Exhibit 10.46
EMPLOYMENT
AGREEMENT
F. CLAY CREASEY,
JR.
This EMPLOYMENT AGREEMENT (the
“ Agreement ”) is dated as of April 5, 2006
(the “ Execution Date ”) by and between Toys
“R” Us, Inc. (the “ Company ”), a
subsidiary of Toys “R” Us Holdings, Inc. (“
Holdings ”), and F. Clay Creasey, Jr. (the “
Executive ”).
WHEREAS , as of the Execution Date, the Company desires
to employ Executive and to enter into an agreement embodying the
terms of such employment and Executive desires to accept such
employment and enter into such an agreement.
NOW, THEREFORE
, in consideration of the premises
and mutual covenants herein and for other good and valuable
consideration, the parties agree as follows:
1. Term of Employment .
Subject to the provisions of Section 7 of this Agreement,
Executive shall be employed by the Company and, as described below,
designated subsidiaries of the Company, for a period commencing on
May 1, 2006 (the “ Hire Date ”) and ending
on the fifth anniversary of the Hire Date (the “ Initial
Term ”), on the terms and subject to the conditions set
forth in this Agreement. Following the Initial Term, the term of
Executive’s employment hereunder shall automatically be
renewed on the terms and conditions hereunder for additional one
year periods commencing on each anniversary of the last day of the
Initial Term (the Initial Term and any annual extensions of the
term of this Agreement, subject to the provisions of Section 7
hereof, together, the “ Employment Term ”),
unless either party gives written notice of non-renewal at least 60
days prior to such anniversary.
2. Position .
a. During the Employment Term, until
May 15, 2006, Executive shall serve as Executive Vice
President of the Company, Toys “R” Us – Delaware,
Inc. and any other subsidiaries of the Company that the board of
directors of the Company (the “ Board ”)
designates or in such other capacities as the Company may determine
from time to time. Thereafter (or commencing on such earlier date
as the Board may determine), during the remainder of the Employment
Term, Executive shall serve as the Chief Financial Officer of the
Company, Toys “R” Us - Delaware, Inc. and any other
subsidiaries of the Company that the Board designates (such
entities collectively referred to as the “ TRU Group
”) or in such other capacities as the Board may determine
from time to time. In such position as the Chief Financial Officer,
Executive shall have such duties and authority as determined by the
Board and the board of directors of each subsidiary of the Company,
as applicable (each, a “ Subsidiary Board ”) and
commensurate with the position of chief financial officer of a
company of similar size and nature to that of the TRU Group. During
the Employment Term, the Executive shall report to the Chief
Executive Officer of the Company (“CEO”) and of each
Subsidiary, as applicable or such other persons as the Company may
determine from time to time.
b. During the Employment Term,
Executive will devote Executive’s full business time and
reasonable best efforts to the performance of Executive’s
duties hereunder and will not engage in any other business,
profession or occupation for compensation or otherwise
which would conflict or interfere in
any material respect with the rendition of such services either
directly or indirectly, without the prior written consent of the
CEO; provided that nothing herein shall preclude Executive
from continuing to serve on any board of directors or trustees,
advisory board or government commission which is listed on Exhibit
A attached hereto, or, subject to the prior approval of the CEO,
from accepting appointment to serve on any board of directors or
trustees of any business corporation or any charitable
organization; provided in each case in the aggregate, that
such activities do not conflict or interfere with the performance
of Executive’s duties hereunder or conflict with
Section 8.
3. Base Salary . During the
Employment Term, the Company shall pay Executive a base salary at
the annual rate of $450,000, payable in substantially equal
periodic payments in accordance with the Company’s practices
for other executive employees, as such practices may be determined
from time to time. Executive shall be entitled to such increases in
Executive’s base salary, if any, as may be determined from
time to time in the sole discretion of the Board or any appropriate
committee or delegee thereof, which shall at least annually review
Executive’s rate of base salary to determine if any such
increase shall be made. Executive’s annual base salary, as in
effect from time to time hereunder, is hereinafter referred to as
the “ Base Salary .”
4. Annual Bonus . During the
Employment Term, Executive shall be eligible to earn an annual
bonus award in respect of each fiscal year of the Company (an
“ Annual Bonus ”), in a target amount of up to
90% of Executive’s Base Salary (the “ Target
Bonus ”), payable upon the Company’s achievement of
certain performance targets established by the Board or any
appropriate committee or delegee thereof and pursuant to the terms
of the Company’s incentive plan, as in effect from time to
time. Notwithstanding the foregoing, in the event the
Company’s performance exceeds such performance targets,
Executive shall be eligible to earn an Annual Bonus in an amount in
excess of the Target Bonus, as determined by the Board or any
appropriate committee or delegee thereof in accordance with the
Company’s incentive plan, as in effect from time to time.
Executive shall be eligible to earn an Annual Bonus for the
Company’s 2006 fiscal year in accordance with the foregoing
without any pro-rata reduction relating to the portion of the 2006
fiscal year occurring prior to the Hire Date.
5. Employee Benefits;
Perquisites; Business and Relocation Expenses .
a. Employee Benefits . During
the Employment Term, Executive and his spouse and dependents, as
applicable, shall be entitled to participate in the Company’s
welfare benefit plans and retirement plans, including, without
limitation, the Company’s 401(k) and supplemental executive
retirement plans and medical, dental and life insurance plans, as
in effect from time to time (collectively, the “ Employee
Benefits ”), on the same basis as those benefits are or
may be made available to the other senior executives of the Company
(other than benefits which have been terminated or for which
participation has been frozen as of the Hire Date). The Company
shall be permitted to modify such benefits from time to time
consistent with any modifications that impact other senior
executives of the Company.
b. Perquisites . During the
Employment Term, Executive shall be entitled to receive such
perquisites as are made available to other senior executives of the
Company in accordance with the Company’s policies, as in
effect from time to time. Executive shall be
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entitled to not less than four
(4) weeks of paid vacation per year, which vacation shall be
taken at such times as are reasonably acceptable to the Company in
light of the Company’s operations, Executive’s
performance of his duties, and in accordance with the terms of the
Company’s vacation policy, as in effect from time to time,
applicable to Executive.
c. Business Expenses . During
the Employment Term, reasonable business expenses incurred by
Executive in the performance of Executive’s duties hereunder
shall be reimbursed by the Company in accordance with the
Company’s policies, as in effect from time to time,
applicable to senior executive officers of the Company.
d. Relocation Expenses . The
Company shall reimburse Executive for relocation costs he
reasonably incurs in connection with relocating his family to the
area in proximity of Wayne, New Jersey, to the extent consistent
with the Company’s current relocation policies or as mutually
agreed upon by Executive and the Company.
6. Equity. Executive shall,
through one or more acquisitions during the 18 month period
following the Hire Date, purchase restricted stock in Holdings in
the form of strips of securities containing nine (9) shares of
Class A Common Stock of Holdings and one (1) share of
Class L Common Stock of Holdings (each a “Strip”) in an
aggregate amount of up to $400,000. Holdings shall make one or more
grants of options to acquire Strips to Executive on the date of
each such purchase, in each case, pursuant to the Toys
“R” Us Holdings, Inc. 2005 Management Equity Plan (the
“ Equity Plan ”). The number of Strips covered
by any such option grant shall be the amount determined by
multiplying 122,841 times the fraction, the numerator of which is
the aggregate dollar value of the restricted stock being purchased
at such time and the denominator of which is $400,000. Holdings and
Executive shall enter into certain agreements in connection with
such grants. The price per Strip of all restricted stock so
purchased shall be equal to the greater of (i) the sum of the
aggregate fair market value of each class of Common Stock of
Holdings underlying the one Strip as of the Execution Date hereof
or (ii) the sum of the aggregate fair market value of each
class of Common Stock of Holdings underlying the one Strip as of
the date of purchase (such greater amount, the “Determined
Value”). The aggregate per Strip strike price of all stock
options so granted shall be equal to the greater of (i) the
Determined Value or (ii) $26.75.
7. Termination . The
Employment Term and Executive’s employment hereunder may be
terminated by either party at any time and for any reason;
provided that Executive will be required to give the Company
at least 60 days’ advance written notice of any resignation
of Executive’s employment without Good Reason (as defined in
Section 7(c) below) (other than due to Executive’s death
or Disability). Notwithstanding any other provision of this
Agreement, the provisions of this Section 7 shall exclusively
govern Executive’s rights upon termination of employment with
the TRU Group; provided, however, that nothing contained in this
Section 7 shall alter Executive’s or Holdings’
rights with respect to the Equity Documents, which shall continue
to govern Executive’s equity holdings following any
termination in accordance herewith.
a. By the Company For Cause or By
Executive Without Good Reason .
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(i) The Employment Term and
Executive’s employment hereunder may be terminated by the
Company for Cause (as defined below) and shall terminate
automatically upon Executive’s resignation without Good
Reason (other than due to Executive’s death or Disability);
provided that Executive will be required to give the Company
at least 60 days’ advance written notice of such
resignation.
(ii) For purposes of this Agreement,
“ Cause ” shall mean any of the following, as
determined by the CEO: (A) Executive’s willful failure
to perform any material portion of his duties; (B) the
commission of any fraud, misappropriation or misconduct by
Executive that causes demonstrable injury, monetarily or otherwise,
to the Company or an affiliate; (C) the conviction of, or
pleading guilty or nolo contendere to, a felony involving moral
turpitude; (D) an act resulting or intended to result,
directly or indirectly, in material gain or personal enrichment to
the Executive at the expense of the Company or an affiliate;
(E) any material breach of Executive’s fiduciary duties
to the Company or an affiliate as an employee or officer;
(F) a violation of the Company’s Code of Ethical
Standards, Business Practices and Conduct or any other violation of
a TRU Group policy; (G) the failure by the Executive to
comply, in any material respect, with the provisions of Sections 8
and 9 of this Agreement or any of the restrictive covenants imposed
pursuant to the Equity Documents; or (H) the failure by the
Executive to comply with any other undertaking set forth in this
Agreement or any other agreement Executive has with the Company or
any affiliate or any breach by Executive hereof or thereof if such
failure or breach is reasonably likely to result in a material
injury to the Company or an affiliate.
(iii) If Executive’s
employment is terminated by the Company for Cause, or if Executive
resigns without Good Reason, Executive shall be entitled to
receive:
(A) a lump sum payment of the Base
Salary that is earned by Executive but unpaid as of the date of
Executive’s termination of employment, paid in accordance
with the Company’s payroll practices, but in no event later
than thirty (30) days following Executive’s termination
of employment;
(B) reimbursement, within 30 days
following submission by Executive to the Company of appropriate
supporting documentation, for any unreimbursed business expenses
properly incurred by Executive in accordance with the Company
policy referenced in Section 5(c) above prior to the date of
Executive’s termination; provided claims for such
reimbursement (accompanied by appropriate supporting documentation)
are submitted to the Company within ninety (90) days following
the date of Executive’s termination of employment;
and
(C) such Employee Benefits, if any,
as to which Executive may be entitled under the employee benefit
plans of the Company (the amounts described in clauses
(A) through (C) hereof being referred to as the “
Accrued Rights ”).
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Following such termination of Executive’s
employment by the Company for Cause or resignation by Executive
without Good Reason, except as set forth in this
Section 7(a)(iii), Executive shall have no further rights to
any compensation or any other benefits under this
Agreement.
b. Disability or Death
.
(i) The Employment Term and
Executive’s employment hereunder shall terminate upon
Executive’s death and may be terminated by the Company upon
the Executive’s Disability. For purposes of this Agreement,
“Disability” shall mean the determination that the
Executive is disabled pursuant to the terms of the Company’s
long term disability plan.
(ii) Upon termination of
Executive’s employment hereunder for either Disability or
death, Executive or Executive’s estate (as the case may be)
shall be entitled to receive:
(A) the Accrued Rights;
(B) a lump sum payment of any Annual
Bonus that is earned by Executive but unpaid as of the date of
termination for the immediately preceding fiscal year, paid in
accordance with Section 4 (except to the extent payment is
otherwise deferred pursuant to any applicable deferred compensation
arrangement with the Company); and
(C) a pro rata portion of the Annual
Bonus, if any, that Executive would have been entitled to receive
pursuant to Section 4 hereof for such year based upon the
Company’s actual results for the year of termination and the
percentage of the fiscal year that shall have elapsed through the
date of Executive’s termination of employment, payable to
Executive pursuant to Section 4 had Executive’s
employment not terminated.
Following Executive’s
termination of employment due to Executive’s death or
Disability, except as set forth in this Section 7(b)(ii),
Executive or his estate, as applicable, shall have no further
rights to any compensation or any other benefits under this
Agreement.
c. By the Company Without Cause
or by Executive for Good Reason .
(i) Executive’s employment
hereunder may be terminated (A) by the Company without Cause
(which shall not include Executive’s termination of
employment due to his death or Disability) or (B) by Executive
for Good Reason (as defined below).
(ii) For purposes of this Agreement,
“ Good Reason ” shall mean, without the consent
of the Executive and other than in connection with a termination of
the Executive’s employment by the Company for Cause or due to
Executive’s death or Disability, (A) the failure of the
Company to pay any undisputed amount due under this Agreement; or
(B) a substantial reduction in Executive’s targeted
compensation level (other than a general reduction in
base
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salary or annual incentive
compensation opportunities that affects all members of senior
management of the Company proportionally). Notwithstanding the
foregoing, any termination by Executive for Good Reason may only
occur if Executive provides a Notice of Termination (as defined in
Section 7(d)) for Good Reason within 45 days after Executive
learns (or reasonably should have learned) about the occurrence of
the event giving rise to the claim of Good Reason. Notwithstanding
the foregoing, resignation by Executive shall not be deemed for
“Good Reason” if the basis for such Good Reason is
cured within a reasonable period of time (determined in light of
the cure appropriate to the basis of such Good Reason), but in no
event more than thirty (30) business days after the Company
receives the Notice of Termination specifying the basis of such
Good Reason. The Company’s good faith determination of cure
shall be binding. The Company shall notify Executive of the timely
cure of any claimed event of Good Reason and the manner in which
such cure was effected, and any Notice of Termination delivered by
Executive based on such claimed Good Reason shall be deemed
withdrawn and shall not be effective to terminate the Employment
Term.
(iii) If Executive’s
employment is terminated by the Company without Cause (excluding by
reason of Executive’s death or Disability) or by Executive
for Good Reason, Executive shall be entitled to receive:
(A) the Accrued Rights;
(B) a lump sum payment of any Annual
Bonus that is earned by Executive but unpaid as of the date of
termination for the immediately preceding fiscal year, paid in
accordance with Section 4 (except to the extent payment is
otherwise deferred pursuant to any applicable deferred compensation
arrangement with the Company);
(C) a pro rata portion of the Annual
Bonus, if any, that Executive would have been entitled to receive
pursuant to Section 4 hereof for such year based upon the
Company’s actual results for the year of termination and the
percentage of the fiscal year that shall have elapsed through the
date of Executive’s termination of employment, payable to
Executive pursuant to Section 4 had Executive’s
employment not terminated;
(D) subject to Executive’s
continued compliance with the provisions of Sections 8 and 9 and
Executive’s execution (and non-revocation) of a release of
all claims against the TRU Group in a form substantially similar to
the Separation and Release Agreement attached hereto as Exhibit B,
an amount equal to the sum of (x) the product of the Severance
Period (expressed in years as described below) times the Base
Salary at the rate in effect immediately prior to the date of
Executive’s termination of employment and (y) one
(1) times the actual Annual Bonus received in respect of the
fiscal year immediately preceding the year of Executive’s
termination of employment (the “ Prior Bonus ”),
payable in equal installments during the Severance Period, in
accordance with the Company’s periodic payroll practices;
provided , however , that the aggregate amount
described in this subsection (D) shall be in lieu of notice or
any other
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severance amounts to which the
Executive may otherwise be entitled and shall be reduced by any
amounts owed by Executive to the Company or any affiliate. For
purposes of clause (y) of this subsection (D), if
Executive’s employment is terminated prior to his first
opportunity to receive an Annual Bonus, the Annual Bonus, if any,
that Executive would have been entitled to receive pursuant to
Section 4 hereof for such year based upon the Company’s
actual results for the year of termination will be substituted for
the Prior Bonus. For purposes of this subsection (D), the
“Severance Period” shall initially be a twelve
(12) month period commencing on the Executive’s
termination of employment, which period shall be increased by three
(3) months on each anniversary of the Hire Date prior to such
termination of employment, up to a maximum of twenty-four
(24) months; and
(E) continuation of medical, dental
and life insurance benefits (pursuant to the same benefit plans as
in effect for active employees of the Company), with Executive
paying a portion of such costs as if Executive’s employment
had not terminated, until the earlier to occur of (1) the end
of the Severance Period and (2) the date on which Executive
commences to be eligible for coverage under medical, dental and
life insurance benefit plans from any subsequent employer,
except
