Adult Entertainment Capital, Inc. 15641 Redhill Ave. Suite 200
Tustin Ca, 92780
August 28, 2008 ComedyNet.TV, 444 Broadway 4th Floor
New York, NY 10013 Attention: Mark Graff
Dear Mr. Graff, This Letter of Intent ("LOI") sets
forth the terms and conditions of a Proposal by Adult Entertainment
Capital, Inc ("AEC"). AEC will acquire 100 % ofComedyNet.TV, mc.
("CNET") via an Asset Purchase or Stock Purchase or other mutually
agreed acquisition structure. AEC and CNET may also be referred to
herein collectively as the "Parties". 1. FORM OF
TRANSACTION. The transaction (the "Transaction") will consist of
ABC acquiring from CNET all assets and business operations of CNET.
In addition AEC will receive all license agreements, and all joint
venture agreements of CNET, whether internationally and domestic in
nature. 2. PURCHASE PRICE. The purchase price $3,500,000.
The payment shall be in two parts as follows: 1) The
assumption of debt and payables in the amount of approximately
$2,100,000. The $2,100,000 of debt will have an agreed-upon payout
schedule based upon successful capital formation amounts. Further,
the debt holders of CNET (approximately $1,600,000) will have an
option to convert to equity of the AEC at 5 cents per share for a
period to be determined. $500,000 will be used to reduce trade
payables, pay deferred salary of the principals, and settle
outstanding Federal and State withholding tax obligations.
2) $1,400,000 of common stock of the AEC at a
basis of 3 cents per share. Of the $1,400,000, the present CNET
private placement shareholders will receive $1,000,000, and the
$400,000 balance will be distributed to the other CNET shareholders
on a pro-rata basis. 3. BUSINESS OPERATION. The parties
agree that upon execution of this LOI, AEC will assume the roles
and responsibilities of managing and operating the CNET business,
retaining President Mark Graff and CFO/COO Jim Hatch. It further
agreed, that the parties will work together to ensure that