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THIRD AMENDMENT
  TO
  AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT    
  

        THIS THIRD AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this "Third Amendment") is entered into
and effective as of November 21, 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 and the Second Amendment to Amended and Restated Loan and Security Agreement dated as of August 15,
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 amendments to the
Loan Agreement. Agent and Lenders are willing 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 terms are hereby inserted in the proper alphabetical order: 

        "Additional Investment" means an investment in any Borrower made by a Person other than another Borrower or Subsidiary thereof after
December 31, 2002 in consideration of (a) the sale of Stock of Parent or (b) the issuance of Indebtedness by Parent that (i) has a stated maturity equal to or longer than
the Kayne Credit Support Indebtedness, (ii) has default provisions no less favorable to the Lender Group than those of the Kayne Credit Support Indebtedness and (iii) is subordinated in
right of payment and priority of payment to all Obligations on terms at least as favorable to the Lender Group as the terms of the Kayne Intercreditor Agreement. 

        "Additional Investment Proceeds" means the net cash proceeds received by a Borrower as a result of one or more Additional Investments. 

        "Liquidity Reserve" means a $10,000,000 Reserve established by Agent in Agent's Discretion and instituted by Agent in $2,500,000
increments on each of November 8, November 15, November 22 and November 29, 2002. 

        "Third Amendment" means the Third Amendment to Amended and Restated Loan and Security Agreement dated as of November 21, 2002 by
and among Borrowers, Agent and Lenders. 

        (ii)
The definition of the term "Equipment Financing Indebtedness" is hereby amended by inserting the words ", including the Kayne Credit Support Indebtedness," after the words "means
Indebtedness". 

 

        (iii)
The definition of the term "Kayne Credit Support Indebtedness" is hereby amended by deleting such definition in its entirety and inserting in lieu thereof the following new
definition: 

        "Kayne Credit Support Indebtedness" means Indebtedness owing by Borrowers to Kayne Anderson Capital Advisors, L.P., as agent, and Fortune
Twenty-Fifth, Inc. under the Amended and Restated Equipment Notes dated as of November 21, 2002 issued by Borrowers to Kayne Anderson Capital Advisors, L.P., as agent, and Fortune
Twenty-Fifth, Inc. in the aggregate principal amount of $13,000,000 and/ or any extension, renewal, replacement, substitution or refinancing thereof. 

        (iv)
The definition of the term "Kayne Intercreditor Agreement" is hereby amended by deleting such definition in its entirety and inserting in lieu thereof the following new definition: 

        "Kayne Intercreditor Agreement" means an Intercreditor Agreement in form and substance reasonably satisfactory to Agent duly executed and
delivered by Kayne Anderson Capital Advisors, L.P. ("KACA"), Fortune Twenty-Fifth, Inc., and each Borrower, together with copies of the
promissory notes evidencing the Kayne Credit Support Indebtedness executed and delivered by Borrowers to each of KACA and Fortune Twenty-Fifth, Inc. 

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

        (vi)
The definition of the term "Restricted Junior Payment" is hereby amended by deleting the words "any subordinated indebtedness" in clause (iv) of such definition and inserting
in lieu thereof the words "Kayne Credit Support Indebtedness and any other subordinated indebtedness". 

        (b)
Section 2.1 of the Loan Agreement is hereby amended by deleting subsections (a)(x)(i), (a)(x)(ii) and
(a)(x)(iii) of such Section 2.1 in their entireties and inserting in lieu thereof the following new subsections (a)(x)(i) and (a)(x)(ii): 

	"(i)
	an
amount equal to the sum of (A) (I) during the calendar months of May through August 2002, 87.5% of the Net Retail Liquidation Value and (II) at all other
times, 85% of the Net Retail Liquidation Value plus (B) the lesser of (I) 75% of Eligible Credit Card Accounts or (II) $7,500,000,
less the amount of the Dilution Reserve plus (C) 85% of the Net Liquidation Percentage times the undrawn amount of undrawn Inventory Letters of Credit outstanding less than 90 days; or

	(ii)
	an
amount equal to the sum of (A) (I) during the period commencing on December 16 of any calendar year and ending on September 30 of the following calendar year,
67.5% of the Cost value of Eligible Inventory, (II) during the calendar month of October of any calendar year, 72%, of the Cost value of Eligible Inventory, (III) during the calendar
month of November of any calendar year, 78% of the Cost value of Eligible Inventory, and (IV) during the period commencing on December 1 of any calendar year and ending on
December 15 of such year, 75% of the Cost value of Eligible Inventory plus (B) the lesser of (I) 75% of Eligible Credit Card
Accounts or (II) $7,500,000, less the amount of the
Dilution Reserve plus (C) 85% of the Net Liquidation Percentage times the undrawn amount of undrawn Inventory Letters of Credit outstanding less
than 90 days;" 

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        (c)
Section 7.11 of the Loan Agreement is hereby amended and restated in its entirety as follows: 

        "7.11.
Restricted Payments and Distributions. 

        (a)
Except as set forth in the Business Plan and subject to Sections 7.8(c) and 7.11 (b), make any Restricted
Junior Payment other than a payment with respect to the Vendex Indebtedness or the Athanor Note; provided, that after December 31, 2003,
Borrowers may make payments of principal and/ or interest in respect of the Kayne Credit Support Indebtedness so long as no Default or Event of Default has occurred and is continuing or to the extent
the making of such a payment would not cause a Default or Event of Default; provided further, that at any time after November 22, 2002,
Borrowers' may pay up to an aggregate of $5,000,000 in respect of the Kayne Credit Support Indebtedness to the holders thereof so long as at the time of any such payment (i) the entire
Liquidity Reserve has been instituted (whether as scheduled herein or earlier upon Borrowers' written request to Agent), (ii) the then applicable minimum Availability covenant level provided
for in Item A of Schedule 7.21(a) is $7,500,000, and (iii) no Default of Event of Default has occurred and is continuing or would be caused by the making of such a payment; and  provided further, that Borrowers may make prepayments of principal and accrued interest in respect of the Kayne Credit Support Indebtedness in an amount
equal to Additional Investment Proceeds received by Parent so long as no Default or Event of Default has occurred and is continuing or to the extent the making of such a payment would not cause a
Default or Event of Default. 

        (b)
Make any payment of principal and/ or interest in respect of the Vendex Indebtedness if any Default or Event of Default has occurred or is continuing or would be caused by such
payment." 

        (d)
The Loan Agreement is hereby amended by deleting Schedules E-1, P-1, R-1, T-1,5.7, 5.8, 5.10, 5.11, 5.13, 5.16, 5.17, 5.18, 6.11, 7.1,
7.3 and 7.4 in their entireties and inserting in lieu thereof the Schedules E-1, P-1, R-1, T-1,5.7, 5.8, 5.10, 5.11, 5.13, 5.16, 5.17, 5.18, 6.11, 7.1,
7.3 and 7.4 attached hereto. 

        (e)  Schedule 7.21(a) of the Loan Agreement is hereby amended by adding the following sentence to the end of Item A of such
Schedule 7.21(a): 

"Borrowers
may elect upon giving written notice to Agent to have the $7,500,000 minimum Availability level apply to Borrowers for purposes of this covenant prior to November 30, 2002." 

        (f)
Schedule 7.21(a) of the Loan Agreement is hereby amended by adding the following new Item C to such
Schedule 7.21(a): 

	"C.
	Maximum Effective Advance Rate.    At all times during each of the periods set forth below, the Effective Advance Rate shall
not exceed the percentage set forth below for such period. Commencing December 27, 2002, the Effective Advance Rate shall not exceed 35% until such time as new maximum Effective Advance Rate
levels are established based on the new Business Plan, if such new Business Plan is accepted by the Lenders and Agent in accordance with the terms hereof. For purposes of this Schedule 7.21(a),
"Effective Advance Rate" means, at any date of determination, the result, expressed as a percentage, of: (i) the sum of the outstanding balance of the Loan Account plus all outstanding
stand-by Letters of Credit in an aggregate amount 

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in
excess of $1,000,000 and all Inventory Letters of Credit divided by (ii) the Cost value of Eligible Inventory. 

	Period:
 
	 	Maximum Effective

Advance Rate:
	 
	December 3—December 9, 2002:	 	70	%
	December 10—December 16, 2002:	 	62	%
	December 17—December 23, 2002:	 	57	%
	December 24—December 26, 2002:	 	45%	"

        3.    Conditions Precedent to Third 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 Third Amendment and each and every provision hereof: 

        (a)
The representations and warranties in this Third Amendment, the Loan Agreement as amended by this Third 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; 

        (d)
Agent shall have received an Amendment and Ratification of the Kayne Intercreditor Agreement; 

        (e)
Agent shall have received a Third Amendment fee of $50,000 from Borrowers (to be shared pro rata with the Lenders signatory hereto); and 

        (f)
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 Third Amendment. 

        4.    Representations and Warranties.    Each Borrower hereby represents and warrants to Agent that (a) the
execution, delivery, and performance of this Third 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 Third 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 Third Amendment has been duly executed and delivered by such
Borrower. 

        5.    Choice of Law.    The validity of this Third 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. 

        6.    Counterparts; Telefacsimile Execution.    This Third 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 Third Amendment by telefacsimile shall be as effective as delivery of a manually executed counterpart of this Third 

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Amendment. Any party delivering an executed counterpart of this Third Amendment by telefacsimile also shall deliver a manually executed counterpart of this Third Amendment but the failure to deliver
a manually executed counterpart shall not affect the validity, enforceability, and binding effect of this Third Amendment. 

        7.    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 Third 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. 

        8.    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 Third Amendment and the Loan Agreement, as amended by this Third Amendment. 

        9.    Miscellaneous.    

        (a)
Upon and after the effectiveness of this Third 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. 

        (c)
For purposes of determining whether Borrowers may make the payment of $5,000,000 in respect of the Kayne Credit Support Indebtedness contemplated by the first proviso of
Section 7.11 of the Loan Agreement as amended hereby, Borrowers' projected failure to comply with Section 7.20 of the Loan
Agreement on the last day of December 2002 shall not be deemed a Default under the Loan Agreement prior to the last day of December 2002. 

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

	 	 	ZB COMPANY, INC.
	

 	
 	
By:	

/s/  RAYMOND P. SPRINGER      
 Raymond P. Springer,

Executive Vice President
	

 	
 	
FAO, INC.
	

 	
 	
By:	

/s/  RAYMOND P. SPRINGER      
 Raymond P. Springer,

Executive Vice President
	

 	
 	
FAO SCHWARZ, INC.
	

 	
 	
By:	

/s/  RAYMOND P. SPRINGER      
 Raymond P. Springer,

Executive Vice President
	

 	
 	
LENDERS:
	
 	
 	

WELLS FARGO RETAIL FINANCE, LLC,

as Agent and a Lender
	

 	
 	

By:	

/s/  PATRICK J. NORTON      
 Patrick J. Norton,

Vice President
	

 	
 	
LASALLE BUSINESS CREDIT, INC.
	

 	
 	
By:	

/s/  WILLIAM STAPEL      
 William Stapel,

First Vice President
	

 	
 	
ORIX FINANCIAL SERVICES, INC.
	

 	
 	
By:	

/s/  DEEDRA DARBY-JONES      
 Deedra Darby-Jones,

Vice President

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SCHEDULE 7.1
  
    Indebtedness    
  

	1.
	Trade
obligations and accruals in the ordinary course of business.

	2.
	Unsecured
indebtedness.

	3.
	Indebtedness
arising under agreements providing for indemnification, adjustment of purchase price or similar obligations, or obligations to perform bids, trade contracts, leases,
statutory obligations or surety and appeal bonds, performance bonds and other similar obligations incurred in the ordinary course of business. 

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SCHEDULE 7.3
  
    Permitted Transactions    
  

        The
transactions set forth below are "Permitted Transactions". The Administrative Borrower shall provide Agent with at least fifteen days prior written notice of each such Permitted
Transaction and shall provide Agent and its counsel copies of all the documentation related to such Permitted Transaction, such documentation to be in form and substance reasonably satisfactory to
Agent. Before
consummating any Permitted Transaction, Borrowers shall deliver to Agent all documents requested by Agent to perfect and continue perfected Agent's Liens on the Collateral. If any Borrower creates a
Subsidiary, such Borrower shall pledge the capital stock of such Subsidiary to Agent and such Subsidiary shall become a Borrower hereunder. 

        1.    Parent
may create and merge into a wholly-owned Delaware subsidiary to be named FAO, Inc. (the "Successor Parent"). 

        2.    The
Successor Parent may create a wholly-owned Delaware subsidiary to be named The Right Start, Inc. ("TRS"). The Successor Parent may sell, assign or otherwise
convey the assets related to The Right Start brand business to TRS upon TRS's becoming a Borrower hereunder. 

        3.    The
winding up of Targoff-RS, LLC after its assets have been transferred to Borrowers or Borrowers' directly or indirectly wholly-owned Subsidiary. 

        4.    Creation
of a Subsidiary that holds all of the group's internet assets. 

        5.    Creation
of a Subsidiary that provides executive employee services to the group. 

        6.    Transfers
of assets among Borrowers and their directly or indirectly wholly-owned Subsidiaries to facilitate any Permitted Transaction, any transaction that is approved
as part of the Business Plan and any immaterial transfer. 

        7.    Issuance
of the Kayne Credit Support Indebtedness and repayment of $5 million in aggregate principal amount thereof together with interest thereon to the extent
otherwise permitted pursuant to Section 7.11. 

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SCHEDULE 7.4
  
    Disposal of Assets    
  

	1.
	The
Phillipsburg, New Jersey warehouse.

	2.
	Any
sale that is permitted as part of a Sale and Leaseback for which a Lien is permitted under the definition of Permitted Liens.

	3.
	Disposal
of Equipment and Fixtures that are obsolete, worn out or damaged or Inventory that is not current.

	4.
	Transfers
of assets among Borrowers or to a Subsidiary that is wholly-owned directly or indirectly by Parent (provided Agent knows and receives such filings as it reasonably deems
necessary to protect its security interests in the Collateral).

	5.
	A
sale of assets producing less than 1% of the annual revenue of the Borrowers on a consolidated basis.

	6.
	Disposals
of cash to make purchases in the ordinary course of business

	7.
	Short-term
leases of Inventory not exceeding a retail value of $100,000 in the aggregate upon the deposit of a credit card against the full retail value if such Inventory
is not returned in pristine saleable condition. 

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THIRD AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

RECITALS

SCHEDULE 7.1 Indebtedness

SCHEDULE 7.3 Permitted Transactions

SCHEDULE 7.4 Disposal of AssetsExhibit 10.5  

AMENDED AND RESTATED INTERIM OPERATING AGREEMENT  

        THIS AMENDED AND RESTATED INTERIM OPERATING AGREEMENT is made as of December 16, 2002 (this "Agreement") by
and among FAO SCHWARZ, INC. f/k/a Toy Soldier, Inc., a Delaware corporation ("Buyer"), FAO, INC., f/k/a The Right
Start, Inc., a Delaware corporation ("Parent"), KBB RETAIL ASSETS CORP., f/k/a F.A.O. Schwarz, a New York corporation
("Seller"), and ROYAL VENDEX KBB N.V., a Netherlands corporation ("Shareholder"). All capitalized terms
contained herein and not otherwise defined in this Agreement shall have those meanings ascribed to them in the Purchase Agreement (as defined below). 

        WHEREAS,
Parent, Buyer, Seller, Quality Fulfillment Services, Inc. ("QFS") and Shareholder are parties to that certain asset purchase agreement dated November 19, 2001 (the
"Purchase Agreement"), pursuant to which, among other things, Buyer purchased the Assets of Seller and QFS upon the terms and subject to the conditions
set forth therein; and 

        WHEREAS,
Section 2.6(a) of the Purchase Agreement provides for the execution and delivery by Seller, QFS, Shareholder and Buyer of an operating agreement, pursuant to which Buyer
shall provide operational and management services to Seller and QFS for certain of Seller's retail toy stores (the "Other Operated Stores") pursuant to
the terms of the operating agreement in the form annexed to the Purchase Agreement as Exhibit 2.6(a)(xi) (the "Other Operating
Agreement"); and 

        WHEREAS,
the terms of the Other Operating Agreement do not address Seller's needs with respect to the operation of Seller's store located at 840 North Michigan Avenue, Chicago, Illinois
(the "Chicago Store"); 

        WHEREAS,
Buyer, Parent, Seller and Shareholder entered into that certain Interim Operating Agreement dated as of January 6, 2002 (the "Original Interim
Operating Agreement"); 

        WHEREAS,
Seller has delivered notice that it will retake possession of the Chicago Store on January 20, 2003 (the "Termination
Date") for turnover to the landlord of the Chicago Store (the "Landlord") and Buyer has agreed to surrender the Chicago Store in
the condition required under the terms of this Agreement on the Termination Date; 

        WHEREAS,
Seller desires to have the Buyer operate the Chicago Store through a date chosen by Buyer in the week of January 6, 2003, and wind up operations and deliver the Chicago
Store in broom clean condition, free of fixtures, Chicago Inventory (as defined below), other personalty, signage and improvements identified by Seller or Shareholder for removal (the
"Removal Improvements"), on or before the Termination Date; and 

        WHEREAS,
Seller and Buyer desire to amend and restate the Original Interim Operating Agreement: 

        NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows: 

1. PROVISION OF SERVICES  

	1.1
	Standard of Operations. Commencing on the date hereof and continuing until a date chosen by Buyer during
the week of January 6, 2003 (the "Store Closing Date"), Buyer shall manage and operate the Chicago Store in a manner consistent with the
standards of quality with respect to the Transferred Stores and Facilities. Buyer shall notify Seller and Shareholder in 

1

 

writing
of the actual Store Closing Date at least three (3) business days in advance. Buyer shall apply substantially the same policies, practices and procedures as apply generally to the
Transferred Stores and Facilities with respect to day-to-day operations, management, accounting, purchasing, control of operating expenses and general administration, including
marketing, promotional activities and other matters, subject to the applicable terms of this Agreement. Exceptions to general policies, practices and procedures may be made by Buyer to deal with
specific circumstances affecting the Chicago Store if, in Buyer's reasonable judgment, there is an adequate business justification for doing so. In conducting the operations of the Chicago Store prior
to the Termination Date, Buyer shall cooperate and diligently assist Seller and Shareholder in all actions required in connection with the removal of personalty (other than the Chicago Inventory,
which is the property of Buyer and shall be removed by Buyer promptly
following the Store Closing Date), fixtures, signage and the Removal Improvements and the closure of the Chicago Store. Buyer shall be permitted to mark down, clear and liquidate inventory in the
Chicago Store. 

	1.2
	Contracts. Buyer shall have authority to enter into in Buyer's name, at Buyer's cost and for Buyer's
sole benefit such purchasing, service and other contracts or agreements, which are in the ordinary course of business, as are in Buyer's reasonable professional judgment necessary for the operation,
supply and maintenance of the Chicago Store as required by this Agreement. 

Buyer
shall also have authority to enter into such contracts as may be necessary in connection with the surrender and turnover of the Chicago Store as contemplated under this Agreement, including,
without limitation, contracts for the demolition and removal of improvements located in and about the Chicago Store, provided such contracts have been approved in advance by Seller or Shareholder. 

	1.3
	Maintenance. Buyer, at its own expense, shall be responsible for maintaining the Chicago Store in good
condition and repair. All repairs and maintenance work shall be completed in accordance with the terms of the real property lease for the Chicago Store (the "Lease").

	1.4
	Operating Expenses. Throughout the Term hereof, Buyer shall pay all expenses incurred in connection with
the operation and close down of the Chicago Store, including payments due under the Lease. Notwithstanding any provision to the contrary contained in this Agreement, Seller reserves the right at any
time and from time to time, upon written notice to Buyer (each, a "Rent Payment Option Notice"), to pay the base rent, additional rent and any other
charges and costs accruing under the Lease (the "Rent") directly to the Landlord. Buyer hereby agrees, upon receipt of a Rent Payment Option Notice, to
promptly deliver any information needed by Seller in connection with the payment of Rent (i.e., sales data used to calculate percentage rent) so as to enable Seller to pay the Rent to Landlord on a
timely basis in accordance with the terms of the Lease. Seller shall have the right upon no less than thirty (30) days written notice to revoke a Rent Payment Option Notice and direct Buyer to
resume paying Rent to the Landlord in accordance with the terms of the Lease.

	1.5
	Recordkeeping. Buyer agrees to maintain all books of record, accounts and other financial and operating
data with respect to the Chicago Store during the Term hereof. Seller shall have the right to audit Buyer's books and record, accounts, financial and operating data upon prior notice to Buyer. 

2. LANDLORD NEGOTIATIONS  

	2.1
	[Intentionally Omitted]

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3. PERSONNEL  

	3.1
	Personnel. Subject to the applicable terms of the Purchase Agreement, Buyer is solely responsible for
hiring, supervising, directing the work of, promoting, discharging and determining the compensation and other benefits of all personnel working in the Chicago Store. Buyer shall be solely liable for
the wages, salaries, benefits and other compensation of its personnel, including but not limited to management personnel such as district or regional managers that it chooses to employ to oversee the
Chicago Store. Notwithstanding any foregoing provision to the contrary, all severance, retention and bonus payments to employees of the Chicago Store must be approved in advance by Seller or
Shareholder in order to be eligible for inclusion in Expenses (as defined below). 

4. INVENTORIES  

	4.1
	Inventories. Buyer has purchased the Inventories of the Chicago Store from Seller in exchange for that
certain Subordinated Note in the aggregate principal amount of $1,500,000 dated as of January 6, 2002 which Subordinated Note shall be cancelled and replaced as of the date hereof by an Amended
and Restated Subordinated Note in the aggregate principal amount of $1,000,000 in the form attached hereto as Exhibit A (as amended as of the date hereof, the "Amended
and Restated Chicago Subordinated Note"). Buyer represents and warrants that it has refreshed the Inventories held in the Chicago Store on the same basis as it has refreshed
its other stores and Buyer shall, at its sole cost and expense, including distribution expenses, supply such additional current merchandise as is needed for sale in the Chicago Store through
December 24, 2002. 

5. MONTH-END RECONCILIATION  

	5.1
	Month-End Reconciliation. Buyer shall deliver a monthly profit and loss report to Seller
detailing Expenses (as hereinafter defined) and Net Sales (as hereinafter defined) generated at the Chicago Store substantially in the form attached hereto as  Exhibit B (the "Monthly Store Operations Report"). The
Monthly Store Operations Report shall also disclose Annual Net Sales (as hereinafter defined) for the applicable fiscal month. In the event Expenses exceed Net Sales during any fiscal month (the
"Monthly Shortfall"), Seller shall reimburse Buyer for the Monthly Shortfall within ten (10) business days of its receipt of the Monthly Store
Operations Report. Seller shall have the right to request reasonably detailed supporting documentation in connection with any Monthly Store Operations Report, which documentation shall be promptly
delivered by Buyer for Seller's review, however, payment of the Monthly Shortfall shall not be subject to Seller's approval of such supporting documentation. Seller anticipates reviewing the Monthly
Store Operations Report on a quarterly basis and expressly reserves all rights under this Section 5.1, including the right to dispute the information contained in any Monthly Store Operations
Report, notwithstanding the fact that one (1) or more months may have elapsed following payment of the applicable Monthly Shortfall reflected in any particular Monthly Store Operations Report
disputed by Seller. In the event Seller disputes any information contained in the Monthly Store Operations Report (the "Disputed Item(s)"), Seller shall
notify Buyer of such Disputed Item(s) in writing (the "Dispute Notice") in the manner required under this Agreement. Buyer shall, within ten
(10) business days of receipt of any Dispute Notice either (i) amend the applicable Monthly Store Operations Report and refund Seller's overpayment of the Monthly Shortfall or
(ii) provide Seller with additional supporting documentation and other related information with respect to the Disputed Item(s). In the event Buyer and Seller are unable to resolve the Disputed
Item(s) in a mutually satisfactory manner upon the request of Buyer or Seller, such dispute shall be submitted to arbitration in accordance with 

3

 

Section 14.9
hereof. In the event Net Sales exceed Expenses during any fiscal month (the "Sales Overage"), Buyer shall be entitled to retain and
use the Sales Overage to offset future Monthly Shortfall amounts subject to Buyer's obligation to reimburse Seller for any payment of Rent provided in the next sentence hereof and reconciliation
following the end of each fiscal year of Buyer (the "Fiscal Year"). Notwithstanding any foregoing provision to the contrary, following delivery of a Rent Payment Option Notice, in the event any Sales
Overage exists during any fiscal month in which Seller has paid the Rent, Buyer shall promptly reimburse Seller for the Rent paid by Seller up to the amount of the Sales Overage. Any excess funds
remaining from any Sales Overage following reimbursement of any Rent paid by Seller shall thereafter be returned to Seller within thirty (30) days following the end of any Fiscal Year, together
with a reconciliation statement for the applicable Fiscal Year. Any late payments shall accrue interest on a daily basis at a rate of eight percent (8%) per annum. For purposes of this Agreement, the
term "Expenses" shall mean (i) the expenses incurred exclusively in connection with Buyer's ordinary operation of the Chicago Store (which shall,
in the case of the non-allocated charges, be limited to the actual out-of-pocket expenses incurred and paid or to be settled in cash by Buyer—i.e.,
actual cost of goods sold, cash payments under the Lease, actual costs and expenses associated with operation and management of the Chicago Store and all out-of-pocket costs of
compliance with the Lease plus the Chicago Store's pro-rata portion of royalties due for the use of the FAO name and interest on the Amended and Restated Chicago Subordinated Note) as well
as the expenses associated with the closing down of the Chicago Store provided such expenses were approved in advance by Seller or Shareholder in accordance with the terms of this Agreement plus
(ii) one twelfth of six and one-half percent (6.5%) of Annual Net Sales, which amount represents the allocable amount of certain variable overhead costs associated with the
operation of all of the stores and locations being transferred to Buyer by Seller and QFS (i.e., warehouse, shipping and labor costs, corporate and home office expenses and other charges) and the term
"Annual Net Sales" shall mean total sales revenues generated by the Chicago Store for the trailing twelve (12) month period net of customer
merchandise returns. Buyer acknowledges and agrees that Shareholder may exercise Seller's rights under this Section 5.1, on Seller's behalf and the term "Net
Sales" shall mean the total sales revenue generated by the Chicago Store during any fiscal month during the Term, net of customer merchandise returns. 

If
total Expenses exceed Net Sales during a Fiscal Year of Buyer by an amount less than Two Hundred Thousand Dollars ($200,000) (such excess being defined as the "Aggregate
Annual Threshold Shortfall"), Buyer shall receive an incentive payment equivalent to the difference between the Two Hundred Thousand Dollars ($200,000) and the Aggregate Annual
Threshold Shortfall (the "Incentive Payment"). Buyer expressly acknowledges and agrees that any Rent paid directly by Seller shall be deemed included in
total Expenses and factored into the calculation of the Aggregate Annual Threshold Shortfall, notwithstanding the fact that such amounts were not actual out-of-pocket expenses
incurred and paid in cash by Buyer. In the event Net Sales for a Fiscal Year of Buyer are equivalent to the total Expenses for such Fiscal Year (the "Break Even
Point") Buyer shall receive an Incentive Payment equivalent to Two Hundred Thousand Dollars ($200,000). Each Incentive Payment shall be paid within forty-five
(45) days of the end of the relevant Fiscal Year provided no unresolved Dispute Notice is outstanding with respect to the applicable Fiscal Year at that time. In the event of an outstanding
Dispute Notice, the Incentive Payment shall be remitted to Buyer within fifteen (15) days of resolution of the Disputed Item(s). At such time that the Break Even Point is exceeded (such excess,
the "Net Profit"), such Net Profit shall be shared equally between Buyer and Seller until the Seller shall have received Two Hundred Thousand Dollars 

4

 

($200,000) (the "Second Break Even Point"). Buyer shall be entitled to retain all Net Profits in excess of the Second Break Even Point. 

6. LICENSE OF FAO NAMES  

	6.1
	License.

	(a)
	Seller
has retained, as of the closing of the Purchase Agreement (and Buyer acknowledges that Seller possesses), a royalty free, non-transferable, nonexclusive license,
for the duration of the Term hereof and solely in connection with matters related to the Chicago Store as contemplated under this Agreement, to use the names "FAO Schwarz," any derivatives thereof,
and any trademarks, service marks or trade names used by Seller in the operation of the Chicago Store prior to such closing (the "FAO Names").

	(b)
	Seller
agrees to use the FAO Names in accordance with reasonable written guidelines delivered by Buyer to Seller and in accordance with the amended and restated Schwarz Agreement. 

7. DISPOSITION OF THE CHICAGO STORE  

	7.1
	Closure Store. Immediately following the Store Closing Date and prior to the Termination Date, Buyer
shall transfer all of the then-existing Inventories at the Chicago Store ("Chicago Inventory"), out of the Chicago Store. Buyer shall work
diligently with Seller and Shareholder to coordinate removal of all other personalty, signage, fixtures and Removal Improvements from the Chicago Store and, on or before the Termination Date, Buyer
shall deliver the Chicago Store to Seller in broom clean condition free from Chicago Inventory, other personalty, signage, fixtures and Removal Improvements. 

Seller
shall pay all reasonable expenses incurred by Buyer in connection with the sale, transfer and liquidation of the Chicago Inventory and the closure of the Chicago Store as contemplated by this
Agreement provided such expenses were approved in advance by Seller or Shareholder in accordance with the terms of this Agreement. Buyer shall use commercially reasonable efforts to minimize such
expenses. Seller represents and warrants to Buyer that Seller has obtained Landlord's consent to closure of the Chicago Store. Seller agrees to take action reasonably requested by Buyer to evidence
Buyer's ownership of the Chicago Inventory. 

	7.2
	Final Store Operations Report. Buyer shall deliver a final Monthly Store Operations Report for the
period from the date of the immediately prior Monthly Store Operations Report up to and including the Termination Date (the "Final Monthly Store Operations
Report"), together with a year-to-date reconciliation statement for the Fiscal Year (or portion thereof) (the "Final Year End
Statement"). Seller's review and dispute rights with respect to the Final Monthly Store Operations Report as well as well as the Final Year End Statement shall mirror Seller's
rights described in Section 5.1 hereof with respect to Monthly Store Operations Reports and Fiscal Year statements. In the event the Final Monthly Store Operations Report and/or the Final Year
End Statement (collectively, the "Final Statements") evidences any amounts due from Seller or Buyer, notwithstanding any other provision of this
Agreement to the contrary, the party from whom such amounts are due shall remit the balance payable within ten (10) business days of receipt of the Final Statements. 

8. TERMINATION  

	8.1
	Term. This Agreement shall automatically terminate on the Termination Date. 

5

 

9. COVENANTS, LIABILITY AND INDEMNITY  

	9.1
	Buyer
hereby covenants that it shall operate the Chicago Store in accordance with the terms of the Lease and comply with all terms and conditions of the
Lease. Parent and Buyer, jointly and severally, agree to indemnify Seller and Shareholder from and against any costs, claims or damages (including reasonable attorneys' fees and reasonable actual
costs) ("Losses") arising out of (i) any breach of Buyer's covenant in this Section 9.1, (ii) events resulting from or occurring in connection with Buyer's operation of the
Chicago Store in a manner that does not comply with the terms of the Lease (except as otherwise contemplated under Section 9.2(iii) hereof), this Agreement and/or any occurrence covered
under the insurance policies required to be maintained by the tenant under the terms of the Lease, (iii) events resulting from or occurring in connection with Buyer's wrongful or intentional
misconduct and (iv) Buyer's or Parent's breach of their respective, representations, warranties and obligations under this Agreement.

	9.2
	Seller
and Shareholder, jointly and severally, agree to indemnify Buyer and Parent against (i) any losses to the extent provided and in
accordance with the terms of Section 5.1, (ii) any COBRA liabilities with respect to Chicago Store employees, (iii) Losses arising from litigation brought by the Landlord in
connection with execution or performance of this Agreement by Buyer or Seller or in connection with Seller's negotiations with Landlord concerning the closure of the Chicago Store and termination of
the Lease, (iv) Losses arising out of events resulting from or occurring in connection with Seller's wrongful or intentional misconduct and (v) Losses arising out of Seller's or
Shareholder's breach of their respective representations, warranties or obligations under this Agreement. 

10. RELATIONSHIP OF PARTIES

	10.1
	Independent Contractors. The parties are independent contractors under this Agreement. Except as
expressly set forth herein, neither party has the authority to, and each party agrees that it shall not, directly or indirectly contract any obligations of any kind in the name of or chargeable
against the other party without such party's prior written consent.

	10.2
	No Assignment of Lease. Nothing set forth in this Agreement is intended to be, or shall be deemed to
be, an assignment of any of Seller's interests in the Lease or a sublease or license to Buyer to use or occupy the Chicago Store. 

11. NOTICES

	11.1
	Notices. All notices or other communications hereunder shall be deemed to have been duly given and made
if in writing and (a) if served by personal delivery upon the party for whom it is intended, on the day so delivered; (b) if mailed by registered or certified mail, return receipt
requested, on the third
business day following such mailing; (c) if deposited for delivery by a reputable courier service, on the business day following deposit with such courier; or (d) if sent by electronic
facsimile transmission, on the day the facsimile is transmitted electronically, or if not a business day, the next succeeding business day to the 

6

 

person
at the address set forth below, or such other address as may be designated in writing hereafter, in the same manner, by such person: 

	 	 	To Seller or Shareholder:	 	 
	 	 	 	 	 
	 	 	Royal Vendex KBB N.V.

De Klencke 6, NL-1083

Postbus 7997, 1008 AD

Amsterdam, The Netherlands

Attention: Drs. Jan de Planque (RA)	 	 
	 	 	 	 	 
	 	 	with a mandatory copy to:	 	 
	 	 	 	 	 
	 	 	Kronish Lieb Weiner & Hellman LLP

1114 Avenue of the Americas

New York, NY 10036

Attention: Mark Lipschutz, Esq.

Fax no.: (212) 479-6275

E-mail address: mlipschutz@kronishlieb.com	 	 
	 	 	 	 	 
	 	 	To Buyer or Parent:	 	 
	 	 	 	 	 
	 	 	FAO, Inc.

2520 Renaissance Boulevard

King of Prussia, PA 19406

Attention: Jerry Welch/Legal

Fax no.: (610) 278-7804

E-mail address: jgroner@faoinc.com

                          kroyer@faoinc.com	 	 
	 	 	 	 	 
	 	 	with a mandatory copy to:	 	 
	 	 	 	 	 
	 	 	Fulbright & Jaworski L.L.P.

865 South Figueroa Street, 29th Floor

Los Angeles, CA 90017

Attention: Victor Hsu

Fax no.: (213) 680-4518

E-mail address: vhsu@fulbright.com	 	 

12. GOVERNING LAW; SUBMISSION TO JURISDICTION; SERVICE OF PROCESS

	12.1
	Any
Proceeding arising out of or relating to this Agreement ("Proceeding") may be brought in the courts
of the State of New York, County of New York, or, if it has or can acquire jurisdiction, in the United States District Court for the Southern District of New York, and each of the parties irrevocably
submits to the exclusive jurisdiction of each such court in any such Proceeding, waives any objection it may now or hereafter have to venue or to convenience of forum, agrees that all claims in
respect of the Proceeding shall be heard and determined only in any such court and agrees not to bring any Proceeding arising out of or relating to this Agreement in any other court. The parties agree
that either or both of them may file a copy of this paragraph with any court as written evidence of the knowing, 

7

 

voluntary
and bargained agreement between the parties irrevocably to waive any objections to venue or to convenience of forum. Each party hereto agrees that service of process in any Proceeding may
be made upon it in any manner permitted by the laws of the state of New York or the federal laws of the United States or as follows: (i) by personal service or (ii) by certified or
registered mail to the party for which intended at its address for notice pursuant to Section 11. Service of process upon any party in any manner referred to in the preceding sentence shall be
deemed in every respect effective service of process upon such party. 

13. SPECIFIC PERFORMANCE

	13.1
	Specific Performance. The parties hereto agree that if any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached, irreparable damage would occur, no adequate remedy at law would exist and damages would be difficult to determine, and
that, in the event of a breach or threatened breach of this Agreement, the parties shall be entitled to specific performance, injunctive or other equitable relief, in addition to any other remedy
available at law or in equity, without posting bond or other undertaking. 

14. MISCELLANEOUS

	14.1
	Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be adjusted rather than voided, if possible, in order to achieve the intent of the parties to this Agreement to the extent possible, without invalidating or adjusting
the remaining
provisions hereof, and any such prohibition, unenforceability or adjustment in any jurisdiction shall not invalidate, render unenforceable or adjust such provision in any other jurisdiction.

	14.2
	Descriptive Headings. The descriptive headings of the several sections and paragraphs of this Agreement
are inserted for convenience only and do not constitute a part of this Agreement.

	14.3
	Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed
to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. The exchange of copies of this Agreement and of signature pages
by facsimile transmission shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the
parties transmitted by facsimile shall be deemed to be their original signatures for all purposes.

	14.4
	Assignment and Delegation. No party to this Agreement may assign any of its rights or obligations under
this Agreement without the prior written consent of the other parties hereto. Notwithstanding the foregoing, Buyer and Parent each expressly acknowledge and agree that no consent shall be required in
connection with any assignments or transfers associated with the winding-up of Seller's and Shareholder's activities in the United States.

	14.5
	Entire Agreement. This Agreement, including the Schedules contains the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, with respect to such matters.

	14.6
	Parties in Interest. This Agreement shall inure to the benefit of and be binding upon the parties and
their respective successors and permitted assigns. Nothing in this Agreement, express or implied, is intended to confer upon any Person other than Seller, Shareholder, 

8

 

Parent
or Buyer or their respective successors or permitted assigns any rights or remedies under or by reason of this Agreement. 

	14.7
	Amendment and Waiver. Any provision of this Agreement may be amended or waived if, and only if, such
amendment or waiver is in writing and signed, in the case of an amendment, by the parties hereto, or in the case of a waiver, by the party against whom the waiver is to be effective. No failure or
delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.

	14.8
	Parent's Obligations. Where in this Agreement provision is made for an action to be taken or not taken
by Buyer, Parent undertakes to cause Buyer to take or not take such action, as the case may be.

	14.9
	Arbitration. In the event of any dispute between Seller and Buyer with respect to matters under this
Agreement, Seller and Buyer agree that: (a) upon the request of either Seller or Buyer, the dispute shall be submitted to KPMG for expedited disposition, which submission to KPMG shall occur
within five (5) business days of Seller's or Buyer's written notice to the other party requesting arbitration (the "Arbitration Notice");
(b) following delivery of the Arbitration Notice by either party, Seller and Buyer shall each compile such documentation and information as may be needed by KPMG to render a decision with
respect to the disputed matter (the "Supporting Documents"), which Supporting Documents shall be delivered to KPMG together with the written request for
KPMG's arbitration of the matter in dispute (the "KPMG Notice") within the time period provided hereinabove in Section 14.9(a);
(c) following submission of the matter to arbitration, upon request from KPMG, Seller and/or Buyer shall promptly deliver such additional documentation and information as may be needed by KPMG
(the "Additional Documents"); (d) KPMG shall render a decision no later than ten (10) business days (or as soon as reasonably practicable
thereafter) following its receipt of (i) the KPMG Notice and (ii) the Supporting Documents and, if applicable, the Additional Documents; (e) the decision of KPMG shall be final
and all actions necessary to implement the decision of KPMG shall be undertaken as soon as possible, but in no event later than ten (10) business days after the rendering of such decision;
(f) judgment upon the dispute or any award rendered may be entered in any court having jurisdiction thereof; and (g) all fees payable to KPMG for services rendered in connection with its
arbitration of the dispute shall be paid by the party suffering the adverse decision of KPMG.

	14.10
	Authority. Buyer and Parent hereby warrant and represent that no third party or lender consents are
required in connection with the execution, delivery and performance of this Agreement and all related documents including, without limitation, the Amended and Restated Chicago Subordinated Note except
as have been obtained on or prior to the date hereof.

	14.11
	Acknowledgements.

	(a)
	Parent
hereby acknowledges and agrees that, upon issuance, each of the Amended and Restated Chicago Subordinated Note and the Amended Acquisition Note (as defined below) shall be
deemed to be "Subordinated Notes" under the terms of that certain Guaranty dated as of January 6, 2002, a copy of which is attached hereto as  Exhibit C, entitled to the benefits thereof and
entitling the holders thereof to the benefits of such guaranty and the associated Parent Security
Agreement dated as of January 6, 2002, a copy of which is attached hereto as Exhibit D. 

9

 

	(b)
	Buyer
hereby acknowledges and agrees that, upon issuance, each of the Amended and Restated Chicago Note and the Amended Acquisition Note shall be deemed "Subordinated Notes" under the
terms of that certain Buyer Security Agreement dated as of January 6, 2002, a copy of which is attached
hereto as Exhibit E, entitled to the benefits thereof and entitling the holders thereof to the benefits of such security agreement.

	(c)
	KBB
and QFS hereby acknowledge that the amendment and restatement as of the date hereof, of that certain Subordinated Note due January 6, 2005, by Company for the benefit of
KBB in the aggregate principal amount of $17,098,100 (reduced to $14,830,637 by its terms) (the "Original KBB Subordinated Note"), to increase the aggregate principal amount of such Original KBB
Subordinated Note to $15,459,859 (as so amended, the "Amended Acquisition Note") shall, for all intents and purposes, be deemed payment in full of the
interest payment due on December 1, 2002 on each of the Original KBB Subordinated Note and that certain Subordinated Note due January 6, 2005, by Company for the benefit of QFS, and
shall cure any default for failure to make such payments prior to such date.

	(d)
	KBB
hereby acknowledges that the Buyer's execution and delivery as of the date hereof, of the Amended and Restated Chicago Subordinated Note satisfies the obligations due under the
Subordinated Note in the aggregate principal amount of $1,500,000 dated as of January 6, 2002 (the "Subordinated Note"), prior to its amendment
and restatement and that the aggregate principal amount outstanding due from Buyer to Seller under the Subordinated Note has been reduced from $1,500,000 to $1,000,000, which amount shall be due and
payable by Buyer in accordance with the terms of the Amended and Restated Chicago Subordinated Note. 

The
provisions of this Section 14.11 shall survive the expiration or earlier termination of the term of this Agreement. 

	14.12
	Warrants. The Company agrees to issue warrants to KBB in the form attached hereto as  Exhibit F simultaneously herewith.

[Remainder
of Page Intentionally Left Blank] 

10

 

        IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their duly authorized officers as of the date first above written. 

	 	 	KBB RETAIL ASSETS CORP.
	

 	
 	

By:	

/s/  ERIC TER HARK      

	 	 	 	Name:	Eric Ter Hark
	 	 	 	Title:	Director of Corporate Development
	 	 	 	 	 
	 	 	ROYAL VENDEX KBB N.V.
	 	 	 	 	 
	 	 	By:	/s/  ERIC TER HARK      

	 	 	 	Name:	Eric Ter Hark
	 	 	 	Title:	Director of Corporate Development
	 	 	 	 	 
	 	 	QUALITY FULFILLMENT SERVICES, INC.
	 	 	 	 	 
	 	 	By:	/s/  ERIC TER HARK      

	 	 	 	Name:	Eric Ter Hark
	 	 	 	Title:	Director of Corporate Development
	 	 	 	 	 
	 	 	FAO SCHWARZ, INC.
	 	 	 	 	 
	 	 	By:	/s/  RAYMOND P. SPRINGER      

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

	 	 	 	Name:	Raymond P. Springer
	 	 	 	Title:	Executive Vice President

11

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