ADDENDUM A NON-COMPETITION AND POST-CONTRACTUAL OBLIGATIONS

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.

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.

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.

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

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.

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.

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

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.

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.

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 ###-###-####.

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

Sincerely,

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:_____________

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.

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.

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.

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

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

 

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: ________________

By:    

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

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.                    

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:

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.

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.

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.

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

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.

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.

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.

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:

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 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

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