Exhibit 10.64

 

FIRST AMENDMENT

TO

SECURITIES PURCHASE AGREEMENT

 

THIS FIRST AMENDMENT TO SECURITIES PURCHASE AGREEMENT (this “First Amendment”)
is entered into and effective as of April 21, 2003 by and among, on the one
hand, FAO, Inc., a Delaware corporation (“Company”), and certain purchasers (the
“Purchasers”) under that certain Securities Purchase Agreement dated as of April
3, 2003 (the “Purchase Agreement”).

 

RECITALS

 

Company and Purchasers have entered into the Purchase Agreement pursuant to
which Purchasers have agreed to purchase and Company has agreed to sell its
Series I Convertible Preferred Stock (the “Preferred Stock”).  Certain
Purchasers have requested and Company has agreed to make certain amendments to
the Purchase Agreement.  Certain new persons (the “New Purchasers”) wish to
purchase the Preferred Stock that certain existing Purchasers have a right to
purchase.

 

Section 8.3 of the Purchase Agreement permits amendment with the written consent
of the Company and any Purchaser who would be materially adversely affected by
the amendment.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties signatory hereto agree
as follows.

 

1.   Definitions  Capitalized terms used but not otherwise defined herein shall
have the respective meanings ascribed to such terms in the Purchase Agreement.

 

2.   Amendments to the Purchase Agreement.

 

(a)  Section 4.1 of the Purchase Agreement is hereby amended by adding to the
end of the definition of “Initial Equity Capitalization” the following:  “, as
set forth in Schedule 2.3 attached hereto.”

 

(b)  Section 7.2 of the Purchase Agreement is hereby amended and restated in its
entirety as follows:

 

“Section 7.2  Commitment Provisions.  The Purchasers, pro rata in proportion to
each Purchaser’s Commitment, shall cause the issuance of the LC so requested by
the Company provided that:

 

(a)  The aggregate stated amount of the LC shall not exceed $5 million:

 

(b)  The expiry of the LC shall not be later than November 30, 2003;

 

(c)  The issuance date shall not be earlier than June 1, 2003; and

 

(d)  The Company shall execute such documentation to apply for and support the
issuance of the LC as may be required by the issuer of the LC, which may be one
of the Company’s senior lenders (the “LC Issuer).”

 

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(c)  Section 7.4(b) of the Purchase Agreement is hereby amended by adding to the
end of such subsection the following:  “; provided that the issuance of such
warrants will not result in the cancellation of the LC Notes.”

 

(d)  Schedule I of the Purchase Agreement is hereby amended and restated in its
entirety as follows:

 

“SCHEDULE I

 

PURCHASERS

 

AMOUNT OF
SHARES
PURCHASED

 

PRICE

 

 

 

 

 

 

 

Saks Incorporated

 

5,000

 

$

5,000,000

 

Fred Kayne

 

4,000

 

$

4,000,000

 

Kayne Anderson Capital Advisors, L.P.

 

5,000

 

$

5,000,000

 

Richard Kayne

 

4,900

 

$

4,900,000

 

Hancock Park Capital II, L.P.

 

5,000

 

$

5,000,000

 

Woodacres LLC

 

3,100

 

$

3,100,000

 

Les Biller, as trustee

 

2,000

 

$

2,000,000

 

Charles Norris

 

1,000

 

$

1,000,000

”

 

(e)  Schedule 2.3  of the Purchase Agreement is hereby amended and restated in
its entirety as follows:

 

“Schedule 2.3

 

Capitalization

 

The equity capitalization of FAO will be as follows on the Closing Date (without
giving effect to the 1:15 reverse stock split):

 

Security

 

COMMON EQUIVALENTS

 

Series I Convertible Preferred Stock*

 

305,000,000

 

Series J Convertible Preferred Stock**

 

65,704,954

 

Warrants***

 

1,650,000

 

Common Stock****

 

39,835,968

 

Total:

 

412,190,924

 

 

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* Assumes 30,000 shares of Series I Convertible Preferred Stock are issued under
the Agreement at a conversion rate of $.10 per share.  Also includes 500 shares
of Series I Convertible Preferred Stock issued to KBB Retail Assets Corp. in
compromise of its claims in the Bankruptcy Case Proceedings.

 

** Series J Convertible Preferred Stock ranks pari passu with the Series I and
is issued in compromise of claims by Kayne Anderson affiliates and Fred Kayne in
connection with the Bankruptcy Case Proceedings.    Assumes that Kayne Anderson
affiliates and Fred Kayne convert the $4 million in aggregate principal amount
of convertible Equipment Notes they receive in compromise of their claims in the
Bankruptcy Case Proceedings.

 

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*** Includes Common Stock issuable upon exercise of warrants held by Kayne
Anderson Affiliates and Fred Kayne.

 

****  Includes Common Stock to be received by unsecured creditors in compromise
of their claims in the Bankruptcy Case Proceedings, and existing Common Stock.

 

Until the Closing Date, FAO will not issue additional equity not shown in this
Schedule except pursuant to the Agreement.”

 

3.   Choice of Law.    The validity of this First Amendment, its construction,
interpretation and enforcement, and the rights of the parties hereunder, shall
be determined under, governed by, and construed in accordance with the laws of
the State of New York.

 

4.   Counterparts; Telefacsimile Execution.    This First Amendment may be
executed in any number of counterparts and by different parties and separate
counterparts, each of which when so executed and delivered, shall be deemed an
original, and all of which, when taken together, shall constitute one and the
same instrument. Delivery of an executed counterpart of a signature page to this
First Amendment by telefacsimile shall be as effective as delivery of a manually
executed counterpart of this First Amendment. Any party delivering an executed
counterpart of this First Amendment by telefacsimile also shall deliver a
manually executed counterpart of this First Amendment but the failure to deliver
a manually executed counterpart shall not affect the validity, enforceability,
and binding effect of this First Amendment.

 

5.   Effect on Purchase Agreement.    The Purchase Agreement, as amended hereby,
shall be and remain in full force and effect in accordance with its respective
terms and hereby is ratified and confirmed in all respects. The execution,
delivery, and performance of this First Amendment shall not operate as a waiver
of or, except as expressly set forth herein, as an amendment of, any right,
power, or remedy of the Agent under the Purchase Agreement, as in effect prior
to the date hereof.

 

6.   Effect of Signatures of New Purchasers.  Upon execution of this Amendment,
the New Purchasers will become entitled to all the rights granted to Purchasers
under the Purchase Agreement and become obligated under the Purchase Agreement
as fully as if they had signed the Purchase Agreement originally, Kayne Anderson
Capital Advisors, L.P., as Agent, Richard Kayne and Fred Kayne will have their
purchase rights reduced as indicated and  PCG Tagi, LLC (Series H) shall no
longer have any rights or obligations under the Purchase Agreement or any
related agreement.

 

7.   Miscellaneous.

 

(a)  Upon and after the effectiveness of this First Amendment, each reference in
the Purchase Agreement to “this Agreement”, “hereunder”, “herein”, “hereof” or
words of like import referring to the Purchase Agreement, and each reference in
the related documents to “the Purchase Agreement”, “thereunder”, “therein”,
“thereof” or words of like import referring to the Purchase Agreement, shall
mean and be a reference to the Purchase Agreement as modified and amended
hereby.

 

(b)  The Purchase Agreement and all related documents, are and shall continue to
be in full force and effect and are hereby in all respects ratified and
confirmed and shall constitute the legal, valid, binding and enforceable
obligations of Company.

 

[The rest of this page is intentionally left blank]

 

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IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
Securities Purchase Agreement to be executed as of the date first above written.

 

 

FAO, INC.

 

 

 

 

 

By

/s/ R.P. Springer

 

 

Raymond P. Springer
Executive Vice President

 

 

 

 

EXITING PURCHASER:

NEW PURCHASERS:

 

 

PCG TAGI, LLC (SERIES H)

WOODACRES LLC

 

 

 

 

By

/s/ Kurt Tomita

 

By

/s/ David Shladovsky

 

Title:

Vice President, Finance

 

Title:

General Counsel of General Partner

 

 

 

 

 

 

 

/s/ Charles A. Norris

 

 

CHARLES NORRIS

 

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NEW PURCHASER:

 

 

 

 

 

 

 

 

/s/ Les Biller

 

 

 

LES BILLER, as Trustee
Amended and Restated Les and Sheri Biller
Revocable Trust U/A Dated June 5, 2002

 

 

 

 

 

 

 

 

REMAINING PURCHASERS:

 

 

 

 

 

KAYNE ANDERSON CAPITAL ADVISORS,

 

 

L.P., as Agent

 

 

 

 

 

 

 

 

By

/s/ David Shladovsky

 

 

 

Title:

General Counsel

 

 

 

 

 

 

 

 

 

/s/ Fred Kayne

 

 

 

FRED KAYNE

 

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