Exhibit 10.16
SPECIAL BONUS AND OPTION
AGREEMENT
THIS SPECIAL BONUS AND OPTION
AGREEMENT (this “Agreement”) is entered into as of July
22, 2005, by and among Richard L. Markee (the “
Executive ”), Toys “R” Us, Inc., a
Delaware corporation (the “ Company ”), and Toys
“R” Us Holdings, Inc., a Delaware corporation (“
Holdings ”).
WHEREAS, Executive is currently
acting as interim Chief Executive Officer of the Company;
and
WHEREAS, Holdings and the Company
desire to provide Executive with certain incentives so that
Executive will continue serving as the interim Chief Executive
Officer of the Company.
NOW, THEREFORE, the parties hereto
agree as follows:
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1.
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Special Cash
Bonus . Executive hereby
agrees and acknowledges that the Company is currently evaluating
its current management structure. As consideration for
Executive’s agreement to serve as the interim Chief Executive
Officer of the Company during such evaluation period, the Company
hereby awards Executive a special bonus (the “ Bonus
”). The Bonus shall be equal to $2,000,000 and shall be
payable to Executive in cash, so long as Executive is then employed
by the Company or one of its Subsidiaries, on the first to occur of
(i) Executive’s agreement to serve as the Chief Executive
Officer of the Company (after written notice to Executive from the
board of directors of the Company (the “ Board
”) that it has decided to retain Executive as Chief Executive
Officer of the Company and that it has stopped its search for a new
Chief Executive Officer), (ii) 90 days after the start date of the
person (if a person other than Executive) appointed by the Board to
the position of Chief Executive Officer of the Company, and (iii)
the twelve month anniversary of the date hereof; provided that, the
Bonus shall be paid to Executive on the date that Executive’s
employment by the Company and its Subsidiaries is terminated
without Cause or Executive resigns with Good Reason, if such events
occur before the date the Bonus would otherwise be paid. Payment of
the Bonus will be subject to all applicable withholding
obligations, and the Bonus will not be taken into account for the
purposes of calculating Executive’s benefits pursuant to any
of the Company’s or its Subsidiaries’ benefit programs.
The Bonus shall be an unfunded obligation of the
Company.
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2.
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Special Option
Grant . As further
consideration for Executive’s agreement to serve as the
interim Chief Executive Officer of the Company during the
above-mentioned evaluation period, Holdings hereby awards
Executive, as of the date hereof, an option to acquire 40,953
shares of the Class L Common Stock of Holdings, par value $0.01 per
share at a price of $24.0752 per share and 368,577 shares of the
Class A Common Stock of Holdings, par value $0.01 per share at a
price of $0.2972 per share (the “ Bonus Option
”). The Bonus Option is hereby granted pursuant to the 2005
Management Equity Plan of Holdings (the “ Plan
”), is (in its entirety) a Tranche I Option within the
meaning of the Plan, and (except as provided otherwise herein) is
subject to all of the terms and conditions of the Plan.
Notwithstanding the terms of the Plan, the Bonus Option
shall
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fully vest if Executive is
employed by the Company or one of its Subsidiaries on the first to
occur of (i) Executive’s agreement to serve as the Chief
Executive Officer of the Company (after written notice to Executive
from the Board that it has decided to retain Executive as Chief
Executive Officer of the Company and that it has stopped its search
for a new Chief Executive Officer), (ii) 90 days after the start
date of the person (if a person other than Executive) appointed by
the Board to the position of Chief Executive Officer of the
Company, and (iii) the twelve month anniversary of the date hereof;
provided that, the Bonus Option shall be deemed vested in full on
the date that Executive’s employment by the Company and its
Subsidiaries is terminated without Cause or Executive resigns with
Good Reason, if such events occur before the date the Bonus Option
would otherwise vest.
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3.
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Call
Provisions Regarding Bonus Option . Notwithstanding the terms of the Plan, in the
event Executive resigns with Good Reason, then, with respect to the
Bonus Option, such resignation shall be treated, for purposes of
Article IX of the Plan, as if Executive had been terminated without
Cause on the date of Executive’s resignation.
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4.
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Severance
Provisions . As further
consideration for the grant to Executive of the Bonus and the Bonus
Option, Executive hereby agrees that in any circumstance in which
Executive becomes entitled to recei
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