Document:

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                                                                     EXHIBIT 4.3

                   EXCHANGE AND REGISTRATION RIGHTS AGREEMENT

         EXCHANGE AND REGISTRATION RIGHTS AGREEMENT, dated as of July 24, 2001,
among Toys "R" Us, Inc., a Delaware corporation (the "Company"), and J.P. Morgan
Securities Inc., BNY Capital Markets, Inc., Credit Suisse First Boston
Corporation, First Union Securities, Inc., Banc One Capital Markets, Inc., Fleet
Securities, Inc., Mizuho International plc, Salomon Smith Barney Inc. and SG
Cowen Securities Corporation (collectively, the "Initial Purchasers").

         The Company proposes to issue and sell to the Initial Purchasers upon
the terms set forth in the Purchase Agreement the Securities (as defined
herein). As an inducement to the Initial Purchasers to enter into the Purchase
Agreement and in satisfaction of a condition to the obligations of the Initial
Purchasers thereunder, the Company agrees with the Initial Purchasers for the
benefit of holders (as defined herein) from time to time of the Registrable
Securities (as defined herein) as follows:

         Section 1. Certain Definitions.

         For purposes of this Exchange and Registration Rights Agreement, the
following terms shall have the following respective meanings:

         The term "broker-dealer" shall mean any broker or dealer registered
with the Commission under the Exchange Act.

         "Closing" shall mean the date of the closing of the issuance and sale
of the Securities pursuant to the Purchase Agreement.

         "Commission" shall mean the Securities and Exchange Commission, or any
other federal agency at the time administering the Exchange Act or the
Securities Act, whichever is the relevant statute for the particular purpose.

         "Company" shall have the meaning assigned thereto in the recitals
hereof (together with any successor).

         "Effective Time," in the case of (i) an Exchange Registration, shall
mean the time and date as of which the Commission declares the Exchange Offer
Registration Statement effective or as of which the Exchange Offer Registration
Statement otherwise becomes effective and (ii) a Resale Registration, shall mean
the time and date as of which the Commission declares the Resale Registration
Statement effective or as of which the Resale Registration Statement otherwise
becomes effective.

         "Electing Holder" shall mean any holder of Registrable Securities that
has returned a completed and signed Notice and Questionnaire to the Company in
accordance with Section 3(d)(ii) or 3(d)(iii) hereof.

         "Exchange Act" shall mean the Securities Exchange Act of 1934, or any
successor thereto, as the same shall be amended from time to time.

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         "Exchange Offer" shall have the meaning assigned thereto in Section
2(a) hereof.

         "Exchange Offer Registration Statement" shall have the meaning assigned
thereto in Section 2(a) hereof.

         "Exchange Registration" shall have the meaning assigned thereto in
Section 3(c) hereof.

         "Exchange Securities" shall have the meaning assigned thereto in
Section 2(a) hereof.

         The term "holder" shall mean each of the Initial Purchasers and other
persons who acquire Registrable Securities from time to time (including any
successors or assigns), in each case for so long as such person owns any
Registrable Securities.

         "Initial Purchasers" shall have the meaning assigned thereto in the
recitals hereof (together with any successors).

         "Indenture" shall mean the Indenture, dated as of July 24, 2001,
between the Company and The Bank of New York, as Trustee, as the same shall be
amended from time to time.

         "Notice and Questionnaire" shall mean a Notice of Registration
Statement and Selling Securityholder Questionnaire substantially in the form of
Exhibit A hereto.

         "Notice of Transfer" shall mean a Notice of Transfer pursuant to
Registration Statement substantially in the form of Exhibit B hereto.

         The term "person" shall mean any individual, corporation, partnership,
joint venture, limited liability company, joint stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof.

         "Purchase Agreement" shall mean the Purchase Agreement, dated as of
July 19, 2001, among the Company and the Initial Purchasers relating to the
Securities, as the same shall be amended from time to time.

         "Registrable Securities" shall mean the Securities; provided, however,
that a Security shall cease to be a Registrable Security when (i) in the
circumstances contemplated by Section 2(a) hereof, the Security has been
exchanged for an Exchange Security in an Exchange Offer as contemplated in
Section 2(a) hereof (provided that any Exchange Security received by a
broker-dealer in an Exchange Offer in exchange for a Registrable Security that
was not acquired by the broker-dealer directly from the Company will also be a
Registrable Security through and including the earlier of the expiration of the
Resale Period or such time as such broker-dealer no longer owns such Security);
(ii) in the circumstances contemplated by Section 2(b) hereof, a Resale
Registration Statement registering such Security under the Securities Act has
been declared or becomes effective and such Security has been sold or otherwise
transferred by the holder thereof pursuant to and in a manner contemplated by

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such effective Resale Registration Statement; (iii) such Security is sold
pursuant to Rule 144 under circumstances in which any legend borne by such
Security relating to restrictions on transferability thereof, under the
Securities Act or otherwise, is removed by the Company or pursuant to the
Indenture; (iv) such Security is eligible to be sold pursuant to paragraph (k)
of Rule 144; or (v) such Security shall cease to be outstanding.

         "Registration Default" shall have the meaning assigned thereto in
Section 2(c) hereof.

         "Registration Expenses" shall have the meaning assigned thereto in
Section 4 hereof.

         "Resale Period" shall have the meaning assigned thereto in Section 2(a)
hereof.

         "Resale Registration" shall have the meaning assigned thereto in
Section 2(b) hereof.

         "Resale Registration Statement" shall have the meaning assigned thereto
in Section 2(b) hereof.

         "Restricted Holder" shall mean (i) a holder that is an affiliate of the
Company within the meaning of Rule 405 under the Securities Act, (ii) a holder
who acquires Exchange Securities outside the ordinary course of such holder's
business, (iii) a holder who has arrangements or understandings with any person
to participate in the Exchange Offer for the purpose of distributing Exchange
Securities and (iv) a holder that is a broker-dealer, but only with respect to
Exchange Securities received by such broker-dealer pursuant to an Exchange Offer
in exchange for Registrable Securities acquired by the broker-dealer directly
from the Company.

         "Rule 144," "Rule 405" and "Rule 415" shall mean, in each case, such
rule promulgated under the Securities Act (or any successor provision), as the
same shall be amended from time to time.

         "Securities" shall mean, collectively, the (i) $250,000,000 aggregate
principal amount of 6.875% Notes due 2006 and (ii) $500,000,000 aggregate
principal amount of 7.625% Notes due 2011, of the Company to be issued and sold
to the Initial Purchasers, and securities issued in exchange therefor or in lieu
thereof pursuant to the Indenture.

         "Securities Act" shall mean the Securities Act of 1933, or any
successor thereto, as the same shall be amended from time to time.

         "Trust Indenture Act" shall mean the Trust Indenture Act of 1939, or
any successor thereto, and the rules, regulations and forms promulgated
thereunder, all as the same shall be amended from time to time.

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         "Trustee" shall mean The Bank of New York, a national banking
association duly organized and existing under the laws of the United States of
America (together with any successor).

         Unless the context otherwise requires, any reference herein to a
"Section" or "clause" refers to a Section or clause, as the case may be, of this
Exchange and Registration Rights Agreement, and the words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Exchange and
Registration Rights Agreement as a whole and not to any particular Section or
other subdivision.

         Section  2. Registration Under the Securities Act.

                  (a) Except as set forth in Section 2(b) below, the Company
         agrees to:

                           (1) file under the Securities Act, no later than 120
                  days after the Closing Date, a registration statement relating
                  to an offer to exchange (such registration statement, the
                  "Exchange Offer Registration Statement," and such offer, the
                  "Exchange Offer") any and all of the Securities (other than
                  Exchange Securities) for a like aggregate principal amount of
                  debt securities issued by the Company, which debt securities
                  are substantially identical to the Securities (and are
                  entitled to the benefits of an indenture which is
                  substantially identical to the Indenture or is the Indenture
                  and which has been qualified under the Trust Indenture Act),
                  except that they have been registered pursuant to an effective
                  registration statement under the Securities Act and do not
                  contain provisions for the additional interest contemplated in
                  Section 2(c) below (such new debt securities hereinafter
                  called "Exchange Securities");

                           (2) use its best efforts to cause the Exchange Offer
                  Registration Statement to become effective under the
                  Securities Act as soon as practicable, but no later than 180
                  days after the Closing Date;

                           (3) use its best efforts to commence and complete the
                  Exchange Offer promptly, but no later than 210 days after the
                  Closing Date; and

                           (4) hold the Exchange Offer open for at least 30 days
                  (or longer if required by applicable law) after the date the
                  notice of the Exchange Offer is mailed to the holders and
                  issue Exchange Securities for all Registrable Securities that
                  have been properly tendered and not withdrawn on or prior to
                  the expiration of the Exchange Offer.

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         The Exchange Offer will be registered under the Securities Act on the
appropriate form and will comply with all applicable tender offer rules and
regulations under the Exchange Act. The Exchange Offer will be deemed to have
been "completed" only if the debt securities received by holders other than
Restricted Holders in the Exchange Offer for Registrable Securities are, upon
receipt, transferable by each such holder without need for further compliance
with Section 5 of the Securities Act and the Exchange Act (except for the
requirement to deliver a prospectus included in the Exchange Offer Registration
Statement applicable to resales by any broker-dealer of Exchange Securities
received by such broker-dealer pursuant to the Exchange Offer in exchange for
Registrable Securities other than those acquired by the broker-dealer directly
from the Company), and without material restrictions under the blue sky or
securities laws of a substantial majority of the States of the United States of
America. Subject to the preceding sentence, the Exchange Offer shall be deemed
to have been completed upon the earlier to occur of (i) the Company having
exchanged the Exchange Securities for all outstanding Registrable Securities
(other than those held by Restricted Holders) pursuant to the Exchange Offer and
(ii) the Company having exchanged, pursuant to the Exchange Offer, Exchange
Securities for all Registrable Securities that have been properly tendered and
not withdrawn before the expiration of the Exchange Offer, which shall be on a
date that is at least 30 days following the commencement of the Exchange Offer.

         The Company agrees (x) to include in the Exchange Offer Registration
Statement a prospectus for use in connection with any resales of Exchange
Securities by a broker-dealer, other than resales of Exchange Securities
received by a broker-dealer pursuant to an Exchange Offer in exchange for
Registrable Securities acquired by the broker-dealer directly from the Company,
and (y) to keep such Exchange Offer Registration Statement effective for a
period (the "Resale Period") beginning when Exchange Securities are first issued
in the Exchange Offer and ending upon the earlier of the expiration of the 180th
day after the Exchange Offer has been completed or such time as such
broker-dealers no longer own any Registrable Securities. With respect to such
Exchange Offer Registration Statement, each broker-dealer that holds Exchange
Securities received in an Exchange Offer in exchange for Registrable Securities
not acquired by it directly from the Company shall have the benefit of the
rights of indemnification and contribution set forth in Sections 6(a), (c), (d)
and (e) hereof.

                           (b) If, on or prior to the date of consummation of
                  the Exchange Offer,

                                    (i) existing Commission interpretations are
                           changed such that the Securities received by holders
                           other than Restricted Holders in the Exchange Offer
                           for Registrable Securities are not or would not be,
                           upon receipt, transferable by each such holder
                           without need for further compliance with Section 5 of
                           the Securities Act (except for the requirement to
                           deliver a prospectus included in the Exchange Offer
                           Registration Statement applicable to resales by a
                           broker-dealer of Exchange Securities received by such
                           broker-dealer pursuant to the Exchange Offer in
                           exchange for Registrable Securities other than those

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                           acquired by the broker-dealer directly from the
                           Company),

                                    (ii) the holder of the Securities shall
                           notify the Company that:

                                             (A) the holder is prohibited by law
                                    or Commission policy from participating in
                                    the Exchange Offer, or

                                             (B) (1) the holder may not resell
                                    the Exchange Notes acquired by it in the
                                    Exchange Offer to the public without
                                    delivering a prospectus and (2) the
                                    prospectus contained in the Exchange Offer
                                    Registration Statement is not appropriate or
                                    available for such resales by the holder, or

                                    (iii) if for any other reason, the Company
                           does not consummate the Exchange Offer within 210
                           days of the Closing Date,

in lieu of conducting the Exchange Offer contemplated by Section 2(a) the
Company shall, as promptly as practicable, file a "shelf" registration statement
providing for the registration of, and the sale on a continuous or delayed basis
by the holders of, all of the Registrable Securities, pursuant to Rule 415 or
any similar rule that may be adopted by the Commission (such registration, the
"Resale Registration" and such registration statement, the "Resale Registration
Statement").

         In addition, in the event that, prior to the consummation of the
Exchange Offer, the Initial Purchasers shall not have resold all of the
Securities initially purchased by them from the Company pursuant to the Purchase
Agreement and the Initial Purchasers shall so request, the Company shall file
under the Securities Act as soon as practicable a Resale Registration Statement
covering such unsold Registrable Securities. (In the case of any Resale
Registration required only by the second sentence of this Section 2(b),
references herein to "Registrable Securities" mean those Securities that the
Initial Purchasers shall have purchased from the Company pursuant to the
Purchase Agreement and shall not have resold.)

         The Company agrees to use its best efforts:

                           (i) to cause the Resale Registration Statement to
                  become or be declared effective,

                           (ii) to keep such Resale Registration Statement
                  continuously effective until the earliest of (A) the time when
                  the Registrable Securities may be sold pursuant to Rule 144
                  (assuming that no holder at such date or within the 90-day

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                  period preceding such date was an affiliate of the Company)
                  without any limitations under clauses (c), (e), (f) and (h) of
                  Rule 144, (B) two years from the Closing Date or (C) the date
                  on which all Registrable Securities registered under the Shelf
                  Registration Statement are disposed of in accordance
                  therewith, in order to permit the prospectus forming a part
                  thereof to be usable by holders for resales of Registrable
                  Securities, provided, however, that no holder shall be
                  entitled to be named as a selling securityholder in the Resale
                  Registration Statement or to use the prospectus forming a part
                  thereof for resales of Registrable Securities unless such
                  holder is an Electing Holder, and

                           (iii) after the Effective Time of the Resale
                  Registration Statement and for so long as the Resale
                  Registration Statement is required to be kept continuously
                  effective pursuant to clause (i) above, promptly upon the
                  request of any holder of Registrable Securities that is not
                  then an Electing Holder, and provided that such holder shall
                  have returned a completed and signed Notice and Questionnaire
                  to the Company in accordance with Section 3(d)(iii) hereof, to
                  take any action reasonably necessary to enable such holder to
                  use the prospectus forming a part thereof for resales of
                  Registrable Securities, including any action necessary to
                  identify such holder as a selling securityholder in the Resale
                  Registration Statement.

         The Company further agrees to supplement or make amendments to the
Resale Registration Statement, as and when required by the rules, regulations or
instructions applicable to the registration form used by the Company for such
Resale Registration Statement or by the Securities Act or rules and regulations
thereunder for shelf registration, and the Company agrees to furnish to each
Electing Holder copies of any such supplement or amendment prior to its being
used or promptly following its filing with the Commission.

                  (c) In the event that:

                           (i) the Company has not filed the Exchange Offer
                  Registration Statement on or before the 120th day after the
                  Closing Date,

                           (ii) such Exchange Offer Registration Statement has
                  not become effective or been declared effective by the
                  Commission on or prior to the 180th day after the Closing
                  Date,

                           (iii) the Exchange Offer has not been completed on or
                  prior to the 210th day after the Closing Date (if the Exchange
                  Offer is then required to be made),

                           (iv) the Company is obligated to file the Resale
                  Shelf Registration Statement, the Company fails to file the

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                  Resale Shelf Registration Statement with the Commission on or
                  prior to the 30th day after the filing obligation arises,

                           (v) the Company is obligated to file the Resale Shelf
                  Registration Statement, the Resale Shelf Registration
                  Statement is not declared effective on or prior to the 90th
                  day after the obligation to file the Resale Shelf Registration
                  Statement arises, or

                           (vi) any Exchange Offer Registration Statement or
                  Resale Registration Statement required by Section 2(a) or 2(b)
                  hereof is filed and declared effective but shall thereafter
                  either be withdrawn by the Company, become subject to an
                  effective stop order issued pursuant to Section 8(d) of the
                  Securities Act suspending the effectiveness of such
                  registration statement or otherwise cease to be available for
                  resales of Registrable Securities covered thereby (except as
                  specifically permitted herein) without being succeeded
                  promptly by an additional registration statement filed,
                  declared effective and available for such purposes (each such
                  event referred to in clauses (i) through (vi), a "Registration
                  Default"),

then, as liquidated damages for such Registration Default, subject to the
provisions of Section 9(b), the Company will pay additional interest (in
addition to the interest otherwise due on the Securities) to each holder of
Securities during the first 90-day period immediately following the occurrence
of each such Registration Default in an amount equal to 0.25% per annum. The
amount of interest will increase by an additional 0.25% per annum for each
subsequent 90-day period until such Registration Default is cured, up to a
maximum amount of additional interest of 1.00% per annum. Such additional
interest will cease accruing on such Securities with respect to any Registration
Default when such Registration Default has been cured.

                  (d) The Company shall take all reasonable actions necessary or
         advisable to be taken by it to ensure that the transactions
         contemplated herein are effected as so contemplated.

                  (e) Any reference herein to a registration statement as of any
         time shall be deemed to include any document incorporated, or deemed to
         be incorporated, therein by reference as of such time, and any
         reference herein to any amendment to a registration statement as of any
         time shall be deemed to include any document incorporated, or deemed to
         be incorporated, therein by reference as of such time.

         Section 3. Registration Procedures.

         If the Company files a registration statement pursuant to Section 2(a)
or Section 2(b), the following provisions shall apply:

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                  (a) At or before the Effective Time of the Exchange Offer or
         the Resale Registration, as the case may be, the Company shall qualify
         the Indenture under the Trust Indenture Act.

                  (b) In the event that such qualification would require the
         appointment of a new trustee under the Indenture, the Company shall
         appoint a new trustee thereunder pursuant to the applicable provisions
         of the Indenture.

                  (c) In connection with the Company's obligations with respect
         to the registration of Exchange Securities as contemplated by Section
         2(a) (the "Exchange Registration"), if applicable, the Company shall,
         as soon as reasonably practicable (or as otherwise specified):

                           (i) prepare and file with the Commission, no later
                  than 120 days after the Closing Date, an Exchange Offer
                  Registration Statement on any form which may be utilized by
                  the Company and which shall permit the Exchange Offer and
                  resales of Exchange Securities by broker-dealers during the
                  Resale Period to be effected as contemplated by Section 2(a),
                  and use all reasonable efforts to cause such Exchange Offer
                  Registration Statement to become effective as soon as
                  practicable thereafter, but no later than 180 days after the
                  Closing Date;

                           (ii) as soon as practicable prepare and file with the
                  Commission such amendments and supplements to such Exchange
                  Offer Registration Statement and the prospectus included
                  therein as may be necessary to effect and maintain the
                  effectiveness of such Exchange Offer Registration Statement
                  for the periods and purposes contemplated in Section 2(a)
                  hereof and as may be required by the applicable rules and
                  regulations of the Commission and the instructions applicable
                  to the form of such Exchange Offer Registration Statement, and
                  promptly provide each broker-dealer holding Exchange
                  Securities with such number of copies of the prospectus
                  included therein (as then amended or supplemented), in
                  conformity in all material respects with the requirements of
                  the Securities Act and the Trust Indenture Act and the rules
                  and regulations of the Commission thereunder, as such
                  broker-dealer reasonably may request prior to the expiration
                  of the Resale Period, for use in connection with resales of
                  Exchange Securities;

                           (iii) promptly notify each broker-dealer that has
                  requested or received copies of the prospectus included in the
                  Exchange Offer Registration Statement, and confirm such advice
                  in writing, (A) when such Exchange Offer Registration
                  Statement or the prospectus included therein, or any amendment
                  or supplement thereto, has been filed, and, with respect to
                  such Exchange Offer Registration Statement or any amendment
                  thereto, when the same has become effective, (B) of any
                  comments by the Commission and by the blue sky or securities
                  commissioner or regulator of any state with respect thereto or

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                  any request by the Commission for amendments or supplements to
                  such Exchange Offer Registration Statement or prospectus or
                  for additional information, (C) of the issuance by the
                  Commission of any stop order suspending the effectiveness of
                  such Exchange Offer Registration Statement or the initiation
                  or threatening of any proceedings for that purpose, (D) if at
                  any time the representations and warranties of the Company
                  contemplated by Section 5 cease to be true and correct in all
                  material respects, (E) of the receipt by the Company of any
                  notification with respect to the suspension of the
                  qualification of the Exchange Securities for sale in any
                  jurisdiction or the initiation or threatening of any
                  proceeding for such purpose or (F) at any time during the
                  Resale Period when a prospectus is required to be delivered
                  under the Securities Act, that such Exchange Offer
                  Registration Statement, prospectus, or any amendment or
                  supplement thereto, does not conform in all material respects
                  to the applicable requirements of the Securities Act and the
                  Trust Indenture Act and the rules and regulations of the
                  Commission thereunder or contains an untrue statement of a
                  material fact or omits to state a material fact required to be
                  stated therein or necessary to make the statements therein not
                  misleading in light of the circumstances then existing;

                           (iv) in the event that the Company would be required,
                  pursuant to Section 3(c)(iii)(F) above, to notify any
                  broker-dealers holding Exchange Securities, promptly prepare
                  and furnish to each such holder a reasonable number of copies
                  of a prospectus supplemented or amended so that, as thereafter
                  delivered to purchasers of such Exchange Securities during the
                  Resale Period, such prospectus shall conform in all material
                  respects to the applicable requirements of the Securities Act
                  and the Trust Indenture Act and the rules and regulations of
                  the Commission thereunder and shall not contain an untrue
                  statement of a material fact or omit to state a material fact
                  required to be stated therein or necessary to make the
                  statements therein not misleading in light of the
                  circumstances then existing. Each broker-dealer holding
                  Exchange Securities during the Resale Period agrees that upon
                  receipt of any notice from the Company pursuant to Section
                  3(c)(iii)(F) above, such broker-dealer shall forthwith
                  discontinue disposition of Exchange Securities pursuant to the
                  Exchange Offer Registration Statement applicable to such
                  Exchange Securities until such broker-dealer shall have
                  received copies of such amended or supplemented prospectus,
                  and if so directed by the Company, such broker-dealer shall
                  deliver to the Company (at the Company's expense) all copies,
                  other than permanent file copies, then in such broker-dealer's
                  possession of the prospectus covering such Exchange Securities
                  at the time of receipt of such notice; provided, however, that
                  the Company hereby agrees that if it provides notice to any
                  broker-dealers pursuant to Section 3(c)(iii)(F) above during
                  the Resale Period, such Resale Period shall be extended by the

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                  number of days in the period from and including the date of
                  the giving of such notice to and including the date on which
                  the Company shall have made available to such broker-dealers
                  copies of the amended or supplemented prospectus necessary to
                  permit such broker-dealers to resume disposition of Exchange
                  Securities;

                           (v) use all reasonable efforts to obtain the
                  withdrawal of any order suspending the effectiveness of such
                  Exchange Offer Registration Statement or any amendment thereto
                  at the earliest practicable date;

                           (vi) use all reasonable efforts to (A) register or
                  qualify the Exchange Securities under the securities laws or
                  blue sky laws of such jurisdictions as are contemplated by
                  Section 2(a), if such registration or qualification is
                  required by such laws, no later than the commencement of the
                  Exchange Offer, (B) keep such registrations or qualifications
                  in effect and comply with such laws so as to permit the
                  continuance of offers, sales and dealings therein in such
                  jurisdictions until the expiration of the Resale Period and
                  (C) take any and all other actions as may be reasonably
                  necessary or advisable to enable each broker-dealer holding
                  Exchange Securities to consummate the disposition thereof in
                  such jurisdictions; provided, however, that the Company shall
                  not be required for any such purpose to (1) qualify as a
                  foreign corporation in any jurisdiction wherein it would not
                  otherwise be required to qualify but for the requirements of
                  this Section 3(c)(vi), or (2) consent to general service of
                  process in any such jurisdiction;

                           (vii) use all reasonable efforts to obtain the
                  consent or approval of each governmental agency or authority,
                  whether federal, state or local, which may be required to
                  effect the Exchange Registration, the Exchange Offer and the
                  offering and sale of Exchange Securities by broker-dealers
                  during the Resale Period;

                           (viii) provide a CUSIP number for all Exchange
                  Securities, not later than the applicable Effective Time;

                           (ix) comply with all applicable rules and regulations
                  of the Commission, and make generally available to the
                  Company's securityholders as soon as practicable but no later
                  than eighteen months after the effective date of such Exchange
                  Offer Registration Statement, an earnings statement of each of
                  the Company and its subsidiaries complying with Section 11(a)
                  of the Securities Act (including, at the option of the
                  Company, Rule 158 thereunder and any applicable Commission
                  interpretation regarding information reporting by a
                  consolidated subsidiary of a reporting company);

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                  (d) In connection with the Company's obligations with respect
         to the Resale Registration, if applicable, the Company shall, as soon
         as reasonably practicable (or as otherwise specified):

                           (i) prepare and file with the Commission, as soon as
                  reasonably practicable but in any case within 30 days after
                  the obligation to file the Resale Registration Statement
                  arises, a Resale Registration Statement on any form which may
                  be utilized by the Company and which shall register all of the
                  Registrable Securities for resale by the holders thereof in
                  accordance with such method or methods of disposition as may
                  be specified by such of the holders as, from time to time, may
                  be Electing Holders and use its reasonable best efforts to
                  cause such Resale Registration Statement to become effective
                  as soon as practicable but in any case within 90 days after
                  the obligation to file the Resale Registration Statement
                  arises;

                           (ii) not less than 30 days prior to the Effective
                  Time of the Resale Registration Statement, mail the Notice and
                  Questionnaire to the holders of Registrable Securities; no
                  holder shall be entitled to be named as a selling
                  securityholder in the Resale Registration Statement as of the
                  Effective Time, and no holder shall be entitled to use the
                  prospectus forming a part thereof for resales of Registrable
                  Securities at any time, unless such holder has returned a
                  completed and signed Notice and Questionnaire to the Company
                  by the deadline for response set forth therein; provided,
                  however, holders of Registrable Securities shall have at least
                  30 days from the date on which the Notice and Questionnaire is
                  first mailed to such holders to return a completed and signed
                  Notice and Questionnaire to the Company;

                           (iii) after the Effective Time of the Resale
                  Registration Statement, (A) upon the request of any holder of
                  Registrable Securities that is not then an Electing Holder,
                  promptly send a Notice and Questionnaire to such holder and
                  (B) upon receipt by the Company of a completed and signed
                  Notice and Questionnaire from any holder of Registrable
                  Securities that is not then an Electing Holder, take any
                  action reasonably necessary to cause such holder to be named
                  as a selling securityholder in the Resale Registration
                  Statement and to enable such holder to use the prospectus
                  forming a part thereof for resales of Registrable Securities;
                  provided that the Company shall not be required to take any
                  action contemplated in clause (B) of this paragraph until such
                  holder has returned a completed and signed Notice and
                  Questionnaire to the Company;

                           (iv) as soon as reasonably practicable prepare and
                  file with the Commission such amendments and supplements to
                  such Resale Registration Statement and the prospectus included
                  therein as may be necessary to effect and maintain the

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                  effectiveness of such Resale Registration Statement for the
                  period specified in Section 2(b) hereof and as may be required
                  by the applicable rules and regulations of the Commission and
                  the instructions applicable to the form of such Resale
                  Registration Statement, and furnish to the Electing Holders
                  copies of any such supplement or amendment simultaneously with
                  or prior to its being used or filed with the Commission;

                           (v) comply with the provisions of the Securities Act
                  with respect to the disposition of all of the Registrable
                  Securities covered by such Resale Registration Statement in
                  accordance with the intended methods of disposition by the
                  Electing Holders provided for in such Resale Registration
                  Statement;

                           (vi) provide (A) the Electing Holders, (B) the
                  underwriters (which term, for purposes of this Exchange and
                  Registration Rights Agreement, shall include a person deemed
                  to be an underwriter within the meaning of Section 2(11) of
                  the Securities Act), if any, thereof, (C) any sales or
                  placement agent therefor, (D) counsel for any such underwriter
                  or agent and (E) not more than one counsel for all the
                  Electing Holders the opportunity to participate in the
                  preparation of such Resale Registration Statement, each
                  prospectus included therein or filed with the Commission and
                  each amendment or supplement thereto; provided, however, that
                  nothing herein shall prevent the Company from filing the
                  Resale Offer Registration Statement in a timely manner to
                  avoid a Registration Default;

                           (vii) for a reasonable period prior to the filing of
                  such Resale Registration Statement, and throughout the period
                  specified in Section 2(b), make available at reasonable times
                  at the Trustee's principal place of business or such other
                  reasonable place for inspection by the persons referred to in
                  Section 3(d)(vi) who shall certify to the Company that they
                  have a current intention to sell the Registrable Securities
                  pursuant to the Resale Registration such financial and other
                  information and certified copies of the books and records of
                  the Company, and cause the officers, employees, counsel and
                  independent certified public accountants of the Company to
                  respond to such inquiries, as shall be reasonably necessary,
                  in the judgment of the Company and its counsel, to conduct a
                  reasonable investigation within the meaning of Section 11 of
                  the Securities Act; provided, however, that each such party
                  shall be required to maintain in confidence and not to
                  disclose to any other person any information or records
                  reasonably designated by the Company in writing as being
                  confidential, until such time as (A) such information becomes
                  a matter of public record (whether by virtue of its inclusion
                  in such registration statement or otherwise), (B) such person
                  shall be required so to disclose such information pursuant to
                  a subpoena or order of any court or other governmental agency

                                       13
<PAGE>

                  or body having jurisdiction over the matter (subject to the
                  requirements of such order, and only after such person shall
                  have given the Company prompt prior written notice of such
                  requirement) or (C) such information is required to be set
                  forth in such Resale Registration Statement or the prospectus
                  included therein or in an amendment to such Resale
                  Registration Statement or an amendment or supplement to such
                  prospectus in order that such Resale Registration Statement,
                  prospectus, amendment or supplement, as the case may be,
                  complies with applicable requirements of the federal
                  securities laws and the rules and regulations of the
                  Commission and does not contain an untrue statement of a
                  material fact or omit to state therein a material fact
                  required to be stated therein or necessary to make the
                  statements therein not misleading in light of the
                  circumstances then existing;

                           (viii) promptly notify each of the Electing Holders,
                  any sales or placement agent therefor and any underwriter
                  thereof (which notification may be made through any managing
                  underwriter that is a representative of such underwriter for
                  such purpose) and confirm such advice in writing, (A) when
                  such Resale Registration Statement or the prospectus included
                  therein, or any amendment or supplement thereto, has been
                  filed, and, with respect to such Resale Registration Statement
                  or any amendment thereto, when the same has become effective,
                  (B) of any comments by the Commission and by the blue sky or
                  securities commissioner or regulator of any state with respect
                  thereto or any request by the Commission for amendments or
                  supplements to such Resale Registration Statement or
                  prospectus or for additional information, (C) of the issuance
                  by the Commission of any stop order suspending the
                  effectiveness of such Resale Registration Statement or the
                  initiation or threatening of any proceedings for that purpose,
                  (D) if at any time the representations and warranties of the
                  Company contemplated by Section 3(d)(xvi) or Section 5 cease
                  to be true and correct in all material respects, (E) of the
                  receipt by the Company of any notification with respect to the
                  suspension of the qualification of the Registrable Securities
                  for sale in any jurisdiction or the initiation or threatening
                  of any proceeding for such purpose or (F) if at any time when
                  a prospectus is required to be delivered under the Securities
                  Act, such Resale Registration Statement, prospectus, or
                  amendment or supplement thereto, does not conform in all
                  material respects to the applicable requirements of the
                  Securities Act and the Trust Indenture Act and the rules and
                  regulations of the Commission thereunder or contains an untrue
                  statement of a material fact or omits to state any material
                  fact required to be stated therein or necessary to make the
                  statements therein not misleading in light of the
                  circumstances then existing;

                           (ix) use all reasonable efforts to obtain the
                  withdrawal of any order suspending the effectiveness of such
                  registration statement or any post-effective amendment thereto
                  at the earliest practicable date;

                                       14
<PAGE>

                           (x) if requested by any managing underwriter or
                  underwriters, any placement or sales agent or any Electing
                  Holder, promptly incorporate in a prospectus supplement or
                  amendment such information as is required by the applicable
                  rules and regulations of the Commission and as such managing
                  underwriter or underwriters, such agent or such Electing
                  Holder specifies should be included therein relating to the
                  terms of the sale of such Registrable Securities, including
                  information with respect to the principal amount of
                  Registrable Securities being sold by such Electing Holder or
                  agent or to any underwriters, the name and description of such
                  Electing Holder, agent or underwriter, the offering price of
                  such Registrable Securities and any discount, commission or
                  other compensation payable in respect thereof, the purchase
                  price being paid therefor by such underwriters and with
                  respect to any other terms of the offering of the Registrable
                  Securities to be sold by such Electing Holder or agent or to
                  such underwriters; and make all required filings of such
                  prospectus supplement or amendment promptly after notification
                  of the matters to be incorporated in such prospectus
                  supplement or amendment;

                           (xi) furnish to each Electing Holder, each placement
                  or sales agent, if any, therefor, each underwriter, if any, of
                  the Registrable Securities and the respective counsel referred
                  to in Section 3(d)(vi) an executed copy (or, in the case of an
                  Electing Holder, a conformed copy) of such Resale Registration
                  Statement, each such amendment and supplement thereto (in each
                  case including all exhibits thereto (in the case of an
                  Electing Holder of Registrable Securities, upon request) and
                  documents incorporated by reference therein) and such number
                  of copies of such Resale Registration Statement (excluding
                  exhibits thereto and documents incorporated by reference
                  therein unless specifically so requested by such Electing
                  Holder, agent or underwriter, as the case may be) and of the
                  prospectus included in such Resale Registration Statement
                  (including each preliminary prospectus and any summary
                  prospectus), in conformity in all material respects with the
                  applicable requirements of the Securities Act and the Trust
                  Indenture Act and the rules and regulations of the Commission
                  thereunder, and such other documents, as such Electing Holder,
                  agent, if any, and underwriter, if any, may reasonably request
                  in order to facilitate the offering and disposition of the
                  Registrable Securities owned by such Electing Holder, offered
                  or sold by such agent or underwritten by such underwriter and
                  to permit such Electing Holder, agent and underwriter to
                  satisfy the prospectus delivery requirements of the Securities
                  Act; and the Company hereby consents to the use of such
                  prospectus (including such preliminary and summary prospectus)
                  and any amendment or supplement thereto by each such Electing
                  Holder and by any such agent and underwriter, in each case in
                  the form most recently provided to such person by the Company,
                  in connection with the offering and sale of the Registrable
                  Securities covered by the prospectus (including such

                                       15
<PAGE>

                  preliminary and summary prospectus) or any supplement or
                  amendment thereto;

                           (xii) use all reasonable efforts to (A) register or
                  qualify the Registrable Securities to be included in such
                  Resale Registration Statement under such securities laws or
                  blue sky laws of such jurisdictions as any Electing Holder and
                  each placement or sales agent, if any, therefor and
                  underwriter, if any, thereof shall reasonably request, (B)
                  keep such registrations or qualifications in effect and comply
                  with such laws so as to permit the continuance of offers,
                  sales and dealings therein in such jurisdictions during the
                  period the Resale Registration is required to remain effective
                  under Section 2(b) above and (C) take any and all other
                  actions as may be reasonably necessary or advisable to enable
                  each such Electing Holder, agent, if any, and underwriter, if
                  any, to consummate the disposition in such jurisdictions of
                  such Registrable Securities during the period the Resale
                  Registration is required to remain effective under Section
                  2(b) above; provided, however, that the Company shall not be
                  required for any such purpose to (1) qualify as a foreign
                  corporation in any jurisdiction wherein it would not otherwise
                  be required to qualify but for the requirements of this
                  Section 3(d)(xii), or (2) consent to general service of
                  process in any such jurisdiction;

                           (xiii) use all reasonable efforts to obtain the
                  consent or approval of each governmental agency or authority,
                  whether federal, state or local, which may be required to
                  effect the Resale Registration or the offering or sale in
                  connection therewith or to enable the selling holder or
                  holders to offer, or to consummate the disposition of, their
                  Registrable Securities;

                           (xiv) provide a CUSIP number for all Registrable
                  Securities, not later than the applicable Effective Time;

                           (xv) enter into one or more underwriting agreements,
                  engagement letters, agency agreements, "best efforts"
                  underwriting agreements or similar agreements, as appropriate,
                  including customary provisions relating to indemnification and
                  contribution, and take such other actions in connection
                  therewith as any Electing Holders aggregating at least 25% in
                  aggregate principal amount of the Registrable Securities at
                  the time outstanding shall reasonably request in order to
                  expedite or facilitate the disposition of such Registrable
                  Securities;

                           (xvi) whether or not an agreement of the type
                  referred to in Section 3(d)(xv) hereof is entered into and
                  whether or not any portion of the offering contemplated by the
                  Resale Registration is an underwritten offering or is made
                  through a placement or sales agent or any other entity, (A)
                  make such representations and warranties to the Electing
                  Holders and the placement or sales agent, if any, therefor and
                  the underwriters, if any, of the Registrable Securities in

                                       16
<PAGE>

                  form, substance and scope as are customarily made in
                  connection with an offering of debt securities pursuant to any
                  appropriate and customary agreement or to a registration
                  statement filed on the form applicable to the Resale
                  Registration; (B) obtain an opinion of counsel to the Company
                  in customary form and covering such matters, of the type
                  customarily covered by such an opinion, as the managing
                  underwriters, if any, or as any Electing Holders of at least
                  25% in aggregate principal amount of the Registrable
                  Securities at the time outstanding may reasonably request,
                  addressed to such Electing Holder or Electing Holders and the
                  placement or sales agent, if any, therefor and the
                  underwriters, if any, of the Registrable Securities and dated
                  the effective date of such Resale Registration Statement (and
                  if such Resale Registration Statement contemplates an
                  underwritten offering of a part or all of the Registrable
                  Securities, dated the date of the closing under the
                  underwriting agreement relating thereto) (it being agreed that
                  the matters to be covered by such opinion shall be similar to
                  those set forth in Exhibits A and B of the Purchase
                  Agreement), such opinion to be subject to customary
                  qualifications and limitations; (C) obtain a "cold comfort"
                  letter or letters from the independent certified public
                  accountants of the Company addressed to the selling Electing
                  Holders, the placement or sales agent, if any, therefor or the
                  underwriters, if any, thereof, dated (i) the effective date of
                  such Resale Registration Statement and (ii) the effective date
                  of any prospectus supplement to the prospectus included in
                  such Resale Registration Statement or amendment to such Resale
                  Registration Statement which includes unaudited or audited
                  financial statements as of a date or for a period subsequent
                  to that of the latest such statements included in such
                  prospectus (and, if such Resale Registration Statement
                  contemplates an underwritten offering pursuant to any
                  prospectus supplement to the prospectus included in such
                  Resale Registration Statement or amendment to such Resale
                  Registration Statement which includes unaudited or audited
                  financial statements as of a date or for a period subsequent
                  to that of the latest such statements included in such
                  prospectus, dated the date of the closing under the
                  underwriting agreement relating thereto), such letter or
                  letters to be in customary form and covering matters of the
                  type customarily covered by letters of such type; (D) deliver
                  such documents and certificates, including officers'
                  certificates, as may be reasonably requested by any Electing
                  Holders of at least 25% in aggregate principal amount of the
                  Registrable Securities at the time outstanding or the
                  placement or sales agent, if any, therefor and the managing
                  underwriters, if any, of the Registrable Securities to
                  evidence the accuracy of the representations and warranties
                  made pursuant to clause (A) above or those contained in
                  Section 5(a) hereof and the compliance with or satisfaction of
                  any agreements or conditions contained in the underwriting
                  agreement or other agreement entered into by the Company; and
                  (E) undertake such obligations relating to expense

                                       17
<PAGE>

                  reimbursement, indemnification and contribution as are
                  provided in Section 6 hereof;

                           (xvii) notify in writing each holder of Registrable
                  Securities of any proposal by the Company to amend or waive
                  any provision of this Exchange and Registration Rights
                  Agreement pursuant to Section 9(i) hereof and of any amendment
                  or waiver effected pursuant thereto, each of which notices
                  shall contain the text of the amendment or waiver proposed or
                  effected, as the case may be;

                           (xviii) in the event that any broker-dealer
                  registered under the Exchange Act shall underwrite any
                  Registrable Securities or participate as a member of an
                  underwriting syndicate or selling group or "assist in the
                  distribution" (within the meaning of the Rules of Fair
                  Practice and the By-Laws of the National Association of
                  Securities Dealers, Inc. ("NASD") or any successor thereto, as
                  amended from time to time) thereof, whether as a holder of
                  such Registrable Securities or as an underwriter, a placement
                  or sales agent or a broker or dealer in respect thereof, or
                  otherwise, assist such broker-dealer in complying with the
                  requirements of such Rules and By-Laws, including by (A) if
                  such Rules or By-Laws shall so require, engaging a "qualified
                  independent underwriter" (as defined in Rule 2720 (or any
                  successor thereto)) to participate in the preparation of the
                  Resale Registration Statement relating to such Registrable
                  Securities, to exercise usual standards of due diligence in
                  respect thereto and, if any portion of the offering
                  contemplated by such Resale Registration Statement is an
                  underwritten offering or is made through a placement or sales
                  agent, to recommend the yield of such Registrable Securities,
                  (B) indemnifying any such qualified independent underwriter to
                  the extent of the indemnification of underwriters provided in
                  Section 6 hereof (or to such other customary extent as may be
                  requested by such underwriter) and (C) providing such
                  information to such broker-dealer as may be required in order
                  for such broker-dealer to comply with the requirements of the
                  Rules of Fair Practice of the NASD;

                           (xix) comply with all applicable rules and
                  regulations of the Commission, and make generally available to
                  the Company's securityholders as soon as practicable but in
                  any event not later than eighteen months after the effective
                  date of such Resale Registration Statement, an earning
                  statement of the Company and its subsidiaries complying with
                  Section 11(a) of the Securities Act (including, at the option
                  of the Company, Rule 158 thereunder and any applicable
                  Commission interpretation regarding information reporting by a
                  consolidated subsidiary of a reporting company);

                  (e) In the event that the Company would be required, pursuant
         to Section 3(d)(viii)(F) above, to notify the Electing Holders, the

                                       18
<PAGE>

         placement or sales agent, if any, therefor and the managing
         underwriters, if any, of the Registrable Securities, the Company shall
         promptly prepare and furnish to each of the Electing Holders, to each
         placement or sales agent, if any, and to each such underwriter, if any,
         a reasonable number of copies of a prospectus supplemented or amended
         so that, as thereafter delivered to purchasers of Registrable
         Securities, such prospectus shall conform in all material respects to
         the applicable requirements of the Securities Act and the Trust
         Indenture Act and the rules and regulations of the Commission
         thereunder and shall not contain an untrue statement of a material fact
         or omit to state a material fact required to be stated therein or
         necessary to make the statements therein not misleading in light of the
         circumstances then existing. Each Electing Holder agrees that upon
         receipt of any notice from the Company pursuant to Section
         3(d)(viii)(F) hereof, such Electing Holder shall forthwith discontinue
         the disposition of Registrable Securities pursuant to the Resale
         Registration Statement applicable to such Registrable Securities until
         such Electing Holder shall have received copies of such amended or
         supplemented prospectus, and if so directed by the Company, such
         Electing Holder shall deliver to the Company (at the Company's expense)
         all copies, other than permanent file copies, then in such Electing
         Holder's possession of the prospectus covering such Registrable
         Securities at the time of receipt of such notice.

                  (f) In the event of a Resale Registration, in addition to the
         information required to be provided by each Electing Holder in its
         Notice and Questionnaire, the Company may require such Electing Holder
         to furnish to the Company such additional information regarding such
         Electing Holder and such Electing Holder's intended method of
         distribution of Registrable Securities as the Company may from time to
         time reasonably request in writing, but only to the extent that such
         information is required in order to comply with the Securities Act or
         state securities or blue sky laws. Each such Electing Holder agrees to
         notify the Company as promptly as practicable of any inaccuracy or
         change in information previously furnished by such Electing Holder to
         the Company or of the occurrence of any event in either case as a
         result of which any prospectus relating to such Resale Registration
         contains or would contain an untrue statement of a material fact
         regarding such Electing Holder or such Electing Holder's intended
         method of disposition of such Registrable Securities or omits to state
         any material fact regarding such Electing Holder or such Electing
         Holder's intended method of disposition of such Registrable Securities
         required to be stated therein or necessary to make the statements
         therein not misleading in light of the circumstances then existing, and
         promptly to furnish to the Company any additional information required
         to correct and update any previously furnished information or required
         so that such prospectus shall not contain, with respect to such
         Electing Holder or the disposition of such Registrable Securities, an
         untrue statement of a material fact or omit to state a material fact
         required to be stated therein or necessary to make the statements
         therein not misleading in light of the circumstances then existing.
         Each Electing Holder further agrees that in the event the amount of

                                       19
<PAGE>

         Registrable Securities that are beneficially owned by such Electing
         Holder and are registered pursuant to such Resale Registration is
         reduced due to a sale of such Registrable Securities under such Resale
         Registration, such Electing Holder shall deliver to the Company and the
         Trustee, at the time of such sale, a Notice of Transfer.

                  (g) Until the earlier of (i) the expiration of two years after
         the Closing or (ii) such time as the Exchange Offer has been completed
         or the Resale Registration Statement has become or been declared
         effective by the Commission, the Company will not, and will not permit
         any of its "affiliates" (as defined in Rule 144 under the Securities
         Act) to, resell any of the Securities which constitute "restricted
         securities" under Rule 144 that have been reacquired by any of them,
         except for Securities purchased by the Company or any of its affiliates
         and resold in a transaction registered under the Securities Act.

         Section 4. Registration Expenses.

         The Company agrees to bear and to pay or cause to be paid promptly all
expenses incident to the Company's performance of or compliance with this
Exchange and Registration Rights Agreement, including (a) all Commission and any
NASD registration, filing and review fees and expenses including reasonable fees
and disbursements of counsel for the placement or sales agent or underwriters in
connection with such registration, filing and review, (b) all fees and expenses
in connection with the qualification of the Securities for offering and sale
under the State securities and blue sky laws and determination of their
eligibility for investment under the laws of such jurisdictions as any managing
underwriters or the Electing Holders may reasonably designate, including any
reasonable fees and disbursements of counsel for the Electing Holders (subject
to the limitations of Clause (i) below) or underwriters in connection with such
qualification and determination, (c) all expenses relating to the preparation,
printing, production, distribution and reproduction of each registration
statement required to be filed hereunder, each prospectus included therein or
prepared for distribution pursuant hereto, each amendment or supplement to the
foregoing, the expenses of preparing the Securities for delivery and the
expenses of printing or producing any underwriting agreements, agreements among
underwriters, selling agreements and blue sky or legal investment memoranda and
all other documents in connection with the offering, sale or delivery of
Securities to be disposed of (including certificates representing the
Securities), (d) messenger, telephone and delivery expenses relating to the
offering, sale or delivery of Securities and the preparation of documents
referred in clause (c) above, (e) fees and expenses of the Trustee under the
Indenture, any agent of the Trustee and any counsel for the Trustee, (f)
internal expenses (including all salaries and expenses of the Company's officers
and employees performing legal or accounting duties), (g) reasonable fees,
disbursements and expenses of counsel and independent certified public
accountants of the Company (including the expenses of any opinions or "cold
comfort" letters required by or incident to such performance and compliance),
(h) reasonable fees, disbursements and expenses of any "qualified independent
underwriter" engaged pursuant to Section 3(d)(xviii) hereof, (i) fees,
disbursements and expenses of one counsel for the Electing Holders retained in

                                       20
<PAGE>

connection with a Resale Registration, as selected by the Electing Holders of at
least a majority in aggregate principal amount of the Registrable Securities
held by Electing Holders (which counsel shall be reasonably satisfactory to the
Company) and (j) any fees charged by securities rating services for rating the
Securities as required by the Indenture (collectively, the "Registration
Expenses"). To the extent that any Registration Expenses are incurred, assumed
or paid by any holder of Registrable Securities or any placement or sales agent
therefor or underwriter thereof, the Company shall reimburse such person for the
full amount of the Registration Expenses so incurred, assumed or paid promptly
after receipt of a request therefor (accompanied by receipts, invoices or other
documentary evidence, as appropriate). Notwithstanding the foregoing, the
holders of the Registrable Securities being registered shall pay all agency fees
and commissions and underwriting discounts and commissions attributable to the
sale of such Registrable Securities and the fees and disbursements of any
counsel or other advisors or experts retained by such holders (severally or
jointly), other than the counsel and experts specifically referred to above.

         Section 5. Representations and Warranties.

         The Company represents and warrants to, and agrees with, each Initial
Purchaser and each of the holders from time to time of Registrable Securities
that:

                  (a) Each registration statement covering Registrable
         Securities and each prospectus (including any preliminary or summary
         prospectus) contained therein or furnished pursuant to Section 3(c) or
         Section 3(d) hereof and any further amendments or supplements to any
         such registration statement or prospectus, when it becomes effective or
         is filed with the Commission, as the case may be, and, in the case of
         an underwritten offering of Registrable Securities, at the time of the
         closing under the underwriting agreement relating thereto, will conform
         in all material respects to the applicable requirements of the
         Securities Act and the Trust Indenture Act and the rules and
         regulations of the Commission thereunder and will not contain an untrue
         statement of a material fact or omit to state a material fact required
         to be stated therein or necessary to make the statements therein not
         misleading; and at all times subsequent to the Effective Time when a
         prospectus would be required to be delivered under the Securities Act,
         other than from (i) such time as a notice has been given to holders of
         Registrable Securities pursuant to Section 3(c)(iii)(F) or Section
         3(d)(viii)(F) hereof until (ii) such time as the Company furnishes an
         amended or supplemented prospectus pursuant to Section 3(c)(iv) or
         Section 3(e) hereof, each such registration statement, and each
         prospectus (including any summary prospectus) contained therein or
         furnished pursuant to Section 3(c) or Section 3(d) hereof, as then
         amended or supplemented, will conform in all material respects to the
         applicable requirements of the Securities Act and the Trust Indenture
         Act and the rules and regulations of the Commission thereunder and will
         not contain an untrue statement of a material fact or omit to state a
         material fact required to be stated therein or necessary to make the
         statements therein not misleading in the light of the circumstances
         then existing; provided, however, that this representation and warranty

                                       21
<PAGE>

         shall not apply to any statements or omissions made in reliance upon
         and in conformity with information furnished in writing to the Company
         by or on behalf of a holder of Registrable Securities expressly for use
         therein.

                  (b) Any documents incorporated by reference in any prospectus
         referred to in Section 5(a) hereof, when they become or became
         effective or are or were filed with the Commission, as the case may be,
         will conform or conformed in all material respects to the requirements
         of the Securities Act or the Exchange Act, as applicable, and none of
         such documents will contain or contained an untrue statement of a
         material fact or will omit or omitted to state a material fact required
         to be stated therein or necessary to make the statements therein not
         misleading; provided, however, that this representation and warranty
         shall not apply to any statements or omissions made in reliance upon
         and in conformity with information furnished in writing to the Company
         by or on behalf of a holder of Registrable Securities expressly for use
         therein.

                  (c) The compliance by the Company with all of the provisions
         of this Exchange and Registration Rights Agreement and the consummation
         of the transactions herein contemplated will not conflict with or
         result in a breach of any of the terms or provisions of, or constitute
         a default under, any indenture, mortgage, deed of trust, loan agreement
         or other agreement or instrument to which the Company or any of its
         subsidiaries is a party or by which the Company or any such subsidiary
         is bound or to which any of the property or assets of the Company or
         any such subsidiary is subject, nor will such action result in any
         violation of the provisions of the certificate of incorporation or
         by-laws of the Company or any statute or any order, rule or regulation
         of any United States court or governmental agency or body having
         jurisdiction over the Company or any such subsidiary or any of their
         properties; and no consent, approval, authorization, order,
         registration or qualification of or with any such court or governmental
         agency or body is required for the consummation by the Company of the
         transactions contemplated by this Exchange and Registration Rights
         Agreement, except the registration under the Securities Act of the
         Securities, qualification of the Indenture under the Trust Indenture
         Act and such consents, approvals, authorizations, registrations or
         qualifications, if any, as may be required under State securities or
         blue sky laws in connection with the offering and distribution of the
         Securities.

                  (d) This Exchange and Registration Rights Agreement has been
         duly authorized, executed and delivered by the Company.

         Section 6. Indemnification.

                  (a) Indemnification by the Company. The Company shall, and it
         hereby agrees to, indemnify and hold harmless each of the holders of
         Registrable Securities included in an Exchange Offer Registration
         Statement, each of the Electing Holders of Registrable Securities
         included in a Resale Registration Statement and each person who

                                       22
<PAGE>

         participates as a placement or sales agent or as an underwriter in any
         offering or sale of such Registrable Securities against any losses,
         claims, damages or liabilities, joint or several, to which such holder,
         agent or underwriter may become subject under the Securities Act or
         otherwise, insofar as such losses, claims, damages or liabilities (or
         actions in respect thereof) arise out of or are based upon an untrue
         statement or alleged untrue statement of a material fact contained in
         any Exchange Offer Registration Statement or Resale Registration
         Statement, as the case may be, under which such Registrable Securities
         were registered under the Securities Act, or any preliminary, final or
         summary prospectus contained therein or furnished by the Company to any
         such holder, Electing Holder, agent or underwriter, or any amendment or
         supplement thereto, or arise out of or are based upon the omission or
         alleged omission to state therein a material fact required to be stated
         therein or necessary to make the statements therein not misleading, and
         the Company shall, and it hereby agrees to, reimburse such holder, such
         Electing Holder, such agent and such underwriter for any legal or other
         expenses reasonably incurred by them in connection with investigating
         or defending any such action or claim as such expenses are incurred;
         provided, however, that the Company shall not be liable to any such
         person in any such case to the extent that any such loss, claim, damage
         or liability arises out of or is based upon an untrue statement or
         alleged untrue statement or omission or alleged omission made in such
         registration statement, or preliminary, final or summary prospectus, or
         amendment or supplement thereto, in reliance upon and in conformity
         with written information furnished to the Company by or on behalf of
         such person expressly for use therein;

                  (b) Indemnification by the Holders and any Agents and
         Underwriters. The Company may require, as a condition to including any
         Registrable Securities in any registration statement filed pursuant to
         Section 2(b) hereof and to entering into any underwriting agreement
         with respect thereto, that it shall have received an undertaking
         reasonably satisfactory to it from the Electing Holder of such
         Registrable Securities and from each underwriter named in any such
         underwriting agreement, severally and not jointly, to (i) indemnify and
         hold harmless the Company and all other holders of Registrable
         Securities, against any losses, claims, damages or liabilities to which
         the Company or such other holders of Registrable Securities may become
         subject, under the Securities Act or otherwise, insofar as such losses,
         claims, damages or liabilities (or actions in respect thereof) arise
         out of or are based upon an untrue statement or alleged untrue
         statement of a material fact contained in such registration statement,
         or any preliminary, final or summary prospectus contained therein or
         furnished by the Company to any Electing Holder, agent or underwriter,
         or any amendment or supplement thereto, or arise out of or are based
         upon the omission or alleged omission to state therein a material fact
         required to be stated therein or necessary to make the statements
         therein not misleading, in each case to the extent, but only to the
         extent, that such untrue statement or alleged untrue statement or
         omission or alleged omission was made in reliance upon and in
         conformity with written information furnished to the Company by or on

                                       23
<PAGE>

         behalf of such Electing Holder or underwriter expressly for use
         therein, and (ii) reimburse the Company for any legal or other expenses
         reasonably incurred by it in connection with investigating or defending
         any such action or claim as such expenses are incurred; provided,
         however, that no such Electing Holder shall be required to undertake
         liability to any person under this Section 6(b) for any amounts in
         excess of the dollar amount of the proceeds to be received by such
         Electing Holder from the sale of such Electing Holder's Registrable
         Securities pursuant to such registration.

                  (c) Notices of Claims, Etc. Promptly after receipt by an
         indemnified party under subsection (a) or (b) above of written notice
         of the commencement of any action, such indemnified party shall, if a
         claim in respect thereof is to be made against an indemnifying party
         pursuant to the indemnification provisions of or contemplated by this
         Section 6, notify such indemnifying party in writing of the
         commencement of such action; but the omission so to notify the
         indemnifying party shall not relieve it from any liability which it may
         have to any indemnified party other than under the indemnification
         provisions of or contemplated by Section 6(a) or 6(b) hereof. In case
         any such action shall be brought against any indemnified party and it
         shall notify an indemnifying party of the commencement thereof, such
         indemnifying party shall be entitled to participate therein and, to the
         extent that it shall wish, jointly with any other indemnifying party
         similarly notified, to assume the defense thereof, with counsel
         reasonably satisfactory to such indemnified party (who shall not,
         except with the consent of the indemnified party, be counsel to the
         indemnifying party), and, after notice from the indemnifying party to
         such indemnified party of its election so to assume the defense
         thereof, such indemnifying party shall not be liable to such
         indemnified party for any legal expenses of other counsel or any other
         expenses, in each case subsequently incurred by such indemnified party,
         in connection with the defense thereof other than reasonable costs of
         investigation. No indemnifying party shall, without the written consent
         of the indemnified party, which shall not be unreasonably withheld,
         effect the settlement or compromise of, or consent to the entry of any
         judgment with respect to, any pending or threatened action or claim in
         respect of which indemnification or contribution may be sought
         hereunder (whether or not the indemnified party is an actual or
         potential party to such action or claim) unless such settlement,
         compromise or judgment (i) includes an unconditional release of the
         indemnified party from all liability arising out of such action or
         claim and (ii) does not include a statement as to or an admission of
         fault, culpability or a failure to act by or on behalf of any
         indemnified party.

                  (d) Contribution. If for any reason the indemnification
         provisions contemplated by Section 6(a) or Section 6(b) are unavailable
         or insufficient to hold harmless an indemnified party in respect of any
         losses, claims, damages or liabilities (or actions in respect thereof)
         referred to therein, then each indemnifying party shall contribute to
         the amount paid or payable by such indemnified party as a result of
         such losses, claims, damages or liabilities (or actions in respect

                                       24
<PAGE>

         thereof) in such proportion as is appropriate to reflect the relative
         fault of the indemnifying party and the indemnified party in connection
         with the statements or omissions that resulted in such losses, claims,
         damages or liability, as well as any other relevant equitable
         considerations. The relative fault of such indemnifying party and
         indemnified party shall be determined by reference to, among other
         things, whether the untrue or alleged untrue statement of a material
         fact or omission or alleged omission to state a material fact relates
         to information supplied by such indemnifying party or by such
         indemnified party, and the parties' relative intent, knowledge, access
         to information and opportunity to correct or prevent such statement or
         omission. The parties hereto agree that it would not be just and
         equitable if contributions pursuant to this Section 6(d) were
         determined by pro rata allocation (even if the holders or any agents or
         underwriters or all of them were treated as one entity for such
         purpose) or by any other method of allocation which does not take
         account of the equitable considerations referred to in this Section
         6(d). The amount paid or payable by an indemnified party as a result of
         the losses, claims, damages, or liabilities (or actions in respect
         thereof) referred to above shall be deemed to include any legal or
         other fees or expenses reasonably incurred by such indemnified party in
         connection with investigating or defending any such action or claim.
         Notwithstanding the provisions of this Section 6(d), no holder shall be
         required to contribute any amount in excess of the amount by which the
         dollar amount of the proceeds received by such holder from the sale of
         any Registrable Securities (after deducting any fees, discounts and
         commissions applicable thereto) exceeds the amount of any damages which
         such holder has otherwise been required to pay by reason of such untrue
         or alleged untrue statement or omission or alleged omission, and no
         underwriter shall be required to contribute any amount in excess of the
         amount by which the total price at which the Registrable Securities
         underwritten by it and distributed to the public were offered to the
         public exceeds the amount of any damages which such underwriter has
         otherwise been required to pay by reason of such untrue or alleged
         untrue statement or omission or alleged omission. No person guilty of
         fraudulent misrepresentation (within the meaning of Section 11(f) of
         the Securities Act) shall be entitled to contribution from any person
         who was not guilty of such fraudulent misrepresentation. The holders'
         and any underwriters' obligations in this Section 6(d) to contribute
         shall be several in proportion to the principal amount of Registrable
         Securities registered or underwritten, as the case may be, by them and
         not joint.

                  (e) The obligations of the Company under this Section 6 shall
         be in addition to any liability which the Company may otherwise have
         and shall extend, upon the same terms and conditions, to each officer,
         director and partner of each holder, agent and underwriter and each
         person, if any, who controls any holder, agent or underwriter within
         the meaning of the Securities Act; and the obligations of the holders
         and any agents or underwriters contemplated by this Section 6 shall be
         in addition to any liability which the respective holder, agent or
         underwriter may otherwise have and shall extend, upon the same terms
         and conditions, to each officer and director of the Company (including

                                       25
<PAGE>

         any person who, with his consent, is named in any registration
         statement as about to become a director of the Company) and to each
         person, if any, who controls the Company within the meaning of the
         Securities Act.

         Section 7. Underwritten Offerings.

                  (a) Selection of Underwriters. If any of the Registrable
         Securities covered by the Resale Registration are to be sold pursuant
         to an underwritten offering, the managing underwriter or underwriters
         thereof shall be designated by the Company, subject to the consent of
         Electing Holders holding at least a majority in aggregate principal
         amount of the Registrable Securities to be included in such offering
         (which shall not be unreasonably withheld or delayed); provided that
         such Electing Holders shall be responsible for all underwriting
         commissions and discounts in connection therewith.

                  (b) Participation by Holders. Each holder of Registrable
         Securities hereby agrees with each other such holder that no such
         holder may participate in any underwritten offering hereunder unless
         such holder (i) agrees to sell such holder's Registrable Securities on
         the basis provided in any underwriting arrangements approved by the
         persons entitled hereunder to approve such arrangements and (ii)
         completes and executes all questionnaires, powers of attorney,
         indemnities, underwriting agreements and other documents reasonably
         required under the terms of such underwriting arrangements.

         Section 8. Rule 144.

         The Company covenants to the holders of Registrable Securities that to
the extent they shall be required to do so under the Exchange Act, the Company
shall timely file the reports required to be filed by it under the Exchange Act
or the Securities Act (including the reports under Section 13 and 15(d) of the
Exchange Act referred to in subparagraph (c)(1) of Rule 144 adopted by the
Commission under the Securities Act) and the rules and regulations adopted by
the Commission thereunder, and shall take such further action as any holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitations of the exemption
provided by Rule 144 under the Securities Act, as such Rule may be amended from
time to time, or any similar or successor rule or regulation hereafter adopted
by the Commission. Upon the request of any holder of Registrable Securities in
connection with that holder's sale pursuant to Rule 144, the Company shall
deliver to such holder a written statement as to whether it has complied with
such requirements. The Company shall not be required to comply with this Section
8 if the Exchange Offer has been completed.

                                       26
<PAGE>

         Section 9. Miscellaneous.

                  (a) No Inconsistent Agreements. The Company represents,
         warrants, covenants and agrees that it has not granted, and shall not
         grant, registration rights with respect to Registrable Securities or
         any other securities which would be inconsistent with the terms
         contained in this Exchange and Registration Rights Agreement.

                  (b) Specific Performance. The parties hereto acknowledge that
         there would be no adequate remedy at law if the Company failed to
         perform any of its obligations hereunder and that the Initial
         Purchasers and the holders from time to time of the Registrable
         Securities may be irreparably harmed by any such failure, and
         accordingly agree that the Initial Purchasers and such holders, in
         addition to any other remedy to which they may be entitled at law or in
         equity, shall be entitled, to the extent permitted by applicable law,
         to compel specific performance of the obligations of the Company under
         this Exchange and Registration Rights Agreement in accordance with the
         terms and conditions of this Exchange and Registration Rights
         Agreement, in any court of the United States or any State thereof
         having jurisdiction.

                  (c) Notices. All notices, requests, claims, demands, waivers
         and other communications hereunder shall be in writing and shall be
         deemed to have been duly given when (i) delivered by hand, if delivered
         personally or by courier, (ii) transmitted by any standard form of
         telecommunication upon receipt of a signal confirming receipt or (iii)
         three days after being deposited in the mail (registered or certified
         mail, postage prepaid, return receipt requested) as follows: If to the
         Company, to 225 Summit Avenue, Montvale, NJ 07645 (telefax: (201)
         802-5877), Attention: Louis Lipschitz, Executive Vice President-Chief
         Financial Officer, with a copy to Weil, Gotshal & Manges LLP, 767 Fifth
         Avenue, New York, New York 10153 (telefax: (212) 310-8007), Attention:
         Jeremy W. Dickens, Esq. and if to a holder, to the address of such
         holder set forth in the security register or other records of the
         Company, or to such other address as the Company, or any such holder
         may have furnished to the other in writing in accordance herewith,
         except that notices of change of address shall be effective only upon
         receipt.

                  (d) Parties in Interest. All the terms and provisions of this
         Exchange and Registration Rights Agreement shall be binding upon, shall
         inure to the benefit of and shall be enforceable by, the parties hereto
         and the holders from time to time of the Registrable Securities and the
         respective successors and assigns of the parties hereto and such
         holders. In the event that any transferee of any holder of Registrable
         Securities shall acquire Registrable Securities, in any manner, whether
         by gift, bequest, purchase, operation of law or otherwise, such
         transferee shall, without any further writing or action of any kind, be
         deemed a beneficiary hereof for all purposes and such Registrable
         Securities shall be held subject to all of the terms of this Exchange
         and Registration Rights Agreement, and by taking and holding such

                                       27
<PAGE>

         Registrable Securities such transferee shall be entitled to receive the
         benefits of, and be conclusively deemed to have agreed to be bound by,
         all of the applicable terms and provisions of this Exchange and
         Registration Rights Agreement. If the Company shall so request, any
         such successor, assign or transferee shall agree in writing to acquire
         and hold the Registrable Securities subject to all of the applicable
         terms hereof.

                  (e) Survival. The respective indemnities, agreements,
         representations, warranties and each other provision set forth in this
         Exchange and Registration Rights Agreement or made pursuant hereto
         shall remain in full force and effect regardless of any investigation
         (or statement as to the results thereof) made by or on behalf of any
         holder of Registrable Securities, any director, officer or partner of
         such holder, any agent or underwriter or any director, officer or
         partner thereof, or any controlling person of any of the foregoing, and
         shall survive delivery of and payment for the Registrable Securities
         pursuant to the Purchase Agreement and the transfer and registration of
         Registrable Securities by such holder and the consummation of an
         Exchange Offer.

                  (f) GOVERNING LAW. THIS EXCHANGE AND REGISTRATION RIGHTS
         AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW
         OF THE STATE OF NEW YORK.

                  (g) Jurisdiction, Venue and Service of Process. Each of the
         parties hereto hereby submits to the jurisdiction of any Federal or
         State court in the City, County and State of New York, or to the courts
         of its own corporate domicile, in respect of actions brought against it
         as a defendant, in any legal suit, action or proceeding based on or
         arising under this Exchange and Registration Rights Agreement and
         agrees that all claims in respect of such suit or proceeding may be
         determined in any such court. The Company waives, to the extent
         permitted by law, the defense of an inconvenient forum or objections to
         personal jurisdiction with respect to the maintenance of such legal
         suit, action or proceeding.

                  (h) Headings. The descriptive headings of the several Sections
         and paragraphs of this Exchange and Registration Rights Agreement are
         inserted for convenience only, do not constitute a part of this
         Exchange and Registration Rights Agreement and shall not affect in any
         way the meaning or interpretation of this Exchange and Registration
         Rights Agreement.

                  (i) Entire Agreement; Amendments. This Exchange and
         Registration Rights Agreement and the other writings referred to herein
         (including the Indenture and the form of Securities) or delivered
         pursuant hereto which form a part hereof contain the entire
         understanding of the parties with respect to its subject matter. This
         Exchange and Registration Rights Agreement supersedes all prior
         agreements and understandings between the parties with respect to its
         subject matter. This Exchange and Registration Rights Agreement may be

                                       28
<PAGE>

         amended and the observance of any term of this Exchange and
         Registration Rights Agreement may be waived (either generally or in a
         particular instance and either retroactively or prospectively) only by
         a written instrument duly executed by the Company and the holders of at
         least a majority in aggregate principal amount of the Registrable
         Securities at the time outstanding. Each holder of any Registrable
         Securities at the time or thereafter outstanding shall be bound by any
         amendment or waiver effected pursuant to this Section 9(i), whether or
         not any notice, writing or marking indicating such amendment or waiver
         appears on such Registrable Securities or is delivered to such holder.

                  (j) Counterparts. This agreement may be executed by the
         parties in counterparts, each of which shall be deemed to be an
         original, but all such respective counterparts shall together
         constitute one and the same instrument.

                                       29
<PAGE>

         Agreed to and accepted as of the date referred to above.

                         TOYS "R" US, INC.

                         By:      /s/  Louis Lipschitz
                                ------------------------------------------
                                Name:  Louis Lipschitz
                                Title: Executive Vice President and Chief
                                       Financial Officer

                         J.P. MORGAN SECURITIES INC.
                         BNY CAPITAL MARKETS, INC.
                         CREDIT SUISSE FIRST BOSTON CORPORATION
                         FIRST UNION SECURITIES, INC.
                         BANC ONE CAPITAL MARKETS, INC.
                         FLEET SECURITIES, INC.
                         MIZUHO INTERNATIONAL PLC
                         SALOMON SMITH BARNEY INC.
                         SG COWEN SECURITIES CORPORATION

                         By:      J.P. Morgan Securities Inc.,
                                  acting on behalf of itself and as the
                                  Representative of the Initial Purchasers

                         By:      /s/  Robert Nordlinger
                                ------------------------------------
                                Name:  Robert Nordlinger
                                Title: Vice President

                                       30
<PAGE>

                                                                       Exhibit A

                                TOYS "R" US, INC.
                                 (the "Company")

                         INSTRUCTION TO DTC PARTICIPANTS
                         -------------------------------

                                (Date of Mailing)

                     URGENT - IMMEDIATE ATTENTION REQUESTED

                         DEADLINE FOR RESPONSE: [DATE](1)

         The Depository Trust Company ("DTC") has identified you as a DTC
Participant through which beneficial interests in the Company's 6.875% Notes due
2006 and/or 7.625% Notes due 2011 (the "Securities") are held.

         The Company is in the process of registering the Securities under the
Securities Act of 1933 for resale by the beneficial owners thereof. In order to
have their Securities included in the registration statement, beneficial owners
must complete and return the enclosed Notice of Registration Statement and
Selling Securityholder Questionnaire.

         It is important that beneficial owners of the Securities receive a copy
of the enclosed materials as soon as possible as their rights to have the
Securities included in the registration statement as of the date and time such
registration statement becomes or is declared effective by the Securities and
Exchange Commission depend upon their returning the Notice and Questionnaire by
[DEADLINE FOR RESPONSE]. Please forward a copy of the enclosed documents to each
beneficial owner that holds interests in the Securities through you. If you
require more copies of the enclosed materials or have any questions pertaining
to this matter, please contact Toys "R" Us, Inc. 225 Summit Avenue, Montvale, NJ
07645 (telefax: (201) 802-5877), Attention: Louis Lipschitz, Executive Vice
President and Chief Financial Officer.

--------
(1) Not less than 30 calendar days from date of mailing.

                                      A-1
<PAGE>

                                TOYS "R" US, INC.
                                 (the "Company")

                        Notice of Registration Statement
                                       and
                      Selling Securityholder Questionnaire
                      ------------------------------------

         Reference is hereby made to the Exchange and Registration Rights
Agreement (the "Exchange and Registration Rights Agreement") among the Company
and the Initial Purchasers named therein. Pursuant to the Exchange and
Registration Rights Agreement, the Company has filed with the United States
Securities and Exchange Commission (the "Commission") a registration statement
on Form S-3 (the "Resale Registration Statement") for the registration and
resale under Rule 415 of the Securities Act of 1933, as amended (the "Securities
Act"), of the Company's 6.875% Notes due 2006 and 7.625% Notes due 2011 (the
"Securities"). A copy of the Exchange and Registration Rights Agreement is
attached hereto. All capitalized terms not otherwise defined herein shall have
the meanings ascribed thereto in the Exchange and Registration Rights Agreement.

         Each beneficial owner of Registrable Securities is entitled to have the
Registrable Securities beneficially owned by it included in the Resale
Registration Statement. In order to have Registrable Securities included in the
Resale Registration Statement as of its Effective Time, this Notice of
Registration Statement and Selling Securityholder Questionnaire ("Notice and
Questionnaire") must be completed, executed and delivered to the Company's
counsel at the address set forth herein for receipt ON OR BEFORE [DEADLINE FOR
RESPONSE]. Any beneficial owner of Registrable Securities who does not complete,
execute and return this Notice and Questionnaire by such date (i) will not be
named as a selling securityholder in the Resale Registration Statement and (ii)
may not use the Prospectus forming a part thereof for resales of Registrable
Securities; provided, however, that if any such beneficial owner delivers this
Notice and Questionnaire to the Company after such date, the Company shall take
any action reasonably necessary to cause such beneficial owner to be named as a
selling securityholder in the Resale Registration Statement and to enable such
beneficial owner to use the prospectus forming a part thereof for resales of
Registrable Securities, in each case, as soon as reasonably practicable after
the Effective Time.

         Certain legal consequences arise from being named as a selling
securityholder in the Resale Registration Statement and related Prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Resale Registration
Statement and related Prospectus.

                                      A-2
<PAGE>

                                    ELECTION

         The undersigned holder (the "Selling Securityholder") of Registrable
Securities hereby elects to include in the Resale Registration Statement the
Registrable Securities beneficially owned by it and listed below in Item (3).
The undersigned, by signing and returning this Notice and Questionnaire, agrees
to be bound with respect to such Registrable Securities by the terms and
conditions of this Notice and Questionnaire and the Exchange and Registration
Rights Agreement, including Section 6 of the Exchange and Registration Rights
Agreement, as if the undersigned Selling Securityholder were an original party
thereto.

         Upon any sale of Registrable Securities pursuant to the Resale
Registration Statement, the Selling Securityholder will be required to deliver
to the Company and Trustee the Notice of Transfer set forth as Exhibit B to the
Exchange and Registration Rights Agreement.

         The Selling Securityholder hereby provides the following information to
the Company and represents and warrants that such information is accurate and
complete:

                                      A-3
<PAGE>

                                  QUESTIONNAIRE

(1)       (a)    Full Legal Name of Selling Securityholder:

          (b)    Full Legal Name of Registered Holder (if not the same as in (a)
                 above) of Registrable Securities Listed in Item (3) below:

          (c)    Full Legal Name of DTC Participant (if applicable and if not
                 the same as (b) above) Through Which Registrable Securities
                 Listed in Item (3) below are Held:

(2)              Address for Notices to Selling Securityholder:

                 Telephone:                                           .
                            ------------------------------------------
                 Fax:                                                 .
                      ------------------------------------------------
                 Contact Person:                             .
                                 -----------------------------

(3)              Beneficial Ownership of Securities:

                 Except as set forth below in this Item (3), the undersigned
                 does not beneficially own any Securities.

          (a)    Principal amount of Registrable Securities beneficially owned:

                 CUSIP No(s). of such Registrable Securities:

          (b)    Principal amount of Securities other than Registrable
                 Securities beneficially owned:

                 CUSIP No(s). of such other Securities:

          (c)    Principal amount of Registrable Securities which the
                 undersigned wishes to be included in the Shelf Registration
                 Statement:

                 CUSIP No(s). of such Registrable Securities to be included in
                 the Shelf Registration Statement:

                                      A-4
<PAGE>

(4)              Relationships with the Company:

                 Except as set forth below, neither the Selling Securityholder
                 nor any of its affiliates, officers, directors or principal
                 equity holders (5% or more) has held any position or office or
                 has had any other material relationship with the Company (or
                 any of its predecessors or affiliates) during the past three
                 years.

                 State any exceptions here:

(5)              Plan of Distribution:

                           Except as set forth below, the undersigned Selling
                 Securityholder intends to distribute the Registrable Securities
                 listed above in Item (3) only as follows (if at all): Such
                 Registrable Securities may be sold from time to time directly
                 by the undersigned Selling Securityholder or, alternatively,
                 through underwriters, broker-dealers or agents. Such
                 Registrable Securities may be sold in one or more transactions
                 at fixed prices, at prevailing market prices at the time of
                 sale, at varying prices determined at the time of sale, or at
                 negotiated prices. Such sales may be effected in transactions
                 (which may involve crosses or block transactions) (i) on any
                 national securities exchange or quotation service on which the
                 Registered Securities may be listed or quoted at the time of
                 sale, (ii) in the over-the-counter market, (iii) in
                 transactions otherwise than on such exchanges or services or in
                 the over-the-counter market, or (iv) through the writing of
                 options. In connection with sales of the Registrable Securities
                 or otherwise, the Selling Securityholder may enter into hedging
                 transactions with broker-dealers, which may in turn engage in
                 short sales of the Registrable Securities in the course of
                 hedging the positions they assume. The Selling Securityholder
                 may also sell Registrable Securities short and deliver
                 Registrable Securities to close out such short positions, or
                 loan or pledge Registrable Securities to broker-dealers that in
                 turn may sell such securities.

                 State any exceptions here:

(6)              Whether you are a corporation or not, the following three
                 questions should be answered. If you are a corporation these
                 questions should also be answered with respect to your
                 officers, directors and holders of 5% or more of your equity
                 securities; if you are a partnership such questions should also
                 be answered with respect to your general partners.

          (a)    Except as set forth below in this Item (6)(a), neither the
                 undersigned nor any of its affiliates(2) is a member(3) of the

                                      A-5
<PAGE>
                 National Association of Securities Dealers, Inc. (the "NASD")
                 or a person associated with a member(2) of the NASD.

                 State any exceptions here:

-------------------
(2) NASD Rule 2720 defines the term "affiliate" to mean a company which
controls, is controlled by or is under common control with a member. The term
affiliate is presumed to include the following:

                                   (i) a company will be presumed to control a
                          member if the company beneficially owns 10 percent or
                          more of the outstanding voting securities of a member
                          which is a corporation, or beneficially owns a
                          partnership interest in 10 percent or more of the
                          distributable profits or losses of a member which is a
                          partnership;

                                   (ii) a member will be presumed to control a
                          company if the member and persons associated with the
                          member beneficially own 10 percent or more of the
                          outstanding voting securities of a company which is a
                          corporation, or beneficially own a partnership
                          interest in 10 percent or more of the distributable
                          profits or losses of a company which is a partnership;

                                   (iii) a company will be presumed to be under
                          common control with a member if:

                                            (1) the same natural person or
                                   company controls both the member and company
                                   by beneficially owning 10 percent or more of
                                   the outstanding voting securities of a member
                                   or company which is a corporation, or by
                                   beneficially owning a partnership interest in
                                   10 percent or more of the distributable
                                   profits or losses of a member or company
                                   which is a partnership; or

                                            (2) a person having the power to
                                   direct or cause the direction of the
                                   management or policies of the member or the
                                   company also has the power to direct or cause
                                   the direction of the management or policies
                                   of the other entity in question.

(3) Article I of the NASD's By-Laws defines the term "member" to mean any broker
or dealer admitted to membership in the NASD and defines the term "person
associated with a member" to mean every sole proprietor, partner, officer,
director or branch manager of any member, or any natural person occupying a
similar status or performing similar functions, or any natural person engaged in
the investment banking or securities business who is directly or indirectly
controlling or controlled by such member (for example, any employee), whether or
not such person is registered or exempt from registration with the NASD.

                                      A-6
<PAGE>
                 State any exceptions here:

          (b)    Except as set forth below in this Item (6)(b), the undersigned
                 does not own stock or other securities of any NASD member not
                 purchased in the open market.

                 State any exceptions here:

          (c)    Except as set forth below in this Item (6)(c), the undersigned
                 has not made any outstanding subordinated loans to any NASD
                 member.

         By signing below, the Selling Securityholder acknowledges that it
understands its obligation to comply, and agrees that it will comply, with the
provisions of the Exchange Act and the rules and regulations thereunder,
particularly Regulation M (which governs manipulation, stabilization and trading
activity during a distribution of securities).

         In the event that the Selling Securityholder transfers all or any
portion of the Registrable Securities listed in Item (3) above after the date on
which such information is provided to the Company, the Selling Securityholder
agrees to notify the transferee(s) at the time of the transfer of its rights and
obligations under this Notice and Questionnaire and the Exchange and
Registration Rights Agreement.

         By signing below, the Selling Securityholder consents to the disclosure
of the information contained herein in its answers to Items (1) through (6)
above and the inclusion of such information in the Resale Registration Statement
and related Prospectus. The Selling Securityholder understands that such
information will be relied upon by the Company and any underwriters in an
underwritten offering of such Selling Securityholder's Registrable Securities
listed in Item(3) above, in connection with the preparation of the Resale
Registration Statement and related Prospectus.

         In accordance with the Selling Securityholder's obligation under
Sections 3(d) and (f) of the Exchange and Registration Rights Agreement to
provide such information as may be required by law for inclusion in the Resale
Registration Statement, the Selling Securityholder agrees to promptly notify the
Company of any inaccuracies or changes in the information provided herein which
may occur subsequent to the date hereof at any time while the Resale
Registration Statement remains in effect. All notices hereunder and pursuant to
the Exchange and Registration Rights Agreement shall be made in writing, by
hand-delivery, first-class mail, or air courier guaranteeing overnight delivery
as follows:

                                      A-7
<PAGE>
                           (i)   To the Company:

                                 Toys "R" Us, Inc.
                                 225 Summit Avenue
                                 Montvale, NJ 07645
                                 Attention: Louis Lipschitz, Executive Vice
                                            President & Chief Financial Officer

                           (ii)  With a copy to:

                                  Weil, Gotshal & Manges LLP
                                  767 Fifth Avenue
                                  New York, New York  10153
                                  Attention: Jeremy W. Dickens, Esq.

         Once this Notice and Questionnaire is executed by the Selling
Securityholder and received by the Company's counsel, the terms of this Notice
and Questionnaire, and the representations and warranties contained herein,
shall be binding on, shall inure to the benefit of and shall be enforceable by
the respective successors, heirs, personal representatives, and assigns of the
Company and the Selling Securityholder (with respect to the Registrable
Securities beneficially owned by such Selling Securityholder and listed in Item
(3) above). This Agreement shall be governed in all respects by the laws of the
State of New York.

                                      A-8
<PAGE>
         IN WITNESS WHEREOF, the undersigned, by authority duly given, has
caused this Notice and Questionnaire to be executed and delivered either in
person or by its duly authorized agent.

Dated:  ________________

                                  Selling Securityholder
                                  (Print/type full legal name of beneficial
                                  owner of Registrable Securities)

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

PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON
OR BEFORE [DEADLINE FOR RESPONSE] TO THE COMPANY'S COUNSEL AT:

                                Weil, Gotshal & Manges LLP
                                767 Fifth Avenue
                                New York, New York  10153
                                Attention: Jeremy W. Dickens, Esq.
                                (212) 310-8000

                                      A-9
<PAGE>
                                                                     Exhibit B

              NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT

Attention:  Trust Officer

         Re:      Toys "R" Us, Inc. (the "Company")
                  [6.875% Notes due 2006]
                  [7.625% Notes due 2011]

Dear Sirs:

         Please be advised that _____________________ has transferred
$___________ aggregate principal amount of the above-referenced Notes pursuant
to an effective Registration Statement on Form S-3 (File No. 333-____) filed by
the Company.

         We hereby certify that the above-named beneficial owner of the Notes is
named as a "Selling Holder" in the Prospectus dated ___________, 200_ or in
supplements thereto, and that the aggregate principal amount of the Notes
transferred are the Notes listed in such Prospectus opposite such owner's name.

         Dated:

                                          Very truly yours,

                                          ------------------------------------
                                          (Name)

                                          By:
                                              --------------------------------
                                              (Authorized Signature)<PAGE>

Exhibit 4.1

THE  SECURITIES  ACT OF 1933,  AS  AMENDED  (THE  "ACT"),  OR  APPLICABLE  STATE
SECURITIES LAWS  (COLLECTIVELY,  THE "LAWS").  THE SECURITIES HAVE BEEN ACQUIRED
FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN
THE ABSENCE OF EITHER (I) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE LAWS,  OR (II) AN OPINION OF COUNSEL  PROVIDED  TO THE ISSUER IN FORM,
SUBSTANCE  AND SCOPE  REASONABLY  ACCEPTABLE  TO THE ISSUER TO THE  EFFECT  THAT
REGISTRATION IS NOT REQUIRED UNDER THE LAWS DUE TO AN AVAILABLE  EXCEPTION TO OR
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE LAWS.

                            SALES ONLINE DIRECT, INC.
                           CONVERTIBLE PROMISSORY NOTE

US$1,000,000                                                    November 7, 2001

     SALES ONLINE DIRECT, INC., a Delaware corporation (the "Corporation"),  for
value received,  hereby promises to pay to Leslie Rotman (the  "Creditor"),  and
her successors and assigns,  the principal sum of One Million Dollars and No/100
($1,000,000.00)  (the  "Principal  Sum"),  plus interest  thereon as hereinafter
provided. The Principal Sum and all accrued and unpaid interest shall be payable
two years from the date hereof pursuant to the terms set forth below.

     This Note is issued under and pursuant to the terms and  provisions  of the
Agreement and Plan of Merger,  dated October 23, 2001,  between the  Corporation
and the Creditor (as the same may be amended, supplemented or otherwise modified
from time to time, the "Agreement and Plan of Merger").  This Note is secured by
an  "all  assets"  Security  Agreement  of even  date  herewith  (the  "Security
Agreement")  and the holder hereof is entitled to all of the rights and benefits
provided for thereby or referred to therein.  All capitalized  terms used herein
without definition shall have the meanings ascribed in the Agreement and Plan of
Merger.

     The Principal Sum shall bear interest,  commencing on and as of the date of
such Advance to and including the date such Advance is repaid in full, at a rate
of six percent (6%) per annum.  Interest  shall be due and payable in arrears on
the last Business Day of each March, June, September, and December commencing on
March 31, 2002 and  continuing  until all amounts  owing under the Note has been
paid. Principal and interest payable to the holder of this Note shall be paid in
shares of Common Stock of the  Corporation,  as set forth in the  Agreement  and
Plan of  Merger,  or,  if no such  shares  of Common  Stock  are  available  for
issuance, in cash.

     If any  principal  or interest is not paid in full on the due date  thereof
(taking  into  account any  applicable  grace  periods)  (whether  by  maturity,
prepayment or acceleration), and upon and during the continuance of any Event of
Default  (as  defined in the  Agreement  and Plan of  Merger),  the  outstanding
principal balance of this Note shall bear interest thereafter at a rate equal to
eighteen  percent  (18%) per annum  until  such  payment is paid in full or such
Event  of  Default  is cured  or  waived  in  accordance  with the  terms of the
Agreement and Plan of Merger.

     To the extent  permitted by law, the Corporation  hereby waives  diligence,
presentment, demand, protest and notice of every kind whatsoever. The failure of
the holder  hereof to exercise  any of its rights  hereunder  in any  particular
instance shall not constitute a waiver of the same or of any other right in that
or any subsequent instance.

     This Note  shall be  binding  upon the  Corporation,  its  successors,  and
permitted  assigns,  and  shall  inure  to  the  benefit  of the  Creditor,  its
successors and assigns.

     This Note is a contract  made under and governed by, and shall be construed
and enforced in accordance with, the laws of the Commonwealth of  Massachusetts,
without regard to conflict of laws principles.

<PAGE>

     Conversion Rights and Procedures

     In  addition to the rights set forth  above,  the holder of this Note shall
have the conversion rights set forth below:

     1. Conversion  Right. At the Creditor's  election,  exercisable at any time
and from time to time, all or a portion of the principal  outstanding under this
Note shall be converted,  without the payment of any  additional  consideration,
into the  number of  fully-paid  and  nonassessable  shares  of Common  Stock as
provided in Section 2 below.

     2. Conversion Calculation.

     The number of shares  issuable  upon  conversion of all or a portion of the
principal  outstanding  under  this  Note at any  time  shall be  determined  by
dividing the amount of principal to be converted by the Conversion Price,  where
the Conversion Price equals eighty percent (80%) (the  "Conversion  Percentage")
of the average of the five (5)  Closing Bid Prices for the Common  Stock for the
five (5) consecutive trading days immediately  preceding the Conversion Date (as
herein defined),  as reported on the National  Association of Securities Dealers
OTC Bulletin  Board  Market (or on such other  national  securities  exchange or
market as the Common Stock may trade at such time);  notwithstanding anything in
this  paragraph to the  contrary,  if the  registration  statement  covering the
resale of the shares of Common Stock  issuable upon  conversion of this Note has
not been declared  effective  within 240 days after the date of issuance of this
Note (the "Due Date"), then, upon written notice by the Creditor to the Company,
the  Conversion  Percentage  shall  decrease by two percent  (2%) for each month
after such notice  (that is, each thirty (30) day period  after the notice after
the Due Date,  beginning  on the 30th day of the month in which the  notice  was
first  provided) or partial month in which the said  registration  statement has
not been  declared,  or does  not  remain,  effective  to a  Minimum  Conversion
Percentage of seventy percent (70%); if such registration statement has not been
declared  and does not remain  effective on the date which is one (1) year after
the date of issuance of this Note,  then, upon written notice by Creditor to the
Company, the Conversion  Percentage shall be seventy percent (70%). For purposes
hereof, the term "Closing Bid Price" shall mean for any security as of any date,
the last closing bid price for such security on the OTC Bulletin Board Market as
reported by  Bloomberg,  L.P.,  or, if the OTC Bulletin  Board Market is not the
principal  trading market for such security,  the last closing bid price of such
security  on the  principal  securities  exchange or trading  market  where such
security  is listed or traded as  reported by  Bloomberg,  L.P.,  or, if no last
closing bid or trade price is reported for such security by Bloomberg, L.P., the
closing bid price shall be  determined  by reference to the closing bid price as
reported  on the  principal  trading  market,  and if not so  reported  shall be
determined  from the  average of the bid  prices of any  market  makers for such
security as reported in the "pink  sheets"  published by the National  Quotation
Bureau,  Inc. If the closing bid price cannot be calculated for such security on
such date on any of the foregoing  bases, the closing bid price of such security
on such date shall be the fair market  value as  mutually  agreed by the Company
and the holder of this Note.

     If the Common  Stock  issuable  upon the  conversion  of this Note shall be
changed into the same or  different  number of shares of any class or classes of
stock, whether by capital reorganization,  reclassification,  stock split, stock
dividend, or similar event, then and in each such event, the holder of this Note
shall have the right  thereafter  to convert all or any portion of the principal
amount  outstanding  under this Note into the kind and amount of shares of stock
and other securities and property  receivable upon such capital  reorganization,
reclassification  or other change which such holder would have received had this
Note  been  converted   immediately   prior  to  such  capital   reorganization,
reclassification or other change.

     3. Conversion Procedure.

     The  holder  of this Note may  exercise  its  right to  convert  all or any
portion of the principal  amount  outstanding  under this Note by telecopying an
executed and completed  notice to the  Corporation  and  delivering the original
notice in the form  annexed  hereto as Exhibit A  ("Notice  of  Conversion")  by
express  courier.  Each  business  date  on  which a  Notice  of  Conversion  is
telecopied to and received by the  Corporation in accordance with the provisions
hereof shall be deemed a "Conversion  Date." The Corporation  will transmit,  or
instruct its transfer agent to transmit the certificates  representing shares of
Common Stock  issuable upon  conversion  of this Note to the holder  thereof via
express courier, by electronic transfer or otherwise,  within three (3) business
days after the Corporation has received the facsimile  Notice of Conversion.  In
addition to any other  remedies  which may be  available  to the

<PAGE>

holders of this Note,  except as otherwise  stated in the  Agreement and Plan of
Merger,  in the event that the  Corporation  fails to deliver,  or has failed to
contact its transfer agent within two (2) business days to deliver,  such shares
of Common  Stock  within  such three  business-day  period,  the holder  will be
entitled to revoke the relevant  Notice of  Conversion by delivering a notice to
such effect to the Company  whereupon  the Company and the holder  shall each be
restored to their  respective  positions  immediately  prior to delivery of such
Notice of Conversion.

     No  fractional  shares of Common Stock shall be issued upon  conversion  of
this Note. In lieu of any fractional share to which the holder would be entitled
but for this  paragraph,  the  number of shares of Common  Stock to be  received
shall be rounded to the nearest whole share.

     4. Issuance of Common  Stock.  The issuance of  certificates  for shares of
Common Stock upon  conversion  of this Note will be made  without  charge to the
holder for any issuance tax or other  governmental  charge in respect thereof or
other cost incurred by the  Corporation in connection  with such  conversion and
the related  issuance of Common Stock.  Upon the  conversion  of this Note,  the
Corporation  will take all such actions as are necessary in order to insure that
the shares of Common  Stock  issuable  with respect to such  conversion  will be
validly issued, fully paid and nonassessable, free of preemptive rights and free
from all taxes,  liens,  charges  and  security  interests  with  respect to the
issuance thereof.  Upon receipt of the certificates  evidencing shares of Common
Stock issued upon a conversion  of principal  outstanding  under this Note,  the
holder of this Note shall make provide documentation  indicating the date of the
conversion  and the  amount of  principal  so  converted.  In the event that the
holder elects to convert all of the principal  outstanding  under this Note, the
holder  shall  surrender  this  Note  to the  Corporation  upon  receipt  of the
certificates   representing   the  shares  of  Common  Stock  issued  upon  such
conversion.

     5.  Reorganization.  If at any time or from time to time  there  shall be a
stock  split,   reverse   stock  split,   stock   dividend,   or  other  capital
reorganization  of the Common  Stock  (other  than a  subdivision,  combination,
reclassification  or exchange  of shares  provided  for  above),  or a merger or
consolidation  of the Company with or into another  corporation,  or the sale of
all or substantially all of the Company's properties, stock and/or assets to any
other  person  or  entity  (any of  which  events  is  herein  referred  to as a
"Reorganization"),  then as a part of such  Reorganization,  provision  shall be
made so that the holder of this Note shall  thereafter  be  entitled  to receive
upon conversion of this Note, the number of shares of stock or other  securities
or property of the Company, or of the successor  corporation resulting from such
Reorganization, to which such holder would have been entitled if such holder had
converted this Note immediately prior to such Reorganization.  In any such case,
appropriate  adjustment  shall be made in the  application  of the provisions of
this  Section 5 with  respect to the rights of the holder of this Note after the
Reorganization,  to the end that the  provisions  of this  Section 5  (including
adjustment of the number of shares  issuable upon conversion of this Note) shall
be  applicable  after  that  event in as  nearly  equivalent  a manner as may be
practicable.  Upon the  occurrence  of each  adjustment or  readjustment  of the
Conversion  Price,  the Company,  at its expense,  shall  promptly  compute such
adjustment or  readjustment  in accordance with the terms hereof and prepare and
furnish to the holder of this Note a  certificate  executed by the president and
chief financial  officer (or in the absence of a person  designated as the chief
financial   officer,   by  the  treasurer)  setting  forth  such  adjustment  or
readjustment  and  showing in detail the facts  upon  which such  adjustment  or
readjustment are based.  The Company shall,  upon written request at any time of
the  holder of this  Note,  furnish or cause to be  furnished  to such  holder a
certificate  setting forth (A) the Conversion  Price at the time in effect,  and
(B) the  number  of shares of Common  Stock  and the  amount,  if any,  of other
property which at the time would be received upon the conversion of this Note.

     6.  Reservation of Common Stock. The Company shall at all times reserve and
keep available out of its authorized but unissued shares of Common Stock, solely
for the purpose of effecting  the  conversion  of this Note,  such number of its
shares of Common  Stock as shall  from time to time be  sufficient  or as may be
available to effect the conversion of the maximum principal amount of this Note,
and if at any time the number of authorized but unissued  shares of Common Stock
shall not be  sufficient to effect the  conversion  of all the then  outstanding
principal  amount of this Note,  the Company  shall use its best efforts to take
such  corporate  action  as may be  necessary  to have a  sufficient  number  of
authorized  but  unissued  shares  of  Common  Stock  available  to  effect  the
conversion.

     7. Restriction on Conversion.  Notwithstanding anything to the contrary set
forth  herein,  in no event shall the holder of this Note be entitled to convert
all or any  portion of the  principal  outstanding  under this Note in excess of
such  portion of the  principal  of this Note that,  upon giving  effect to such
conversion,  would  cause  the

<PAGE>

aggregate number of shares of Common Stock beneficially owned by such converting
holder  and its  affiliates  to exceed  4.99% of the  outstanding  shares of the
Common Stock following such conversion.  For purposes of the foregoing  proviso,
the aggregate number of shares of Common Stock  beneficially owned by the holder
and its  affiliates  shall include the number of shares of Common Stock issuable
upon  conversion  of this Note with respect to which the  determination  of such
proviso  is being  made.  Except as set  forth in the  preceding  sentence,  for
purposes of this Section, beneficial ownership shall be calculated in accordance
with  Section  13(d) of the  Securities  Exchange Act of 1934,  as amended.  The
limitations  imposed by this Section on  conversion of this Note shall no longer
apply, and the holder of this Note, upon notice to the Corporation,  may convert
all or any portion of the principal outstanding under this Note, irrespective of
the resulting beneficial ownership of the Corporation's Common Stock, should any
Event of Default, as defined in Paragraph 8, occur.

     8. Events of Default.  The following  shall  constitute an Event of Default
under this Note:  (a) any default  under either the Agreement and Plan of Merger
or the  Security  Agreement;  (b)  The  Corporation  shall  either:  (i)  become
insolvent;  or (ii) admit in writing its inability to pay its debts generally or
as they become due;  (iii) make an  assignment  for the benefit of  creditors or
commence  proceedings for its dissolution;  or (iv) apply for, or consent to the
appointment of, a trustee,  liquidator, or receiver for its or for a substantial
part of its property or business; or (c) A trustee, liquidator or receiver shall
be appointed for the  Corporation  or for a substantial  part of its property or
business  without  the  Corporation's   consent  and  such  appointment  is  not
discharged  within  sixty  (60)  days  after  such   appointment;   or  (d)  Any
governmental  agency or any court of competent  jurisdiction  at the instance of
any  governmental  agency  shall  assume  custody or control of the whole or any
substantial  portion of the properties or assets of the Corporation;  or (e) Any
money judgment, writ or note of attachment, or similar process in excess of Five
Hundred Thousand United States Dollars (US$500,000.00) in the aggregate shall be
entered or filed against the  Corporation or any of its properties or assets and
shall  remain  unpaid,  unvacated,  unbonded or unstayed for a period of fifteen
(15) days or in any  event  later  than  five (5) days  prior to the date of any
proposed  sale  thereunder;  or (f)  Bankruptcy,  reorganization,  insolvency or
liquidation proceedings or other proceedings for relief under any bankruptcy law
or any law for the  relief of debtors  shall be  instituted  by or  against  the
Corporation and, if instituted  against the Corporation,  shall not be dismissed
within sixty (60) days after such  institution or the  Corporation  shall by any
action or answer approve of, consent to, or acquiesce in any such proceedings or
admit the material  allegations of, or default in answering a petition filed in,
any such proceeding.

     9.  Notices.  Any  notices  desired,  required  or  permitted  to be  given
hereunder  shall be delivered  in  accordance  with the notice  provision in the
Agreement and Plan of Merger.

Executed as a sealed instrument.

                                        SALES ONLINE DIRECT, INC.

                                        By:    /s/ Gregory Rotman
                                               ---------------------------------
                                        Name:  Gregory Rotman
                                        Title: President

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