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Consulting Agreement - Toys R us Inc. and Michael Goldstein

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                              CONSULTING AGREEMENT

            THIS CONSULTING  AGREEMENT (this  "Agreement"),  dated as of June 6,
2001, by and between TOYS "R" US, INC., a Delaware  corporation (the "Company"),
and MICHAEL GOLDSTEIN ("Goldstein").

                                    RECITALS

            WHEREAS,  pursuant to a Retention Agreement dated as of February 25,
1998 between the Company and Goldstein (the "Retention Agreement"), Goldstein is
employed by the Company as  Chairman  of the Board of  Directors  of the Company
("Chairman"); and

            WHEREAS,  Goldstein  desires to retire from his position as Chairman
and all other officer and employee  positions,  if any, held by Goldstein in the
Company  and  any  of  its  subsidiaries  effective  as of  June  6,  2001  (the
"Retirement Date"); to remain a member of the Board of Directors of the Company;
and to  provide  consulting  services  to the  Company as the  Company  may deem
appropriate  during  the  period  from the  Retirement  Date  through  the third
anniversary of the Retirement Date (the "Consulting Period"); and

            WHEREAS, the parties desire to set forth their respective rights and
obligations in respect of Goldstein's retirement and consulting arrangement;

            NOW, THEREFORE, in consideration of the covenants and conditions set
forth  herein and for other good and  valuable  consideration,  the  receipt and
adequacy of which are hereby acknowledged,  the parties, intending to be legally
bound, agree as follows:


<PAGE>

                                    AGREEMENT

            1. Retirement.

            (a) Effective as of the Retirement Date,  Goldstein will retire from
his position as Chairman and all other  officer and employee  positions,  if any
held by  Goldstein in the Company and any of its  subsidiaries.  It is agreed by
the parties that, on and as of the Retirement  Date, all rights and  obligations
of Goldstein and the Company with respect to such  employment  shall  terminate,
except for the continuing obligations of both parties under this Agreement.

            (i) On the Retirement Date,  Goldstein will deliver to the Company a
letter of resignation in the form of Exhibit A hereto.

            2.  Compensation.  In  consideration  of the agreements of Goldstein
herein,  Goldstein  will be entitled to the  compensation,  consulting  fees and
benefits set forth in this Section 2.

            (a)  Incentive  bonus.  The Company will pay Goldstein the incentive
bonus which  Goldstein  would have been entitled to receive for fiscal year 2001
under the terms of the February 28, 1998 Retention  Agreement,  prorated for the
number of complete  months of employment  during the fiscal year,  and any other
bonuses the Board of Directors or the Chief Executive  Officer deems appropriate
based upon  outstanding  service.  Said  bonuses will be paid to Goldstein on or
about April 1, 2002.

            (b)  Consulting  fees.  From the  Retirement  Date through the third
anniversary of the Retirement  Date, the Company will pay Goldstein a consulting
fee of $200,000  per annum for  consulting  services  provided to the Company as
requested  from time to time by the Company.  Said fee will be paid to Goldstein
in the amount of sixteen  thousand six hundred  sixty six dollars and  sixty-six
cents ($16,666.66) monthly, in arrears, by the 15th day of each following month.
This  Agreement,  and  the  consulting  services  provided  to  the  Company  by
Goldstein,  shall  automatically  be  extended on the third  anniversary  of the
retirement  date,  for an additional one year period  thereafter  under the same
terms and conditions as provided for herein, and automatically  renewed annually
thereafter,  unless,  at least six months prior to the  expiration  date of this
Agreement,  the Company  gives  notice to Goldstein of its decision to terminate
the Agreement.

                        (i) Federal,  state and local income tax and payroll tax
            of any  kind  shall  not be  withheld  or  paid  by the  Company  on
            Goldstein's  behalf.  Goldstein  shall not be treated as an employee
            with respect to the  consulting  services  performed  hereunder  for
            Federal,  State or local tax  purposes.  The Company will report the
            amounts paid to Goldstein on Form 1099 to the extent  required under
            the Internal Revenue Code.

                        (ii)  Goldstein  agrees to pay any  applicable  federal,
            state  and  local  taxes  required  by law  and  further  agrees  to
            indemnify and hold the Company  harmless  from all claims,  demands,
            deficiencies,   levies,  assessments,   executions,   judgements  or
            recoveries by any  governmental  entity  against the Company for any
            amounts  claimed  due on  account  of the  consulting  fees  paid to
            Goldstein pursuant to Paragraph 2(b) above.


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<PAGE>

                        (iii)  Death  or  Disability.  Should  Goldstein  die or
            become disabled during the Consulting Period, the Company shall make
            a lump sum cash payment to Goldstein (or, in the event of his death,
            to his  estate)  an  amount  equal to the  remaining  payments  owed
            through the end of the Consulting Period.

            (c) Health Benefits. As of the Retirement Date and for the remainder
of his life,  Goldstein (and his spouse and dependent children) will be entitled
to continuation of medical,  prescription and dental benefits  maintained by the
Company from time to time at a level commensurate with the level at which senior
executives of the Company participate. If Goldstein (or his spouse and dependent
children  upon his death) elects to receive such health  benefits,  he shall pay
the premium charged to former employees of the Company pursuant to Section 4980B
of the Code;  provided,  that the Company can amend or otherwise alter the Plans
to provide benefits to Goldstein that are no less than those  commensurate  with
Goldstein's current position;  provided, that to the extent such benefits cannot
be provided to Goldstein  under the terms of the Plans or the Plans cannot be so
amended in any  manner not  adverse to the  Company,  the  Company  shall pay to
Goldstein,  on an after-tax  basis, an amount necessary for Goldstein to acquire
such benefits from an independent  insurance carrier ; and provided further that
the obligations of the Company under this clause 2(c) shall be terminated if, at
any time after the  Retirement  Date,  Goldstein  is  employed  or is  otherwise
affiliated with a party that offers comparable health benefits to Goldstein.

            (d) Stock Options.  All Toys "R" Us, Inc.  stock options  granted to
Goldstein under the 1994 Plan will become 100% vested as of the Retirement Date,
and may be  exercised  at any time  prior to the  expiration  date of each stock
option. All unvested Toysrus.com stock options shall continue to vest during the
Consulting Period.

            (e) Restricted  Shares.  In recognition of the services  rendered by
Goldstein  to the Company  during his years of  employment  and  hereafter  as a
consultant  to the  Company,  all  Restricted  Stock Units  granted to Goldstein
pursuant to his February  28, 1998  Retention  Agreement  shall remain in effect
pursuant to the terms of the  Restricted  Stock Unit Plan except that should the
performance criteria set forth in the Plan not be achieved, all Restricted Stock
Units granted pursuant to the February 28, 1998 Retention Agreement will vest as
of April 1, 2002.

            (f) Savings and Profit  Sharing.  Goldstein  shall be 100% vested in
the value of his account balance under the "TRU" Partnership  Employees' Savings
and  Profit  Sharing  Plan  as of  the  Retirement  Date,  and  entitled  to the
distribution of such account balance at his discretion.

            (g) SERP. Goldstein shall be 100% vested in the value of his account
balance under the Toys "R" Us Supplemental  Executive  Retirement Plan (SERP) as
of the Retirement Date, and entitled to the distribution of such account balance
in accordance with the provisions of the Plan.

            (h)  Deferred  Compensation.  Goldstein  shall  be  entitled  to the
distribution  of his  account  balance  under  the  Partnership  Group  Deferred
Compensation Plan in accordance with the provisions of the Plan.

            (i)  Non-Employee  Director   Compensation.   Effective  as  of  the
Retirement  Date,  Goldstein shall  participate in the  Non-Employee  Directors'
Compensation Program.


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<PAGE>

            (j)  Office.  Goldstein  will be provided  with office  space at the
National  Store Support  Center and  secretarial  support  during the Consulting
Period and any periods  thereafter  as long as he  continues  as a  Non-Employee
Director of the Company.

            (k) Retained Property. During the Consulting Period, Goldstein shall
retain all property of the Company in his possession, including, but not limited
to,  credit  cards,  security key cards,  telephone  cards,  car service  cards,
computer software or hardware, Company identification cards, Company records and
copies of records,  correspondence  and copies of correspondence and other books
or manuals issued by the Company.

            (l) Expense  Reimbursement.  The Company shall reimburse  Goldstein,
upon  submission of  appropriate  statements and  documentation,  his reasonable
expenses and  disbursements  incurred in the course of providing the  consulting
services under this Agreement.  Said expenses  include  expenses  related to the
leasing,  maintenance  and insurance of an automobile on an equivalent  basis to
the automobile benefit received by Goldstein while employed by the Company.

            (m) Other Benefits.  Goldstein  acknowledges that he is not entitled
to receive  benefits from the Company other than as set forth in this Section 2,
except for any benefits afforded Goldstein by applicable law.

            3.   Termination  of  All  Existing   Agreements.   All  rights  and
obligations of the Company and Goldstein  under the Retention  Agreement,  other
employment  agreement,  arrangement  or  understanding  and any other  agreement
between the Company and Goldstein are hereby  canceled and  terminated as of the
Retirement  Date  without  liability  of any party  hereunder,  except that this
Agreement,  the terms of the February 25, 1998 Restricted Stock Option Agreement
as set forth in Section 2 (e) of this  Agreement,  the Stock  Option  Agreements
dated as of April 6, 2001 the Restoration  Options granted June 4, 1999, January
26, 2001 and April, 20, 2001, the Toysrus.com, Inc. Stock Option Agreement dated
as of July 16, 1999, and the  Restricted  Share  Agreement  dated as of April 1,
2000 shall continue in full force and effect.

            4.  Release  Agreement.  The  benefits  pursuant  to  Section  2 are
contingent upon Goldstein (i) executing a Separation and Release  Agreement (the
"Release  Agreement"),  in the form attached  hereto as Exhibit B, upon or after
his Retirement Date and (ii) not revoking or challenging the  enforceability  of
the Release Agreement or this Agreement.

            5. No  Solicitation  of Employees  or  Customers.  Goldstein  hereby
represents  and warrants that during the six month period  preceding the date of
this  Agreement he has not (i) solicited any customers of the Company or induced
any customer of the Company to enter into a business relationship with Goldstein
or any other  person or (ii)  solicited  for  employment  or induced  any person
employed by the Company to  terminate  employment.  During the three year period
commencing on the Retirement Date,  Goldstein shall not, directly or indirectly,
(i) employ or seek to employ any person who is as of the Retirement Date, or was
at any time  during the six month  period  preceding  the  Retirement  Date,  an
officer,  general manager,  director or equivalent or more senior level employee
of the Company or any of its subsidiaries or otherwise solicit, encourage, cause
or  induce  any such  employee  of the  Company  or any of its  subsidiaries  to
terminate such employee's employment with the Company or such subsidiary for the
employment of another company  (including for this purpose the contracting  with
any person  who was an  independent  contractor  (excluding  consultant)  of the
Company during such period) or (ii)


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<PAGE>

take any action that would interfere with the relationship of the Company or its
subsidiaries with their suppliers and franchisees  without,  in either case, the
prior  written  consent of the Company's  Board of  Directors,  or engage in any
other  action or  business  that  would have a  material  adverse  effect on the
Company.

            6. Non-competition.

            (a) During the three year period  commencing on the Retirement Date,
Goldstein shall not, directly or indirectly:

            (i) engage in any managerial,  administrative,  advisory, consulting
            or operational or sales activities in Restricted  Business  anywhere
            in the Restricted Area, including, without limitation, as a director
            or partner of such Restricted Business, or

            (ii) organize,  establish, operate, own, manage or control or have a
            direct or indirect  investment or ownership interest in a Restricted
            Business or in any  corporation,  partnership  (limited or general),
            limited liability  company  enterprise or other business entity that
            engages in a Restricted Business anywhere in the Restricted Area.

            (b) Nothing in this Section 5 shall  prohibit or otherwise  restrict
Goldstein  from  acquiring  or  owning,  directly  or  indirectly,  for  passive
investment purposes not intended to circumvent this Agreement, securities of any
entity engaged,  directly or indirectly, in a Business if either (i) such entity
is a public entity and Goldstein (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 Goldstein (A) is not a controlling  Person of,
or a member of a group that controls, such entity and (B) does not own, directly
or indirectly, more than 1% of any class of equity securities of such entity.

            (c) "Restricted Business" means Wal-Mart,  K-Mart,  Target,  Kohl's,
Noodle Kadoodle/Zany  Brainy,  e-toys, KB Toys, FAO Schwarz, Buy Buy Baby or any
other  business,  including  mail  order  or  internet  business,  if more  than
one-third of the business' revenues are generated by the manufacture,  marketing
or sale  of toys  (including,  without  limitation,  video  games  and  computer
software for kids, electronic toys and wheel goods),  juvenile or baby products,
juvenile  furniture and  children's  clothing or any other business in which the
Company may be engaged on the Retirement Date,  except that the Company,  in its
sole discretion, may elect to exclude a specific business from this definition.

            (d) "Restricted  Area" means any country in which the Company or its
subsidiaries  owns or  franchises  any retail store  operations or otherwise has
operations on the Retirement Date.

            7. Confidentiality.  Goldstein acknowledges that he has had and will
continue to have access to Confidential  Information (as hereinafter defined) of
the Company. Goldstein agrees not to disclose, communicate or divulge to, or use
for the direct or indirect benefit of, any person (including  Goldstein),  firm,
association or other entity (other than the


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<PAGE>

Company  or  its  affiliates)  any   Confidential   Information.   "Confidential
Information"  includes,  but is not  limited  to,  customer  and  vendor  lists,
database,  computer programs,  frameworks,  models,  marketing programs,  sales,
financial,  marketing,  training and technical  information,  business  methods,
business policies, procedures,  techniques,  research or development projects or
results,  trade secrets (which Goldstein  agrees include the Company's  customer
and prospective  customer lists),  pricing  policies,  business plans,  computer
software, intellectual property, information concerning how the Company creates,
develops,  acquires or maintains its products and marketing  plans,  targets its
potential customers, and operates its retail and other businesses, and any other
information  not  otherwise  available  to the  general  public.  If any  person
(including  any  government  employee)  requests  the  disclosure  or release of
Confidential  Information,  Goldstein  shall (i) promptly  notify the Company of
such  request so that the Company may pursue any  available  remedies to prevent
the disclosure or release of such Confidential  Information and (ii) furnish the
Company  a copy  of  all  written  materials  pertaining  to  such  request  for
Confidential Information as the Company shall deem appropriate.

            8. No Inducements.  Goldstein warrants that he is entering into this
Agreement  voluntarily,  and that,  except as set forth  herein,  no promises or
inducements  for this  Agreement  have been made,  and he is entering  into this
Agreement  without reliance upon any statement or  representation  by any of the
Company and its affiliates,  and its and their present and former  stockholders,
directors, officers, employees, agents, attorneys, successors and assigns or any
other person, concerning any fact material hereto.

            9.  Litigation  Assistance.  Goldstein  agrees to cooperate with the
Company  and its  counsel  in  regard to any  litigation  presently  pending  or
subsequently  initiated  involving  matters of which  Goldstein  has  particular
knowledge  as a result of his  employment  with the  Company or in his role as a
consultant under the terms of this Agreement.  Such cooperation shall consist of
Goldstein 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.  Goldstein shall not receive any additional
compensation  for  rendering  such  assistance.   Reasonable  travel  costs  and
out-of-pocket  expenses in connection with such cooperation  shall be reimbursed
by the Company,  as well as reasonable  compensation  for  Goldstein's  time and
service if said assistance  occurs after the termination of this Agreement.  The
obligations under this section shall survive for a ten-year period following the
end of this Agreement.

            10. Expenses of Contests.

The Company agrees to reimburse  Goldstein (within 60 days) all reasonable legal
and  professional  fees and expenses that  Goldstein may  reasonably  incur as a
result of any contest by Goldstein,  by the Company or others of the validity or
enforceability  of, or liability under, any provision of this Agreement,  or the
Release Agreement.

            (a) Goldstein  shall  reimburse the Company (within 60 days) for its
reasonable legal and professional fees and expenses, and in the case of payments
made pursuant to paragraph (a) above,  shall refund to the Company the amount of
such  payments,  to the extent  there is a final  determination  that such fees,
expenses or payments relate to claims brought by Goldstein against,  or defenses
by Goldstein of any claim of, the Company  with respect to this  Agreement,  the
Release  Agreement  that  were  determined  to have  been  made or  asserted  by
Goldstein in bad faith or frivolously.


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<PAGE>

            11.  Entire  Agreement.   This  Agreement   constitutes  the  entire
agreement  between the parties with respect to the subject  matter  hereof,  and
supersedes any and all prior  agreements or  understandings  between the parties
arising out of or relating to Goldstein's  employment and the cessation thereof.
This Agreement may only be changed by written agreement executed by the parties.

            12.  Governing Law. This Agreement  shall be governed by the laws of
the  State  of  New  Jersey,  without  giving  effect  to the  conflicts  of law
principles thereof.

            13.  Counterparts.  This  Agreement  may be  executed in one or more
counterparts,  each of  which  shall  be  deemed  an  original  and all of which
together shall be one and the same instrument.

            14.  Arbitration.  Except as  otherwise  provided  for  herein,  any
controversy  arising  under,  out of, in  connection  with, or relating to, this
Agreement,  and any amendment hereof, or the breach hereof or thereof,  shall be
determined  and settled by  arbitration in New York, New York, by a three person
panel  mutually  agreed  upon,  or in  the  event  of a  disagreement  as to the
selection of arbitrators,  in accordance with the Employment  Dispute Resolution
Rules of the American Arbitration Association.  Any award rendered therein shall
specify the findings of fact of the arbitrator or arbitrators and the reasons of
such award,  with  references  to and  reliance on relevant  law. Any such award
shall be final and  binding  on each and all of the  parties  thereto  and their
personal  representatives,  and  judgment  may be  entered  thereon in any court
having jurisdiction thereof.

      IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as of
the day and year first above written.

                                          TOYS "R" US, INC.

                                          By:
                                          Name:
                                          Title: _______________________________

                                          ______________________________________
                                          Michael Goldstein


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<PAGE>

                                                             June 6, 2001

Board of Directors
Toys "R" Us, Inc.

Ladies and Gentlemen:

            I,  Michael  Goldstein,  hereby  retire from Toys "R" Us, Inc.  (the
"Company"),  its  subsidiaries  and  affiliates and from all officer or employee
positions  held by me in the  Company,  its  subsidiaries  and  affiliates,  all
effective as of June 6, 2001.

                                                          Very truly yours,

                                                          Michael Goldstein