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EXHIBIT 10.87    
  

SETTLEMENT AGREEMENT

AND MUTUAL GENERAL RELEASE  

    This SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE (this "Agreement") is made and entered into as of this 15th day of December, 2000, by and between The
Harvey Entertainment Company, a California corporation (the "Company"), and Rick Mischel ("Mischel"). 

    WHEREAS,
on April 26, 1999, Mischel entered into an employment agreement with the Company (the "Employment Agreement"); and 

    WHEREAS,
the Company desires to terminate Mischel and engage Mischel as an independent contractor, and Mischel desires to continue to provide services to the Company as an independent
contractor, on the terms and conditions set forth in this Agreement. 

    NOW,
THEREFORE, the Company and Mischel agree as follows: 

1.  TERM. The term of this Agreement (the "Term") shall commence on January 1, 2001, (the "Effective Date") and shall terminate on
April 25, 2003. 

2.  TERMINATION OF EMPLOYMENT AGREEMENT. The Employment Agreement is hereby terminated as of the Effective Date. 

3.  CONSULTING SERVICES. 

    (a) Commencing
on the Effective Date, Mischel shall provide the following services (the "Services") to the Company on a non-exclusive, part-time
basis, for a period of one year (the "Service Term"): (i) assistance in developing and producing the BUNNY feature film project currently in development at MGM, the RICHIE RICH television
series currently in development at the WB network, the HOT STUFF feature film pitches and, until the Company's current option on the WALTER MILLER
project expires, the WALTER MILLER television series pitches; and (ii) if requested by the Company, handling of approvals of new Hearst licensing and merchandising deals; provided, however,
that Mischel will not be required to manage contract administration or accounting for any such matters. The parties acknowledge that Mischel's service obligations hereunder are limited to the
foregoing and that Mischel is not required to develop any other projects or to bring in new projects for the Company. Mischel shall be available reasonably to perform the services described above, but
shall have no obligation to provide such services at the offices of the Company and may render such services, to the extent practicable, from his home or another office. 

    (b) Mischel
shall resign his title as President of the Company. 

4.  CONSULTING FEES. 

    (a) The
Company shall pay to Mischel in equal monthly installments an annual consulting fee equal to One Hundred Thirty Four Thousand Three Hundred Seventy Five
Dollars, ($134,175) for the duration of the Term (the "Consulting Fee"). 

    (b) If
the Company is sold to a third party not currently affiliated with the Company (a "sale") during the Term, the Company shall pay to Mischel an amount equal to
Three Hundred Thirteen Thousand Five Hundred Dollars ($313,500) less the amounts previously paid to Mischel hereunder. Such payment shall be made within five (5) business days of consummation
of the sale. If the acquiring or purchasing entity fails to pay the foregoing amount at such time, Mischel shall become entitled to receive Six Hundred Twenty Seven Thousand Dollars ($627,000) less
the amounts previously paid to Mischel hereunder (the "Default Fee"), which amount shall be paid by the Company (or its successor) within thirty (30) days after the consummation of the sale. 

    (c) In
the event the Company files for bankruptcy during the Term and Mischel does not receive the full Consulting Fee in a timely manner, Mischel immediately shall
become entitled to the Default Fee. 

    (d) All amounts due and payable under Paragraphs 4(b) and (c) shall be payable notwithstanding that Mischel may have remaining performance obligations
hereunder at the time of the sale or filing for bankruptcy, as the case may be. 

    (e) Notwithstanding
any early termination by the Company of the Services prior to the end of the Service Term, the payment obligations set forth in this
Section 4 shall continue for the duration of the Term in accordance with this Agreement. 

5.  WARRANTS AND STOCK OPTIONS. 

    (a) Warrants
to Purchase Common Stock. All unvested warrants to purchase shares of common stock of the Company held by Mischel on the Effective Date (the "Warrants")
shall be cancelled as of the Effective Date. 

    (b) Stock
Options. All of the options to purchase shares of common stock of the Company held by Mischel on the Effective Date (the "Options") shall become fully vested
on the Effective Date and shall be exercisable for one year after the date Mischel ceases providing the Services hereunder; provided, however, that in no event shall any Options be exercisable after
January 2, 2002. The exercise price of all Options shall be reduced to $0.80 per share. 

6.  EXPENSE REIMBURSEMENT. So long as Mischel is providing the Services to the Company, upon presentation to the Company of customary
documentation, Mischel shall be entitled to reimbursement of his reasonable business expenses incurred on behalf of the Company in an amount up to Five Hundred Dollars ($500) per month (excluding
reasonable expenses incurred by Mischel on behalf of the Company in connection with the upcoming NATPE conference). Reasonable business expenses incurred by Mischel on behalf of the Company in excess
of Five Hundred Dollars ($500) during any month will be reimbursed by the Company only if such expenses are approved in advance in writing by the Chief Executive Officer of the Company. 

7.  BENEFITS. Mischel shall be entitled to no benefits other than health insurance coverage. The Company will continue to pay for and
provide to Mischel, health insurance coverage as provided to him prior to the Effective Date, until the earlier of: (i) April 25, 2003, or (ii) such time that Mischel becomes
eligible for health insurance coverage by a new employer. 

8.  NATPE CONFERENCE. Mischel shall attend the NATPE conference to be held in Las Vegas, Nevada on January 21-26,
2001, on behalf of the Company. The Company shall reimburse Mischel for reasonable business expenses incurred in connection with the NATPE conference and for hotel and airline fare expenses incurred
in connection therewith, up to an amount equal to Two Thousand Dollars ($2,000). 

9.  COMPANY CAR. Mischel shall be entitled to continue using the company car provided to him prior to the Effective Date, until the
expiration, on January 21, 2001, of the current lease thereon. Mischel agrees (i) to pay to the Company one-half of the costs of the lease (it being understood that the Company and
Mischel shall pay equally the lease payments due and payable prior to the Effective Date, and it being acknowledged that Mischel has made all such required payments through the month of December);
(ii) to operate the Company car in a safe and responsible manner and maintain the Company car in good condition; and (iii) to return the Company car to the Company or leasing company in
the condition required under the lease at the end of the lease term. 

10.  VACATION. The Company promptly will calculate and pay all accrued vacation (calculated in accordance with the requirements of
California law) due to Mischel through the Effective Date within three (3) business days after the Effective Date. Mischel will not accrue vacation from and after the Effective Date. 

11.  FURNITURE; OFFICE EQUIPMENT. The Company shall provide to Mischel on the Effective Date, or as soon thereafter as is reasonable
practicable, his current laptop computer and printer, a desk, a wooden file cabinet, a bookcase and a TV, TV cabinet and VCR. 

12.  CREDITS. The Company will use its best efforts to give credit to Mischel for his work on the BUNNY and RICHIE RICH projects, so long
as, at the time such projects commence production, (i) Mischel is continuing to provide services in connection with such projects, and (ii) the Company has not been sold. Mischel
acknowledges and agrees that the order in which such credit is given shall be determined by the Company in its sole discretion, and that producer agreements with third parties may preclude such
credits. 

13.  THE MISCHEL COMPANY PROJECTS. On the Effective Date, the Company agrees to transfer to The Mischel Company, whatever right, title
and interest the Company may have, without warranty or representation of any kind, in and to the motion picture and television projects listed on Schedule 1 attached hereto. 

14.  NONDISCLOSURE OF CONFIDENTIAL INFORMATION. 

    (a) "Confidential
Information" shall include, but not be limited to, all of the Company's and its subsidiaries' and affiliates' performance, sales, financial, pricing,
cost, manufacturing, contractual and marketing information, ideas, knowledge and data, and all processes, products, formulae, designs, practices, techniques, trade secrets, research,
know-how, merchandising agreements, licensing agreements, distribution agreements, customer lists, technical requirements of customers and identity and purchasing terms of suppliers. 

    (b) Mischel
acknowledges that the Company and its subsidiaries and affiliates have exclusive rights to all of their respective Confidential Information and agrees to
assign all rights he might otherwise possess in any Confidential Information to the Company. Except as required in the performance of his duties hereunder, Mischel shall not at any time during or
after the Term, directly or indirectly use, communicate, disclose or disseminate, lecture upon/publish articles or otherwise put in the public domain, any Confidential Information or any other
information of a secret, proprietary, confidential or generally undisclosed nature relating to the Company or its subsidiaries or affiliates or their products,
operations and activities until such Confidential Information is disclosed by law or legal process or becomes generally available to the public by independent discovery, development or publication or
generally known within the industry other than as a result of Mischel's breach hereof. 

    (c) All
documents, records, notebooks, notes, memoranda, correspondence, computer records and other repositories of or containing Confidential Information or any other
information of a secret, proprietary, confidential or generally undisclosed nature relating to the Company or its subsidiaries or affiliates or to its products, operations and activities made or
compiled by Mischel at any time or made available to Mischel prior to, or during, the Term by the Company, including any and all copies thereof shall be the property of the Company, shall be held by
Mischel in trust solely for the benefit of the Company, and shall be delivered to the Company by Mischel upon the request of the Company. Mischel may retain a copy of his personal rolodex subject to
the Company's right to cause to be deleted therefrom any Confidential Information or other information of a proprietary nature to the Company. 

15.  MUTUAL GENERAL RELEASES AND WAIVER OF CIVIL CODE SECTION 1542. Mischel, on the one hand, and the Company on the other, on behalf of
themselves and their respective predecessors, successors and assigns and their respective officers, directors, employees, representatives and shareholders do hereby remise, release and forever
discharge the other and their respective predecessors, successors and assigns and, in the case of Mischel, release hereunder, the Company's officers, directors, shareholders, agents, employees,
representatives, attorneys and all affiliated parent or subsidiary corporations or divisions and each of them, of and from any and all claims, rights, debts, liabilities, demands, obligations,
promises, acts, agreements, costs and expenses (all of the foregoing being referred to collectively as the "Claims and Expenses")(including, but not limited to, unknown Claims and Expenses through and
including the Effective Date, including, without limitation, any and all Claims and Expenses in any way based on, arising out of or related to the Employment Agreement or Mischel's employment with the
Company prior to the Effective Date), as well as any claim not set forth in this Agreement for severance pay, bonus, sick leave, holiday pay, vacation, pay, life insurance, health and medical
insurance or any other fringe benefit, workers' compensation or disability under 

Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act or the California Fair Employment and Housing Act, including, but not limited to, all claims for breaches of the Age
Discrimination in Employment Act of 1967, as amended (the "Age Act"); provided, however, that this general release is not intended to and shall not be construed as a release of any rights or
obligations of the parties under this Agreement. 

    Said
parties, and each of them, expressly waive and relinquish all rights and benefits under Section 1542 of the Civil Code of California, which reads as follows: 

"1542.
General Release; Extent. 

A
general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected
his settlement with the debtor." 

    Said
parties, and each of them, acknowledge that they, or any of them, may hereafter discover facts different from or in addition to those they, or any of them, now know or believe to
be true with respect to the Claims and Expenses herein released, and agree that this Agreement shall be and remain effective in all respects, notwithstanding such different or additional facts. It is
the intention hereby fully, finally and forever to settle and release all Claims and Expenses which do now exist, may exist or heretofore have existed between Mischel, on the one hand, and the Company
(or any of its predecessors in interest in the Employment Agreement), on the other, in any way based on, arising out of or related to the Employment Agreement or Mischel's employment with the Company
prior to the Effective Date. In furtherance of such intention, among other things, the releases herein given shall be and remain in full force and effect as full and complete mutual general releases
to the full extent of their terms, and the Employment Agreement shall be and remain of no further force or effect notwithstanding the discovery or existence of any such additional or different claims
or facts relative thereto, and notwithstanding the breach of any terms or conditions of this Agreement. 

    Notwithstanding
anything herein to the contrary, this general release is not intended to and shall not be construed as a release of the Employee's right to indemnification under the
Employment Agreement, the Company's Articles and bylaws and under California law. 

16.  REPRESENTATIONS, WARRANTIES AND INDEMNITIES. Mischel hereby represents and warrants that he: (i) is free to enter into this
Agreement and to furnish Company all of the services and grant all of the rights herein set forth; (ii) is in good health and free from any disability or other condition which will or could
interfere with the full performance of his obligations hereunder; (iii) he is under the age of forty (40); and (iv) has not made or will make any commitments or do any acts in conflict
with this Agreement or in derogation of the Company's rights hereunder. Mischel shall defend, indemnify and hold harmless the Company and all those claiming under the Company from and against any
claims, damages, liabilities, costs and expenses (including reasonable outside attorney's fees and costs, whether or not in connection with litigation) arising out of any breach or default by Mischel
hereunder. Mischel agrees that the Company shall have the sole right to control the legal defense against any such claims, demands or litigation, including the right to select counsel of its choice
and to compromise or settle any such claims, demands or litigation. 

17.  RIGHT TO INJUNCTION/REMEDIES. Mischel acknowledges that the Company's remedies at law for a breach by him of the provisions of
Paragraph 14 hereof may be inadequate. Accordingly, in the event of the breach or threatened breach by Mischel of any such provisions, the Company shall be entitled to seek injunctive relief in
addition to any other remedy it may have. In the event of any breach by the Company of this Agreement, Mischel shall be limited to his remedy at law for damages, if any, and shall not have the right
to terminate or rescind this Agreement or in any way to enjoin or restrain the production, distribution, advertising or other exploitation of any motion pictures or other productions, it being
specifically agreed that all rights granted and agreed to be granted to the Company under this Agreement shall be irrevocably vested in the Company and shall not be subject to rescission for any
cause. 

18.  ASSIGNMENT. Mischel may not assign, transfer or convey this Agreement or any interest therein to any person. This Agreement and all
of the Company's rights and obligations hereunder may be assigned or transferred by it, in whole, but not in part, to and shall be binding upon and inure to the benefit of any successor of the
Company, but any such assignment shall not relieve the Company of any of its obligations. The term successors shall mean only any corporation or other business entity which by merger, consolidation,
purchase of assets or otherwise succeeds to or otherwise acquires all or substantially all of the assets of the Company. 

19.  ARBITRATION. 

    (a) Without
limiting the Company's right to seek injunctive relief as described in Paragraph 17, in the event of a disagreement or dispute between the Company
and Mischel related to this Agreement, the matter will be finally settled in Los Angeles, California, by arbitration by a single arbitrator (unless the parties cannot agree on such arbitrator in which
case each party will select an arbitrator and the two arbitrators so selected shall select the third arbitrator) in a proceeding conducted under the rules of the American Arbitration Association or
any similar successor body, the arbitrator also apportioning the costs of the arbitration. The decision of the arbitrator(s) in writing shall be final and binding upon the parties and will not be
subject to appeal. If either party fails to abide by such decision, the other party may seek the order of any federal or state court having jurisdiction thereof which shall enter judgment on the
decision of the arbitrator(s), and the party so failing to abide shall be responsible for the payment of the expenses of the court proceeding and all resulting enforcement expenses, including actual
attorneys' fees. The parties agree to use their best efforts to complete any arbitration hereunder expeditiously. 

    (b) The
prevailing party in any arbitration shall be entitled to be reimbursed for attorneys fees and costs in connection with the pursuit of such arbitration, subject
to the following limitation: such reimbursement shall not exceed the total attorneys fees and costs incurred by whichever of the two parties to such arbitration has the lesser aggregate attorneys fees
and costs. By way of example, if Mischel brings an arbitration against the Company and the Company prevails in such arbitration, (thus entitling the Company to reimbursement of attorneys fees and
costs), and if Mischel's legal fees and costs amount to $50,000 and the Company's legal fees and costs amount to $85,000, the Company's recovery of legal fees and costs against Mischel in such
instance shall be limited to $50,000. 

20.  NOTICES. All notices hereunder shall be in writing and shall be given either by personal delivery, telegram or telecopy (toll
prepaid) or by registered or certified mail (postage prepaid) to the appropriate party at the address listed below, and the date of such personal delivery, mailing, telegraphing or telecopying shall
be the date of the giving of such notice. 

	

 	
 	

If to the Company:	
 	

The Harvey Entertainment Company

11835 W. Olympic

Suite 550

Los Angeles, CA 90064

Attention: Chairman of the Board
	

 	
 	

If to Mischel:	
 	

Rick Mischel

420 Marine Street, #5

Santa Monica, California 90405
	

 	
 	

with a copy to:	
 	

Kleinberg Lopez Lange Brisbin & Cuddy, LLC

2049 Century Park East,, Suite 3180

Los Angeles, California 90067

Attention: Scott Edel, Esq.

21.  MISCELLANEOUS. 

    (a) In
the event there is any conflict between the provisions of this Agreement and any statute, law or regulation, the latter shall prevail; provided, however, that in
such event the provision(s) of this Agreement so affected shall be curtailed and limited only to the minimum extent necessary to permit 

compliance with the minimum mandatory requirement(s) thereof, and no other provision(s) of this Agreement shall be affected thereby, and all such other provisions will continue in full force and
effect. 

    (b) This
Agreement shall be governed by the laws of the State of California applicable to agreements executed and to be wholly performed therein and shall not be
modified except by a written document executed by the parties hereto. 

    (c) This
Agreement expresses the entire understanding of the parties hereto and replaces any and all former agreements, negotiations or understandings, written or oral,
relating to the subject matter hereof. 

    (d) The
remedies herein provided are cumulative and the exercise of one shall not preclude the exercise of any other. 

    (e) No
waiver by either party hereto of any failure by the other party to keep or perform any covenant or condition of this Agreement shall be deemed a waiver of any
preceding, succeeding or continuing breach of the same, or any other covenant or condition. 

    (f)  Paragraph
headings are for the convenience of the parties only and shall not be used in construing meaning. 

    (g) This
Agreement shall not be construed to create a joint venture or partnership between the parties, and shall not be interpreted in favor of or against either party
on grounds that said party drafted this Agreement. 

    (h) This
Agreement shall be executed in a number of identical counterparts, each of which shall be construed as an original for all purposes, but all of which taken
together shall constitute one and the same agreement. 

    IN
WITNESS WHEREOF, the parties hereto have executed this Settlement Agreement and Mutual General Release as of the day and year first above written. 

	

MISCHEL	
 	

THE HARVEY ENTERTAINMENT COMPANY
	

/s/ RICK MISCHEL
	
 	

By:	
 	

/s/ ROGER A. BURLAGE

	 	 	 	 	Name: Roger A. Burlage

Title: CEO

 
 
 

SCHEDULE I    
  

    THE MISCHEL COMPANY PROJECTS  

CHAIN LETTER

CHET GEKKO

FAMILY MOVIES—SKINNING THE CAT

YOUNG BLADES

MINERVA LOUISE

THE SPECIALS

STREET FIGHTER

HAZARDOUS WASTE

ANTOINETTE FRANK

BLACK LAGOON

CON TOWN

COOLEY BROTHERS

DUDLEY THE DRAGON

THE FIX

SLEEPY HOLLOW

LOOKING GLASS

HAPPENCHANCE

PRINCESS ALICE

SOUTHERN COMFORT

STUY HIGH

WET HOT AMERICAN SUMMER

YAHOOLIGANS 

 
 

QUITCLAIM    
  

    For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, The Harvey Entertainment Company ("Grantor") hereby grants,
assigns and quitclaims to the Mischel Company ("Mischel"), its successors and assignees, whatever right, title and interest which Grantor may have, without warranty or representation of any kind, in
and to the motion picture and television projects listed on Schedule "I" (collectively the "Projects") throughout the Universe for the term of perpetuity. 

    The
provisions of this instrument shall be binding upon and inure to the benefit of Grantor and Mischel and their respective successors and assigns. 

    In
Witness Whereof, Grantor has executed this Quitclaim, effective as of January 1, 2001. 

	

THE HARVEY ENTERTAINMENT COMPANY	
 	

 
	

By:	
 	

/s/ ROGER A. BURLAGE
 Name: Roger A. Burlage

Title: CEO	
 	

 

    Mischel hereby accepts the foregoing assignment and confirms that the Projects are being sold on an "As Is" basis, without any representations or warranties,
express or implied, of any nature whatsoever. 

	

/s/ ERIC "RICK" MISCHEL
 ERIC "RICK" MISCHEL	
 	

 

 
 
 

SCHEDULE "I"    
  

    PROJECTS  

CHAIN LETTER

CHET GEKKO

FAMILY MOVIES—SKINNING THE CAT

YOUNG BLADES

MINERVA LOUISE

THE SPECIALS

STREET FIGHTER

HAZARDOUS WASTE

ANTOINETTE FRANK

BLACK LAGOON

CON TOWN

COOLEY BROTHERS

DUDLEY THE DRAGON

THE FIX

SLEEPY HOLLOW

LOOKING GLASS

HAPPENCHANCE

PRINCESS ALICE

SOUTHERN COMFORT

STUY HIGH

WET HOT AMERICAN SUMMER

YAHOOLIGANS 

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EXHIBIT 10.87 SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE

SCHEDULE I THE MISCHEL COMPANY PROJECTS

QUITCLAIM

SCHEDULE I PROJECTSPrepared by MERRILL CORPORATION www.edgaradvantage.com

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EXHIBIT 10.88    
  

As
of February 1, 2001 

Mr. Roger
Burlage

CEO

Harvey Entertainment, Inc.

11835 West Olympic, Suite 550

Los Angeles, CA 90064 

Re:  PM
LIBRARY 

Dear
Roger: 

    The
following sets forth the terms of the agreement between Cinetel Films, Inc. ("Cinetel") and Harvey Entertainment ("Producer") in connection with Cinetel's engagement as the
sales agent for the motion pictures attached on Exhibit "A" hereto which represent the PM library (the "Pictures"). 

A.  Conditions Precedent: Cinetel's obligations hereunder shall be subject in all respects to Cinetel being added as an additional
insured to the errors and omissions policy for each Picture and access to all delivery materials necessary for Cinetel to deliver the Pictures. In addition this Agreement is subject to the prior
approval of Chase Securities, Inc., the Producer's Board of Directors and Cinetel's primary lender, if necessary. 

B.  Territory: The territory (the "Territory") is the universe excluding Canada, the United States, and its territories and possessions
and those territories (but only with respect to the rights granted and for the term licensed) as provided in the previous sales as listed on Exhibit "B" attached hereto (the "Excluded Sales"). For
purposes herein that portion of the Territory encompassing France, Germany, Italy, Japan, Spain and the United Kingdom shall be referred to as the "Select Territory" and that portion of the Territory
outside the Select Territory shall be referred to herein as the "General Territory." 

C.  Term: The term (the "Term") is two years from the date of execution of this Agreement by Producer as listed on the execution page of
this Agreement (the "Execution Date") subject to Paragraph H. below. Cinetel shall have a customary right of first negotiation with respect to an extension of the Term. 

D.  Rights Represented by Cinetel: (a) Subject to the Excluded Sales, Producer hereby engages Cinetel on an exclusive basis during
the Term to act as the Producer's Sales Agent in the Territory to arrange on behalf of the Producer for the distribution, exhibition, sale, leasing, licensing and other exploitation of the Pictures of
the following distribution rights in the Pictures: theatrical, non-theatrical, video (including DVD), airlines, pay-per-view and pay and free television (the
"Rights") but not including exploitation via the Internet, except as set forth below, and any other forms of distribution whether now known or hereafter developed which such rights shall be reserved
by Producer. 

    (b) Notwithstanding
anything set forth above the Producer grants Cinetel the following rights for distribution and exploitation of the Pictures in the Territory over
what is commonly known as the Internet. In the event Cinetel grants a sublicensee all rights its controls to a particular picture it may also grant rights to distribute the Picture over the Internet.
Any distribution over the Internet by way of web-casting, web-TV, streaming, download or any other form of Internet transmission must be limited to receipt only within the
Territory. If such reception can not be so limited, then Cinetel can not grant such distribution rights. 

    (c) Despite
the above, Producer reserves the right to distribute and exploit any and all of the Pictures via the Internet, subject to any agreements Cinetel may already
have entered into with sublicensees. After Cinetel has been notified of Producer's exercise of such rights on any Pictures, it shall have no further right to license any Internet rights on such
Pictures. 

E.  Gross Receipts: All gross revenues from the exploitation of the Pictures (to the extent (i) earned and
non-refundable, (ii) actually received by either (a) Chase Securities, Inc. (the "Collection Agent"), (b) Cinetel and or (c) any other person or entity
receiving such monies on behalf of the Producer or Cinetel in U.S. Dollars and (iii) as determined after the deduction of sub-distributor fees (which sub-distributor
fees shall not be applied against any minimum guarantees and may only be applied against license fees generated as overages pursuant to a license or a distribution agreement) and expenses and all
reasonable and customary refunds, taxes, credits, discounts, allowances, adjustments, exclusions and deductions granted to sub-distributors under the subdistribution agreement ("Gross
Receipts") which determination shall be as soon as practicable by the party receiving such monies, shall promptly be paid into a collection account (the "Collection Account") in the name of Producer
and disbursed as follows by the Collection Agent: 

    1.  Sales Agency Fee: Cinetel shall be entitled to be paid by the Collection Agent the following sales agency fees
(each, a "Sales Agency Fee") within ten business days of receipt of each monthly statement: 

    a)  General Sales Agency Fee: Cinetel shall be entitled to be paid a fee equal to fifteen percent (15%) (the "General
Sales Agency Fee") of all Gross Receipts in the General Territory except with respect to the Excluded Sales. 

    b)  Select Sales Agency Fee: Cinetel shall be entitled to be paid a fee equal to ten percent (10%) of all Gross Receipts
in the Select Territory except with respect to the Excluded Sales. 

    c)  Servicing Fee for Excluded Sales: Cinetel shall be entitled to be paid a servicing fee for collection of receivables
equal to five percent (5%) of all Gross Receipts with respect to the Excluded Sales. 

    d)  New Product and Straight Distribution Sales Agency Fee: Cinetel shall be entitled to be paid a fee of up to fifteen
percent (15%) of all Gross Receipts (the "New Product and Straight Distribution Sales Agency Fee") with respect to the exploitation of new product which has not commenced principal photography prior
to the Execution Date. In no event shall the New Product and Straight Distribution Sales Agency Fee exceed one half of any distribution fee to be paid to Producer on such new product. Cinetel hereby
agrees to defer five percent (5%) of the New Product and Straight Distribution Sales Agency Fee if required by third-party financiers until such time as the third-party financier has recouped its
financing. Upon such recoupment, Cinetel shall then be paid all Gross Receipts after deduction of the New Product Sales Agency Fee until it has been paid all of its deferred fee. 

    2.  Marketing/Servicing Expenses: Cinetel shall be entitled to be paid by the Collection Agent all direct, third party
good faith out-of-pocket expenses (e.g., no overhead to Cinetel or any related or affiliated companies) incurred by Cinetel resulting from Cinetel's engagement as sales agent
(the "Marketing/Servicing Expenses") from the Gross Receipts remaining after the deduction of the Sales Agency Fee. Notwithstanding the foregoing, Cinetel shall also be entitled to be paid by
Collection Agent a one-time film market overhead charge in connection with the Pictures of $30,000 which shall cover all overhead costs (such as travel, hotels, phone, office rental and
supplies) incurred by Cinetel in attending various sales markets. Regarding per-Picture expenses beyond the aforementioned film market overhead charge: Cinetel shall not recoup further
Marketing/Servicing Expenses in excess of $25,000 in the aggregate for each group or package of Pictures or in excess of $5,000 for any one single Picture. Any single commitment in excess of $1,000
will be subject to the prior written approval of the Producer. 

    3.  Producer's Share of Gross Receipts: After the deductions set forth in Paragraphs E.1 through E.2 above, Producer
shall be entitled to the remaining Gross Receipts, if any (the "Producer's Share of Gross Receipts"). 

F.  Statements and Payments: Cinetel shall maintain books and records which shall reflect all Gross Receipts received from
subdistributors and the deductions made by Cinetel pursuant to this Agreement. Cinetel will render to Producer on a monthly basis for such time as Gross Receipts are received by 

either Cinetel, the Producer or the Collection Agent commencing with the start of the Term, a collection report showing Gross Receipts received and all deductions made by Cinetel pursuant to this
Agreement, plus any fees due to Cinetel. Such statements shall be rendered within thirty (30) days following the end of the applicable accounting period and shall indicate thereon that portion
of the Gross Receipts that is then due Producer. Any statement rendered to Producer hereunder shall be deemed accepted by Producer, and no claim by Producer with respect to any statement shall be
maintained unless made in writing, specifying in detail the claim, within one (1) year after the date on which Cinetel renders the statement (with requested back-up) in which such
item is first reflected, and no lawsuit shall be maintained or instituted except if based on such claim and commenced within one (1) year after such written claim is made. Any matter covered by
a statement which has become incontestable hereunder shall remain so, even if included in a subsequent statement or statements. 

    Cinetel
shall also produce and prepare a monthly schedule setting forth all contracts executed within a calendar month, plus the status of any and all pending contracts or on going
negotiations. Such schedule shall be rendered by the tenth day of each month for the previous month during the Term of the Agreement. 

G.  Examination of Books: Producer shall have the right, at its own expense, to engage an outside reputable certified public accountant
with expertise in the motion picture industry, and approved by Cinetel, to audit the books and records of Cinetel pertaining to the Pictures at Cinetel's office during normal business hours upon at
least ten (10) days' prior written notice to Cinetel, and in such as manner as not to interfere with Cinetel's normal business activities. Producer may not exercise its audit rights more than
once annually or for more than one consecutive thirty (30) day period annually. 

H.  Reversion of Rights: In the event that either Producer or Cinetel is acquired by a company which will acquire all or substantially
all of its assets, securities or film library, or in the event that Paul Hertzberg shall cease for any reason, including without limitation, termination of employment, death or disability (provided
such disability continues for a term of sixty (60) consecutive days) to perform the functions he currently performs for Cinetel, Producer shall have the right to demand that the Rights to the
Pictures revert to Producer on a date which is six (6) months from the date of such notice of reversion and subject to Producer's payment to Cinetel of a reversion fee of One Hundred Fifty
Thousand ($150,000) (the "Reversion Fee") and the repayment of any Marketing/Servicing Expenses (as such term is defined under Paragraph E.2 above) that have been incurred by Cinetel and not
otherwise recouped as provided under Paragraph E.2 above. The Reversion Fee shall be reduced to Seventy Five Thousand ($75,000) on the date which is twelve (12) months from the Execution
Date. In the event of such reversion, Producer shall arrange for Cinetel to be paid its Sales Agency Fee (as such term is defined under paragraph E.1 above) on all sales to date at the time of
reversion from revenues received from such sales and prior to the disbursement of such revenues received. Notwithstanding the foregoing, the Reversion Fee shall be reduced by fifty cents ($.50) for
every one dollar paid or credited to Cinetel pursuant to Paragraphs E.1(a) through E.1(d), inclusive, up to and including the date of reversion. 

I.  Producer Approvals: All third party license or other agreements that Cinetel arranges will be subject to Producer's prior written
approval, such approval not to be unreasonably withheld. Cinetel's request for approval shall include all information reasonably necessary for Producer to make an informed decision, including but not
limited to all pictures to be included within the license agreement and all pictures or other product licensed by Cinetel to the same Licensee concurrent with the license to be approved, the license
fee to be allocated to all pictures licensed to the Licensee, and their proposed license terms. Producer agrees that it shall give any required approval within 5 business days of receipt by Producer
of such written request and accompanying documentation from Cinetel. In the event Producer does not disapprove any such submitted license within 5 business days of receipt by Producer of such written
request from Cinetel, any such submitted license shall be deemed approved. Notwithstanding the above, during film markets (including but not limited to AFMA, MIFED, MIP-TV,
MIP-COM and NATPE) the Producer agrees that it shall give any required approvals within 48 hours of receipt by Producer of such request, and such approval may be given verbally,
rather than in writing, but in the event of a verbal approval one of the parties must confirm the approval to the other in 

writing as soon as practical thereafter, but not later than 24 hours after the granting of the verbal approval. All license agreements entered into by Cinetel as the agent for Producer shall
provide that Gross Receipts be paid into the Collection Account. Cinetel can not package or group any of the Pictures with any non-Producer pictures unless such package or group has
previously been approved in writing by Producer. The parties agree that they may incorporate into the definitive agreement a list of minimum acceptable prices in each territory. If the parties so
agree on such a list, any license agreements in which the license fee is excess of such minimum fees will be deemed automatically approved. In addition, any appointment of a sales agent by Cinetel in
the Territory shall be subject to Producer's prior written approval. Any requests to Producer for approval, until otherwise notified in writing, should be sent as follows: 

	

 	

Robert Burlage

Chairman of the Board

The Harvey Entertainment Company

11835 W. Olympic Blvd., Suite 550E

Los Angeles, CA 90064

(310) 444-4100

(310) 444-4102 fax

e-mail: Rburlage@Harvey.com
	

 	

with a copy:

Caroline Stewart

Chief Financial Officer

The Harvey Entertainment Company

11835 W. Olympic Blvd., Suite 550E

Los Angeles, CA 90064

(310) 444-4100

(310) 444-4103

e-mail: Cstewart@Harvey.com

    Notices to Cinetel shall be sent to the following address: 

    Notices
shall be effective upon delivery personally, by fax, federal express (or other such overnight services), e-mail, or within three business days if delivered by
certified mail return receipt requested. Either party may change the place and person to which notices shall be addressed upon sending written notification of such fax to the other party. 

    a.  Notwithstanding
anything to the contrary contained in this Agreement, Cinetel is not authorized to sublicense or subdistribute (i.e., enter into an agreement with a
third-party wherein the third party would act as an additional sales agent in consideration for a fee which would dilute the share of receipts to which the parties hereto would otherwise be entitled)
the license hereunder without the prior written approval of PM or Harvey. For avoidance of doubt, nothing in this paragraph shall prevent Cinetel from licensing the Property to local or regional
distributors. 

J.  Representations. Warranties and Indemnities: As an inducement to Cinetel to enter into this Agreement, and in consideration of its
doing so, Producer represents, warrants and agrees as follows: 

    a.  The
Pictures with the exception of the Excluded Sales, have not heretofore been distributed or otherwise exploited in any part of the Territory; 

    b.  Producer
has the full rights, power and authority to enter into and perform this Agreement, and Producer is the sole and exclusive owner of the Rights. Upon
request, Producer shall provide such chain-of-title with respect to the Pictures as it has in its possession; 

    c.  Upon
Delivery of the Pictures to Cinetel, (i) Producer shall own or have good and sufficient licenses from the owners of all literary, dramatic and musical
material contained in the Pictures, or upon which the Pictures are based, to the extent required to enable Cinetel to enter into any and all sub-distribution agreements; and
(ii) all amounts and obligations to all third-parties with respect to 

production and delivery of the Pictures (including without limitation, all production costs, deferments, profit participations, royalty payments, music synchronization or other music costs, license
fees and any residual, supplemental market or other payments to any guild or union or the members thereof) shall have been full paid and satisfied by Producer and Producer shall be solely responsible
for the payment and/or satisfaction thereof; 

    d.  Producer
shall exclusively own or have good and sufficient exclusive licenses from the owners of all the copyrights in and to the screenplays of the Pictures and
the Pictures themselves, and such copyrights are valid and existing throughout Territory and neither the screenplays for the Pictures are in the public domain anywhere in the Territory, and Producer
has obtained copyright registration of said screenplays and Pictures in Producer's name in the United States Copyright Office, and Producer will obtain any and all renewals thereof, and will promptly
after obtaining them furnish Cinetel with copies of the applicable copyright registration certificates; 

    e.  Neither
the Pictures nor any part thereof nor the exercise by Cinetel's subdistributors of any of the Rights does or will violate or infringe upon the copyright,
right of privacy or any other rights of any person or company whomsoever; 

    f.   Subject
to the existing liens and security interests granted to Chase Securities, Inc. in all assets of Producer, the Lewis Horwitz Organization liens and
security interests in the films "Layover" and "Firetrap" and the joint liens and security interests granted to Imperial Bank and Natexis Banque in the film "Inferno", Cinetel's
sub-distributors shall have quiet title to the Rights during the Term; there are no other known material claims, liens, encumbrances, security interests or other rights or charges of any
kind in, to or on the Pictures, or any part thereof, or any literary, musical or other material contained therein, or any of the Rights or any of the physical materials of the Pictures, which can or
will impair, limit, restrict, prejudice or interfere with any of the Rights of the exercise thereof by Cinetel or its sub-distributors and Cinetel may freely exploit the Rights, or any of
them, in the Territory and throughout the Term without interference from any other person or company; 

    g.  No
material claims or litigation are pending or threatened, and Producer does not know of any dispute which may result in a material claim or litigation, which
might adversely affect any of the Rights granted to Cinetel's sub-distributors; 

    h.  There
are no agreements with, or rights in, any person or company which would require Cinetel or its sub-distributors or sub-licensees to
pay any such person or company any royalty, compensation or other sum whatsoever by reason of the exhibition or distribution of the Pictures hereunder or the exercise of any of the Rights or which
would require Cinetel or its sub-distributors to obtain any consent or permission in order for Cinetel's sub-distributors to exercise legally any of the Rights; 

    i.   Producer
will not, during the Term, negotiate or enter into any distribution or sub-distribution agreements for the Pictures in the Territory, and
Producer will direct any inquiries therefor to Cinetel; 

    j.   All
screen and advertising credits which Producer, or any other person or company, has agreed, or may agree prior to delivery of the Pictures to Cinetel, to accord
in connection with the Pictures are and will be consistent with each other and in accordance with all applicable guild and union agreements, and will be accurately reflected in a schedule of credits
to be delivered to Cinetel. No credit obligations in relation to the Pictures shall be assumed or undertaken by Producer after the delivery of the Pictures to Cinetel; 

    k.  Good,
marketable and technically first-class release prints and high-definition video masters can be made from the pre-print materials
delivered by Producer to Cinetel hereunder, and first-class PAL and NTSC video masters of all Pictures will be provided to Cinetel; 

    l.   All
of Producer's representations and warranties hereunder will be valid, true and correct at the time of delivery of each Picture to Cinetel and throughout the
Term, and will survive the expiration or termination of this Agreement. At the time of delivery of the Pictures to Cinetel, the Pictures will 

not theretofore have been exhibited anywhere in the Territory, commercially, at festivals, or otherwise, except as provided under the Excluded Sales. 

    Cinetel
shall have the unqualified right to rely upon all representations, warranties and covenants made by Producer in this Agreement notwithstanding any information obtained by
Cinetel from any other source, and notwithstanding any investigation which could have been made by Cinetel (it being agreed that Cinetel is under no obligation to make any such investigation), and
notwithstanding the provisions of any documents delivered by Producer to Cinetel pursuant to the terms of this Agreement or otherwise. 

K.  Indemnity: Producer hereby agrees at all times to defend and indemnify Cinetel and all persons and companies acquiring any Rights in
the Territory during the Term from or through Cinetel, and their respective officers, agents, directors, stockholders and employees ("Indemnitees") against, and to hold each of them harmless from and
against, any and all loss, liability, cost, damage and expense, including, without limitation, court costs and reasonable counsel fees, which they or any of them may suffer or incur by reason of any
breach or alleged breach of any warranty or representation made by Producer hereunder, or any other breach of this Agreement by Producer, or any error or omission in any of the material furnished by
Producer in accordance with this Agreement, or any failure of Producer to furnish timely such material or information as and when required hereunder. There shall be included in the loss, liability,
cost, damage and expense against which the Indemnitees are indemnified hereunder all sums which any of the Indemnitees may pay in settlement of any such claim. In addition, Cinetel may, at its option,
postpone or suspend the distribution, exhibition, marketing and exploitation of the Rights or any of them until such claim, action suit or proceeding has been finally settled or adjudicated
in favor of Producer and Cinetel. If any such claim remains pending for twenty-four (24) months or more from the first notice to Cinetel of such claim, action, suit or proceeding,
and if as a result thereof Cinetel has suspended the exercise of the Rights to a substantial extent, Cinetel shall have the right to terminate this Agreement by written notice to Producer. In the
event of such termination, and without limiting the right of Cinetel to recover any damages sustained by Cinetel, Producer shall, upon demand of Cinetel, refund to Cinetel any then unrecouped portion
of Marketing Expenses, plus interest on all the foregoing at the rate charged Cinetel by its principal lender (the "Interest Rate"). 

L.  Producer
shall agree to add Cinetel as an additional Insured on its existing Errors and Omission Insurance policies. Producer further agrees to maintain the current or a similar
policy for the term of this agreement. 

    Producer
and Cinetel anticipate negotiating a more formal long-form agreement to be negotiated in good faith, incorporating the terms and conditions hereunder as well as
other terms and conditions that are customary in the motion picture industry. Unless and until such long-form agreement is executed, this Agreement shall constitute a binding agreement
between Producer and Cinetel. 

    If
the foregoing is acceptable, please so indicate by signing in the space provided below. 

	

Very truly yours,

CINETEL FILMS, INC.	
 	

AGREED AND ACCEPTED

THE HARVEY ENTERTAINMENT COMPANY

("Producer")
	

By:	
 	

/s/ PAUL HERTZBURG
	
 	

By:	
 	

/s/ ROGER A. BURLAGE

	Its:	 	PRESIDENT	 	Its:	 	CEO

QuickLinks

EXHIBIT 10.88

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