<PAGE>

EXHIBIT 10.3

                                LICENSE AGREEMENT
                                -----------------

         THIS LICENSE AGREEMENT ("Agreement") is dated the 8th day of September,
2003, between Falcon Picture Group, LLC ("Falcon"), with its principal office at
974 Estes Court, Schaumburg, Illinois 60193 (Attn: Carl Amari), and Genius
Products, Inc. ("Licensee"), with its principal office at 11250 El Camino Real,
Suite 100, San Diego, California 92130 (Attn: Klaus Moeller).

         1. EXCLUSIVE LICENSEE. Except as otherwise provided herein, Falcon
hereby appoints Licensee as Falcon's exclusive licensee for (a) all of Falcon's
existing audio and Digital Video Disc ("DVD") programs as listed on SCHEDULE A,
and all future audio and DVD programs hereafter licensed to Licensee pursuant to
the right of first refusal provisions in Section 3 below (collectively, the
"Licensed Article(s)") in the Territory for sales made through wholesale,
retail, direct-to-consumer and e-commerce channels of trade. Except as otherwise
permitted herein, Falcon agrees that it shall not, at any time during the Term,
directly or indirectly manufacture or produce any of the Licensed Article(s) or
sell or offer to sell any of the Licensed Articles to any person or entity
(other than Licensee) located within the Territory.

         2. EXCLUSIONS FROM LICENSED ARTICLES. The Licensed Articles do not
include the film Madison (which is not owned by Falcon), any program developed
for Critic's Choice or its affiliates and the television series Bozo (which is
covered by a separate agreement between Falcon and Licensee). It is agreed that
the Bozo television series will remain under the current distribution agreement
between Licensee and Falcon and that nothing contained herein will terminate,
replace or supersede that agreement.

         3. RIGHT OF FIRST REFUSAL. With respect to Falcon's future audio and
DVD programs not existing as of the date of this Agreement, Licensee will have a
right of first refusal to license such programs. Falcon shall first offer such
programs to Licensee, and Licensee shall within a reasonable time either accept
or reject such offer. If Licensee fails to accept or reject such offer promptly,
Falcon may give Licensee a written notice allowing Licensee five (5) days to
either accept or reject such offer. If Licensee rejects or fails to exercise
such right as to any future programs in a timely manner after notice from
Falcon, Falcon may distribute such programs itself or through other parties
without further obligation under this Agreement with respect thereto. To the
extent Falcon presents to Licensee an opportunity to acquire new programs from a
third party, if Licensee exercises its right of first refusal as to such
programs, Licensee must pay any necessary advances, guaranteed payments and
royalties due to that third party licensor, although Licensee may recoup such
amounts against future royalties due to Falcon with respect to sales of such
programs.

         4. BEST EFFORTS BY LICENSEE. Licensee will use its commercially
reasonable best efforts to maximize the sales of the Licensed Articles
throughout the Territory during the Term.

         5. TERM. The term ("Term") of the rights granted to Licensee under this
Agreement shall be effective as of July 1, 2003, for a three-year term with an
automatic renewal for an additional three-year term ("Renewal Term"), subject to
Licensee's fulfilling all of its financial obligations hereunder to Falcon and



<PAGE>

[Confidential treatment has been requested with respect to the omitted portions
of this exhibit. The copy filed herewith omits the information subject to the
confidentiality request. Omissions are designated as **. A complete version of
this exhibit has been filed separately with the Securities and Exchange
Commission.]

Falcon's fulfilling its obligations to provide Licensee with no less than 100
hours of digitally remastered DVD program content per year. At the end of the
Renewal Term, if any, the parties agree to negotiate in good faith regarding the
terms and conditions of a further renewal. This Agreement may be terminated
prior to the expiration of the Term or any Renewal Term pursuant to the
provisions of Article 21.

         6. TERRITORY. The rights granted to Licensee hereunder shall be
exercised solely in the following territory: the United States and Canada
("Territory").

         7. ROYALTIES.

                  (a) ROYALTIES.

                           (i) ROYALTY FEES. Licensee shall pay to Falcon a
                  royalty fee ("Royalty Fee") of ** on all Net Sales, as defined
                  below. With respect to Twilight Zone program sales, in
                  addition to and not in lieu of the ** royalty on all Net
                  Sales Falcon shall be entitled to a further royalty payment
                  equal to ** for each copy of a Twilight Zone program
                  sold by Licensee (E.G., the additional royalty on each
                  4-program pack sold by Licensee would be **).

                           (ii) GUARANTEED MINIMUM ROYALTY FEE. Licensee shall
                  pay to Falcon a minimum yearly guaranteed amount of
                  $240,000.00 against above Royalty Fees ("Guaranteed Minimum
                  Royalty Fee"), payable at a rate of ** at the first of
                  each month, with advance payments as described below. Licensee
                  shall provide monthly royalty statements to Falcon in a form
                  reasonably acceptable to Falcon setting forth all pertinent
                  information needed by Falcon to understand the nature and
                  amount of sales made by Licensee during the prior month so
                  that Falcon can reasonably confirm that the amount of the
                  Royalty Fees reported and paid is accurate, complete and
                  correct. Such royalty statements shall clearly show the
                  application of any credits for advances and guaranteed
                  payments that are being recouped by Licensee for such period.
                  As soon as any advances and guaranteed payments recoupable by
                  Licensee have been recouped, Licensee's monthly reports shall
                  be accompanied by payment in full for all Royalty Fees due to
                  Falcon. For purposes of reporting and paying Royalty Fees to
                  Falcon, sales shall be deemed to occur at the time the time of
                  payment from the customer.

                  (b) ADVANCES. The first ** of the initial Guaranteed Minimum
         Royalty Fee of ** was paid upon the execution of the term sheet between
         the parties dated June 12, 2003, which underlies this Agreement ("Term
         Sheet"). The second ** installment of the initial Guaranteed Minimum
         Royalty Fee shall be paid contemporaneously with the execution this
         Agreement.

                  (c) NET SALES. As used in this Article 7, the term "Net Sales"
         shall mean the Licensee's total gross billings (not including taxes or
         shipping charges) for sales of the Licensed Articles, reduced only by
         normal trade discounts actually taken and credits or refunds actually
         issued for returned or damaged merchandise.

                                       2


<PAGE>

                  (d) BOOKS AND RECORDS. In order for Falcon to verify the
         accuracy and completeness of royalty reports and payments, Licensee
         shall maintain appropriate books and records concerning the sale and
         usage of the Licensed Articles. Falcon may, at Falcon's expense,
         examine the books and records of Licensee from time to time during
         Licensee's normal business hours upon reasonable notice to Licensee,
         but not more than once in any twelve (12) month period. Statements
         rendered hereunder shall be deemed final if no objections are made by
         Licensor within twenty-four (24) months after the same are issued.
         Should an audit by Falcon reveal a deficiency in any payments due
         Falcon for that audit period(s), Licensee shall bring all payments
         current within ten (10) days of the receipt of written notice from
         Falcon or Falcon shall have the right to:

                            (i) immediately terminate the Agreement and recover
                            all materials provided Licensee by Falcon;

                            (ii) demand Licensee turn over all product and
                            unfilled orders to Falcon and immediately cease all
                            transactions with the property;

                            (iii) commence any legal or equitable action to
                            which the Licensor may be entitled.

         Should an audit discover any deficiency in excess of ten percent (10%)
         of monies paid in that audit period(s), Licensee shall pay all costs
         and fees incurred in the audit along with interest at the rate of 10%
         per annum on the amount due from the date the same became due.

         8. OPTION TO ACQUIRE FALCON. Upon the execution of this Agreement,
Licensee shall issue to Falcon $100,000.000 in Licensee's common stock, par
value $.001 per share ("Common Stock"), valued by the average of the closing
market price on the effective date of this Agreement (I.E., July 1, 2003) and
the execution date of this Agreement, for the option to acquire the assets of
Falcon at any time during the three-year period following the execution of this
Agreement ("Option") for a purchase price of $3,600,000.00 ("Purchase Price").
The Common Stock issued in payment of the Option will have customary piggyback
registration rights for registration statements filed by Licensee after the
registration statement currently pending filing. The Purchase Price may be paid
in cash or with Common Stock (or any combination of cash and Common Stock). If
Common Stock is used as the consideration for the purchase of Falcon's assets,
then (i) Licensee must continue to be a publicly-traded company and shall have
filed all necessary and appropriate reports and filings under the Securities Act
of 1933, as amended ("Securities Act"), the Exchange Act of 1934, as amended
("Exchange Act"), any applicable state securities law or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any applicable state
securities law (collectively, the "Securities Laws"), (ii) Licensee shall remain
eligible to promptly register its shares for resale and shall promptly register
such shares for resale, (iii) the transaction shall be structured as a purchase
agreement with a commitment by Licensee to promptly file a registration
statement covering the resale of the shares; PROVIDED, HOWEVER, that to the
extent possible, at the request of Falcon, the acquisition will be structured as
a tax-free reorganization, and (iv) regardless of the trading price of Common
Stock, in no event will the purchase price be less than 1,500,000 shares of
Common Stock. If the foregoing option is not exercised by timely written notice
to Falcon by the third anniversary of the date of this Agreement, the option
shall expire and no longer be in force or effect.

                                       3


<PAGE>

         9. PAYMENT BY COMMON STOCK. All Common Stock issued under the terms of
this Agreement is issued and will be issued (i) subject to the notices provided
in Exhibit 1, (ii) with the understanding that Falcon is an "Accredited
Investor" as such term is defined in Rule 501 of Regulation D under the
Securities Act, and (iii) pursuant to the other acknowledgements and
representations made by Falcon elsewhere in this Agreement.

         10. DELIVERY OF CONTENT/CONTENT OWNERSHIP.

                  (a) DELIVERY OF CONTENT. Upon execution of this Agreement,
         Falcon is to deliver to Licensee its digitally remastered program
         content ("Content") on a mutually agreeable schedule. Licensee commits
         to accept a minimum of 100 hours of Content annually from Falcon, so
         long as the Content delivered meets Licensee's reasonable requirements
         for suitability and quality. Licensee agrees that in the future, its
         standards of suitability and quality will be substantially the same as,
         and consistent with, its standards as exercised through the date hereof
         with respect to Content heretofore delivered to and accepted by Genius.
         Licensee reserves the right to determine the suitability and quality of
         Content received from Falcon prior to acceptance, with such acceptance
         not to be unreasonably withheld and the determination of suitability
         and quality to be made in good faith and on a consistent basis
         throughout the Term.

                  (b) CONTENT OWNERSHIP. Except as otherwise provided in this
         paragraph, Content provided by Falcon will be created for and will be
         deemed to be the property of Licensee, subject in all respects to any
         licensing or licensing-type agreements with third parties, copies of
         which are to be provided to Licensee at or before the time of delivery
         of affected Content. Licensee agrees to honor and abide by all of the
         terms of such license agreements, and to refrain from any activity that
         would cause Falcon to be in breach or default thereof. Following the
         Term or if Licensee fails to fulfill its financial or other obligations
         to Falcon during the Term and the Agreement is terminated, Licensee may
         continue to use all non-Twilight Zone and non-audio Content paid for by
         Licensee prior to the time of termination, but all logos, trademarks,
         titles, etc., provided by Falcon (or by others such as AMC) along with
         or as part of the Content, shall revert to Falcon (or the party to whom
         it belongs). Following termination or expiration hereof, Licensee shall
         continue to report and pay Royalty Fees to Falcon with respect to any
         Content provided to Licensee by Falcon during the Term so long as the
         Brand (defined below) associated with the Content continues in effect
         or is replaced by a new Brand that is acceptable to Licensee, with such
         acceptance not to be unreasonably withheld. The term "Brand" as used
         herein shall mean third-party logos, trademarks, titles, etc., (such as
         AMC) provided as part of the Licensed Articles. Licensee will not be
         required to pay a Royalty on any Content provided by Falcon without a
         Brand. Twilight Zone or other audio Content shall not at any time
         become the property of Licensee but shall remain the property of Falcon
         at all times hereunder (including upon expiration or termination of
         this Agreement), and Licensee will no longer have the right to use or
         distribute such Content.

                                       4


<PAGE>

         11. COST OF CONTENT.

                  (a) The cost for Content shall be as follows: (i) $3,000 per
         hour for the first 100 hours delivered by Falcon, (ii) $500 per hour
         for the next 50 hours delivered by Falcon, and (iii) $2,500 per hour
         for each and every hour of Content delivered by Falcon thereafter
         throughout the Term ("Cost(s)"). Fifty percent (50%) of the Cost for
         Content shall be paid to Falcon by Licensee in advance and the other
         fifty percent (50%) within twenty (20) days after delivery to and
         acceptance by Licensee of such Content, pursuant to the terms of
         acceptance described in Article 10(a). Falcon agrees that $350,000 of
         Content hereunder may be paid to Falcon either (i) in cash or (ii) in
         shares of Licensee's Common Stock on and subject to the provisions of
         Section 11(b) below. In addition to the recouping of costs associated
         with guarantees and advances paid directly by Licensee to third parties
         (as described in Article 3), 25% of the first $300,000.00 of Cost is
         recoupable against the Royalty Fees. Costs shall only be recoupable on
         an annualized basis to the extent that the offsetting Royalty Fees have
         accrued during the same one-Year period as the Costs were incurred and
         paid. The term "Year" as used herein shall mean each successive
         one-year period commencing on the date of this Agreement. For instance
         the first Year shall begin on the date hereof and end on the first
         anniversary hereof.

                  (b) Within thirty (30) days after the date of this Agreement,
         Licensee will issue 350,000 shares of Common Stock to Falcon as a
         deposit for the payment of $350,000.00 worth of Content to be delivered
         hereunder to Licensee. Such shares shall vest to Falcon as the hours of
         Content are delivered to and accepted by Licensee. The cost of Content
         accepted shall be determined pursuant to paragraph (a) above. In
         accepting this form of payment for the Content, Falcon expressly
         conditions the same upon its ability to freely trade the Common Stock
         so that it may liquidate the shares. If at any time, Falcon is not able
         to sell a sufficient number of shares of Licensee's Common Stock to
         cover the Costs incurred by Falcon through such date, Licensee shall
         pay an equivalent amount of cash to Falcon to cover all such Costs. If
         the shares of Common Stock, upon sale by Falcon do not yield sufficient
         proceeds to cover all Costs incurred by Falcon, Licensee shall promptly
         pay the full amount of such unreimbursed Costs to Falcon in cash. Prior
         to making any demand for payment in cash under the terms of this
         paragraph (b), Falcon agrees (i) to make a good faith effort to sell
         the Common Stock for a thirty (30) day period, (ii) that it will not
         sell the Common Stock below the market price, (iii) that it will
         provide Licensee with a written demand for payment under this paragraph
         accompanied by broker's statements regarding the sale or attempted
         sale, and (iv) Licensee will have twenty (20) days to make the cash
         payment demanded. Falcon agrees that it will not commence any sale of
         the Common Stock until the registration statement currently pending
         filing becomes effective.

                  (c) Licensee agrees to (i) prepare and file with the SEC
         within thirty (30) days after the execution date of this Agreement a
         registration statement ("Registration Statement") and such other
         documents, including a prospectus, as may be necessary in the opinion
         of counsel for Licensee in order to comply with the provisions of the
         Securities Act so as to permit a public offering and sale by Falcon of
         Common Stock acquired in connection with the payment of the cost of
         Content, and (ii) cause the Registration Statement to become effective
         at the earliest possible date after filing with the SEC.

                                       5


<PAGE>

         12. FALCON'S ACKNOWLEDGMENTS. Falcon hereby acknowledges that Licensee
reserves the right, in the future, to sell additional shares of Common Stock and
to issue additional warrants or options, any of which may result in substantial
dilution of the equity interest accepted by Falcon pursuant to this Agreement.

         13. LICENSEE'S ACKNOWLEDGEMENTS. Licensee acknowledges that Falcon may
desire to vary the release date and/or approved base product line, packaging
format, or product configuration with respect to the Licensed Articles in
response to special circumstances or marketplace and promotional opportunities
including, for example, (i) if Falcon determines that any Licensed Article will
(A) materially infringe upon the rights of another; (B) violate any law, court
order, government regulation or other ruling of any governmental agency; or (C)
subject Falcon to a material liability or (ii) if Falcon desires (with the
approval of Licensee) to create a multiple-unit-boxed set to be released in
conjunction with a major event or promotion sponsored by American Movie
Classics. Licensee acknowledges and agrees that it shall withdraw any Licensed
Article from the marketplace and cease selling such item if Falcon notifies
Licensee that such Licensed Article will (A) materially infringe upon the rights
of another; (B) violate any law, court order, government regulation or other
ruling of any governmental agency; or (C) subject Falcon and/or Licensee to a
material liability.

         14. FALCON'S REPRESENTATIONS AND WARRANTIES. Falcon hereby represents
and warrants that all of the following information is correct and complete as of
the date on the signature page hereto:

                  (a) Falcon represents and warrants that Falcon's state of
         organization is Illinois, Falcon's executive offices are located in the
         state of Illinois and the Falcon's principal business operations are
         located in the state of Illinois.

                  (b) Falcon represents and warrants that Falcon qualifies as an
         Accredited Investor based upon the fact that Falcon is an entity that
         comes within one of the categories listed in Rule 501(a)(1) of
         Regulation D under the Securities Act, namely, Falcon is an entity in
         which all of the equity owners are Accredited Investors.

                  (c) Falcon hereby represents and warrants that Falcon meets
         the following criteria as described under Section 25102(f) of the
         California Corporations Code ("Section 25102(f)") and acknowledges that
         Licensee will rely on such representations and warranties for purposes
         of establishing any exemption from registration pursuant to Section
         25102(f): Falcon has a preexisting personal or business relationship
         with Licensee or one or more of its officers, directors or controlling
         persons in that Falcon and Licensee are parties to a prior licensing
         agreement and have had an ongoing business relationship as a result of
         that agreement.

                  (d) Falcon is accepting the Common Stock for Falcon's own
         account and not with a view to or for sale in connection with any
         distribution of the Common Stock.

                                       6


<PAGE>

                  (e) Falcon acknowledges that the offer and acceptance of the
         Common Stock pursuant to this Agreement has not been accomplished by
         the publication of any advertisement or by any general solicitation.

                  (f) Falcon has received, read and fully understands the
         representations and warranties contained in this Article 13. Falcon
         acknowledges that Falcon's decision to accept the Common Stock is based
         solely on the documents filed with the Securities and Exchange
         Commission ("SEC") by Licensee, which Falcon has had the opportunity to
         obtain and review, and on Falcon's personal expertise in, or knowledge
         of, Licensee and the industry in which Licensee operates its business,
         and Falcon has relied only on the information contained in said
         materials and has not relied upon any representations made by any other
         person. Falcon further acknowledges that, as a result of the Falcon's
         expertise in or knowledge of Licensee and its industry, Falcon is in a
         position to evaluate the risks associated with this investment without
         relying solely on information provided by Licensee.

                  (g) Falcon's overall commitment to investments that are not
         readily marketable is not disproportionate to Falcon's net worth, and
         Falcon's investment in the Common Stock will not cause such overall
         commitment to become excessive. Falcon has adequate means of providing
         for Falcon's financial requirements, both current and anticipated, and
         has no need for liquidity in this investment. Other than as provided in
         Article 11, Falcon can bear, and is willing to accept, the economic
         risk of losing Falcon's entire investment in the Common Stock.

                  (h) Falcon recognizes that an investment in the Common Stock
         is speculative and involves substantial risk and is fully cognizant of
         and understands all of the risk factors related to the acceptance of
         the Common Stock, including without limitation the risk factors set
         forth in the Licensee's documents filed with the SEC.

                  (i) Falcon has had the opportunity to ask questions of, and
         receive answers from Licensee and its officers, directors and employees
         concerning Licensee, the creation and operation of Licensee, and the
         terms and conditions of the acceptance of the Common Stock and to
         obtain any additional information deemed necessary. Falcon has been
         provided with all materials and information requested by the Falcon, or
         others representing the Falcon, including any information requested to
         verify any information furnished to the Falcon.

                  (j) Falcon understands and acknowledges that legends will be
         placed on any certificates evidencing the Common Stock with respect to
         restrictions on distribution, transfer, resale, assignment,
         hypothecation or subdivision of the Common Stock imposed by applicable
         federal and state securities laws. Falcon is fully aware that the
         Common Stock accepted hereunder has not been registered with the SEC or
         under any state securities law and that the acceptance is intended to
         be a non-public offering in reliance upon Section 4(2) of the
         Securities Act and/or Rule 506 of Regulation D as promulgated under the
         Securities Act and under Section 25102 of the California Corporations
         Code or other applicable state regulations, which reliance is based in
         part upon Falcon's representations and warranties set forth in this
         Article 13. Falcon understands and acknowledges that unless the Common

                                       7


<PAGE>

[Confidential treatment has been requested with respect to the omitted portions
of this exhibit. The copy filed herewith omits the information subject to the
confidentiality request. Omissions are designated as **. A complete version of
this exhibit has been filed separately with the Securities and Exchange
Commission.]

         Stock is registered in compliance with all applicable laws, the Common
         Stock may not be re-offered for sale or resold except in a transaction,
         or as a security, exempt under such laws. Falcon further understands
         and acknowledges that the specific approval of such resales by the
         state securities administrator may be required in some states.

         15. NO SHORT SALES. Falcon expressly agrees that until such time that
it has sold all of the Common Stock issued pursuant to this Agreement, it will
not directly or indirectly, through an affiliate (as that term is defined under
Rule 405 promulgated under the Securities Act) or by, with or through an
unrelated third party or entity, whether or not pursuant to a written or oral
understanding, agreement, arrangement, scheme, or artifice of nature whatsoever,
engage in the short selling of Licensee's Common Stock or any other equity
securities of Licensee, whether now existing or hereafter issued, or engage in
any other activity of any nature whatsoever that has the same effect as a short
sale, or is a DE FACTO or DE JURE short sale, of Licensee's Common Stock or any
other equity security of Licensee, whether now existing or hereafter issued,
including, but not limited to, the sale of any rights pursuant to any
understanding, agreement, arrangement, scheme or artifice of any nature
whatsoever, whether oral or in writing, relative to Licensee's Common Stock or
any other equity securities of Licensee whether now existing or hereafter
created.

         16. LICENSEE'S PRODUCTION COSTS. Notwithstanding anything to the
contrary stated herein, Licensee shall bear all costs and expenses of
reproducing, packaging, selling, advertising and promoting the Licensed Articles
which are incurred by Licensee. None of these costs will be passed on to Falcon
in any manner.

         17. FUTURE CONTENT DEVELOPMENT. Carl Amari, manager of Falcon, shall in
good faith actively pursue new audio and DVD programming for Licensee during the
Term.

         18. OTHER AGREEMENTS. Falcon's rights are in certain cases subject to
or limited by other agreements, including but not limited to (i) a Settlement
Agreement with ** dated January 3, 2003 ("** Agreement"), and (ii) a Licensing
Agreement with CBS regarding "The Twilight Zone." Licensee acknowledges that the
parties will be required to comply with and honor in all respects the terms of
all existing agreements, copies of which are to be provided to Licensee,
including obtaining any third party consents required thereunder. With respect
to Falcon's fulfilling its obligations to provide products created and produced
by Falcon (or by Carl Amari) to ** at special pricing under the terms of the **
Agreement, Licensee shall cooperate with Falcon by (i) permitting Falcon to
purchase such products from Licensee at Licensee's manufactured price plus **
plus cost of shipping, and (ii) shipping such products to Falcon so that **
orders can be fulfilled by Falcon. Licensee also understands and acknowledges
that Carl Amari and Falcon are subject to certain restrictive covenants in favor
of **, which may preclude them from developing certain types of products
relating to old-time radio until the expiration of such covenants. Falcon agrees
on its part to only sell to ** those products that Falcon is required to sell to
** pursuant to the terms of the ** Agreement.

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<PAGE>

[Confidential treatment has been requested with respect to the omitted portions
of this exhibit. The copy filed herewith omits the information subject to the
confidentiality request. Omissions are designated as **. A complete version of
this exhibit has been filed separately with the Securities and Exchange
Commission.]

         19. RADIO SHOW EXCLUSION. Licensee acknowledges that (i) Falcon
produces, owns and syndicates a radio show whereby episodes of "The Twilight
Zone" are broadcast over numerous radio stations and through other
non-traditional broadcasting formats (e.g., XM Satellite Radio and Sirius
Satellite Radio), (ii) this agreement does not in any way relate to or affect
Falcon's ability to continue to produce, own and operate that radio show or any
other future radio shows it might develop, regardless of whether any such show
is based on or otherwise utilizes content that is otherwise subject to this
agreement, (iii) Licensee agrees that Falcon may continue to broadcast all
current and future shows through the current or future syndication arrangements,
and (iv) Licensee has no rights or interests whatsoever in any such broadcasting
arrangements, any commercial time allotted to Falcon by any broadcaster(s) or
any advertising sales or other revenue generated in connection with the
broadcast of such shows.

         20. SALES BY FALCON. Licensee understands, acknowledges and agrees that
Falcon will be permitted to continue to operate Falcon's website(s), toll free
number(s) and product catalog, and to continue to sell all products created by
Falcon, including but not limited to episodes of "The Twilight Zone" on compact
disc and audio cassette, through such website(s), toll free number(s) and
catalog. Licensee agrees to supply all of Falcon's product needs for resale
through the Falcon website(s), toll free number(s) and product catalog at a
price equal to Licensee' manufactured cost plus ** plus actual shipping costs.
Falcon agrees that it will not advertise or sell any of the products purchased
from Licensee (whether sold through Falcon's web site, toll free number(s) or
product catalog) at a price which is more than ** off of manufacturer's
suggested retail price for such products.

         21. INDEMNIFICATION.

                  (a) BY FALCON. Falcon warrants and represents that it has
         entered into the License Agreement and has the exclusive right and
         authority to enter into this Agreement and to grant the rights granted
         herein. Falcon hereby indemnifies and holds Licensee, which shall
         include Genius Products, Inc., its subsidiaries, affiliated companies,
         successors or assigns and all officers, authorized agents, directors
         and employees:

                           (i) from and against any and all claims, demands and
                           causes of action arising out of any claims in
                           connection with Licensee's use of the Licensed
                           Articles to the extent (and only to the extent) such
                           use is pursuant to and in accordance with all of the
                           terms and conditions of this Agreement;

                           (ii) against all liabilities, costs and expenses
                           incurred by them as a result of any misrepresentation
                           made by the undersigned contained herein or any sale
                           or distribution by Falcon in violation of any
                           Securities Laws; and

                           (iii) in the event any Common Stock held by Falcon is
                           included in a registration statement under Article
                           11, to the extent permitted by law, Falcon will, if
                           such Common Stock is included in the securities as to
                           which such registration qualification or compliance
                           is being effected, indemnify and hold harmless
                           Licensee, each of its directors and officers and each
                           person, if any, who controls Licensee within the
                           meaning of the Securities Act, any underwriter and
                           any other investor selling securities under such
                           registration statement or any of such other
                           investor's partners, directors or officers or any

                                       9


<PAGE>

                           person who controls such investor (each, a
                           "Registration Indemnitee"), against any losses,
                           claims, damages or liabilities (joint or several) to
                           which any Registration Indemnitee may become subject
                           under the Securities Laws (each, a "Registration
                           Loss"), insofar as such Registration Losses (or
                           actions in respect thereto) arise out of or are based
                           upon any of the following statements, omissions or
                           violations by Licensee (each, a "Violation"): (i) any
                           untrue statement or alleged untrue statement of a
                           material fact contained in such registration
                           statement, including any preliminary prospectus or
                           final prospectus contained therein or any amendments
                           or supplements thereto, (ii) the omission or alleged
                           omission to state therein a material fact required to
                           be stated therein, or necessary to make the
                           statements therein not misleading, or (iii) any
                           violation or alleged violation by Licensee of the
                           Securities Laws in connection with the offering
                           covered by such registration statement; in each case
                           to the extent (and only to the extent) that such
                           Violation occurs in reliance upon and in conformity
                           with written information furnished by Falcon for use
                           in connection with such registration; and Falcon will
                           pay as incurred any legal or other expenses
                           reasonably incurred by any Registration Indemnitee in
                           connection with investigating or defending any
                           Registration Loss if it is judicially determined that
                           there was such a Violation; provided, however, that
                           the indemnity obligation contained in this Article 21
                           shall not apply to amounts paid in settlement of any
                           Registration Loss if such settlement is effected
                           without the consent of Falcon, which consent shall
                           not be unreasonably withheld.

                  (b) BY LICENSEE. Licensee warrants and represents that it has
         entered into the License Agreement and has the exclusive right and
         authority to enter into this Agreement and to perform the obligations
         set forth herein. Licensee hereby indemnifies and holds Falcon, which
         shall include its subsidiaries, affiliated companies, successors or
         assigns and all officers, authorized agents, directors and employees:

                           (i) from and against any and all claims, demands and
                           causes of action arising out of any claims in
                           connection with Licensee's use of the Licensed
                           Articles to the extent (and only to the extent) such
                           use is not in accordance with all of the terms and
                           conditions of this Agreement;

                           (ii) against all liabilities, costs and expenses
                           incurred by them as a result of any misrepresentation
                           made by the undersigned contained herein or any
                           failure of Licensee to honor its covenants and
                           obligations herein; and

                           (iii) in the event any Common Stock held by Falcon is
                           included in a registration statement under Article
                           11, to the extent permitted by law, Licensee will, if
                           such Common Stock is included in the securities as to
                           which such registration qualification or compliance
                           is being effected, indemnify and hold harmless
                           Falcon, each of its directors and officers and each
                           person, if any, who controls Falcon within the

                                       10


<PAGE>

                           meaning of the Securities Act, any underwriter and
                           any other investor selling securities under such
                           registration statement or any of such other
                           investor's partners, directors or officers or any
                           person who controls such investor (each, a
                           "Registration Indemnitee"), against any losses,
                           claims, damages or liabilities (joint or several) to
                           which any Registration Indemnitee may become subject
                           under the Securities Laws (each, a "Registration
                           Loss"), insofar as such Registration Losses (or
                           actions in respect thereto) arise out of or are based
                           upon any of the following statements, omissions or
                           violations by Licensee (each, a "Violation"): (i) any
                           untrue statement or alleged untrue statement of a
                           material fact contained in such registration
                           statement, including any preliminary prospectus or
                           final prospectus contained therein or any amendments
                           or supplements thereto, (ii) the omission or alleged
                           omission to state therein a material fact required to
                           be stated therein, or necessary to make the
                           statements therein not misleading, or (iii) any
                           violation or alleged violation by Licensee of the
                           Securities Laws in connection with the offering
                           covered by such registration statement; in each case
                           to the extent (and only to the extent) that such
                           Violation occurs other than in reliance upon and in
                           conformity with written information furnished by
                           Falcon for use in connection with such registration;
                           and Licensee will pay as incurred any legal or other
                           expenses reasonably incurred by any Registration
                           Indemnitee in connection with investigating or
                           defending any Registration Loss if it is judicially
                           determined that there was such a Violation; provided,
                           however, that the indemnity obligation contained in
                           this Article 21 shall not apply to amounts paid in
                           settlement of any Registration Loss if such
                           settlement is effected without the consent of
                           Licensee, which consent shall not be unreasonably
                           withheld.

         22. TERMINATION. This Agreement shall be subject to termination as
follows:

                  (a) Should Licensee fail to make the payments required by
         Articles 7 and 10, or otherwise breach any of the material provisions
         of this Agreement, and should Licensee fail to fully and completely
         remedy the same within fifteen (15) days after Falcon provides written
         notice to Licensee of its failure to make required payments or the
         occurrence of a material breach of this Agreement, as applicable, then
         Falcon shall have the right to terminate this Agreement forthwith or at
         any time.

                  (b) Should Falcon fail to deliver 100 hours of Content
         acceptable to Licensee in any one-Year period, then Licensee shall have
         the right to terminate this Agreement forthwith or at any time.

         23. INDEPENDENT CONTRACTOR. Each party to this Agreement is an
independent contractor with respect to the rights granted to Licensee hereunder
and with respect to the exercise of said rights. Neither party has the authority
to bind or commit the other party in any respect whatsoever, and neither party
shall hold itself out as the other party's agent, principal, partner, associate
or joint venturer, or as having any power or authority to bind or commit the
other party. Falcon may continue to engage in other types of businesses that are
not explicitly covered by this Agreement so long as such businesses are not in
direct competition with the Licensee.

                                       11


<PAGE>

         24. WAIVER. Any waiver express or implied, by any party hereto, of any
breach by any other party hereto, of any provision herein contained shall not
operate as a waiver with respect to any subsequent breach of the same or any
other provision of this Agreement.

         25. NOTICES. All notices, statements, payments and communications which
the parties may desire to transmit to each other shall be in writing and shall
be sent by both fax and either by first class mail or by overnight express
courier service, except where this Agreement expressly sets forth the specific
manner of delivery, in which case, such manner of delivery must be followed. The
effectiveness of such service or delivery shall be determined as in this
Agreement specifically set forth. The addresses of the parties are as follows:

                  LICENSEE:         GENIUS PRODUCTS, INC.
                                    11250 El Camino Real, Suite 100
                                    San Diego, CA 92127
                                    Attention:  Klaus Moeller, CEO
                                    Phone No.:   (858) 793-8840
                                    Fax No.:  (858) 793-8842

                  FALCON:           FALCON PICTURE GROUP, LLC
                                    974 Estes Court
                                    Schaumburg, IL 60193
                                    Attention:  Mr. Carl P. Amari
                                    Phone No.:  (847) 923-0400
                                    Fax No.:  (847) 923-0353

         All changes of address shall be communicated promptly to the other
party, failing which, the addresses above set forth shall be deemed to be
correct.

         26. NON-DISCLOSURE. During the Term of this Agreement or at any time
after the expiration or termination of this Agreement, Licensee shall not
disclose the terms, conditions, restrictions or economic details of this
Agreement to any other party not related to Licensee; the only exceptions being,
authorized agents, attorneys, auditors, accountants and representatives of
Licensee and its employees with a need to know, or under order of a court of
competent jurisdiction, or upon request from a governmental agency with the
authority to make such a request, or as required by the rules of the SEC.

         27. DEFINITION OF PARTIES AND ASSIGNMENT: This Agreement shall be
binding upon and shall inure to the benefit of the parties and their respective
heirs, executors, administrators, successors and permitted assigns.
Notwithstanding anything contained in this Agreement, the Licensee may assign
this Agreement in whole or in part to any parent, subsidiary or affiliated
company or to an assignee expressly assuming all of the obligations of the
Licensee who or which acquires all or a substantial portion of the Licensee's
business.

                                       12


<PAGE>

         28. JURISDICTION. In the event of a dispute between the parties hereto
arising out of or concerning this Agreement, each of the parties accepts and
consents to the jurisdiction of the State or Federal courts of either: (i) the
State of California in San Diego County, or (ii) the State of Illinois in Cook
County.

         29. APPLICABLE LAWS. This Agreement constitutes the entire Agreement
between the parties with respect to the subject thereof and all prior oral and
written agreements, negotiations, discussions, understandings and commitments
are superseded hereby. This Agreement may be amended only by an instrument in
writing by all parties hereto.

         IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY
SPECIAL, INDIRECT, SPECULATIVE, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND
OR NATURE, INCLUDING WITHOUT LIMITATION DAMAGES FOR LOST PROFITS, LOST BUSINESS
OPPORTUNITIES OR THE LIKE, ARISING OUT OF, RESULTING FROM OR RELATING, DIRECTLY
OR INDIRECTLY, TO EITHER PARTY'S REPRESENTATIONS, WARRANTIES, COVENANTS OR
PERFORMANCE UNDER THIS AGREEMENT. RATHER, IT IS EXPRESSLY AGREED THAT EACH
PARTY'S LIABILITY HEREUNDER SHALL BE LIMITED TO SUCH PARTY'S ACTUAL DAMAGES,
INCLUDING, WITHOUT LIMITATION, (I) OUT-OF-POCKET COSTS AND EXPENSES AND (II)
LIABILITY TO THIRD PARTIES.

         IN WITNESS WHEREOF, Licensee and Falcon have entered into this
Agreement on the date set forth above.

FALCON PICTURE GROUP, INC.

By:   /s/ Carl Amari
    --------------------
Its:     CEO
    --------------------

GENIUS PRODUCTS, INC.

By:   /s/ Klaus Moeller
    --------------------
Its:     CEO
    --------------------

                                       13


<PAGE>

                                   SCHEDULE A
                                   ----------

                           EXISTING LICENSED ARTICLES

1) The Twilight Zone radio dramas
2) Zero Hour radio series
3) Sears Radio Theatre
4) Falcon's current television and movie programming of 12 (3-DVD) releases
5) Falcon's current access to more than 20,000 television programs and movies
6) Three brands of American Movie Classics ("AMC") programming: AMC-MOVIES,
   AMC-MONSTERFEST and AMC-TV
7) The Mutual Radio Theatre (pending negotiation and finalization of an
   appropriate agreement with the licensor)



<PAGE>

                                    EXHIBIT 1
                                    ---------

                    NOTICES REGARDING COMMON STOCK ISSUANCES

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED WITH ANY STATE SECURITIES
OR FEDERAL REGULATORY AGENCY, AND NO STATE OR FEDERAL REGULATORY AGENCY HAS
PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY
OF ANY DISCLOSURE MADE IN CONNECTION THEREWITH. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

THE SECURITIES OFFERED HEREBY MAY NOT BE RESOLD WITHOUT REGISTRATION UNDER
APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
SATISFACTORY TO GENIUS PRODUCTS, INC. IS OBTAINED TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER SUCH LAWS.

FALCON ACKNOWLEDGES THAT THE COMMON STOCK HAS NOT BEEN REGISTERED UNDER THE
FEDERAL SECURITIES LAWS, THE CALIFORNIA CORPORATE SECURITIES LAW OR THE
SECURITIES LAWS OF NEVADA OR ANY OTHER STATE. THE SECURITIES HAVE BEEN ACQUIRED
FOR INVESTMENT AND THEY MAY NOT BE OFFERED, SOLD OR TRANSFERRED UNLESS AND UNTIL
SUCH SECURITIES ARE REGISTERED UNDER APPLICABLE FEDERAL AND STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION IS
OBTAINED TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH LAWS.

FALCON'S ACCEPTANCE OF THE COMMON STOCK CONSTITUTES A SPECULATIVE, HIGH-RISK
INVESTMENT WHICH SHOULD BE ACCEPTED ONLY IF FALCON IS ABLE TO AFFORD THE LOSS OF
ITS ENTIRE INVESTMENT.

THE SUITABILITY OF THIS TYPE OF INVESTMENT SHOULD BE EXAMINED IN THE CONTEXT OF
FALCON'S OWN NEEDS, INVESTMENT OBJECTIVES AND FINANCIAL CAPABILITIES, AND FALCON
SHOULD MAKE AN INDEPENDENT INVESTIGATION AND DECISION AS TO THE SUITABILITY OF
THIS INVESTMENT AND AS TO THE RISKS AND POTENTIAL LOSSES INVOLVED. FALCON IS
ENCOURAGED TO CONSULT WITH ITS ATTORNEYS, ACCOUNTANTS, FINANCIAL CONSULTANTS AND
OTHER BUSINESS AND TAX ADVISORS REGARDING THE RISKS AND MERITS OF THE
INVESTMENT.