Exhibit A hereto.
2. Compensation. In consideration of the agreements of Xxxxxxxxx
herein, Xxxxxxxxx will be entitled to the compensation, consulting fees and
benefits set forth in this Section 2.
(a) Incentive bonus. The Company will pay Xxxxxxxxx the incentive
bonus which Xxxxxxxxx would have been entitled to receive for fiscal year 2001
under the terms of the February 28, 1998 Retention Agreement, prorated for the
number of complete months of employment during the fiscal year, and any other
bonuses the Board of Directors or the Chief Executive Officer deems appropriate
based upon outstanding service. Said bonuses will be paid to Xxxxxxxxx on or
about April 1, 2002.
(b) Consulting fees. From the Retirement Date through the third
anniversary of the Retirement Date, the Company will pay Xxxxxxxxx a consulting
fee of $200,000 per annum for consulting services provided to the Company as
requested from time to time by the Company. Said fee will be paid to Xxxxxxxxx
in the amount of sixteen thousand six hundred sixty six dollars and sixty-six
cents ($16,666.66) monthly, in arrears, by the 15th day of each following month.
This Agreement, and the consulting services provided to the Company by
Xxxxxxxxx, shall automatically be extended on the third anniversary of the
retirement date, for an additional one year period thereafter under the same
terms and conditions as provided for herein, and automatically renewed annually
thereafter, unless, at least six months prior to the expiration date of this
Agreement, the Company gives notice to Xxxxxxxxx of its decision to terminate
the Agreement.
(i) Federal, state and local income tax and payroll tax
of any kind shall not be withheld or paid by the Company on
Xxxxxxxxx'x behalf. Xxxxxxxxx shall not be treated as an employee
with respect to the consulting services performed hereunder for
Federal, State or local tax purposes. The Company will report the
amounts paid to Xxxxxxxxx on Form 1099 to the extent required under
the Internal Revenue Code.
(ii) Xxxxxxxxx agrees to pay any applicable federal,
state and local taxes required by law and further agrees to
indemnify and hold the Company harmless from all claims, demands,
deficiencies, levies, assessments, executions, judgements or
recoveries by any governmental entity against the Company for any
amounts claimed due on account of the consulting fees paid to
Xxxxxxxxx pursuant to Paragraph 2(b) above.
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(iii) Death or Disability. Should Xxxxxxxxx die or
become disabled during the Consulting Period, the Company shall make
a lump sum cash payment to Xxxxxxxxx (or, in the event of his death,
to his estate) an amount equal to the remaining payments owed
through the end of the Consulting Period.
(c) Health Benefits. As of the Retirement Date and for the remainder
of his life, Xxxxxxxxx (and his spouse and dependent children) will be entitled
to continuation of medical, prescription and dental benefits maintained by the
Company from time to time at a level commensurate with the level at which senior
executives of the Company participate. If Xxxxxxxxx (or his spouse and dependent
children upon his death) elects to receive such health benefits, he shall pay
the premium charged to former employees of the Company pursuant to Section 4980B
of the Code; provided, that the Company can amend or otherwise alter the Plans
to provide benefits to Xxxxxxxxx that are no less than those commensurate with
Xxxxxxxxx'x current position; provided, that to the extent such benefits cannot
be provided to Xxxxxxxxx under the terms of the Plans or the Plans cannot be so
amended in any manner not adverse to the Company, the Company shall pay to
Xxxxxxxxx, on an after-tax basis, an amount necessary for Xxxxxxxxx to acquire
such benefits from an independent insurance carrier ; and provided further that
the obligations of the Company under this clause 2(c) shall be terminated if, at
any time after the Retirement Date, Xxxxxxxxx is employed or is otherwise
affiliated with a party that offers comparable health benefits to Xxxxxxxxx.
(d) Stock Options. All Toys "R" Us, Inc. stock options granted to
Xxxxxxxxx under the 1994 Plan will become 100% vested as of the Retirement Date,
and may be exercised at any time prior to the expiration date of each stock
option. All unvested Xxxxxxx.xxx stock options shall continue to vest during the
Consulting Period.
(e) Restricted Shares. In recognition of the services rendered by
Xxxxxxxxx to the Company during his years of employment and hereafter as a
consultant to the Company, all Restricted Stock Units granted to Xxxxxxxxx
pursuant to his February 28, 1998 Retention Agreement shall remain in effect
pursuant to the terms of the Restricted Stock Unit Plan except that should the
performance criteria set forth in the Plan not be achieved, all Restricted Stock
Units granted pursuant to the February 28, 1998 Retention Agreement will vest as
of April 1, 2002.
(f) Savings and Profit Sharing. Xxxxxxxxx shall be 100% vested in
the value of his account balance under the "TRU" Partnership Employees' Savings
and Profit Sharing Plan as of the Retirement Date, and entitled to the
distribution of such account balance at his discretion.
(g) SERP. Xxxxxxxxx shall be 100% vested in the value of his account
balance under the Toys "R" Us Supplemental Executive Retirement Plan (SERP) as
of the Retirement Date, and entitled to the distribution of such account balance
in accordance with the provisions of the Plan.
(h) Deferred Compensation. Xxxxxxxxx shall be entitled to the
distribution of his account balance under the Partnership Group Deferred
Compensation Plan in accordance with the provisions of the Plan.
(i) Non-Employee Director Compensation. Effective as of the
Retirement Date, Xxxxxxxxx shall participate in the Non-Employee Directors'
Compensation Program.
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(j) Office. Xxxxxxxxx will be provided with office space at the
National Store Support Center and secretarial support during the Consulting
Period and any periods thereafter as long as he continues as a Non-Employee
Director of the Company.
(k) Retained Property. During the Consulting Period, Xxxxxxxxx shall
retain all property of the Company in his possession, including, but not limited
to, credit cards, security key cards, telephone cards, car service cards,
computer software or hardware, Company identification cards, Company records and
copies of records, correspondence and copies of correspondence and other books
or manuals issued by the Company.
(l) Expense Reimbursement. The Company shall reimburse Xxxxxxxxx,
upon submission of appropriate statements and documentation, his reasonable
expenses and disbursements incurred in the course of providing the consulting
services under this Agreement. Said expenses include expenses related to the
leasing, maintenance and insurance of an automobile on an equivalent basis to
the automobile benefit received by Xxxxxxxxx while employed by the Company.
(m) Other Benefits. Xxxxxxxxx acknowledges that he is not entitled
to receive benefits from the Company other than as set forth in this Section 2,
except for any benefits afforded Xxxxxxxxx by applicable law.
3. Termination of All Existing Agreements. All rights and
obligations of the Company and Xxxxxxxxx under the Retention Agreement, other
employment agreement, arrangement or understanding and any other agreement
between the Company and Xxxxxxxxx are hereby canceled and terminated as of the
Retirement Date without liability of any party hereunder, except that this
Agreement, the terms of the February 25, 1998 Restricted Stock Option Agreement
as set forth in Section 2 (e) of this Agreement, the Stock Option Agreements
dated as of April 6, 2001 the Restoration Options granted June 4, 1999, January
26, 2001 and April, 20, 2001, the Xxxxxxx.xxx, Inc. Stock Option Agreement dated
as of July 16, 1999, and the Restricted Share Agreement dated as of April 1,
2000 shall continue in full force and effect.
4. Release Agreement. The benefits pursuant to Section 2 are
contingent upon Xxxxxxxxx (i) executing a Separation and Release Agreement (the
"Release Agreement"), in the form attached hereto as Exhibit B, upon or after
his Retirement Date and (ii) not revoking or challenging the enforceability of
the Release Agreement or this Agreement.
5. No Solicitation of Employees or Customers. Xxxxxxxxx hereby
represents and warrants that during the six month period preceding the date of
this Agreement he has not (i) solicited any customers of the Company or induced
any customer of the Company to enter into a business relationship with Xxxxxxxxx
or any other person or (ii) solicited for employment or induced any person
employed by the Company to terminate employment. During the three year period
commencing on the Retirement Date, Xxxxxxxxx shall not, directly or indirectly,
(i) employ or seek to employ any person who is as of the Retirement Date, or was
at any time during the six month period preceding the Retirement Date, an
officer, general manager, director or equivalent or more senior level employee
of the Company or any of its subsidiaries or otherwise solicit, encourage, cause
or induce any such employee of the Company or any of its subsidiaries to
terminate such employee's employment with the Company or such subsidiary for the
employment of another company (including for this purpose the contracting with
any person who was an independent contractor (excluding consultant) of the
Company during such period) or (ii)
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take any action that would interfere with the relationship of the Company or its
subsidiaries with their suppliers and franchisees without, in either case, the
prior written consent of the Company's Board of Directors, or engage in any
other action or business that would have a material adverse effect on the
Company.
6. Non-competition.
(a) During the three year period commencing on the Retirement Date,
Xxxxxxxxx shall not, directly or indirectly:
(i) engage in any managerial, administrative, advisory, consulting
or operational or sales activities in Restricted Business anywhere
in the Restricted Area, including, without limitation, as a director
or partner of such Restricted Business, or
(ii) organize, establish, operate, own, manage or control or have a
direct or indirect investment or ownership interest in a Restricted
Business or in any corporation, partnership (limited or general),
limited liability company enterprise or other business entity that
engages in a Restricted Business anywhere in the Restricted Area.
(b) Nothing in this Section 5 shall prohibit or otherwise restrict
Xxxxxxxxx from acquiring or owning, directly or indirectly, for passive
investment purposes not intended to circumvent this Agreement, securities of any
entity engaged, directly or indirectly, in a Business if either (i) such entity
is a public entity and Xxxxxxxxx (A) is not a controlling Person of, or a member
of a group that controls, such entity and (B) owns, directly or indirectly, no
more than 3% of any class of equity securities of such entity or (ii) such
entity is not a public entity and Xxxxxxxxx (A) is not a controlling Person of,
or a member of a group that controls, such entity and (B) does not own, directly
or indirectly, more than 1% of any class of equity securities of such entity.
(c) "Restricted Business" means Wal-Mart, K-Mart, Target, Kohl's,
Noodle Kadoodle/Zany Brainy, e-toys, KB Toys, FAO Xxxxxxx, Buy Buy Baby or any
other business, including mail order or internet business, if more than
one-third of the business' revenues are generated by the manufacture, marketing
or sale of toys (including, without limitation, video games and computer
software for kids, electronic toys and wheel goods), juvenile or baby products,
juvenile furniture and children's clothing or any other business in which the
Company may be engaged on the Retirement Date, except that the Company, in its
sole discretion, may elect to exclude a specific business from this definition.
(d) "Restricted Area" means any country in which the Company or its
subsidiaries owns or franchises any retail store operations or otherwise has
operations on the Retirement Date.
7. Confidentiality. Xxxxxxxxx acknowledges that he has had and will
continue to have access to Confidential Information (as hereinafter defined) of
the Company. Xxxxxxxxx agrees not to disclose, communicate or divulge to, or use
for the direct or indirect benefit of, any person (including Xxxxxxxxx), firm,
association or other entity (other than the
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Company or its affiliates) any Confidential Information. "Confidential
Information" includes, but is not limited to, customer and vendor lists,
database, computer programs, frameworks, models, marketing programs, sales,
financial, marketing, training and technical information, business methods,
business policies, procedures, techniques, research or development projects or
results, trade secrets (which Xxxxxxxxx agrees include the Company's customer
and prospective customer lists), pricing policies, business plans, computer
software, intellectual property, information concerning how the Company creates,
develops, acquires or maintains its products and marketing plans, targets its
potential customers, and operates its retail and other businesses, and any other
information not otherwise available to the general public. If any person
(including any government employee) requests the disclosure or release of
Confidential Information, Xxxxxxxxx shall (i) promptly notify the Company of
such request so that the Company may pursue any available remedies to prevent
the disclosure or release of such Confidential Information and (ii) furnish the
Company a copy of all written materials pertaining to such request for
Confidential Information as the Company shall deem appropriate.
8. No Inducements. Xxxxxxxxx warrants that he is entering into this
Agreement voluntarily, and that, except as set forth herein, no promises or
inducements for this Agreement have been made, and he is entering into this
Agreement without reliance upon any statement or representation by any of the
Company and its affiliates, and its and their present and former stockholders,
directors, officers, employees, agents, attorneys, successors and assigns or any
other person, concerning any fact material hereto.
9. Litigation Assistance. Xxxxxxxxx agrees to cooperate with the
Company and its counsel in regard to any litigation presently pending or
subsequently initiated involving matters of which Xxxxxxxxx has particular
knowledge as a result of his employment with the Company or in his role as a
consultant under the terms of this Agreement. Such cooperation shall consist of
Xxxxxxxxx making himself available at reasonable times for consultation with
officers of the Company and its counsel and for depositions or other similar
activity should the occasion arise. Xxxxxxxxx shall not receive any additional
compensation for rendering such assistance. Reasonable travel costs and
out-of-pocket expenses in connection with such cooperation shall be reimbursed
by the Company, as well as reasonable compensation for Xxxxxxxxx'x time and
service if said assistance occurs after the termination of this Agreement. The
obligations under this section shall survive for a ten-year period following the
end of this Agreement.
10. Expenses of Contests.
The Company agrees to reimburse Xxxxxxxxx (within 60 days) all reasonable legal
and professional fees and expenses that Xxxxxxxxx may reasonably incur as a
result of any contest by Xxxxxxxxx, by the Company or others of the validity or
enforceability of, or liability under, any provision of this Agreement, or the
Release Agreement.
(a) Xxxxxxxxx shall reimburse the Company (within 60 days) for its
reasonable legal and professional fees and expenses, and in the case of payments
made pursuant to paragraph (a) above, shall refund to the Company the amount of
such payments, to the extent there is a final determination that such fees,
expenses or payments relate to claims brought by Xxxxxxxxx against, or defenses
by Xxxxxxxxx of any claim of, the Company with respect to this Agreement, the
Release Agreement that were determined to have been made or asserted by
Xxxxxxxxx in bad faith or frivolously.
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11. Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof, and
supersedes any and all prior agreements or understandings between the parties
arising out of or relating to Xxxxxxxxx'x employment and the cessation thereof.
This Agreement may only be changed by written agreement executed by the parties.
12. Governing Law. This Agreement shall be governed by the laws of
the State of New Jersey, without giving effect to the conflicts of law
principles thereof.
13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be one and the same instrument.
14. Arbitration. Except as otherwise provided for herein, any
controversy arising under, out of, in connection with, or relating to, this
Agreement, and any amendment hereof, or the breach hereof or thereof, shall be
determined and settled by arbitration in New York, New York, by a three person
panel mutually agreed upon, or in the event of a disagreement as to the
selection of arbitrators, in accordance with the Employment Dispute Resolution
Rules of the American Arbitration Association. Any award rendered therein shall
specify the findings of fact of the arbitrator or arbitrators and the reasons of
such award, with references to and reliance on relevant law. Any such award
shall be final and binding on each and all of the parties thereto and their
personal representatives, and judgment may be entered thereon in any court
having jurisdiction thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
TOYS "R" US, INC.
By:
Name:
Title: _______________________________
______________________________________
Xxxxxxx Xxxxxxxxx
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June 6, 2001
Board of Directors
Toys "R" Us, Inc.
Ladies and Gentlemen:
I, Xxxxxxx Xxxxxxxxx, hereby retire from Toys "R" Us, Inc. (the
"Company"), its subsidiaries and affiliates and from all officer or employee
positions held by me in the Company, its subsidiaries and affiliates, all
effective as of June 6, 2001.
Very truly yours,
Xxxxxxx Xxxxxxxxx
