OUTPUT DISTRIBUTION AGREEMENT

1.

Grant of Rights. ESPN hereby grants to Genius, throughout the Territory and during the Term, the exclusive Videogram rights as more particularly set forth herein, in and to all audiovisual productions released by ESPN that ESPN elects to distribute or cause to be distributed by means of Videograms during the Term and as to which ESPN owns or controls said rights in the Territory (each an “AP” and individually or collectively, “APs”). In addition to future APs, subject to the terms and conditions hereof Genius will distribute hereunder certain APs existing as of the date hereof which are set forth in Exhibit “1” attached hereto, and Exhibit 1 will be supplemented from time to time as each additional AP or APs become covered hereunder during the Term. Notwithstanding the foregoing, the following productions are excluded from this Agreement and are not APs hereunder: (i) ”ESPN Golf Schools 3-Club Tour with Hank Haney,” (ii) “ESPN Golf Schools Top Tips with Hank Haney,” and (iii) “Code*Breakers.”

2.

Territory. Unless ESPN notifies Genius to the contrary in writing with respect to a particular AP no later than six (6) months prior to the intended Release Date (as defined below) of such AP hereunder, the “Territory” is the United States and Canada and their respective territories and possessions, including the U.S. Virgin Islands, Puerto Rico and Guam. The Territory shall also include Army, Navy, Air Force, Red Cross and other U.S. and Canadian national and governmental installations. wherever any such facilities and installations are located.

3.

Term. The “Term” of this Agreement shall mean the period commencing on the date hereof and continuing through and including December 31, 2011. Commencing immediately at the end of the Term, Genius will have an additional six (6) month period as a non-exclusive sell-off period for Videograms, during which sell-off period Genius will have the right to continue to market, distribute and account for hereunder all previously manufactured Videograms remaining in Genius’s inventory.

4.

Rights Granted. Subject to the terms and conditions set forth herein, ESPN hereby irrevocably licenses to Genius, throughout the Territory during the Term, the exclusive right, under copyright and otherwise, to manufacture, produce, market and distribute, and subject to ESPN’s prior written approval except for licenses or sub-licenses to wholesalers (e.g., Ingram) and revenue-sharing arrangements with retailers, to license, sub-license, lease, rent, exhibit and exploit each and all of the APs (in their entirety (except for marketing and publicity) unless otherwise approved in writing in advance by ESPN) and all elements thereof by means of and in connection with “Videograms,” which for purposes hereof shall mean videocassettes, videodiscs, videotape, DVD, High-Definition DVD (e.g., “HD-DVD” and “Blu-Ray”), Universal Media Disc (“UMD”), CD-ROM, DVD-ROM or other hard carrier devices now known or hereafter devised and designed to embody one or more APs or portions thereof and to be used in conjunction with a personal reproduction, player or viewing apparatus which causes a visual image (whether or not synchronized with sound) to be seen on a screen, display or device (e.g., a television receiver or computer display), all for home use and falling within the definition of “home video” as that term is generally understood in the industry; and to act as sales agent on behalf of ESPN with respect to such rights; and to authorize others to do any or all of the foregoing; and/or to refrain from any or

all of the foregoing as Genius may determine in its reasonable discretion subject only to the terms and conditions hereof. For the avoidance of doubt, “Videograms” does not include digital downloads, podcasts, television (other than for display of Videograms), theatrical, non-theatrical, online / internet, digital media, VOD, SVOD, SD Cards or Flash Memory.

5.

ESPN Rights. ESPN reserves all rights in the APs not granted to Genius hereunder. Without limiting the foregoing, ESPN reserves the following rights in the APs:

(a)

The right to promote the APs with respect to ESPN’s reserved rights, and with respect to Videograms to the extent that ESPN’s existing distribution partners (e.g., Hart Sharp Video, Ingram, etc.) may promote their ESPN Videogram titles, and so that ESPN and its partners may promote the APs.

(b)

Exploitation of content contained in or derived from the APs, provided that such exploitation is by means of “Video Now” and similar interactive videogame devices, broadband, video-on-demand, interactive board games, greeting cards, SD cards, books or other products (which may include added Videogram content); provided, however, that such content may be exploited by ESPN only in conjunction with such products and not as standalone Videogram product in any of the formats set forth in Paragraph 4 above, Genius acknowledging that the foregoing rights set forth in this Paragraph 5(b) have been licensed to a third party;

(c)

Licensing of excerpts and clips derived from the APs (each a “Clip”) by means of Videograms; provided, however, that unless otherwise agreed to in writing by Genius and ESPN, if a Clip licensed by ESPN to a third party for use in a Videogram to be sold at retail is part of the titled content of an AP, such Clip may not have a length longer than the greater of ten percent (10%) of the length of the AP or five (5) minutes, but if such Clip is not part of such titled content but is part of “value added” or “bonus content” included (or to be included) in a Videogram of such AP, there will be no limitation on the length of such Clip. For the avoidance of doubt, nothing in the foregoing will limit Genius’s marketing and publicity rights with respect to APs hereunder or Genius’s use of Clips in connection therewith.

(d)

Exploitation of “premium” offerings of APs (i.e., co-branded or custom content product created for an advertiser or affiliate of ESPN as a premium item for promotional or other non-retail purposes), direct to consumer continuity programs (i.e., the marketing and delivery of content to targeted databases via direct mail or otherwise but not made available at retail), or exploitation by means of electronic sell-through or download.

(e)

Notwithstanding the foregoing, ESPN and Genius shall discuss in good faith any proposed exploitation by ESPN of the APs in digital media during the Term; provided, however, that ESPN shall have no obligation to enter into an agreement with Genius regarding such exploitation. In this connection, upon Genius’s request at any time after January 1, 2009, Genius and ESPN will review and discuss in good faith (i) then-prevailing industry trends concerning the impact of digital media upon the Videogram business in general and the impact of ESPN’s digital distribution rights upon the value of Genius’s rights hereunder in particular, and (ii) possible adjustment of the remaining “Minimum Guarantee” (as defined below) payable by Genius hereunder based on such impacts; provided, however, that no such adjustment shall be made unless agreed to in writing by Genius and ESPN.

6.

ESPN Approvals; Marketing Plan.

(a)

ESPN shall have the right of final approval over all content of all Videograms manufactured, produced and/or distributed hereunder, including the packaging thereof and all creative content, unit forecast, inventory production and initial shipment, as well as final approval over the initial marketing plan (including, without limitation, wholesale pricing), release strategy, budget and all of the “Distribution Expenses” (as defined below) for each AP, which approval may be granted or withheld in ESPN’s sole discretion. In connection with ESPN’s approval right over Distribution Expenses, the marketing plan submitted by Genius for each AP pursuant to subparagraph (b) below will include Genius’s estimate of the “P&L” for such AP, including all customary Distribution Expenses, and ESPN’s approval of such marketing plan will constitute approval of all such customary Distribution Expenses to the extent set forth in such P&L.

(b)

Genius will submit the initial marketing plan for each AP, and if ESPN does not expressly approve or disapprove the marketing plan within five (5) business days after its receipt thereof, such marketing plan will be deemed not approved. In the event such plan is so deemed not approved, Genius shall contact ESPN’s designee hereunder and ESPN shall give Genius the reasons for such disapproval within the next five (5) business days. Genius and ESPN will use their best efforts to resolve any disagreement with respect to the marketing plan, but ESPN shall have the final decisions in its sole discretion with respect thereto.

(c)

Genius may modify the approved marketing plan for each AP based on the performance of such AP in the marketplace and prevailing market costs, provided that any such marketing expenses and/or other Distribution Expenses in excess of the approved marketing expenses plus 5% shall require ESPN’s prior written approval, which shall not be unreasonably withheld.

(d)

Without limiting the foregoing, in connection with the marketing of APs hereunder Genius shall not purchase advertising on a television sports network competitive with ESPN without ESPN’s prior written approval.

7.

Genius Obligations. During the Term:

(a)

Genius shall provide all customary manufacturing, production, marketing, sales and distribution services with respect to Genius’s manufacturing, production, marketing, sales and distribution of Videograms of the APs hereunder. Subject to ESPN’s approval rights hereunder, such services shall include,:

(i)

Package design, menu design, VAM development, authoring and replication;

(ii)

Taking orders and picking, packing and shipping Videograms to retailers (such services to be fully operational by June 5, 2006);

(iii)

Providing dedicated personnel to work exclusively on furnishing Genius’s services for ESPN as set forth herein, consisting of a minimum of one brand manager and one retail strategies manager;

(iv)

Providing weekly status updates regarding sales solicitation, sell-through tracking, industry tracking and key performance indicators;

(v)

Providing monthly reporting pursuant to Paragraph 20 below and , periodic business reviews, industry comparison analyses and recommendations for increasing sales;

(vi)

Designing, preparing and monitoring point-of-purchase materials and in-store presence; and

(vii)

Coordinating retailer-sponsored advertising.

(viii)

If requested by ESPN and to the extent reasonably available to Genius and not otherwise available to ESPN or included in Genius’s reporting to ESPN hereunder, providing such additional information as is necessary to enable ESPN to determine its obligations pursuant to Paragraph 8(b) below.

(b)

Subject to ESPN’s approval in each instance, Genius shall release each AP in at least the following formats: DVD and High Definition DVD, subject to a release schedule to be approved in advance by ESPN. Genius acknowledges that ESPN currently plans to use the Blu-Ray format for its high definition releases, and any non Blu-Ray High Definition DVD release contemplated by Genius shall be subject to ESPN’s prior written approval.

(c)

Genius shall not enter into a distribution agreement or similar arrangement for production, manufacture and/or distribution of any Videograms of content owned by any third-party sports media brand (i.e., a sports television network or other sports broadcast outlet) without ESPN’s prior written approval, which may be granted or withheld at ESPN’s sole discretion.

(d)

ESPN shall be entitled to purchase from Genius Videograms of each AP at a reduced price equal to Genius’s *** thereof, in aggregate quantities not to exceed *** Videogram units for all APs per Sales Period, to be used only for internal sales and promotions by ESPN. Any ESPN requests for additional reduced-price purchases shall be subject to good faith negotiation.

(e)

Genius shall deliver to ESPN, at no cost to ESPN in advance of the retail launch of each AP hereunder, fifty (50) Videogram units of such AP in each format released by Genius.

(f)

Unless otherwise agreed to in writing by Genius and ESPN, all promotional and/or insert space on the Videogram of each AP and/or the packaging thereof shall be reserved for

ESPN promotional content (e.g., promotional spots in a DVD, packaging inserts, etc.) as designated by ESPN in its sole discretion subject to Paragraph 8(b) below.

(g)

Genius shall use its best efforts to cause the Videograms manufactured, produced and distributed hereunder to be of first class technical quality customary in the US home video industry at the time of manufacture.

(h)

Genius shall give “equal treatment” to the APs as compared to other productions distributed by Genius, i.e., Genius shall deal with the distribution of APs hereunder with a standard of care and diligence no less than that accorded other productions distributed by Genius;

(i)

Genius shall be solely responsible for all third party clearances, all residual costs and royalties payable to third parties, including all music clearance costs, guild and union residuals and other payments, and all third party profit participations or other contingent compensation associated with any DVD Extras or other content created and/or added to the Videograms by Genius (i.e., not supplied to Genius by ESPN). The inclusion of any such Genius-created material in Videograms hereunder, and Genius’s right to include the costs of such material as part of Distribution Expenses hereunder, shall be subject to ESPN’s prior written approval.

(j)

If ESPN requests that Genius execute any further documents reasonably relating to this Agreement or ESPN’s rights hereunder, subject to Genius’s right to review and comment thereon Genius shall complete, execute and return such documents to ESPN expeditiously, including at the end of the Term of this Agreement and any sell-off period hereunder.

8.

ESPN Obligations. During the Term:

(a)

ESPN shall deliver to Genius a minimum of fifteen (15) APs during each Sales Period (as defined below) hereunder. The parties may discuss in good faith a reduction of such minimums, provided that any reduction will be subject to the parties’ mutual agreement, which may be given or withheld in their respective sole discretion. The APs may include national, regional and/or exclusive releases.

(b)

Subject to Paragraph 7(i) above, ESPN shall be solely responsible for all third party clearances, all residual costs and royalties payable to third parties, including all music clearance costs, guild and union residuals and other payments, and all third party profit participations or other contingent compensation associated with the APs; and all APs will be delivered to Genius fully cleared and authorized for Genius’s distribution hereunder with no additional payments to be made by Genius to any third party in connection therewith. If an AP is not cleared by ESPN for distribution in Canada hereunder, ESPN will evaluate the costs of such clearance and, in its sole discretion, will either (i) undertake such clearance so as to allow Genius to distribute the AP in Canada, or (ii) notify Genius in writing pursuant to Paragraph 2 above that such AP is not cleared for distribution in Canada (in which case Genius shall not distribute such AP in Canada).

(c)

If Genius requests that ESPN execute any further documents reasonably relating to this Agreement or Genius’s rights hereunder, subject to ESPN’s right to review and comment thereon ESPN shall complete, execute and return such documents to Genius expeditiously, including at the end of the Term of this Agreement and any sell-off period hereunder.

9.

Minimum Guarantee. Subject to Paragraph 21 below, Genius shall pay to ESPN a minimum of Four Million Five Hundred Thousand Dollars ($4,500,000) in “ESPN Receipts” (as defined below) during each Sales Period (as defined below) (each, a “Minimum Guarantee”) during the Term, subject to the following:

(a)

Each payment of the Minimum Guarantee hereunder will be non-returnable to Genius except as provided in Paragraphs 21 and/or 22 below, will be recoupable by Genius and credited against ESPN Receipts pursuant to Paragraph 11 below, and will be net of any ESPN Receipts theretofore paid to ESPN during such Sales Period. For the avoidance of doubt, in any Sales Period ESPN will be entitled to receive the greater, but not both, of (i) the actual ESPN Receipts for such Sales Period and (ii) the Minimum Guarantee.

(b)

The Minimum Guarantee for Sales Period 1 shall be payable 50% thereof within ten (10) business days after full execution of this Agreement and 50% thereof (less any ESPN Receipts theretofore paid in such Sales Period) on or before February 1, 2007. The Minimum Guarantee for each of Sales Periods 2 through 5 shall be payable 50% thereof on or before the first day of such Sales Period, 25% thereof (less any ESPN Receipts theretofore paid in such Sales Period) on or before three (3) months after such first day and 25% thereof (less any ESPN Receipts theretofore paid in such Sales Period and not already credited against the Minimum Guarantee) on or before six (6) months after such first day.

(c)

The Sales Periods are as follows:

(d)

***

10.

Gross Receipts; Net Receipts. With respect to each AP, “Gross Receipts” means all amounts actually received by Genius in U.S. Dollars in the United States from the distribution of Videograms that are released hereunder during the Term; and “Net Receipts” means Gross Receipts less all refunds, rebates, credits, discounts, allowances, advance payments (until earned or forfeited), security deposits (until earned or forfeited), the Return Reserve (as defined below) and actual returns in excess of the Return Reserve. Genius shall be entitled to establish and maintain a reserve for returns of Videograms in an amount (“Return Reserve”) equal to twenty percent (20%) of Gross Receipts, provided that each addition to the Return Reserve shall be liquidated (to the extent not applied to actual returns) within six (6) months of its establishment, subject to Genius’ retention of its Distribution Fee (as defined below) on such liquidated Return Reserves.

11.

Allocation of Net Receipts. All Net Receipts derived from the distribution of each AP hereunder shall be allocated as follows:

(a)

First, Genius shall retain a distribution fee in an amount equal to the following applicable percentage of the Net Receipts, computed as follows based on the Net Receipts derived from all APs distributed hereunder in each Sales Period (for each Sales Period, “Sales Period’s Net Receipts”):

(i)

If a Sales Period’s Net Receipts are less than or equal to *** Dollars ($***): *** Percent (***%) of such Sales Period’s Net Receipts;

(ii)

If a Sales Period’s Net Receipts are greater than *** but less than or equal to *** Dollars ($***): *** Percent (***%) of the first *** Dollars ($***) of such Sales Period’s Net Receipts and *** Percent (***%) of such Sales Period’s Net Receipts in excess of *** Dollars ($***); and

(iii)

If a Sales Period’s Net Receipts are greater than $***: *** Percent (***%) of the first *** Dollars ($***) of such Sales Period’s Net Receipts, *** Percent (***%) of such Sales Period’s Net Receipts in excess of *** Dollars ($***) but less then or equal to *** Dollars ($***), and *** Percent (***%) of such Sales Period’s Net Receipts in excess of *** Dollars ($***).

(b)

Then, Genius shall retain 100% of further Net Receipts until it has recouped (i) the Minimum Guarantee for the applicable Sales Period (i.e., the Sales Period in which such Net Receipts are derived), (ii) any unrecouped portion of the Minimum Guarantees for the immediately preceding two (2) Sales Periods, and (ii) *** percent (***%) of any unrecouped portion of the Minimum Guarantees for all Sales Periods prior to the immediately preceding two (2) Sales Periods;

(c)

Then, Genius shall retain 100% of all further Net Receipts until it has recouped all Distribution Expenses of such Sales Period and all previous Sales Periods; and

(d)

Then, ESPN shall be entitled to all further Net Receipts (collectively, “ESPN Receipts”).

12.

Distribution Expenses. Subject to ESPN’s approval rights pursuant to Paragraph 6 above, whether as to individual expense items or as included as part of the “P&L” for each AP, Genius shall pay for, and recoup pursuant to the terms hereof, all customary “Distribution Expenses” with respect to each AP, which for purposes hereof means and includes all costs and expenses of whatever kind paid or incurred in connection with the manufacture, production, distribution, advertising, exploitation and turning to account of each AP hereunder and includes without limitation all of the following, as applicable:

(a)

All costs of duped and dubbed tapes, Videograms (including without limitation the creation, compression and authoring of Videogram masters (e.g., a 16:9 digibeta video master), duplicating material and facilities and all other material manufactured for use in connection with each AP, including the cost of inspecting, repairing, checking and renovating Videograms, packing, storing, shipping and all other expenses connected therewith.

(b)

All out-of-pocket costs of advertising, publicizing and/or exploiting each AP, including without limitation all advertisements, press books, artwork, publicity materials, advertising accessories and trailers, Videogram screeners and all other pre- and post-release advertising and publicity, so-called cooperative advertising, and/or other advertising and/or publicity engaged in with or for television exhibitors, internet providers and/or Videogram retailers.

(c)

All other costs of preparing and delivering the APs for distribution hereunder, including without limitation all costs in connection with the preparation of “bonus materials” or other additional materials contained in or as part of the Videograms and all costs of preparing such Videograms, including the costs of creating menus and other navigational elements and designs in connection therewith.

(d)

Subject to Paragraph 20(e) below, all sums paid or liabilities incurred on account of sales, use, receipts, excise, remittance and other transactional taxes (however denominated) to any governmental authority assessed upon the Videograms, or upon the use or distribution of the APs hereunder, or upon the revenues derived therefrom, or any part thereof, or upon the remittance of such revenues, or any part thereof; and provided that the following sums or liabilities are not recouped by Genius by means of a tax refund or other reimbursement from the governing tax authority (in connection with which Genius shall use commercially reasonable efforts to obtain such a refund, and costs which are so refunded or reimbursed to Genius after having been deducted shall be added back to Gross Receipts hereunder),any and all sums paid or accrued on account of duties, customs and imposts, costs of acquiring permits or any similar authority to secure the entry, licensing, exhibition, performance, use or televising of the APs in the Territory or part thereof, regardless of whether such payments or liabilities are assessed against the AP or the proceeds thereof or against a group of motion pictures in which the AP may be included or the proceeds thereof. Genius’s own income taxes and franchise taxes based on Genius’s net income shall not be deductible hereunder.

(e)

Expenses of transmitting to the United States any funds accruing to Genius from the APs in foreign countries and any discounts from such funds taken to convert such funds directly or indirectly into U.S. dollars, and all customs costs, bank fees, transfer fees and other similar fees and charges.

(f)

In the event any person or entity shall make a claim relating to any AP against Genius or any of its licensees, which claim, in Genius ‘s judgment, is of sufficient merit to constitute a reasonable probability of ultimate loss, cost, damage or expense, Genius may, subject to ESPN’s approval in its sole discretion, deduct such amount as Genius may reasonably deem necessary to cover loss, cost, damage or expense which may be suffered as a result thereof. Subject to ESPN’s approval in its sole discretion, Genius shall have the right to settle and pay any such claim, and after the settlement of any such claim, or after the final judicial determination thereof, the amount previously deducted hereunder shall be adjusted accordingly with the next accounting statement rendered hereunder. Nothing herein contained shall be construed as a waiver of any of ESPN’s warranties contained in this Agreement, or a waiver of any right or remedy at law or otherwise which may exist in favor of Genius including without limitation the right to require ESPN to reimburse Genius on demand for any liability, cost, damage or expense arising out of, or resulting from, any breach by ESPN of any warranty, undertaking or obligation by ESPN, or any right on the part of Genius to recoup or recover any such cost or expense out of ESPN’s share of any monies payable hereunder, or otherwise, rather than treating such costs or expenses as Distribution Expenses.

13.

Manufacturing/Sourcing; International Labor Standards (“ILS”); Compliance.

(a)

Genius.

(i)

With regard to international labor standards (“ILS”), to the extent that Genius owns or operates any manufacturing facilities utilized for the manufacture of Videograms hereunder (for purposes of this Paragraph 13, “Videograms”

referring to Videograms of APs hereunder), Genius covenants on behalf of such Genius-owned or Genius-operated manufacturing facilities to comply with the Code of Conduct attached hereto as Attachment 1 and incorporated by this reference (the “Code”), in the manufacturing, packaging and distribution of Videograms. “Manufacturer” means any of the manufacturers, factories, suppliers and facilities (as well as any sub-manufacturers, factories, suppliers and facilities) that reproduce or use any of the Videograms, components of Videograms, promotional materials, or any other item related to the Videograms, or that assemble the Videograms, or that assemble a final product including one or more Videograms. Genius shall require all Genius-owned and/or Genius-operated Manufacturers to covenant to comply with the Code in the manufacturing, packaging and distribution of the Videograms by signing the Manufacturer’s Agreement in substantially the form and substance attached hereto as Attachment 4. The Code shall not be interpreted to require Genius or its owned or operated Manufacturers to violate any applicable Law.

(ii)

Genius agrees to be bound by the Code of Conduct for Genius, attached hereto as Attachment 2 and incorporated by this reference (“Genius’s Code”).

(iii)

As provided in the Code, , Genius agrees that ESPN and its designated agents (including third parties) may engage in monitoring activities to confirm compliance with this Paragraph. An inspection typically consists of an initial audit, a period of time to remediate, and a follow-up audit; provided, however, that egregious violations, e.g., child labor, result in an immediate failure with no opportunity to remediate.

(iv)

Genius agrees to investigate or notify ESPN of any claimed or observed violations of the Code, and, if it finds there have been violations of the Code, to take appropriate and prompt steps to correct the situation. In any case where there are severe violations of the Code and remediation is unlikely to occur, ESPN shall have the right to require that Genius move the production of Videograms to an alternative factory on a reasonably expedient basis.

(b)

Manufacturers.

(i)

Genius shall supply ESPN with the names and addresses of all of its owned or operated manufacturing facilities, if any, for the Videograms. If Genius at any time desires to use a third-party Manufacturer to produce the Videograms, components of Videograms or related items, whether the third party is located within or outside the Territory, Genius shall provide ESPN the accurate name and complete address of the Manufacturer and identify the Videograms, components, or related items, using the Facilities and Merchandise Authorization (FAMA) form, attached hereto as Attachment 2, and obtain ESPN’s prior written permission to use the third party. The references to “Disney” and “Disney’s merchandise” in the FAMA form shall be deemed to be references to “ESPN” and “ESPN’s merchandise” for purposes of this Agreement. ESPN’s decision as to whether a Manufacturer complies with the Code shall be a matter within ESPN’s absolute discretion. ESPN’s permission in each case is conditioned upon the execution and delivery of a Manufacturer’s Agreement. The references to “Disney” and “Disney’s merchandise” in the Manufacturer’s Agreement form shall be deemed to be references to “ESPN” and “ESPN’s merchandise” for purposes of this Agreement. ESPN may require a pre-approval compliance inspection (at ESPN’s sole cost) of a Manufacturer prior to the production of any Videograms, components, or other related items. Genius immediately shall notify ESPN when

Genius no longer is using a Manufacturer. Genius agrees to comply with all applicable privacy and data protection laws with regard to the submission of information regarding Manufacturers and the ILS inspection reports on such Manufacturers.

(ii)

If any Manufacturer utilizes an AP for any unauthorized purpose, Genius shall cooperate fully in bringing such utilization to an immediate halt. If, by reason of Genius’s failure to submit all necessary FAMA forms, ESPN makes any representation or takes any action that causes it to be subject to any penalty or expense, Genius shall fully reimburse ESPN for any cost or loss ESPN sustains, and ESPN shall retain all rights it otherwise would have to other legal or equitable remedies.

(iii)

If a Manufacturer fails to pass a compliance inspection as referenced in subparagraph (c) below, and thereafter fails to remedy the cited failure(s) within the time designated by ESPN, or if the Manufacturer otherwise breaches the Manufacturer’s Agreement, the Manufacturer’s Agreement for such Manufacturer may be terminated immediately by ESPN, and upon receipt by Genius of written notice from ESPN of such termination, Genius thereafter shall not use such Manufacturer to manufacture Videograms, components, or related items, subject to an orderly transition of business. If a Manufacturer fails to pass a pre-approval compliance inspection, and thereafter fails to remedy the cited failure(s) within the time designated by ESPN, upon receipt by Genius of written notice from ESPN thereof Genius shall not use such Manufacturer to produce Videograms, components or related items.

(iv)

Genius agrees not to manufacture Videograms, or permit the manufacturing of Videograms, in countries where the manufacturing of ESPN products is prohibited. A current list of prohibited countries may be obtained by written request to ESPN.

(c)

Videogram Quality and Safety

(i)

With regard to product quality and safety, Genius covenants that each Videogram, and each component of each Videogram, shall be of good technical quality and free of defects in design, materials and workmanship, and shall comply with all applicable laws (other than laws relating to the content of each Videogram, as to which ESPN has sole responsibility), and such specifications, if any, as may have been required in connection with this Agreement, and shall conform to the approvals given by ESPN.

(ii)

Both before and after Genius puts Videograms on the market, Genius shall follow reasonable and proper procedures for testing or otherwise determining that Videograms comply with all applicable product safety laws, and shall permit ESPN’s designees, at ESPN’s sole cost, to inspect testing and quality control records and procedures, and to test the Videograms for compliance with product safety and other applicable laws; however, ESPN shall not be required to conduct any such testing. Genius also shall give due consideration to any recommendations by ESPN that Videograms exceed the requirements of applicable laws. Videograms not manufactured, packaged or distributed in

accordance with applicable laws shall be deemed unapproved, even if previously approved by ESPN, and shall not be shipped unless and until they have been brought into full compliance.

(iii)

Without limiting the foregoing, Genius agrees that all Videograms shall comply fully with all applicable federal and state laws and regulations and all voluntary industry standards and shall be safe for children as required by applicable laws (collectively, “Safety Requirements”). Genius immediately shall notify ESPN if Genius obtains information reasonably supporting the conclusion that a Videogram may fail to comply with one or more Safety Requirements or may contain a defect that could create a substantial risk of injury to the public, and thereafter shall provide ESPN with timely information regarding further developments. If ESPN determines from information supplied by Genius or from other information that such a defect or failure to comply exists, and if ESPN so directs, then Genius, at its expense and in compliance with any applicable governmental regulations and ESPN’s directions, shall notify the CPSC (or other governmental agency specified by ESPN) of such defect or failure to comply and shall take such further actions as the CPSC, other governmental agency or ESPN shall direct, including, without limitation, notifying the public of such failure or defect, recalling the Videogram from retailers and consumers, repairing or replacing the Videogram and refunding sums paid and expenses incurred by retailers, consumers and others by reason of the recall (all such actions being referred to collectively as the “Recall Campaign”). Genius shall provide ESPN with contemporaneous copies of correspondence and communications related to the foregoing. Whether ESPN or Genius notifies the CPSC or other governmental agency of such defect or failure, all reasonable expenses paid or incurred by ESPN by reason of or in connection with such notification, including, without limitation, all Recall Campaign expenses, shall be promptly reimbursed by Genius to ESPN. In addition, Genius shall not be entitled to recoup at any time any of its Distribution Expenses (as defined in Paragraph 12) which are associated with the Videogram in question. The obligations of Genius under this Paragraph are in addition to and not in limitation of other obligations, representations, warranties and indemnities of Genius.

(iv)

Without limiting the foregoing, Genius shall give ESPN written notice of any product liability claim made or suit filed with respect to any Videogram, any investigations or directives regarding the Videograms issued by the CPSC or other federal, state, provincial, or local consumer safety agency, and any notices sent by Genius to, or received by Genius from, the CPSC or other consumer safety agency regarding the Videograms within seven (7) days after Genius’s receipt or promulgation of the claim, suit, investigation, directive, or notice.

14.

Delivery.

(a)

With respect to each AP, “Delivery” means complete delivery and acceptance, in Genius’s sole discretion as to completeness and technical quality, of all of the delivery materials set forth in Schedule A attached hereto (comprised of “Documentation,” “Film Materials” and “Publicity Materials,” and collectively, “Delivery Materials”), which Delivery Materials shall be delivered to Genius, at ESPN’s sole cost and expense, on or before the applicable delivery dates for such materials as set forth below (as to each category of Delivery Materials, the “Delivery Date”). Time is of the essence of this Agreement with respect to ESPN’s complete Delivery on or before the Delivery Date.

(b)

The applicable Delivery Date for all of the items comprising each category of the Delivery Materials shall be, with respect to the initial Videogram release date of each AP in the Territory as set forth in the mutually-approved marketing plan for each AP (as to each AP, the “Release Date”): (i) for the Publicity Materials no later than one hundred twenty (120) days prior to the Release Date, and (ii) for the Film Materials and Documentation, no later than ninety (90) days prior to the Release Date.