EX-10.1



 





Exhibit 10.1




AMENDED AND RESTATED

TOYS “R” US HOLDINGS, INC.

2005 MANAGEMENT EQUITY PLAN




ARTICLE I

ESTABLISHMENT AND PURPOSE; ADMINISTRATION




     1.1 Establishment; Prior Plan. On July 21, 2005, the board of directors (the
“Board”) of Toys “R” Us Holdings, Inc., a Delaware corporation (the “Company”)
adopted and established a stock incentive plan known as the “Toys “R” Us Holdings, Inc. 2005
Management Equity Plan” (the “Initial Plan”). On February 6, 2006, the Board adopted
Amendment No. 1 to the Initial Plan (the “First Amendment”) and on June 28, 2006 the Board
adopted Amendment No. 2 to the Initial Plan (the “Second Amendment” and together with the
Initial Plan and the First Amendment, the “Original Plan”). Effective as of August 3,
2007, and in connection with the adoption and approval of Amendment No. 1 to the Company’s Amended
and Restated Certificate of Incorporation (the “COI Amendment”), the Board has adopted this
“Amended and Restated Toys “R” Us Holdings, Inc. 2005 Management Equity Plan” (the “Plan”),
which such Plan amends and restates in its entirety the provisions of the Original Plan.



     1.2 Purpose. The Plan is intended to promote the long-term growth and profitability
of the Company and its Subsidiaries by providing those persons who are or will be involved in the
Company’s and its Subsidiaries’ growth with an opportunity to acquire an ownership interest in the
Company, thereby encouraging such persons to contribute to and participate in the success of the
Company and its Subsidiaries. Under the Plan, the Company may make Awards (as defined in
Section 3.1 below) to such present and future officers, directors, employees, consultants,
and advisors of the Company or its Subsidiaries as may be selected in the sole discretion of the
Board (collectively, “Participants”).



     1.3 Administration. The Board shall have the power and authority to prescribe, amend
and rescind rules and procedures governing the administration of this Plan, including, but not
limited to the full power and authority (a) to interpret the terms of this Plan, the terms of any
Awards made under this Plan, and the rules and procedures established by the Board governing any
such Awards, (b) to determine the rights of any person under this Plan, or the meaning of
requirements imposed by the terms of this Plan or any rule or procedure established by the Board,
(c) to select Participants for Awards under the Plan, (d) to set the purchase price for sales, if
any, of Restricted Stock, (e) to set the exercise price of any Options or Rollover Options granted
under the Plan, (f) to establish performance and vesting standards, (g) to impose such limitations,
restrictions and conditions upon such Awards as it shall deem appropriate, (h) to adopt, amend, and
rescind administrative guidelines and other rules and regulations relating to the Plan, (i) to
correct any defect or omission or reconcile any inconsistency in the Plan, and (j) to make all
other determinations and take all other actions necessary or advisable for the implementation and
administration of the Plan, subject to such limitations as may be imposed by the Code or other
applicable law. Each action of the Board shall be binding on all
persons. The Board may, to the extent permissible by law, delegate any of its authority hereunder to any
duly authorized committee of the Board or any other persons as it deems appropriate.



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ARTICLE II

DEFINITIONS




     As used in this Plan, the following terms shall have the meanings set forth below:



     “Affiliate” of a Person means any other person, entity, or investment fund
controlling, controlled by, or under common control with such Person and, in the case of a Person
which is a partnership, any partner of such Person.



     “Aggregate Spread” of any option (including any Option or Rollover Option) as of any
particular date means the Fair Market Value of the securities for which such option is exercisable,
minus the aggregate exercise price payable by the holder of such option in order to acquire such
securities.



     “Award Agreement” means a written agreement between the Company and a Participant
setting forth the terms, conditions, and limitations applicable to an Award. All Award Agreements
shall be deemed to include all of the terms and conditions of the Plan, except to the extent
otherwise set forth in an Award Agreement and approved by the Board.



     “Award Stock” with respect to a Participant, means any Common Stock issued to such
Participant upon exercise of any Options or Rollover Options granted hereunder and any Common Stock
issued to such Participant as Restricted Stock. For all purposes of this Plan, Award Stock will
continue to be Award Stock in the hands of any holder (including any Permitted Transferee) other
than a Participant (except for the Company and purchasers pursuant to a Public Sale), and each such
other holder of Award Stock will succeed to all rights and obligations attributable to such
Participant as a holder of Award Stock hereunder. Award Stock will also include shares of the
Company’s capital stock issued with respect to shares of Award Stock by way of a stock split, stock
dividend or other recapitalization.



     “Cause” means, for any Participant, the meaning given to such term in an employment or
other similar agreement entered into by such Participant on or after the Effective Date and
approved by the Board, or in the absence of such an agreement it shall mean with respect to such
Participant any of the following, as determined by the Board, (i) the willful failure of such
Participant to perform any portion of his or her duties, (ii) willful misconduct by such
Participant which is or is likely to be injurious to the Company or any of its Subsidiaries,
monetarily or otherwise, (iii) such Participant’s conviction of a felony (including a plea of nolo
contendere), (iv) such Participant’s negligent performance of his or her duties, (v) any material
breach by such Participant of the terms of this Plan, an Award Agreement, or any other agreement
with the Company or any of its Subsidiaries to which such Participant is a party, or (vi) a
violation of the Toys “R” Us Code of Ethical Standards and Business Practices and Conduct Agreement
or any other serious violation of any written policy of the Company or any of its Subsidiaries.



     “Change in Control” means (i) prior to an Initial Public Offering, any transaction or
series of related transactions which result in the Sponsors ceasing collectively to own shares of
Common Stock which represent at least 50% of the total voting power or economic interest in



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the Company, (ii) at any time, any transaction or series of related transactions which result
in an Independent Third Party acquiring shares of Common Stock which represent more than 50% of the
total voting power or economic interest in the Company, and (iii) at any time, a sale or
disposition of all or substantially all of the assets of the Company and its Subsidiaries on a
consolidated basis; provided that, in the case of clauses (i) and (ii) above, such transactions
shall only constitute a Change in Control if they result in the Sponsors ceasing to have the power
(whether by ownership of voting securities, contractual right, or otherwise) collectively to elect
a majority of the Board.



     “Code” means the Internal Revenue Code of 1986, as it may be amended from time to
time.



     “Common Stock” means the Company’s Common Stock, par value $.01 per share, or, in the
event that the outstanding shares of Common Stock are hereafter recapitalized, converted into or
exchanged for different stock or securities of the Company, such other stock or securities.



     “Competing Business” means, with respect to any Participant at any time, any Person
engaged wholly or in part (directly or through one or more Subsidiaries) in the retail sale or
retail distribution (via stores, mail order, e-commerce, or similar means) of Competing Products,
if more than one-third (1/3) of such Person’s gross sales for the twelve (12) month period
preceding such time (or with respect to the period after such Participant’s Termination Date, as of
such Termination Date) are generated by engaging in such sale or distribution of Competing
Products. Without limiting the foregoing, Competing Businesses shall in any event include
Wal-Mart, K-Mart, Target, Amazon, Zellers, Sears, Right Start, Zany Brainy, FAO Schwartz, Buy Buy
Baby, e-toys, KB Toys, Mattel, Hasbro, Lego, Bandai, Playmobil, Ravensburger, Evenflo, Graco/Little
Tikes, Chicco, Cosco, Maclaren, Britax, Woolworths, Argos, Tesco, Asda, Mothercare, Carrefour,
Auchan, Leclerc, La Grande Recre, Karstadt, Real, Kaufhof, Mueller, El Corte Ingles, Loblaws, or
any of their respective Subsidiaries.



     “Competing Products” means, with respect to any Participant at any time, (i) toys and
games, (ii) video games, computer software for children, and electronic toys or games, (iii)
juvenile or baby: products, apparel, equipment, furniture, or consumables, (iv) wheeled goods for
children, and (v) any other product or group of related products that represents more than twenty
(20) percent of the gross sales of the Company and its Subsidiaries for the twelve (12) month
period preceding such time (or with respect to the period after such Participant’s Termination
Date, as of such Termination Date).



     “Disability” means, for any Participant, the meaning given to such term in an
employment or other similar agreement entered into by such Participant on or after the Effective
Date and approved by the Board, or in the absence of such an agreement it shall mean such
Participant’s eligibility to receive disability benefits under the Company’s or its Subsidiaries’
long-term disability plan or the inability of such Participant, as determined by the Board, to
perform the essential functions of his or her regular duties and responsibilities, with or without
reasonable accommodation, due to a medically determinable physical or mental illness which has
lasted (or can reasonably be expected to last) for a period of six consecutive months.



     “Effective Date” means July 21, 2005.



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     “Fair Market Value” of a share of Award Stock (or any other security) means the fair
market value of a share of Award Stock (or such other security, as applicable) as determined in
good faith by the Board, and such determination shall be binding and conclusive on the Company, the
Participants, and all other Persons interested in this Plan.



     “Independent Third Party” means any Person or group (within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended) who, immediately prior to the
contemplated transaction or series of related transactions, does not own in excess of 5% of the
Company’s Common Stock on a fully-diluted basis, who is not an Affiliate of any such 5% owner of
the Company’s Common Stock and who is not the spouse or descendent (by birth or adoption) of any
such 5% owner of the Company’s Common Stock.



     “Initial Public Offering” means an initial public offering, after the Effective Date,
of the Company’s Common Stock pursuant to an offering registered under the Securities Act, other
than any such offerings which are registered on Forms S-4 or S-8 under the Securities Act.



     “Non-Competition Period” for a Participant means (i) in the case of termination by the
Company with Cause, the period of such Participant’s employment plus one (1) year after such
Participant’s Termination Date, (ii) in the case of resignation for any reason other than
Retirement, the period of such Participant’s employment, (iii) in the case of resignation for
Retirement, the period of such Participant’s employment plus one (1) year after such Participant’s
Termination Date, and (iv) otherwise, the period of such Participant’s employment plus the length
of time, if any, for which the Participant receives (or is eligible to receive, where Participant
declines or otherwise takes action to reject) in connection with such Participant’s termination
severance benefits or other similar payments from the Company or its Subsidiaries pursuant to an
agreement with such Participant, the severance policies of the Company and its Subsidiaries then in
effect, at the Company’s or any of its Subsidiaries’ election, or otherwise (or the length of time
in terms of compensation used to determine the amount of such Participant’s severance benefits in
the event such severance benefits are payable in a lump sum or on a schedule different than such
length of time). In no event shall any amount received by a Participant pursuant to Articles
IX or X of the Plan constitute severance or other similar payments for purposes of this
definition.



     “Original Value” (a) for each share of Award Stock which is originally issued as
Restricted Stock will be equal to the purchase price paid, if any, by the Participant for such
share of Award Stock, (b) for each share of Award Stock which is originally issued upon exercise of
any Options will be equal to the exercise price paid by the Participant for such share of Award
Stock, and (c) for each share of Award Stock which is originally issued upon exercise of any
Rollover Options will be equal to the Fair Market Value of such share of Award Stock on the date on
which such Rollover Option is originally issued, and in each case as proportionally adjusted for
all stock splits, stock dividends, and other recapitalizations affecting the Award Stock subsequent
to the Effective Date.



     “Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a government or any branch, department, agency, political subdivision or official
thereof.



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     “Permitted Transferee” with respect to any Participant means such Participant’s spouse
and descendants (whether or not adopted) and any trust, family limited partnership or limited
liability company that is and remains at all times solely for the benefit of such Participant
and/or such Participant’s spouse and/or descendants, in each case which transferee has executed and
delivered to the Company the documents required under Section 6.6(b) or 7.3(b), as
applicable.



     “Public Sale” means any sale pursuant to a registered public offering under the
Securities Act or any sale to the public through a broker, dealer or market maker pursuant to Rule
144 promulgated under the Securities Act.



     “Retirement” means, for any Participant, the meaning given to such term in an
employment or other similar agreement entered into by such Participant on or after the Effective
Date and approved by the Board, or in the absence of such an agreement it shall mean voluntary
resignation by such Participant at or after the age of sixty-two (62) following continuous
employment by the Company and its Subsidiaries for a period of at least ten (10) years.



     “Securities Act” means the Securities Act of 1933, as amended from time to time.



     “Sponsor Inflows” means, without duplication, as of any measurement date, all cash
payments (excluding management fees and expense reimbursements) received by the Sponsors with
respect to or in exchange for equity securities (including securities which are convertible into
equity securities) of the Company (whether such payments are received from the Company or any third
party) from the Effective Date through such measurement date. If such measurement date is the date
of consummation of a Change in Control, any equity securities (including securities which are
convertible into equity securities) held by the Sponsors and not transferred in such Change in
Control will be deemed to have been sold on such measurement date for the price per share for such
equity securities implied by the Change in Control. After consummation of an Initial Public
Offering, if the measurement date is not the date of a consummation of a Change in Control, any
equity securities (including securities which are convertible into equity securities) held by the
Sponsors will be deemed to have been sold for a price per share equal to the weighted average (by
dollar volume) of the closing trading price for each of the 90 consecutive trading days ending on
such measurement date, and for purposes of calculating the Sponsor IRR such sale will be deemed to
occur on the first day of such 90 trading day period.



     “Sponsor IRR” as of any measurement date, means the annual interest rate (compounded
annually) which, when used to calculate the net present value of all Sponsor Inflows and all
Sponsor Outflows, causes such net present value amount to equal zero. The Sponsor IRR shall be
determined in good faith by the Board.



     “Sponsor Outflows” means, without duplication, as of any measurement date, all cash
payments made by the Sponsors (on a cumulative basis) with respect to or in exchange for equity
securities (including securities which are convertible into equity securities) of the Company
(whether such payments are made to the Company or any third party) from the Effective Date until
such measurement date.



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     “Sponsors” means, collectively, Bain Capital Partners LLC, Toybox Holdings, LLC, and
Vornado Truck, LLC, in each case together with their respective Affiliates.



     “Stockholders Agreement” means the Management Stockholders Addendum, which is attached
hereto as Exhibit A.



     “Subsidiary” means any corporation, partnership, limited liability company, or other
entity in which the Company owns, directly or indirectly, stock or other equity securities or
interests possessing 50% or more of the total combined voting power of such entity.



     “Termination Date” means the earliest date on which a Participant is no longer
employed by the Company or any of its Subsidiaries for any reason. For the avoidance of doubt, a
Participant’s Termination Date shall be considered to be the last date of his actual and active
employment with the Company or one of its Subsidiaries, whether such day is selected by agreement
with the Participant or unilaterally by the Company or such Subsidiary and whether advance notice
is or is not given to the Participant; no period of notice that is or ought to have been given
under applicable law in respect of the termination of employment will be taken into account in
determining entitlement under the Plan. Furthermore, a Participant who goes on a leave of absence
approved by the Company or one of its Subsidiaries shall not be deemed to have ceased their
employment with the Company or its Subsidiaries during the period of such approved leave; provided
that, the time vesting of such Participant’s Options under Section 4.2 shall be suspended
during the period of such leave, except to the extent required by applicable law.



     “Transfer” means any direct or indirect sale, transfer, assignment, pledge,
encumbrance or other disposition (whether with or without consideration and whether voluntary or
involuntary or by operation of law, including to the Company or any of its Subsidiaries) of any
interest.



ARTICLE III

AWARDS AND ELIGIBILITY




     3.1 Awards. Awards under the Plan may be granted in any one or all of the following
three forms: (i) non-qualified stock options (“Options”), as described in Article
IV of the Plan, (ii) non-qualified stock options issued in exchange for options of Subsidiaries
of the Company which a Participant may have been granted prior to the Effective Date (“Rollover
Options”), as described in Article V of the Plan, and (iii) shares of Common Stock
which are subject to certain restrictions (“Restricted Stock” and together with Options and
Rollover Options, “Awards”), as described in Article VII of the Plan. For the
avoidance of doubt, no Option or Rollover Option shall be an incentive stock option within the
meaning of Section 422(a) of the Code or any successor provision. Each grant of Options, Rollover
Options, or Restricted Stock shall be evidenced by a written Award Agreement containing such
restrictions, terms, and conditions, if any, as the Board may require; provided that, except as
otherwise expressly provided in an Award Agreement, if there is any conflict between any provision
of the Plan and an Award Agreement, the provisions of the Plan shall govern.



     3.2 Maximum Shares Available. The Board may authorize Awards consisting of Rollover
Options or Restricted Stock in such numbers of shares as it may determine from time to



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time. An aggregate of no more than 3,889,000 shares of Common Stock shall be reserved for
issuance with respect to Options. All Awards shall be subject to adjustment by the Board as
follows. In the event of any reorganization, recapitalization, stock split, stock dividend,
combination of shares, merger, consolidation or other change in the Common Stock, the Board shall
make such changes in the number and type of shares of Common Stock covered by outstanding Awards
and the terms thereof as the Board determines in its sole discretion are necessary to prevent
dilution or enlargement of rights of Participants under the Plan. Without limiting the generality
of the foregoing, in the event of any such transaction, the Board shall have the power to make such
changes as it deems appropriate in the number and type of shares covered by outstanding Awards, the
prices specified therein, and the securities or other property to be received upon exercise (which
may include providing for cash payment (or no consideration) in exchange for cancellation of
outstanding Options or Rollover Options). If any Options or Rollover Options expire unexercised or
unpaid or are canceled, terminated or forfeited in any manner without the issuance of Common Stock
or payment thereunder, the shares with respect to which such Options or Rollover Options were
granted shall again be available under this Plan, subject to the foregoing maximum amounts.
Similarly, if any shares of Common Stock issued hereunder, either as Restricted Stock or upon
exercise of Options or Rollover Options, are repurchased hereunder, such shares shall again be
available under this Plan for reissuance, subject to the foregoing maximum amounts. Shares of
Common Stock to be issued upon exercise of Options or Rollover Options or shares of Common Stock to
be issued as Restricted Stock hereunder may be either authorized and unissued shares, treasury
shares, or a combination thereof, as the Board shall determine.



     3.3 Eligibility. The Board may, from time to time, select the Participants who shall
be eligible to participate in the Plan and the Awards to be made to each such Participant. The
Board may consider any factors it deems relevant in selecting Participants and in making Awards to
such Participants. The Board’s determinations under the Plan (including without limitation
determinations of which persons are to receive Awards and in what amount) need not be uniform and
may be made by it selectively among persons who are eligible to receive Awards under the Plan.



     3.4 No Right to Continued Employment. Nothing in this Plan or (in the absence of an
express provision to the contrary) in any Award Agreement, as applicable, shall confer on any
Participant any right to continue in the employment of the Company or its Subsidiaries or interfere
in any way with the right of the Company or its Subsidiaries to terminate such Participant’s
employment at any time for any reason or to continue such Participant’s present (or any other) rate
of compensation.



     3.5 Return of Prior Awards. The Board shall have the right, at its discretion, to
require Participants to return to the Company Awards previously granted to them under the Plan in
exchange for new Awards; provided that, no Participant shall be required, without such
Participant’s prior written consent, to return any Award if the new Award is to be made on terms
less favorable to such Participant than the Award to be returned. Subject to the provisions of the
Plan, such new Awards shall be upon such terms and conditions as are specified by the Board at the
time the new Awards are made.



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     3.6 Securities Laws. The Plan has been instituted by the Company to provide certain
compensatory incentives to Participants and is intended to qualify for an exemption from the
registration requirements (i) under the Securities Act, as amended, pursuant to Rule 701 of the
Securities Act, and (ii) under applicable state securities laws.



ARTICLE IV

OPTIONS




     4.1 Options. The Board shall have the right and power to grant to any Participant, at
any time prior to the termination of this Plan, Options in such quantity, at such price, on such
terms and subject to such conditions that are consistent with this Plan and established by the
Board. Options granted under this Plan shall be in the form described in this Article IV,
or in such other form or forms as the Board may determine, and shall be subject to such additional
terms and conditions and evidenced by Award Agreements, as shall be determined from time to time by
the Board. Except as otherwise set forth in an Award Agreement, Options shall be subject to all of
the terms and conditions contained in this Plan.



     4.2 Vesting of Options. Unless otherwise set forth in an Award Agreement, all Options
shall be subject to vesting in accordance the provisions of this Section 4.2. Options
shall be exercisable only to the extent that they are vested. In addition to the other
requirements set forth in this Section 4.2, Options shall vest only so long as a
Participant remains employed by the Company or one of its Subsidiaries. Unless otherwise set forth
in an Award Agreement, all Awards of Options shall be divided into three equal portions, with each
such portion exercisable for one-third of the number of shares of Common Stock for which such
Options are exercisable, and such portions shall be referred to hereunder as “Tranche I Options”,
“Tranche II Options”, and “Tranche III Options”.



          (a) Tranche I Vesting. The Tranche I Options will be subject to time vesting and
will time vest on each date set forth below with respect to the cumulative percentage of shares of
Common Stock issuable upon each of the Tranche I Options set forth opposite such date if the
respective Participant is, and has been, continuously employed by the Company or any of its
Subsidiaries from the date of award through such date:




	 	 	 	 	 
	 	 	Cumulative Percentage
	Date	 	of Shares Vested
	 
	 	 	 	 
	2nd anniversary of date of grant
	 	 	40	%
	3rd anniversary of date of grant
	 	 	60	%
	4th anniversary of date of grant
	 	 	80	%
	5th anniversary of date of grant
	 	 	100	%






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Notwithstanding the foregoing, all Tranche I Options shall be considered 100% vested upon
consummation of a Change in Control.




          (b) Tranche II Vesting. The Tranche II Options shall be subject to time and
performance vesting, and will only be deemed fully vested when they have both time vested and
performance vested in accordance with the terms hereof. The Tranche II Options will time vest in
the same manner as the Tranche I Options. The Tranche II Options will performance vest upon the
earlier to occur of:




               (i) a Change in Control in which both (A) the Sponsor IRR on consummation of the Change in
Control is equal to or greater than 15%, and (B) the Sponsor Inflows prior to and in connection
with such Change in Control are at least two (2) times the Sponsor Outflows prior to such Change in
Control; or



               (ii) any day on which both (A) the Sponsor IRR measured as of such measurement date is equal
to or greater than 15%, and (B) the Sponsor Inflows through such date are at least two (2) times
the Sponsor Outflows through such measurement date.



          (c) Tranche III Vesting. The Tranche III Options shall be subject to time and
performance vesting, and will only be deemed fully vested when they have both time vested and
performance vested in accordance with the terms hereof. The Tranche III Options will time vest in
the same manner as the Tranche I Options. The Tranche III Options will performance vest upon the
earlier to occur of:




               (i) a Change in Control in which both (A) the Sponsor IRR on consummation of the Change in
Control is equal to or greater than 20%, and (B) the Sponsor Inflows prior to and in connection
with such Change in Control are at least three (3) times the Sponsor Outflows prior to such Change
in Control; or



               (ii) any day on which both (A) the Sponsor IRR measured as of such measurement date is equal
to or greater than 20%, and (B) the Sponsor Inflows through such date are at least three (3) times
the Sponsor Outflows through such measurement date.



          (d) Eight Year Limit. Notwithstanding the provisions of clauses (b) and (c) above,
all Tranche II Options and Tranche III Options shall vest in full on the date which is eight (8)
years after the date on which such options were first granted, so long as a Participant remains
employed by the Company or any of its Subsidiaries from the date of award through such date.




ARTICLE V

ROLLOVER OPTIONS




     5.1 Rollover Options. The Board shall have the right and power to grant to any
Participant, at any time prior to the termination of this Plan, Rollover Options in such quantity,
at such price, on such terms and subject to such conditions that are consistent with this Plan and
established by the Board. Rollover Options granted under this Plan shall be in the form described
in this Article V, or in such other form or forms as the Board may determine, and shall be
subject to such additional terms and conditions and evidenced by Award Agreements, as shall be
determined from time to time by the Board. Except as otherwise set
forth in an Award Agreement, Rollover Options shall be subject to all of the terms and conditions contained in
this Plan.





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     5.2 Issuance for Cancellation of Other Awards. Rollover Options shall only be issued
as consideration for the agreement of Participants to cancel or forgo options issued by
Subsidiaries of the Company to Participants prior to the Effective Date. All Rollover Options
shall have an Aggregate Spread equal, on the day of grant, to the Aggregate Spread of the options
cancelled or foregone in exchange for such Rollover Options.



     5.3 Vesting of Rollover Options. All Rollover Options shall be exercisable in full on
the date on which they are granted to a Participant.



ARTICLE VI

GENERAL OPTION PROVISIONS




     6.1 Normal Expiration. All Options granted under this Plan shall expire at the close
of business on the tenth anniversary of the date of grant to the Participant holding such Options,
subject to earlier expiration as provided in this Article VI. All Rollover Options granted
under this Plan shall expire at the date that is specified in the Award Agreement applicable to
such Rollover Options.



     6.2 Exercise on Termination. If a Participant ceases to be employed by the Company
and its Subsidiaries for any reason, then the portion of such Participant’s Options that have not
fully vested as of the Termination Date shall expire at such time. In addition, upon consummation
of a Change in Control, all unvested Tranche II Options and Tranche III Options shall expire at the
time of such consummation if they do not otherwise vest in connection with such Change in Control
in accordance with the provisions of Section 4.2. Unless otherwise set forth in an Award
Agreement, the portion of a Participant’s Options that have fully vested as of such Participant’s
Termination Date shall expire (i) 30 days after the Termination Date if a Participant is terminated
without Cause or if a Participant resigns for any reason (including Retirement), (ii) 90 days after
the Termination Date if a Participant is terminated due to Disability, (iii) 180 days after the
Termination Date if a Participant is terminated due to death, and (iv) immediately upon termination
if a Participant is terminated with Cause. All of a Participant’s Rollover Options shall expire at
the end of their stated term, notwithstanding any termination of a Participant’s employment.



     6.3 Procedure for Exercise. At any time after all or any portion of a Participant’s
Options or Rollover Options have become vested and prior to their expiration, a Participant may
exercise all or any specified portion of such vested Options or Rollover Options by delivering
written notice of exercise specifically identifying the particular Options or Rollover Options
(including whether Options are Tranche I, II, or III Options or are Rollover Options) to the
Company (an “Exercise Notice”), together with a written acknowledgment that such
Participant has read and has been afforded an opportunity to ask questions of management of the
Company regarding all financial and other information provided to such Participant regarding the
Company. Payment by Participants in connection with any exercise (a) shall be made by delivery of
a cashier’s, certified check or wire transfer in the amount equal to the product of the exercise
price multiplied by the number of Award Shares to be acquired, plus the amount of any



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additional federal and state income taxes or any income taxes or employee’s social security
contributions arising in any jurisdiction outside the United States required to be withheld (or
accounted for to appropriate revenue authorities by the Participant’s employer) by reason of the
exercise of the Options or Rollover Options (which such amount shall be calculated by the Company
and provided to Participants promptly following delivery of an Exercise Notice, and which shall be
subject to later adjustment by the Company (with a corresponding payment by or refund to
Participant) in the event that any such adjustment is required), and (b) shall be due in full from
the Participant either (i) at the same time as delivery of the Exercise Notice (with the portion
representing taxes or contributions due within two (2) days of the date on which the Company
informs the Participant of the amount of such items pursuant to the provisions of this section) or
(ii) in the event the Participant is at the time of exercise not employed by the Company or any of
its Subsidiaries, then upon the first to occur of (A) the date of closing of any repurchase of
Award Stock issuable in connection with such exercise in accordance with the provisions of
Section 9.8, (B) the Company’s delivery of notice that neither it nor the Sponsors will
exercise their Repurchase Option with respect to the Award Stock issuable in connection with such
exercise, and (C) the expiration of the Repurchase Option (in accordance with the provisions of
Section 9.6) applicable to the Award Stock issuable in connection with such exercise. For
United States federal income tax purposes, the Company intends to treat Options and Rollover
Options as exercised at the time the Company issues the applicable Award Stock to the Participant.
At the discretion of the Board, which discretion shall be exercised (among other considerations) in
a manner intended (as determined in good faith by the Board) to cause a Participant’s options not
to be treated as deferred compensation within the meaning of Code Section 409A, a Participant may
be permitted to acquire Award Stock upon the exercise of Options or Rollover Options without
payment in cash therefor pursuant to a cashless exercise of such Options or Rollover Options. Such
cashless exercise shall be effectuated by the Company delivering shares of Common Stock to the
Participant with a Fair Market Value equal to (a) the Fair Market Value of all shares issuable upon
exercise of such Options or Rollover Options, minus (b) the aggregate exercise price of all shares
issuable upon exercise of such Options or Rollover Options (together with the amount of any income
taxes or employee’s social security contributions arising in respect of such cashless exercise).



     6.4 Representations on Exercise. In connection with any exercise of Options or
Rollover Options and the issuance of Award Stock thereunder (other than pursuant to an effective
registration statement under the 1933 Act), Participant shall by the act of delivering the Exercise
Notice (and without any further action on the part of the Participant) represent and warrant to the
Company that as of the time of such exercise:



          (a) The Award Stock to be acquired by Participant upon exercise shall be acquired for
Participant’s own account and not with a view to, or intention of, distribution thereof in
violation of the Securities Act or any applicable state securities laws, and the Award Stock shall
not be disposed of in contravention of the Securities Act or any applicable state securities laws.




          (b) Participant is or was an employee of the Company or one of its Subsidiaries, is
sophisticated in financial matters, and is able to evaluate the risks and benefits of the
investment in the Award Stock.




11









 








          (c) Participant is able to bear the economic risks of his investment in the Award Stock for an
indefinite period of time and is aware that transfer of the Award Stock may not be possible because
(A) such transfer is subject to contractual restrictions on transfer set forth herein and in the
Stockholders Agreement and (B) the Award Stock has not been registered under the Securities Act or
any applicable state securities laws and, therefore, cannot be sold unless subsequently registered
under the Securities Act and such applicable state securities laws or an exemption from such
registration is available.




          (d) Participant has had an opportunity to ask questions and receive answers concerning the
terms and conditions of the offering of the Award Stock issued upon exercise and has had full
access to such other information concerning the Company as Participant has requested.



In connection with any exercise of Options or Rollover Options, Participant shall make such
additional customary investment representations as the Company may require and Participant shall
execute such documents necessary for the Company to perfect exemptions from registration under
federal and state securities laws as the Company may reasonably request. In addition, in
connection with any exercise of Options or Rollover Options, Participant shall make an election
under Section 83(b) of the Code, in the form prescribed by the Board.




     6.5 [Reserved].



     6.6 Non-Transferability.



          (a) All Options and Rollover Options are personal to a Participant and are not Transferable by
such Participant, other than by will or pursuant to applicable laws of descent and distribution.
Only a Participant, his estate or personal representatives or heirs, or any Permitted Transferee
are entitled to exercise Options or Rollover Options. All Award Stock issued pursuant to the
exercise of any Option or Rollover Option shall not be Transferable (other than pursuant to
Article IX or X below, or as otherwise permitted pursuant to the terms of the
Stockholders Agreement) by the Participant or Permitted Transferee who exercised such option and
purchased such Award Stock (or any subsequent transferee) until the occurrence of a Change in
Control. Any attempted Transfer of Options, Rollover Options, or Award Stock issued upon exercise
thereof which is not specifically permitted under the Plan shall be null and void.




          (b) Notwithstanding the provisions of Section 6.6(a) above, Options, Rollover Options,
and Award Stock issued pursuant to the exercise of any Option or Rollover Option shall be
Transferable by a Participant to any of such Participant’s Permitted Transferees; provided that, in
no event shall any Participant be allowed, without the prior consent of the Board, to Transfer
Options or Rollover Options pursuant to this Section 6.6(b) more than once, nor to more
than one (1) of such Participant’s Permitted Transferees, and in such case such Permitted
Transferee shall thereafter not be allowed, without the prior consent of the Board, to Transfer any
of the Options or Rollover Options Transferred to such Permitted Transferee pursuant to this
Section 6.6(b). As part of any such Transfer, the Permitted Transferee shall execute such
documents as the Company may reasonably require, which documents shall provide that the Permitted
Transferee (i) remains bound by the Plan and the applicable
Award Agreement in the same manner as the Participant, and (ii) is bound by all of the terms and conditions of the Stockholders
Agreement.



12









 








          (c) No Participant shall make any Transfer prohibited by this Section 6.6 either
directly or indirectly. Without limiting the generality of the foregoing, no Participant shall
make one or more transfers to one or more Permitted Transferees and then dispose of all or any
portion of such Participant’s interest in any such Permitted Transferee. Any Transfer or attempted
Transfer in violation of this clause (c) shall be null and void.




          (d) Any Award Stock issued upon exercise of any Options or Rollover Options will be subject to
the provisions of Sections 7.4 and 7.5 in the same manner as Restricted Stock is
subject to such provisions.




     6.7 Rights as a Stockholder. A Participant holding Options or Rollover Options shall
have no rights as a stockholder with respect to any shares of Award Stock issuable upon exercise
thereof until the date on which a stock certificate is issued to such Participant representing such
Award Stock. The Company shall issue Award Stock to Participants no later than twenty (20) days
following receipt by the Company of all exercise payments required to be made by a Participant in
connection therewith; provided that, such time period shall be reduced to two (2) days during the
thirty (30) days following any notice given by the Company pursuant to Section 6.8 of the
Plan. Except as otherwise expressly provided in the Plan or in any Award Agreement, no adjustment
shall be made for cash dividends or other rights for which the record date is prior to the date
such stock certificate is issued.



     6.8 Notice of Dividends. The Board shall provide notice to all Participants who hold
vested Options or Rollover Options in the event that it intends to declare any dividend or
distribution in respect of shares of Common Stock. Such notice shall be provided not less than ten
(10) days prior to the record date of such dividend or distribution, and shall describe in
reasonable detail the approximate amounts anticipated to be distributed in respect of the Common
Stock.



ARTICLE VII

RESTRICTED STOCK




     7.1 Restricted Stock. The Board shall have the right and power, at any time prior to
the termination of this Plan, to sell to any Participant for purchase prices equal to Fair Market
Value, or to grant to any Participant without consideration as an incentive for future services,
Restricted Stock in such quantity, on such terms, and subject to such conditions that are
consistent with this Plan and established by the Board. Restricted Stock sold or granted under
this Plan shall be in the form described in this Article VII, or in such other form or
forms as the Board may determine, and shall be subject to such additional terms and conditions and
evidenced by Award Agreements, as shall be determined from time to time by the Board. Except as
otherwise set forth in an Award Agreement, Restricted Stock shall be subject to all of the terms
and conditions contained in this Plan. The consideration for any such sale shall be cash, unless
otherwise determined by the Board. In the case of a sale of Restricted Stock under the Plan, a
Participant may elect to purchase any or all of the Restricted Stock awarded to him or her by the
Board through one or more entities (but not natural persons) that would constitute a Permitted



13









 




Transferee as such term is defined in the Plan, which entity shall be bound by all of the terms of
this Plan, any Award Agreement, and the Stockholders Agreement in the same manner as any
other Permitted Transferee hereunder. In the case of a grant of Restricted Stock under the
Plan without consideration, the grant shall be made solely to the Participant.




     7.2 Representations on Acquisition. In connection with any acquisition of Restricted
Stock (other than pursuant to an effective registration statement under the 1933 Act), Participant
shall, by his or her acceptance of such Restricted Stock (and without any further action on the
part of the Participant), represent and warrant to the Company that as of the time of such
acquisition:



          (a) The Restricted Stock to be acquired by Participant shall be acquired for Participant’s own
account and not with a view to, or intention of, distribution thereof in violation of the
Securities Act or any applicable state securities laws, and the Restricted Stock shall not be
disposed of in contravention of the Securities Act or any applicable state securities laws.




          (b) Participant is an employee of the Company or one of its Subsidiaries, is sophisticated in
financial matters, and is able to evaluate the risks and benefits of the investment in the
Restricted Stock.




          (c) Participant is able to bear the economic risks of his investment in the Restricted Stock
for an indefinite period of time and is aware that transfer of the Restricted Stock may not be
possible because (A) such transfer is subject to contractual restrictions on transfer set forth
herein and in the Stockholders Agreement and (B) the Restricted Stock has not been registered under
the Securities Act or any applicable state securities laws and, therefore, cannot be sold unless
subsequently registered under the Securities Act and such applicable state securities laws or an
exemption from such registration is available.




          (d) Participant has had an opportunity to ask questions and receive answers concerning the
terms and conditions of the offering of the Restricted Stock and has had full access to such other
information concerning the Company as Participant has requested.



In connection with any acquisition of Restricted Stock, Participant shall make such additional
customary investment representations as the Company may require and Participant shall execute such
documents necessary for the Company to perfect exemptions from registration under federal and state
securities laws as the Company may reasonably request. In addition, in connection with any
acquisition of Restricted Stock that is purchased from the Company, Participant shall make an
election under Section 83(b) of the Code, in the form prescribed by the Board. A Participant may,
but is not required to, make such an election in the case of Restricted Stock granted for no
consideration.




     7.3 Restrictions on Transfer.



          (a) All Restricted Stock shall not be Transferable (other than pursuant to Article IX
or X below, or as otherwise permitted pursuant to the terms of the Stockholders Agreement)
by the Participant holding such Restricted Stock until the occurrence of a Change in Control or
such later time as may set forth in the applicable Award Agreement.
Any attempted Transfer of Restricted Stock which is not specifically permitted under the Plan shall be null and void.




14









 








          (b) Notwithstanding the provisions of Section 7.3(a) above, Restricted Stock for which
an election under Section 83(b) of the Code has been timely filed shall be Transferable by a
Participant to any of the Participant’s Permitted Transferees. As part of any such Transfer, the
Permitted Transferee shall execute such documents as the Company may reasonably require, which such
documents shall provide that the Permitted Transferee (i) remains bound by the Plan and the
applicable Award Agreement in the same manner as the Participant, and (ii) is bound by all of the
terms and conditions of the Stockholders Agreement.




          (c) No Participant shall make any Transfer prohibited by this Section 7.3 either
directly or indirectly. Without limiting the generality of the foregoing, no Participant shall
make one or more transfers to one or more Permitted Transferees and then dispose of all or any
portion of such Participant’s interest in any such Permitted Transferee. In addition, in the event
that a Participant acquires Restricted Stock through one or more entities that would otherwise
constitute Permitted Transferees, then such Participant shall not dispose of all or any portion of
such Participant’s interest in any such Permitted Transferee. Any Transfer or attempted Transfer
in violation of this clause (c) shall be null and void.




     7.4 Restricted Stock Certificates. The Company shall issue, in the name of each
Participant to whom Restricted Stock has been granted or sold, stock certificates representing the
total number of shares of Award Stock granted or sold to such Participant, as soon as reasonably
practicable after such grant or sale. The Company shall hold such certificates for the
Participant’s benefit until such Restricted Stock becomes freely Transferable, at which time the
Company shall deliver such certificates (free of all such Transferability restrictions) to the
Participant.



     7.5 Rights of a Participant. Unless the Board determines otherwise, any Participant
who holds Restricted Stock shall have the right to receive dividends and distributions, if any are
declared, with respect to such Restricted Stock. Any shares of Company Stock received by a
Participant as a result of any such dividends or distributions shall be considered Restricted Stock
and shall be subject to all of the restrictions contained in the Plan.



ARTICLE VIII

JOINDERS




     8.1 Stockholders Agreement. Exercise of any Options or Rollover Options, or purchase
of or acceptance of any Restricted Stock, shall constitute agreement by the Participant making such
exercise or purchasing or receiving such Restricted Stock, to be bound by all of the terms and
conditions of the Stockholders Agreement with respect to the Award Stock, or any other Company
capital stock, issuable to or held by such Participant. All of the terms of the Stockholders
Agreement are incorporated herein by reference.





15









 





ARTICLE IX

REPURCHASE OF SHARES





     9.1 Repurchase Option. In order to provide a market for Award Stock, in the event
that a Participant is no longer employed by the Company or any of its Subsidiaries for any reason,
all Award Stock issued or issuable to such Participant (whether as Restricted Stock or
upon the exercise of Options or Rollover Options), whether held by such Participant or one or
more transferees of such Participant, will be subject to repurchase by the Company and the Sponsors
(solely at their option), by delivery of one or more Repurchase Notices (as defined below) within
the time periods set forth below, pursuant to the terms and conditions set forth in this
Article IX (the “Repurchase Option”), unless otherwise set forth in the Award
Agreement between the Company and the Participant. The Repurchase Option shall terminate on the
first to occur of a Change in Control or an Initial Public Offering.



     9.2 Termination Other than for Cause or Resignation. Unless otherwise specified in an
Award Agreement, if a Participant is no longer employed by the Company or any of its Subsidiaries
as a result of any reason other than such Participant’s (a) termination for Cause or (b)
resignation for any reason other than Retirement, then on or after the Termination Date (subject to
the provisions of Section 10.2) the Company may elect to purchase all or any portion of the
Award Stock issued or issuable to such Participant at a price per share equal to the Fair Market
Value thereof, in each case as determined as of a date determined by the Board that is the
anticipated date of the Repurchase Closing (as defined in Section 9.6 below).
Notwithstanding the foregoing, in the event a Participant resigns due to Retirement and
subsequently takes any action described in the first sentence of Section 12.3 at any time
within one (1) year after such Participant’s Termination Date, then the purchase price per share
shall be the lower of Fair Market Value and Original Value; provided that, in the event a
Participant exercises his or her put rights set forth in Section 10.3, the purchase price
shall be calculated so that such Participant does not receive, with respect to all shares of Award
Stock held by such Participant, an aggregate amount greater than (a) the lower of the Fair Market
Value or Original Value of all such shares of Award Stock, minus (b) any amounts paid to the
Participant pursuant to Section 10.3.



     9.3 Termination for Cause. Unless otherwise specified in an Award Agreement, if a
Participant is no longer employed by the Company or any of its Subsidiaries as a result of such
Participant’s termination for Cause, then on or after the Termination Date, the Company may elect
to purchase all or any portion of the Award Stock issued or issuable to such Participant at a price
per share equal to the lower of the Fair Market Value and Original Value thereof, in each case as
determined as of a date determined by the Board that is the anticipated date of the Repurchase
Closing (as defined in Section 9.6 below).



     9.4 Resignation. Unless otherwise specified in an Award Agreement if a Participant is
no longer employed by the Company or any of its Subsidiaries as a result of such Participant’s
resignation (for any reason other than Retirement), then on or after the Termination Date, the
Company may elect to purchase all or any portion of the Award Stock issued or issuable to such
Participant at a price per share equal to the Fair Market Value thereof, in each case as determined
as of a date determined by the Board that is the anticipated date of the Repurchase Closing (as
defined in Section 9.6 below). Notwithstanding the foregoing, in the event a Participant
takes any action described in the first sentence of Section 12.3 at any time within one (1)
year after such Participant’s Termination Date (as if such period was part of such Participant’s
Non-Competition Period), then the purchase price per share shall be the lower of (a) the Fair
Market Value, and (b) Original Value, in each case as determined as of a date determined by the
Board that is the anticipated date of the Repurchase Closing (as defined in Section 9.6
below).



16









 








     9.5 Option Repurchases. In the event the Company and/or the Sponsors, as applicable,
exercise the Repurchase Option with respect to any shares of Award Stock issuable upon exercise of
any Options or Rollover Options held by a Participant, then such Participant shall be required,
promptly following receipt of a Repurchase Notice (as defined below), to exercise such Options
and/or Rollover Options and purchase from the Company (in accordance with the provisions of
Section 6.3) all shares of Award Stock for which the Company and/or the Sponsors, as
applicable, shall have delivered a Repurchase Notice.



     9.6 Repurchase Procedures. Pursuant to the Repurchase Option, the Company may elect
to exercise the right to purchase all or any portion of the shares of Award Stock issued to a
Participant by delivering written notice or notices (each, a “Repurchase Notice”) to the
holder or holders of the such Award Stock at any time and from time to time no later than 120 days
after the Termination Date (or 180 days, in the case of the Participant’s Disability, or 270 days,
in the case of the Participant’s death, or one year and 10 days, in the case of the Participant’s
resignation); provided that such periods may be tolled in accordance with Section 9.9
below; provided further, in the event that Section 10.2 applies to a Participant’s
termination, then the period of exercise for the Repurchase Option applicable in such circumstances
shall be the later of (a) 120 days after the Participant’s Termination Date, and (b) seven (7)
months after the Effective Date. Each Repurchase Notice will specifically identify the shares of
Award Stock to be acquired from such holder(s) (including whether such shares are issuable upon
exercise of Tranche I, II, or III Options or Rollover Options), the repurchase price of such
shares, the aggregate consideration to be paid for such shares and the time and place for the
closing of the transaction (each, a “Repurchase Closing”). In the event that the Company
elects to purchase a portion of such Award Stock pursuant to the terms of this Section 9.6,
if any shares of such Award Stock are held by transferees of such Participant, the Company shall
purchase the shares elected to be purchased first from such Participant to the extent of the shares
of such Award Stock then held by such Participant and second purchase any remaining shares elected
to be purchased from such other holder(s) of Award Stock pro rata according to the number of shares
of Award Stock held by such other holder(s) at the time of delivery of such Repurchase Notice
(determined as nearly as practicable to the nearest share) and the number of shares of each class
of Award Stock to be purchased will be allocated among such other holders pro rata according to the
total number of shares of Award Stock to be purchased from such persons.



     9.7 Sponsor Rights.



          (a) If for any reason the Company does not elect to purchase all of the Award Stock (issued or
issuable to a particular Participant) pursuant to the Repurchase Option pursuant to one or more
Repurchase Notices, the Sponsors will be entitled to exercise the Repurchase Option, in the manner
set forth in this Section 9.7, for the Award Stock the Company has not elected to purchase
(the “Available Shares”). As soon as practicable after the Company has determined that
there will be Available Shares, but in any event within 90 days after the Termination Date (or 150
days, in the case of the Participant’s Disability, or 240 days, in the case of the Participant’s
death), the Company shall give written notice (each, an “Option Notice”) to
the Sponsors setting forth the number of Available Shares and the price for each Available Share as determined
pursuant to the provisions of this Article IX.



17









 







          (b) The Sponsors may elect to purchase any number of Available Shares by delivering written
notice (an “Election Notice”) to the Company within 20 days after receipt of the Option
Notice from the Company. If the Sponsors elect to purchase an aggregate number of shares greater
than the number of Available Shares, each class of Available Shares shall be allocated among the
Sponsors based upon the number of shares of Common Stock owned by each Sponsor on a fully-diluted
basis.




          (c) As soon as practicable, and in any event within ten days after the expiration of the
20-day period set forth above, the Company shall notify the holder(s) of Award Stock as to the
number of shares being purchased from such holder(s) by the Sponsors (each, a “Supplemental
Repurchase Notice”). At the time the Company delivers a Supplemental Repurchase Notice to the
holder(s) of Award Stock, the Company shall also deliver written notice to each electing Sponsor
setting forth the number of shares that the Company and each Sponsor will acquire, the aggregate
purchase price and the time and place of the closing of the transaction.




     9.8 Closing of Repurchase. The closing of the transactions contemplated by this
Article IX will take place on the date designated by the Company in the applicable
Repurchase Notice or Supplemental Repurchase Notice, as the case may be, which date will not be
more than 60 days after the delivery of such notice. The Company and/or the Sponsors, as the case
may be, will pay for the Award Stock to be purchased pursuant to the Repurchase Option by delivery
of a check payable to the holder(s) of Award Stock or a wire transfer of immediately available
funds. In addition, the Company may pay the repurchase price for such Award Stock by offsetting
such amounts against any bona fide debts owed by Participant to the Company or any of its
Subsidiaries. The Company and/or the Sponsors as the case may be, will receive customary
representations and warranties from each seller regarding the sale of Award Stock including, but
not limited to, the representation that such seller has good and marketable title to the Award
Stock to be Transferred free and clear of all liens, claims and other encumbrances, and will be
entitled to require all sellers’ signatures be guaranteed by a national bank or reputable
securities broker. In the event that a repurchase is to take place at a price equal to Fair Market
Value, and the Fair Market Value of the Award Stock has increased or decreased from the date on
which it is determined to the date of closing pursuant to this Section 9.8, then the
repurchase shall be consummated at such higher or lower price.



     9.9 Restrictions on Repurchase. Notwithstanding anything to the contrary contained in
this Agreement, all repurchases of Award Stock by the Company shall be subject to applicable
restrictions contained in the Delaware General Corporation Law and in the Company’s and its
Subsidiaries’ debt and equity financing agreements. If any such restrictions prohibit the
repurchase of Award Stock for cash and the Sponsors have not elected to acquire all Award Stock
which the Company and the Sponsors have a right to repurchase pursuant to this Article IX,
the Company shall have the right to deliver, as payment of the repurchase price, a subordinated
note or notes payable in up to three equal annual installments beginning on the first anniversary
of the closing of such repurchase and bearing interest (accruing quarterly) at a rate per annum
equal to 7%. Any such notes issued by the Company shall be subject to any



18









 







restrictive covenants which the Company is subject to at the time of repurchase. If any such restrictions prohibit the
repurchase of Award Stock for such subordinated notes and the Sponsors have not elected to acquire
all Award Stock which the Company and the Sponsors have a right to
repurchase pursuant to this Article IX, the time periods provided in this Article
IX shall be suspended for a period of up to twelve months, and the Company may make such
repurchases as soon as it is permitted to do so under such restrictions but in no event later than
twelve months after the initial time periods hereunder.



ARTICLE X

PUT RIGHTS




     10.1 Put Rights on Death or Disability. In order to provide a market for Award Stock,
each Participant shall have the right (solely at their option) to require the Company to repurchase
all (but not less than all) of such Participant’s shares of Award Stock (whether actually issued or
issuable upon exercise of Rollover Options) in the event such Participant’s employment is
terminated because of death or Disability. Such put right must be exercised no more than (a) 240
days in event of death, or (b) 150 days in the event of Disability, following such Participant’s
Termination Date by giving written notice to the Company. The purchase price payable by the
Company in connection with such put shall be Fair Market Value. The closing of the transactions
contemplated by this Section 10.1 will take place no later than 60 days after delivery of
notice of exercise of the put right by the Participant and otherwise in accordance with the
provisions of Sections 9.8 and 9.9, to the extent applicable. Notwithstanding the
foregoing put right, the Company and/or the Sponsors, as applicable, shall still have the
repurchase rights set forth in Article IX with respect to any termination otherwise subject
to this Section 10.1.



     10.2 Put Rights on Termination Without Cause. In order to provide Participants with
protection against losses in respect of Award Stock in certain circumstances, each Participant
shall have the right (solely at their option) to require the Company to repurchase all (but not
less than all) of such Participant’s shares of Award Stock (whether actually issued or issuable
upon exercise of Rollover Options) in the event such Participant’s employment is terminated without
Cause within one (1) year of the Effective Date. Such put right shall be exercised by giving
written notice to the Company. Such put right may not be exercised prior to the date that is six
(6) months and one (1) day after the Effective Date and shall expire on the later of (a) the date
that is 30 days following such Participant’s Termination Date or (b) the date that is six (6)
months and ten (10) business days after the Effective Date. The purchase price payable by the
Company in connection with such put shall be Original Value. The closing of the transactions
contemplated by this Section 10.2 will take place no later than 60 days after delivery of
notice of exercise of the put right by the Participant and otherwise in accordance with the
provisions of Sections 9.8 and 9.9, to the extent applicable. Notwithstanding the
foregoing put right, in the event the Participant has not exercised such put right by the deadlines
specified above, then thereafter the Company and/or the Sponsors, as applicable, shall still have
the repurchase rights set forth in Article IX with respect to any termination otherwise
subject to this Section 10.2.



     10.3 Put Rights on Retirement. In order to provide a market for Award Stock, each
Participant shall have the right (solely at their option) to require the Company to repurchase a
portion (as determined below) of such Participant’s shares of Award Stock (whether actually issued
or issuable upon exercise of Rollover Options) in the event such Participant’s employment



19









 







is terminated because of resignation due to Retirement. Such put right must be exercised no more than
30 days following such Participant’s Termination Date by giving written notice to the Company. The
purchase price per share payable by the Company in connection with such put
shall be Fair Market Value. Each Participant shall have the right to require the Company to
repurchase no more than those number of shares of Award Stock (whether actually issued or issuable
upon exercise of Rollover Options) that would produce total pre-tax proceeds to such Participant
equal to the aggregate Original Value of all Rollover Options and Restricted Stock held by such
Participant. The closing of the transactions contemplated by this Section 10.3 will take
place no later than 60 days after delivery of notice of exercise of the put right by the
Participant (or, if later, delivery of a Repurchase Notice or Supplemental Repurchase Notice) and
otherwise in accordance with the provisions of Sections 9.8 and 9.9, to the extent
applicable. Notwithstanding the foregoing put right, the Company and/or the Sponsors, as
applicable, shall still have the repurchase rights set forth in Article IX with respect to
any termination otherwise subject to this Section 10.3.



     10.4 Option Puts. In the event a Participant exercises a put right with respect to
any shares of Award Stock issuable upon exercise of any Rollover Options held by such Participant,
then such Participant shall be required, in connection with the exercise of such put right, to
exercise such Rollover Options and purchase from the Company (in accordance with the provisions of
Section 6.3) all shares of Award Stock for which such Participant shall have exercised such
put right. The closing of any such exercise shall take place concurrently with the closing of the
put transactions set forth in this Article X.



     10.5 Termination of Puts. Notwithstanding any other provision in this Article
X, each of the put rights contained in this Article X shall terminate on the first to
occur of a Change in Control or an Initial Public Offering.



     10.6 Applicability of Puts. Except as otherwise expressly provided in an Award
Agreement, none of the put rights set forth in this Article X shall apply to any Awards
made on or after the date that is one hundred and twenty (120) days after the Effective Date.



ARTICLE XI

PUBLIC OFFERINGS




     11.1 Cooperation in an IPO. In the event that the Company approves an Initial Public
Offering, the holders of Options, Rollover Options, or Award Stock will take all necessary or
desirable actions in connection with the consummation of such offering. In the event that such
Initial Public Offering is an underwritten offering and the managing underwriters advise the
Company in writing that in their opinion the Common Stock structure will adversely affect the
marketability of the offering, each holder of Options, Rollover Options, or Award Stock will
consent to and vote for a recapitalization, reorganization and/or exchange of the Common Stock into
securities that the managing underwriters and the Board find acceptable and will take all necessary
or desirable actions in connection with the consummation of the recapitalization, reorganization
and/or exchange.



     11.2 Holdback. No Participant shall effect any public sale or distribution (including
sales pursuant to Rule 144) of any Award Stock during the 7 days prior to and the 90 days (or



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180 days in the event of an Initial Public Offering) after the effective date of any underwritten
public offering of the Company’s Common Stock, except as part of such underwritten public offering
or if otherwise permitted by the Company.



     11.3 Compliance with Laws. Each Option and Rollover Option shall be subject to the
requirement that if at any time the Board shall determine, in its discretion, that the listing,
registration or qualification of the shares subject to such Option or Rollover Option upon any
securities exchange or under any state or federal securities or other law or regulation or the
consent or approval of any governmental regulatory body, is necessary or desirable as a condition
to or in connection with the granting of such Option or Rollover Option or the issue or purchase of
shares thereunder, no such Option or Rollover Option may be exercised or paid in Common Stock in
whole or in part unless such listing, registration, qualification, consent or approval (a
“Required Listing”) shall have been effected or obtained and the holder of the Option or
Rollover Option, as applicable, will supply the Company with such certificates, representations and
information as the Company shall request which are reasonably necessary or desirable in order for
the Company to obtain such Required Listing, and shall otherwise cooperate with the Company in
obtaining such Required Listing. In the case of officers and other persons subject to Section
16(b) of the Securities Exchange Act of 1934, as amended, the Board may at any time impose any
limitations upon the exercise of an Option or Rollover Option which, in the Board’s discretion, are
necessary or desirable in order to comply with Section 16(b) and the rules and regulations
thereunder. If the Company, as part of an offering of securities or otherwise, finds it desirable
because of federal or state regulatory requirements to reduce the period during which any Options
or Rollover Options may be exercised, the Board may, in its discretion and without the consent of
the holders of any such Options or Rollover Options, so reduce such period on not less than 15
days’ written notice to the holders thereof.



     11.4 Purchaser Representative. If the Company or the holders of the Company’s
securities enter into any negotiation or transaction for which Rule 506 (or any similar rule then
in effect) promulgated by the Securities Exchange Commission may be available with respect to such
negotiation or transaction (including a merger, consolidation or other reorganization), as a
condition to participation in such sale (whether or not obligated to so participate pursuant to the
provisions of the Stockholders Agreement or otherwise), the holders of Award Stock will, at the
request of the Company, appoint a purchaser representative (as such term is defined in Rule 501)
reasonably acceptable to the Company. If any holder of Award Stock appoints a purchaser
representative designated by the Company, the Company will pay the fees of such purchaser
representative; but if any holder of Award Stock declines to appoint the purchaser representative
designated by the Company, such holder will appoint another purchaser representative and such
holder will be responsible for the fees of the purchaser representative so appointed.



ARTICLE XII

RESTRICTIVE COVENANTS




     The Company and its Subsidiaries operate in a highly sensitive and competitive commercial
environment. As part of their employment with the Company and its Subsidiaries, Participants will
be exposed to highly confidential and sensitive information regarding the Company’s and its
Subsidiaries’ business operations, including corporate strategy, pricing and other market
information, know-how, trade secrets, and valuable customer, supplier, and



21









 







employee relationships. It is critical that the Company take all necessary steps to safeguard its legitimate protectible
interests in such information and to prevent any of its competitors or any other persons from
obtaining any such information. Therefore, as consideration for the
Company’s agreement to grant or sell Options, Rollover Options, and/or Restricted Stock to a
Participant, each Participant shall agree to be bound by the following restrictive covenants:



     12.1 Confidentiality. Each Participant acknowledges that the information,
observations and data obtained by him or her while employed by the Company and its Subsidiaries
concerning the business or affairs of the Company or any of its Subsidiaries (“Confidential
Information”) are the property of the Company or such Subsidiary. Therefore, each Participant
agrees that he or she shall not disclose to any unauthorized Person or use for his or her own
purposes any Confidential Information without the prior written consent of the Board, unless and to
the extent that the aforementioned matters become generally known to and available for use by the
public other than as a result of such Participant’s acts or omissions. Each Participant shall
deliver to the Company or one of its Subsidiaries, at the termination of such Participant’s
employment, or at any other time the Company may request, all memoranda, notes, plans, records,
reports, computer tapes, printouts and software and other documents and data (and copies thereof)
relating to the Confidential Information, Work Product (as defined below) or the business of the
Company or any of its Subsidiaries which he or she may then possess or have under his or her
control.



     12.2 Assignment of Inventions. Each Participant acknowledges that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings, reports, formulas,
recipes, customer lists, and all similar or related information (whether or not patentable) which
relate to the Company’s or any of its Subsidiaries’ actual or anticipated business, research and
development or existing or future products or services and which are conceived, developed or made
by such Participant while employed by the Company and its Subsidiaries (“Work Product”)
belong to the Company or such Subsidiary. Each Participant shall promptly disclose such Work
Product to the Board and perform all actions reasonably requested by the Board (whether during or
after the period of Participant’s employment) to establish and confirm such ownership (including,
without limitation, assignments, consents, powers of attorney and other instruments).



     12.3 Non-Competition; Non-Solicitation. At any time during a Participant’s
Non-Competition Period, such Participant shall not, for himself or herself or on behalf of any
other Person, participate in, directly or indirectly, any Competing Business in any country in
which the Company or any of its Subsidiaries or licensees operates or conducts business as of such
time (or with respect to the period after such Participant’s Termination Date, as of such
Termination Date); provided that, nothing in this sentence shall restrict a Participant from
passive ownership of three (3) percent or less of the publicly traded securities of any Person.
During a Participant’s employment with the Company and/or its Subsidiaries and for 1 year
thereafter, a Participant shall not (i) induce or attempt to induce any employee of the Company or
its Subsidiaries to leave the employ of the Company or its Subsidiaries, or in any way interfere
with the relationship between the Company or its Subsidiaries and any employee thereof, (ii) hire
directly or through another entity any person who was an employee (other than clerical or
administrative support personnel) of the Company or its Subsidiaries at any time during the
Non-Competition Period or (iii) induce or attempt to induce any customer, supplier, licensee or
other business



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relation of the Company or its Subsidiaries to cease doing business with the Company
or its Subsidiaries, or in any way interfere with the relationship between any such customer,
supplier, licensee or business relation and the Company or its Subsidiaries (including, without
limitation, making any negative statements or communications concerning the Company or its Subsidiaries);
provided that, clauses (i) and (ii) above shall not apply with respect to any person solicited or
employed after the date that is twelve (12) months after the date on which such person’s employment
with the Company and its Subsidiaries is terminated.



     12.4 No Restriction on Earning a Living. By his or her acceptance and/or acquisition
of an Award, each Participant thereby acknowledges that the provisions of this Article XII
do not preclude such Participant from earning a livelihood, nor do they unreasonably impose
limitations on Participant’s ability to earn a living. In addition, each Participant thereby
acknowledges that the potential harm to the Company and/or its Subsidiaries of non-enforcement of
this Article XII outweighs any harm to Participant of enforcement (by injunction or
otherwise) of this Article XII against him. If any portion of the provisions of this
Article XII is found to be invalid or unenforceable by a court of competent jurisdiction
because its duration, territory, definition of activities covered, or definition of information
covered is considered to be unreasonable in scope, the invalid or unenforceable term shall be
redefined, or a new enforceable term provided, such that the intent of the Company and Participant
in agreeing to the provisions of this Article XII will not be impaired and the provision in
question shall be enforceable to the fullest extent of applicable law.



ARTICLE XIII

OTHER PROVISIONS




     13.1 Indemnification. No member of the Board, nor any person to whom ministerial
duties have been delegated, shall be personally liable for any action, interpretation or
determination made with respect to the Plan or Awards made thereunder, and each member of the Board
shall be fully indemnified and protected by the Company with respect to any liability he or she 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.



     13.2 Termination and Amendment. The Board at any time may suspend or terminate this
Plan and make such additions or amendments as it deems advisable under this Plan; provided that,
the Board may not change any of the terms of an Award Agreement in a manner adverse to a
Participant without the prior written approval of such Participant. In the event any Participant
so requests in writing, the Company shall amend the terms of such Participant’s Rollover Options so
that they will expire on the same terms as the options which were cancelled or foregone by such
Participant in exchange for such Rollover Options.



     13.3 Taxes.



          (a) The Company shall have the right to require Participants or their beneficiaries or legal
representatives to remit to the Company an amount sufficient to satisfy his or her minimum Federal,
state, local, and foreign withholding tax requirements, or to deduct



23









 






from all payments under the Plan amounts sufficient to satisfy such minimum withholding tax requirements.
Whenever payments under the Plan are to be made to a Participant in cash, such
payments shall be net of any amounts sufficient to satisfy all Federal, state, local, and
foreign withholding tax requirements.




          (b) Except as otherwise expressly provided in an Award Agreement, the Board may, in its
discretion permit a Participant to satisfy his or her tax withholding obligation either by (i)
surrendering Award Stock owned by the Participant or (ii) having the Company withhold from Award
Stock otherwise deliverable to such Participant. Award Stock surrendered or withheld shall be
valued at Fair Market Value as of the date on which income is required to be recognized for income
tax purposes.




     13.4 Withholding. In a situation where, if a Participant were to receive Award Stock
(by virtue of the exercise of any Options, Rollover Options or the issue to such Participant of any
Restricted Stock), the Company or any of its Affiliates (or a former Affiliate) would be obliged to
(or would suffer a disadvantage if it were not to) account for any tax or social security
contributions in any jurisdiction for which that person would be liable by virtue of the receipt of
Award Stock or which would be recoverable from that person (together, the “Tax Liability”),
the Options and Rollover Options may not be exercised and the Restricted Stock may not be issued
unless that person has either (i) made a payment to the Company or any of its Affiliates (or a
former Affiliate) of an amount at least equal to the Company’s estimate of the Tax Liability, or
(ii) entered into arrangements acceptable to the Company or any of its Affiliates (or a former
Affiliate) to secure that such a payment is made (whether by authorizing the sale of some or all of
the Award Stock on his behalf and the payment to the Company or any of its Affiliates (or a former
Affiliate) of the relevant amount out of the proceeds of sale or otherwise).



     13.5 Data Protection. By participating in the Plan or accepting any rights granted
under it, each Participant consents to the collection and processing of personal data relating to
the Participant so that the Company and its Affiliates can fulfill their obligations and exercise
their rights under the Plan and generally administer and manage the Plan. This data will include,
but may not be limited to, data about participation in the Plan and shares offered or received,
purchased or sold under the Plan from time to time and other appropriate financial and other data
(such as the date on which the Options, Rollover Options or Restricted Stock were granted) about
the Participant and his participation in the Plan.



     13.6 Notices. Notices required or permitted to be made under the Plan shall be in
writing and shall be deemed given, delivered and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile prior to 5:00 p.m. (New
York time) on a business day, (ii) the business day after the date of transmission, if such notice
or communication is delivered via facsimile later than 5:00 p.m. (New York time) on any business
day and earlier than 11:59 p.m. (New York time) on the day preceding the next business day, (iii)
one (1) business day after when sent, if sent by nationally recognized overnight courier service
(charges prepaid), or (iv) upon actual receipt by the person to whom such notice is required to be
given. All notices shall be addressed (a) to a Participant at such Participant’s address as set
forth in the books and records of the Company and its Subsidiaries, or (b) to the Company or the
Board at the principal office of the Company clearly marked “Attention: Board of Directors”.



24









 





     13.7 Severability. Whenever possible, each provision of this Plan shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Plan is held to be invalid, illegal or unenforceable in any respect under any applicable
law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Plan shall be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been
contained herein.



     13.8 Prior Agreements. No provision of any employment, severance, incentive award, or
other similar agreement entered into by a Participant, on the one hand, and any Subsidiary of the
Company, on the other hand, prior to the Effective Date shall modify or have any effect in any
manner on any provision of this Plan or any term or condition of any Award Agreement to which such
Participant is a party. Without limiting the generality of the foregoing, any provision in any
such agreement that purports to apply in any manner to options, stock, equity-based awards, or the
like shall not apply to or have any effect on any Awards under the Plan.



     13.9 Governing Law and Forum; Waiver of Jury Trial. The Plan shall be construed and
interpreted in accordance with the laws of the State of Delaware. Each Participant who accepts an
Award thereby agrees that any suit, action or proceeding brought by or against such Participant in
connection with this Plan shall be brought solely in the courts of the State of Delaware or the
United States District Court for the District of Delaware, each Participant consents to the
jurisdiction and venue of each such court, and each Participant agrees to accept service of process
by the Company or any of its agents in connection with any such proceeding. EACH PARTICIPANT WHO
ACCEPTS AN AWARD IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY SUIT, ACTION OR OTHER
PROCEEDING INSTITUTED BY OR AGAINST SUCH PARTICIPANT IN RESPECT OF HIS OR HER RIGHTS OR OBLIGATIONS
HEREUNDER.



     13.10 Section 409A Compliance. It is the intention of the Company and the Board that
the Plan not be subject to the provisions of Section 409A of the Code, as in effect as of the
Effective Date or subsequently modified thereafter, or to the extent subject to such provisions
then to comply in all material respects with such provisions. In the event that Section 409A would
impose a detriment on the Participants, taken as a whole, with respect to Awards under the Plan,
then the Board shall consider in good faith modifications or amendments to the Plan intended to
eliminate or ameliorate such detriment; provided that, in no event shall the Board be required to
modify or amend the Plan in a manner adverse to the Company or the Sponsors. In no event shall the
Company, the Board, or any of their respective Affiliates be liable to any Participant or any other
Person for any such detriment, or any other cost, expense, tax, or liability imposed on a
Participant or any other Person as a result of such Participant’s acceptance of any Award or
participation in the transactions contemplated by the Plan.



     13.11 Amendment and Restatement. This Plan supersedes, in its entirety, all of the
terms and conditions of the Original Plan, and all Awards made pursuant to the terms of the
Original Plan shall be governed by the terms of this Plan.



* * * * *




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Exhibit A



The attached Management Stock Holders Addendum is hereby incorporated in and made a part of the
Amended and Restated Toys “R” Us Holdings, Inc. 2005 Management Equity Plan.