Document:

TRU.2013.10K-Ex10.42

Exhibit 10.42

RESTRICTED STOCK UNIT AWARD AGREEMENT
OF
TOYS “R” US, INC.

THIS AGREEMENT (the “Agreement”), is made, effective as of the __ day of November, 2013 (the “Grant Date”), between Toys “R” Us, Inc., a Delaware corporation (the “Company”), and _________________ (“Participant”).
R E C I T A L S:
WHEREAS, the Company has adopted the Toys “R” Us, Inc. 2010 Incentive Plan (the “Plan”), which Plan (together with the Appendix attached hereto applicable to Participant who is not a U.S. resident or taxpayer) is incorporated herein by reference and made a part of this Agreement.  Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan; and
WHEREAS, pursuant to that certain Employment Agreement dated as of ______________ by and between the Company and Participant (the “Employment Agreement”), the Company agreed to grant certain service-based restricted stock units to Participant pursuant to the Plan.
NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties agree as follows:
1.Grant of the Restricted Stock Units.  Subject to the terms and conditions of the Plan and the additional terms and conditions set forth in this Agreement, the Company hereby grants to Participant a Restricted Stock Unit Award consisting of the ___________ Stock Units (the “Restricted Stock Units”). The Restricted Stock Units shall vest and become nonforfeitable in accordance with Section 2 or 3 hereof.
2.    Vesting.
(a)    _______ percent (___%) of the Restricted Stock Units granted hereunder shall vest and become nonforfeitable on the earlier of (i) the first anniversary of the Grant Date, or (ii) termination of Participant’s employment by the Company other than for Cause.
(b)    ___________ percent (_____%) of the Restricted Stock Units granted hereunder shall vest and become nonforfeitable on the last day of each of the ____, _______, ______ and _______ fiscal quarters next following the first anniversary of the Grant Date.  
3.    Treatment of Restricted Stock Units under Certain Conditions.  
(a)    Termination of Employment Due to Death or Disability.  If Participant’s employment with the Company is terminated due to death or Disability, the Restricted Stock Units shall become fully vested. 
(b)    Other Termination of Employment.  If Participant’s employment with the Company is terminated for any other reason (including Retirement), the Restricted Stock Units shall, to the extent not then vested, be forfeited by Participant without consideration.

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(c)    Change in Control.  Upon the occurrence of a Change in Control, the Restricted Stock Units shall become fully vested. 
4.    Rights as a Stockholder.  Participant shall not be the record owner of the number of Shares issued in respect of the Restricted Stock Units Award until or unless such Restricted Stock Units vest. As from the vesting date of the Restricted Stock Units, Participant shall be the record owner of the number of Shares that vest pursuant to the Restricted Stock Units Award and shall be entitled to all rights of a common stockholder of the Company, including, without limitation, voting rights with respect to the Shares and Participant shall receive, when paid, any dividends on all of the Shares granted under this Section 4 as to which Participant is the record holder on the applicable record date. Upon Participant’s request following the vesting of any Shares pursuant to Section 2 or 3, certificates for the Shares which shall be issued in respect of Restricted Stock Units Awards that have vested shall be delivered to Participant or to Participant’s legal guardian or representative along with the stock powers relating thereto.
5.    Legend on Certificates.  The certificates representing the vested Restricted Stock Units delivered to Participant as contemplated by Section 4 above shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which such Shares are listed, and any applicable Federal or state laws of the United States or any foreign jurisdiction, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
6.    No Right to Continued Employment.  The granting of the Restricted Stock Units evidenced by this Agreement shall impose no obligation on the Company or any Affiliate to continue the employment of Participant and shall not lessen or affect the Company’s or its Affiliate’s right to terminate the employment of Participant.
7.    Transferability.  The Restricted Stock Units may not, at any time prior to becoming vested pursuant to Section 2 or 3, be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by Participant and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or any Affiliate; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.
8.    Stockholders Agreement.  Acceptance of the Restricted Stock Units shall constitute agreement by Participant to be bound by all of the terms and conditions of the Stockholders Agreement with respect to the Shares, or any other Company capital stock, issuable to or held by Participant.  All of the terms of the Stockholders Agreement are incorporated herein by reference.  For purposes of this Agreement, the term “Stockholders Agreement” shall mean the Management Stockholders Addendum, as amended, which is attached hereto as Exhibit A.
9.    Put Right.  Participant shall have the right (solely at his election) at any time until the occurrence of an initial public offering of the Company’s common stock (an “IPO”) to require the Company to repurchase, in one or more transactions, up to 100% of the Shares acquired by Participant upon vesting of the Restricted Stock Units granted hereunder (but no other Shares granted to or held by Participant).  The put right may be exercised by giving notice to the Company no sooner than six months after the earlier of (i) the expiration or earlier termination of the Employment Term (as defined in the Employment Agreement), or (ii) the effective date of Participant’s Retirement, but in no event sooner than the first determination of Fair Market Value (or confirmation of prior–determined Fair Market Value) by the Board that occurs at least six months 

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after Participant’s acquisition of the Shares upon vesting of the Restricted Stock Units.  The purchase price per Share payable by the Company in connection with such put right shall be the Fair Market Value as of a date determined by the Board that is the anticipated closing date of the repurchase.  The closing of the repurchase will take place as soon as practical (i.e., as of the next valuation of the Company’s common stock which customarily occurs in or about April and October of each year), but no later than 180 days after Participant’s delivery to the Company of notice of exercise of the put right.
10.    Withholding.  Participant may be required to pay to the Company or any Affiliate and the Company shall have the right and is hereby authorized to withhold, any applicable withholding taxes in respect of the Restricted Stock Units, the grant or vesting or any payment or transfer with respect to the Restricted Stock Units and to take such action as may be necessary in the opinion of the Committee to satisfy all obligations for the payment of such withholding taxes. Without limiting the foregoing, if at the time of such taxable event Participant would be precluded from selling Shares on the open market, Participant may instruct the Company, and the Company shall follow such instructions, to withhold Shares from the Restricted Stock Units having a Fair Market Value on the date of withholding equal to the minimum statutory amount required to be withheld for tax purposes.
11.    Securities Laws.  Upon the vesting of any Restricted Stock Units, Participant will make or enter into such written representations, warranties and agreements as the Committee may reasonably request prior to the issuance of any Shares in order to comply with applicable securities laws or with this Agreement.
12.    Notices.  Any notice necessary under this Agreement shall be addressed to the Company in care of is Secretary at the principal executive office of the Company and to Participant at the address appearing in the personnel records of the Company for Participant or to either party at such other address as either party hereto may hereafter designate in writing to the other.  Any such notice shall be deemed effective upon receipt thereof by the addressee.
13.    Choice of Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO CONFLICTS OF LAWS.
14.    Restricted Stock Unit Award Subject to Plan.  By entering into this Agreement Participant agrees and acknowledges that Participant has received and read a copy of the Plan.  The Restricted Stock Unit Award and the Restricted Stock Units granted hereunder is subject to the Plan.  The terms and provisions of the Plan as it may be amended from time to time are hereby incorporated herein by reference.  In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.  
15.    Signature.  This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as of the date first above written, which expressly includes Sections 8 and 9 of this Agreement.
TOYS “R” US, INC.
________________________________________
By: ___________________________________

PARTICIPANT
_______________________________________
___________________________

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RESTRICTED STOCK UNIT AWARD AGREEMENT
APPENDIX

This Appendix includes additional terms and conditions that govern the Restricted Stock Unit Awards granted to the Participant if the Participant resides (for tax purposes) in one of the countries listed herein.  (Please note that the Participant could be subject to income tax both in the country where the services are performed and the country of the Participant’s residence or citizenship, depending on the relevant jurisdictions.)  Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Agreement or the Plan.

AUSTRIA
No Claims of the Participant.  The granting of the Restricted Stock Unit Awards evidenced by this Agreement is made on a non-binding basis without legal title.  The Participant has no legal claim whatsoever to be granted any Award, including Restricted Stock Unit Awards, under the Plan or the Agreement, even if such Award is granted to the Participant on more than one occasion.
Assignment of Inventions.  Any rights of the Participant under the Austrian Patent Act shall remain unaffected by this Agreement.  

AUSTRALIA
Eliminate Section 6 of this Agreement and substitute the following:  The granting of the Restricted Stock Unit Awards evidenced by this Agreement shall impose no obligation on the Company or any Affiliate to make another grant or continue the employment of the Participant and shall not lessen or affect the Company’s or its Affiliate’s right to terminate the Employment of such Participant and the Participant acknowledges that continued employment creates no obligation on the Company or any Affiliate to make any future grants.

CANADA
Discretionary.  The parties agree that the grant of a Restricted Stock Unit Award and Shares is within the Company’s sole discretion.  The Company may, at any time and from time to time, amend, modify or terminate any and all entitlements under the Plan including the Restricted Stock Unit Award.  The grant of Restricted Stock Unit Awards and a Restricted Stock Unit Award also may vary from year to year depending on business conditions.  The parties further agree that the Restricted Stock Unit Award is not intended to form part of the Participant’s expected total compensation.  
Employment Termination.  The parties agree that for all purposes under the terms of this Agreement and the Plan, the Participant’s employment including Continuous Service is deemed to be terminated on the later of the last day on which the Participant performs active service for the Company and the end of any applicable statutory notice period.  Termination of employment includes constructive termination, voluntary termination, termination of service, termination with “Cause”, termination “without Cause” and termination “for any reason”.  There are no entitlements of any kind under this Agreement or the Plan during any additional period of notice or payment in lieu either provided by the Company or ordered by a Court. 

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CHINA
By accepting the Restricted Stock Unit Awards, the Participant fully accepts and agrees to the terms and conditions set out in the Agreement, the Plan (as may be amended by the Company from time to time) and this Appendix. 

The Participant hereby acknowledges and agrees that:

(i) the grant of the Restricted Stock Unit Awards pursuant to the Agreement has been made by the Company to the Participant on a purely discretionary basis and shall NOT form part of the Participant’s contractual remuneration or other entitlements under the Participant’s employment arrangements with Toys “R” Us (China) Ltd. or otherwise;

(ii) the grant of the Restricted Stock Unit Awards pursuant to the Agreement shall not create any obligation on the part of the Company to grant any subsequent Restricted Stock Unit Awards or any other Award under the Plan in the future;

(iii) the Company may, at its sole discretion, amend the Plan and, once amended, the original version of the Plan shall be deemed to have been automatically replaced by the amended Plan;

(iv) the implementation of the Agreement may involve specific approval/registration procedures and other formalities in the People’s Republic of China as required under applicable Chinese laws and regulations, in particular registration of the Agreement and related documentation with the relevant foreign exchange and taxation authorities; and

(v) the ultimate liability for all taxes payable by the Participant shall at all times remain the Participant's responsibility and if the Participant becomes subject to taxation in more than one jurisdiction between the Grant Date and the date of any relevant taxable event, the Company and/or Toys “R” Us (China) Ltd. shall withhold payable taxes in more than one jurisdiction accordingly.

The Participant shall, as required, cooperate fully with the Company and Toys “R” Us (China) Ltd. in relation to the procedures and formalities referred to in paragraph (iv) above and, in this regard, shall provide any information and sign any documents reasonably required to enable the implementation of the Agreement in the People’s Republic of China. 

This Appendix shall be incorporated into the Agreement.

GERMANY
This is a grant limited to the Restricted Stock Unit Awards and does not entitle the Participant to any grant of Restricted Stock Unit Awards in future years.  Even if the Company will grant Restricted Stock Unit Awards in future years this shall not establish a legal claim of the Participant for years after the respective grant. 
In any event, the Company reserves the right to amend the  Plan and this Agreement in case of changes in the economic development and circumstances of the Company or due to the decision of stockholders to grant Restrictive Stock Unit Awards or due to the performance of the employee, unless such an amendment is unreasonable for the employee.  An amendment of the plan will not result in a reduction of the average total compensation of the Employee in the last three years by more than 25%.

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Any rights of the Participants under the German Act on Employee Inventions remain unaffected by this Agreement.

In the event that individual provisions of this Agreement are ineffective, the remaining regulations shall remain in effect.  In lieu of the invalid provision or as a remedy of the possible incompleteness of the Agreement, an appropriate valid provision, which the parties would have intended if they had known of the ineffectiveness or of the incompleteness of the Agreement and which corresponds either to the commercial effect of the invalid provision or comes as close to it as possible, shall replace the invalid one.

JAPAN
Eliminate Section 2(b) of this Agreement and substitute the following:
 
The vesting of the Restricted Stock Unit Awards shall be subject to the condition that the Participant’s Employment with the Company is not terminated for any reason (other than death, Disability, Retirement, or in the event of a Change in Control), and if the Participant’s Employment with the Company is terminated for any reason (other than death, Disability, Retirement, or in the event of a Change in Control), the Restricted Stock Unit Awards shall, to the extent not then vested, not vest.

PORTUGAL
No modification of employment conditions.  By entering into this Agreement the Participant agrees and acknowledges that his participation in the Plan does not in any way constitute an amendment or modification of the terms and conditions of his current employment contract with Toys “R” Us Portugal, Limitada, and no claim made under or arising from the Plan may under any circumstances be invoked as a right under the same employment agreement. 

SPAIN
The Plan is given by the Company on a voluntary basis and only for the period detailed in Sections 3.1 and 3.2 of the Plan.
This is a grant limited to the Restricted Stock Unit Awards and does not entitle the Participant to any grant of Restricted Stock Unit Awards in future years.  Even if the Company will grant Restricted Stock Unit Awards in future years this shall not establish a legal claim of the Participant for years after the respective grant.
The number of Restricted Stock Unit Awards each eligible Employee will be entitled to receive, which could be none, shall be assessed on an annual basis.
UNITED KINGDOM
Eligibility. Notwithstanding Section 2.1(p) of the Plan, or any provision or discretion in the Plan or the Agreement to the contrary, Restricted Stock Unit Awards may only be granted to employees and executive directors in the United Kingdom.  For the avoidance of doubt, consultants based in the United Kingdom shall not be eligible to participate in the Plan.

Data Privacy.  By accepting the Restricted Stock Unit Award, the Participant hereby consents to the collection, use and transfer of personal data in electronic or other form, by and among the Company and any Affiliate for the exclusive purpose of implementing, administering and managing the Participant’s participation in the Plan.  The Participant understands that:

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(i)  the Company or any Affiliate may hold certain personal information about the Participant, including, but not limited to, the Participant’s name, home address and telephone number, date of birth, National Insurance number, salary, nationality, job title, residency status, and details of all equity awards granted to the Participant, for the purposes of managing and administering the Plan (“Data”);
(ii) the Company or any Affiliate will transfer Data among themselves as necessary for the purposes of the implementation, administration and management of the Participant’s participation in the Plan, and the Company and any Affiliate may each further transfer Data to any third parties assisting in the implementation, administration and management of the Plan;
(iii) the recipients of such transfer of Data may be located in the European Economic Area or elsewhere, including the United States of America, and the recipient’s country may have different data privacy laws and protections than the U.K.;
(iv) the Participant may request a list with the names and addresses of any potential recipients of the Data by contacting the Participant’s local human resources representative; and
(v) the Participant may, at any time, view the Data, request additional information about the storage and processing of the Data, require any necessary amendments to the Data or refuse or withdraw the consent herein, in any case without cost to the Participant, in writing by contacting the Participant's local human resources representative, provided however that refusing or withdrawing the Participant’s consent may affect the Participant’s ability to participate in the Plan.
Nature of Grant.  In accepting the Restricted Stock Unit Award, the Participant agrees that the grant of the Restricted Stock Unit Award is voluntary and occasional and does not create any contractual or other right to receive future grants of Restricted Stock Unit Awards, or benefits in lieu of Restricted Stock Unit Awards, even if Restricted Stock Unit Awards have been granted repeatedly in the past.  The Participant further agrees that all decisions with respect to future grants under the Plan, if any, including, but not limited to, the level and type of Award which may be granted under the Plan, will be at the sole discretion of the Committee.  

The Participant agrees that no claim or entitlement to compensation or damages shall arise from the forfeiture of the Restricted Stock Unit Award resulting from the cessation of the Participant’s employment with the Company or any Affiliate (for any reason whatsoever and whether or not in breach of law).

Tax Acknowledgment. The following provisions supplement Section 8 of the Agreement:

By accepting this Restricted Stock Unit Award, and regardless of any action the Company or the Participant's employing company (the “Employer”) takes with respect to any or all income tax, National Insurance contributions, payment on account or other tax-related withholding due in connection with or otherwise related to the Restricted Stock Unit Award acquired by the Participant or otherwise in connection with the participation of the Participant in the Plan (“Tax-Related Items”), the Participant acknowledges that the ultimate liability for all Tax-Related Items legally due by the Participant is and remains the Participant's responsibility and may exceed the amount actually withheld by the Company or the Employer.  

By accepting this Restricted Stock Unit Award, the Participant further acknowledges that the Company and/or the Employer: (a) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this Restricted Stock Unit Award, 

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including but not limited to the grant, or vesting, of this Restricted Stock Unit Award or any part of it, the subsequent sale or disposal of Shares following vesting of the Restricted Stock Unit Award, and the receipt of any dividends; and (b) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Restricted Stock Unit Award to reduce or eliminate the Participant's liability for Tax-Related Items or achieve any particular tax result.  

Further, if the Participant becomes subject to taxation in more than one jurisdiction between the Grant Date and the date of any relevant taxable event, the Participant acknowledges by accepting the Restricted Stock Unit Award that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

Prior to the vesting of the Restricted Stock Unit Award, or any other event or circumstance giving rise to Tax-Related Items, the Participant will pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all withholding and payment on account obligations for Tax-Related Items of the Company and/or the Employer.  

Without limitation to the above, the Company or any Affiliate shall be entitled to withhold, and the Participant shall be obliged to pay, the amount of any income tax and/or National Insurance contributions legally payable by the Participant (including any amount of employer's National Insurance contributions, where the liability for the employer's contributions can be passed to the Participant) attributable to or payable in connection with or pursuant to the grant, or vesting, of the Restricted Stock Unit Award or otherwise in connection with the Restricted Stock Unit Award acquired by the Participant.
 
The Participant authorizes the Company and/or the Employer, or their respective agents, to withhold all applicable Tax-Related Items legally payable by the Participant by one or a combination of the following:  

(a) withholding from the Participant's wages or other cash compensation paid to the Participant by the Company or the Employer or any Affiliate; and/or

(b) withholding from the proceeds of the sale of Shares following vesting of the Restricted Stock Unit Awards, either through a voluntary sale or through a mandatory sale arranged by the Company (on the Participant's behalf pursuant to this authorisation). 

The certificates evidencing Shares issued upon vesting of the Restricted Stock Unit Award may not be delivered to the Participant if the Participant fails to comply with the Participant's obligations in connection with the Tax-Related Items.

The Participant agrees that if the Employer or the Company does not withhold or otherwise collect the full amount of Tax-Related Items that the Participant owes on account of the occurrence of a taxable event in connection with the Restricted Stock Unit Award (the “Chargeable Event”) from the Participant within 90 days after the Chargeable Event or such other period as required by U.K. law (the "Due Date"), then the amount that should have been withheld or collected shall constitute a loan owed by the Participant to the Employer, effective on the Due Date.  The Participant agrees that the loan will bear interest at the then-current Official Rate of Her Majesty’s Revenue & Customs ("HMRC") and it will be immediately due and repayable by the Participant and the Company and/or the Employer may recover it at any time thereafter by any of the means referred to above.

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Notwithstanding the foregoing, if the Participant is an officer or executive director (as within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), the terms of the provision above will not apply.  In the event that the Participant is an officer or executive director and Tax-Related Items are not collected from or paid by the Participant by the Due Date, the amount of any uncollected Tax-Related Items may constitute a benefit to the Participant on which additional income tax and National Insurance Contributions may be payable.  The Participant acknowledges that the Company or the Employer may recover it at any time thereafter by any of the means referred to above.  The Participant also authorizes the Company to withhold the delivery of any certificates evidencing Shares issued upon vesting of the Restricted Stock Unit Award unless and until the loan is repaid in full.

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Exhibit A
MANAGEMENT STOCKHOLDERS ADDENDUM
This Management Stockholders Addendum (this “Addendum”) is hereby incorporated in and made a part of that certain Restricted Stock Unit Award Agreement dated as of __________ __, 201__ between Toys “R” Us, Inc. (the “Company”) and Antonio Urcelay (“Participant”) representing service-based restricted stock units granted to Participant under the Toys “R” Us, Inc. 2010 Incentive Plan (the “Plan”).  Upon grant of the award, Participant shall, without any action by Participant, automatically become bound by the terms hereof with respect to the Award Stock or any other Company capital stock, issued to or held by Participant under the Plan.  Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Plan. 
1.    Definition. For purposes of this Addendum, the following terms shall have the following meanings: 
“Addendum” shall have the meaning set forth in the Preface. 
“Approved Sale” shall have the meaning set forth in Section 4(b). 
“Award Stock” with respect to a Participant, means any Stock issued to such Participant upon exercise of any Options granted under the Plan and any Stock issued to such Participant as Restricted Stock or Restricted Stock Unit. 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.
“Business Day” shall mean any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in the City of New York. 
“Executive Officer” shall mean any Management Stockholder who is an officer of the Company (as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended).
“Management Stockholder” shall mean any Participant (including Participants who hold vested Options) and any other holder of Shares, in either case so long as they hold any Shares. 
“Participating Sellers”, with respect to Section 4(a), shall have the meaning set forth in Sections 4(a)(ii), and with respect to Section 4(b) shall mean any Management Stockholder that is Transferring Shares in an Approved Sale. 
“Permitted Vornado Transfer” shall mean any Transfer of shares of the Company’s capital stock by Vornado in order to ensure the preservation of its status as a real estate investment trust under federal tax laws. 
“Permitted Transferee” with respect to any Participant means such Participant’s spouse and descendants (whether or not adopted) and any trust, family limited partnership 

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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 Sections 13.3 or 13.4 of the Plan, as applicable.
“Piggyback Registration” shall have the meaning set forth in Section 5(a). 
“Plan” shall have the meaning set forth in the Preface. 
“Prospective Buyer” shall mean any Person, including the Company or any of its subsidiaries, proposing to purchase or otherwise acquire shares in a Sale under Section 4(a) or Section 4(b). 
“Public Offering” shall mean a public offering and sale of Stock for cash pursuant to an effective registration statement under the Securities Act. 
“Public Sale” shall mean any sale pursuant to a registered public offering under the Securities Act, any sale to the public through a broker, dealer or market maker pursuant to Rule 144 promulgated under the Securities Act, or, after an Initial Public Offering, any block sale to a financial institution in the ordinary course of its trading business.
“Registrable Securities” shall mean (i) any share of Class A Common issued to or otherwise acquired by any Management Stockholder and (ii) any equity securities issued or issuable directly or indirectly with respect to any of the foregoing securities referred to in clause (i) by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization. As to any particular shares constituting Registrable Securities, such shares will cease to be Registrable Securities when they have been (x) effectively registered under the Securities Act and disposed of in accordance with the registration statement covering them, or (y) sold to the public pursuant to Rule 144 under the Securities Act. For purposes of this Addendum, a Person will be deemed to be a holder of Registrable Securities whenever such Person has the right to acquire directly or indirectly such Registrable Securities upon the exercise of Options, to the extent they are then fully vested and exercisable. 
“Rule 144” shall mean Rule 144 under the Securities Act (or any successor rule). 
“Sale” shall mean a Transfer for value and the terms “Sell” and “Sold” shall have correlative meanings. 
“Securities Act” shall mean the Securities Act of 1933, as amended and in effect from time to time. 
“Securities Commission” shall mean the Securities and Exchange Commission, or any successor regulatory body. 
“Shares” means any shares of Award Stock under the Plan, and any other capital stock of the Company issued to or held by a holder of Award Stock. For all purposes of the Plan (including this Addendum), Shares will continue to be Shares in the hands of any holder (including any Permitted Transferee), and each such holder of Shares will succeed to all the rights and obligations attributable to such Person as a Management Stockholder hereunder with respect to such Shares, until such time as such Shares cease to be considered Shares pursuant to the express terms of Section 3(b) of this Addendum. 

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66111-1

“Sponsor” shall mean any of Bain Capital (TRU) VIII, LP., Bain Capital (TRU) VIII-E, L.P., Bain Capital (TRU) Coinvestment, L.P., Bain Capital Integral Investors, LLC, BCIP TCV, LLC, Toybox Holdings, LLC, and Vornado, in each case together with their respective Affiliates. 
“Tag Along Deadline” shall have the meaning set forth in Section 4(a)(ii). 
“Tag Along Holder” shall have the meaning set forth in Section 4(a)(i). 
“Tag Along Notice” shall have the meaning set forth in Section 4(a)(i). 
“Tag Along Offer” shall have the meaning set forth in Section 4(a)(ii). 
“Transfer” shall mean any sale, pledge, assignment, encumbrance or other transfer or disposition of any Shares to any other person, whether directly, indirectly, voluntarily, involuntarily, by operation of law, pursuant to judicial process or otherwise; provided that the sale, pledge, assignment encumbrance or other transfer or disposition of the common shares or beneficial interest, par value $0.04, of Vornado Realty Trust, a Maryland Realty Trust, a Maryland real estate investment trust (or its successors), will not be deemed a Transfer. 
“Vornado” means Vornado Truck, LLC.
2.    Voting Agreement. Each Management Stockholder, shall at all times cast all votes to which such Management Stockholder is entitled in respect of such Management Stockholder’s Shares, whether at any annual or special meeting, by written consent or otherwise, in such manner as the Company may instruct by written notice. Further, each Management Stockholder hereby grants to the Company an irrevocable proxy coupled with an interest to vote, including in any action by written consent, such Management Stockholder’s Shares as the Company deems appropriate in its sole discretion, which proxy shall be valid and remain in effect with respect to all Shares until they cease, to be Shares pursuant to the terms hereof. 
3.    Transfer Restrictions. 
(a)     General Transfer Restrictions. Each Management Stockholder understands and agrees that any Shares issued to or held by such Management Stockholder on the date hereof have not been registered under the Securities Act or under any state securities laws or the securities laws of any country. No Management Stockholder shall Transfer any such Shares (or solicit any offers in respect of any Transfer of such Shares), except in compliance with the Securities Act, or any applicable state or national securities laws and any restrictions on Transfer contained in the Plan (including this Addendum). 

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66111-1

(b)    Allowed Transfers. Until the expiration of the provisions of this Section 3, no Management Stockholder shall Transfer any of such Management Stockholder’s Shares to any other Person except as follows: 
(i)    Permitted Transferees. A Management Stockholder may Transfer Shares to Permitted Transferees solely to the extent provided by, and in accordance with the terms of, Sections 13.3 and 13.4 of the Plan. 
(ii)    Participation in Drag Along and Tag-Along; Puts and Calls. 
(A)    Drag-Along. A Management Stockholder may Transfer such Management Stockholder’s Shares to the extent required pursuant to Section 4(b) below. 
(B)    Tag-Along. A Participating Seller may Transfer Shares pursuant to and in accordance with the provisions of Section 4(a) below. 
Shares Transferred pursuant to this Section 3(b)(ii) shall conclusively be deemed thereafter not to be Shares under this Addendum. 
(iii)    Public Transfers. A Management Stockholder may Transfer Shares: (a) in a Public Offering pursuant to Section 5 below, or (b) (I) with respect to any Executive Officer, from and after the two-year anniversary of the closing of the Initial Public Offering, pursuant to Rule 144 or a block sale to a financial institution in the ordinary course of its trading business or any other legally permitted sale, or (II) with respect to any other Management Stockholder, from and after the six-month anniversary of the closing of the Initial Public Offering, pursuant to Rule 144 or a block sale to a financial institution in the ordinary course of its trading business or any other legally permitted sale. Shares Transferred pursuant to this Section 3(b)(iii) shall conclusively be deemed thereafter not to be Shares under this Addendum.
(c)    Impermissible Transfer. Any attempted Transfer of Shares not permitted under the terms of this Section 3 shall be null and void, and the Company shall not in any way give effect to any such impermissible Transfer. 
(d)    Notice of Transfer. To the extent any Management Stockholder shall Transfer any Shares pursuant to Sections 3(b)(i) or 3(b)(iii), such Management Stockholder shall, within three (3) Business Days following (or, in the case of a Transfer to a Permitted Transferee, within three (3) Business Days prior to) consummation of such Transfer, deliver notice thereof to the Company, which shall then deliver such notice to the Sponsors. 
(e)    Period. Each of the foregoing provisions of this Section 3 shall expire upon a Change in Control. 
4.    “Tag Along” and “Drag Along” Rights. 
(a)    “Tag Along” Rights. In connection with any Sale by a Sponsor of any Shares of Stock to any Person (other than a Public Sale, a Permitted Vornado transfer, or any Sale between or among the Sponsors, their Affiliates, or any employee of the Company or any of its Subsidiaries): 

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(i)    Notice. The Company shall, prior to any such proposed Sale, deliver a written notice (the “Tag Along Notice”) to each Management Stockholder (each, a “Tag Along Holder”), specifying the principal terms and conditions of the Sale (including the number of shares of each class of the Company’s capital stock to be Sold in such Sale). 
(ii)    Exercise. Each Tag Along Holder may elect to participate in the Transfer by delivering written notice (the “Tag Along Offer”) within five (5) Business Days after the date of delivery of the Tag Along Notice to such Holder (such date the “Tag Along Deadline”) (each Tag Along Holder so electing, a “Participating Seller”). Each Tag Along Holder who does not make a Tag Along Offer prior to the Tag Along Deadline shall be deemed to have waived all of such holder’s rights to participate in such Sale. Each Tag Along holder will be given the opportunity to exercise their vested Options prior to or in connection with the consummation of a Sale pursuant to this Section 4(a) and the Award Stock issued upon exercise of such vested Options will be Shares for purposes of this Section 4(a). 
(iii)    Number of Shares Sold. Each Participating Seller will have the right to include in the Sale, on the same terms and conditions (subject to Section 4(c)(i)) with respect to each Share Sold as the Sponsor proposing such Sale, a number of Shares of each class of Stock to be Sold in such Sale equal to the product of (x) the number of shares of such class of Stock to be Sold in the contemplated Sale, times (y) the quotient obtained by dividing the number of Shares of such class of Stock owned by such Participating Seller by the number of Shares of such class of Stock owned by such Participating Seller and any other Persons participating in such Sale (including the proposing Sponsor and any other Participating Sellers). 
(iv)    Rule 144 Eligibility. Notwithstanding anything to the contrary herein, after the two year anniversary of the Initial Public Offering, upon becoming eligible to sell all of his or her shares pursuant to Rule 144, a Tag Along Holder shall no longer be eligible to participate in the Tag Along rights provided by this Section 4(a). 
(b)    “Drag Along” Rights. If the Board approves a Change in Control (an “Approved Sale”), each Management Stockholder hereby agrees, if and to the extent requested by the Board, to Sell any or all of such Management Stockholder’s Shares in such Approved Sale on the terms and conditions approved by the Board. 
(i)    Management Stockholder Actions. Each Management Stockholder will take all necessary or desirable actions in connection with the consummation of any Approved Sale (including, if such Approved Sale is structured as a merger or consolidation, waiving any dissenters rights, appraisal rights or similar rights in connection with such merger or consolidation). 
(ii)    Conditions. The obligations of the Management Stockholders with respect to an Approved Sale are subject to the satisfaction of the following conditions: (i) upon the consummation of the Approved Sale, each Management Stockholder will receive the same form and amount of consideration per share as received by the Sponsors for the corresponding class of shares of the Company’s capital stock, or if any Sponsor is given an option as to the form and amount of consideration to be received in respect of shares of the Company’s capital stock of any class, all Management Stockholders holding shares of the Company’s capital stock of such class will be given the same option; and (ii) each holder of vested and exercisable Options will be given the opportunity to exercise such rights prior to or in 

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connection with the consummation of an Approved Sale and the Award Stock issued upon exercise of such vested Options will be Shares for purposes of this Section 4(b). 
(c)    Miscellaneous. The following provisions shall be applied to any proposed Sale to which Section 4(a) or 4(b) applies: 
(i)    Certain Legal Requirements. In the event the consideration to be paid in exchange for Shares in a proposed Sale pursuant to Section 4(a) or Section 4(b) includes any securities, and the receipt thereof by a Participating Seller would require under applicable law (A) the registration or qualification of such securities or of any Person as a broker or dealer or agent with respect to such securities where such registration or qualification is not otherwise required for the Sale or (B) the provision to any Participating Seller of any specified information regarding such securities or the issuer thereof that is material and not otherwise required to be provided for the Sale, then such Participating Seller shall not have the right to Sell Shares in such proposed Sale, and the Sponsors proposing such Sale (in the case of Section 4(a)) or the Board (in the case of Section 4(b)), as applicable, shall (x) in the case of a Sale that is not a Change in Control, have the right, but not the obligation, and (y) in the case of a Sale that is a Change in Control, have the obligation, to cause to be paid to such Participating Seller in lieu of the issuance of such securities, against surrender of the Shares which would have otherwise been Sold by such Participating Seller to the Prospective Buyer in the proposed Sale, an amount in cash equal to the Fair Market Value of such securities as of the date such securities would have been issued in exchange for such Shares. 
(ii)    Further Assurances. Each Participating Seller shall take or cause to be taken all such actions as may be reasonably necessary or reasonably desirable in order to expeditiously consummate each Sale pursuant to Section 4(a) or Section 4(b) and any related transactions, including executing acknowledging and delivering consents, assignments, waivers and other documents or instruments; furnishing information and copies of documents; filing applications, reports, returns, filings and other documents or instruments with governmental authorities: and otherwise cooperating with the Sponsor proposing such Sale or the Board (as applicable) and the Prospective Buyer, provided, however, that Participating Sellers shall be obligated to become liable in respect of any representations, warranties, covenants, indemnities or otherwise to the Prospective Buyer solely to the extent provided in the immediately following sentence. Without limiting the generality of the foregoing, each Participating Seller agrees to execute and deliver such agreements as may be reasonably specified by the Sponsor proposing such Sale or the Board (as applicable) to which other sellers will also be party, including agreements to (i)(A) make individual representations, warranties, covenants and other agreements as to the unencumbered title to its Shares and the power, authority and legal right to Transfer such Shares, the absence of any adverse claims with respect to such shares and the non-contravention of other agreements and (B) be liable as to such representations, warranties, covenants and other agreements, in each ease to the same extent (but with respect to its own Shares and with respect to its own representations, warranties, covenants and other agreements) as the other sellers, and (ii) be liable (whether by purchase price adjustment, indemnity payments or otherwise) in respect of representations, warranties, covenants and agreements in respect of the Company and its subsidiaries; provided, however, that the aggregate amount of liability described in this clause (ii) in connection with any Sale shall not exceed the lesser of (i) such Participating Seller’s pro rata portion of any such liability, to be determined in accordance with such Participating Seller’s portion of the aggregate proceeds to all sellers 

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in connection with such Sate and (ii) the proceeds to such Participating Seller in connection with such Sale. 
(iii)    Sale Process. The Sponsor proposing such Sale, in the case of a proposed Sale pursuant to Section 4(a), or the Board, in the case of a proposed Sale pursuant to Section 4(b), shall, in its sole discretion, decide whether or not to pursue, consummate, postpone or abandon any proposed Sale and the terms and conditions thereof. If any proposed Sale is postponed, abandoned or not consummated, then the Sponsors or the Board, as applicable, shall comply with the provisions of this Section 4 with respect to any subsequent proposed Sale. No Company stockholder nor any Affiliate of any such holder shall have any liability to any Management Stockholder arising from, relating to or in connection with the pursuit, consummation, postponement, abandonment or terms and conditions of any proposed Sale. 
(iv)    Expenses. All reasonable costs and expenses incurred for the benefit of all holders of Stock in connection with any proposed Sale shall be paid by the Company (to the extent not otherwise paid by the acquiring party), subject to the following sentence. Any costs incurred by or on behalf of any Participating Sellers on their own behalf will not be considered costs of the Sale hereunder, and will be borne by such Participating Seller(s). 
(d)    Period. The provisions of Section 4(a) shall expire upon the earlier to occur of (i) the Initial Public Offering and (ii) a Change in Control. Each of the other provisions of this Section 4 above shall expire upon a Change in Control. 
5.    Registration Rights. 
(a)    Right to Piggyback. Whenever the Company proposes to conduct an underwritten registration of any of its securities under the Securities Act (other than (i) in an Initial Public Offering or (ii) in connection with registration on Form S-4 or Form S-8 or any successor or similar form) and the registration form to be used may be used for the registration of Registrable Securities (a “Piggyback Registration”), the Company will give prompt written notice to all holders of Registrable Securities of its intention to effect such a registration and, subject to Section 5(b), will include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 15 days after the delivery of the Company’s notice. 
(b)    Priority on Registrations. In any underwritten registration, if the managing underwriters advise the Company that in their opinion the number of Registrable Securities, or the total number of securities of the Company, requested or proposed to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability of such offering, the Company will include in such registration the Registrable Securities, and the other securities of the Company, that in the opinion of the managing underwriters can be sold without adversely affecting the marketability of such offering, as follows: (i) first, if the registration is a primary offering on behalf of the Company, the securities the Company proposes to sell, (ii) second, any securities of the Company requested to be included in such registration by holders that have a contractual right to include securities in such registration prior to the holders of Registrable Securities, (iii) third, the Registrable Securities and any other securities of the Company requested to be included in such registration, pro rata among the holders of such Registrable Securities and other securities on the basis of the number of shares owned by each such holder. 

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(c)    Further Assurances. Each holder of Registrable Securities will take all necessary or desirable action in connection with the consummation of any Piggyback Registration. including (a) agreeing to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Board; (b) completing and executing all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements; and (c) providing in writing such information and affidavits as requested by the Board in connection with any registration statement or prospectus relating to such offering. 
6.    Legends. 
(a)    Restrictive Legend. Each certificate representing Shares shall have the following legend endorsed conspicuously thereupon: 
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN TRANSFER AND OTHER RESTRICTIONS PURSUANT TO THE TOYS “R” US, INC. 2010 INCENTIVE PLAN, AS AMENDED (THE “PLAN”) INCLUDING THE MANAGEMENT STOCKHOLDERS ADDENDUM ATTACHED THERETO AND MADE A PART THEREOF. A COPY OF THE PLAN WILL BE FURNISHED WITHOUT CHARGE BY TOYS “R” US HOLDINGS, INC. TO THE HOLDER HEREOF UPON WRITTEN REQUEST.” 
Any Person who acquires Shares which cease to be subject to the terms of the Plan (including this Addendum) shall have the right to have such legend (or the applicable portion thereof) removed from certificates representing such Shares. 
(b)    Securities Act Legend. Each certificate representing Shares shall have the following legend endorsed conspicuously thereupon: 
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A PRIVATE PLACEMENT WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD, ASSIGNED, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH LAWS OR QUALIFICATION FOR AN EXEMPTION THEREFROM.” 

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(c)    Stop Transfer Instruction. The Company will instruct any transfer agent not to register the Transfer of any Management Stockholder’s Shares until the conditions specified in the foregoing legends and the Plan (including this Addendum) are satisfied. 
(d)    Termination of the Securities Act Legend. The requirement imposed by Section 6(b) shall cease and terminate as to any particular Management Stockholder’s Shares (i) when, in the opinion of counsel reasonably acceptable to the Company, such legend is no longer required in order to assure compliance by the Company with the Securities Act or (ii) when such Shares have been effectively registered under the Securities Act or transferred pursuant to Rule 144. Wherever (A) such requirement shall cease and terminate as to any Management Stockholders Shares or (B) such Shares shall be transferable under paragraph (k) of Rule 144, the holder thereof shall be entitled to receive from the Company, without expense, new certificates not bearing the legend set forth in Section 6(b). 
7.    Notices. Notices required or permitted to be made under this Addendum shall be made in the manner specified in the Plan. 
8.    Section 16. The Company shall use its commercially reasonable efforts to cause any acquisition of Options or Award Stock under the Plan to be exempt under Rule 16b-3 promulgated trader the Securities Exchange Act of 1934. 

19
66111-1TRU.2013.10K-Ex10.55

Exhibit 10.55
                                                         

March 3, 2014

Mr. Antonio Urcelay
Spain

Dear Antonio:

I am pleased that you have agreed to serve as the Chief Executive Officer (“CEO”) of Toys “R” Us, Inc., Branch in Spain (“Sucursal en España”) (the “Company”), which includes serving as the CEO of Toys “R” Us, Inc. and its subsidiaries worldwide.  This letter agreement details the terms of your continued employment with the Company.  

In recognition of your continued leadership and contributions, the Company is pleased to inform you that you will receive additional benefits as set forth herein and the attached addenda.  This letter agreement supersedes and replaces the July 1, 2013 letter agreement between you, Toys “R” Us, Inc. and Toys “R” Us – Delaware, Inc. and the October 16, 2013 letter agreement between you, Toys “R” Us, Inc. and Toys “R” Us – Delaware, Inc. (the “October 2013 Agreement”), and such prior letter agreements are now null and void.  This letter agreement does not, however, supersede or amend the terms of your Special Transition Bonus Agreement, dated March 11, 2013.  Your Special Transition Bonus shall continue to be payable to you under the terms and conditions of your Special Transition Bonus Agreement dated March 11, 2013. 

		
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	Term of Employment – You shall be employed as CEO for a period commencing on October 16, 2013 (the “Commencement Date”) and ending October 31, 2015 (the “Initial Term”), on the terms and subject to the conditions set forth in this letter agreement.  Following the Initial Term, the Company and you may mutually agree to extend the term of your employment on the terms and conditions hereunder for an additional one (1) year period (the “Extension Term”, and together with the Initial Term, subject to earlier termination by the Company as provided herein, the “Employment Term”).  Neither the Company nor you shall be obligated to enter into the Extension Term.  Your decision to not enter into the Extension Term shall not affect any of the rights that you have acquired or that have accrued as of the end of the Initial Term, shall not affect your ability to retire from the Company and shall not have an effect upon your rights upon retirement.   

		
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	Annual Base Pay – Your annual base pay for your professional services as CEO shall be 1,000,000 Euro gross.  This includes any concepts you are entitled to, considering your relationship with the Company, including the non-competition compensation agreed with you in Addendum A.  Your performance and base pay will continue to be reviewed on an annual basis and you shall be entitled to such increases in annual base pay, if any, as may be determined from time to time in the sole discretion of the Board of Directors of 

the Company (the “Board”); provided, however, that your annual base pay together with your annual bonus payment shall be at all times at least 10% greater than the annual base pay and the annual bonus payment for any other employee of the Company.  The annual base pay provided herein, and any increases that may be provided by the Board from time to time, shall be your “Annual Base Pay.”  The aforementioned Annual Base Pay shall be used for calculating any applicable benefits, such as incentive pay and other benefits that are calculated based upon annual base pay, except for Severance Compensation, which shall be calculated as provided herein.  Your Annual Base Pay will be reviewed once the payments for the non-competition post-termination obligation are paid out, at which time both parties will agree as to the annual base pay going forward.

You will continue to be entitled to receive the “Other Benefits” provided herein, such as life and medical insurance, pension contributions and other benefits that you currently receive.    

		
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	Annual Bonus – Your incentive target is 150% of your Annual Base Pay.  Therefore, your target total cash (base pay plus target incentive) is 2,500,000 Euro gross.  The Annual Bonus is payable upon the Company’s achievement of certain performance targets established by the Board.  For Fiscal Year 2013, your Annual Bonus shall be payable based upon the criteria set forth in Addendum B.  Thereafter, your Annual Bonus shall be consistent with the metrics and weightings adopted by the Board, at their discretion, for similarly situated Executive employees under the terms and conditions of the Company’s Annual Bonus Plan.

		
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	One-Time Offer Acceptance Bonus – You shall receive a one-time offer acceptance bonus of 250,000 Euro gross (“Offer Acceptance Bonus”), which you acknowledge that you received under the October 2013 Agreement.  If you voluntarily terminate your employment with the Company without Good Reason or if the Company terminates your employment for Cause prior to the first anniversary of the Commencement Date, then you agree to reimburse the Company 100% of your Offer Acceptance Bonus.  If you voluntarily terminate your employment with the Company or if the Company terminates your employment for Cause on or following the first anniversary of your Commencement Date but prior to the second anniversary of your Commencement Date, then you agree to reimburse the Company 50% of your Offer Acceptance Bonus.  You hereby agree that such reimbursement may, at the election of the Company, be effected by offsetting the amount to be reimbursed, in whole or in part, by withholding other amounts due to you by the Company.  

For purposes of this letter agreement, “Good Reason” shall mean, without your consent and other than in connection with a termination of the your employment by the Company for Cause or due to your death or Disability, (A) the failure of the Company to pay any undisputed amount due under this Agreement; (B) a substantial reduction in your targeted compensation level (other than a general reduction in base salary or annual incentive compensation opportunities that affects all members of senior management of the 

Company proportionally); or (C) the Company requiring you, without your consent, to relocate and be based at any office or location outside of the Madrid, Spain area.  Notwithstanding the foregoing, any termination by you for Good Reason may only occur if you provide a notice to the Company in writing within 45 days after you learn (or reasonably should have learned) about the occurrence of the event giving rise to the claim of Good Reason and such notice is sent as follows:  by certified mail or overnight courier to Toys “R” Us, One Geoffrey Way, Wayne, NJ  07470, attention General Counsel.  Notwithstanding the foregoing, resignation by you shall not be deemed for “Good Reason” if the basis for such Good Reason is cured within a reasonable period of time (determined in light of the cure appropriate to the basis of such Good Reason), but in no event more than thirty (30) business days after the Company receives the notice of termination specifying the basis of such Good Reason.  For purposes of this letter “Disability” shall mean the determination that you are disabled pursuant to the terms of the Company’s long term disability plan

For purposes of this letter agreement, “Cause” shall mean any of the following, as determined by the Board: (A) your willful failure to perform any material portion of your duties; (B) the commission of any fraud, misappropriation or misconduct by you that causes demonstrable injury, monetarily or otherwise, to the Company or an affiliate; (C) the conviction of, or pleading guilty or nolo contendere to, a felony involving moral turpitude; (D) an act resulting or intended to result, directly or indirectly, in material gain or personal enrichment to you at the expense of the Company or an affiliate; (E) any material breach of your fiduciary duties to the Company or an affiliate as an employee or officer; (F) a material violation of the Company’s Code of Ethical Standards, Business Practices and Conduct or any other violation of a Company policy; (G) the failure by you to comply, in any material respect, with the provisions or any other undertaking set forth in this Agreement or any other agreement you has with the Company or any affiliate or any breach by you hereof or thereof if such failure or breach is reasonably likely to result in a material injury to the Company or an affiliate.

		
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	One-Time Equity Award – You shall receive a grant of Restricted Stock Units (“RSU”) of Toys “R” Us, Inc.’s common stock having a value of eight million dollars ($8,000,000) based upon the fair market value of Toys “R” Us, Inc.’s common stock as of the grant date (the “One-Time Equity Award”), which you acknowledge that you received under the October 2013 Agreement.  The number of RSU for the One-Time Equity Award shall be rounded up to the nearest 100 shares.  

The vesting schedule for the One-Time Equity Award (subject to your continued employment through the applicable vesting dates) shall be as follows:

		
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	50% of the One-Time Equity Award shall vest on the earlier to occur of (i) the first anniversary of the grant date, anticipated to be on or about October 31, 2014, or (ii) the termination of Initial Term by the Company without Cause.

		
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	The remaining 50% shall vest as follows:

		
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	25% shall vest at the end of the first quarter after the first anniversary of the grant date, anticipated to be on or about January 31, 2015;

		
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	25% shall vest at the end of the second quarter after the first anniversary of the grant date, anticipated to be on or about April 30, 2015;

		
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	25% shall vest at the end of the third quarter after the first anniversary of the grant date, anticipated to be on or about July 31, 2015; and

		
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	25% shall vest at the end of the fourth quarter after the first anniversary of the grant date, on or about October 31, 2015.

Once vested, the One-Time Equity Award is not forfeitable even if the Employment Term expires.  This One-Time Equity Award shall not be eligible for retirement acceleration as defined under the Toys “R” Us, Inc. 2010 Incentive Plan, notwithstanding anything to the contrary under the Toys “R” Us, Inc. 2010 Incentive Plan.  

You shall have the right (solely at your election) at any time until the occurrence of an initial public offering of Toys “R” Us, Inc.’s common stock (an “IPO”) to require the Company to repurchase in one or more transactions up to 100% of your shares of common stock acquired upon vesting of the One-Time Equity Award.  The put right may be exercised by giving notice to the Company no sooner than six months after the earlier of (i) the expiration or earlier termination of the Employment Term or (ii) the effective date of your retirement.  The purchase price per share payable by the Company in connection with such put rights shall be the fair market value determined as of a date determined by the Board that is the anticipated closing date of the repurchase.  The closing of the repurchase will take place as soon as practical (i.e., as of the next valuation of Toys “R” Us, Inc.’s common stock which customarily occurs in or about April and October of each year), but no later than 180 days after your delivery to the Company of notice of exercise of the put right.  
 
In all other respects, this grant shall be subject to the terms and conditions detailed in the Toys “R” Us, Inc. 2010 Incentive Plan and the grant agreement thereunder.  

		
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	Annual Equity Award – You shall continue to participate in Toys “R” Us, Inc.’s Amended and Restated 2005 Management Equity Plan, the Toys “R” Us, Inc. 2010 Incentive Plan and any subsequent long-term incentive plans of the Company (collectively, the “Long-Term Incentive Plans”) in accordance with the policies and procedures of the Long-Term Incentive Plans.  Your annual target long-term incentive award shall be 100% of Annual Base Pay.  

Any previous or future awards granted to you pursuant the Long-Term Incentive Plans shall be subject to the following enhanced rights upon retirement:  Upon your retirement with at least 6 months written notice, but no sooner than May 10, 2014, you shall have the right (solely at your election) at any time until the occurrence of an IPO to require the Company to repurchase shares of common stock acquired by you upon vesting or 

exercise of your equity awards (including the shares of common stock to be issued pursuant to a cashless exercise of options) at a repurchase rate not to exceed 25% of the total shares of common stock acquired by you upon vesting or exercise of your equity awards (including the shares of common stock to be issued pursuant to a cashless exercise of options) pursuant to the Long-Term Incentive Plans per year over a four-year period following your exercise of the put right, subject to an initial six-month holding period following your acquisition of such shares (pursuant to option exercise, settlement of RSU or otherwise).  The put right may be exercised by giving notice to the Company no sooner than six months after the effective date of your retirement.  The purchase price per share payable by the Company in connection with such put rights shall be the fair market value determined as of a date determined by the Board that is the anticipated closing date of the repurchase.  The initial closing of the repurchase will take place as soon as practical (i.e., as of the next valuation of Toys “R” Us, Inc.’s common stock which customarily occurs in or about April and October of each year), but no later than 180 days after your delivery to the Company of notice of exercise of the put right, with the remaining three installment purchases to take place annually thereafter.  You may not require the Company to repurchase more than 25% of the total shares of common stock acquired by you upon vesting or exercise of your equity awards (including the shares of common stock to be issued pursuant to a cashless exercise of options) pursuant to the Long-Term Incentive Plans in any year during the four-year period described above.  

		
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	2015 Equity Award – If the Initial Term of this letter agreement is extended for the Extension Term, then, you shall receive a grant of RSU of Toys “R” Us, Inc.’s common stock having a value of four million dollars ($4,000,000) based upon the then current fair market value of Toys “R” Us, Inc.’s common stock.  The number of RSU shall be rounded up to the nearest 100 shares (the “2015 Equity Award”).

The vesting schedule for the 2015 Equity Award (subject to your continued employment through the applicable vesting dates) shall be as follows:

		
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	25% of the 2015 Equity Award shall vest at the end of each quarter over a 12 month period – anticipated to be on or about January 31, 2016, April 30, 2016, July 31, 2016 and October 31, 2016. 

The 2015 Equity Award shall not be eligible for retirement acceleration as defined under the Toys “R” Us, Inc. 2010 Incentive Plan, notwithstanding anything to the contrary under the Toys “R” Us, Inc. 2010 Incentive Plan.

You shall have the right (solely at your election) at any time until the occurrence of an IPO to require the Company to repurchase in one or more transactions up to 100% of your shares of common stock acquired upon vesting of the 2015 Equity Award.  The put right may be exercised by giving notice to the Company no sooner than six months after the earlier of (i) the expiration or earlier termination of the Employment Term or (ii) the effective date of your retirement.  The purchase price per share payable by the Company 

in connection with such put rights shall be the fair market value determined as of a date determined by the Board that is the anticipated closing date of the repurchase.  The closing of the repurchase will take place as soon as practical (i.e., as of the next valuation of Toys “R” Us, Inc.’s common stock which customarily occurs in or about April and October of each year), but no later than 180 days after your delivery to the Company of notice of exercise of the put right.  

In all other respects, this grant shall be subject to the terms and conditions detailed in the Toys “R” Us, Inc. 2010 Incentive Plan and the grant agreement thereunder.  

		
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	Other Benefits – During the Employment Term, you will continue to be eligible to participate in the other Company benefit programs in which you currently participate subject to the terms of the benefit plans and any subsequent modifications the Company may make to those benefit plans, and this Agreement does not affect the manner in which such benefits are calculated or determined. 

		
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	Severance Compensation – If, prior to the expiration of the Initial Term, your employment with the Company is terminated by the Company (for reasons other than Cause), or if, prior to the expiration of the Initial Term, you resign for Good Reason, the Company will provide you with an amount equal to 2,444,400 Euro gross (the “Severance Compensation”), payable in twenty-four (24) equal monthly installments following your termination.  The Severance Compensation will include any statutory notice and/or termination pay you would otherwise be entitled to for the termination of your professional relationship with the Company. You will only have the right to receive the compensation defined for each scenario, if you and the Company accept, sign and comply with the Separation and Release Agreement attached hereto as Addendum C.

In the event this severance obligation arises within the twenty-four (24) months following the Company’s Change in Control1, the Severance Compensation shall be paid in a lump sum within sixty (60) days following your employment termination date.

No Severance Compensation shall be due in case of the termination of your employment for Cause or your resignation or retirement from your post at any time, including following a Change in Control, for any reason other than your resignation for Good Reason during the Initial Term.  

No Severance Compensation shall be due in the case of your removal as CEO within twenty-four (24) months following a Change in Control, if you are offered another professional position in the Company with equivalent target compensation in the Madrid, Spain area.

                                              
1  Change in Control shall have the same meaning as defined in the Company's 2010 Incentive Plan.

No Severance Compensation shall be due in case of the termination of your employment for any reason, whether with or without Cause, or for your resignation for Good Reason, on or after the expiration of the Initial Term or at any time during the Extension Term.

The relevant tax withholdings and Social Security deductions shall be applied to the Severance Compensation, if applicable.

		
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	Continued Benefits – Additionally, for eighteen (18) months after the termination of your employment by the Company (for reasons other than for Cause) or by you if you resign for Good Reason, you will continue to receive (i) your car benefit (although you will be responsible for your own gas, maintenance and other usage-related expenses); (ii) health benefits; and (iii) the use of your Company provided laptop computer and cell phone.  (You will be responsible for the cost of any phone calls and will be excluded from logging in to the Company network.)  Once this eighteen (18) month period has elapsed, you are requested to return the car, the laptop computer and the cell phone, in good working condition, to the Company.  For the avoidance of doubt, the continuation of benefits does not apply if you resign or retire (other than as a result of your resignation for Good Reason).

		
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	Pension Payments – For a period of eighteen (18) months after the involuntary termination of your employment by the Company (for reasons other than for Cause) or by you if you resign for Good Reason, the Company will continue making contributions to the pension plan and providing you with tax advice.

		
	•
	Tax Equalization and Tax Preparation -   During the Employment Term, the Company will provide tax equalization and tax preparation for you in accordance with Addendum D attached hereto.

Antonio, I know you will continue to make many contributions to the success of this Company.  If you have any questions, please feel free to contact me at (973) 617-5768.

To conclude, we kindly request you to sign below as acknowledgment of receipt and agreement with the terms and conditions of this letter. 

Sincerely,

/s/ Robert S. Zarra_______________________________

Robert S. Zarra
Representative, Branch in Spain (“Sucursal en España”)

I received the original and I agree with its contents 
Signed by Antonio Urcelay

/s/ Antonio Urcelay_____________                    Date:_____________
Antonio Urcelay

ADDENDUM A

NON-COMPETITION AND POST-CONTRACTUAL OBLIGATIONS

Non-Competition

During your employment and for a period of twenty-four (24) months following your last date of employment with the Company for any reason (the “Restricted Period”), you will not, without prior written consent of the Company, whether on your own behalf or on behalf of or in conjunction with any person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise whatsoever (“Person”), directly or indirectly:

(A)    engage in any business that directly or indirectly is a “Competitive Business.”  A “Competitive Business” means any Person engaged wholly or in part (directly or through one or more subsidiaries) in the retail sale or distribution (including in stores or via mail order, e-commerce, or similar means) of “Competing Products,”2 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 your termination date, as of such termination date) are generated by engaging in such sale or distribution of Competing Products;3  

(B)    enter the employ of, or render any services to, any Person (or any division or controlled or controlling affiliate of any Person) who or which engages in a Competitive Business;

(C)    acquire a financial interest in, or otherwise become actively involved with, any Competitive Business, directly or indirectly, as an individual, partner, shareholder, officer, director, principal, agent, trustee or consultant; or

(D)    interfere with, or attempt to interfere with, business relationships (whether formed before, on or after the date of this Agreement) between the Company  or any of its affiliates and customers, clients, suppliers, partners, members or investors of the Company or its affiliates.

(E)    Notwithstanding anything to the contrary in this Agreement, you may, directly or indirectly own, solely as a passive investment, securities of any Person engaged in a
                                                    
2 “Competing Products” means, with respect to the Executive at any time, (1) toys and games, (2) video games, computer software for children, and electronic toys or games, (3) juvenile or baby products, apparel, equipment, furniture, or baby related consumables, (4) wheeled goods for children, and (5) any other product or group of related products that represents more than twenty (20) percent of the gross sales of the Company and its affiliates and subsidiaries for the twelve (12) month period preceding such time (or with respect to the period after the Executive’s termination date, as of such termination date).
3 Without limiting the foregoing, the term “Competitive Business” shall in any event include Wal-Mart, K-Mart/Sears, Target, Amazon.com, Buy Buy Baby, Mattel, Hasbro, Tesco, Carrefour, Zellers, Ravensburger, King Jouet, Eroski, Famosa, Argos, Asda,  Auchan, Leclerc, La Grande Recre, Karstadt, Real, Kaufhof, Mueller, El Corte Ingles, Loblaws and any of their respective parents, subsidiaries, affiliates or commonly controlled entities.   

Competitive Business which are publicly traded on a national or regional stock exchange or on the over-the-counter market or privately held if you (x) are not a controlling Person of, or a member of a group which controls, such Person and (y) do not, directly or indirectly, own 3% or more of any class of securities of such Person who is publicly traded or privately held. 

Non-Solicitation of Employees
In addition, during the Restricted Period, you will not, whether on your own behalf or on behalf of or in conjunction with any Person, directly or indirectly:
(A)      solicit to leave the employment of, or encourage any employee of the Company to leave the employment of the Company; or
(B)      hire any such employee (other than clerical or administrative support personnel) who was employed by the Company as of the date of your termination of employment with the Company or who left the employment of the Company coincident with, or within one year prior to, the termination of your employment with the Company.
Non-Solicitation of Third Parties
During the Restricted Period, you will not, directly or indirectly, solicit to leave the employment of, or encourage to cease to work with, as applicable, the Company any consultant, supplier or service provider then under contract with the Company.

Compensation 

As a compensation for the obligations set forth herein, you shall receive:

		
	i.
	50% of your Annual Base Pay for each year shall be deemed to constitute special consideration for each year in which the non-competition obligation will be in force. Such compensation shall be paid by the Company in twelve (12) equal monthly installments starting from October 31, 2013 and continuing until October 30, 2014, and in eleven (11) equal monthly installments starting from October 31, 2014 and continuing until September 30, 2015.  At your request and for your convenience we have agreed to allocate the 50% of your Annual Base Pay for the second year of the Initial Term over an eleven (11) month period.  This amount is part of the Annual Base Pay agreed with you in the letter agreement to which this Addendum A is attached and will appear in your salary slip as "non-competition compensation".

		
	ii.
	If your employment terminates prior to October 31, 2015 for any reason that does not trigger Severance Compensation under your October 16, 2013 letter agreement, you will not receive the remaining amount as compensation for the non-competition obligation of up to the twenty-four (24) months. At the same time, the non-competition obligation 

will only be enforceable for the number of months you were paid the non-competition compensation when terminated.  

		
	iii.
	If your employment contract is terminated prior to October 31, 2015, and results in the Company’s payment of Severance Compensation under your October 16, 2013 letter agreement, the non-competition obligation will be enforceable for twenty-four (24) months.  In this case, you acknowledge that the Company’s payment of Severance Compensation significantly exceeds any amounts due to you as statutory severance and such additional amounts are provided to you to ensure that you comply with this non-competition agreement for the entire twenty-four month period post termination.

		
	iv.
	The relevant tax withholdings and Social Security deductions shall be applied to said amount, and shall not be taken into account when determining the daily gross salary to calculate potential severance compensations. 

 
The parties acknowledge that the provisions of the non-competition Covenant are reasonable and necessary for the protection of the Company and its subsidiaries. The parties also acknowledge that the compensation stated above is appropriate taking into account the limited scope of the industry stated in the clause. In addition, you further acknowledge that the Company and its parent, affiliates and/or subsidiaries will be irreparably harmed if such covenants are not specifically enforced.  Accordingly, should you default the obligation to refrain from competition, you shall reimburse the Company any compensation paid hereby. In addition, the Company shall be able to claim for damages, pursuant to Article 1124 of the Civil Code.

I received the original and I agree with its contents 
Signed by Antonio Urcelay

_______________________________        Date: ________________
Antonio Urcelay                    
 

Acknowledged and agreed to by:

Toys “R” Us, Inc., Branch in Spain (“Sucursal en España”)
                
______________________________
By:    
Title:    ______________, Toys “R” Us, Inc., Branch in Spain (“Sucursal en España”)

ADDENDUM B

2013 Annual Bonus
	
				
	Time Period
	2/1 to 10/31
	 
	11/1 to 1/31

	Title
	President, Europe
	 
	Chief Executive Officer

	Base Salary
	€582,000
	 
	€1,000,000

	Target Bonus %
	110%
	 
	150%

	Full Year Target Bonus
	€640,200
	 
	€1,500,000

	Days in Role
	273
	 
	92

	Base Salary Earnings
	€435,304
	 
	€252,055

	Target Bonus for Time Period
	€478,835
	 
	€378,082

	 
	 
	 
	 

	MIP Metrics
	Target Weighting
	 
	Target 
Weighting

	Consolidated EBITDA
	15%
	 
	30%

	Consolidated Cash Flow
	5%
	 
	20%

	US Domestic EBITDA
	—
	 
	20%

	International EBITDA
	—
	 
	10%

	 
	 
	 
	 

	Country EBITDA
	45%
	 
	 

	United Kingdom
	9%
	 
	 

	Central Europe
	9%
	 
	 

	Iberia
	9%
	 
	 

	France
	9%
	 
	 

	Canada
	9%
	 
	 

	 
	 
	 
	 

	Country Cash Flow
	15%
	 
	 

	United Kingdom
	3%
	 
	 

	Central Europe
	3%
	 
	 

	Iberia
	3%
	 
	 

	France
	3%
	 
	 

	Canada
	3%
	 
	 

	 
	 
	 
	 

	Financial Component Weighting
	80%
	 
	80%

	Personal Component Weighting
	20%
	 
	20%

Note:  From 7/1 until the Commencement Date, you also held the title of Interim CEO and from the Commencement Date until 10/31 you held the title of CEO, but your bonus for this period is being calculated as noted above for this period.

ADDENDUM C
SEPARATION AND RELEASE AGREEMENT
This Separation and Release Agreement (“Agreement”) is entered into as of this ___ day of __________________________, 20__, between TOYS “R” US, INC., Branch in Spain (“Sucursal en España”) and its subsidiaries, including but not limited to, TOYS “R” US – DELAWARE, INC. and TOYS R US IBERIA, S.A., and any successor thereto (collectively, the “Company”) and ___________ (the “Executive”).
The Executive and the Company agree as follows:
1.    The employment relationship between the Executive and the Company and its subsidiaries and affiliates, as applicable, terminated on _________________________________ (the “Termination Date”).
2.    In accordance with the Executive’s Employment Agreement, Executive is entitled to receive certain payments and benefits after the Termination Date.
3.    In consideration of the above, the sufficiency of which the Executive hereby acknowledges, the Executive, on behalf of the Executive and the Executive’s heirs, executors and assigns, hereby releases and forever discharges the Company, its parent Company and/or any related Company and all of each of their members, parents, affiliates, subsidiaries, divisions, any and all current and former directors, officers, employees, agents, and contractors of all of the foregoing companies, and affiliates and their heirs and assigns, and any and all employee pension benefit or welfare benefit plans of the Company or its affiliates, including current and former trustees and administrators of such employee pension benefit and welfare benefit plans, from all claims, charges, or demands, in law or in equity, whether known or unknown, which may have existed or which may now exist from the beginning of time to the date of this Agreement, including, without limitation, any claims the Executive may have arising from or relating to the Executive’s employment or termination from employment with the Company and its subsidiaries and affiliates, as applicable, including a release of any rights or claims the Executive may have under Title VII of the Civil Rights Act of 1964, as amended, and the Civil Rights Act of 1991 (which prohibit discrimination in employment based upon race, color, sex, religion, and national origin); the Americans with Disabilities Act of 1990, as amended, and the Rehabilitation Act of 1973 (which prohibit discrimination based upon disability); the Family and Medical Leave Act of 1993 (which prohibits discrimination based on requesting or taking a family or medical leave); Section 1981 of the Civil Rights Act of 1866 (which prohibits discrimination based upon race); Section 1985(3) of the Civil Rights Act of 1871 (which prohibits conspiracies to discriminate); the Employee Retirement Income Security Act of 1974, as amended (which prohibits discrimination with regard to benefits); any other federal, state or local laws against discrimination; or any other federal, state, or local statute, or common law relating to employment, wages, hours, or any other terms and conditions of employment. This includes a release by the Executive of any claims for wrongful discharge, breach of contract, torts or any other claims in any way related to the Executive’s employment with or resignation or termination from the Company and its subsidiaries and affiliates, as applicable. This release also includes a release of any claims for age discrimination under the Age Discrimination in Employment Act, as amended (“ADEA”) or any other federal, state or local statute or common law in this sense that may be applicable. The ADEA requires that the Executive be advised to consult with an attorney before the Executive waives any claim under ADEA. In addition, the ADEA provides the Executive with at least 21 days to decide whether to waive claims under ADEA and seven days after the Executive signs the Agreement to revoke that waiver. This 

release does not release the Company from any obligations due to the Executive under the Executive’s Employment Agreement or under this Agreement, any rights Executive has to indemnification by the Company and any vested rights Executive has under the Company’s employee pension benefit and welfare benefit plans.
Additionally, in consideration of the foregoing, the Company agrees to release and forever discharge the Executive and the Executive’s heirs, executors and assigns from any claims, charges or demands, and/or causes of action whatsoever, in law or in equity, whether known or unknown, which may have existed or which may now exist from the beginning of time to the date of this Agreement, including, but not limited to, any claim, matter or action related to the Executive’s employment and/or affiliation with, or termination and separation from the Company and its subsidiaries and affiliates or related companies; provided that such release shall not release the Executive from any loan or advance by the Company or its subsidiaries or affiliates, as applicable, a breach of Executive’s fiduciary obligations under New Jersey state law or a breach of the Executive’s Non-Competition and Post-Contractual Obligations Agreement, or the corresponding federal, state, or local statute, or common law that may be applicable.
4.    The Company agrees to indemnify and defend you against any claims brought against you by third parties, as a result of acts you performed in the course of and within the scope of your employment with the Company.  The Company will not defend and indemnify you for any acts performed outside of the scope of your employment, including but not limited to, acts of fraud, gross negligence, misconduct and willful violations of Company policies.  You agree to give prompt written notice to the Company of any such third party claims.   
5.    This Agreement is not an admission by either the Executive or the Company of any wrongdoing or liability.
6.    The Executive waives any right to reinstatement or future employment with the Company and its subsidiaries and affiliates following the Executive’s separation from the Company and its subsidiaries and affiliates on the Termination Date.
7.    The Executive agrees and allows the Company to deduct any amount due at the termination date by the Executive, from the amounts that should be paid by the Company to him, if any.
8.    The Executive agrees not to engage in any act after execution of the Agreement that is intended, or may reasonably be expected to harm the reputation, business, prospects or operations of the Company or its subsidiaries or affiliates or their respective officers, directors, stockholders or employees. The Company further agrees that it will engage in no act which is intended, or may reasonably be expected to harm the reputation, business or prospects of the Executive.
9.    The Executive shall continue to be bound by the Non-Compete and Post-Contractual Obligation Agreement.
10.    The Executive shall promptly return all Company and subsidiary and affiliate property in the Executive’s possession, including, but not limited to, Company or subsidiary or affiliate keys, credit cards, cellular phones, computer equipment, software and peripherals and originals or copies of books, records, or other information pertaining to the Company or subsidiary or affiliate business; provided however, that in the event that Executive is terminated under circumstances that give rise to certain “Continued Benefits” under Executive’s employment letter agreement, he shall be permitted to maintain 

the benefits and equipment contemplated thereunder, consistent with the terms and conditions set forth therein.
11.    This Agreement represents the complete agreement between the Executive and the Company concerning the subject matter in this Agreement and supersedes all prior agreements or understandings, written or oral. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.
12.    Each of the sections contained in this Agreement shall be enforceable independently of every other section in this Agreement, and the invalidity or unenforceability of any section shall not invalidate or render unenforceable any other section contained in this Agreement.
13.    It is further understood that for a period of 7 days following the execution of this Agreement in duplicate originals, the Executive may revoke this Agreement, and this Agreement shall not become effective or enforceable until the revocation period has expired. No revocation of this Agreement by the Executive shall be effective unless the Company has received within the 7 day revocation period, written notice of any revocation, all monies received by the Executive under this Agreement and the Executive’s Employment Agreement and all originals and copies of this Agreement.
14.    This Agreement has been entered into voluntarily and not as a result of coercion, duress, or undue influence. The Executive acknowledges that the Executive has read and fully understands the terms of this Agreement and has been advised to consult with an attorney before executing this Agreement. Additionally, the Executive acknowledges that the Executive has been afforded the opportunity of at least 21 days to consider this Agreement.
The parties to this Agreement have executed this Agreement as of the day and year first written above.                    

THE COMPANY

By:                        
Name:
Title:

ANTONIO URCELAY

                        

 

ADDENDUM D
TAX EQUALIZATION POLICY AND TAX PREPARATION

During the Employment Term, the Company will provide tax equalization between Spanish and U.S. taxes on all employment-related earnings including, but not limited to, annual base salary, annual bonus, offer acceptance bonus, and equity awards, as to ensure that your total income and social tax liability does not exceed the tax burden that you would have incurred in your home country (i.e., Spain) alone, and had no tax burden been imposed by the host country (i.e., the U.S.), including without limitation in connection with your travel to the U.S., lodging in the U.S., local transportation in the U.S. and in connection with any withholding tax paid on your behalf by the Company.  In addition, it is to ensure that you do not benefit from a tax reduction as compared to the home country, as a result of the CEO assignment on Company derived income. For avoidance of doubt, the Tax Equalization will not take into account or reimburse you for any taxes incurred by you as a result of your Spanish residency being terminated by you voluntarily (i.e., if you choose to remain in the U.S. for more than 182 days during any calendar year).  

The Tax Equalization will be effective from the tax year the U.S. assignment begins through the year where any assignment income has a significant effect on your tax situation.  Generally, this is through the end of the calendar year in which the assignment ends. However, certain applications of the policy will be extended where assignment-related income, credits or deductions related to the assignment period may exist in the home or host country, or where Company-paid foreign tax credits or other expenses are used to offset the your income tax liability after the end of the assignment period.  In the case of separation of services for Cause (as defined in the agreement), the application of this policy to any separation related payments and the provision of tax preparation services will be at the discretion of the Company.

This tax equalization will be accomplished as follows:

		
	a.
	Hypothetical tax will be deducted from your pay each pay cycle.  Hypothetical tax is an estimate of your projected Spanish Federal and Provincial Income Tax in light of your position as CEO of the Company and your travel to the U.S.  Determination of your hypothetical tax amount will be calculated at the beginning of the assignment by the selected tax consulting firm.  Payments made under any incentive plan will also be subject to a hypothetical tax-withholding.  The hypothetical tax rate used is an estimate of the tax rate on Company derived income only and is based on the hypothetical tax withholding calculation in light of your position as CEO of the Company and your travel to the U.S.

		
	b.
	As the Spanish and U.S. income tax returns are prepared and filed, the Company will pay, on your behalf, the actual income tax liabilities attributable to your employment.  As such, the Company will be entitled to any applicable refunds received in connection with your tax returns which will need to be remitted to the Company upon receipt from the applicable tax authority.

		
	c.
	Following the preparation of your home and host country income tax returns, the tax consulting firm will prepare a tax equalization settlement statement reconciling your hypothetical taxes due on your base salary, bonus and other Company compensation that would have been due had you not been on assignment, to your final hypothetical tax withheld for the year using the applicable Spanish tax laws and tax rates. If the result shows that the Company has withheld 

1
 

more hypothetical tax than your final hypothetical tax calculation (settlement statement), then you will receive a reimbursement of the difference.  The tax equalization reimbursement shall be made as soon as practicable after the actual taxes are paid in both countries, but no later than the end of the second calendar year following the later of (i) the calendar year in which your U.S. income tax return is required to be filed (including extensions) for the year to which the compensation subject to the tax equalization reimbursement relates, or (ii) the calendar year in which your foreign income tax return or tax payment is required to be filed or made (including extensions) for the year to which the compensation subject to the tax equalization reimbursement relates.  Where such reimbursements arise due to an audit, litigation or similar proceeding, payment must be made no later than the end of the first calendar year after the year in which you remit the related taxes.

If the result shows that an insufficient amount of hypothetical tax was withheld, then you will make payment to the Company for this amount.  This amount must be paid within 60 days of notification by the tax consultant or the Company.

		
	d.
	It is your responsibility to fully comply with all applicable tax laws by the proper and timely filing of Spanish and all U.S. tax returns.  Your full cooperation with the selected tax consults is required.

An accounting firm designated by the Company (the “Tax Service Provider”) will prepare your Spanish and U.S. tax returns and will determine the tax equalization and hypothetical tax calculations, related to employment compensation during the Employment Term.  During the Employment Term, and for the tax years in connection with your assignment as CEO of the Company (including without limitation Toys “R” Us, Inc. and its subsidiaries), the Company will pay all fees for the tax return preparation for you.  You shall be responsible for any further expense, such as personal estate or tax planning. 

Other Matters:

U.S. Tax Residency
The tax equalization is based on the premise that you will be considered a U.S. nonresident for federal income tax purposes during the assignment period, which may generally be the case if you spend less than 183 days of physical presence in the U.S. in any calendar year counting days in the current year, 1/3 of days in the first preceding year, and 1/6 of days in the second preceding year. To the extent you voluntarily decide to remain in the U.S. for more than 182 days during any calendar year of the Employment Term, or take steps that would indicate an intention to move to the U.S. permanently such as applying for U.S. permanent residency, transferring assets into the U.S., or purchasing a personal residence, whereby you become a U.S. tax resident for any period of time during or after the expiration or termination of the U.S. Employment Term and the application of the tax equalization policy, any tax payment or tax reimbursements due to you on any payment will be determined by the Company as if you were a U.S. nonresident.  Any additional tax on any and all payments received that is above the tax that would have been calculated as a U.S. nonresident and as a Spanish resident will be your responsibility.  

U.S. State Tax Residency
The tax equalization is also based on the premise that you will NOT be considered a resident of any U.S. state. Therefore, to the extent that you take steps that would result in your becoming a tax resident of any U.S. state including, but not limited to, having a place of abode available to you or your spouse in New 

2
 

York or New Jersey state throughout the tax year, Any additional tax on any and all payments received that is above the tax that would have been calculated as a nonresident will be your responsibility.

Personal Income
Please note that any non-Company income including gains on sale of stock, sale of real estate or any other non-Company compensation (such as equity based compensation from other employers) will not be subject to the tax equalization policy.  This means that you will bear the full worldwide tax burden for non-Company income.  Similarly, the policy does not cover the tax implications and liabilities related to estate/inheritance tax nor wealth tax on either the home or host country. 

Foreign Tax Credits
Any foreign tax credits resulting from taxes paid by the Company which may offset your home country tax will be for the benefit of the Company.  This includes foreign tax credit carryovers or carry-backs to tax years outside of the U.S. assignment period.  Any refunds generated from the use of such foreign tax credits, shall be returned to the Company.

In the event you have accrued foreign tax credits prior your U.S. assignment, the benefit of those foreign tax credits will be for you.  However, foreign tax credits related to the Company-paid host country taxes will be applied first.

In addition, should you utilize company-paid foreign tax credits in a future non-assignment year, you shall be required to return the refund associated with these credits to the Company regardless of whether you are still with the Company or have left the Company.

Tax Audits
In the event a tax return prepared under this policy is examined or audited by home or host country tax authorities in connection with a year for which you are subject to this policy, you shall report such notice of examination or audit to the Company and the designated Tax Service Provider in writing within fifteen (15) days of receipt of such notice.  

The Company may elect to protest or challenge, at its expense, any adjustment or increase assessment resulting from such audit provided that:

		
	•
	The positions on the tax return under examination were adopted with the Company’s approval and relate to the international assignment; and

		
	•
	You cooperate fully with the designated Tax Service Provider throughout the examination and take steps the designated Tax Service Provider deems necessary for its satisfactory conclusion.

Where an audit results in a change affecting taxes actually paid, an adjustment of the tax equalization settlement for the year or years affected shall be made upon the adjustment becoming final.  If you have taken unauthorized action that creates additional audit requests or taxes, you shall be responsible for the additional tax.

Penalties
Penalties and interest attributable to Company-related matters, for which you are not at fault, will be paid by the Company.  Penalties and interest assessed as a result of your failure to provide timely and accurate data for the preparation of your tax returns, or to timely file and pay taxes due as instructed by the designated Tax Service Provider, will not be reimbursed by the Company.  The Company, in conjunction 

3
 

with the designated Tax Service Provider, will determine the appropriate allocation of penalties and interest between you and the Company, if applicable.

4

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