Exhibit 10.3

ASSIGNMENT AND ASSUMPTION

This ASSIGNMENT AND ASSUMPTION (this "Assignment and Assumption") dated as of September 10, 2002 is made
between F.A.O., Inc., a California corporation (the "Assignor") and FAO, Inc., a Delaware corporation (the
"Assignee").

RECITALS

A.    The
Assignor is party to that certain 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 and the Second Amendment to Amended and Restated Loan and Security Agreement dated as of August 15, 2002 (as so amended and
as further amended, restated, supplemented or otherwise modified from time to time, the "Loan Agreement") by and among, on the one hand, the Assignor,
FAO Schwarz, Inc., a Delaware corporation, and ZB Company, Inc., a Delaware corporation, and, on the other hand, the several financial institutions from time to time party thereto as
Lenders (the "Lenders"), and Wells Fargo Retail Finance, LLC, as agent for the Lenders (in such capacity, the
"Agent").

B.    The
Assignor and the Assignee have entered into an Agreement and Plan of Merger dated as of August 23, 2002 (the "Merger
Agreement") the date hereof pursuant to which the Assignor shall be merged with and into the Assignee.

C.    The
Assignor wishes to assign to the Assignee all rights and obligations of the Assignor under the Loan Agreement and the other Loan Documents on the terms and subject to
the conditions set forth herein and the Assignee wishes to accept assignment of such rights and to assume such obligations from the Assignor on such terms and subject to such conditions.

NOW
THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the parties hereto agree as follows:

1.Assignment and Assumption.



2.Representations and Warranties.



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3.Further Assurances.The Assignor and the Assignee each hereby agrees to execute and deliver such other
instruments, and take such other action, as either party or the Agent may reasonably request in connection with the transactions contemplated by this Assignment and Assumption, including the delivery
of any notices or other documents or instruments to any such party, which may be required in connection with the assignment and assumption contemplated hereby.

4.Third Party Beneficiaries.The Agent and the Lenders are third-party beneficiaries of the representations,
warranties and agreements of the Assignor and the Assignee hereunder and may enforce the same.

5.Miscellaneous.



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IN
WITNESS WHEREOF, the Assignor and the Assignee have caused this Assignment and Assumption to be executed and delivered by their duly authorized officers as of the date first above
written.

| |  | ASSIGNOR:F.A.O., INC., a California corporation
| |  | -----------------------------------------------
| |  | By:                                            
| |  |                                                
| |  |                                                
| |  | ASSIGNEE:FAO, INC., a Delaware corporation     
| |  | By:                                            

|AGREED AND CONSENTED TO:
WELLS FARGO RETAIL FINANCE, LLC,
as Agent |  |                                              |  | 
|------------------------------------------------------------------ |  | -------------------------------------------- |  | 
|By:                                                                |  | /s/PATRICK J. NORTON                         |  | 
|                                                                   |  | Patrick J. Norton
Vice President             |  | 
|FAO SCHWARZ, INC.                                                  |  |                                              |  | 
|By:                                                                |  | /s/RAYMOND P. SPRINGER                       |  | 
|                                                                   |  | Raymond P. Springer
Executive Vice President |  | 
|ZB COMPANY, INC.                                                   |  |                                              |  | 
|By:                                                                |  | /s/RAYMOND P. SPRINGER                       |  | 
|                                                                   |  | Raymond P. Springer
Executive Vice President |  | 

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