Exhibit 10.58
GUARANTY
(FAO, Inc.)
This GUARANTY, dated as of April 23, 2003, is made by FAO, Inc. (fka The Right
Start, Inc.), a Delaware corporation ("Guarantor"), in favor of KBB Retail
Assets Corp., a New York corporation (fka F.A.O. Schwarz) ( the "Subordinated
Note Holder") the holder of that certain Subordinated Note (the "Subordinated
Note") issued by FAO Schwarz, Inc. (fka Toy Soldier, Inc.), a Delaware
corporation ("Issuer") and wholly-owned subsidiary of Guarantor pursuant to the
Plan (defined below):
RECITALS
A.
PURSUANT TO THAT CERTAIN ASSET PURCHASE
AGREEMENT DATED NOVEMBER 19, 2001(THE "PURCHASE AGREEMENT") ENTERED INTO BY AND
AMONG GUARANTOR, ISSUER, ROYAL VENDEX KBB N.V., A NETHERLANDS CORPORATION,
SUBORDINATED NOTE HOLDER, AND QUALITY FULFILLMENT SERVICES, INC., A VIRGINIA
CORPORATION ("QFS") , ISSUER ISSUED TO THE SUBORDINATED NOTE HOLDER AND QFS
CERTAIN SUBORDINATED NOTES IN PARTIAL PAYMENT OF THE INITIAL PURCHASE PRICE (AS
DEFINED BY THE PURCHASE AGREEMENT).
B.
ON JANUARY 13, 2003 THE GUARANTOR AND
ISSUER COMMENCED THEIR RESPECTIVE REORGANIZATION CASES BY FILING VOLUNTARY
PETITIONS FOR RELIEF UNDER CHAPTER 11 OF THE BANKRUPTCY CODE.
C.
THE SUBORDINATED NOTE IS BEING ISSUED TO
SUBORDINATED NOTE HOLDER PURSUANT TO THE GUARANTOR'S AND ISSUER'S FIRST AMENDED
JOINT PLAN OF REORGANIZATION AS CONFIRMED ON APRIL 4, 2003 BY THE UNITED STATES
BANKRUPTCY COURT DISTRICT OF DELAWARE IN CASE NO. 03-10119(LK) (THE "PLAN") IN
COMPROMISE OF SUCH EARLIER ISSUED SUBORDINATED NOTES.
D.
PURSUANT TO THE PLAN GUARANTOR IS REQUIRED
TO ENTER INTO THIS GUARANTY AND TO GUARANTY THE GUARANTIED OBLIGATIONS AS
HEREINAFTER PROVIDED.
AGREEMENT
NOW, THEREFORE,
Guarantor hereby represents, warrants, covenants, agrees and
guaranties as follows:
1.
DEFINITIONS.
GUARANTOR IS FAO, INC.
TERMS DEFINED IN THE SUBORDINATED NOTE AND NOT OTHERWISE DEFINED IN THIS
GUARANTY SHALL HAVE THE MEANINGS GIVEN THOSE TERMS IN THE SUBORDINATED NOTE WHEN
USED HEREIN AND SUCH DEFINITIONS ARE INCORPORATED HEREIN AS THOUGH SET FORTH IN
FULL.
IN ADDITION, AS USED HEREIN, THE FOLLOWING TERMS SHALL HAVE THE MEANINGS
RESPECTIVELY SET FORTH AFTER EACH:
"Guarantied Obligations" means any and all present and future obligations of
Issuer to Subordinated Note Holder arising under or related to the Subordinated
Note and/or any one or more of them, whether due or to become due, matured or
unmatured, or liquidated or unliquidated, including interest that accrues after
the commencement of any bankruptcy or insolvency proceeding by or against any
Subordinated Note Holder, Issuer or any other person.
"Guaranty" means this Guaranty, and any extensions, modifications, renewals,
restatements, reaffirmations, supplements or amendments hereof.
2.
SUBORDINATION AGREEMENT.
THIS
INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN
THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION
AND INTERCREDITOR AGREEMENT DATED AS OF APRIL 23, 2003 (AS AMENDED, SUPPLEMENTED
OR OTHERWISE MODIFIED FROM TIME TO TIME, THE "SUBORDINATION AGREEMENT") AMONG
ROYAL VENDEX KBB, N.V., KBB RETAIL ASSETS CORP., ISSUER, GUARANTOR AND FLEET
RETAIL FINANCE, INC., TO THE INDEBTEDNESS (INCLUDING INTEREST) OWED BY GUARANTOR
AND ISSUER PURSUANT TO THE LOAN AND SECURITY AGREEMENT DATED AS OF APRIL 23,
2003 (AS AMENDED, SUPPLEMENTED