EXHIBIT 99.2

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of May 24, 2002 between
F.A.O., Inc., a California corporation (the "Company"), and Vardon Focus Fund, LP (the
"Purchaser").

WHEREAS,
the Company and the Purchaser have entered into a Common Stock Purchase Agreement dated as of May 24, 2002 (the "Purchase
Agreement") pursuant to which the Purchaser purchased shares (the "Registrable Securities") of the Company's common stock, no
par value;

WHEREAS,
pursuant to the Purchase Agreement, the Company and the Purchaser desire to enter into this Agreement to provide the Purchaser with certain registration rights and to address
related matters;

NOW,
THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements set forth herein, the parties agree as follows:

1.1Covenant to Register; Suspension.



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1.2Piggyback Registration Rights.



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1.3Registration Procedures.

The
Company shall have no obligation to file a Shelf Registration Statement pursuant to Section 1.1 hereof, nor to include Registrable Securities in a registration statement
pursuant to Section 1.2 hereof, unless and until the Purchaser shall have furnished the Company with all information and statements about or pertaining to the Selling Holder in such reasonable
detail and on such timely basis as is reasonably requested by the Company in connection with the preparation of such registration statement;provided,
however, that any such information shall be given or made by a Selling Holder without representation or warranty of any kind whatsoever, except with respect to the identity of such Selling Holder,
such Selling Holder's Registrable Securities and such Selling Holder's intended method of distribution or any other representation required by applicable law. In connection with the filing of any
registration statement hereunder, the Company shall use commercially reasonable efforts, as expeditiously as possible, to:



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1.4Registration Expenses.

The
Company will pay all Registration Expenses of all registrations made under this Agreement. For purposes of this Section, the term "Registration
Expenses" means all expenses incurred by the Company in complying with this Agreement, including, without limitation, all registration and filing fees (other than National
Association of Securities Dealers, Inc. filing fees pursuant to an underwritten offering), exchange listing fees, printing expenses, fees and expenses of counsel and accountants for the Company
and the reasonable fees and expenses of one firm or counsel selected by the Purchaser, state Blue Sky fees and expenses, and the expense of any special audits incident to or required by any such
registration, but excluding underwriting discounts and selling commissions and transfer taxes, if any, which shall be paid by the Selling Holders pro rata, based on the number of shares sold by each
Selling Holder under the applicable registration statement.

1.5Preparation; Reasonable Investigation.

In
connection with the preparation and filing of each registration statement under the Act pursuant to this Agreement, the Company will give the Selling Holders with respect to such
registration statement and their counsel the opportunity to participate in the preparation of such registration statement and each prospectus included therein or filed with the Commission, and each
amendment thereof or supplement thereto, and will give each of them such reasonable access to its books and records and such opportunities to discuss the business of the Company with its officers and
the independent public accountants who have certified its financial statements as shall be necessary, in the opinion of the Selling Holders' counsel, to conduct a reasonable investigation within the
meaning of the Act.

1.6Indemnity.



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2.Miscellaneous.

2.1Additional Actions and Documents.

Each
of the parties hereto hereby agrees to use commercially reasonable efforts to take or cause to be taken such further actions, to execute, deliver and file or cause to be executed,
delivered and filed such further documents and instruments, and to obtain such consents, as may be necessary or as

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may be reasonably requested in order to fully effectuate the purposes, terms and conditions of this Agreement.

2.2Assignment.

Any
Holder may assign its rights under this Agreement to any assignee of the Registrable Securities.

2.3Entire Agreement; Amendment and Waiver.

This
Agreement, including the other writings referred to herein or delivered pursuant hereto, constitutes the entire agreement among the parties hereto with respect to the transactions
contemplated herein, and it supersedes all prior oral or written agreements, commitments or understandings with respect to the matters provided for herein. No amendment, modification or discharge of
this Agreement shall be valid or binding unless set forth in writing and duly executed by a party against whom enforcement of the amendment, modification, or discharge is sought. No course of dealing
or the failure of any party to enforce any of the provisions of this Agreement shall in any way operate as a waiver of such provisions and shall not affect the right of such party thereafter to
enforce each and every provision of this Agreement in accordance with its terms.

2.4Limitation On Benefits.

Except
as provided for elsewhere herein, it is the explicit intention of the parties hereto that no person or entity other than the parties hereto (and their respective successors and
assigns) is or shall be entitled to bring any action to enforce any provision of this Agreement against any of the parties hereto, and the covenants, undertakings and agreements set forth in this
Agreement shall be solely for the benefit of, and shall be enforceable only by, the parties hereto or their respective successors and assigns.

2.5Binding Effect.

This
Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. The respective indemnities, agreements,
representations, warranties
and other provisions set forth in this Agreement or made pursuant hereto shall remain in full force and effect following any sale of Registrable Securities as contemplated hereby and regardless of any
investigation (or statement as to the results thereof) made by or on behalf of any Holder or any representative of any Holder.

2.6Governing Law.

This
Agreement, the rights and obligations of the parties hereto, and any claims or disputes relating thereto, shall be governed by and construed in accordance with the laws of the State
of New York, without regard to conflicts of laws principles.

2.7Notices.

All
notices and other communications provided for in this Agreement shall be in writing and delivered, telecopied or mailed, first class postage prepaid, addressed:



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Any
such notice or communication shall be deemed to have been duly given when delivered, telecopied or mailed as aforesaid. Each party may designate by notice in writing a new address to
which any notice, demand, request or communication may thereafter be so given, served or sent. Each notice, demand, request, or communication which shall be mailed, delivered or transmitted in the
manner described above shall be deemed sufficiently given, served, sent and received for all purposes at such time as it is delivered to the addressee (with the return receipt, the delivery receipt or
the affidavit of messenger being deemed conclusive (but not exclusive) evidence of such delivery) or at such time as delivery is refused by the addressee upon presentation.

2.8Headings.

Article
and Section headings contained in this Agreement are inserted for convenience of reference only, shall not be deemed to be a part of this Agreement for any purpose, and shall not
in any way define or affect the meaning, construction or scope of any of the provisions hereof.

2.9Execution in Counterparts.

To
facilitate execution, this Agreement may be executed in as many counterparts as may be required; and it shall not be necessary that the signatures of each party appear on each
counterpart; but it shall be sufficient that the signature of each party appear on one or more of the counterparts. All counterparts shall collectively constitute a single agreement. It shall not be
necessary in making proof of this Agreement to produce or account for more than a number of counterparts containing the respective signatures of all of the parties hereto. Signatures pages may be
delivered with original signatures or by facsimile, and the delivery of a signature by facsimile shall have the same effect as the delivery of an original signature.

2.10Remedies.

The
Purchaser, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees to waive
the defense in any action for specific performance that a remedy at law would be adequate.

2.11Illegality.

If
any term or provision of this Agreement or any application thereof shall be declared or held invalid, illegal or unenforceable, in whole or in part, whether generally or in any
particular jurisdiction, such provision shall be deemed amended to the extent, but only to the extent, necessary to cure such invalidity, illegality or unenforceability, and the validity, legality and
enforceability of the remaining provisions, both generally and in every other jurisdiction, shall not in any way be affected or impaired thereby.

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2.12Inspection.

For
so long as this Agreement shall be in effect, this Agreement shall be made available for inspection and copying on any business day after reasonable notice to the Company by the
Purchaser at the offices of the Company at the address thereof set forth in Section 2.7 above.

2.13No Inconsistent Agreements.

The
Company has not entered into (except, with the respect to 500,000 shares then held by Albert O. Nicholas and Primerica Life Insurance Company under the Registration Rights Agreement
dated as of August 3, 1995 between them, the Company and certain of the shareholders of the Company, which to the best knowledge of the Company do not currently have rights inconsistent with
the rights granted hereby), and will not hereafter enter into, any agreement with respect to its securities that is inconsistent with the rights granted to the Holders of Registrable Securities in
this Agreement. Without limiting the generality of the foregoing, the Company will not hereafter grant to any holder of the Company's securities registration rights that are senior to or that would
have the effect of blocking or delaying the rights of any of the Holders herein.

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IN
WITNESS WHEREOF, each of the parties hereto has caused this Registration Rights Agreement to be duly executed on its behalf as of the date first above written.

| |  | F.A.O., INC.
| |  | ------------
| |  | By:         
| |  | Purchaser   
| |  | By:         

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