January 12, 1999


Steven J. Schoch
24445 Valley Street 
Newhall, California 91321


Dear Candidate:

eToys Inc. (the "Company") is pleased to offer you employment on the 
following terms:

POSITION. You will serve in a full-time capacity as Senior Vice President and 
Chief Financial Officer of the Company. You will report to the Company's 
Chief Executive Officer. You will be encouraged to participate in meetings of 
the Company's Board of Directors (the "Board") at the discretion of the 
Company's Chief Executive Officer. Your start date will be January 31st, 1999.

CASH COMPENSATION. You will be paid a monthly salary of not less than 
$10,416.67, which is equivalent to $125,000 on an annual basis, payable in 
monthly installments in accordance with the Company's standard payroll 
practices for salaried employees. In addition, you will receive a base 
signing bonus of $25,000 payable within your first week of employment. In 
addition, in the event that your previous employer does not pay you your 
expected $200,000 cash bonus for fiscal '98 due to your departure, you will 
be paid an additional signing bonus of up to 50% of your lost fiscal '98 cash 
bonus, but in no case greater than $100,000. In the event your employer does 
pay you your fiscal '98 cash bonus, you will not receive an additional 
signing bonus. You will vest with respect to your base and additional signing 
bonus in 12 equal monthly installments for each of the 12 months during which 
you continue to be employed by the Company following the commencement of your 
employment. If the Company terminates your employment for any reason, with or 
without cause (see definition of "cause" below) prior to the end of this 12 
month period, or if you end your employment with the Company, you will be 
obligated to refund to the Company the unvested portion of your base and 
additional signing bonus. If the Company terminates your employment without 
cause within the first 12 months of your employment, you will receive a 
severance payment of $93,750, which is equivalent to 9 months of salary. Your 
cash compensation will be reviewed annually by the Board. 

STOCK OPTIONS. In connection with the commencement of your employment, the 
Company will recommend that the Board of Directors grant you stock options to 
purchase 250,000 shares of the Company's Common Stock. The exercise price 
will be equal to the fair market value of the Common Stock on the date of 
grant. The option will be an incentive stock option to the maximum extent 
permitted by applicable tax law and will be subject to the terms and 
conditions applicable to options granted under the Company's 1997 Stock Plan, 
as described in that Plan and the applicable stock option agreement 
(including customary transfer and "lock-up" restrictions). The option will be 
immediately exercisable, but the purchased shares will be subject to 
repurchase by the Company at the exercise price in the event that your 
employment terminates before you vest in the shares. You will vest in 1/4th 
of the option shares after twelve months of employment, and the balance will 
vest in monthly installments over the next 36 months of employment, as 
described in the applicable stock option agreement. If you are terminated by 
the

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Company without Cause within the first 6 months of employment, you will vest 
a number of shares equivalent to 1/8th of the option shares. If you are 
terminated by the Company without Cause within the first 6-12 months of 
employment, you will vest a number of shares equivalent to 1/48th of the 
option shares for each month of employment. If there is a change of control 
of the Company during the eighteen month period immediately following the 
date of the commencement of your employment with the Company, you will vest 
in an additional number of unvested option shares equal to the number in 
which you would have vested if your employment had continued through the 
expiration of such eighteen month period.

"Cause" means (a) willful and repeated failure to comply with the lawful 
directions of the Board, (b) gross negligence or willful misconduct in the 
performance of your duties to the Company, (c) commission of any act of fraud 
against, or the misappropriation of material property belonging to, the 
Company or (d) conviction of a crime that is materially injurious to the 
business or reputation of the Company, in each case as determined in good 
faith by the Board.

BENEFITS.
a. INSURANCE BENEFITS. The Company will provide you with standard medical and 
dental insurance benefits. In addition, the Company currently indemnifies all 
officers and directors to the maximum extent permitted by law, and you will 
be requested to enter into the Company's standard form of Indemnification 
Agreement giving you such protection. Pursuant to the Indemnification 
Agreement, the Company will agree to advance any expenses for which 
indemnification is available to the extent allowed by applicable law.
b. VACATION. You will be entitled to 2 weeks paid vacation per year.

PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. Like all Company employees, 
you will be required, as a condition to your employment with the Company, to 
sign the Company's standard Employee Information and Inventions Agreement, a 
copy of which is attached hereto as Exhibit A.
                        
PERIOD OF EMPLOYMENT. Your employment with the Company will be "at will", 
meaning that either you or the Company will be entitled to terminate your 
employment at any time and for any reason, with or without cause. Any 
contrary representations which may have been made to you are superseded by 
this offer. This is the full and complete agreement between you and the 
Company on this term. Although your job duties, title, compensation and 
benefits, as well as the Company's personnel policies and procedures, may 
change from time to time, the "at will" nature of your employment may only be 
changed in an express written agreement signed by you and a duly authorized 
officer of the Company.

PROOF OF RIGHT TO WORK. For purposes of federal immigration law, you will be 
required to provide to the Company documentary evidence of your identity and 
eligibility for employment in the United States. Such documentation must be 
provided to us within three (3) business days of your date of hire, or our 
employment relationship with you may be terminated and, in such event, you 
would not be entitled to the severance payment set forth in the preceding 
paragraph.

WITHHOLDING TAXES. All forms of cash compensation referred to in this letter 
are subject to reduction to reflect applicable withholding and payroll taxes.

CONFIDENTIALITY OF TERMS. You agree to follow the Company's strict policy 
that employees must not disclose, either directly or indirectly, any 
information, including any of the terms of this agreement, regarding salary, 
bonuses, or stock purchase or option allocations to any person, including 
other employees of the Company; provided, however, that you may discuss such 
terms with members of your immediate family and any legal, tax or accounting 
specialists who provide you with individual legal, tax or accounting advice.

ENTIRE AGREEMENT. This letter and the Exhibit attached hereto contain all of 
the terms of your employment with the Company and supersede any prior 
understandings or agreements, whether oral or written, between you and the 
Company. 


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We hope that you find the foregoing terms acceptable. You may indicate your 
agreement with these terms and accept this offer by signing and dating both 
the enclosed duplicate original of this letter and the enclosed Employee 
Information and Inventions Agreement and returning them to me. This offer of 
employment is contingent upon the satisfactory completion of reference checks 
regarding your past employment. As required by law, your employment with the 
Company is also contingent upon your providing legal proof of your identity 
and authorization to work in the United States.

We look forward to your decision to join eToys Inc. no later than January 
20th, 1999 at 5 p.m. Pacific Standard Time.


Very truly yours,

/s/ Toby Lenk

By:
Toby Lenk
Chief Executive Officer
eToys Inc.


I have read and accept this employment offer:

/s/ Steven J. Schoch

Signature of Candidate
Dated January 10, 1999


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