EXHIBIT 10X
SEPARATION AGREEMENT
THIS SEPARATION AGREEMENT (this "Agreement"), dated as of March 25, 1999,
is by and between TOYS "R" US, INC., a Delaware corporation (the "Company"), and
XXXXX X. XXXXXXX (the "Executive").
RECITALS
WHEREAS, pursuant to a Retention Agreement dated as of February 12, 1998
between the Company and the Executive (the "Retention Agreement"), Executive is
a Director of the Company and is employed by the Company as President and Chief
Operating Officer ("COO"), and as President - U.S. Toy Stores Division; and
WHEREAS, pursuant to a Stock Unit Agreement dated as of February 12, 1998
between the Company and the Executive (the "Stock Unit Agreement"), on February
12, 1998, the Company granted Executive 200,000 Stock Units (the "Stock Units");
and
WHEREAS, pursuant to the Company's 1994 Stock Option and Performance
Incentive Plan (the "Plan"), on May 4, 1998, the Company granted Executive
options to acquire 300,000 shares of common stock (the "Initial Grant") and, on
September 8, 1998, the Company granted Executive options to acquire 600,000
shares of common stock (the "September Grant"); and
WHEREAS, Executive desires to resign his employment with the Company and
his position as President and COO and all other director, officer and employee
positions, if any, held by Executive in the Company and any of its subsidiaries
effective as of March 26, 1999 (the "Termination Date"); and
WHEREAS, the parties desire to set forth their respective rights and
obligations in respect of Executive's resignation from the above positions;
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. Resignation.
(a) Effective as of the Termination Date, Executive will resign from his
positions as a Director and President and COO, and all other director, officer
and employee positions, if any, held by Executive in the Company and any of its
subsidiaries. It is agreed by the parties that, on and as of the Termination
Date, all rights and obligations of Executive and the Company with respect to
such employment shall terminate.
(b) On the Termination Date, Executive will deliver to the Company a
letter of resignation in the form of Exhibit A hereto and a certificate of
release in the form of Exhibit B hereto.
2. Benefits. In consideration of the agreements of Executive herein,
Executive will be entitled to the benefits set forth in this Section 2.
(a) Salary. From the Termination Date through the Second Anniversary of
the Termination Date and regardless of whether Executive obtains other
employment, the Company will pay Executive $800,000 per year, such amount to be
payable in accordance with the Company's regular payroll policies as in effect
from time to time. All payments to Executive under this Section 2(a) will be
less applicable withholdings for federal, state and local taxes.
(b) Relocation Expenses. If, during the two year period commencing on the
Termination Date and regardless of whether Executive obtains other employment
during such period, the Executive relocates his family to an area other than
Northeastern New Jersey, the Company will purchase at fair market value the
house currently being constructed for Executive in Ridgewood, NJ, subject to the
terms of the Company's relocation policy as from time to time in effect and
provided that the Executive has taken possession of such house.
(c) Health Benefits. From the Termination Date until the earlier to occur
of (i) the Second Anniversary of the Termination Date or (ii) the date Executive
commences employment with another employer, the Company will permit Executive to
continue to participate in the medical, prescription, dental and disability
plans maintained by the Company from time to time at a level commensurate with
the level at which senior executives of the Company participate.
(d) Stock Units. Executive hereby forfeits all of the Stock Units in their
entirety, except that on the second anniversary of the Termination Date, subject
to the achievement of the performance objective set forth on Exhibit A to the
Stock Unit Agreement, 40,000 of such units shall be converted into an equivalent
number of shares of common stock of the Company, which shares shall be delivered
to the Executive on the second anniversary of the Termination Date. Except as
modified by the preceding sentence, the Stock Unit Agreement shall continue in
full force and effect.
(e) Stock Options. All Stock Options granted to Executive as part of the
Initial Grant and the September Grant are hereby canceled, except that of the
300,000 options granted in the Initial Grant, Executive shall retain 60,000
options and of the 600,000 options granted in the September Grant, Executive
shall retain 120,000 options. All stock options retained by Executive pursuant
to this paragraph (e) shall be subject to the terms and conditions (including
vesting requirements) of the original grants.
(f) Life Insurance. From the Termination Date until the earlier to occur
of (i) the Second Anniversary of the Termination Date or (ii) the date Executive
commences employment with another employer, the Company will permit Executive to
continue to participate in the Company's basic life insurance and accidental
death and dismemberment
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policy for a benefit equal to two times the annual payment to be made by the
Company pursuant to Section 2(a) of this Agreement.
(g) Automobile. Executive will retain use of the automobile currently
leased for him by the Company until the end of the term of the lease for such
automobile (i.e., February 28, 2001). (h) Executive 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 Executive by applicable law. (i) No
payments shall be made under this Section 2 until this Agreement becomes
effective pursuant to Sections 20 and 24 hereof.
3. Termination of All Existing Agreements. All rights and obligations of
the Company and the Executive under any employment agreement, arrangement or
understanding and any other agreement between the Company and the Executive are
hereby canceled and terminated as of the Termination Date without liability of
any party hereunder, except that this Agreement, the Stock Unit Agreement (as
modified by Section 2(d) above) and the Partnership Option Agreements dated as
of September 8, 1998 and May 4, 1998 between the Company and Executive (each as
modified by Section 2(e) above) shall continue in full force and effect.
4. No Solicitation of Executives or Customers. Executive 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 Executive or
any other person or (ii) solicited for employment or induced any person employed
by the Company to terminate employment. During the two year period commencing on
the Termination Date, the Executive shall not, directly or indirectly, (i)
employ or seek to employ any person who is as of the Termination Date, or was at
any time during the six month period preceding the Termination Date, an officer,
general manager, or 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) 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.
5. Non-competition and Consulting.
(a) During the two year period commencing on tshe Termination Date (the
"Consulting Period"), the Executive shall not, directly or indirectly:
(x) 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
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(y) 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) During the Consulting Period, the Executive shall:
(x) be available to render services to the Company as an independent
contractor/consultant but not as an employee of the Company; and
(y) perform such duties as may be reasonably requested in writing from
time to time during the Consulting Period by the Company's Chief Executive
Officer, provided that such duties shall not conflict with the duties of the
Executive for a new employer if such employment does not violate the terms of
Section 5(a).
(c) Nothing in this Section 5 shall prohibit or otherwise restrict the
Executive 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 the Executive (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 the Executive (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.
(d) For purposes of this Section 5, "Restricted Business" shall mean the
retail store or mail order business or internet business or any business, in
each case if it is involved in the manufacture or marketing of toys, juvenile or
baby products, juvenile furniture or children's clothing or any other business
in which the Company may be engaged on the Termination Date. "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 Termination Date.
6. Retained Property. Subject to Section 2(g), no later than the
Termination Date, Executive shall return 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.
Executive also warrants that he has no debts to or loans from the Company.
Notwithstanding the foregoing, Executive shall have the right to retain (i)
duplicate photocopies of books and records of the Company that do not fall
within the category of "Confidential Information" (as defined below) and (ii)
all personal property of the Executive located on the premises of the Company.
7. Confidentiality. Executive acknowledges that he has had and through the
Termination Date will continue to have access to Confidential Information (as
hereinafter defined) of the Company. Executive agrees not to disclose,
communicate or divulge to, or use for the direct or indirect benefit of, any
person (including Executive), firm, association or other
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entity (other than the 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 Executive 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, Executive 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. Executive 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. 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 the Executive's employment and the cessation thereof. This
Agreement may only be changed by written agreement executed by the parties.
10. 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.
11. Representations and Warranties. Each party represents and warrants to
the other party that (i) the execution and delivery of this Agreement has been
duly authorized and all actions necessary for the due execution of this
Agreement have been taken, (ii) this Agreement constitutes the legal, valid and
binding obligation of the party, and (iii) this Agreement has been executed and
delivered as its own free act and deed and not as the result of duress by the
other party hereto. Executive specifically acknowledges that he has been advised
to consult legal counsel prior to executing this Agreement, and has been
afforded the opportunity of at least 21 days to consider this Agreement.
12. Non-Disparagement. Executive covenants and agrees not to engage in any
act or say anything that is intended, or may reasonably be expected to harm the
reputation, business, prospects or operations of the Company, its officers,
directors, stockholders or employees. The Company agrees that it will engage in
no act which is intended, or may reasonably be expected to harm the reputation,
business or prospects of Executive.
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13. Public Announcement. Except as required by law, Executive agrees not
to make any public disclosure with respect to this Agreement, the events leading
up to this Agreement, and the transactions contemplated by this Agreement.
14. No Admissions. Nothing contained in this Agreement shall be considered
an admission by either party of any wrongdoing or liability under any Federal,
state or local statute, public policy, tort law, contract law, common law or
otherwise.
15. Expenses. Subject to the following sentence, each party shall pay its
own costs incident to the negotiation, preparation, performance, execution, and
enforcement of this Agreement, and all fees and expenses of its or his counsel,
accountants, and other consultants, advisors and representatives for all
activities of such persons undertaken in connection with this Agreement.
Notwithstanding the immediately preceding sentence, solely to the extent that
the Executive is successful with respect thereto, the Company agrees to pay all
reasonable legal fees and expenses of one counsel that the Executive may
reasonably incur as result of any contest by Executive, by the Company or others
of the validity or enforceability of, or liability under, any provision of this
Agreement (including as a result of any contest by the Executive about the
amount of any payment pursuant to this Agreement).
16. Cooperation. Upon reasonable notice, Executive agrees to cooperate
reasonably with the Company and its affiliated corporation entities in the
defense of any claim asserted against them and as to which Executive has, or may
have, knowledge. The Company agrees to reimburse Executive for any regular and
ordinary expenses incurred in connection with such cooperation.
17. No Third Party Claims. Executive represents and warrants that no other
person or entity has, or to the best knowledge of Executive, claims, any
interest in any potential claims, demands, causes of action, obligations,
damages or suits pursuant to this Agreement; that he is the owner of all other
claims, demands, causes of action, obligations, damages or suits pursuant to
this Agreement; that he has full and complete authority to execute this
Agreement; and that he has not sold, assigned, transferred, conveyed or
otherwise disposed of any claim, demand, cause of action, obligation or
liability subject to this Agreement.
18. No Third Party Beneficiaries. Except as expressly stated herein, the
parties do not intend to make any person or entity who is not a party to this
Agreement a beneficiary hereof, and this Agreement should not be construed as
being made for the benefit of any person or entity not expressly provided for
herein.
19. 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.
20. Acceptance and Revocation. Executive shall have a period of twenty-one
(21) days from the date of receipt of this Agreement to review and accept this
Agreement. Executive shall have seven (7) days following his execution of this
Agreement during which time he may revoke this Agreement by providing the
Company with written notice of the revocation. This Agreement shall become
effective and enforceable after the expiration of seven
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(7) days following Executive's execution of the Agreement, and is not
enforceable until after the seven-day revocation period expires.
21. Future Employment. Executive hereby waives any right to reinstatement
or future employment with the Company following the Termination Date.
22. 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.
23. Merger, Consolidation, Sale of Assets by the Company. The Company
shall not merge or consolidate with any other person or sell or otherwise
dispose of all or substantially of its assets unless (i) the Company is the
continuing person in such merger or consolidation or (ii) the entity surviving
such consolidation or merger (if other than the Company) or to which such sale
or disposition is made assumes all of the obligations of the Company under this
Agreement.
24. Executive Committee Approval. This Agreement shall be subject to the
approval of the Executive Committee of the Company's Board of Directors. 1.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
Toys "R" Us, Inc.
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Chief Executive Officer
EXECUTIVE
/s/ Xxxxx X. Xxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxx
Original Document issued to Xxxxx X. Xxxxxxx on March __, 1999
