A.

On April 24, 2001, Diamond and Publisher entered into an Agency Agreement (the “Original Agency Agreement”).

B.

On July 19, 2002, Diamond and Publisher amended the Original Agency Agreement by means of a letter agreement (the “Letter Agreement”).

C.

On March 1, 2003, Diamond and Publisher amended and restated the Original Agency Agreement (as amended by the Letter Agreement) (the “Amended and Restated Agency Agreement”).

D.

Diamond and Publisher now desire to make further amendments to the Amended and Restated Agency Agreement, and to restate the Amended and Restated Agency Agreement, as amended hereby, in its entirety.

1.

APPOINTMENT

(a)

Publisher and Diamond agree that, effective as of October 1, 2004 (the “Effective Date”), Diamond is appointed:

(i)

Publisher’s (A) exclusive agent in the US and Canada, and non-exclusive agent throughout the rest of the world, to perform the services of selling, billing, warehousing, shipping, returns handling, and all other appropriate customer services for distribution of Publisher Books (as defined below) to Direct Market Customers (defined below) and Bookstores (as defined below), and (B) non-exclusive agent to perform such services for the distribution of Publisher Books to Specialty Stores (as defined below; Direct Market Customers, Bookstores, and Specialty Stores are referred to collectively as “Distribution Channels”).

(ii)

Diamond shall purchase on a non-returnable, firm-sale basis from Publisher all Publisher Books intended for Diamond’s

distribution and resale to (A) Distribution Channels located in the United Kingdom and (B) such other customers serviced by Diamond’s United Kingdom facility as are listed on Schedule A-1 hereto (collectively, “U.K. Distribution Channels”) (Publisher Books described in this subparagraph 1(a)(ii) are referred to as “U.K. Product”) pursuant to the Terms of Sale to Diamond for U.K. Product attached hereto as Schedule A-2 and forming a part hereof. In the event an account located outside the UK Distribution Channels wishes to buy from Diamond’s UK facility, Diamond will request permission from Marvel to allow such and this permission will not be unreasonably withheld. Diamond’s distribution of all U.K. Product shall be (x) in accordance with the distribution rights granted to Diamond by Publisher in the preceding subparagraph 1(a)(i); and (y)   limited to Diamond’s distribution and resale to U.K. Distribution Channels.

(iii)

In the event that Publisher believes, in good faith, that any customer listed on Schedule A-1 or Schedule B is acting or has acted as a distributor (i.e., a seller to anyone but an end-user) of Publisher Books received from Diamond, then, upon request by Publisher to Diamond, such customer’s name shall be removed from such schedule.

(b)

As used herein, the following terms shall mean the following:

(i)

“Comic Books” means all English-language comic book titles published by Publisher companies owned at least 51% by Publisher (“Affiliates”) under the “Marvel” trademark or all comic book titles published by Publisher companies which are owned 100% by Publisher, which are intended to be sold through wholesale and retail outlets. “Trade Paperbacks” means all bound trade paperback titles currently published by Publisher and its Affiliates and all bound trade paperback titles published by Publisher and its Affiliates during the term of this Agreement which are comprised of collections of Comic Books.

(ii)

“Bookstores” means (A) those customers that are listed on Schedule C hereto; and (B) all other retailers, wholesalers and libraries, the business of which is primarily the sale or distribution of books, periodicals and book-related products; provided that such term does not include newsstands, Direct Market Customers and Specialty Stores.

(iii)

“Publisher Books” means all Comic Books and Trade Paperbacks, games, and all posters, art books, soft-cover and hardcover books published by Publisher and its Affiliates under the “Marvel” trademark, and any other publications

mutually agreed upon by the parties that are not published under the “Marvel” trademark, during the term of this Agreement, which are intended to be sold through wholesale and retail outlets, in each case excluding U.K. Product.

(iv)

“Direct Market Customers” means (A) those customers that are listed on Schedule B hereto; and (B) Hobby Shops.

(v)

“Hobby Shops” means customers which are solicited in advance and which purchase 50 or more comic book titles monthly (as averaged over a three-month period) from a full-line selection on a non-returnable basis; provided that such term shall not include newsstands.

(vi)

“Specialty Stores” means stores the primary purpose of which is the sale of music or video items.

(vii)

“Business Day” means any day other than a day which is a national holiday, a day when national banks generally are closed, or a day on which banks are closed in the District of Columbia.

(c)

Sales of Publisher Books shall be at such prices as are determined by Publisher from time to time in its sole discretion, with such discounts as are determined by Publisher from time to time in its sole discretion, but after consultation with Diamond. Reasonable payment and credit terms for customers shall be established by Diamond, and, because Diamond is establishing all credit terms, Diamond shall be responsible for the collection of all accounts receivable related to sales of Publisher Books by Diamond during the Term and shall assume the responsibility for the bad debt risk; provided, however, that Publisher shall have the right, upon notice to Diamond, to require Diamond to extend credit to a particular customer or to grant such customer more favorable credit terms than those originally agreed to by Diamond, as the case may be, on the condition that Publisher shall assume the entire risk of loss with respect to all sales thereafter to such customer. Notwithstanding the foregoing, Publisher shall assume bad debt responsibility and risk of credit extended for shipping costs in any calendar year for all amounts in excess of the total fees paid to Diamond in that calendar year hereunder. Diamond shall have the right to sue or otherwise seek legal redress against any delinquent customer as to which it has assumed the responsibility for the bad debt risk and to seek recovery of amounts owed, and shall have the right to enter into settlements with such delinquent customer in its reasonable discretion. The terms and conditions of this paragraph do not apply to U.K. Product which is governed by the terms and conditions set forth in the attached Schedule A-2 .

(d)

Publisher acknowledges that Diamond’s customers are free to re-sell copies of the Publisher Books purchased from Diamond to any customers that they choose, and such sales, if any, to Diamond’s customers and resales by them will in no way be deemed a breach of this Agreement.

(e)

Diamond shall accommodate Publisher’s reasonable EDI software protocols in carrying out the services to be performed by Diamond pursuant to this Agreement in the manner such services are currently performed.

(f)

Diamond will maintain an on-line order entry system for use by Direct Market Customers in the manner currently maintained, subject to modifications made in Diamond’s discretion which do not adversely affect the services performed hereunder.

(g)

Publisher acknowledges that some of its operational and business decisions have the potential to impact Diamond’s costs for performing the services outlined herein, in a way not contemplated in this agreement. Publisher therefore agrees, with respect to any operational or business decision that, to Publisher’s knowledge, is reasonably likely to have a material impact on Diamond’s costs, to consult with Diamond so that Diamond may make any suggestions as to how to marginalize the impact on Diamond. If any such impact so arises where the reasonable likelihood of its arising was not known, but should have been known, to Publisher, then such consultation shall occur upon notice to Publisher of such impact.

2.

TERM AND TERMINATION.

(a)

The term of this Agreement (the “Term”) shall commence on the Effective Date and shall continue until August 16, 2007, and thereafter shall only be renewed or extended by a writing executed by both parties. Each consecutive twelve-month period during the Term commencing on August 17, 2001 (the “Commencement Date”) or any anniversary of the Commencement Date is referred to herein as a “Year.”

(b)

Notwithstanding Paragraph 2(a), this Agreement may be terminated as follows:

(i)

Publisher shall have the right to terminate this Agreement at any time effective after the initial 90 days of this Agreement upon 60 days’ prior notice; **************************************************************** ************************** ******************************************************

  (A)

****************************************** **************

  (B)

******************************************************************************************* *******************************************************************************************

(ii)

Without prejudice to any other rights and remedies available at law or under this Agreement, either party shall have the right to terminate this Agreement forthwith if the other party commits a material breach of any of the provisions of this Agreement (other than the payment of money) and has not either cured such breach within 28 days after having been requested to do so in writing or, if such breach is not reasonably capable of being cured within 28 days, either (i) has not (X) used best efforts to commence to cure such breach within such 28-day period and (Y) continued to diligently pursue such efforts beyond such 28-day period, or (ii) in any event has not cured such breach within 45 days of having been requested to do so in writing. Either party shall have the right to terminate this Agreement if the other party commits a breach of this Agreement involving the payment of money and has not cured such breach within five (5) days after having been requested to do so in writing.

(iii)

Either party shall have the right to terminate this Agreement immediately in the event that the other party is adjudicated as a bankrupt or insolvent, institutes voluntary proceedings for bankruptcy or reorganization, makes an assignment for the benefit of creditors, applies for or consents to the appointment of a receiver for it or a substantial portion of its property, or admits in writing its inability to pay debts as they become due. Any such termination shall not release either party of any accrued obligations hereunder, including Diamond’s right of offset pursuant to paragraph 2(e) hereafter.

(c)

Promptly upon termination of this Agreement, Publisher will remove at its own expense the inventory of the Publisher Books from Diamond’s distribution center. If Publisher fails to remove such inventory within sixty (60) days after the later of the termination of this Agreement and written demand from Diamond that such inventory be removed, Diamond shall have the right either to dispose of such inventory as it deems best or to destroy such inventory. Except as specifically provided for herein, upon termi