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Advisory Agreement

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Exhibit 10.20


ADVISORY AGREEMENT

This Advisory Agreement (this " Agreement" ) is made and entered into as of July 21, 2005 (the " Effective Date" ), by and among Toys " R" Us Holdings, Inc., a Delaware corporation (" Holdings" ), Toys " R" Us, Inc., a Delaware corporation (the " Company" ), Bain Capital Partners, LLC, a Delaware limited liability company (" BCP" ), Bain Capital, Ltd., a company organized under the laws of England and Wales (" BCL" and, together with BCP, " Bain" ), Kohlberg Kravis Roberts & Co., L.P., a Delaware limited partnership (" KKR" ), and Vornado Truck LLC, a Delaware limited liability company (" Vornado" and together with Bain and KKR, the " Advisors" ). Certain defined terms are defined in Section 21 .


WHEREAS, the Company desires to retain the Advisors with respect to the services described herein.

NOW, THEREFORE, the parties to this Agreement agree as follows:


1. Term . This Agreement shall be in effect for an initial term commencing on the Effective Date and ending on the tenth anniversary of the Effective Date (the " Term" ), which Term shall automatically be extended thereafter on a year to year basis unless the Company or the Advisor Majority provides written notice of its desire to terminate this Agreement to each of the Advisors and the Company at least 90 days prior to the expiration of the Term or any extension thereof. In addition, in connection with the consummation of a Change in Control or the Initial Public Offering, the Advisor Majority may terminate this Agreement by delivery of written notice of termination to the Company. In the event of a termination of this Agreement, the Company shall pay in cash to each of the Advisors (a) all unpaid Advisory Fees (as defined in Section 3 (a) ), all unpaid Subsequent Transaction Fees (as defined in Section 4(b) ) and expenses due under this Agreement with respect to periods prior to the termination date, plus (b) the net present value (using a discount rate equal to the yield as of such termination date on U.S. Treasury securities of like maturity based on the times such payments would have been due) of the Advisory Fees that would have been payable with respect to the period from the termination date through the tenth anniversary of the Effective Date or, in the case of any extension thereof, through the end of such extension period (assuming, for purposes of such calculation, that each Advisor will be deemed to hold throughout such period the same percentage of its Initial Shares as it holds at the termination date). The provisions of Sections 1 , 4(b) , 6 , 7 , 9 , and 17 through 21 shall survive any termination of this Agreement.

2. Services . The Advisors shall perform or cause to be performed such services for the Company and/or its subsidiaries as mutually agreed by the Advisors and the Company, which services may include, without limitation, the following:


(a) general executive and management services;

(b) identification, support, negotiation and analysis of acquisitions and dispositions by the Company and/or its subsidiaries;


(c) support, negotiation and analysis of financing alternatives, including, without limitation, in connection with acquisitions, capital expenditures and refinancing of existing indebtedness;

(d) finance functions, including assistance in the preparation of financial projections and monitoring of compliance with financing agreements;


(e) real estate functions, including management and monitoring of real estate properties and development and implementation of real estate strategies;


(f) marketing functions, including monitoring of marketing plans and strategies;

(g) human resources functions, including searching and hiring of executives; and


(h) other services for the Company and its subsidiaries upon which the Company and the Advisors agree.


3. Advisory Fees and Expenses .


(a) During the Term of this Agreement, the Company will pay each Advisor an advisory fee (such Advisor' s " Advisory Fee" ) for each fiscal quarter of the Company equal to the product of (x) one-third of the Quarterly Fee Amount for such fiscal quarter times (y) such Advisor' s Fee Allocation Percentage. Each Advisor' s Advisory Fee will be payable in advance to such Advisor or its designee by wire transfer of immediately available funds on the first business day of the first month of each fiscal quarter, except that no payment shall be due and owing in respect of the final fiscal quarter in 2005 as a result of the payment made on the Effective Date. The pro-rated amount of each Advisor' s Advisory Fee for the period commencing on the Effective Date and ending on the last day of the Company' s fiscal quarter ending on or about October 31, 2005 will be payable by wire transfer of immediately available funds on the Effective Date and shall be paid in respect of services for the remainder of the 2005 fiscal year.

(b) The Company will reimburse each Advisor for such reasonable travel expenses and other reasonable out-of-pocket fees and expenses (including the reasonable fees and expenses of attorneys and, to the extent approved in advance by the Company, accountants or other advisors retained by such Advisor) as may be incurred by such Advisor and its partners, members, employees or agents in connection with the rendering of services pursuant to this Agreement. Such expenses will be reimbursed by wire transfer of immediately available funds promptly upon the request of such Advisor (but in any case no later than five business days following such request) and will be in addition to any other fees or amounts payable to such Advisor pursuant to this Agreement. Unless requested by the Company, in no event shall any Advisor submit its expenses to the Company more often than monthly.


4. Transaction Fees and Expenses .


(a) The Company will pay the Advisors or their respective designees a fee in the aggregate amount of $75,000,000 for services rendered in connection with debt financing of the transactions (the " Merger" ) contemplated by the Agreement and Plan of Merger, dated as of March 17, 2005, among the Company, Global Toys Acquisition, LLC, a Delaware limited liability company, and Global Toys Acquisition Merger Sub, Inc., a Delaware corporation. Such fee shall be allocated among the Advisors as follows: one-third to Bain; one-third to KKR; and


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one-third to Vornado. Each Advisor' s allocated portion of such fee will be payable to such Advisor or its designee by wire transfer of immediately available funds on the Effective Date. In addition, the Company will reimburse each Advisor or its designee, by wire transfer of immediately available funds on the Effective Date, for its reasonable travel expenses and other reasonable out-of-pocket fees and expenses (including the fees and expenses of accountants, attorneys and other advisors retained by such Advisor) incurred in connection with the foregoing and the investigation, negotiation, and consummation of the Merger.

(b) The Company will pay the Advisors or their designees a transaction fee (each, a " Subsequent Transaction Fee" ) in connection with the consummation of each transaction that is completed during the Term (or completed after any termination of this Agreement, if such transaction was contemplated at the time of termination of the Agreement) resulting in a Change in Control, acquisition, disposition or divestiture, spin-off, split-off, or financing (whether debt or equity financing) by or involving Holdings, the Company or their respective subsidiaries in an amount equal to 1% of the aggregate value of each such transaction (in each case, whether such transaction is by way of merger, purchase or sale of stock, purchase or sale or other disposition of assets, recapitalization, reorganization, consolidation, tender offer, public or private offering or otherwise, and whether consummated directly by Holdings, the Company or their respective subsidiaries or, in the case of a Change in Control, indirectly by their respective stockholders, and determining the value of debt financing without regard to whether such debt financing is actually drawn upon). Each Advisor shall be entitled to a portion of such Subsequent Transaction Fee equal to the product of (x) the amount of such Subsequent Transaction Fee, times (y) a fraction, the numerator of which is the Fee Allocation Percentage of such Advisor, and the denominator of which is the aggregate Fee Allocation Percentages of all Advisors. Each Advisor' s allocated portion of a Subsequent Transaction Fee will be payable to such Advisor or its designee by wire transfer of immediately available funds on the date on which such transaction resulting in a Subsequent Transaction Fee is consummated.


5. Personnel . Each Advisor will provide and devote to the performance of this Agreement such partners, employees and agents of such Advisor as it shall deem appropriate to the furnishing of the services mutually agreed upon by the Company and the Advisors; it being understood that no minimum number of hours is required to be devoted by any or all of the Advisors on a weekly, monthly, annual, or other basis. The fees and other compensation specified in this Agreement will be payable by the Company regardless of the extent of services requested by the Company pursuant to this Agreement, and regardless of whether or not the Company requests an Advisor to provide any such services. The Company acknowledges that the services of each of the Advisors are not exclusive, and that each of the Advisors will render similar services to other Persons (including with the same partners, employees, and agents thereof as may render services to the Company).

6. Liability . None of the Advisors nor any of their respective Affiliates, nor any of their respective partners, shareholders, directors, officers, members, employees or agents (collectively, the " Advisor Group" ) shall be liable to Holdings, its subsidiaries or any of their Affiliates or stockholders for any loss, liability, damage or expense (including attorneys' fees and expenses) (collectively, a " Loss" ) arising out of or in connection with the performance of services contemplated by this Agreement or otherwise provided by any of the Advisors to, or otherwise in connection with the operations of, Holdings or a
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