December 30, 1999



Mr. John T. O'Neill
28 Narragansett Bay Avenue
Warwick, RI  02889

Dear John:    

In connection with your retirement from employment with Hasbro, 
Inc. (the "Company"), on December 31, 1999, the "Company" will 
pay you the basic early retirement benefits described in Section 
2 of the attached "Description of Early Retirement Benefits" if 
you do not sign and return this letter postmarked by February 22, 
2000.

If you timely sign and return this letter, the Company will pay 
and provide you the enhanced early retirement benefits subject to 
the terms and conditions outlined in Section 1 of the attached 
"Description of Early Retirement Benefits".   By signing and 
returning this letter you will be agreeing to the terms and 
conditions set forth in the numbered paragraphs below, including 
the release of claims set forth in paragraph 2.  You should 
consult with your own attorney before signing this letter.

If after reviewing this letter with your attorney, you find the 
terms and conditions are satisfactory to you, you should sign and 
return this letter to Bob Carniaux, Sr. Vice President, Human 
Resources in the enclosed Airborne  Express return envelope 
postmarked by February 22, 2000.   If you sign this letter, you 
may change your mind and revoke your agreement during the seven 
(7) day period after you have signed it.  If you do not so 
revoke, this letter will become a binding agreement between you 
and the Company upon the expiration of the seven (7) day 
revocation period.

The following numbered paragraphs set forth the terms and 
conditions which will apply if you timely sign and return this 
letter and do not revoke it within the seven (7) day revocation 
period:

  1.  Description of Early Retirement Benefits.  The early 
retirement benefits to be paid to you if you timely sign and 
return this letter are as described in Section 1 of the attached 
"Description of Early Retirement Benefits".  The payment of these 
benefits is subject to the terms of this letter.  You acknowledge 
and agree that the benefits payable to you if you timely sign and 
return this letter are more than the Company would be obligated 
to pay or provide to you if you did not sign and return this 
letter.

  2.  Release.  You hereby fully, forever, irrevocably and 
unconditionally release, remise and discharge the Company, and 
any subsidiary or affiliated organization of the Company or their 
current or former officers, directors, stockholders, corporate 
affiliates, attorneys, agents and employees (the "Released 
Parties") from any and all claims, charges, complaints, demands, 
actions, causes of action, suits, rights, debts, sums of money, 
costs, accounts, reckonings, covenants, contracts, agreements, 
promises, doings, omissions, damages, executions, obligations, 
liabilities, and expenses (including attorneys' fees and costs), 
of every kind and nature, known or unknown, which you ever had or 
now have against the Released Parties, including, but not limited 
to, all claims arising out of your employment, all claims arising 
out of the retirement of your employment, all claims arising from 
any failure to re-employ you, all claims of race, sex, national 
origin, handicap, religious, sexual preference, benefit and age 
discrimination, all employment discrimination claims under Title 
VII of the Civil Rights Act of 1964, 42 U.S.C. Sec. 2000 et seq., 
the Age Discrimination in Employment Act, 29 U.S.C. Sec. 621 et 

JOHN T. O'NEILL             
December 30, 1999  
Page 2
 
 seq., the Americans with Disabilities Act of 1990, 29 U.S.C. 
Sec. 12101 et seq., the Employee Retirement Income Security Act 
of 1974, 29 U.S.C. Sec. 1001 et seq., and similar state or local 
statutes, wrongful discharge claims, common law tort, defamation, 
breach of contract and other common law claims, and any claims 
under any other federal, state or local statutes or ordinances 
not expressly referenced above; provided, that nothing contained 
herein will be construed to release your rights, as a former 
employee, officer and director of the Company and various of its 
divisions and subsidiaries, to indemnification under applicable 
by-laws and Company policies, or to your rights to vested 
benefits under Company-sponsored employee benefits plans.

  3.  Covenant Not To Sue.  You represent and warrant that you 
have not filed any complaints, charges, or claims for relief 
against the Released Parties.  You further agree not to bring any 
complaints, charges or claims against the Released Parties with 
respect to any matters arising out of your employment with or 
retirement from employment with the Company.

  4.  Proprietary Information.  You acknowledge and reaffirm your 
representations and obligations as set forth in the Invention, 
Assignment and Proprietary Information Agreement which you 
previously signed in connection with your employment with the 
Company.

  5.  Legal Expenses.  The Company agrees to pay reasonable and 
documented legal expenses, up to a maximum of fifteen thousand 
dollars ($15,000), incurred by you in connection with drafting 
this Letter Agreement and related documents. 

  6.  Nature of Agreement.  You and the Company understand and 
agree that this letter agreement is a early retirement and 
settlement agreement and does not constitute an admission of 
liability or wrongdoing on the part of you, the Company, or any 
other person.

  7.  Amendment.  This letter agreement shall be binding upon the 
parties and may not be modified in any manner, except by an 
instrument in writing of concurrent or subsequent date signed by 
a duly authorized representative of the parties hereto.  This 
agreement is binding upon and shall inure to the benefit of the 
parties and their respective agents, assigns, heirs, executors, 
successors and administrators.  No delay or omission by the 
Company in exercising any right under this agreement shall 
operate as a waiver of that or any other right.  A waiver or 
consent given by the Company on any one occasion shall be 
effective only in that instance and shall not be construed as a 
bar or waiver of any right on any other occasion.
 
  8.  Validity.  Should any provision of this letter agreement  
be declared or be determined by any court of competent 
jurisdiction to be illegal or invalid, the validity of the 
remaining parts, terms, or provisions shall not be affected 
thereby and said illegal and invalid part, term or provision 
shall be deemed not to be a part of this agreement.
 
 
 JOHN T. O'NEILL             
 December 30, 1999  
 Page 3
 
  9.  Confidentiality.  You understand and agree that the terms 
and contents of this letter agreement, and the contents of the 
negotiations and discussions resulting in this agreement, shall 
be maintained as confidential by you and your agents and 
representatives, and any dispute resolved by this agreement shall 
also remain confidential, and none of the above shall be 
disclosed except to the extent required by federal or state law 
or as otherwise agreed to in writing by an officer of the 
Company; provided, that you shall not be under any restraint with 
respect to disclosure of your continuing obligations to the 
Company under Section 4 and 13 hereof.

  10.  Entire Agreement and Applicable Law.  This letter 
agreement contains and constitutes the entire understanding and 
agreement between the parties hereto with respect to your early 
retirement benefits and settlement of claims against the Company 
and cancels all previous oral and written negotiations, 
agreements, commitments, and writings in connection therewith.  
This agreement shall be governed by the laws of the State of 
Rhode Island to the extent not preempted by federal law.

  11.  Acknowledgments.  You acknowledge that you have been given 
at least twenty-one (21) days to consider this letter agreement 
and that the Company advised you to consult with any attorney of 
your own choosing prior to signing this letter.  You may revoke 
this agreement for a period of seven (7) days after signing this 
letter, and the agreement shall not be effective or enforceable 
until the expiration of this seven (7) day revocation period.  
Additionally, you will receive another seven (7) day revocation 
period if the Company's Compensation and Stock Option Committee 
fails to approve the items described in Section 1(j) of the 
attached Description of Early Retirement Benefits, said seven (7) 
days to run from receipt by you of written notice of the 
Compensation and Stock Option Committee's decision.

  12.  Voluntary Assent.  You affirm that no other promises or 
agreements of any kind have been made to or with you by any 
person or entity whatsoever to cause you to sign this letter 
agreement, and that you fully understand the meaning and intent 
of this agreement.  You state and represent that you have had an 
opportunity to fully discuss	and review the terms of this 
agreement with an attorney.  You further state and represent that 
you have carefully read this letter, understand the contents 
herein, freely and voluntarily assent to all of the terms and 
conditions hereof, and sign your name of your own free act.

  13.  Covenant Not to Compete.  
    (a).  You agree that you will not, without written consent of 
the Company, at any time during which Early Retirement Benefits 
are payable under this letter agreement and for a period of two 
years from the date Early Retirement Benefits cease under this 
letter agreement, directly or indirectly, own, manage, operate, 
join, control or participate in the ownership, management, 
operation or control of, render services or advice to, or be 
connected with, as partner, stockholder, director, officer, 
agent, employee, consultant or otherwise, any business, firm or 
corporation which competes with the Company in any country or 
line of business in which the Company is engaged.

    (b).  You agree that during the period in which Early 
Retirement Benefits are paid and thereafter for a period of two 
years, you will not interfere with any relationship, contractual 
or otherwise, between the Company and any other party, including; 
without limitation, any customer, supplier, distributor, lessor 
or lessee, licenser or licensee, commercial or investment banker.

    (c).  You understand, acknowledge and agree that the 
provisions of this Section 12 shall survive the termination of 
this letter agreement.


 JOHN T. O'NEILL             
 December 30, 1999  
Page 4



If you have any questions about the matters covered in this 
letter, please call Bob Carniaux, Sr. Vice President, Human 
Resources at (401) 727-5654.

                                  Very truly yours,


                                  /s/ Alan G. Hassenfeld

                                  Alan G. Hassenfeld
                                  Chairman & CEO
                                  Hasbro, Inc.

JOHN T. O'NEILL             
December 30, 1999  
Page 5



I hereby agree to the terms and conditions set forth above and in 
the attached Description of Early Retirement Benefits.  I intend 
that this letter will become a binding agreement between me and 
the Company if I do not revoke my acceptance within seven (7) 
days.


                                            /s/ John T. O'Neill
                                  Signature ---------------------
                                                (Employee's Name)
       February 18, 2000
Date:  --------------------




To be returned in enclosed envelope by February 22, 2000. 

                                  HASBRO, INC.

                     DESCRIPTION OF EARLY RETIREMENT BENEFITS



Name of Employee: JOHN T. O'NEILL             

Date of Offer: December 30, 1999  

Retirement Date:  December 31, 1999  

If you timely sign and return the attached letter and it becomes 
a binding contract between you and the Company, the Company will 
pay you the enhanced early retirement subject to the terms and 
conditions outlined in Section 1 below, the terms and conditions 
contained in the attached letter and description.

If you do not timely sign and return the attached letter, the 
Company will pay you the basic early retirement benefits 
described in Section 2 below, subject to the terms and conditions 
contained in this description and the Company's Early Retirement 
Benefits Plan for Salaried Employees.

Section 1.   Enhanced Early Retirement Benefits.  If you timely 
sign and return the attached letter and it becomes a binding 
contract between you and the Company, you will be entitled to an 
enhanced program of early retirement benefits consisting of the 
following.  These enhanced early retirement payments are offered 
in consideration of your agreement to retire early:

  (a)  early retirement payment in the amount of $960,000 paid in 
five installments as follows: first payment by February 28, 2000 
in the amount of $135,000, three quarterly payments in the amount 
of $200,000 paid on March 31, 2000, June 30, 2000, September 30, 
2000, and a final payment on January 3, 2001 in the amount of 
$225,000.

  (b)  early retirement pay at the base rate of $20,280.78 bi-
weekly for 43 pay periods beginning January 21, 2000 and ending 
on August 31, 2001, (the period between December 31, 1999 and 
August 31, 2001 being sometimes hereinafter referred to as the 
"early retirement period").  In addition, since your first week 
of early retirement will be during the middle of a bi-weekly pay 
period, your first week of early retirement pay (January 3, 2000 
- January 7, 2000) will be for $10,140.39 and will be combined 
with your last week of employment pay in the amount of $10,140.39 
for a total of $20,280.78 which will be paid on January 7, 2000.  

  (c)  an enhanced deferred compensation program where you will 
defer 40% of your early retirement pay in the amount of $8,112.31 
bi-weekly on a pre-tax basis for 43 pay periods and one pay 
period of 40% of your first week's retirement pay in the amount 
of $4,056.16, which will be made on January 7, 2000 and 
thereafter in bi-weekly deferrals (the "Deferrals"). The 
Deferrals will constitute a separate deferred compensation 
program ("Program") for you in consideration of your early 
retirement, the terms of which shall be consistent with the terms 
of the Hasbro, Inc., Nonqualified Deferred Compensation plan (the 
"DCP"), in which you will continue to participate including, 
without limitation, the beneficiary designation and trust 
provisions, except to the extent inconsistent with the following 
terms: For purposes of your Program, the Deferrals will be deemed 
allocated to the same funds and in the same percentages as your 
election under the DCP and your distributions will be made in ten 
annual installments in a manner consistent with the DCP, but not 
commencing until the month next following the termination of your 
early retirement payments described above;

  (d)  an award equal to your target incentive (i.e. $290,015) 
payable as a management bonus for 1999 when bonuses are paid by 
the Company in Q1 of 2000;


JOHN T. O'NEILL             
December 30, 1999  

             DESCRIPTION OF EARLY RETIREMENT BENEFITS (CONTINUED)

                                    - 2 -

  (e)  continuance of your current level of basic, supplemental 
and dependent life insurance with the Company and you sharing the 
cost for this coverage on the same basis as the cost is shared 
between the Company and similarly situated active employees 
during the early retirement period.  Long-term disability benefit 
ends on December 31, 1999;

  (f)  continuance of your current medical and dental coverage 
during the early retirement period, with the Company and you 
sharing the cost for this coverage on the same basis as the cost 
is shared between the Company and similarly situated active 
employees during the same period, and with your and your 
dependents respective rights to continued coverage (or conversion 
to an individual policy) at your own expense where available 
beginning when the extended coverage under this item ends and 
continuing for the maximum period permitted by the law known as 
COBRA notwithstanding the continuation of medical and dental 
coverage during the early retirement period;

  (g)  continuance of your leased Company executive automobile 
through the end of the current lease (i.e. January 2002);

  (h)  continuance of use of your personal computer during the 
early retirement period provided that you will be responsible for 
all operating and maintenance costs;

  (i)  continuance of reimbursement for reasonable expenses for 
personal executive income tax filing preparation and advising 
services for tax years 1999 and 2000;

  (j)  the vesting of all previously granted unvested stock 
options will be accelerated to  December 31, 1999.  You will be 
granted an extended exercise period expiring 36 months after the 
end of the early retirement period for all your outstanding 
premium priced stock options.  You will be granted an extended 
exercise period of 12 months after the end of the early 
retirement period for: (A) all regular stock options granted in 
and after 1997, and (B) 22,500 regular stock options granted on 
December 21, 1993.  All other regular stock options held by you 
will be canceled.  All of the terms in this section 1 (j) are 
subject to the approval of the Compensation and Stock Option 
Committee of the Board of Directors of Hasbro, Inc.

  (k)  during the early retirement period, your right to 
reimbursement for income tax service expenses, executive 
automobile, personal computer, continuance of basic, supplemental 
and dependent life insurance coverage partially at Company 
expense, continuance of medical and dental coverage partially at 
Company expense each shall end to the extent that you are 
provided with similar coverage(s) or benefit(s) through such new 
employment.


Section 2.   Basic Benefits.  If you do not timely sign and 
return the attached letter, you will be entitled to a 
program of early retirement benefits consisting of:

  (a)  early retirement pay at your base rate of pay (as in 
effect immediately before termination and exclusive of any 
bonuses, commissions, overtime pay, or other extra forms of 
compensation) for three (3) weeks;

  (b)  a lump sum payment to be made at the end of the period of 
early retirement pay for your unused vacation that has been 
granted for use in the current year;


JOHN T. O'NEILL             
December 30, 1999 

             DESCRIPTION OF EARLY RETIREMENT BENEFITS (CONTINUED)

                                    - 3 -

  (c)  continuance of your current level of basic, supplemental 
and dependent life insurance with the company and you sharing the 
cost for this coverage on the same basis as the cost is shared 
between the company and similarly situated active employees 
during the period of early retirement pay;

  (d)  continuance of your current medical and dental coverage 
during the period of early retirement pay, with the Company and 
you sharing the cost for this coverage on the same basis as the 
cost is shared between the Company and similarly situated active 
employees during the same period, and with your and your 
dependents rights to continued coverage (or conversion to an 
individual policy) at your own expense where available beginning 
when the extended coverage under this item ends and continuing 
for the maximum period permitted by the law known as COBRA 
notwithstanding the continuation of medical and dental coverage 
during the salary continuation period.

  (e)  If you begin new employment during the period of early 
retirement pay, your right to early retirement pay and 
continuance of basic, supplemental and dependent life insurance 
coverage and of medical and dental coverage partially at Company 
expense shall end when the new employment begins and you shall be 
obligated to repay to the Company any early retirement pay paid 
to you and any premiums paid by the Company for basic life 
insurance coverage and the Company's share of the cost for 
medical and dental coverage paid after you begin the new 
employment.



Section 3.  Other Provisions.

  (a)  You will be entitled to any benefits payable after or on 
account of retirement from employment under any employee pension 
or welfare benefit plans, stock option 	plans, or other plans or 
programs or policies of the Company in accordance with their 
terms and conditions, unless otherwise stated above in Section 1.  
You also will receive a profit sharing payment for fiscal year 
1999 on the same basis as other similarly-situated senior 
executives.  Further, for the purpose of computing your pension 
benefit, you will be credited with 1.30435 years of Credited 
Service for each 1.0 year of Credited Service actually earned 
under the Pension Plan. The benefits attributed to the additional 
service credit shall be payable by the Company and not from the 
Hasbro, Inc. Pension Plan or the Hasbro, Inc. Supplemental 
Benefit Retirement Plan, but shall be included and secured under 
any trust established with respect to the Hasbro, Inc., 
Supplemental Benefit Retirement Plan, on the same terms and 
subject to the same conditions as benefits under the Hasbro, Inc. 
Supplemental Benefits Retirement Plan;

  (b)  The Company may withhold from any payment described 
herein:

    (1)  any federal, state, or local income or payroll taxes 
required by law to be withheld with respect to such payment;

    (2)  such sum as the Company may reasonably estimate is 
necessary to cover any taxes for which the Company may be liable 
and which may be assessed with regard to such payment; and


JOHN T. O'NEILL             
December 30, 1999 

             DESCRIPTION OF EARLY RETIREMENT BENEFITS (CONTINUED)

                                    - 4 -

    (3)  such other amounts as appropriately may be withheld 
under the Company's payroll policies and procedures from time to 
time in effect.

  (c)  The early retirement benefits described herein are the 
maximum benefits that the Company will pay.  To the extent that 
the Company owes you any amounts in the nature of early 
retirement benefits under any other program, policy or plan of 
the Company, or to the extent that any federal, state or local 
law, including, without limitation, so-called "plant closing" 
laws, requires the Company to give advance notice or make a 
payment of any kind to you because of your involuntary 
termination due to a layoff, reduction 	in force, plant or 
facility closing, sale of business, or similar event, the 
benefits provided hereunder or under the other arrangement shall 
either be reduced or eliminated to avoid any duplication of 
payment;

  (d)  In the event of your death during the early retirement 
period, the early retirement pay shall cease at death.