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Exhibit 10.9

FOURTH AMENDMENT
TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

        THIS FOURTH AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT (this "Fourth Amendment") is entered into and effective as of
December 16, 2002 by and among, on the one hand, FAO, Inc., FAO Schwarz, Inc.
and ZB Company, Inc., each a Delaware corporation (collectively, "Borrowers"),
and, on the other hand, the financial institutions from time to time party to
the Loan Agreement referred to below (collectively, the "Lenders" and each
individually, a "Lender") and Wells Fargo Retail Finance, LLC, as agent for the
Lenders (in such capacity, "Agent").

RECITALS

        Borrowers, Agent and Lenders have entered into the Amended and Restated
Loan and Security Agreement dated as of April 30, 2002, as amended by the First
Amendment to Amended and Restated Loan and Security Agreement dated as of
May 31, 2002, the Second Amendment to Amended and Restated Loan and Security
Agreement dated as of August 15, 2002 and the Third Amendment to Amended and
Restated Loan and Security Agreement dated as of November 21, 2002 (as so
amended, as amended hereby and as further amended, restated, supplemented or
otherwise modified from time to time, the "Loan Agreement") pursuant to which
Lenders and Agent have agreed to make certain revolving credit advances and
provide other financial accommodations to Borrowers.

        Borrowers have requested certain waivers under the Loan Agreement, and
the parties desire to amend certain provisions of the Loan Agreement. Agent and
Lenders are willing to grant the waiver set forth in Section 3 below and to
amend the Loan Agreement on the terms and conditions hereinafter set forth.

        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 given to such terms in the Loan Agreement.

        2. Amendments to the Loan Agreement.

        (a) Section 1.1 of the Loan Agreement is hereby amended as follows:

        (i) The following new defined term is hereby inserted in the proper
alphabetical order:

        "Fourth Amendment" means the Fourth Amendment to Amended and Restated
Loan and Security Agreement dated as of December 16, 2002 by and among
Borrowers, Agent and Lenders.

        (ii) The definition of the term "Loan Documents" is hereby amended by
inserting the words "the Fourth Amendment," after the words "the Third
Amendment,".

        (b) Section 7.20 of the Loan Agreement is hereby amended and restated in
its entirety as follows:

        "7.20 Minimum EBITDA. Fail to maintain EBITDA of at least 70% of the
projected EBITDA set forth in the Business Plan, tested as of the last day of
each calendar month during the term of this Agreement, commencing February 2003,
on a trailing 12 month basis."

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        (c) Section 7.22 of the Loan Agreement is hereby amended and restated in
its entirety as follows:

        "7.22 Capital Expenditures. Make capital expenditures in Borrowers'
fiscal year ending February 1, 2003 in excess of $6,700,000 and in any fiscal
year thereafter in excess of the amount set forth in the Business Plan."

        3. Waivers.

        (a) The Agent and the Lenders hereby waive the following Events of
Default under the Loan Agreement (collectively, the "Identified Events of
Default"):

        (i) the Event of Default arising under Section 5.17(b) of the Loan
Agreement solely to the extent resulting from the Borrowers' failure to deliver
to Agent control agreements for DDAs established after April 30, 2002 so long as
Borrowers obtain control agreements in form and substance satisfactory to Agent
for 12 of such DDAs within 30 days of the date hereof and use commercially
reasonable efforts to obtain the remainder as soon thereafter as possible;

        (ii) the Event of Default arising under Section 6.14 of the Loan
Agreement solely to the extent resulting from the Borrowers' failure to make the
lease payments for the retail store locations set forth on Exhibit A hereto for
the month of December 2002 so long as Borrowers make all such lease payments on
or before December 30, 2002; and

        (iii) the Event of Default arising under Section 7.15 of the Loan
Agreement solely to the extent resulting from the Borrowers' failure to provide
Agent prior written notice of its opening of outlet stores in San Diego,
California and Roanoke, Virginia.

        (b) The Borrowers acknowledge and agree that the foregoing provisions of
this Section 3 relate solely to the Identified Events of Default specified in
Section 3(a) hereof and shall in no way be deemed or construed as a waiver by
the Agent and the Lenders of any other Default or Event of Default under the
Loan Agreement or any other Loan Document, known or unknown, now existing or
occurring subsequent to the date of this Fourth Amendment, including without
limitation, any Event of Default arising by reason of Borrowers' failure to
comply with the maximum Effective Advance Rate covenant of Item C of
Schedule 7.21(a) to the Loan Agreement. The Agent and the Lender expressly
reserve the full extent of their rights under the Loan Agreement, the other Loan
Documents and applicable law in respect of any Default or Event of Default
existing on the date hereof and not specified herein as an Identified Event of
Default.

        4. Conditions Precedent to Fourth Amendment. The satisfaction of each of
the following, unless waived or deferred by Agent in its sole discretion or, in
the case of subsection (b) below, by the Required Lenders or all of the Lenders,
as applicable, shall constitute conditions precedent to the effectiveness of
this Fourth Amendment and each and every provision hereof:

        (a) The representations and warranties in this Fourth Amendment, the
Loan Agreement as amended by this Fourth Amendment, and the other Loan Documents
shall be true and correct in all respects on and as of the date hereof, as
though made on such date (except to the extent that such representations and
warranties relate solely to an earlier date);

        (b) No Event of Default shall have occurred and be continuing on the
date hereof nor shall result from the consummation of the transactions
contemplated herein;

        (c) No injunction, writ, restraining order, or other order of any nature
prohibiting, directly or indirectly, the consummation of the transactions
contemplated herein shall have been issued and remain in force by any
Governmental Authority against any Borrower or Agent;

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        (d) Agent shall have received a Fourth Amendment fee of $150,000 from
Borrowers (to be shared pro rata with the Lenders signatory hereto); and

        (e) Agent shall have received payment in full of its out-of-pocket
expenses (including reasonable attorneys' fees and expenses) incurred in
connection with the Loan Agreement and this Fourth Amendment.

        5. Representations and Warranties. Each Borrower hereby represents and
warrants to Agent that (a) the execution, delivery, and performance of this
Fourth Amendment and of the Loan Agreement are within such Borrower's corporate
powers, have been duly authorized by all necessary corporate action, and are not
in contravention of any law, rule, or regulation, or any order, judgment,
decree, writ, injunction, or award of any arbitrator, court, or governmental
authority, or of the terms of its charter or bylaws, or of any contract or
undertaking to which it is a party or by which any of its properties may be
bound or affected, (b) this Fourth Amendment and the Loan Agreement constitute
such Borrower's legal, valid, and binding obligation, enforceable against such
Borrower in accordance with its terms, and (c) this Fourth Amendment has been
duly executed and delivered by such Borrower.

        6. Choice of Law. The validity of this Fourth 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.

        7. Counterparts; Telefacsimile Execution. This Fourth 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
Fourth Amendment by telefacsimile shall be as effective as delivery of a
manually executed counterpart of this Fourth Amendment. Any party delivering an
executed counterpart of this Fourth Amendment by telefacsimile also shall
deliver a manually executed counterpart of this Fourth Amendment but the failure
to deliver a manually executed counterpart shall not affect the validity,
enforceability, and binding effect of this Fourth Amendment.

        8. Effect on Loan Agreement. The Loan 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 Fourth 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 Loan Agreement, as in effect prior to
the date hereof.

        9. Further Assurances. Each Borrower shall execute and deliver all
agreements, documents, and instruments, in form and substance satisfactory to
Agent, and take all actions as Agent may reasonably request from time to time,
to perfect and maintain the perfection and priority of the security interest in
the Collateral held by Agent and to fully consummate the transactions
contemplated under this Fourth Amendment and the Loan Agreement, as amended by
this Fourth Amendment.

        10. Miscellaneous.

        (a) Upon and after the effectiveness of this Fourth Amendment, each
reference in the Loan Agreement to "this Agreement", "hereunder", "herein",
"hereof" or words of like import referring to the Loan Agreement, and each
reference in the other Loan Documents to "the Loan Agreement", "thereunder",
"therein", "thereof" or words of like import referring to the Loan Agreement,
shall mean and be a reference to the Loan Agreement as modified and amended
hereby.

        (b) The Loan Agreement and all other Loan 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 Borrowers to Agent and Lenders.

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[Signatures appear on following page.]

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        IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment
to Amended and Restated Loan and Security Agreement to be executed as of the
date first above written.

    FAO, INC.
 
 
By:
/s/  RAYMOND P. SPRINGER      

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Raymond P. Springer
Executive Vice President
 
 
ZB COMPANY, INC.
 
 
By:
/s/  RAYMOND P. SPRINGER      

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Raymond P. Springer
Executive Vice President
 
 
FAO SCHWARZ, INC.
 
 
By:
/s/  RAYMOND P. SPRINGER      

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Raymond P. Springer
Executive Vice President
 
 
LENDERS:
 
 
WELLS FARGO RETAIL FINANCE, LLC,
as Agent and a Lender
 
 
By:
/s/  PATRICK J. NORTON      

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Patrick J. Norton
Vice President
 
 
LASALLE BUSINESS CREDIT, INC.
 
 
By:

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William Stapel
First Vice President
 
 
ORIX FINANCIAL SERVICES, INC.
 
 
By:
/s/  DEEDRA DARBY-JONES      

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Deedra Darby-Jones
Vice President
Signature Page to Fourth Amendment

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Acknowledgment and Consent

        Reference is made to (i) the Amended and Restated Participation and
Intercreditor Agreement dated as of April 30, 2002 by and between Agent and
Hilco Capital LP, a Delaware limited partnership ("Hilco") and (ii) the Amended
and Restated Participation and Intercreditor Agreement dated as of April 30,
2002 by and between Agent and Kayne Anderson Private Investors, L.P. ("KAPI").
By its respective signature below, each of Hilco and KAPI acknowledges receipt
of a copy of the Fourth Amendment and consents to the execution and delivery by
Borrowers, Agent and the Lenders of the Fourth Amendment and the execution and
delivery of all other Loan Documents (as defined in the Loan Agreement, as
amended by the Fourth Amendment) to be executed in connection therewith.

 
 
HILCO CAPITAL LP
 
 
By:

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Regina Gornick
Vice President
 
 
KAYNE ANDERSON PRIVATE INVESTORS, L.P.
 
 
By:
Kayne Anderson Capital Advisors, L.P.
its General Partner

    By: Kayne Anderson Investment
Management, Inc., its General Partner
 
 
By:

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David Shladovsky,
General Counsel and Secretary

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QuickLinks

Exhibit 10.9

FOURTH AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
RECITALS
Acknowledgment and Consent