Fill and Sign the Charles P Lazarus Toys R Us Founder Dies at 94 the Form

OFFICERS AND EMPLOYEES§15.204 APPROVAL OF AMENDMENT TO THE EMPLOYMENT AGREEMENT OF CHARLES LAZARUS Mr. Charles Lazarus is presently employed under an employment agreement dated March 14, 1978, as amended, and his employment term thereunder expires on February 1, 1987. On March 6, 1984, the Board of Directors of the Company approved an amendment (the “Amendment”) to the employment agreement subject to approval of stockholders. Mr. Lazarus currently serves the Company as Chairman of the Board and Chief Executive Officer and has served the Company in such capacity since 1978, the year the Company emerged from a reorganization proceeding. Mr. Lazarus founded Toys “R” Us in 1948. The Board of Directors believes that Mr. Lazarus has played the key role in the growth of the Company to it s current position as the largest toy specialty retail chain in the United States, and has approved the Amendment to assure the continued services of Mr. Lazarus beyond the expiration of his current employment agreement. Under the Amendment, Mr. Lazarus’ term of full-time employment wi ll be extended an additional seven years and will expire on January 31, 1994. The compensati on for full-time employment under the Amendment will not change from that in his present agreement: a base salary of $315,000 and incentive compensation equal to 1% of the Compa ny’s pre-tax profits in excess of $18,000,000. For the fiscal year ended January 29, 1984, Mr. Lazarus earned a total of $1,887,480 (including the base salary). The Amendment provides that Mr. Lazarus will have the right at any time upon six months’ notice to the Company t o terminate his full-time employment as Chief Executive Officer of the Company and become a consultant to the Company for a five-year period. Mr. Lazarus has advised the Board of Directors that he strongl y desires to remain as the Chief Executive Officer for the full extended 10 year term of his agreement, provided he can continue to devote his full time and energies to the Com pany, and that at the present time he knows no reason why he would be unable to do so. If Mr. Laza rus becomes a consultant, he would be obligated to render such consulting services as may be requested by the Board of Directors at such times as may be mutually convenient for the Company and Mr. Lazarus. Mr. Lazarus would be entitled to receive as compensation during t he five-year consulting period the following amounts: for the first year an amount equal to his t otal compensation (base salary and incentive compensation) received for the full fiscal ye ar prior to his becoming a consultant and for the second through fifth years, 90%, 80%, 70% and 60% of such amount, respectively (the “Consulting Period Compensation”). Under Mr. Lazarus’ existing employment agreement, in the event of a Control Terminati on (as defined on page 7), Mr. Lazarus is entitled to receive a lump sum payment from the Company equal to the compensation payable to him with respect to the last compl ete fiscal year of the Company preceding his termination, and if the Company elected to have Mr. La zarus consult, he would be obligated to do so and would receive $125,000 a year until January 31, 1987. Under the Amendment, in the event of a Control Termination, (i) Mr. Lazarus would continue to be entitled to the lump sum payment, (ii) if the Company electe d to have Mr. Lazarus consult, he would be obligated to do so and would be entitled to receive the Consulting Period Compensation for the next five years, and (iii) if the Company did not elect to have Mr. Lazarus consult, he would still be entitled to the Consulting Period Compensation. Under his exist ing agreement Mr. Lazarus also is entitled to receive a retirement/death benefit of $200,000 a year for five years, which under the Amendment would commence at the later of the termina tion of Mr. Lazarus’ full-time or consulting period employment. Also, the disability benefits of $157,500 a year which Mr. Lazarus would receive under his existing agreement would apply for the extended term of full-time employment as well as during the consulting period. The employee benefits Mr. Lazarus is presently entitled to receive, to the extent consistent with the terms of the plans, would also be provided during the consulting period. The registration rights Mr. Lazarus has under his existing agreement will be extended from 1990 to 1999, and if the additional grant of options to Mr. Lazarus is approved by stockholders, the registration rights will include the shares issuable under such options. During the term of Mr. Lazarus’ employment, either full time or as a consultant, and for three years thereafter, he will be obligated to refrain from competing, either directly or indirectly, with any business c arried on by the Company at the time he ceases being employed. See the discussion on pages 6 and 7 for additional information on Mr. Lazarus’ existing employment agreement and Proposal 3 for additional information on stock options granted to Mr. Lazarus, subject to stockholder approval, and additional information on outstanding stock options held by him. The Board of Directors believes that providing for the continued services of Mr. Lazarus under the terms of the Amendment is in the best interests of the Company and its st ockholders, and recommends approval. The affirmative vote of a majority of the shares voting at the meeting is required for approval.