Exhibit 10.8

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|No. of Stock Units: 100,000 |  | Warrant No. VX-1

WARRANT    to Purchase Common Stock of    FAO, Inc.

THIS
IS TO CERTIFY THAT KBB RETAIL ASSETS CORP. or registered assigns, is entitled, to purchase from FAO, Inc., a Delaware corporation (the
"Company"), at any time and from time to time, but not later than 5:00 p.m., Pacific Standard time, on December 16, 2007 (the
"Expiration Date"), 100,000 Stock Units, in whole or in part, at a purchase price per Stock Unit of $1.90 all on the terms and conditions hereinbelow.

This
Warrant has been issued in connection with the issuance of that the certain Amended and Restated Subordinated Note due January 5, 2005, dated as of even date herewith (the "KBB Note")
and that certain Amended and Restated Subordinated Note due December 1, 2003, dated as of even date herewith (the "Chicago Note", and, collectively, the
"Notes").

THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE PROPOSED TRANSACTION DOES NOT REQUIRE REGISTRATION OR QUALIFICATION UNDER FEDERAL OR STATE SECURITIES LAWS, OR UNLESS THE PROPOSED TRANSACTION
IS REGISTERED OR QUALIFIED AS REQUIRED.

Section 1.Certain Definitions. As used in this Warrant, unless the context otherwise requires:

"Affiliate" of any Person means a Person (1) that directly or indirectly controls, or is controlled by, or is under common control
with, such other Person, (2) that beneficially owns ten percent (10%) or more of the Voting Stock of such other Person, or (3) ten percent (10%) or more of the Voting Stock (or in the
case of a Person which is not a corporation, ten percent (10%) or more of the equity interest) of which is owned by such other Person. The term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

"Appraised Value" shall mean the fair market value of all outstanding shares of Common Stock (on a fully diluted basis including any
fractional shares and assuming the exercise in full of all then-outstanding options, warrants or other rights to purchase shares of Common Stock that are then currently exercisable at
exercise prices less than the Current Market Price), as determined by the Board of Directors or, if the holders of Warrants object to such appraisal, by a written appraisal prepared by an appraiser
acceptable to the Company and the holders of Warrants. "Fair market value" is defined for this purpose as the price in a single transaction determined on a going-concern basis that would be agreed
upon by the most likely hypothetical buyer for a 100% controlling interest in the equity capital of the Company (on a fully diluted basis including any fractional shares and assuming the exercise in
full of all then-outstanding options, warrants or other rights to purchase shares of Common Stock that are then currently exercisable at exercise prices less than the Current Market
Price), with consideration given to the effect of all noncompete covenants signed by the seller and employment agreements signed by key management personnel of the Company (and of its subsidiaries),
each extending for a period of time considered sufficient by all parties to effect the transfer of goodwill from the seller to the buyer and disregarding any discounts for nonmarketability of Common
Stock of the Company. In the event

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that the Company and said holders cannot, in good faith, agree upon an appraiser, then the Company, on the one hand, and said holders, on the other hand, shall each select an appraiser, the two
appraisers so selected shall select a third appraiser who shall be directed to prepare such a written appraisal (the "Appraisal") and the term Appraised
Value shall mean the appraised value set forth in the Appraisal prepared in accordance with this definition. The fees and expenses of any appraisers shall be paid by the Company, except in the case in
which the valuation of any appraiser who renders an Appraisal is within ten percent (10%) of the value originally determined by the Board of Directors, in which case
the holders shall pay the fees and expenses of any appraisers. In the event that the Company bears the cost of the appraisal process, such cost shall be deemed an account payable of the Company and
shall be considered in the determination of the Appraised Value.

"Board of Directors" shall mean either the board of directors of the Company or any duly authorized committee of that board.

"Business Day" shall mean any day other than a Saturday, Sunday or a day on which banks in the State of New York are required or permitted
to close.

"Commission" shall mean the Securities and Exchange Commission and any other similar or successor agency of the federal government
administering the Securities Act and the Exchange Act.

"Common Stock" shall mean the Company's authorized Common Stock, $0.001 par value per share, irrespective of class unless otherwise
specified, as constituted on the date of original issuance of this Warrant, and any stock into which such Common Stock may thereafter be changed, and shall also include stock of the Company of any
other class, which is not preferred as to dividends or assets over any other class of stock of the Company issued to the holders of shares of stock upon any reclassification thereof.

"Current Market Price" per share of Common Stock for the purposes of any provision of this Warrant at the date herein specified, shall be
deemed to be the price determined pursuant to the first applicable of the following methods:



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"Current Warrant Price" per share of Common Stock, for the purpose of any provision of this Warrant at the date herein specified, shall
mean the amount equal to the quotient resulting from dividing the Exercise Price in effect on such date by the number of shares (including any fractional share) of Common Stock comprising a Stock Unit
on such date.

"Exchange Act" shall mean the Securities and Exchange Act of 1934, as amended, and any similar or successor federal statute, and the rules
and regulations of the Commission thereunder, all as the same shall be in effect at any applicable time.

"Exercise Price" shall mean the purchase price per Stock Unit as set forth on the first page of this Warrant on the Issuance Date and
thereafter shall mean such dollar amount as shall result from the adjustments specified in Section 4.

"Holder" means, initially, KBB RETAIL ASSETS CORP., and thereafter any Person that is or Persons that are the registered holder(s) of the
Warrant or Warrant Stock as registered on the books of the Company.

"Issuance Date" shall mean the date of issuance of this Warrant.

"Nonpreferred Stock" shall mean the Common Stock and shall also include stock of the Company of any other class which is not preferred as
to dividends or assets over any other class of stock of the Company and which is not subject to redemption.

"Person" shall include a natural person, limited partnership, a corporation, an association, a partnership, a limited liability company, a
trust or estate, a government, foreign or domestic, and any agency or political subdivision thereof, or any other entity.

"Restricted Certificate" shall mean a certificate for Common Stock or a Warrant bearing the restrictive legend set forth in the preamble.

"Restricted Securities" shall mean Restricted Stock and the Restricted Warrant.

"Restricted Stock" shall mean Common Stock evidenced by a Restricted Certificate.

"Restricted Warrant" shall mean a Warrant evidenced by a Restricted Certificate.

"Securities" shall mean the Warrant issued to the Holder, and the certificates and other instruments from time to time evidencing the
same.

"Securities Act" shall mean the Securities Act of 1933, as amended, and any similar or successor federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at any applicable time.

"Stock Unit" shall constitute one share of Common Stock, as such Common Stock was constituted on the date hereof and thereafter shall
constitute such number of shares (including any fractional shares) of Common Stock as shall result from the adjustments specified in Section 4.

"Trading Day" shall mean a day on which the national securities exchanges were open for trading.

"Voting Stock" shall mean any equity security entitling the holder of such security to vote at meetings of shareholders except an equity
security which entitles the holder of such security to vote only upon the occurrence of some contingency, unless that contingency shall have occurred and be continuing.

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"Warrant" shall mean this Warrant to purchase an aggregate of 100,000 Stock Units initially issued to KBB RETAIL ASSETS CORP., and all
Warrants issued upon transfer, division or combination of, or in substitution therefor.

"Warrant Stock" shall mean the shares of Common Stock purchasable by the holder of any Warrants upon the exercise thereof.

Section 2.Exercise of Warrant. The holder of this Warrant may, at any time and from time to time, but not later than the
Expiration Date, exercise this Warrant in whole or in part for the number of Stock Units which such holder is then entitled to purchase hereunder. The Holder may exercise this Warrant, in whole or in
part, by any of the following methods (or a combination thereof or as otherwise determined by the Company's Board of Directors):



Any
notice required under this Section 2 may be in the form of a subscription set out at the end of this Warrant. Upon delivery thereof, the Company shall as promptly as
practicable, and in any event, subject to compliance with Section 9, within 10 Business Days thereof, cause to be issued in the name of and delivered to such Holder or, subject to
Section 9, as Holder may direct, a certificate or certificates
representing the aggregate number of duly authorized, validly issued, fully-paid and nonassessable shares of Common Stock issuable upon such exercise and, in case such exercise is in part
only, a new Warrant or Warrants of like tenor, as further described below.

The
stock certificate or certificates for Warrant Stock so delivered shall be in such denominations as may be specified in said notice and shall be registered in the name of such Holder
or, subject to Section 9, such other name or names as shall be designated in said notice. Such certificate or

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certificates shall be deemed to have been issued and such Holder or any other Person so designated to be named therein shall be deemed to have become a holder of record of such shares, with, to the
extent permitted by law, the right to vote such shares or to consent or to receive notice as a stockholder, as of the time said notice is delivered to the Company as aforesaid. If this Warrant shall
have been exercised only in part, the Company shall, at the time of delivery of said certificate or certificates, deliver to such Holder a new Warrant dated the date it is issued, evidencing the
rights of such Holder to purchase the remaining Stock Units called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

The
Company shall pay all expenses, taxes (other than federal, state, local or foreign income taxes) and other charges payable in connection with the preparation, issue and delivery of
stock certificates and new Warrants under this Section 2.

All
shares of Common Stock issuable upon the exercise of this Warrant shall be duly authorized, validly issued, fully paid and nonassessable, and free from all liens and other
encumbrances thereon. The Company will from time to time take all such action as may be necessary to assure that the par value per share of the unissued Common Stock acquirable upon exercise of this
Warrant is at all times equal to or less than the Exercise Price then in effect.

The
Company shall not issue certificates for fractional shares of Common Stock upon any exercise of this Warrant whenever, in order to implement the provisions of this Warrant, the
issuance of such fractional shares is required. Instead, the Company shall pay cash in lieu of such fractional shares upon such exercise.

Section 3.Transfer, Division and Combination. Subject to Section 9, this Warrant and all rights hereunder are transferable,
in whole or in part, on the books of the Company to be maintained for such purpose, upon surrender of this Warrant at the office of the Company maintained for such purpose pursuant to
Section 13, together with (a) a written assignment in the form set out at the end of this Warrant duly executed by the Holder hereof or its agent or attorney and (b) payment of
funds sufficient to pay any stock transfer taxes payable upon the making of such transfer. Upon such surrender, execution and payment, the Company shall, subject to Section 9, execute and
deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denominations specified in such instrument of assignment, and this Warrant shall promptly be canceled. If and when
this Warrant is assigned in blank (in case the restrictions on transferability in Section 9 shall have been terminated), the Company may (but shall not
be obliged to) treat the bearer hereof as the absolute owner of this Warrant for all purposes and the Company shall not be affected by any notice to the contrary. This Warrant, if properly assigned in
compliance with this Section 3 and Section 9, may be exercised by an assignee for the purchase of shares of Common Stock without having a new Warrant issued.

This
Warrant may, subject to Section 9, be divided upon presentation at the aforesaid office of the Company, together with a written notice specifying the names and denominations
in which new Warrants are to be issued, signed by the holder hereof or its agent or attorney. Subject to compliance with the preceding paragraph and with Section 9, as to any transfer which may
be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant to be divided or combined in accordance with such notice.

The
Company shall pay all expenses, taxes (other than federal, state, local or foreign income taxes) and other charges incurred by the Company in the performance of its obligations in
connection with the preparation, issue and delivery of Warrants under this Section 3.

The
Company agrees to maintain at its aforesaid office books for the registration and transfer of the Warrants.

Section 4. Adjustment of Stock Unit or Exercise Price. The number of shares of Common Stock comprising a Stock Unit, and the
Exercise Price per Stock Unit, shall be subject to adjustment from

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time to time as set forth in this Section 4 and in Section 5. The Company will not take any action with respect to its Nonpreferred Stock of any class requiring an adjustment pursuant
to any of the following Subsections 4.1 or 4.3 without at the same time taking like action with respect to its Nonpreferred Stock of each other class.

4.1. Stock Dividends, Subdivisions and Combinations. In case at any time or from time to time the Company shall:



then
the number of shares of Common Stock comprising a Stock Unit immediately after the happening of any such event shall be adjusted so as to consist of the number of shares of Common Stock which a
record holder of the number of shares of Common Stock comprising a Stock Unit immediately prior to the happening of such event would own or be entitled to receive after the happening of such event.

4.2.Other Provisions Applicable to Adjustments. The following provisions shall be applicable to the making of adjustments of the number
of shares of Common Stock comprising a Stock Unit hereinbefore provided for in this Section 4:



4.3.Merger, Consolidation Etc. In case the Company shall (a) merge into or consolidate with another Person and shall not be the
continuing or surviving Person of such merger or consolidation, (b) shall permit any other Person to merge into or consolidate with the Company and the Company shall be the continuing or
surviving Person, but, in connection with such merger or consolidation, the Common Stock shall be changed into or exchanged for stock or other securities of any other Person or cash or any other any
other property, (c) shall sell, transfer or otherwise dispose of all or substantially all of its property, assets or business to another Person or (d) effect a capital reorganization or
reclassification of the Common Stock (other than a capital reorganization or reclassification for which an adjustment is provided by Section 4.1) and pursuant to the terms of such merger,
consolidation, disposition, capital reorganization or reclassification, shares of common stock of a successor or acquiring Person are to be received by or distributed to the holders of Nonpreferred
Stock of the Company, then each holder of a Warrant shall have the right thereafter to receive, upon exercise of such Warrant, Stock Units each comprising the number of shares of common stock of such
successor or acquiring Person receivable upon or as a result of such merger, consolidation, disposition, capital reorganization or reclassification by a holder of the number of shares of Nonpreferred
Stock

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comprising a Stock Unit immediately prior to such event. If, pursuant to the terms of such merger, consolidation, disposition, capital reorganization or reclassification, any cash, shares of stock,
other securities or property or warrants or other subscription or purchase rights or property of any nature whatsoever are to be received by or distributed to the holders of Nonpreferred Stock of the
Company, there shall be either, at the Holder's option, (i) a reduction of the Exercise Price equal to the amount applicable to the number of shares of Common Stock then comprising a Stock Unit
of any such cash and of the fair value of any and all such shares of stock or of other securities or property to be received by or distributed to the holders of Nonpreferred Stock of the Company, or
(ii) such Holder shall have the right to receive, upon exercise of its Warrant, such cash, shares of stock or other securities or property of any nature as a holder of the number of shares of
Nonpreferred Stock underlying a Stock Unit would have been entitled to receive upon the occurrence of such event. Such fair value shall be determined in good faith by the Board of Directors of the
Company, provided that if such determination is objected to by the holders of Warrants, such determination shall be made by an independent appraiser selected by the Company and said holders. In the
event that the Company and said holders cannot, in good faith, agree upon an appraiser, then the Company, on the one hand, and said holders, on the other hand, shall each select an appraiser, the two
appraisers so selected shall select a third appraiser who shall be directed to prepare such a written appraisal which shall be conclusive and binding on the parties. The fees and expenses of any
appraisers shall be paid by the Company, except in the case where the valuation of any appraiser who renders an Appraisal is within ten percent (10%) of the value originally determined by the Board of
Directors, in which case the holders shall pay the fees and expenses of any appraisers. In case of any such merger, consolidation, disposition, capital reorganization or reclassification, the
successor or acquiring Person shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Warrant to be performed and observed by the
Company and all of the obligations and liabilities hereunder, subject to such modification as shall be necessary to provide for adjustments of Stock Units which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 4. For the purposes of this Section 4 "common stock of the successor or acquiring
Person" shall include stock of such corporation of any class, that is not preferred as to dividends or assets over any other class of stock of such corporation and that is not
subject to redemption, and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or
upon the arrival of a specified date or the happening of a specified event, and any warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of this Subsection
4.3 shall similarly apply to successive mergers, consolidations, dispositions, capital reorganizations or reclassifications.

4.4No Impairment. The Company will not, by amendment of its certificate of incorporation or through a consolidation, merger,
reorganization, transfer of assets, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder of
this Warrant against impairment. Without limiting the generality of the foregoing, the Company (a) shall obtain the consent of the original Holder to any merger, consolidation or sale of all or
substantially all of the Company's assets to which the Company is a party and any equity issuance by the Company (other than as a result of the conversion or exchange of, or exercise of rights or
issuance of pay-in-kind securities with respect to, outstanding securities of the Company or the issuance of securities in connection with the acquisition of the assets of
F.A.O. Schwarz and its online affiliate) until such time as the Company shall have obtained approval from its shareholders to authorize sufficient additional shares of Common Stock to permit exercise
of this Warrant, (b) will not permit the par value of any shares of stock receivable upon the exercise of this Warrant to exceed the amount
payable therefor upon such exercise, (c) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares
of stock on

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the exercise of the Warrants from time to time outstanding, and (d) will not take any action that results in any adjustment of the Exercise Price if the total number of shares of Common Stock
(or other securities) issuable after the action upon exercise of all of the Warrants would exceed the total number of shares of Common Stock (or other securities) then authorized by the Company's
certificate of incorporation and available for the purpose of issue upon such exercise.

Section 5. Notice to Warrant Holders.

5.1.Notice of Adjustment of Stock Unit or Exercise Price. Whenever the number of shares of Common Stock comprising a Stock Unit, or the
price at which a Stock Unit may be purchased upon exercise of the Warrants, shall be adjusted pursuant to Section 4, the Company shall forthwith obtain a certificate signed by independent
accountants, of recognized national standing, selected by the Company and reasonably acceptable to the Holder(s) of the Warrants, setting forth, in reasonable detail, the event requiring the
adjustment and the method by which such adjustment was calculated (including a statement of the fair value, as determined by the Board of Directors of the Company or by appraisal (if applicable), of
any evidences of indebtedness, shares of stock, other securities or property or warrants or other subscription or purchase rights or property of any nature whatsoever referred to in
Section 4.3) and specifying the number of shares of Common Stock comprising a Stock Unit and (if such adjustment was made pursuant to Section 4.3) describing the number and kind of any
other shares of stock comprising a Stock Unit, and any change in the purchase price or prices thereof, after giving effect to such adjustment or change. The Company shall promptly, and in any case
within three days after the making of such adjustment, cause a signed copy of such certificate to be delivered to each holder of a Warrant in accordance with Section 14. The Company shall keep
at its office or agency, maintained for the purpose pursuant to Section 13, copies of all such certificates and cause the same to be available for inspection at said office during normal
business hours by any holder of a Warrant or any prospective purchaser of a Warrant designated by a holder thereof.

5.2.Notice of Certain Corporate Actionf. In case the Company shall propose (a) to pay any dividend to the holders of any class of
securities or to make any other distribution to the holders of any class of securities (other than a regular, periodic cash dividend in an amount not exceeding the amount of the immediately preceding
cash dividend for the immediately preceding period) or to grant any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to
receive any other right or (b) to effect any consolidation, merger or sale, capital reorganization, reclassification or recapitalization of the capital stock organic change, transfer or other
disposition of all or substantially all of its property, assets or business, voluntary or involuntary dissolution, liquidation or winding-up of the Company, then in each such case, the
Company shall deliver to each holder of a Warrant, in accordance with Section 14, a notice of such proposed action, which shall specify the date on which a record is to be taken for the
purposes of, and expected date of consummation of, such dividend, distribution or rights, consolidation, merger, sale, capital reorganization, reclassification or recapitalization of the capital
stock, organic change, transfer or voluntary or involuntary dissolution, liquidation or winding-up of the Company or transfer is to take place and the date of any participation therein by
the holders of Nonpreferred Stock, if any such date is to be fixed, and shall also set forth such facts with respect thereto as shall be reasonably necessary to
indicate the effect of such action on the Nonpreferred Stock and the number and kind of any other shares of stock which will comprise a Stock Unit, and the purchase price or prices thereof, after
giving effect to any adjustment which will be required as a result of such action. Such notice shall be so delivered as promptly as reasonably possible and, in any event, at least 10 days prior
to the date therein specified.

Section 6.Reservation and Authorization of Common Stock. The Company shall at all times reserve and keep available for solely
issue upon the exercise of Warrants such number of its authorized but unissued shares of Common Stock as will be sufficient to permit the exercise in full of all outstanding Warrants. All shares of
Common Stock which shall be so issuable, when issued upon exercise of any

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Warrant or upon such exercise, as the case may be, shall be duly and validly authorized and issued, fully-paid and nonassessable.

Section 7.Taking of Record; Stock and Warrant Transfer Books. In the case of all dividends or other distributions by the Company
to the holders of its Nonpreferred Stock with respect to which any provision of Section 4 refers to the taking of a record of such holders, the Company will in each such case take such record
as of the close of business on a Business Day. The Company will not at any time, except upon dissolution, liquidation or winding up or as otherwise may be required by law, close its stock transfer
books or Warrant transfer books so as to result in preventing or delaying the exercise or transfer of any Warrant.

Section 8.Taxes. The Company will pay all taxes (other than federal, state, local or foreign income taxes) which may be payable in
connection with the execution and delivery of this Warrant or the issuance and sale of the Restricted Securities hereunder or in connection with any modification of the Restricted Securities and will
hold the Holder harmless without limitation as to time against any and all liabilities with respect to or resulting from any delay in paying, or omission to pay, such taxes. The obligations of the
Company under this Section 8 shall survive any redemption, repurchase or acquisition of Restricted Securities by the Company.

Section 9.Restrictions on Transferability. The Restricted Securities shall not be transferable except upon the conditions
specified in this Section 9.

9.1Transfer to an Affiliate. The Holder shall have the right to transfer any Restricted Securities to any Affiliate of the Holder, in
each case without complying with the restrictions imposed by this Section 9 other than the requirement as to the legending of the certificates for such Restricted Securities specified in
Section 9.3. No opinion of counsel shall be required for a transfer of Restricted Securities to an Affiliate of the Holder.

9.2Transfer to a Non-Affiliate. The Holder and his or her or her subsequent transferees shall have the right to transfer any
Restricted Securities to a non-Affiliate of the Holder as follows:



9.3Restrictive Legend. Unless and until the Restricted Securities have been registered under the Securities Act, this Warrant, each
Warrant issued to any transferee of the Holder, each certificate for any Warrant Stock issued upon exercise of any Warrant and each certificate for any Warrant Stock

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issued to any transferee of any such certificate, shall be stamped or otherwise imprinted with a legend in substantially the following form:



Whenever
such restriction shall cease and terminate as to any Restricted Securities, the Holder shall be entitled to receive from the Company, without expense (other than applicable transfer taxes, if
any), new securities of like tenor not bearing the legend required by this Subsection 9.3 upon delivery of satisfactory evidence to the Company of such cessation and termination (including an opinion
of counsel reasonably satisfactory to the Company).

Section 10. Limitation of Liability. No provision hereof, in the absence of affirmative action by the Holder to purchase shares of
Common Stock, and no mere enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of the Warrant Stock or as a stockholder
of the Company, whether such liability is asserted by the Company or by creditors of the Company.

Section 11.Loss or Destruction of Warrant Certificates. Upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction, upon receipt of indemnity or security in an amount reasonably satisfactory to the Company
(the original Holder's or any other institutional Holder's indemnity being satisfactory indemnity in the event of loss, theft or destruction of any Warrant owned by such institutional Holder), or, in
the case of any such mutilation, upon surrender and cancellation of such Warrant, the Company will at its own expense execute and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant,
a new Warrant of like tenor and representing the right to purchase the same aggregate number of shares of Common Stock.

Section 12. Amendments. The terms of this Warrant may be amended, and the observance of any term therein may be waived, but only
with the unanimous written consent of the holders of Warrants subject to such amendment.

Section 13.Office of the Company. So long as any Warrant remains outstanding, the Company shall maintain an office where the
Warrants may be presented for exercise, transfer, division or combination as in this Warrant provided. Such office shall be at 2520 Renaissance Boulevard, King of Prussia, Pennsylvania, 19406 FAX:
(610) 278-7804, unless and until the Company shall designate and maintain some other office for such purposes and deliver written notice thereof to the holders of all outstanding
Warrants.

Section 14.Notices Generally.

14.1.
All communications (including all required or permitted notices) pursuant to the provisions hereof shall be in writing and shall be sent, to any registered Holder of any Warrants
or Warrant Stock, to the address of such Holder as it appears in the stock or warrant ledger of the Company or at such other address as such Holder may have furnished in writing to the Company.

14.2.
Any notice shall be deemed to have been duly delivered when delivered by hand, if personally delivered, and if sent by mail to a party whose address is in the same country as the
sender, two Business Days after being deposited in the mail, postage prepaid, and if sent by recognized international courier, freight prepaid, with a copy sent by telecopier, to a party whose address
is not in

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the same country as the sender, three Business Days after the later of (a) being telecopied and (b) delivery to such courier.

Section 15. Registration Rights. The Company agrees that the Common Stock issuable upon exercise of this Warrant shall be deemed
Registrable Securities under the terms of that certain Registration Rights Agreement dated as of January 6, 2002 between the Company and Royal Vendex KBB N.V.

Section 16.Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of New York
(without regard to conflicts of law provisions thereof).

Section 17.Remedies. The Company stipulates that the remedies at law of the Holder in the event of any default or threatened
default by the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate and that, to the fullest extent permitted by law, such terms may be
specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise.

[Remainder
of Page Intentionally Left Blank]

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IN
WITNESS WHEREOF, the Company has caused this Warrant to be signed in its name by its President or a Vice President and attested by its Secretary or an Assistant Secretary

Dated
as of: December 16, 2002

|                                                             |  |  | FAO, INC.                                                                                              
|------------------------------------------------------------ |  |  | -------------------------------------------------------------------------------------------------------
|                                                             |  |  | /s/RAYMOND P. SPRINGERBy: Raymond P. Springer
Its: Executive Vice President and Chief Financial Officer
|ATTEST:                                                      |  |  |                                                                                                        
|/s/KENDRICK F. ROYERName: Kendrick F. Royer
Title: Secretary |  |  |                                                                                                        

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SUBSCRIPTION FORM(to be executed only upon exercise of Warrant)

The
undersigned registered owner of this Warrant irrevocably exercises this Warrant for and purchases Stock Units of FAO, Inc., a Delaware corporation, purchasable with this
Warrant, and herewith makes payment therefor (by check in the amount of $            ), or hereby
tenders                        Stock Units as payment therefor, all at the price and on the terms and
conditions specified in this Warrant and requests that certificates for the shares of Common Stock hereby purchased (and any securities or other property issuable upon such exercise) be issued in the
name of and delivered to                        whose address
is                                         
       and, if such Stock Units shall not include all of the Stock Units issuable as provided in this Warrant that a new Warrant of
like tenor and date for the balance of the Stock Units issuable thereunder be delivered to the undersigned.

Dated:                        ,

| |  |                                
| |  | -------------------------------
| |  | (Signature of Registered Owner)
| |  | (Street Address)               
| |  | (City)      (State)  (Zip Code)

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ASSIGNMENT FORM

FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby sells, assigns and transfers unto the Assignee named below all of the rights of the
undersigned under this Warrant, with respect to the number of Stock Units set forth below:

|Number of Stock Units |  | Name and Address of Assignee
|--------------------- |  | ----------------------------

and does hereby irrevocably constitute and appoint                        Attorney to make sure transfer occurs on the books of
FAO, Inc., a Delaware corporation, maintained for the purpose, with full
power of substitution in the premises.

|          |  | 
|--------- |  | 
|Dated:    |  | 
|Signature |  | 
|Witness   |  | 

|        |  |                                                                                                                                                                                                
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|NOTICE: |  | The signature to the assignment must correspond with the name as written upon the face of the Warrant in every particular instance, without alteration or enlargement or any change whatsoever.

The
signature to this assignment must be guaranteed by a bank or trust company having an office or correspondent in New York, New York or by a firm having membership on the New York
Stock Exchange.

14

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