Exhibit 10BB

                               RETENTION AGREEMENT

                                     BETWEEN

                                TOYS "R" US, INC.

                                       AND

                               JOHN H. EYLER, JR.

                                   DATED AS OF

                                 January 6, 2000


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                                TOYS "R" US, INC.
                               RETENTION AGREEMENT

      AGREEMENT (this "Agreement"), by and between Toys "R" Us, Inc., a Delaware
corporation (the "Company"), and John H. Eyler, Jr. (the "Executive"),  dated as
of January 6, 2000.  Capitalized  terms used in this  Agreement and in Exhibit A
hereto that are not defined in the operative  provisions shall have the meanings
ascribed to them on Exhibit B hereto.

      1.  Employment  Period.  The Company hereby agrees to employ the Executive
and the Executive  hereby agrees to remain in the employ of the Company  subject
to the terms and conditions of this Agreement,  for the Employment  Period.  The
term  "Employment  Period"  means the period  commencing on January 17, 2000 and
ending on the second  anniversary  of such date as  automatically  extended  for
successive  additional one-year periods unless, at least six months prior to the
scheduled  expiration  of the  Employment  Period,  the  Company,  based  upon a
determination  by the  Board,  shall  give  notice  to the  Executive  that  the
Employment Period shall not be so extended.

      2. Terms of Employment.

      (a) Position.  (i) Commencing on January 17, 2000 and for the remainder of
the  Employment  Period,  the  Executive  shall  serve as  President  and  Chief
Executive Officer of the Company.  The Executive shall be based in Paramus,  New
Jersey.

            (ii) During the  Employment  Period,  and  excluding  any periods of
      vacation and sick leave to which the Executive is entitled,  the Executive
      agrees  to  devote  his full  time  during  normal  business  hours to the
      business and affairs of the Company and to use his best efforts to perform
      faithfully and efficiently such  responsibilities.  The Executive shall be
      entitled to not less than four weeks of paid vacation during each calendar
      year of the Employment Period.

            (iii) During the  Employment  Period,  the Executive may, so long as
      such  activities do not materially  interfere with the  performance of his
      responsibilities  to  the  Company  in  accordance  with  this  Agreement,
      continue the corporate  directorships  on which the Executive  serves,  if
      any, as of the date hereof and such other corporate  directorships  as are
      consented to by the Committee.  It is expressly understood and agreed that
      to the  extent  that  any  such  activities  have  been  conducted  by the
      Executive  with the knowledge of the Company prior to a Change of Control,
      the  continued  conduct of such  activities  (or the conduct of activities
      similar in nature  and scope  thereto)  subsequent  to a Change of Control
      shall not thereafter be deemed to violate this Agreement.

            (iv) The Board shall appoint or nominate and recommend Executive for
      election,  and shall use its best efforts to cause Executive to be elected
      and  reelected to (1)  membership  on the Board  effective  from and after
      January 17, 2000 through the  remainder of the  Employment  Period and (2)
      the position of Chairman of the Board  effective  from and after not later
      than June 30, 2001,  through the remainder of the


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      Employment  thereafter.  Executive  shall also be a member of the  Board's
      Executive  Committee  and a member  ex-officio  of the Board's  Nominating
      Committee.

      (b)  Compensation.  (i) Base Salary.  During the  Employment  Period,  the
Executive shall receive his Annual Base Salary, which will be paid in accordance
with the Company's regular payroll policies as in effect from time to time.

            (ii) Incentive Bonus. The Executive shall also be eligible, for each
      fiscal year ending during the Employment  Period,  to receive an Incentive
      Bonus, in accordance with  guidelines  established by the Committee.  Each
      such  Incentive  Bonus  shall be paid in  accordance  with  the  Company's
      Incentive Bonus plan.

            (iii)  Participation  in Plans.  During the Employment  Period,  the
      Executive  shall be  eligible  to  participate  in all  Plans  (including,
      without limitation, stock option and other equity-based award programs) at
      a level  not less  than  that  which is  commensurate  with  other  senior
      executives of the Company.

            (iv) Stock Units.  As further  inducement for the Executive to enter
      into this  Agreement  and to  continue in the employ of the  Company,  the
      Company agrees to grant to the Executive 200,000 stock units contingent on
      performance and future service, pursuant to the Stock Unit Agreement to be
      executed  and  delivered  by the  Company in the form  attached as Annex A
      hereto.

            (v) Internet  Subsidiary  Stock  Options.  As further  inducement to
      enter into this  Agreement  and to continue in the employ of the  Company,
      the  Company  agrees  to cause  the  Internet  Subsidiary  to grant to the
      Executive  options to acquire 300,000 shares of the Internet  Subsidiary's
      common  stock  pursuant  the Stock  Option  Agreement  to be executed  and
      delivered by the  Internet  Subsidiary  (the  "Internet  Subsidiary  Stock
      Option   Agreement").   Notwithstanding  any  provision  of  the  Internet
      Subsidiary Stock Option Agreement, the options granted to the Executive in
      the Internet Subsidiary shall be governed by this Agreement.

            (vi) TRU Stock Options.  As further  inducement for the Executive to
      enter into this  Agreement  and to continue in the employ of the  Company,
      the Company agrees to grant to the Executive  stock options to acquire (A)
      700,000 shares of common stock of the Company, pursuant to the Partnership
      Option  Agreement  to be  executed  and  delivered  by  the  Company  (the
      "Partnership  Option  Agreement")  and  (B)  subject  to  approval  by the
      Company's  stockholders  of a  new  employee  stock  option  plan  at  the
      Company's  next annual meeting of  stockholders,  300,000 shares of common
      stock  of the  Company,  pursuant  to the  Stock  Option  Agreement  to be
      executed and  delivered by the Company (the "Stock Option  Agreement"  and
      together  the  Partnership   Option  Agreement,   the  "TRU  Stock  Option
      Agreements").  As of April 1 of each year  during the  Employment  Period,
      commencing  with April 1, 2001,  the Company  shall grant to the Executive
      additional stock options to acquire shares of common stock of the Company.
      Each such annual  grant shall  consist of options to acquire not less than
      300,000 shares of common stock of the Company.


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            (vii) Supplemental  Executive Retirement Plans. All contributions to
      the Executive's  Supplemental  Executive  Retirement Plan account shall be
      fully vested immediately upon contribution.

            (viii)  Company's  Long-Term   Incentive   Performance  Awards.  The
      Executive  acknowledges  that the Company may issue restricted stock as an
      award to employees in  connection  with the  elimination  of the Company's
      outstanding  long-term incentive performance awards and that the Executive
      will not be  eligible  to receive  any shares of  restricted  stock in the
      Company in  connection  with the  elimination  of such  awards;  provided,
      however,  that Executive shall be eligible to participate in any incentive
      compensation program that replaces or is otherwise  established  following
      elimination of the current long-term incentive award program.

      3. Termination of Employment.

      (a) Notice of Termination. Any termination by the Company for Cause, or by
the Executive for Good Reason, shall be communicated by Notice of Termination to
the other  party  hereto  given in  accordance  with this  Agreement.  Notice of
Termination  by the Company for Cause shall be subject to, and may be given only
in full compliance with the substantive and procedural requirements set forth in
clauses (a), (b) and (c) of the definition of "Cause"  appearing in Exhibit B to
this  Agreement.

      (b)  Termination  for Death,  Disability or  Retirement.  The  Executive's
employment shall terminate upon his death,  Disability or Retirement  during the
Employment Period. In the event of such termination:

            (i) the Company  shall make a lump sum cash payment to the Executive
      (or,  in  the  event  that  termination  results  from  the  death  of the
      Executive,  to his estate) within 30 days after the Date of Termination in
      an amount  equal to the sum of:

                  (A) the  Executive's  pro  rata  Annual  Base  Salary  payable
            through the Date of Termination to the extent not already paid;

                  (B) the targeted  amount of the  Executive's  Incentive  Bonus
            that  would have been  payable  with  respect to the fiscal  year in
            which the Date of Termination occurs,  absent the termination of the
            Executive's employment, prorated for the portion of such fiscal year
            through the Date of  Termination  taking into  account the number of
            complete  months  during  such  fiscal  year  through  the  Date  of
            Termination;

                  (C) the  Executive's  actual  earned  Incentive  Bonus for any
            completed fiscal year or period not theretofore paid; and

                  (D) the account balances  provided for under the Plans subject
            to the terms and conditions of the Plans;  and

            (ii) (1) all unvested  options to acquire stock of the Company or of
      the Internet  Subsidiary  held by the Executive  shall vest on the Date of
      Termination, (2) all unvested


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      profit shares held by the Executive or for the benefit of the Executive by
      a grantor  trust  established  by the  Company  shall  vest on the Date of
      Termination  and  shall be  promptly  delivered  to the  Executive  or his
      estate, (3) all other unvested  equity-based  awards  (including,  without
      limitation,  restricted  stock and stock units  together with all property
      attributable  thereto)  held by the  Executive  or for the  benefit of the
      Executive by a grantor trust  established by the Company shall vest on the
      Date of Termination and shall be promptly  delivered to the Executive,  or
      in the event of  termination  due to his death,  the  Executive's  estate,
      entirely in the form of Common  Stock,  $.10 par value per share  ("Common
      Stock") of the Company, (4) all options to acquire stock of the Company or
      of the Internet Subsidiary  (including,  without limitation,  options that
      vest  pursuant to this clause  (ii)) held by the  Executive  shall  remain
      exercisable  in whole  or in part at all  times,  and  from  time to time,
      following  the Date of  Termination  through the  expiration  date of such
      options,  and (5) the  Executive  shall not be entitled to any  additional
      grants of any stock options,  restricted  stock, or other  equity-based or
      long-term awards following the Date of Termination; and

            (iii) the Executive (and his spouse and dependent  children) will be
      entitled to  continuation  of health  benefits  under the Plans at a level
      commensurate  with the Executive's  current  position and if the Executive
      (or his spouse and  dependent  children  upon his death) elects to receive
      such health  benefits,  the  Executive  shall pay the  premium  charged to
      former  employees  of the Company  pursuant to Section  4980B of the Code;
      provided,  that the  Executive  and his spouse  will only be  entitled  to
      receive such health  benefits until  attaining the age of sixty-five  (65)
      and  dependent  children  will only be  entitled  to receive  such  health
      benefits  as long as such  children  qualify  as  dependent  children  for
      federal income tax purposes.  The Company can amend or otherwise alter the
      Plans to provide  health  benefits to the Executive  that are no less than
      those  commensurate with the Executive's  current position.  To the extent
      such health  benefits  cannot be provided to the Executive under the terms
      of the Plans or the Plans  cannot be so amended in any manner not  adverse
      to the  Company,  the Company  shall pay the  Executive,  on an  after-tax
      basis, an amount necessary for the Executive to acquire such benefits from
      an independent  insurance  carrier.  The  obligations of the Company under
      this clause  (iii) shall be  terminated  if, at any time after the Date of
      Termination,  the Executive is employed by or is otherwise affiliated with
      a party that offers  comparable  health  benefits to the Executive and his
      spouse and dependent children.

      (c) Termination by the Company for Cause.  If the  Executive's  employment
shall be terminated for Cause during the  Employment  Period as provided in this
Agreement,  the Employment Period shall terminate without further obligations to
the Executive  other than (i) the obligation to pay him (x) the  Executive's pro
rata Annual Base Salary  payable  through the Date of  Termination to the extent
not theretofore paid, (y) the Executive's  actual earned Incentive Bonus for any
completed  fiscal year or period not theretofore  paid, and (z) all payments and
benefits  due,  in  accordance  with the  Company's  Plans  through  the Date of
Termination  and (ii) the  obligations  of the Company and  Internet  Subsidiary
under all stock  options,  stock  units and other  equity-based  awards that are
vested as of the date of  Termination.


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      (d)  Termination by the Company Without Cause or By the Executive for Good
Reason. If the Executive's  employment shall be terminated during the Employment
Period by the Company without Cause, or by the Executive for Good Reason, then:

            (i) the Company  shall make a lump sum cash payment to the Executive
      within 30 days after the Date of  Termination of (x) the  Executive's  pro
      rata Annual Base Salary  payable  through the Date of  Termination  to the
      extent not  theretofore  paid, (y) the targeted  amount of the Executive's
      Incentive  Bonus that would have been  payable  with respect to the fiscal
      year in which the Date of Termination  occurs,  absent the  termination of
      the Executive's  employment,  prorated for the portion of such fiscal year
      through the Date of Termination taking into account the number of complete
      months during such fiscal year through the Date of Termination and (z) the
      Executive's actual earned Incentive Bonus for any completed fiscal year or
      period not theretofore paid; and

            (ii) the Company shall pay to the  Executive in equal  installments,
      made at least monthly,  over the twenty-four  months following the Date of
      Termination,  an aggregate  amount equal to (1) two times the  Executive's
      Annual Base Salary in effect on the Date of Termination  and (2) two times
      the targeted  amount of the  Incentive  Bonus that would have been paid or
      accrued to the  Executive  with  respect to the  Company's  fiscal year in
      which such Date of Termination occurs; and

            (iii) the  Company  shall  continue  to  provide,  in the manner and
      timing  provided  for in the Plans (other than as provided in clauses (i),
      (ii), (iv) and (v) of this Section 3(d)), the benefits  provided under the
      Plans  that the  Executive  would  receive if the  Executive's  employment
      continued for two years after the Date of  Termination,  assuming for this
      purpose that the Executive's  compensation  during such two-year period is
      the amount paid pursuant to clause (ii) above,  and the Executive shall be
      fully  vested in any  account  balance  and all other  benefits  under the
      Plans; provided, however, that the benefits provided under the Plans under
      this clause  (iii) shall be limited to the amounts  permitted by law or as
      would otherwise not potentially  adversely impact on the tax qualification
      of any Plans; and provided,  further, that if any such benefits may not be
      continued  under the Plans,  the  Company  shall pay to the  Executive  an
      amount equal to the amount that the Executive would have received had such
      benefits been continued under the Plans; and

            (iv) (1) all unvested  options to acquire stock of the Company or of
      the Internet  Subsidiary  held by the Executive  shall vest on the Date of
      Termination,  (2) all unvested  profit shares held by the Executive or for
      the benefit of the Executive by a grantor trust established by the Company
      shall vest on the Date of Termination and 50% of such vested profit shares
      shall  be  delivered  to the  Executive  promptly  following  the  Date of
      Termination and 50% of such vested profit shares shall be delivered to the
      Executive on the first  anniversary  of the Date of  Termination,  (3) all
      other  unvested   equity-based  awards  (including,   without  limitation,
      restricted  stock and stock units together with all property  attributable
      thereto)  held by the  Executive or for the benefit of the  Executive by a
      grantor  trust  established  by the  Company  shall  vest  on the  Date of
      Termination  and 50% of such  vested  awards  shall  be  delivered  to the
      Executive  promptly  following  the  Date of  Termination  and 50% of such
      vested awards shall be delivered to


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      the Executive on the first anniversary of the Date of Termination, (4) all
      options to acquire  stock of the  Company  or of the  Internet  Subsidiary
      (including,  without limitation, options that vest pursuant to this clause
      (iv)) held by the Executive  shall remain  exercisable in whole or in part
      at all times,  and from time to time,  following  the Date of  Termination
      through the  expiration  date of such options and (5) the Executive  shall
      not be entitled to any additional grants of any stock options,  restricted
      stock,  or other  equity-based or long-term  awards  following the Date of
      Termination; and

            (v) the  Executive,  his  spouse  and  dependent  children  shall be
      entitled to the benefits set forth under Section 3(b)(iii).

      4. Obligations of the Company Relating to a Change of Control.

      (a)  Notwithstanding  any  provision of this  Agreement or any Plan, in no
event shall the compensation or benefits,  individually or in the aggregate,  to
which the Executive  shall be entitled for the three years following a Change of
Control  be less  favorable  than that to which the  Executive  would  have been
entitled based upon the most favorable of the Company's  Plans in effect for the
Executive  at any time  during the 120-day  period  immediately  preceding  such
Change of Control.

      (b) If the  Executive's  employment  shall  have  been  terminated  by the
Company  (other than for Cause) or by the  Executive  for Good  Reason  during a
Change of Control Period:

            (i) the Company  shall make a lump sum cash payment to the Executive
      within 30 days after the Date of Termination in an amount equal to the sum
      of the  amounts  provided  by  Sections  3(d)(i)  and (ii) except that all
      references  in Section  3(d)(ii)  therein to "two  times"  shall be "three
      times"; and

            (ii) the Company shall make a lump sum cash payment to the Executive
      within 30 days  after the Date of  Termination  in an amount  equal to the
      cumulative  amounts that would have been provided by Section  3(d)(iii) if
      the  Executive's  employment  continued  for three years after the Date of
      Termination,  assuming for this purpose that the Executive's  compensation
      during such three-year period is the amount payable pursuant to clause (i)
      above; and

            (iii) (1) all unvested options to acquire stock of the Company or of
      the Internet  Subsidiary  held by the Executive  shall vest on the Date of
      Termination,  (2) all unvested  profit shares held by the Executive or for
      his benefit by a grantor  trust  established  by the Company shall vest on
      the Date of Termination and shall be delivered to Executive promptly,  (3)
      all  other  unvested  equity  awards   (including,   without   limitation,
      restricted  stock and stock units together with all property  attributable
      thereto)  held by the  Executive  or for his  benefit  by a grantor  trust
      established  by the Company shall vest on the Date of  Termination  and be
      promptly  delivered to the Executive entirely in the form of Common Stock,
      (4) all  options  to  acquire  stock  of the  Company  or of the  Internet
      Subsidiary (including,  without limitation,  options that vest pursuant to
      this  Section  4(c))  held by the  Executive  may be  exercised  until the
      expiration date of the options, and (5) the Executive


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      shall not be  entitled  to any  additional  grants  of any stock  options,
      restricted stock, and other equity-based or long term awards following the
      Date of  Termination;  and

            (iv) the  Executive,  his spouse  and  dependent  children  shall be
      entitled to the benefits set forth in Section 3(b)(iii).

      5. Release  Agreement.  The benefits  pursuant to Section 3 are contingent
upon the  Executive  (i)  executing  a  Separation  and Release  Agreement  (the
"Release  Agreement") upon or after any Date of Termination,  a copy of which is
attached as Exhibit A to this Agreement and (ii) not revoking or challenging the
enforceability of the Release Agreement or this Agreement.

      6. Offset. The Company shall have the right to offset the amounts required
to be paid to the Executive under this Agreement against any amounts owed by the
Executive  to the  Company,  and  nothing in this  Agreement  shall  prevent the
Company from pursuing any other available remedies against the Executive.

      7.  Nonexclusivity  of Rights.  Nothing in this Agreement shall prevent or
limit the Executive's  continuing or future  participation in any Plan for which
the Executive may qualify nor shall  anything  herein limit or otherwise  affect
such rights as the Executive  may have under any contract or agreement  with the
Company.  Amounts  that are vested  benefits or that the  Executive is otherwise
entitled to receive under any Plan, contract or agreement with the Company at or
subsequent to the Date of Termination  shall be payable in accordance  with such
Plan, or contract or agreement except as explicitly modified by this Agreement.

      8.  Full Settlement; Legal Fees.

      (a) No  Obligation  to  Mitigate.  In no  event  shall  the  Executive  be
obligated to seek other employment or take any other action by way of mitigation
of the amounts  payable to the  Executive  under any of the  provisions  of this
Agreement,  and, except as specifically provided in this Agreement, such amounts
shall not be reduced whether or not the Executive obtains other employment.

      (b)  Expenses  of  Contests.  The  following  shall  apply for any dispute
arising  hereunder,  under the Release  Agreement or under either the Stock Unit
Agreement or the TRU Stock Option Agreements:

            (i) Other  than with  respect  to claims  brought  by the  Executive
      against,  or defenses by the  Executive  of any claim of, the Company with
      respect to this  Agreement,  the Release  Agreement or either of the Stock
      Unit Agreement or the TRU Stock Option  Agreements that were determined to
      have been made or asserted by the  Executive in bad faith or  frivolously,
      the Company agrees to pay all reasonable legal and  professional  fees and
      expenses  that the  Executive  may  reasonably  incur  as a result  of any
      contest by the  Executive,  by the  Company or others of the  validity  or
      enforceability  of, or liability  under,  any provision of this Agreement,
      the Release  Agreement or either the Stock Unit Agreement or the TRU Stock
      Option  Agreements  (including as a result of any contest by the Executive
      about the amount of any payment pursuant to this Agreement), plus in each


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      case  interest  on any  delayed  payment at the  applicable  Federal  rate
      provided for in Section 7872(f)(2)(A) of the Code or any successor Section
      of the Code.

            (ii) The Executive  shall  reimburse the Company for its  reasonable
      legal and professional  fees and expenses,  to the extent there is a final
      determination  that such fees or expenses  relate to claims brought by the
      Executive  against,  or  defenses  by the  Executive  of any claim of, the
      Company with respect to this  Agreement,  the Release  Agreement or either
      the Stock Unit  Agreement  or the TRU Stock  Option  Agreements  that were
      determined  to have been made or asserted by the Executive in bad faith or
      frivolously.

      9. Certain Additional Payments by the Company.  Anything in this Agreement
to the contrary  notwithstanding,  in the event that any actual or  constructive
payment or  distribution  by the Company to or for the benefit of the  Executive
(whether paid or payable or distributed or  distributable  pursuant to the terms
of this  Agreement,  either the Stock  Unit  Agreement  or the TRU Stock  Option
Agreements or otherwise) is subject to the excise tax imposed by Section 4999 of
the Code or any  successor  provision of the Code (the "Excise  Tax"),  then the
Company shall make the payments described on Exhibit C hereto.

      10. Restrictions and Obligations of the Executive.

      (a)  Consideration  for  Restrictions  and  Covenants.  The parties hereto
acknowledge and agree that the principal consideration for the agreement to make
the  payments  provided  in  Sections  3 and 4 hereof  from the  Company  to the
Executive and the grant to the Executive of the stock options and stock units of
the Company as set forth in Section 2 hereof is the Executive's  compliance with
the  undertakings  set forth in this  Section 10.  Specifically,  the  Executive
agrees to comply with the provisions of this Section 10  irrespective of whether
the  Executive is entitled to receive any payments  under Section 3 or 4 of this
Agreement.

      (b) Confidentiality.  The confidential and proprietary  information and in
any material  respect  trade  secrets of the Company are among its most valuable
assets,  including but not limited to, its customer and vendor lists,  database,
computer  programs,  frameworks,  models,  its  marketing  programs,  its sales,
financial,   marketing,  training  and  technical  information,  and  any  other
information, whether communicated orally, electronically, in writing or in other
tangible  forms  concerning  how the  Company  creates,  develops,  acquires  or
maintains its products and marketing plans,  targets its potential customers and
operates  its  retail  and other  businesses.  The  Company  has  invested,  and
continues to invest,  considerable  amounts of time and money in  obtaining  and
developing the goodwill of its customers, its other external relationships,  its
data  systems  and  data  bases,   and  all  the  information   described  above
(hereinafter  collectively referred to as "Confidential  Information"),  and any
misappropriation or unauthorized  disclosure of Confidential  Information in any
form,  would  irreparably  harm  the  Company.  The  Executive  shall  hold in a
fiduciary  capacity for the benefit of the Company all Confidential  Information
relating to the Company and its business,  which shall have been obtained by the
Executive  during the Executive's  employment by the Company and which shall not
be or  become  public  knowledge  (other  than  by  acts  by  the  Executive  or
representatives  of  the  Executive  in  violation  of  this  Agreement).  After
termination of the Executive's  employment with the Company, the Executive shall
not, without the prior written consent of the Company or


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as may otherwise be required by law or legal  process,  communicate,  divulge or
use any such information, knowledge or data to anyone other than the Company and
those designated by it.

      (c)  Non-Solicitation  or Hire.  During  the  Employment  Period and for a
three-year  period  following the Date of Termination,  the Executive shall not,
directly  or  indirectly  (i)  employ or seek to employ any person who is at the
Date of Termination,  or was at any time within the six-month  period  preceding
the Date of Termination,  an officer,  general manager or director or equivalent
or more  senior  level  employee of the  Company or any of its  subsidiaries  or
otherwise solicit,  encourage,  cause or induce any such employee of the Company
or any of its  subsidiaries  to terminate such  employee's  employment  with the
Company or such subsidiary for the employment of another company  (including for
this purpose the contracting  with any person who was an independent  contractor
(excluding  consultant)  of the  Company  during  such  period) or (ii) take any
action  that  would  interfere  with  the  relationship  of the  Company  or its
subsidiaries with their suppliers and franchisees  without,  in either case, the
prior written  consent of the Company's Board of Directors;  provided,  however,
that if the Executive  terminates the Agreement for "Good Reason" or the Company
terminates the Executive's  employment  hereunder without Cause, the obligations
under this Section 10(c) shall survive for only a two-year period  following the
Date of Termination.

      (d) Non-Competition  and Consulting.  (i) During the Employment Period and
for a two-year  period  following the Date of  Termination,  the Executive shall
not, directly or indirectly:

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

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

            (z) interfere with,  disrupt or attempt to disrupt the relationship,
      contractual or otherwise,  between the Company and any customer, supplier,
      lessor, lessee, employee, consultant,  research partner or investor of the
      Company.

      (e)  Litigation  Assistance.  The Executive  agrees to cooperate  with the
Company  and its  counsel  in  regard to any  litigation  presently  pending  or
subsequently  initiated  involving matters of which the Executive has particular
knowledge  as a result of your  employment  with the Company.  Such  cooperation
shall consist of the Executive making himself  available at reasonable times for
consultation with officers of the Company and its counsel and for depositions or
other similar  activity should the occasion arise.  Reasonable  travel costs and
out-of-pocket  expenses in connection with such cooperation  shall be reimbursed
by the Company. The Executive shall not receive any additional  compensation for
providing  assistance  pursuant  to this  Section  10(e)  following  the Date of
Termination;  provided  that  such  assistance,  together  with  any  assistance
provided by the Executive pursuant to Section 12(e), does not


                                       9
<PAGE>

require an aggregate of more than 10 days during the entire period following the
Date of Termination.  If such  assistance  requires more than 10 days during the
entire period following the Date of Termination,  the Company will pay Executive
an amount per day equal to the  Executive's  Annual  Base  Salary on the Date of
Termination  divided by 250, for each day on which  assistance  is provided that
exceeds the foregoing  limits.  The  obligations  under this Section 10(e) shall
survive for a five-year period following the Date of Termination.

      (f) Exceptions. Sections 10(c) and (d) shall not bind the Executive during
any period following the termination of the Executive's  employment if there has
been a Change of Control,  irrespective  of whether the Change of Control occurs
before or after the Date of Termination.

      (g)  Permitted  Investments.  Nothing  contained  in Section  10(d)  shall
prohibit or otherwise restrict the Executive from acquiring or owning,  directly
or indirectly,  for passive investment  purposes not intended to circumvent this
Agreement,  securities  of any entity  engaged,  directly  or  indirectly,  in a
Restricted  Business if either (i) such entity is a public  entity and Executive
(A) is not a controlling  person of, or a member of a group that controls,  such
entity and (B) owns,  directly  or  indirectly,  no more than 3% of any class of
equity  securities of such entity or (ii) such entity is not a public entity and
the Executive  (A) is not a  controlling  person of, or a member of a group that
controls, such entity and (B) does not own, directly or indirectly, more than 1%
of any class of equity securities of such entity.

      (h) Definitions. For purposes of this Section 10:

      (i) "Restricted  Business" means any retail store, mail order,  electronic
commerce or Internet business or any business, in each case if it is involved in
the  manufacture,  sale or marketing of toys,  juvenile or baby products  (other
than children's clothing), juvenile furniture or any other business in which the
Company  may be engaged on the Date of  Termination,  provided  that such entity
derives at least 10% or more of its revenues in the aggregate from such products
and/or business in its most recent fiscal year. Notwithstanding the foregoing, a
Restricted  Business shall not include  non-discount  department stores, such as
Federated Department Stores (whether or not such a non-discount department store
would  otherwise meet the definition set forth in the preceding  sentence),  but
shall include discount stores, such as Wal-Mart, K-Mart and Target to the extent
such a discount department store meets the definition set forth in the preceding
sentence.

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

            (i)  Relief.   The  parties  hereto  hereby   acknowledge  that  the
      provisions  of  this  Section  10 are  reasonable  and  necessary  for the
      protection of the Company and its subsidiaries. In addition, the Executive
      further  acknowledges  that  the  Company  and  its  subsidiaries  will be
      irrevocably  damaged  if such  covenants  are not  specifically  enforced.
      Accordingly, the Executive agrees that, in addition to any other relief to
      which the Company may be  entitled,  the Company  will be entitled to seek
      and obtain  injunctive relief (without the requirement of any bond) from a
      court of competent jurisdiction for


                                       10
<PAGE>

      the purposes of  restraining  the Executive  from any actual or threatened
      breach of such covenants.

      11. Successors.

      (a) This  Agreement  is  personal to the  Executive  and without the prior
written  consent  of the  Company  shall  not  be  assignable  by the  Executive
otherwise than by will or the laws of descent and  distribution.  This Agreement
shall  inure to the  benefit  of and be  enforceable  by the  Executive's  legal
representatives.

      (b) This  Agreement  shall inure to the benefit of and be binding upon the
Company and its successors and assigns.

      (c) The Company will,  within  thirty days after a Change of Control,  and
the Company will require any successor (whether direct or indirect, by purchase,
merger,  consolidation or otherwise) to all or substantially all of the business
and/or  assets  of the  Company  within  thirty  days  after  any such  event of
succession to, assume  expressly and agree to perform this Agreement in the same
manner and to the same extent  that the Company  would be required to perform it
if no such  succession  had taken place.  As used in this  Agreement,  "Company"
shall mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid  that assumes and agrees to perform this Agreement by
operation of law, or otherwise.

      12. Miscellaneous.

      (a) Governing  Law. This  Agreement  shall be governed by and construed in
accordance  with  the laws of the  State of New  Jersey,  without  reference  to
principles of conflict of laws.

      (b)  Captions.  The  captions  of  this  Agreement  are  not  part  of the
provisions  hereof  and  shall  have no force or  effect.

      (c)  Amendment.  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.

      (d) Notices.  All notices and other  communications  hereunder shall be in
writing and shall be given by hand  delivery to the other party or by registered
or certified  mail,  return receipt  requested,  postage  prepaid,  addressed as
follows:

            (i) If to the  Executive,  to the address on file with the  Company;
      and

            (ii) If to the Company,  to it at Toys "R" Us, Inc.,  461 From Road,
      Paramus,  New Jersey  07652,  Attention:  Senior  Vice  President  - Human
      Resources;

or to such other  address as either  party shall have  furnished to the other in
writing in accordance  herewith.  Notice and  communications  shall be effective
when actually received by the addressee.


                                       11
<PAGE>

      (e) Assistance to Company.  At all times during and after the  Employment
Period and at the  Company's  expense for  out-of-pocket  expenses  actually and
reasonably  incurred by the  Executive in  connection  therewith,  the Executive
shall  provide  reasonable  assistance  to  the  Company  in the  collection  of
information and documents and shall make the Executive available when reasonably
requested  by the Company in  connection  with  claims or actions  brought by or
against third parties or  investigations  by  governmental  agencies  based upon
events or circumstances concerning the Executive's duties,  responsibilities and
authority  during the  Employment  Period.  The Executive  shall not receive any
additional  compensation for providing assistance pursuant to this Section 12(e)
following the Date of Termination;  provided that such assistance, together with
any  assistance  provided by the  Executive  pursuant to Section  10(e) does not
require an aggregate of more than 10 days during the entire period following the
Date of Termination.  If such  assistance  requires more than 10 days during the
entire period following the Date of Termination,  the Company will pay Executive
an amount per day equal to the  Executive's  Annual  Base  Salary on the Date of
Termination  divided by 250, for each day on which  assistance  is provided that
exceeds the foregoing limits.

      (f) Severability  of Provisions.  Each of the sections  contained in this
Agreement  shall be  enforceable  independently  of every other  section in this
Agreement,  and the  invalidity  or  nonenforceability  of any section shall not
invalidate  or  render   unenforceable  any  other  section  contained  in  this
Agreement.  The Executive  acknowledges that the restrictive covenants contained
in Section 10 are a condition of this  Agreement and are reasonable and valid in
geographical  and  temporal  scope  and in all other  respects.  If any court or
arbitrator  determines  that any of the  covenants in Section 10, or any part of
any of them, is invalid or  unenforceable,  the remainder of such  covenants and
parts  thereof  shall not  thereby be affected  and shall be given full  effect,
without  regard to the invalid  portion.  If any court or arbitrator  determines
that any of such  covenants,  or any part thereof,  is invalid or  unenforceable
because of the  geographic or temporal  scope of such  provision,  such court or
arbitrator  shall reduce such scope to the minimum extent necessary to make such
covenants valid and enforceable.

      (g) Withholding.  The Company may withhold from any amounts payable under
this Agreement such Federal,  state, local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.

      (h) Waiver. The Executive's or the Company's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement or
the failure to assert any right the Executive or the Company may have  hereunder
shall  not be  deemed  to be a waiver  of such  provision  or right or any other
provision or right of this Agreement.

      (i) Arbitration.  Except as otherwise provided for herein, any controversy
arising under, out of, in connection  with, or relating to, this Agreement,  and
any amendment hereof,  or the breach hereof or thereof,  shall be determined and
settled by  arbitration  in New York, New York, by a three person panel mutually
agreed  upon,  or in the  event of a  disagreement  as to the  selection  of the
arbitrators,  in accordance with the Employment  Dispute Resolution Rules of the
American Arbitration  Association.  Any award rendered therein shall specify the
findings of fact of the arbitrator or arbitrators and the reasons of such award,
with the  reference  to and  reliance on relevant  law.  Any such award shall be
final and binding on each and


                                       12
<PAGE>

all of the parties thereto and their personal representatives,  and judgment may
be entered thereon in any court having jurisdiction thereof.

      13. Indemnification; Directors and Officers Liability Coverage.

      (a) Indemnification.  The Executive shall be indemnified and held harmless
by the Company to the greatest extent permitted under applicable Delaware law as
the same now  exists or may  hereafter  be amended if  Executive  was,  is or is
threatened to be made, a party to any pending,  completed or threatened  action,
suit,  arbitration,  alternate  dispute  resolution  mechanism,   investigation,
administrative   hearing  or  any  other  proceeding  whether  civil,  criminal,
administrative  or investigative,  and whether formal or informal,  by reason of
the fact that Executive is or was, or had agreed to become, a director, officer,
employee,  agent or fiduciary of the Company or any other entity which Executive
is or was  serving at the  request of the  Company  ("Proceeding"),  against all
expenses  (including,   without  limitation,  all  reasonable  attorneys'  fees,
retainers,  court costs,  transcripts,  fees of experts,  witness  fees,  travel
expenses,  duplicating  costs,  printing and binding costs,  telephone  charges,
postage,  delivery  service  fees,  and all other  reasonable  disbursements  or
expenses  customarily required in connection with asserting or defending claims)
("Expenses") and all claim, damages, liabilities and losses (including,  without
limitation,  judgments;  fines;  liabilities  under  the  Code  or the  Employee
Retirement Income Security Act of 1974, as amended, for damages, excise taxes or
penalties;  damages,  fines or  penalties  arising out of  violation  of any law
related to the protection of the public health, welfare or the environment;  and
amounts paid or to be paid in settlement)  incurred or suffered by any person or
to which the Executive may become subject for any reason.

      (b)  Advancement  of Expenses and Costs.  All  Expenses  incurred by or on
behalf of the Executive in defending or otherwise being involved in a Proceeding
shall  be  paid  by the  Company  in  advance  of  the  final  disposition  of a
Proceeding,  including  any  appeal  therefrom,  within  ten (10) days after the
receipt  by  the  Company  of a  statement  or  statements  from  the  Executive
requesting  such  advance  or  advances  from time to time.  Such  statement  or
statements shall reasonably  evidence the Expenses  incurred by the Executive in
connection therewith.

      (c) Effect of Certain  Proceedings.  The  termination of any Proceeding by
judgment,  order, settlement or conviction,  or upon a plea of nolo contendre or
its  equivalent,  except,  in each case,  to the extent  that the terms  thereof
expressly so provide,  shall not, of itself (1)  adversely  affect the rights of
the Executive to indemnification, or (2) create a presumption that the Executive
did not meet any particular standard of conduct or have any particular belief or
that  a  court  has  determined  that  indemnification  or  contribution  is not
permitted by applicable law.

      (d)  Other  Rights  to   Indemnification.   The   Executive's   rights  of
indemnification  and advancement of Expenses  provided by this Section shall not
be deemed exclusive of any other rights to which the Executive may now or in the
future be entitled  under  applicable  law, the  certificate  of  incorporation,
by-laws,  agreement,  vote of  stockholders,  or  resolution of the Board of the
Company,  or other  provisions  of this  Agreement  or any other  agreement,  or
otherwise.


                                       13
<PAGE>

      (e) Expenses Incurred By the Executive to Enforce This Agreement. Expenses
incurred by the Executive in  connection  with the  Executive's  request for, or
efforts to secure, preserve,  establish entitlement to or obtain indemnification
or advances  hereunder  shall be reimbursed by the Company on a current basis in
accordance with the provisions of Section 13(b).

      (f) Representations. The Company represents and warrants that this Section
does not conflict with or violate its certificate of  incorporation  or by-laws,
and agrees that it will not amend its certificate of incorporation or by-laws in
a manner that would  limit the rights of the  Executive  hereunder.  The Company
represents that the execution, delivery and performance of this Agreement by the
Company has been duly and validly authorized by its Board.

      (g) Survival of Indemnity.  This Section shall survive any  termination of
the  relationship of the Executive with the Company and shall be binding on, and
inure to the  benefit  of the  successors  and  assigns of the  Company  and the
successors, assigns, heirs and personal representatives of the Executive.

      (h) Directors and Officers  Liability  Coverage.  The Company shall at all
time  maintain  directors  and  officers  liability  insurance  coverage for the
benefit  of  Executive  in a form  that is no less  broad  than  that  which  is
currently in effect, a copy of which is set forth as Exhibit D hereto.


                                       14
<PAGE>

                  IN  WITNESS  WHEREOF,  the  Executive  has  hereunto  set  the
Executive's hand and the Company has caused these presents to be executed in its
name on its behalf, all as of the day and year first above written.

                                                 JOHN H. EYLER, JR.

                                                     /s/ John H. Eyler, Jr.
                                                 -------------------------------

                                                 TOYS "R" US, INC.

                                                 By:    /s/ Michael Goldstein
                                                     ---------------------------
                                                 Name: Michael Goldstein
                                                 Title: Chairman of the Board

Accepted and Agreed:

TOYRSRUS.COM, INC.

By: /s/ Michael Goldstein
   -----------------------------
Name: Michael Goldstein
Title: Chairman of the Board


<PAGE>

                                                                       EXHIBIT A

                        SEPARATION AND RELEASE AGREEMENT

      This Separation and Release Agreement  ("Agreement") is entered into as of
this __ day of  __________________,  ____,  among TOYS "R" US,  INC., a Delaware
corporation,  and any  successor  thereto  ("TRU"),  TOYSRUS.COM,  INC.  and any
successor  thereto (.COM and  collectively  with TRU, the "Company") and John H.
Eyler, Jr. (the "Executive").

      The Executive and the Company agree as follows:

      1. The  employment  relationship  between  the  Executive  and the Company
terminated on __________________________________ (the "Termination Date").

      2. In accordance with the Executive's  Retention Agreement (the "Retention
Agreement"), the Company has agreed to pay the Executive certain payments and to
make certain  benefits  available  after the Date of Termination as set forth in
Section 3 of the  Retention  Agreement.  No  payments  shall be made  under this
Agreement or the Retention  Agreement until the seven (7) day revocation  period
set forth in Section 12 hereof has expired.

      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 and its members, parents, affiliates,  subsidiaries,  divisions, any
and  all  current  and  former  directors,   officers,  employees,  agents,  and
contractors  and  their  heirs and  assigns,  and any and all  employee  pension
benefit or welfare  benefit plans of the Company,  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 letter 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,  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.  This  release  also  includes a
release of any claims for age  discrimination  under the Age  Discrimination  in
Employment Act, as amended


                                      A-1
<PAGE>

("ADEA").  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.  Notwithstanding the foregoing provisions of this Section 3, the release
given by Executive  hereunder shall not apply to, and the Executive shall retain
and shall be entitled  to enforce by  arbitration  as provided in the  Retention
Agreement,  all rights  arising under or with respect to (i) the  obligations of
the Company to indemnify and hold harmless the Executive whether pursuant to the
provisions  of  Section  13 of  the  Retention  Agreement,  the  certificate  of
incorporation  or  by-laws  of the  Company,  or  otherwise;  (ii)  any  and all
directors and officers liability insurance coverage applicable to the Executive,
and (iii) any and all benefits  under the Plans to which the Executive  shall be
entitled in the ordinary course.

      Additionally,  the Company  agrees to discharge  and release the Executive
and the  Executive's  heirs from any claims,  demands,  and/or  causes of action
whatsoever,  presently  known or  unknown,  that are based upon facts  occurring
prior 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; provided that such release shall
not release the Executive  from any loan or advance by the Company or any of its
subsidiaries,  any act that  would  constitute  "Cause"  under  the  Executive's
Retention  Agreement  or a  breach  under  Sections  8(b),  10 or  12(e)  of the
Executive's Retention Agreement.

      4. This  Agreement  is not an  admission  by either the  Executive  or the
Company of any wrongdoing or liability.

      5. The Executive waives any right to  reinstatement  or future  employment
with the Company  following the  Executive's  separation from the Company on the
Termination Date.

      6. The  Executive  agrees not to engage in any act after  execution of the
Separation and Release Agreement that is intended, or may reasonably be expected
to harm the reputation,  business,  prospects or operations of the Company,  its
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.  Executive  is
required to request  and  receive  approval of the Company of the content of any
voluntary  statements,  whether oral or written,  to be made by Executive to any
media-third party regarding Executive's employment with the Company, termination
of employment with the Company, or the reputation,  goodwill, business, business
relationships,  prospects or  operations  of the  Company,  its past and present
divisions, affiliates, officers, directors,  stockholders,  employees or agents.
The Company is required to request and receive  approval of the Executive of the
content of any voluntary statements,  whether oral or written, to be made by the
Company  or any  representative  thereof  to  any  media-third  party  regarding
Executive's  employment  with the Company,  termination  of employment  with the
Company,  or the reputation,  business or prospects of the Executive.  Executive
and the  Company  each  hereby  covenants  and  agrees  not to make  any  public
statements to any  media-third  party,  including,  without  limitation,  to any
representative of any news  organization,  which is inconsistent in any material
respect with the


                                      A-2
<PAGE>

agreed upon statements to the public.  "Media-Third  Party" refers to the press,
news organizations,  public relations firms and research analysts for securities
firms.

      7. The Executive shall continue to be bound by Sections 8(b), 10 and 12(e)
of the Executive's Retention Agreement.

      8. The Executive  shall  promptly  return all the Company  property in the
Executive's possession,  including, but not limited to, the Company keys, credit
cards,  cellular  phones,  computer  equipment,  software  and  peripherals  and
originals or copies of books,  records,  or other information  pertaining to the
Company business. The Executive shall return any leased or Company automobile at
the  expiration  of the  restrictions  under  Section  10(d) of the  Executive's
Retention Agreement.

      9. This  Agreement  shall be governed by and construed in accordance  with
the laws of the State of New Jersey,  without  reference  to the  principles  of
conflict of laws.  Exclusive  jurisdiction  with respect to any legal proceeding
brought  concerning  any subject  matter  contained in this  Agreement  shall be
settled by arbitration as provided in the Executive's Retention Agreement.

      10. 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.

      11. Each of the sections  contained in this Agreement shall be enforceable
independently  of every other section in this  Agreement,  and the invalidity or
nonenforceability  of any section shall not  invalidate or render  unenforceable
any other section contained in this Agreement.

      12. 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.

      13. 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.


                                      A-3
<PAGE>

      The parties to this  Agreement  have executed this Agreement as of the day
and year first written above.

                                        TOYS "R" US, INC.

                                        By:
                                           -------------------------------
                                           Name:
                                           Title:

                                        TOYSRUS.COM, INC.

                                        By:
                                           -------------------------------
                                           Name:
                                           Title:

                   -----------------------------
                        JOHN H. EYLER, JR.


                                      A-4
<PAGE>

                                                                       EXHIBIT B

      Capitalized  terms used in the Agreement that are not elsewhere defined in
the Agreement have the definitions set forth below:

      "Annual Base Salary" means  $1,000,000 per annum or such greater amount as
may be determined  from time to time in the discretion of either the Board,  the
Committee or any  appropriate  committee of the Board.  After any such increase,
Annual Base Salary shall not be reduced and the term "Annual Base Salary"  shall
thereafter refer to the increased amount.

      "Board" means the Board of Directors of the Company.

      "Cause" means:

      (a) (i) the  conviction  of, or pleading  guilty or nolo  contendere to, a
felony involving moral turpitude which conviction is non-appealable or for which
the period for filing an appeal has expired;  (ii) the willful commission of any
fraud,  misappropriation  or misconduct which causes  demonstrable injury to the
Company and its affiliates  taken as a whole;  (iii) a willful act of dishonesty
resulting or intended to result,  directly or  indirectly,  in material  gain or
personal  enrichment  to the  Executive  at the  expense of the  Company and its
affiliates  taken as a whole;  (iv)  any  willful  and  material  breach  of the
Executive's  fiduciary  duties to the Company as an employee or director;  (v) a
serious and willful  violation of the Toys "R" Us Ethics  Agreement or any other
serious and willful  violation of a Company  policy  which  causes  demonstrable
injury to the Company and its affiliates taken as a whole;  (vi) the willful and
continued  failure of the  Executive to perform  substantially  the  Executive's
duties with the Company or one of its subsidiaries  (other than any such failure
resulting  from  incapacity  due to physical or mental  illness  resulting  in a
Disability),  within a reasonable  time after a written  demand for  substantial
performance  is delivered  to the  Executive  by the Board,  which  specifically
identifies  the manner in which the Board  believes  that the  Executive has not
substantially performed the Executive's duties; (vii) the willful failure by the
Executive to comply, in any material respect,  with the provisions of Section 10
of the Agreement;  or (viii) the willful failure by the Executive to comply with
any other  undertaking  set forth in the  Agreement  which  causes  demonstrable
injury to the Company and its affiliates  taken as a whole. For purposes of this
provision,  no act or failure  to act,  on the part of the  Executive,  shall be
considered  "willful" unless it is done, or omitted to be done, by the Executive
in bad  faith or  without  reasonable  belief  that the  Executive's  action  or
omission  was in or not opposed to the  interests  of the  Company.  Any act, or
failure to act, based upon authority given pursuant to a resolution duly adopted
by the  Board or based  upon the  advice of  counsel  for the  Company  shall be
conclusively  presumed to be done,  or omitted to be done,  by the  Executive in
good faith and in the best interests of the Company.

      (b) Notwithstanding the foregoing,  Cause shall not include any or more of
the following: (i) an error in judgment or negligence;  (ii) any act or omission
believed  by the  Executive  in good faith to have been in or not opposed to the
interests  of the  Company;  (iii) any act or omission  with  respect to which a
determination  could properly have been made by the Board that the Executive met
the applicable  standard of conduct for  indemnification or reimbursement  under
the Company's by-laws, any applicable indemnification agreement, or


                                      B-1
<PAGE>

applicable  law,  in each case in effect at the time of such act or  omission or
(iv)  any act or  omission  with  respect  to which  notice  of  termination  of
employment  of the  Executive  is given more than six months  after the earliest
date on which any member of the Board, not a party to the act or omission,  knew
or should have known of such act or omission.

      (c) The Company may not terminate  the  Executive's  employment  for Cause
unless: (i) no fewer than 60 days prior to the Date of Termination,  the Company
provides  Executive with written notice (the "Notice of  Consideration")  of its
intent to consider termination of Executive's  employment for Cause, including a
detailed  description  of the  specific  reasons  which  form the basis for such
consideration;  (ii) Executive  shall have the  opportunity to appear before the
Board, with or without legal representation, at Executive's election, to present
arguments and evidence on his own behalf;  and (iii) following the  presentation
to the Board provided in (ii) above or following  Executive's  failure to appear
before the Board at a date and time  specified  in the  Notice of  Consideration
(which  date  shall  not be less  than 30 days  after  the  date the  Notice  of
Consideration  is provided),  Executive may be terminated  for Cause only if (x)
the Board,  by the  affirmative  vote of not less than a majority  of all of its
members  (excluding  Executive  and any other  member  of the  Board  reasonably
believed  by the  Board  to be  involved  in the  events  leading  the  Board to
terminate Executive for Cause),  determines that the actions or inactions of the
Executive specified in the Notice of Consideration  occurred,  that such actions
or  inactions   constitute   Cause,  and  that  Executive's   employment  should
accordingly be terminated for Cause; and (y) the Board provides Executive with a
Notice of Termination together with a written determination (a "Determination of
Cause")  setting  forth in  specific  detail  the basis of such  termination  of
employment for Cause, which  Determination of Cause shall be consistent with the
reasons set forth in the Notice of Consideration.

      Unless the Company establishes by clear and convincing evidence,  both (x)
its full compliance with the substantive and procedural  requirements of clauses
(a), (b) and (c) of this provision  prior to giving Notice of  Termination,  and
(y) that Executive's  action or inaction specified in the Determination of Cause
did occur and constitutes  Cause,  any Notice of Termination and any termination
of employment  thereby  resulting shall, for all purposes of this Agreement,  be
deemed to be other than for Cause,  and the  obligations  of the  Company to the
Executive shall be governed by Section 3(d) of the Retention Agreement.

      "Change of Control" means, after the date hereof:

      (a) The acquisition by any individual, entity or group (within the meaning
of Section  13(d)(3) or  14(d)(2) of the  Securities  Exchange  Act of 1934,  as
amended (the "Exchange Act")) (a "Person") of beneficial  ownership  (within the
meaning  of Rule 13d-3  promulgated  under the  Exchange  Act) of 25% or more of
either  (i) the then  outstanding  shares of common  stock of the  Company  (the
"Outstanding  Company  Common  Stock") or (ii) the combined  voting power of the
then outstanding  voting securities of the Company entitled to vote generally in
the  election  of  directors  (the  "Outstanding  Company  Voting  Securities");
provided,  however,  that for purposes of this  subsection  (a),  the  following
acquisitions  shall not constitute a Change of Control:  (i) any  acquisition by
the Company or any of its  subsidiaries,  (ii) any  acquisition  by any employee
benefit plan (or related  trust)  sponsored or  maintained by the Company or any
subsidiary of the Company,  (iii) any  acquisition  by any Person  pursuant to a
transaction that


                                      B-2
<PAGE>

complies with clauses (i), (ii) and (iii) of subsection  (c) below,  or (iv) any
acquisition  by any  entity  in which the  Executive  has a  material  direct or
indirect equity interest; or

      (b) The cessation of the "Incumbent Board" for any reason to constitute at
least a majority of the Board.  "Incumbent Board" means the members of the Board
on the date  hereof and any member of the Board  subsequent  to the date  hereof
whose election,  or nomination for election by the Company's  stockholders,  was
approved by a vote of at least a majority of the directors  then  comprising the
Incumbent Board, except that the Incumbent Board shall not include any member of
the Board whose initial  assumption of office occurs as a result of an actual or
threatened  election  contest  with  respect  to  the  election  or  removal  of
directors, any other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board.

      (c) The consummation of a reorganization,  merger or consolidation or sale
or other disposition of all or substantially all of the assets of the Company (a
"Business  Combination"),  in each  case,  unless,  immediately  following  such
Business Combination each of the following would be correct:

            (i) all or  substantially  all of the  individuals  and entities who
      were the  beneficial  owners,  respectively,  of the  Outstanding  Company
      Common Stock and Outstanding  Company Voting Securities  immediately prior
      to such Business  Combination  beneficially  own,  directly or indirectly,
      more  than 60% of,  respectively,  the then  outstanding  shares of common
      stock  and the  combined  voting  power  of the  then  outstanding  voting
      securities entitled to vote generally in the election of directors, as the
      case may be,  of the  Person  resulting  from  such  Business  Combination
      (including,  without  limitation,  a  Person  which  as a  result  of such
      transaction owns the Company or all or substantially  all of the Company's
      assets  either   directly  or  through  one  or  more   subsidiaries)   in
      substantially  the same proportions as their ownership,  immediately prior
      to such Business  Combination of the Outstanding  Company Common Stock and
      Outstanding Company Voting Securities, as the case may be, and

            (ii) no Person  (excluding (A) any employee benefit plan (or related
      trust)  sponsored or  maintained  by the Company or any  subsidiary of the
      Company, or such corporation  resulting from such Business  Combination or
      any  Affiliate  of  such  corporation,  or (B) any  entity  in  which  the
      Executive has a material equity  interest,  or any "Affiliate" (as defined
      in Rule 405 under the  Securities Act of 1933, as amended) of such entity)
      beneficially owns, directly or indirectly,  25% or more of,  respectively,
      the then outstanding  shares of common stock of the corporation  resulting
      from such Business  Combination,  or the combined voting power of the then
      outstanding  voting  securities of such  corporation  except to the extent
      that such ownership existed prior to the Business Combination, and

            (iii) at least a majority of the  members of the board of  directors
      of the corporation  resulting from such Business  Combination were members
      of the  Incumbent  Board  at the  time  of the  execution  of the  initial
      agreement,  or of the action of the  Board,  providing  for such  Business
      Combination; or


                                      B-3
<PAGE>

      (d) Approval by the stockholders of the Company of a complete  liquidation
or dissolution of the Company.

      "Change of Control Period" means the period commencing 120 days prior to a
Change of Control  and  expiring  on the third  anniversary  date of a Change of
Control.

      "Committee" means the Company's  Management  Compensation and Stock Option
Committee  of the Board of  Directors  or any  successor  committee of the Board
performing equivalent functions.

      "Date  of  Termination"  means  (i)  if  the  Executive's   employment  is
terminated by the Company for Cause,  or by the  Executive for Good Reason,  the
date of  receipt  of the  Notice  of  Termination  or any later  date  specified
therein,   as  the  case  may  be  (although  such  Date  of  Termination  shall
retroactively  cease  to  apply  if the  circumstances  providing  the  basis of
termination  for  Cause  or  Good  Reason  are  cured  in  accordance  with  the
Agreement),  (ii) if the  Executive's  employment  is  terminated by the Company
other than for Cause, the Date of Termination shall be the date so designated by
the Company in its notification to the Executive of such  termination,  (iii) if
the Executive's  employment is terminated by reason of death or Disability,  the
Date of Termination shall be the date of death of the Executive or the effective
date of the Disability,  as the case may be, (iv) if the Executive's  Employment
is  terminated  by the Executive  without Good Reason,  the Date of  Termination
shall be the last day on which the  Executive  is  employed  by the Company as a
regular employee,  or (v) the last day of the Employment Period during which the
Company  shall have given notice to the  Executive  that the  Employment  Period
shall not be extended.

      "Disability"  means  the  determination  that the  Executive  is  disabled
pursuant  to the terms of the TRU  Partnership  Employees'  Savings  and  Profit
Sharing  Plan, as amended and restated as of October 1, 1993, as the same may be
amended from time to time.

      "Good Reason" means,  without the Executive's  prior written consent,  the
occurrence  of any of the  following,  provided  that the  Executive  delivers a
Notice of  Termination  specifying  such  occurrence  within  six  months  after
Executive first has knowledge of such occurrence:

            (i)  the  assignment  of the  Executive  to a  position  other  than
      President and Chief Executive Officer; or

            (ii) any  failure by the Company to comply in any  material  respect
      with any of the provisions of the Retention Agreement,  other than failure
      not  occurring  in bad faith and that is remedied by the Company  within a
      reasonable time after receipt of notice thereof given by the Executive;

            (iii) any failure by the Company to comply with and satisfy  Section
      11(c) of the Retention Agreement; or

            (iv) notice by the Company that it is not extending the  termination
      date of the Employment Period; or


                                      B-4
<PAGE>

            (v) the  assignment to the Executive of any duties  inconsistent  in
      any respect with the  Executive's  position  (including  offices,  titles,
      reporting  requirements  or  responsibilities),  authority  or  duties  as
      contemplated  by Section  2(a) of the  Retention  Agreement,  or any other
      action by the  Company,  which  results in a diminution  or other  adverse
      changes  in  such  position,   authority  or  duties  or  in  the  status,
      responsibilities or perquisites of the Executive; or

            (vi)  failure  of  the  Executive  to be  elected  or  reelected  to
      membership on the Board; or

            (vii) from and after June 30, 2001,  failure of the  Executive to be
      elected or reelected Chairman of the Board; or

            (viii) the  Company's  requiring  the  Executive  to be based at any
      office or location that is more than 35 miles  distance from Paramus,  New
      Jersey; or

            (ix) any  purported  termination  by the Company of the  Executive's
      employment   otherwise  than  as  expressly  permitted  by  the  Retention
      Agreement; or

            (x) the delivery to Executive of a Notice of Consideration  pursuant
      to clause (c) of the  definition  of Cause if,  within a period of 90 days
      thereafter,  the Board fails for any reason to terminate the Executive for
      Cause  in  compliance   with  all  of  the   substantive   and  procedural
      requirements  set forth in clauses (a), (b) and (c) of the  definition  of
      Cause.

      Any  termination  of  employment by the Executive for Good Reason shall be
communicated to the Company by Notice of Termination.

      "Incentive  Bonus" means the sum of (i) an incentive  payment,  calculated
annually,  targeted at 100% of the  Executive's  Annual Base Salary and based on
financial measurements approved by the Committee following  consideration of the
Executive's  recommendations  with regard  thereto,  and (ii) (A) for the fiscal
year ending February 4, 2001 only, a strategic  incentive  payment,  targeted at
50% of the  Executive  Annual  Base Salary and (B) for the fiscal  years  ending
after February 4, 2001, an incentive  payment that is of equivalent value to the
strategic incentive payment for the fiscal year ending February 4, 2001, in each
case  based  on  qualitative   criteria  approved  by  the  Committee  following
consideration  of the  Executive's  recommendations  with  regard  thereto.  The
Incentive  Bonus  may be  modified  from time to time in the  discretion  of the
Board,  the  Committee,  or any  appropriate  Committee  of the Board  following
consideration of the Executive's  recommendations with regard thereto,  provided
the Incentive Bonus for the other senior  executives of the Company is similarly
modified  and any such  modification  does not reduce  Executive's  then current
total annual compensation.

      "Internet Subsidiary" means Toysrus.com, Inc., a Delaware corporation.

      "Notice of  Termination"  means a written  notice that (i)  indicates  the
specific termination provision in this Agreement relied upon, (ii) to the extent
applicable,  sets forth in reasonable detail the facts and circumstances claimed
to  provide a basis for  termination  of the


                                      B-5
<PAGE>

Executive's employment under the provision so indicated and (iii) if the Date of
Termination (as defined above) is other than the date of receipt of such notice,
specifies the termination date.

      "Partnership Plan" means the Partnership Group Deferred  Compensation Plan
of the Company.

      "Plans"  means all  employee  compensation,  benefit  and  welfare  plans,
policies and programs of the Company, including, without limitation,  incentive,
savings,  retirement,  stock option,  restricted stock,  supplemental  executive
retirement,  the Partnership Plan, medical,  prescription,  dental,  disability,
salary continuance,  group life,  accidental death and travel accident insurance
plans, vacation practices, fringe benefit practices and policies relating to the
reimbursement of business expenses.

      "Retirement"  shall  have the  meaning  ascribed  to that term in the Plan
under which  benefits are being sought by the  Executive  or, if such meaning is
inapplicable,  the term shall mean a termination of employment  with the Company
or a subsidiary on a voluntary  basis after attaining the age of sixty (60). The
term  "Retirement"  shall also include  "early"  retirement  prior to the age of
sixty (60)  provided that the  Committee,  in its sole  discretion,  consents in
writing to accept such early retirement.


                                      B-6
<PAGE>

                                                                       EXHIBIT C

                                  TAX GROSS-UP

      (a) If required by Section 9 of the Agreement, in addition to the payments
described in Section 4 of the Agreement,  the grants described in the Stock Unit
Agreement,  and all other  obligations  of the Company to the Executive  whether
under  the  Retention  Agreement  or  otherwise,  the  Company  shall pay to the
Executive an amount (the  "Gross-up")  equal to the product of (i) the amount of
Excise Taxes multiplied by (ii) the Gross-up Multiple (as hereinafter  defined).
The Gross-up is intended to  compensate  the  Executive for the Excise Taxes and
any Federal, state, local or other income or excise taxes or other taxes payable
by the Executive  with respect to the Gross-up.  The "Gross-up  Multiple"  shall
equal a fraction,  the  numerator of which is one (1.0) and the  denominator  of
which is one (1.0) minus the sum, expressed as a decimal fraction,  of the rates
of all Federal,  state, local and other taxes and any Excise Taxes applicable to
the Gross-up  after taking into account the  deductibility  of state,  local and
other taxes. If different rates of tax are applicable to various portions of the
Gross-up,  the  weighted  average of such rates shall be used.  For  purposes of
determining  the  amount  of any  Gross-up,  it  shall be  assumed  that (i) the
Executive  is  subject to  Federal,  state and local  income tax at the  highest
marginal  statutory  rates in effect for the  relevant  period after taking into
account any  deduction  (and any  limitations  on the use thereof)  available in
respect  of any such tax and (ii) the  deduction  available  for state and local
income  taxes in  computing  Federal  income  taxes is  subject  to the  maximum
adjusted gross income limitations.

      (b) Subject to the  provisions  of  paragraph  (c) of this  Exhibit C, the
determination  of whether a Gross-up is required and the amount of such Gross-up
shall be made in accordance  with the  assumptions set forth in paragraph (a) of
this  Exhibit C by Ernst & Young LLP or such  other  "Big Six"  accounting  firm
designated by the Executive and reasonably acceptable to the Company.

      (c) The  Executive  shall  notify the  Company as soon as  practicable  in
writing of any claim by the Internal Revenue Service that, if successful,  would
require any Gross-up  payment.  The Executive  shall not pay such claim prior to
the  expiration of the 30-day  period  following the date on which it gives such
notice to the Company. If the Company notifies the Executive in writing prior to
the  expiration  of such  period  that it  desires to contest  such  claim,  the
Executive shall take all actions  necessary to permit the Company to control all
proceedings  taken in connection  with such  contest.  In that  connection,  the
Company  may,  at its sole  option,  pursue or forgo any and all  administrative
appeals, proceedings, hearings and conferences in respect of such claim and may,
at its sole option,  either  direct the Executive to pay the tax claimed and sue
for a refund or contest the claim in any permissible manner; provided,  however,
that the Company  shall pay and  indemnify  the  Executive  from and against all
costs and expenses  incurred in connection with such contest;  provided further,
however, that if the Company directs the Executive to pay such claim and sue for
a refund,  the Company shall advance the amount of such payment to the Executive
on an interest-free basis and at no net after-tax cost to the Executive.  If the
Executive  becomes entitled to receive any refund or credit with respect to such
claim (or would be  entitled  to a refund or credit but for a  counterclaim  for
taxes not  indemnified  hereunder),  the  Executive  shall  promptly  pay to the
Company the amount of such refund


                                      C-1
<PAGE>

(together with any interest paid or credited thereon) plus the amount of any tax
benefit  available to the Executive as a result of making such payment (any such
benefit calculated based on the assumptions that (i) the Executive is subject to
the highest marginal statutory rates of Federal,  state and local income tax for
the relevant  periods after taking into account any deductions (and  limitations
on the use thereof)  available in respect to any such tax and (ii) any deduction
available  for state and local  taxes or other  Form 1040  Schedule A amounts is
subject to the maximum adjusted gross income limitations).


                                      C-2
<PAGE>

                                     ANNEX A

                              STOCK UNIT AGREEMENT

      STOCK UNIT AGREEMENT, dated as of January 17, 2000 (the "Unit Agreement"),
between TOYS "R" US, INC., a Delaware  corporation (the "Company"),  and JOHN H.
EYLER, JR. (the "Executive").

                              W I T N E S S E T H:

      WHEREAS,  the  Executive  and the Company  have  entered  into a Retention
Agreement, dated as of January 6, 2000 (the "Retention Agreement");

      WHEREAS,  as further inducement for the Executive to execute the Retention
Agreement  and continue in the employ of the Company and subject to the terms of
the Company's 1994 Stock Option and Performance Incentive Plan (the "Plan"), the
Management  Compensation  and  Stock  Option  Committee  (the  "Committee")  has
determined to grant the Executive Performance Shares (as defined in the Plan and
referred to herein as "Stock  Units") as described in this Stock Unit  Agreement
based on performance criteria that may be utilized by the Committee, and

      WHEREAS,  the Board and the Committee desire that the compensation arising
from the Stock  Units  shall  qualify as  "performance-based  compensation"  for
purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended.

      WHEREAS,  shares of the Company's  common stock to be issued  hereunder to
Executive will be issued pursuant to a registration  statement on Form S-8 filed
with and declared effective by the Securities and Exchange Commission.

      NOW, THEREFORE, in consideration of the covenants set forth herein and for
other good and valuable consideration, the parties agree as follows:

      1.  Definitions.  Capitalized  terms used herein without  definition shall
have the meanings ascribed to them in the Plan and in the Retention Agreement.

      2. Stock Unit Grant. Subject to the terms and conditions set forth in this
Unit  Agreement and in Section 10 of the Plan,  the Executive is hereby  granted
200,000 Stock Units.  Each Stock Unit  represents the right to receive one share
of Common Stock (collectively, with other shares of Common Stock relating to the
Stock Units and held in the Executive's  account in the Trust (as defined below)
in respect of the Stock  Units,  the  "Shares").  The  200,000  Shares  shall be
promptly  deposited after the date hereof in the grantor trust created  pursuant
to the Grantor Trust Agreement,  dated as of October 1, 1995 between the Company
and American Express Trust Company, a Minnesota trust company (together with any
grantor trust subsequently established by the Company, the "Trust") and shall be
allocated by the Trust to the Executive's account therein subject to the vesting
and payment  provisions of Sections 3 and 4


                                   Annex A-1
<PAGE>

below. Any property attributable to the Shares,  including,  without limitation,
dividends and distributions  thereon shall be deposited into the Trust, shall as
promptly as  practicable  be reinvested in shares of Common Stock,  and shall be
allocated by the Trust to the Executive's account therein subject to the vesting
and payment provisions of Sections 3 and 4 below.

      3. Vesting.

      (a) Subject to earlier vesting, as provided in the Retention Agreement and
subject to Section 4(b), the Stock Units shall vest at the rate of  thirty-three
and one-third percent (33 1/3 %) per annum on February 1 of each year, beginning
on February 1, 2002,  throughout  the  Employment  Period;  provided  that,  the
Committee has determined that the  Performance  Objective set forth in Exhibit A
has been achieved.

      (b) The Committee  shall determine  whether the Performance  Objective set
forth on Exhibit A has been achieved as soon as  practicable,  but no later than
the earlier of (x) February 1, 2004 or (y) the Date of Termination.

      4. Payment of Stock Units.  (a) Subject to  Executive's  election to defer
receipt thereby,  the Shares,  together with any property  attributable  thereto
(including,  without limitation,  dividends and distributions thereon), shall be
delivered to the Executive  immediately upon vesting as provided in Section 3 or
upon such earlier vesting as provided in the Retention Agreement.

      (b) The provisions of Sections 8(b) and 9 of the Retention Agreement shall
apply to the Stock  Units  and  related  Shares,  whether  or not the  Retention
Agreement is then in effect.

      5.  Registration  Representation.  The Company  represents that the Shares
acquired by the Executive  under this Unit  Agreement are  registered  under the
Securities Act of 1933, as amended (the "Act").

      6. Liability;  Indemnification. No member of the Committee, nor any person
to whom ministerial  duties have been delegated,  shall be personally liable for
any  action,  interpretation  or  determination  made with  respect to this Unit
Agreement,  and each  member of the  Committee  shall be fully  indemnified  and
protected  by the Company with  respect to any  liability  such member may incur
with respect to any such action, interpretation or determination,  to the extent
permitted  by  applicable  law  and  to the  extent  provided  in the  Company's
Certificate of Incorporation  and Bylaws, as amended from time to time, or under
any agreement between any such member and the Company.

      7.  Severability.  Each of the Sections  contained in this Unit  Agreement
shall  be  enforceable  independently  of  every  other  section  in  this  Unit
Agreement,  and the  invalidity  or  nonenforceability  of any section shall not
invalidate  or render  unenforceable  any other  section  contained in this Unit
Agreement.

      8. Governing  Law. This Unit Agreement  shall be governed by and construed
in  accordance  with the laws of the State of New Jersey,  without  reference to
principles of conflict of laws. Exclusive jurisdiction with respect to any legal
proceeding  brought  concerning


                                   Annex A-2
<PAGE>

any  subject  matter  contained  in this  Unit  Agreement  shall be  settled  by
arbitration as provided in the Retention Agreement.

      9. Captions. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.

      10.  Amendment.  This  Unit  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.

      11. Notices.  All notices and other  communications  hereunder shall be in
writing and shall be given by hand  delivery to the other party or by registered
or certified  mail,  return receipt  requested,  postage  prepaid,  addressed as
follows:

            (i) If to the  Executive,  to the address on file with the  Company;
      and

            (ii) If to the Company,  to it at Toys "R" Us, Inc.,  461 From Road,
      Paramus,  New Jersey  07652,  Attention:  Senior  Vice  President  - Human
      Resources;

or to such other  address as either  party shall have  furnished to the other in
writing in accordance  herewith.  Notice and  communications  shall be effective
when actually received by the addressee.

      12.  Interpretation.  The  interpretation  and decision with regard to any
question  arising  under this Unit  Agreement or with respect to the Stock Units
shall be made by the Committee.

      13. Successors.  This Unit Agreement shall be binding upon the Company and
its successors and assigns.


                                   Annex A-3
<PAGE>

      IN WITNESS WHEREOF, this Agreement has been executed by the Company by one
of its duly authorized officers as of the date specified above.

                                               TOYS "R" US, INC.

                                               ---------------------------------
                                               Name:
                                               Title:

      I  hereby  acknowledge  receipt  of  the  Stock  Units  and  agree  to the
provisions set forth in this Agreement.

                                               ---------------------------------
                                               John H. Eyler, Jr.


                                   Annex A-4
<PAGE>

                                                                       EXHIBIT A

                              Performance Objective
                 Under Section 3(ii) of the Stock Unit Agreement

For any fiscal quarter in the Company's 2000, 2001, 2002 or 2003 fiscal year,
the consolidated net earnings of the Company is at least equal to the amount of
any corresponding quarter in the Company's fiscal year ending January 29, 2000.
For these purposes, "consolidated net earnings" shall exclude extraordinary or
unusual items reported by the Company as such.


                                   Annex A-5