EXECUTION COPY
RETENTION AGREEMENT
BETWEEN
TOYS "R" US, INC.
AND
XXXXXX X. XXXXXXXX
DATED AS OF
February 25, 1998
XXXXXXXX AGREEMENT
EXECUTION COPY
TOYS "R" US, INC.
RETENTION AGREEMENT
AGREEMENT (this "Agreement"), by and between Toys "R" Us,
Inc., a Delaware corporation (the "Company"), and Xxxxxx X. Xxxxxxxx
(the "Executive"), dated as of February 25, 1998. Capitalized terms
used in this Agreement and in Exhibit A hereto that are not defined in
the operative provisions shall have the meanings ascribed to them on
Exhibit B hereto.
1. Employment Period. The Company hereby agrees to
continue to employ the Executive and the Executive hereby agrees to
remain in the employ of the Company subject to the terms and conditions
of this Agreement, for the Employment Period. The term "Employment
Period" means the period commencing on the date hereof and ending on the
second anniversary of such date as automatically extended for successive
additional one-year periods unless, at least six months prior to the
scheduled expiration of the Employment Period, the Company, based upon a
determination by the Board, shall give notice to the Executive that the
Employment Period shall not be so extended.
2. Terms of Employment. (a) Position. (i) Commencing
on the date hereof and for the remainder of the Employment Period, the
Executive shall serve as the Chief Executive Officer of the Company.
The Executive shall be based in Northeastern New Jersey.
(ii) During the Employment Period, and
excluding any periods of vacation and sick leave to which the Executive
is entitled, the Executive agrees to devote his full time during normal
business hours to the business and affairs of the Company and to use his
best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period, the Executive may, so
long as such activities do not interfere with the performance of his
responsibilities to the Company in accordance with this Agreement,
continue the corporate directorships on which the Executive serves, if
any, as of the date hereof and such other corporate directorships as are
consented to by the Committee. It is expressly understood and agreed
that to the extent that any such activities have been conducted by the
Executive with the knowledge of the Company prior to a Change of
Control, the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to a Change
of Control shall not thereafter be deemed to violate this Agreement.
(b) Compensation. (i) Base Salary. During the
Employment Period, the Executive shall receive his Annual Base Salary,
which will be paid in accordance with the Company's regular payroll
policies as in effect from time to time.
(ii) Incentive Bonus. The Executive shall also
be eligible, for each fiscal year ending during the Employment Period,
to receive (A) an annual incentive bonus, in accordance with targets
established by the Committee, of one-hundred percent (100%) of Annual
Base Salary at the target and up to two-hundred percent (200%) of Annual
Base Salary and (B) long-term incentive awards pursuant to the Company's
incentive Plans and subject to the terms thereof at a level commensurate
with his current grants and his current position. Each such incentive
bonus shall be paid in accordance with the Company's incentive Plans.
(iii) Participation in Other Plans. During the
Employment Period, the Executive shall be eligible to participate in all
other Plans at a level commensurate with his participation in such Plans
as of the date hereof, including continued vesting of outstanding option
grants and profits shares.
(iv) Stock Units. As further inducement for
the Executive to enter into this Agreement and to continue in the employ
of the Company, the Company has granted to the Executive stock units
contingent on performance and future service, pursuant to the Stock Unit
Agreement executed and delivered by the Company on the date hereof in
the form attached as Annex A hereto.
(v) Partnership Plan Units. During the
Employment Period the Executive shall be granted units under the
Partnership Plan in accordance with targets established by the Committee
in an amount equal to forty percent (40%) of the actual Annual Base
Salary at such target.
3. Termination of Employment.
(a) Notice of Termination. Any termination by the Company
for Cause, or by the Executive for Good Reason, shall be communicated by
Notice of Termination to the other party hereto given in accordance with
this Agreement. The failure by the Executive or the Company to set
forth in the Notice of Termination any fact or circumstance that
contributes to a showing of Good Reason or Cause shall not waive any
right of the Executive or the Company, respectively, hereunder or
preclude the Executive or the Company, respectively, from asserting such
fact or circumstance in enforcing the Executive's or the Company's
rights hereunder.
(b) Termination for Death, Disability or Retirement. the
Executive's employment shall terminate upon his death, Disability or
Retirement during the Employment Period. In the event of such
termination:
(i) the Company shall make a lump sum cash
payment to the Executive (or, in the event that termination results from
the death of the Executive, to his estate) within 30 days after the Date
of Termination in an amount equal to the sum of:
(A) the Executive's pro rata Annual Base
Salary payable through the Date of Termination to the extent not already
paid;
(B) the targeted amount of the
Executive's annual bonus, long-term incentive awards and Partnership
Plan Units that would have been awarded with respect to the fiscal year
in which the Date of Termination occurs, in each case absent the
termination of the Executive's employment, prorated for the portion of
such fiscal year through the Date of Termination taking into account the
number of complete months during such fiscal year through the Date of
Termination;
(C) the Executive's actual earned annual
bonus and long-term incentive awards and Partnership Plan Units for any
completed fiscal year or period not theretofore paid; and
(D) the account balance provided for
under the Plans, including the Company's supplemental executive
retirement plan, which shall be fully vested; and
(ii) (1) all unvested options held by the
Executive shall vest on the Date of Termination, (2) all unvested
profit shares held by the Executive or for the benefit of the Executive
by a grantor trust established by the Company shall vest on the Date of
Termination and shall be promptly delivered to the Executive or his
estate, (3) any other unvested equity based award (including, without
limitation, restricted stock and stock units) held by the Executive
shall vest on the Date of Termination and shall be delivered to the
Executive, or in the event of termination due to his death, the
Executive's estate, entirely in the form of Common Stock, $.10 par value
per share ("Common Stock") of the Company immediately upon termination
in the event of the Executive's death, or, in the event of termination
due to Retirement or Disability upon the later of May 1, 2002; or the
expiration of the period that the Executive's activities are restricted
under Section 10(c), subject to his compliance with the terms of this
Agreement through such date, (4) any options held by the Executive may
be exercised until the expiration date of such options and (5) the
Executive shall not be entitled to any additional grants of any stock
options, restricted stock, or other equity based or long-term awards;
and
(iii) the Executive (and his spouse and
dependent children) will be entitled to continuation of health benefits
under the Plans at a level commensurate with the Executive's current
position and if the Executive (or his spouse and dependent children upon
his death) elects to receive such health benefits, the Executive 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 the Executive that are
no less than those commensurate with the Executive's current position;
provided, that to the extent such benefits cannot be provided to the
Executive 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 the
Executive, on an after-tax basis, an amount necessary for the Executive
to acquire such benefits from an independent insurance carrier; and
provided further, that the obligations of the Company under this clause
(iii) shall be terminated if, at any time after the Date of Termination,
the Executive is employed by or is otherwise affiliated with a party
that offers comparable health benefits to the Executive.
(c) Resignation by the Executive Without Good Reason.
If the Executive shall resign his employment with the Company without
Good Reason, the Executive shall provide the Company with a Notice of
Termination at least six (6) months prior to the Date of Termination.
In the event of such resignation:
(i) the Company shall make a lump sum cash
payment to the Executive within 30 days after the Date of Termination in
an amount equal to the sum of:
(A) the Executive's pro rata Annual Base
Salary payable through the Date of Termination to the extent not already
paid;
(B) the Executive's actual earned annual
incentive awards for any completed fiscal year or period not theretofore
paid or deferred unless the Committee determines not to permit the
cancellation of such deferral; and
(C) the account balance provided for
under the Plans, including the Company's supplemental executive
retirement plan, which shall be fully vested; and
(ii) (1) all unvested options held by the
Executive that otherwise do not vest on the Date of Termination shall
continue to vest in accordance with their terms for two years after the
Date of Termination, and all remaining unvested options held by the
Executive shall be forfeited at the end of such two-year period, (2) all
unvested profit shares held by the Executive or for the benefit of the
Executive by a grantor trust established by the Company that otherwise
do not vest on the Date of Termination shall continue to vest in
accordance with their terms for two years after the Date of Termination
at the rate of 20% per annum and all remaining unvested profit shares
shall be forfeited at the end of such two-year period provided that, if
permitted by the terms of any such trust, any unvested profit shares
shall continue to be held by such grantor trust until such profit shares
vest pursuant to this clause (ii) and any such unvested profit share
that would otherwise vest in accordance with this clause (ii) but that
is not permitted to be so held shall vest immediately, (3) any other
unvested equity based award (including, without limitation, restricted
stock and stock units) held by the Executive shall be forfeited, (4) any
other vested equity award (including, without limitation, restricted
stock and stock units) shall be delivered to the Executive upon the
later of May 1, 2002; or the expiration of the period that the
Executive's activities are restricted under Sections 10(c) and (d),
subject to his compliance with the terms of this Agreement through such
date, (5) any options held by the Executive that are vested on the Date
of Termination or vest thereafter pursuant to this clause (ii) may be
exercised until the earlier of (x) 30 days after the twenty-four month
anniversary date of the Date of Termination and (y) the expiration date
of such options, and (6) the Executive shall not be entitled to any
additional grants of any stock options, restricted stock or, other
equity based or long-term awards; and
(iii) the Executive, his spouse and dependent
children will be entitled to the benefits set forth under Section
3(b)(iii).
(d) Termination by the Company for Cause. If the
Executive's employment shall be terminated for Cause during the
Employment Period, the Employment Period shall terminate without further
obligations to the Executive other than the obligation to pay him all
payments and benefits due, in accordance with the Company's Plans
through the Date of Termination. All stock units held by the Executive,
whether or not vested, shall be forfeited on the Date of Termination.
(e) Termination by the Company Without Cause or By
the Executive for Good Reason. If the Executive's employment shall be
terminated by the Company without Cause during the Employment Period, or
by the Executive for Good Reason, then:
(i) the Company shall make a lump sum cash
payment to the Executive within 30 days after the Date of Termination of
(x) the Executive's pro rata Annual Base Salary payable through the Date
of Termination to the extent not theretofore paid, (y) the targeted
amount of the Executive's annual incentive bonus and long-term incentive
awards and Partnership Plan Units that would have been payable with
respect to the fiscal year in which the Date of Termination occurs in
each case absent the termination of the Executive's employment, prorated
for the portion of such fiscal year through the Date of Termination
taking into account the number of complete months during such fiscal
year through the Date of Termination and (z) the Executive's actual
earned annual incentive bonus or long-term incentive awards and
Partnership Plan Units for any completed fiscal year or period not
theretofore paid or deferred;
(ii) the Company shall pay to the Executive in
equal installments, made at least monthly, over the twenty-four months
following the Date of Termination, an aggregate amount equal to (1) two
times the Executive's Annual Base Salary in effect on the Date of
Termination, (2) two times the targeted amount of the annual incentive
bonus that would have been paid or accrued to the Executive with respect
to the Company's fiscal year in which such Date of Termination occurs
and (3) two times the targeted amount of the long-term incentive award
and Partnership Plan Units that would have been paid or accrued to the
Executive with respect to such fiscal year;
(iii) the Company shall continue to provide, in
the manner and timing provided for in the Plans (other than as provided
in clauses (i), (ii), (iv) and (v) of this Section 3(e)), the benefits
provided under the Plans that the Executive would receive if the
Executive's employment continued for two years after the Date of
Termination, assuming for this purpose that the Executive's compensation
is the amount paid pursuant to clause (ii) above, and the Executive
shall be fully vested in any account balance and all other benefits
under the Plans; provided, however, that the benefits provided under
this clause (iii) shall be limited to the amounts permitted by law or as
would otherwise not potentially adversely impact on the tax
qualification of any Plans; provided, further, that if such benefits may
not be continued under the Plans, the Company shall pay to the Executive
an amount equal to the Company's cost had such benefits been continued.
(iv) (1) all unvested options held by the
Executive shall vest on the Date of Termination, (2) all unvested profit
shares held by the Executive or for the benefit of the Executive by a
grantor trust established by the Company shall vest on the Date of
Termination, (3) any other unvested equity based award (including,
without limitation, restricted stock and stock units) held by the
Executive shall vest on the two year anniversary date of the Date of
Termination on a pro rata basis determined by a fraction, the numerator
of which is the number of months elapsed from the grant of such equity
award through the Date of Termination plus the twenty-four months after
the Date of Termination and the denominator of which is the total number
of months in the vesting period for such award, and shall be delivered
to the Executive entirely in the form of Common Stock upon the later of
May 1, 2002 and the expiration of the period of that the Executive's
activities are restricted under Section 10(c), subject to compliance
with this Agreement through such date, (4) any options held by the
Executive that are vested on the Date of Termination or vest thereafter
pursuant to this clause (iv) may be exercised until the expiration date
of such options and (5) the Executive shall not be entitled to any
additional grants of any stock options, restricted stock, or other
equity based or long-term awards; and
(v) the Executive, his spouse and dependent
children shall be entitled to the benefits set forth under Section
3(b)(iii).
4. Obligations of the Company Relating to a Change of
Control.
(a) Notwithstanding any provision of this Agreement
or any Plan, in no event shall any compensation or benefits,
individually or in the aggregate, to which the Executive would be
entitled be less favorable for the two years following a Change of
Control than to which the Executive would have been entitled based upon
the most favorable of the Company's Plans in effect for the Executive at
any time during the 120-day period immediately preceding such Change of
Control.
(b) If the Executive's employment shall have been
terminated by the Company (other than for Cause) or by the Executive for
Good Reason during a Change of Control Period:
(i) the Company shall make a lump sum cash
payment to the Executive within 30 days after the Date of Termination in
an amount equal to the sum of the amounts provided by Sections 3(e)(i),
(ii) and (iii) except that all references therein to "two times" shall
be "three times"; and
(ii) (1) all unvested options held by the
Executive shall vest on the Date of Termination, (2) all unvested profit
shares held by the Executive or for his benefit by a grantor trust shall
vest on the Date of Termination, (3) any other unvested equity awards
(including, without limitation, restricted stock and stock units) held
by the Executive shall vest immediately and be promptly delivered to the
Executive entirely in the form of Common Stock, (4) any options held by
the Executive may be exercised until the expiration date of the options,
and (5) the Executive shall not be entitled to any additional grants of
any stock options, restricted stock, and other equity based or long term
awards; and
(iii) the Executive, his spouse and dependent
children shall be entitled to the benefits set forth in Section
3(b)(iii).
5. Release Agreement. The benefits pursuant to Section 3
are contingent upon the Executive (i) executing a Separation and Release
Agreement (the "Release Agreement") upon or after any Date of
Termination, a copy of which is attached as Exhibit A to this Agreement
and (ii) not revoking or challenging the enforceability of the Release
Agreement or this Agreement.
6. Offset. The Company shall have the right to offset the
amounts required to be paid to the Executive under this Agreement
against any amounts owed by the Executive to the Company, and nothing in
this Agreement shall prevent the Company from pursuing any other
available remedies against the Executive.
7. Nonexclusivity of Rights. Nothing in this Agreement
shall prevent or limit the Executive's continuing or future
participation in any Plan for which the Executive may qualify nor shall
anything herein limit or otherwise affect such rights as the Executive
may have under any contract or agreement with the Company. Amounts that
are vested benefits or that the Executive is otherwise entitled to
receive under any Plan, contract or agreement with the Company at or
subsequent to the Date of Termination shall be payable in accordance
with such Plan, or contract or agreement except as explicitly modified
by this Agreement.
8. Full Settlement; Legal Fees.
(a) No Obligation to Mitigate. In no event shall the
Executive be obligated to seek other employment or take any other action
by way of mitigation of the amounts payable to the Executive under any
of the provisions of this Agreement, and, except as specifically
provided in this Agreement, such amounts shall not be reduced whether or
not the Executive obtains other employment.
(b) Expenses of Contests. (i) The following shall
apply for any dispute arising hereunder, under the Release Agreement or
under the Stock Unit Agreement prior to a Change of Control: Other than
with respect to claims brought by the Executive against, or defenses by
the Executive of any claim of, the Company with respect to this
Agreement, the Release Agreement or the Stock Unit Agreement that were
determined to have been made or asserted by the Executive in bad faith
or frivolously, the Company agrees to pay all reasonable legal and
professional fees and expenses that the Executive may reasonably incur
as a result of any contest by the Executive, by the Company or others of
the validity or enforceability of, or liability under, any provision of
this Agreement, the Release Agreement or the Stock Unit Agreement
(including as a result of any contest by the Executive about the amount
of any payment pursuant to this Agreement), plus in each case interest
on any delayed payment at the applicable Federal rate provided for in
Section 7872(f)(2)(A) of the Code or any successor Section of the Code.
(ii) The following shall apply for any dispute
arising hereunder, under the Release Agreement or under the Stock Unit
Agreement upon or following a Change of Control: The Company agrees to
advance to the Executive all reasonable legal and professional fees and
expenses that the Executive may reasonably incur as a result of any
contest by the Executive, by the Company or others of the validity or
enforceability of, or liability under, any provision of this Agreement,
the Release Agreement or the Stock Unit Agreement (including as a result
of any contest by the Executive about the amount of any payment pursuant
to this Agreement), plus, in each case, interest on any delayed payment
at the applicable Federal rate provided for in Section 7872(f)(2)(A) of
the Code or any successor Section of the Code.
(iii) the Executive shall reimburse the
Company for its reasonable legal and professional fees and expenses, and
in the case of advances made pursuant to paragraph (ii) above, shall
refund the Company the amount of such advances, to the extent there is a
final determination that such fees, expenses or advances relate to
claims brought by the Executive against, or defenses by the Executive of
any claim of, the Company with respect to this Agreement, the Release
Agreement or the Stock Unit Agreement that were determined to have been
made or asserted by the Executive in bad faith or frivolously.
9. Certain Additional Payments by the Company. Anything
in this Agreement to the contrary notwithstanding, in the event that any
actual or constructive payment or distribution by the Company to or for
the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement, the Stock Unit
Agreement or otherwise) is subject to the excise tax imposed by Section
4999 of the Code or any successor provision of the Code (the "Excise
Tax"), then the Company shall make the payments described on Exhibit C
hereto.
10. Restrictions and Obligations of the Executive. (a)
Consideration for Restrictions and Covenants. The parties hereto
acknowledge and agree that the principal consideration for the agreement
to make the payments provided in Sections 3 and 4 hereof from the
Company to the Executive and the grant to the Executive of the stock
units of the Company as set forth in Section 2 hereof is the Executive's
compliance with the undertakings set forth in this Section 10.
Specifically, the Executive agrees to comply with the provisions of this
Section 10 irrespective of whether the Executive is entitled to receive
any payments under Section 3 or 4 of this Agreement.
(b) Confidentiality. The confidential and
proprietary information and in any material respect trade secrets of the
Company are among its most valuable assets, including but not limited
to, its customer and vendor lists, database, computer programs,
frameworks, models, its marketing programs, its sales, financial,
marketing, training and technical information, and any other
information, whether communicated orally, electronically, in writing or
in other tangible forms 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. The
Company has invested, and continues to invest, considerable amounts of
time and money in obtaining and developing the goodwill of its
customers, its other external relationships, its data systems and data
bases, and all the information described above (hereinafter collectively
referred to as "Confidential Information"), and any misappropriation or
unauthorized disclosure of Confidential Information in any form, would
irreparably harm the Company. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all Confidential Information
relating to the Company and its business, which shall have been obtained
by the Executive during the Executive's employment by the Company and
which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of
the Company or as may otherwise be required by law or legal process,
communicate, divulge or use any such information, knowledge or data to
anyone other than the Company and those designated by it.
(c) Non-Solicitation or Hire. During the Employment
Period and for a three-year period following the Date of Termination,
the Executive shall not, directly or indirectly (i) employ or seek to
employ any person who is at the Date of Termination, or was at any time
within the six-month period preceding the Date of Termination, 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; provided,
however, that if the Executive terminates the Agreement for "Good
Reason" or the Company terminates the Executive's employment hereunder
without Cause, the obligations under this Section 10(c) shall survive
for only a two-year period following the Date of Termination.
(d) Non-Competition and Consulting. (i) During the
Employment Period and for a two-year period following the Date of
Termination, the Executive shall not, directly or indirectly:
(x) engage in any managerial, administrative,
advisory, consulting, operational or sales activities in a Restricted
Business anywhere in the Restricted Area, including, without limitation,
as a director or partner of such Restricted Business, or
(y) organize, establish, operate, own, manage,
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;
and
(z) interfere with, disrupt or attempt to
disrupt the relationship, contractual or otherwise, between the Company
and any customer, supplier, lessor, lessee, employee, consultant,
research partner or investor of the Company.
(e) Litigation Assistance. The Executive agrees to
cooperate with the Company and its counsel in regard to any litigation
presently pending or subsequently initiated involving matters of which
the Executive has particular knowledge as a result of your employment
with the Company. Such cooperation shall consist of the Executive
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. The Executive 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. The obligations
under the Section 10(e) shall survive for a five-year period following
the Date of Termination.
(f) Exceptions. Sections 10(c) and (d) shall not
bind the Executive during any period following the termination of the
Executive's employment if there has been a Change of Control,
irrespective of whether the Change of Control occurs before or after the
Date of Termination.
(g) Permitted Investments. Nothing contained in
Section 10(d) 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 Restricted Business if
either (i) such entity is a public entity and such 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.
(h) Definitions. For purposes of this Section 10:
(i) "Restricted Business" means, (A) if the
Executive's employment is terminated for Cause or if the Executive
terminates his employment other than for Good Reason, any retail store
or mail order 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 Date of Termination, and (B) if the
Executive's employment is terminated for any other reason, Restricted
Business shall be limited to any such entity if it derives at least 10%
or more of its revenues in the aggregate from such products and/or
business in its most recent fiscal year.
(ii) "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 Date of Termination.
(i) Relief. The parties hereto hereby acknowledge
that the provisions of this Section 10 are reasonable and necessary for
the protection of the Company and its subsidiaries. In addition, the
Executive further acknowledges that the Company and its subsidiaries
will be irrevocably damaged if such covenants are not specifically
enforced. Accordingly, the Executive agrees that, in addition to any
other relief to which the Company may be entitled, the Company will be
entitled to seek and obtain injunctive relief (without the requirement
of any bond) from a court of competent jurisdiction for the purposes of
restraining the Executive from any actual or threatened breach of such
covenants. In addition, without limiting the Company's remedies for any
breach of any restriction on the Executive set forth in Section 10,
except as required by law, the Executive shall not be entitled to any
payments set forth in Section 3 or 4 hereof if the Executive willfully
breaches in any material respect any of the covenants applicable to the
Executive contained in this Section 10, the Executive will immediately
return to the Company such payments previously received upon such a
breach, and, in the event of such breach, the Company will have no
obligation to pay any of the amounts that remain payable by the Company
under Section 3 or 4.
11. Successors. (a) This Agreement is personal to the
Executive and without the prior written consent of the Company shall not
be assignable by the Executive otherwise than by will or the laws of
descent and distribution. This Agreement shall inure to the benefit of
and be enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
(c) The Company will, within thirty days after a
Change of Control, and the Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company
within thirty days after any such event of succession to, assume
expressly and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no
such succession had taken place. As used in this Agreement, "Company"
shall mean the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid that assumes and agrees to perform
this Agreement by operation of law, or otherwise.
12. Miscellaneous. (a) Governing Law. This Agreement
shall be governed by and construed in accordance with the laws of the
State of New Jersey, without reference to principles of conflict of
laws.
(b) Captions. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect.
(c) Amendment. This Agreement may not be amended or
modified otherwise than by a written agreement executed by the parties
hereto or their respective successors and legal representatives.
(d) Notices. All notices and other communications
hereunder shall be in writing and shall be given by hand delivery to the
other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
(i) If to the Executive, to the address
on file with the Company; and
(ii) If to the Company, to it at Toys
"R" Us, Inc., 000 Xxxx Xxxx, Xxxxxxx, Xxx Xxxxxx 00000, Attention:
Senior Vice President - Human Resources;
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(e) Assistance to Company. At all times during and
after the Employment Period and at the Company's expense for significant
out-of-pocket expenses actually and reasonably incurred by the Executive
in connection therewith, the Executive shall provide reasonable
assistance to the Company in the collection of information and documents
and shall make the Executive available when reasonably requested by the
Company in connection with claims or actions brought by or against third
parties or investigations by governmental agencies based upon events or
circumstances concerning the Executive's duties, responsibilities and
authority during the Employment Period.
(f) Severability of Provisions. Each of the
sections contained in this Agreement shall be enforceable independently
of every other section in this Agreement, and the invalidity or
nonenforceability of any section shall not invalidate or render
unenforceable any other section contained in this Agreement. The
Executive acknowledges that the restrictive covenants contained in
Section 10 are a condition of this Agreement and are reasonable and
valid in geographical and temporal scope and in all other respects. If
any court or arbitrator determines that any of the covenants in Section
10, or any part of any of them, is invalid or unenforceable, the
remainder of such covenants and parts thereof shall not thereby be
affected and shall be given full effect, without regard to the invalid
portion. If any court or arbitrator determines that any of such
covenants, or any part thereof, is invalid or unenforceable because of
the geographic or temporal scope of such provision, such court or
arbitrator shall reduce such scope to the minimum extent necessary to
make such covenants valid and enforceable.
(g) Withholding. The Company may withhold from any
amounts payable under this Agreement such Federal, state, local or
foreign taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
(h) Waiver. The Executive's or the Company's
failure to insist upon strict compliance with any provision hereof or
any other provision of this Agreement or the failure to assert any right
the Executive or the Company may have hereunder shall not be deemed to
be a waiver of such provision or right or any other provision or right
of this Agreement.
(i) 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 the 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 the reference 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 Executive has hereunto set the
Executive's hand and the Company has caused these presents to be
executed in its name on its behalf, all as of the day and year first
above written.
XXXXXX X. XXXXXXXX
/s/ Xxxxxx X. Xxxxxxxx
TOYS "R" US
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Sr. V.P. - Human Resources
EXHIBIT A
SEPARATION AND RELEASE AGREEMENT
This Separation and Release Agreement ("Agreement") is
entered into as of this __ day of ___________________________, 19__,
between TOYS "R" US, INC., a Delaware corporation, and any successor
thereto (collectively, the "Company") and Xxxxxx X. Xxxxxxxx (the
"Executive").
the Executive and the Company agree as follows:
1. The employment relationship between the Executive and
the Company terminated on __________________________________ (the
"Termination Date").
2. In accordance with the Executive's Retention Agreement
(the "Retention Agreement"), the Company has agreed to pay the Executive
certain payments and to make certain benefits available after the Date
of Termination.
3. In consideration of the above, the sufficiency of which
the Executive hereby acknowledges, the Executive, on behalf of the
Executive and the Executive's heirs, executors and assigns, hereby
releases and forever discharges the Company and its members, parents,
affiliates, subsidiaries, divisions, any and all current and former
directors, officers, employees, agents, and contractors and their heirs
and assigns, and any and all employee pension benefit or welfare benefit
plans of the Company, including current and former trustees and
administrators of such employee pension benefit and welfare benefit
plans, from all claims, charges, or demands, in law or in equity,
whether known or unknown, which may have existed or which may now exist
from the beginning of time to the date of this letter agreement,
including, without limitation, any claims the Executive may have arising
from or relating to the Executive's employment or termination from
employment with the Company, including a release of any rights or claims
the Executive may have under Title VII of the Civil Rights Act of 1964,
as amended, and the Civil Rights Act of 1991 (which prohibit
discrimination in employment based upon race, color, sex, religion, and
national origin); the Americans with Disabilities Act of 1990, as
amended, and the Rehabilitation Act of 1973 (which prohibit
discrimination based upon disability); the Family and Medical Leave Act
of 1993 (which prohibits discrimination based on requesting or taking a
family or medical leave); Section 1981 of the Civil Rights Act of 1866
(which prohibits discrimination based upon race); Section 1985(3) of the
Civil Rights Act of 1871 (which prohibits conspiracies to discriminate);
the Employee Retirement Income Security Act of 1974, as amended (which
prohibits discrimination with regard to benefits); any other federal,
state or local laws against discrimination; or any other federal, state,
or local statute, or common law relating to employment, wages, hours, or
any other terms and conditions of employment. This includes a release
by the Executive of any claims for wrongful discharge, breach of
contract, torts or any other claims in any way related to the
Executive's employment with or resignation or termination from the
Company. This release also includes a release of any claims for age
discrimination under the Age Discrimination in Employment Act, as
amended ("ADEA"). The ADEA requires that the Executive be advised to
consult with an attorney before the Executive waives any claim under
ADEA. In addition, the ADEA provides the Executive with at least 21
days to decide whether to waive claims under ADEA and seven days after
the Executive signs the Agreement to revoke that waiver.
Additionally, the Company agrees to discharge and release
the Executive and the Executive's heirs from any claims, demands, and/or
causes of action whatsoever, presently known or unknown, that are based
upon facts occurring prior to the date of this Agreement, including, but
not limited to, any claim, matter or action related to the Executive's
employment and/or affiliation with, or termination and separation from
the Company; provided that such release shall not release the Executive
from any loan or advance by the Company or any of its subsidiaries, any
act that would constitute "Cause" under the Executive's Retention
Agreement or a breach under Section ________ or _______ of the
Executive's Retention Agreement.
4. This Agreement is not an admission by either the
Executive or the Company of any wrongdoing or liability.
5. the Executive waives any right to reinstatement or
future employment with the Company following the Executive's separation
from the Company on the Termination Date.
6. the Executive agrees not to engage in any act after
execution of the Separation and Release Agreement 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 further agrees that it will engage in no act
which is intended, or may reasonably be expected to harm the reputation,
business or prospects of the Executive.
7. the Executive shall continue to be bound by Sections
_____ and _____ of the Executive's Retention Agreement.
8. the Executive shall promptly return all the Company
property in the Executive's possession, including, but not limited to,
the Company keys, credit cards, cellular phones, computer equipment,
software and peripherals and originals or copies of books, records, or
other information pertaining to the Company business. The Executive
shall return any leased or Company automobile at the expiration of the
restrictions under Section 10(d) of the Executive's Retention Agreement.
9. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey, without reference
to the principles of conflict of laws. Exclusive jurisdiction with
respect to any legal proceeding brought concerning any subject matter
contained in this Agreement shall be settled by arbitration as provided
in the Executive's Retention Agreement.
10. This Agreement represents the complete agreement
between the Executive and the Company concerning the subject matter in
this Agreement and supersedes all prior agreements or understandings,
written or oral. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or
their respective successors and legal representatives.
11. Each of the sections contained in this Agreement shall
be enforceable independently of every other section in this Agreement,
and the invalidity or nonenforceability of any section shall not
invalidate or render unenforceable any other section contained in this
Agreement.
12. It is further understood that for a period of 7 days
following the execution of this Agreement in duplicate originals, the
Executive may revoke this Agreement, and this Agreement shall not become
effective or enforceable until the revocation period has expired. No
revocation of this Agreement by the Executive shall be effective unless
the Company has received within the 7-day revocation period, written
notice of any revocation, all monies received by the Executive under
this Agreement and all originals and copies of this Agreement.
13. This Agreement has been entered into voluntarily and
not as a result of coercion, duress, or undue influence. The Executive
acknowledges that the Executive has read and fully understands the terms
of this Agreement and has been advised to consult with an attorney
before executing this Agreement. Additionally, the Executive
acknowledges that the Executive has been afforded the opportunity of at
least 21 days to consider this Agreement.
The parties to this Agreement have executed this Agreement
as of the day and year first written above.
TOYS "R" US, INC.
By: ___________________________
Name:
Title:
XXXXXX X. XXXXXXXX
_______________________________
EXHIBIT B
Capitalized terms used in the Agreement that are not elsewhere defined
in the Agreement have the definitions set forth below:
"Annual Base Salary" means the annual base salary of the
Executive in effect as of the date of the Agreement as may be increased
in the discretion of the Committee.
"Board" means the Board of Directors of the Company.
"Cause" means: (i) the conviction of, or pleading guilty or
nolo contendere to, a felony involving moral turpitude; (ii) the
commission of any fraud, misappropriation or misconduct which causes
demonstrable injury to the Company or a subsidiary; (iii) an act of
dishonesty resulting or intended to result, directly or indirectly, in
material gain or personal enrichment to the Executive at the expense of
the Company or a subsidiary; (iv) any willful and material breach of the
Executive's fiduciary duties to the Company as an employee or director;
(v) a serious and willful violation of the Toys "R" Us Ethics Agreement
or any other serious and willful violation of a Company policy; (vi) the
willful and continued failure of the Executive to perform substantially
the Executive's duties with the Company or one of its subsidiaries
(other than any such failure resulting from incapacity due to physical
or mental illness resulting in a Disability), within a reasonable time
after a written demand for substantial performance is delivered to the
Executive by the Board, which specifically identifies the manner in
which the Board believes that the Executive has not substantially
performed the Executive's duties; (vii) the failure by the Executive to
comply, in any material respect, with the provisions of Section 10 of
the Agreement; or (viii) the failure by the Executive to comply with any
other undertaking set forth in the Agreement or any breach by the
Executive hereof that is reasonably likely to result in a material
injury to the Company.
For purposes of this provision, no act or failure to act, on
the part of the Executive, shall be considered "willful" unless it is
done, or omitted to be done, by the Executive in bad faith or without
reasonable belief that the Executive's action or omission was in the
best interests of the Company. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or
based upon the advice of regular outside counsel for the Company shall
be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The
cessation of employment of the Executive shall not be deemed to be for
Cause unless and until there shall have been delivered to the Executive
a copy of a resolution duly adopted by the affirmative vote of a
majority of the entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice is provided to
the Executive and the Executive is given an opportunity, together with
counsel, to be heard before the Board), finding that, in the good faith
opinion of the Board, the Executive is guilty of the conduct described,
and specifying the particulars thereof in detail.
"Change of Control" means, after the date hereof:
(a) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 25% or more of either (i) the
then outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or (ii) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this subsection
(a), the following acquisitions shall not constitute a Change of
Control: (i) any acquisition by the Company or any of its
subsidiaries, (ii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any subsidiary
of the Company, (iii) any acquisition by any Person pursuant to a
transaction that complies with clauses (i), (ii) and (iii) of subsection
(c) below, or (iv) any acquisition by any entity in which the Executive
has a material direct or indirect equity interest; or
(b) The cessation of the "Incumbent Board" for any
reason to constitute at least a majority of the Board. "Incumbent
Board" means the members of the Board on the date hereof and any member
of the Board subsequent to the date hereof whose election, or nomination
for election by the Company's stockholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board,
except that the Incumbent Board shall not include any member of the
Board whose initial assumption of office occurs as a result of an actual
or threatened election contest with respect to the election or removal
of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board.
(c) The consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all
of the assets of the Company (a "Business Combination"), in each case,
unless, immediately following such Business Combination each of the
following would be correct:
(i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively,
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the Person resulting from
such Business Combination (including, without limitation, a Person which
as a result of such transaction owns the Company or all or substantially
all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the
case may be, and
(ii) no Person (excluding (A) any employee
benefit plan (or related trust) sponsored or maintained by the Company
or any subsidiary of the Company, or such corporation resulting from
such Business Combination or any Affiliate of such corporation, or (B)
any entity in which the Executive has a material equity interest, or any
"Affiliate" (as defined in Rule 405 under the Securities Act of 1933, as
amended) of such entity) beneficially owns, directly or indirectly, 25%
or more of, respectively, the then outstanding shares of common stock of
the corporation resulting from such Business Combination, or the
combined voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to
the Business Combination, and
(iii) at least a majority of the members of the
board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(d) Approval by the stockholders of the
Company of a complete liquidation or dissolution of the
Company.
"Change of Control Period" means the period commencing 120
days prior to a Change of Control and expiring on the second anniversary
date of a Change of Control.
"Committee" means the Company's Management Compensation and
Stock Option Committee of the Board of Directors or any successor
committee of the Board performing equivalent functions.
"Date of Termination" means (i) if the Executive's
employment is terminated by the Company for Cause, or by the Executive
for Good Reason, the date of receipt of the Notice of Termination or any
later date specified therein, as the case may be (although such Date of
Termination shall retroactively cease to apply if the circumstances
providing the basis of termination for Cause or Good Reason are cured in
accordance with the Agreement), (ii) if the Executive's employment is
terminated by the Company other than for Cause, the Date of Termination
shall be the date so designated by the Company in its notification to
the Executive of such termination, (iii) if the Executive's employment
is terminated by reason of death or Disability, the Date of Termination
shall be the date of death of the Executive or the effective date of the
Disability, as the case may be, (iv) if the Executive's Employment is
terminated by the Executive without Good Reason, the Date of Termination
shall be the last day on which the Executive is employed by the Company
as a regular employee, or (v) the last day of the Employment Period
during which the Company shall have given notice to the Executive that
the Employment Period shall not be extended.
"Disability" means the determination that the Executive is
disabled pursuant to the terms of the TRU Partnership Employees' Savings
and Profit Sharing Plan, as amended and restated as of October 1, 1993,
as the same may be amended from time to time.
"Good Reason" means, without the Executive's prior written
consent, the occurrence of any of the following, provided that the
Executive delivers a Notice of Termination specifying such occurrence
within 30 days thereof:
(i) the assignment of the Executive to a position
other than Chief Executive Officer;
(ii) any failure by the Company to comply in any
material respect with any of the provisions of Section 2(b) of the
Agreement, other than failure not occurring in bad faith and that is
remedied by the Company within a reasonable time after receipt of notice
thereof given by the Executive;
(iii) any failure by the Company to comply with and
satisfy Section 11(c) of the Agreement; or
(iv) notice by the Company that it is not extending
the termination date of the Employment Period.
"Notice of Termination" means a written notice that (i)
indicates the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if
the Date of Termination (as defined above) is other than the date of
receipt of such notice, specifies the termination date.
"Partnership Plan" means the Partnership Group Deferred
Compensation Plan of the Company.
"Plans" means all employee compensation, benefit and welfare
plans, policies and programs of the Company, which may include, without
limitation, incentive, savings, retirement, stock option, restricted
stock, supplemental executive retirement, the Partnership Plan, pension,
medical, prescription, dental, disability, salary continuance, employee
life, group life, accidental death and travel accident insurance plans,
vacation practices, fringe benefit practices and policies relating to
the reimbursement of business expenses.
"Retirement" shall have the meaning ascribed to that term in
the Plan under which benefits are being sought by the Executive or, if
such meaning is inapplicable, the term shall mean a termination of
employment with the Company or a subsidiary on a voluntary basis prior
to the age of sixty (60). The term "Retirement" shall also include
"early" retirement prior to the age of sixty (60) provided that the
Committee, in its sole discretion, consents in writing to accept such
early retirement.
EXHIBIT C
TAX GROSS-UP
(a) If required by Section 9 of the Agreement, in addition
to the payments described in Section 4 of the Agreement and the grants
described in the Stock Unit Agreement, the Company shall pay to the
Executive an amount (the "Gross-up") such that the net amount retained
by the Executive, after deduction of any Excise Tax and any Federal,
state and local income taxes, equals the amount of such payments that
the Executive would have retained had such Excise Tax not been imposed.
In addition, the Company shall indemnify and hold the Executive harmless
on an after-tax basis from any Excise Tax imposed on or with respect to
any such payment (including, without limitation, any interest, penalties
and additions to tax) payable in connection with any such Excise Tax.
For purposes of determining the amount of any Gross-up or the amount
required to make an indemnity payment on an after-tax basis, it shall be
assumed that the Executive is subject to Federal, state and local income
tax at the highest marginal statutory rates in effect for the relevant
period after taking into account any deduction available in respect of
any such tax (e.g., if state and local taxes are deductible for Federal
income tax purposes in the relevant period, it shall be assumed that
such taxes offset income that would otherwise be subject to Federal
income tax at the highest marginal statutory rate in effect for such
period).
(b) Subject to the provisions of paragraph (c) of this
Exhibit C, the determination of (i) whether a Gross-up is required and
the amount of such Gross-up and (ii) the amount necessary to make any
payment on an after-tax basis, shall be made in accordance with the
assumptions set forth in paragraph (a) of this Exhibit C by Ernst &
Young LLP or such other "Big Six" accounting firm designated by the
Executive and reasonably acceptable to the Company.
(c) the Executive shall notify the Company as soon as
practicable in writing of any claim by the Internal Revenue Service
that, if successful, would require any Gross-up or indemnity payment.
The Executive shall not pay such claim prior to the expiration of the
30-day period following the date on which it gives such notice to the
Company. If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the
Executive shall take all actions necessary to permit the Company to
control all proceedings taken in connection with such contest. In that
connection, the Company may, at its sole option, pursue or forgo any and
all administrative appeals, proceedings, hearings and conferences in
respect of such claim and may, at its sole option, either direct the
Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner; provided, however, that the Company
shall pay and indemnify the Executive from and against all costs and
expenses incurred in connection with such contest; provided further,
however, that if the Company directs the Executive to pay such claim and
xxx for a refund, the Company shall advance the amount of such payment
to the Executive on an interest-free basis and at no net after-tax cost
to the Executive. If the Executive becomes entitled to receive any
refund or credit with respect to such claim (or would be entitled to a
refund or credit but for a counterclaim for taxes not indemnified
hereunder), the Executive shall promptly pay to the Company the amount
of such refund (together with any interest paid or credited thereon)
plus the amount of any tax benefit available to the Executive as a
result of making such payment (any such benefit calculated based on the
assumption that any deduction available to the Executive offsets income
that would otherwise be taxed at the highest marginal statutory rates of
Federal, state and local income tax for the relevant periods).
EXECUTION COPY
ANNEX A
STOCK UNIT AGREEMENT
STOCK UNIT AGREEMENT, dated as of February 25, 1998 (the
"Unit Agreement"), between TOYS "R" US, INC., a Delaware corporation
(the "Company"), and XXXXXX X. XXXXXXXX (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company proposed for the approval of the
stockholders of the Company at the 1997 Annual Meeting of Stockholders
an Amendment (the "Amendment") to the Company's 1994 Stock Option and
Performance Incentive Plan (the "Plan") providing for performance
criteria that may be utilized by the Management Compensation and Stock
Option Committee (the "Committee") in connection with the grant of
Performance Shares (as defined in the Plan and referred to herein as
"Stock Units"), and the Stockholders approved such Amendment;
WHEREAS, concurrently herewith, the Executive and the
Company are entering into a Retention Agreement, dated as of even date
herewith (the "Retention Agreement");
WHEREAS, as further inducement for the Executive to execute
the Retention Agreement and continue in the employ of the Company, the
Committee has determined to grant the Executive the Stock Units as
described in this Unit Agreement, and
WHEREAS, the Board and the Committee desire that the
compensation arising from the Stock Units shall qualify as "performance-
based compensation" for purposes of Section 162(m) of the Internal
Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the covenants set forth
herein and for other good and valuable consideration, the parties agree
as follows:
1. Definitions. Capitalized terms used herein without
definition shall have the meanings ascribed to them in the Plan and in
the Retention Agreement.
2. Stock Unit Grant. Subject to the terms and conditions
set forth in this Unit Agreement and in Section 10 of the Plan, the
Executive is hereby granted 158,000 Stock Units. Each Stock Unit
represents the right to receive one share of Common Stock (collectively,
with other shares of Common Stock relating to the Stock Units and held
in the Executive's account in the Trust (as defined below) in respect of
the Stock Units, the "Shares"). The 158,000 Shares shall be promptly
deposited after the date hereof in the grantor trust created pursuant to
the Grantor Trust Agreement, dated as of October 1, 1995 between the
Company and American Express Trust Company, a Minnesota trust company
(together with any grantor trust subsequently established by the
Company, the "Trust") and shall be allocated by the Trust to the
Executive's account therein subject to the vesting conditions of
Sections 3 and 4 below. Any property attributable to the Shares,
including, without limitation, dividends and distributions thereon shall
be deposited into the Trust, shall as promptly as practicable be
reinvested in shares of Common Stock, and shall be allocated by the
Trust to the Executive's account therein subject to the vesting
conditions of Sections 3 and 4 below.
3. Vesting. (a) Except as provided in the Retention
Agreement and subject to Section 4(b), the Stock Units shall vest at the
rate of twenty percent (20%) per annum on May 1 of each year, beginning
on May 1, 1998, throughout the Employment Period; provided that, the
Committee has determined that the Performance Objective set forth in
Exhibit A has been achieved.
(b) The Committee shall determine whether the Performance
Objective set forth on Exhibit A has been achieved as soon as
practicable, but no later than the earlier of (x) May 1, 2002 or (y) the
Date of Termination.
4. Payment of Stock Units. (a) The Shares, together
with any property attributable thereto (including, without limitation,
dividends and distributions thereon), shall be delivered to the
Executive as provided in the Retention Agreement.
(b) The provisions of Sections 8(b) and 9 of the Retention
Agreement shall apply to the Stock Unit and related Shares, whether or
not the Retention Agreement is then in effect.
5. Investment Representation. The Shares acquired by the
Executive under this Unit Agreement will be acquired for the Executive's
account and not with a view to the distribution thereof, and the
Executive will not sell or otherwise dispose of the Shares unless the
Shares are registered under the Securities Act of 1933, as amended (the
"Act"), or the Executive shall furnish the Company with an opinion of
counsel reasonably satisfactory to the Company that such registration is
not required, and a legend to such effect may be placed on the
certificate for the Shares.
6. Liability; Indemnification. No member of the
Committee, nor any person to whom ministerial duties have been
delegated, shall be personally liable for any action, interpretation or
determination made with respect to this Unit Agreement, and each member
of the Committee shall be fully indemnified and protected by the Company
with respect to any liability such member may incur with respect to any
such action, interpretation or determination, to the extent permitted by
applicable law and to the extent provided in the Company's Certificate
of Incorporation and Bylaws, as amended from time to time, or under any
agreement between any such member and the Company.
7. Severability. Each of the Sections contained in this
Unit Agreement shall be enforceable independently of every other section
in this Unit Agreement, and the invalidity or nonenforceability of any
section shall not invalidate or render unenforceable any other section
contained in this Unit Agreement.
8. Governing Law. This Unit Agreement shall be governed
by and construed in accordance with the laws of the State of New Jersey,
without reference to principles of conflict of laws. Exclusive
jurisdiction with respect to any legal proceeding brought concerning any
subject matter contained in this Unit Agreement shall be settled by
arbitration as provided in the Retention Agreement.
9. Captions. The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect.
10. Amendment. This Unit Agreement may not be amended or
modified otherwise than by a written agreement executed by the parties
hereto or their respective successors and legal representatives.
11. Notices. All notices and other communications
hereunder shall be in writing and shall be given by hand delivery to the
other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
(i) If to the Executive, to the address on file with the
Company; and
(ii) If to the Company, to it at Toys "R" Us, Inc.,
000 Xxxx Xxxx, Xxxxxxx, Xxx Xxxxxx 00000, Attention: Senior Vice
President - Human Resources;
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
12. Interpretation. The interpretation and decision with
regard to any question arising under this Unit Agreement or with respect
to the Stock Units made by the Committee shall be final and conclusive
on the Executive.
13. Successors. This Unit Agreement shall be binding upon
the Company and its successors and assigns.
IN WITNESS WHEREOF, this Agreement has been executed by the
Company by one of its duly authorized officers as of the date specified
above.
TOYS "R" US, INC.
By: Xxxxx X. Xxxxxx
Title: Sr. V.P. - Human Resources
I hereby acknowledge receipt of the Stock Units and agree to
the provisions set forth in this Agreement.
/s/ Xxxxxx X. Xxxxxxxx
Signature of Executive
