(iii)   provides the Existing Debtors with continuing capacity to potentially reorganize a portion of their U.S. business as a going concern utilizing the Company’s retail stores, distribution centers and/or headquarters facility;

(iv) provides a framework for a restructuring plan to be vetted by Lenders and supported by the Majority Lenders (including the Majority Lenders’ willingness to consider acting as a backstop for the Sale Process described below);

(v)   provides the benefit of input from long-time constructive investors in the Company who have thorough knowledge of the Company’s business, operations and real estate portfolio, and who also have extensive experience in maximizing value for retail real estate credit-related investments and assets; and

(vi) utilizes the Majority Lenders’ willingness to contribute experience and plan process support in order to minimize and manage administrative costs associated with the Chapter 11 Cases (as defined below).

(vii) The Company will, in consultation with the Majority Lenders, work in good faith to make available to the Lenders sufficient information, in accordance with applicable law (including, without limitation, title 11 of the United States Code (the “Bankruptcy Code”)), for Lenders to evaluate the transactions contemplated in this Term Sheet.

The entities comprising the Company shall commence voluntary chapter 11 bankruptcy cases (the “Chapter 11 Cases”) on or before [after March 19], 2018 (such date, the “Petition Date”).

The Company shall not file any motion, application or other pleading (and shall oppose any motion, application or other pleading filed by any other party) requesting relief, and shall not take any actions, that would or are reasonably likely to result (directly or indirectly) in any of the following:

(i)  the Company’s cash or cash equivalents being transferred to any affiliate, including, without limitation, Toys “R” Us-Delaware, Inc. (“Toys Delaware”), Toys “R” Us, Inc. (“Toys Inc.”) and their affiliated debtors and debtors in possession (collectively, the “Existing Debtors”);

(ii)  the Company’s cash or cash equivalents being used to satisfy the claims of any creditor, equityholder or other stakeholder of the Existing Debtors;

(iii)   the Company being liable for any professional fees or other administrative costs and expenses incurred by any of the Existing Debtors or their respective estates, including without limitation, any professional fees incurred by any official or ad hoc creditor committees on account of or for the direct benefit of the Existing Debtors on account of or for the direct benefit of the Existing Debtors; and

(iv) the Company entering into any material affiliate or related-party transaction without: (a) prior to the Restructuring Process Agreement Effective Date (as defined below), consulting with the Majority Lenders, seeking the Majority Lenders’ consent and using best efforts to incorporate reasonable requests from the Majority Lenders related thereto; and (b) following the Restructuring Process Agreement Effective Date, the prior written consent of the Majority Lenders;

(v)   the Company assuming or rejecting (or extending any deadline with respect to the assumption or rejection of) any unexpired leases of nonresidential real property without: (a) prior to the Restructuring Process Agreement Effective Date, consulting with the Majority Lenders, seeking the Majority Lenders’ consent and using best efforts to incorporate reasonable requests from the Majority Lenders related thereto; and (b) following the Restructuring Process Agreement Effective Date, the prior written consent of the Majority Lenders;

(ivvi) the Company being subject to any orders entered or motions or applications pending in the chapter 11 cases of the Existing Debtors, other than the store closing motion, the joint administration motion, the insurance motion, the cash management motion, and the retention orders for all the professionals retained by the Company.which store closing motion must be in form and substance reasonably satisfactory to the Majority Lenders; and

(vii)  the sale, lease, license or use of any assets of the Company outside of the ordinary course of business without: (a) prior to the Restructuring Process Agreement Effective Date, consulting with the Majority Lenders, seeking the Majority Lenders’ consent and using best efforts to incorporate reasonable requests from the Majority Lenders related thereto; and (b) following the Restructuring Process Agreement Effective Date, the prior written consent of the Majority Lenders.

On or as soon as reasonably practicable after the Petition Date, the Company shall use commercially reasonable efforts to file a motion to reject the unexpired leases of nonresidential real property listed on Schedule A to this Term Sheet.¹

Toys Delaware shall continue to pay rent at a rate of 50% of Base Rent (including a payment on account of March rent at the same 50% rate)any past-due rent payments) in full in cash to the Company under the Master Lease (as defined in the Credit Agreement) on the date it becomes due until the later of: (i) the effective date of rejection of such Master Lease; and (ii) such time that Toys Delaware exits the Company’s properties, unless and until the Majority Lenders’ agree otherwise. Toys Delaware shall confirm that it will not have access to, occupancy or enjoyment of the Company’s retail, distribution or headquarters properties beyond the date for which rent was paid to the Company under the Master Lease;, except as otherwise agreed with the Majority Lenders.

The Majority Lenders shall consent to the extension of the deadline to assume or reject the Master Lease under 365(d)(4) of the Bankruptcy Code in connection with this Term Sheet until [JulyApril 30, 2018]². Toys Delaware, the Company and the Majority Lenders will work together in good faith on a flexible plan for Toys Delaware to exit the Company’s properties consistent with the terms of this Term Sheet.

With respect to the Company’s retail, distribution and headquarters properties, the Company and Toys Delaware shall permit a designee of the Majority Lenders to monitor the return of the Company’s properties to their appropriate vacant condition under the Master Lease. Toys Delaware will vacate the Company’s properties and apportion fixtures and other equipment in accordance with the Master Lease and any other governing leases for all properties. The Company, in consultation with the Majority Lenders, shall formulate for Toys Delaware a schedule of fixtures and other equipment that is to remain with the properties.

TheOn the Petition Date, the Company shall seek authority to pay the legal fees and expenses of the Majority Lenders to assume the engagement letter of Akin Gump Strauss Hauer & Feld LLP and one local counsel as part of a restructuring support agreement or a stalking horse appraisal motion.have such assumption order entered within 30 days of the Petition Date.

The Company may seek to retain Kirkland & Ellis, LLP, Kutak Rock LLP, and Lazard Ferres & Co. LLC (“Lazard”) to assist in the sale and/or restructuring of its assets on a standalone basis, provided that the Company shall also retain independent conflicts counsel to review all intercompany matters [law firm TBD].

TheTo maximize the value of real estate assets for the Lenders and other stakeholders of PropCo I, the Company shall retain Kirkland & Ellis, LLP, Klehr Harrison Harvey Branzburg LLP, [Klehr local], Kutak Rock LLP, Alvarez & Marsal, and Lazard Ferres & Co. LLC (“Lazardan independent real estate advisor (the “Real Estate Advisor”) to assist in the sale and/or restructuring of its assets, which advisor shall be acceptable to the Majority Lenders in their sole discretion. The Company shall retain the Real Estate Advisor within 14 days of the Petition Date. The Majority Lenders will assist the advisorsReal Estate Advisor in preparing the optimal marketing and sale process in order to maximize the value of the real estate assets.

TheWithin five (5) days of the Petition Date, the Company will provide the Majority Lenders with a schedule of all chapter 11 advisors and a non-binding estimate of expected professional fees and expenses for the Company.

The Company will consult withand the Majority Lenders regardingwill cooperate in good faith to promptly pursue a consensual restructuring (including but not limited to any sale process) of some or all of the properties of the Company consistent with this Term Sheet (the “PropCo I Restructuring”).

The Company will consult with the Majority Lenders and their advisors throughout this period with respect to the formulation and documentation of the PropCo I Restructuring, including without limitation:

(i)  the Company incurring or making material capital expenditures, other than as set forth in a budget which shall be reasonably acceptable the Majority Lenders (as defined below);

(ii)  the sale, lease, license or use of any assets of the Company outside of the ordinary course of business without the prior written consent of the Majority Lenders.

(iiiii)  the treatment or disposition of the Company’s real properties (including assumptions or rejections related to such properties); and

(iviii) the abandonment of properties pursuant to section 554 of the Bankruptcy Code.

The Company shall negotiate with the Lenders in good faith with respect to the terms of the PropCo I Restructuring, including with respect to restructuring strategy, the Sale Process (as defined below) and the Standalone Plan (as defined below). The Standalone Plan may also serve as a backstop for the Sale Process.

The Company, the Existing Debtors and their advisors shall, prior to the Restructuring Process Agreement Effective Date, consult with the Majority Lenders with respect to the marketing, sale, or participation in the marketing or sale of all or a material part of the Company or any of the real estate assets of the Company and incorporate any reasonable suggestions and comments of the Majority Lenders.

The Standalone Plan and Sale Process

The Standalone Plan

The Company and the Majority Lenders shall negotiate in good faith the terms of a standalone plan of reorganization (the “Standalone Plan”) with respect to the PropCo I Restructuring, subject to due diligence and agreement on terms, documentation, sale procedures and related milestones, which shall be in form and substance acceptable to the Majority Lenders, including without limitation the following:

(i)  the Majority Lenders and the entities comprising the Company shall enter into a restructuring support and process agreement (the “Restructuring Process Agreement,” and the date such agreement becomes effective, the “Restructuring Process Agreement Effective Date”) with respect to the Standalone Plan on or before 4530 days after the Petition Date;

(ii)  the Company shall file the Standalone Plan and related disclosure statement (the “Standalone DS”) with the Bankruptcy Court on or before 45 days after the Petition Date, [concurrently with a motion seeking approval of the Company’s entry into the Restructuring Process Agreement];

(iii)   [the Bankruptcy Court shall enter an order authorizing the Company’s entry into the Restructuring Process Agreement on or before 8055 days after Petition Date];

(iv) the Bankruptcy Court shall enter an order approving the Standalone DS on or before 8055 days after the Petition Date;

(v)   the Bankruptcy Court shall enter an order confirming the Standalone Plan on or before 150 days after the Petition Date; and

(vi) the Standalone Plan shall be consummated on or before 180 days after the Petition Date.

The Standalone Plan will contemplate the conversion of existing debt and unsecured claims to equity, debt, other instruments or a combination thereof, the rejection of uneconomic leases, the abandonment of uneconomic properties, and management and governance provisions to maximize the value of the properties. The Standalone Plan shall also provide for the appointment of a “Plan Administrator,”selected by the Company in consultation with theto be agreed by the Majority Lenders and the Company, to manage claims reconciliation and distributions after consummation of the Standalone Plan. For the avoidance of doubt, all terms of the Standalone Plan are subject to negotiation and nothing in this Term Sheet shall not be binding on the Company or the Majority Lenders.

The Sale Process

Concurrently with the prosecution of the Standalone Plan outlined above, the Company shall use commercially reasonable efforts to pursue a sale of its real estate assets pursuant to section 363 of the Bankruptcy Code to determine if some or all of the Company’s properties should be sold to third parties rather than vested in the reorganized Company under the Standalone Plan (the “Sale Process”), subject to due diligence and agreement on terms, documentation, sale procedures and related milestones, including without limitation the following:

(i)  Within approximately 30 days of the Petition Date, the Company shall file a motion for approval of bidding procedures with respect to the Sale Process in form and substance reasonably acceptable to the Majority Lenders;

(ii)  the Bankruptcy Court shall enter an order approving the bidding procedures on or before approximately 55 days after the Petition Date (the “Bid Procedures Order”), which order shall be in form and substance reasonably acceptable to the Majority Lenders;

(iii)   the Company, with the assistance of the Real Estate Advisor, shall market their properties for sale and conduct auctions, in consultation with the Majority Lenders, for the Company’s properties in accordance with the agreed bidding procedures for a period of approximately 60 days following the entry of the Bid Procedures Order;³ and

(iv) the Sale Process with respect to the Company’s assets shall be completed on or before approximately 130 days after the Petition Date.

Subject to disclosure to, and prior review by, the Majority Lenders in advance of execution of the Restructuring Process Agreement, the Existing Debtors shall continue to provide the Company with all shared services, employees, suppliers/vendors, business systems and data it presently provides to the Company in the ordinary course of business at the lesser of: (i) current terms; and (ii) cost; provided, that the Existing Debtors and the Company shall not expand the existing scope of such services without the prior written consent of the Majority Lenders. The Existing Debtors will also provide any assistance reasonably requested by the Company in connection with its preparation, consummation and transition for the PropCo I Restructuring.Notwithstanding anything to the contrary herein, nothing in this Term Sheet or any definitive documents shall require the Company or Existing Debtors, nor any of the Company or Existing Debtors’ directors, managers, and officers, to take or refrain from taking any action to the extent such person or persons determines based on advice of counsel that taking such action, or refraining from taking such action, as applicable, would be inconsistent with applicable law or its fiduciary obligations under applicable law.

Any definitive documents shall provide that such agreements or undertakings, as applicable, with respect to the Standalone Plan shall be terminable by the Company or any of the Existing Debtors where its board of directors or similar governing body, including with respect to each subsidiary, determines in good faith after consulting with counsel that continued performance would be inconsistent with its fiduciary duties under applicable law.