EXECUTION COPY















                             RETENTION AGREEMENT

                                  BETWEEN

                              TOYS "R" US, INC.

                                    AND

                             MICHAEL GOLDSTEIN

                                DATED AS OF



                              February 25, 1998






















                                  <PAGE>


                                                          EXECUTION COPY


                             TOYS "R" US, INC.
                           RETENTION AGREEMENT

            AGREEMENT (this "Agreement"), by and between Toys "R" Us, 
Inc., a Delaware corporation (the "Company"), and Michael Goldstein 
("Goldstein"), dated as of February 25, 1998.  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 
continue to employ Goldstein and Goldstein 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 the date hereof and ending on the last day of 
the Company's 1999 fiscal year as automatically extended for successive 
additional one-fiscal year periods unless, at least six months prior to 
the scheduled expiration of the Employment Period, the Company, based 
upon a determination by the Committee, shall give notice to Goldstein 
that the Employment Period shall not be so extended.

            2.   Terms of Employment.  (a)  Position.  (i)  Commencing on 
the date hereof and for the remainder of the Employment Period, Goldstein 
shall serve as the Chairman of the Board.  Goldstein shall be based in 
Northeastern New Jersey.

                       (ii)   During the Employment Period, and excluding 
any periods of vacation and sick leave to which Goldstein is entitled, 
Goldstein agrees to devote full time during normal business hours to the 
business and affairs of the Company up to June 30, 1998, and thereafter 
to devote up to 500 hours each year (pro rated for partial years) 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.  During the Employment Period, Goldstein may, so long 
as such activities do not interfere with the performance of his 
responsibilities to the Company in accordance with this Agreement, 
continue the corporate directorships on which Goldstein 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 
Goldstein 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.

                 (b)   Compensation.  (i)   Base Salary.  During the 
Employment Period, Goldstein shall receive his Annual Base Salary, which 



                                  <PAGE>


will be paid in accordance with the Company's regular payroll policies as 
in effect from time to time.  

                       (ii)   Incentive Bonus.  Goldstein shall also be 
eligible, for each fiscal year ending during the Employment Period, to 
receive (A) an annual incentive bonus, in accordance with targets 
established by the Committee, of one-hundred percent (100%) of Annual 
Base Salary at the target and up to two-hundred percent (200%) of Annual 
Base Salary and (B) long-term incentive awards pursuant to the Company's 
incentive Plans and subject to the terms thereof at a level commensurate 
with his current grants and his current position adjusted to take into 
account the actual Annual Base Salary in any fiscal year.  Each such 
incentive bonus shall be paid in accordance with the Company's incentive 
Plans.  

                       (iii)   Participation in Other Plans.  During the 
Employment Period, Goldstein shall continue to participate in all other 
Plans at a level commensurate with his participation in such Plans as of 
the date hereof, including continued vesting of outstanding option grants 
and profits shares.

                       (iv)   Stock Units.  As further inducement for 
Goldstein to enter into this Agreement and to continue in the employ of 
the Company, the Company has granted to Goldstein stock units contingent 
on performance and future service, pursuant to the Stock Unit Agreement 
executed and delivered by the Company on the date hereof in the form 
attached as Annex A hereto.

                       (v)   Partnership Plan Units.  During the 
Employment Period Goldstein shall be granted units under the Partnership 
Plan in accordance with targets established by the Committee in an amount 
equal to forty percent (40%) of the actual Annual Base Salary for any 
fiscal year at such target.

                       (vi)   Expense Reimbursement.  The Company shall 
reimburse Goldstein, upon submission of appropriate evidence of 
incurrence, his reasonable business expenses and disbursements incurred 
in the course of the performance of his duties.

                       (vii)   Office.  During the employment period, 
Goldstein shall be entitled to retain his office or a comparable office, 
and shall be entitled to part-time secretarial services.

                       (viii)   Automobile Lease.  Until June 30, 1998, 
Goldstein shall be entitled to his current benefits relating to his 
automobile and driver.  Beginning July 1, 1998, during the Employment 
Period, the Company shall reimburse Goldstein's expenses in leasing, 
maintaining and insuring an automobile on a basis equivalent to his 
current automobile benefit.




                                  <PAGE>


            3.   Termination of Employment.

                 (a)   Notice of Termination.  Any termination by the 
Company for Cause, or by Goldstein for Good Reason, shall be communicated 
by Notice of Termination to the other party hereto given in accordance 
with this Agreement.  The failure by Goldstein or the Company to set 
forth in the Notice of Termination any fact or circumstance that 
contributes to a showing of Good Reason or Cause shall not waive any 
right of Goldstein or the Company, respectively, hereunder or preclude 
Goldstein or the Company, respectively, from asserting such fact or 
circumstance in enforcing Goldstein's or the Company's rights hereunder.

                 (b)   Termination for Death, Disability or Retirement.  
Goldstein'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 Goldstein (or, in the event that termination results from the 
death of Goldstein, to his estate) within 30 days after the Date of 
Termination in an amount equal to the sum of:

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

                             (B)   the targeted amount of Goldstein's 
                  annual bonus, long-term incentive awards and 
                  Partnership Plan Units that would have been awarded 
                  with respect to the fiscal year in which the Date of 
                  Termination occurs, in each case absent the termination 
                  of Goldstein'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)   Goldstein's actual earned annual bonus 
                  and long-term incentive awards and Partnership Plan 
                  Units for any completed fiscal year or period not 
                  theretofore paid; and

                             (D)   the account balance provided for under 
                  the Plans, including the Company's supplemental 
                  executive retirement plan, which shall be fully vested; 
                  and 

                       (ii)   (1)  all unvested options held by 
Goldstein shall vest on the Date of Termination, (2)  all unvested 
profit shares held by Goldstein or for the benefit of Goldstein by a 
grantor trust established by the Company shall vest on the Date of 
Termination and shall be promptly delivered to Goldstein or his estate, 


                                  <PAGE>


(3) any other unvested equity based award (including, without 
limitation, restricted stock and stock units) held by Goldstein shall 
vest on the Date of Termination and shall be delivered to Goldstein or, 
in the event of termination due to death, his estate, entirely in the 
form of Common Stock, $.10 par value per share ("Common Stock") of the 
Company immediately to his estate in the event of termination due to 
death, or, in the event of termination due to Retirement or Disability 
upon the later of May 1, 2002, or the expiration of the period that 
Goldstein's activities are restricted under Section 10(c), subject to 
his compliance with the terms of this Agreement through such date, (4) 
any options held by Goldstein may be exercised until the expiration date 
of such options and (5) Goldstein shall not be entitled to any 
additional grants of any stock options, restricted stock, or other 
equity based or long-term awards; and 

                       (iii)  Goldstein (and his spouse and dependent 
children) will be entitled to continuation of health benefits under the 
Plans at a level commensurate with Goldstein's current position and if 
Goldstein (or his spouse and dependent children upon his death) elects 
to receive such health benefits, Goldstein shall pay the premium charged 
to former employees of the Company pursuant to Section 4980B of the 
Code; provided, that the Company can amend or otherwise alter the Plans 
to provide benefits to Goldstein that are no less than those 
commensurate with Goldstein's current position; provided, that to the 
extent such benefits cannot be provided to Goldstein 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 Goldstein, on an after-tax basis, an 
amount necessary for Goldstein to acquire such benefits from an 
independent insurance carrier; and provided further, that the 
obligations of the Company under this clause (iii) shall be terminated 
if, at any time after the Date of Termination, Goldstein is employed by 
or is otherwise affiliated with a party that offers comparable health 
benefits to Goldstein.  

                 (c)   Resignation by Goldstein Without Good Reason.  If 
Goldstein desires to resign from his position as Chairman of the Board of 
the Company without Good Reason, Goldstein shall provide the Company with 
a Notice of Termination at least six (6) months prior to the commencement 
of the Transition Period.  In the event of such resignation:

                       (i)   Goldstein shall continue to be nominated by 
the Company as a director of the Board and will serve as a member of the 
Board if elected by the Company's stockholders to serve during the 
Transition Period.  For as long as Goldstein serves as a director of the 
Company during the Transition Period, he shall receive the same 
compensation in the same form and at the same times as would be paid to 
him if he were a non-employee director of the Company, however, if he is 
not elected or chooses not to serve as a director during the Transition 
Period, he shall continue to be employed by the Company during the 
balance of the Transition Period for nominal compensation;



                                  <PAGE>


                       (ii)   the Company shall make a lump sum cash 
payment to Goldstein within 30 days after the commencement of the 
Transition Period in an amount equal to the sum of: 

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

                              (B)   Goldstein's actual earned annual 
                  bonus and long-term incentive awards for any completed 
                  fiscal year or period not theretofore paid or deferred 
                  unless the Committee determines not to permit the 
                  cancellation of such deferral; and 

                              (C)   the account balance provided for 
                  under the Plans, including the Company's supplemental 
                  executive retirement plan, which shall be fully vested; 
                  and

                       (iii)   (1)  all unvested options held by 
Goldstein that otherwise do not vest on the commencement of the 
Transition Period shall continue to vest in accordance with their terms 
during the Transition Period, and all remaining unvested options held by 
Goldstein shall be forfeited at the end of such Transition Period, (2) 
all unvested profit shares held by Goldstein or for the benefit of 
Goldstein by a grantor trust established by the Company that otherwise 
do not vest upon commencement of the Transition Period shall continue to 
vest in accordance with their terms during the Transition Period at the 
rate of 20% per annum and all remaining unvested profit shares shall be 
forfeited at the end of such two-year period provided that, if permitted 
by the terms of any such trust, any unvested profit shares shall 
continue to be held by such grantor trust until such profit shares vest 
pursuant to this clause (iii) and any such unvested profit share that 
would otherwise vest in accordance with this clause (iii) but that is 
not permitted to be so held shall vest immediately, (3) any other 
unvested equity based award (including, without limitation, restricted 
stock and stock units) held by Goldstein shall be forfeited, (4) any 
other vested equity award (including, without limitation, restricted 
stock and stock units) shall be delivered to Goldstein upon the later of 
May 1, 2002 and the expiration of the period that Goldstein's activities 
are restricted under Sections 10(c) and (d), subject to his compliance 
with the terms of this Agreement through such date, (5) any options held 
by Goldstein that are vested upon commencement of the Transition Period 
or vest thereafter pursuant to this clause (iii) may be exercised until 
the earlier of (x) 30 days after the expiration of the Transition Period 
and (y) the expiration date of such options, and (6) Goldstein shall not 
be entitled to any additional grants of any stock options, restricted 
stock or other equity based or long-term awards; and 





                                  <PAGE>


                       (iv)   Goldstein, his spouse and dependent 
children will be entitled to the benefits set forth under Section 
3(b)(iii).

                 (d)   Termination by the Company for Cause.  If 
Goldstein's employment shall be terminated for Cause during the 
Employment Period, the Employment Period shall terminate without further 
obligations to Goldstein other than the obligation to pay him all 
payments and benefits due, in accordance with the Company's Plans 
through the Date of Termination.  All stock units held by Goldstein, 
whether or not vested, shall be forfeited on the Date of Termination.

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

                       (i)   the Company shall make a lump sum cash 
payment to Goldstein within 30 days after the Date of Termination of (x) 
Goldstein's pro rata Annual Base Salary payable through the Date of 
Termination to the extent not theretofore paid, (y) the targeted amount 
of Goldstein's annual incentive bonus, long-term incentive awards and 
Partnership Plan Units that would have been payable with respect to the 
fiscal year in which the Date of Termination occurs in each case absent 
the termination of Goldstein'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) Goldstein's actual earned annual incentive bonus, 
long-term incentive awards and Partnership Plan Units for any completed 
fiscal year or period not theretofore paid or deferred; 

                       (ii)   the Company shall pay to Goldstein 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 Goldstein's Annual Base Salary in effect on the Date of 
Termination, (2) two times the targeted amount of the annual incentive 
bonus that would have been paid or accrued to Goldstein with respect to 
the Company's fiscal year in which such Date of Termination occurs and 
(3) two times the targeted amount of the long-term incentive award and 
Partnership Plan Units that would have been paid or accrued to Goldstein 
with respect to such fiscal year; 

                       (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(e)), the benefits 
provided under the Plans that Goldstein would receive if Goldstein's 
employment continued for two years after the Date of Termination, 
assuming for this purpose that Goldstein's compensation is the amount 
paid pursuant to clause (ii) above, and Goldstein shall be fully vested 
in any account balance and all other benefits under the Plans; provided, 



                                  <PAGE>


however, that the benefits provided 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; 
provided, further, that if such benefits may not be continued under the 
Plans, the Company shall pay to Goldstein an amount equal to the 
Company's cost had such benefits been continued. 

                       (iv)   (1)   all unvested options held by 
Goldstein shall vest on the Date of Termination, (2) all unvested profit 
shares held by Goldstein or for the benefit of Goldstein by a grantor 
trust established by the Company shall vest on the Date of Termination, 
(3) any other unvested equity based award (including, without 
limitation, restricted stock and stock units) held by Goldstein shall 
vest on the two year anniversary date of the Date of Termination on a 
pro rata basis determined by a fraction, the numerator of which is the 
number of months elapsed from the grant of such equity award through the 
Date of Termination plus the twenty-four months after the Date of 
Termination and the denominator of which is the total number of months 
in the vesting period for such award, and shall be delivered to 
Goldstein entirely in the form of Common Stock upon the later of May 1, 
2002 and the expiration of the period of that Goldstein's activities are 
restricted under Section 10(c), subject to compliance with this 
Agreement through such date, (4) any options held by Goldstein that are 
vested on the Date of Termination or vest thereafter pursuant to this 
clause (iv) may be exercised until the expiration date of such options 
and (5) Goldstein shall not be entitled to any additional grants of any 
stock options, restricted stock, or other equity based or long-term 
awards; and 

                       (v)   Goldstein, 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 any compensation or benefits, individually or 
in the aggregate, to which Goldstein would be entitled be less favorable 
for the two years following a Change of Control than to which Goldstein 
would have been entitled based upon the most favorable of the Company's 
Plans in effect for Goldstein at any time during the 120-day period 
immediately preceding such Change of Control.

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






                                  <PAGE>


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

                       (ii)  (1) all unvested options held by Goldstein 
shall vest on the Date of Termination, (2) all unvested profit shares 
held by Goldstein or for his benefit by a grantor trust shall vest on the 
Date of Termination, (3) any other unvested equity awards (including, 
without limitation, restricted stock and stock units) held by Goldstein 
shall vest immediately and be promptly delivered to Goldstein entirely in 
the form of Common Stock, (4) any options held by Goldstein may be 
exercised until the expiration date of the options, and (5) Goldstein 
shall not be entitled to any additional grants of any stock options, 
restricted stock, and other equity based or long term awards; and

                       (iii)  Goldstein, 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 Goldstein (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 Goldstein under this Agreement against any 
amounts owed by Goldstein to the Company, and nothing in this Agreement 
shall prevent the Company from pursuing any other available remedies 
against Goldstein.

            7.   Nonexclusivity of Rights.  Nothing in this Agreement 
shall prevent or limit Goldstein's continuing or future participation in 
any Plan for which Goldstein may qualify nor shall anything herein limit 
or otherwise affect such rights as Goldstein may have under any contract 
or agreement with the Company.  Amounts that are vested benefits or that 
Goldstein 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 
Goldstein be obligated to seek other employment or take any other action 
by way of mitigation of the amounts payable to Goldstein under any of the 
provisions of this Agreement, and, except as specifically provided in 



                                  <PAGE>


this Agreement, such amounts shall not be reduced whether or not 
Goldstein obtains other employment. 

                 (b)   Expenses of Contests.  (i) The following shall 
apply for any dispute arising hereunder, under the Release Agreement or 
under the Stock Unit Agreement prior to a Change of Control:  Other than 
with respect to claims brought by Goldstein against, or defenses by 
Goldstein of any claim of, the Company with respect to this Agreement, 
the Release Agreement or the Stock Unit Agreement that were determined to 
have been made or asserted by Goldstein in bad faith or frivolously, the 
Company agrees to pay all reasonable legal and professional fees and 
expenses that Goldstein may reasonably incur as a result of any contest 
by Goldstein, by the Company or others of the validity or enforceability 
of, or liability under, any provision of this Agreement, the Release 
Agreement or the Stock Unit Agreement (including as a result of any 
contest by Goldstein about the amount of any payment pursuant to this 
Agreement), plus in each 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 following shall apply for any dispute 
arising hereunder, under the Release Agreement or under the Stock Unit 
Agreement upon or following a Change of Control:  The Company agrees to 
advance to Goldstein all reasonable legal and professional fees and 
expenses that Goldstein may reasonably incur as a result of any contest 
by Goldstein, by the Company or others of the validity or enforceability 
of, or liability under, any provision of this Agreement, the Release 
Agreement or the Stock Unit Agreement (including as a result of any 
contest by Goldstein about the amount of any payment pursuant to this 
Agreement), plus,  in each 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.

                       (iii)   Goldstein shall reimburse the Company for 
its reasonable legal and professional fees and expenses, and in the case 
of advances made pursuant to paragraph (ii) above, shall refund the 
Company the amount of such advances, to the extent there is a final 
determination that  such fees, expenses or advances relate to claims 
brought by Goldstein against, or defenses by Goldstein of any claim of, 
the Company with respect to this Agreement, the Release Agreement or the 
Stock Unit Agreement that were determined to have been made or asserted 
by Goldstein 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 Goldstein (whether paid or payable or distributed or 
distributable pursuant to the terms of this Agreement, the Stock Unit 
Agreement or otherwise) is subject to the excise tax imposed by Section 
4999 of the Code or any successor provision of the Code (the "Excise 



                                  <PAGE>


Tax"), then the Company shall make the payments described on Exhibit C 
hereto.

            10.   Restrictions and Obligations of Goldstein.  (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 Goldstein and the grant to Goldstein of the stock units of the Company 
as set forth in Section 2 hereof is Goldstein's compliance with the 
undertakings set forth in this Section 10.  Specifically, Goldstein 
agrees to comply with the provisions of this Section 10 irrespective of 
whether Goldstein 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.  
Goldstein 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 Goldstein during Goldstein's 
employment by the Company and which shall not be or become public 
knowledge (other than by acts by Goldstein or representatives of 
Goldstein in violation of this Agreement).  After termination of 
Goldstein's employment with the Company, Goldstein shall not, without the 
prior written consent of the Company or 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, 
Goldstein 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 


                                  <PAGE>


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, or 
engage in any other action or business that would have a material adverse 
effect on the Company; provided, however, that if Goldstein terminates 
the Agreement for "Good Reason" or the Company terminates Goldstein'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, Goldstein 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.  Goldstein agrees to 
cooperate with the Company and its counsel in regard to any litigation 
presently pending or subsequently initiated involving matters of which 
Goldstein has particular knowledge as a result of your employment with 
the Company.  Such cooperation shall consist of Goldstein 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.  Goldstein shall not receive any additional 
compensation for rendering such assistance.  Reasonable travel costs and 
out-of-pocket expenses in connection with such cooperation shall be 
reimbursed by the Company.  The obligations under the Section 10(e) shall 
survive for a five-year period following the Date of Termination.





                                  <PAGE>


                 (f)   Exceptions.   Sections 10(c) and (d) shall not 
bind Goldstein during any period following the termination of Goldstein'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 Goldstein 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 such 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 Goldstein (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, (A) if 
Goldstein's employment is terminated for Cause or if Goldstein terminates 
his employment other than for Good Reason, any retail store or mail order 
business or any business, in each case if it is involved in the 
manufacture or marketing of toys, juvenile or baby products, juvenile 
furniture or children's clothing or any other business in which the 
Company may be engaged on the Date of Termination, and (B) if Goldstein's 
employment is terminated for any other reason, Restricted Business shall 
be limited to any such entity if it derives 10% or more of its revenues 
in the aggregate from such products and/or business in its most recent 
fiscal year.

                       (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, 
Goldstein further acknowledges that the Company and its subsidiaries will 
be irrevocably damaged if such covenants are not specifically enforced.  
Accordingly, Goldstein 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 the purposes of restraining Goldstein 
from any actual or threatened breach of such covenants.  In addition, 
without limiting the Company's remedies for any breach of any restriction 
on Goldstein set forth in Section 10, except as required by law, 
Goldstein shall not be entitled to any payments set forth in Section 3 or 
4 hereof if Goldstein willfully breaches in any material respect any of 
the covenants applicable to Goldstein contained in this Section 10, 
Goldstein will immediately return to the Company such payments previously 
received upon such a breach, and, in the event of such breach, the 
Company will have no obligation to pay any of the amounts that remain 
payable by the Company under Section 3 or 4.

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



                                  <PAGE>


                 (e)   Assistance to Company.  At all times during and 
after the Employment Period and at the Company's expense for significant 
out-of-pocket expenses actually and reasonably incurred by Goldstein in 
connection therewith, Goldstein shall provide reasonable assistance to 
the Company in the collection of information and documents and shall make 
Goldstein 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 Goldstein's duties, responsibilities and 
authority during the Employment Period.

                 (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.  Goldstein 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.  Goldstein'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 Goldstein 
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 all of the parties 


                                  <PAGE>


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

            IN WITNESS WHEREOF, Goldstein has hereunto set Goldstein'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.


                                     MICHAEL GOLDSTEIN



                                     /s/ Michael Goldstein



                                     TOYS "R" US, INC.



                                     By:  /s/ Robert C. Nakasone
                                          Name: Robert C. Nakasone
                                          Title: Chief Executive Officer






























                                  <PAGE>


                                                              EXHIBIT A


                     SEPARATION AND RELEASE AGREEMENT

            This Separation and Release Agreement ("Agreement") is 
entered into as of this __ day of ___________________________, 19__, 
between TOYS "R" US, INC., a Delaware corporation, and any successor 
thereto (collectively, the "Company") and Michael Goldstein 
("Goldstein").

            Goldstein and the Company agree as follows:

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

            2.   In accordance with Goldstein's Retention Agreement (the 
"Retention Agreement"), the Company has agreed to pay Goldstein certain 
payments and to make certain benefits available after the Date of 
Termination.

            3.   In consideration of the above, the sufficiency of which 
Goldstein hereby acknowledges, Goldstein, on behalf of Goldstein and 
Goldstein'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 Goldstein may have arising 
from or relating to Goldstein's employment or termination from 
employment with the Company, including a release of any rights or claims 
Goldstein 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 


                                  <PAGE>


other terms and conditions of employment.  This includes a release by 
Goldstein of any claims for wrongful discharge, breach of contract, 
torts or any other claims in any way related to Goldstein'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 ("ADEA").  The ADEA requires 
that Goldstein be advised to consult with an attorney before Goldstein 
waives any claim under ADEA.  In addition, the ADEA provides Goldstein 
with at least 21 days to decide whether to waive claims under ADEA and 
seven days after Goldstein signs the Agreement to revoke that waiver. 

            Additionally, the Company agrees to discharge and release 
Goldstein and Goldstein'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 Goldstein's 
employment and/or affiliation with, or termination and separation from 
the Company; provided that such release shall not release Goldstein from 
any loan or advance by the Company or any of its subsidiaries, any act 
that would constitute "Cause" under Goldstein's Retention Agreement or a 
breach under Section ________ or _______ of Goldstein's Retention 
Agreement.

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

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

            6.   Goldstein 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 Goldstein.

            7.   Goldstein shall continue to be bound by Sections _____ 
and _____ of Goldstein's Retention Agreement.

            8.   Goldstein shall promptly return all the Company 
property in Goldstein'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.  Goldstein shall 
return any leased or Company automobile at the expiration of the 
restrictions under Section 10(d) of Goldstein'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 


                                  <PAGE>


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 Goldstein's Retention Agreement.

            10.   This Agreement represents the complete agreement 
between Goldstein 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, 
Goldstein may revoke this Agreement, and this Agreement shall not become 
effective or enforceable until the revocation period has expired.  No 
revocation of this Agreement by Goldstein shall be effective unless the 
Company has received within the 7-day revocation period, written notice 
of any revocation, all monies received by Goldstein under this Agreement 
and all originals and copies of this Agreement.

            13.   This Agreement has been entered into voluntarily and 
not as a result of coercion, duress, or undue influence.  Goldstein 
acknowledges that Goldstein has read and fully understands the terms of 
this Agreement and has been advised to consult with an attorney before 
executing this Agreement.  Additionally, Goldstein acknowledges that 
Goldstein has been afforded the opportunity of at least 21 days to 
consider this Agreement.

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

                                     TOYS "R" US, INC.


                                     By:  _____________________________
                                          Name:
                                          Title:



                                     MICHAEL GOLDSTEIN


                                     ___________________________________


                                  <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 an annual rate of $900,000 until 
June 30, 1998, and, the annual rate of $300,000 thereafter, subject to 
annual review and as may be increased in the discretion of the Committee.

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

            "Cause" means:  (i) the conviction of, or pleading guilty or 
nolo contendere to, a felony involving moral turpitude; (ii)  the 
commission of any fraud, misappropriation or misconduct which causes 
demonstrable injury to the Company or a subsidiary; (iii) an act of 
dishonesty resulting or intended to result, directly or indirectly, in 
material gain or personal enrichment to Goldstein at the expense of the 
Company or a subsidiary; (iv) any willful and material breach of 
Goldstein'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; (vi) the 
willful and continued failure of Goldstein to perform substantially 
Goldstein'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 Goldstein by 
the Board, which specifically identifies the manner in which the Board 
believes that Goldstein has not substantially performed Goldstein's 
duties; (vii) the failure by Goldstein to comply, in any material 
respect, with the provisions of Section 10 of the Agreement; or (viii) 
the failure by Goldstein to comply with any other undertaking set forth 
in the Agreement or any breach by Goldstein hereof that is reasonably 
likely to result in a material injury to the Company.

            For purposes of this provision, no act or failure to act, on 
the part of Goldstein, shall be considered "willful" unless it is done, 
or omitted to be done, by Goldstein in bad faith or without reasonable 
belief that Goldstein's action or omission was in the best 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 regular outside counsel for the Company shall be conclusively 
presumed to be done, or omitted to be done, by Goldstein in good faith 
and in the best interests of the Company.  The cessation of employment of 
Goldstein shall not be deemed to be for Cause unless and until there 
shall have been delivered to Goldstein a copy of a resolution duly 
adopted by the affirmative vote of a majority of the entire membership of 
the Board at a meeting of the Board called and held for such purpose 
(after reasonable notice is provided to Goldstein and Goldstein is given 
an opportunity, together with counsel, to be heard before the Board), 



                                  <PAGE>


finding that, in the good faith opinion of the Board, Goldstein is guilty 
of the conduct described, and specifying the particulars thereof in 
detail.

            "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 
      complies with clauses (i), (ii) and (iii) of subsection (c) below, 
      or (iv) any acquisition by any entity in which Goldstein 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 or 
      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 


                                  <PAGE>


      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 Goldstein 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

                 (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 second 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 Goldstein's employment is 
terminated by the Company for Cause, or by Goldstein 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 Goldstein'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 Goldstein of such 
termination, (iii) if Goldstein's employment is terminated by reason of 
death or Disability, the Date of Termination shall be the date of death 
of Goldstein or the effective date of the Disability, as the case may be, 
(iv) if Goldstein's position as Chairman of the Board is terminated by 
Goldstein without Good Reason, the Date of Termination shall be the last 
day of the Transition Period during which Goldstein 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 Goldstein that 
the Employment Period shall not be extended.

            "Disability" means the determination that Goldstein 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 Goldstein's prior written 
consent, the occurrence of any of the following, provided that Goldstein 
delivers a Notice of Termination specifying such occurrence within 30 
days thereof:

                        (i)   the assignment of Goldstein to a position 
       other than Chairman of the Board;"

                        (ii)   any failure by the Company to comply in 
       any material respect with any of the provisions of Section 2(b) of 
       the 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 Goldstein;

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

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

            "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 
Goldstein'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, which may include, without 
limitation, incentive, savings, retirement, stock option, restricted 
stock, supplemental executive retirement, the Partnership Plan, pension, 
medical, prescription, dental, disability, salary continuance, employee 
life, group life, accidental death and travel accident insurance plans, 
vacation practices, fringe benefit practices and policies relating to the 
reimbursement of business expenses.


                                  <PAGE>



            "Retirement" shall have the meaning ascribed to that term in 
the Plan under which benefits are being sought by Goldstein or, if such 
meaning is inapplicable, the term shall mean a termination of employment 
with the Company or a subsidiary on a voluntary basis prior to 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.

            "Transition Period" means the two-year period commencing on 
the date that Goldstein has terminated his position as chairman of the 
Board without Good Reason.









































                                  <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 and the grants 
described in the Stock Unit Agreement, the Company shall pay to Goldstein 
an amount (the "Gross-up") such that the net amount retained by 
Goldstein, after deduction of any Excise Tax and any Federal, state and 
local income taxes, equals the amount of such payments that Goldstein 
would have retained had such Excise Tax not been imposed.  In addition, 
the Company shall indemnify and hold Goldstein harmless on an after-tax 
basis from any Excise Tax imposed on or with respect to any such payment 
(including, without limitation, any interest, penalties and additions to 
tax) payable in connection with any such Excise Tax.  For purposes of 
determining the amount of any Gross-up or the amount required to make an 
indemnity payment on an after-tax basis, it shall be assumed that 
Goldstein 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 available in respect of any such tax 
(e.g., if state and local taxes are deductible for Federal income tax 
purposes in the relevant period, it shall be assumed that such taxes 
offset income that would otherwise be subject to Federal income tax at 
the highest marginal statutory rate in effect for such period).

            (b)   Subject to the provisions of paragraph (c) of this 
Exhibit C, the determination of (i) whether a Gross-up is required and 
the amount of such Gross-up and (ii) the amount necessary to make any 
payment on an after-tax basis, 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 Goldstein 
and reasonably acceptable to the Company.

            (c)   Goldstein 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 or indemnity payment.  
Goldstein 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 Goldstein in writing prior to the expiration of 
such period that it desires to contest such claim, Goldstein 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 Goldstein 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 
Goldstein from and against all costs and expenses incurred in connection 
with such contest; provided further, however, that if the Company directs 
Goldstein to pay such claim and sue for a refund, the Company shall 


                                  <PAGE>


advance the amount of such payment to Goldstein on an interest-free basis 
and at no net after-tax cost to Goldstein.  If Goldstein 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), Goldstein shall promptly pay to the Company the 
amount of such refund (together with any interest paid or credited 
thereon) plus the amount of any tax benefit available to Goldstein as a 
result of making such payment (any such benefit calculated based on the 
assumption that any deduction available to Goldstein offsets income that 
would otherwise be taxed at the highest marginal statutory rates of 
Federal, state and local income tax for the relevant periods).










































                                  <PAGE>


                                                         EXECUTION COPY


                                                              ANNEX A


                           STOCK UNIT AGREEMENT

            STOCK UNIT AGREEMENT, dated as of February 25, 1998 (the 
"Unit Agreement"), between TOYS "R" US, INC., a Delaware corporation 
(the "Company"), and MICHAEL GOLDSTEIN ("Goldstein").  

                           W I T N E S S E T H:

            WHEREAS, the Company proposed for the approval of the 
stockholders of the Company at the 1997 Annual Meeting of Stockholders 
an Amendment (the "Amendment") to the Company's 1994 Stock Option and 
Performance Incentive Plan (the "Plan") providing for performance 
criteria that may be utilized by the Management Compensation and Stock 
Option Committee (the "Committee") in connection with the grant of 
Performance Shares (as defined in the Plan and referred to herein as 
"Stock Units"), and the Stockholders approved such Amendment;

            WHEREAS, concurrently herewith, Goldstein and the Company 
are entering into a Retention Agreement, dated as of even date herewith 
(the "Retention Agreement");

            WHEREAS, as further inducement for Goldstein to execute the 
Retention Agreement and continue in the employ of the Company, the 
Committee has determined to grant Goldstein the Stock Units as described 
in this Unit Agreement, 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.

            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, 
Goldstein is hereby granted 52,700 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 Goldstein's account in the Trust (as defined below) in respect of the 
Stock Units, the "Shares").  The 52,700 Shares shall be promptly 

                                  <PAGE>


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 Goldstein's 
account therein subject to the vesting conditions of Sections 3 and 4 
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 Goldstein's account 
therein subject to the vesting conditions of Sections 3 and 4 below.

            3.   Vesting.  (a) Except as provided in the Retention 
Agreement and subject to Section 4(b), the Stock Units shall vest at the 
rate of twenty percent (20%) per annum on May 1 of each year, beginning 
on May 1, 1998, throughout the Employment Period; provided that the 
Committee has determined that the Performance Objective set forth in 
Exhibit A has been achieved.

            (b)  As soon as practicable, but no later than the earlier 
of (x) May 1, 2002 or (y) the Date of Termination, the Committee shall 
determine whether the Performance Objective set forth on Exhibit A has 
been achieved.

            4.   Payment of Stock Units.  (a)   The Shares, together 
with any property attributable thereto (including, without limitation, 
dividends and distributions thereon), shall be delivered to Goldstein as 
provided in the Retention Agreement.

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

            5.   Investment Representation. The Shares acquired by 
Goldstein under this Unit Agreement will be acquired for Goldstein's 
account and not with a view to the distribution thereof, and Goldstein 
will not sell or otherwise dispose of the Shares unless the Shares are 
registered under the Securities Act of 1933, as amended (the "Act"), or 
Goldstein shall furnish the Company with an opinion of counsel 
reasonably satisfactory to the Company that such registration is not 
required, and a legend to such effect may be placed on the certificate 
for the Shares.

            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.
                                  <PAGE>



            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 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 Goldstein, 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 made by the Committee shall be final and conclusive 
on Goldstein.

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









                                  <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.


                                    By:    /s/ Robert C. Nakasone
                                    Title: Chief Executive Officer



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



                                     /s/ Michael Goldstein
                                     Signature of Executive


































                                  <PAGE>