**Exhibit
10.1**








**OPERATING
AGREEMENT**





**OF**





**NL
RADIO, LLC**








THE
SECURITIES REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 NOR REGISTERED NOR QUALIFIED UNDER ANY STATE SECURITIES
LAWS. SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE,
TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS QUALIFIED AND REGISTERED UNDER
APPLICABLE STATE AND FEDERAL SECURITIES LAWS OR UNLESS, IN THE OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY, SUCH QUALIFICATION AND REGISTRATION IS NOT
REQUIRED. ANY TRANSFER OF THE SECURITIES REPRESENTED BY THIS AGREEMENT IS
FURTHER SUBJECT TO OTHER RESTRICTIONS, TERMS AND CONDITIONS WHICH ARE SET FORTH
HEREIN.






-1-




**OPERATING
AGREEMENT**


**FOR**


**NL
RADIO, LLC**


**A
Delaware limited liability company**








This
Operating Agreement is entered into as of March 2, 2005 by and between K-Tahoe
Investments, Ltd. (“K-Tahoe) and Front Row Films, Inc. (“FRF”) (sometimes
collectively referred to as “Emmons”) and National Lampoon, Inc. (“Lampoon”),
(Emmons and Lampoon and additional members who may be admitted as hereinafter
provided are referred to individually as a Member and collectively as the
“Members”).





A.  The
Members have formed a limited liability company (“Company”) pursuant to the
applicable laws of the State of Delaware (the “Act”). The Certificate of
Formation (the “Certificate”) of the Company filed with the Delaware Secretary
of State on September 30, 2004 under the initial name of Comedy Radio Partners,
LLC, is hereby adopted and approved by the Members. The Company subsequently
changed its name by a filing dated March 2, 2005 to NL Radio, LLC.





B.  The
initial purpose of the Company is the financing and launching of a radio network
whose primary purpose is to program a 24/7 entertainment/lifestyle radio format
under the National Lampoon brand.





C.  Emmons
Media Group (predecessor in interest to K-Tahoe) and Lampoon have heretofore
entered into a letter agreement dated December 21, 2004 (the “Letter
Agreement”), pursuant to which the parties agreed upon the basic terms of their
business relationship; this Operating Agreement is intended to supplement the
terms of the Letter Agreement. However, in the event of a conflict between this
Operating Agreement and the Letter Agreement, the terms of the Letter Agreement
shall control. It is acknowledged by the parties that K-Tahoe has succeeded to
all of the rights and obligations of Emmons Media Group under the Letter
Agreement;





D.  The
Members are entering into this Operating Agreement in order to provide for the
governance of the Company and the conduct of its business and to specify their
relative rights and obligations.





NOW,
THEREFORE, in consideration of the mutual covenants herein contained, the
Members hereby agree as follows:





ARTICLE
I


ORGANIZATIONAL
MATTERS





1.1  Name . The
name of the Company shall be “NL RADIO, LLC”. The Company may conduct business
under the aforesaid name or any other name approved by the Members.




-2-




1.2  Certificates/Filings . The
Members have filed the Certificate with the Delaware Secretary of State. Any
Member may execute and file with the Delaware Secretary of State any amendments
to the Certificate approved by Lampoon and K-Tahoe and by a majority vote of the
Members. Each of the Members is authorized to execute, file and cause to be
published with the proper authorities in any appropriate jurisdiction, such
other certificates or documents as are required by any fictitious business
statement act or similar statute in effect. If there exists a conflict between
this Agreement and the Certificate, the Certificate shall control. The Members
from time to time shall execute or cause to be executed all such certificates
and other documents, and do or cause to be done all such filings, recordings,
publishings and other acts, including without limitation a Statement of
Registration, as are necessary to comply with the Act for the formation and
operation of the Company in all jurisdictions in which the Company is authorized
to conduct business.





1.3  Term . The
term of the Company shall commence as of the date of the filing of the
Certificate and, unless sooner terminated under Section 9.1, shall terminate on
December 31, 2030. Subject to other terms and conditions of this Agreement and
provided that the Company is not in material uncured default of any of its
obligations to Lampoon on December 31, 2030, the term of the Company and this
Agreement shall be automatically renewed for successive twenty-five year
periods, if at the end of the immediately preceding twenty-five year period the
Company continues to be a reasonably viable entity and/or “National Lampoon
Radio” continues to be a reasonably viable brand.





1.4  Office
and Agent . The
Company shall continuously maintain a registered office and registered agent in
the State of Delaware as required by the Act. The principal business office of
the Company shall be at9229 Sunset Blvd., Suite 820, Los Angeles, CA 90069, or
such other location as the Members may determine. The registered agent shall be
as stated in the Certificate or as otherwise determined by the
Members.





1.5  Business
and Purpose of the Company . The
business and purpose of the Company shall be to engage in any lawful act or
activity for which a limited liability company may be organized under the Act.
It is contemplated that (i) the Company will focus its terrestrial distribution
on FM stations in the top 50 United States radio markets, but will be available
for FM stations in all markets, (ii) in addition to the 24/7 radio channel, the
Company shall provide day-part syndication, wireless (through Lampoon’s Disney
deal or otherwise), satellite radio, internet radio, cable television audio
channel programming (collectively, with any other medium or method of audio
transmission to multiple listeners hereafter devised, “Audio Broadcasting”) and
content for any other medium mutually agreed to by the parties that will be
ideal for repurposing content originated by the Company, and (iii) the primary
revenue model will be based on ad sales, direct response and product promotion
arrangements. The parties acknowledge that the principal initial business of the
Company will consist of an FM-oriented comedy radio programming service that
will be initially targeted at an 18-34 year old male demographic (the “Format”).




-3-






ARTICLE
II


CAPITAL
CONTRIBUTIONS





2.1  Capital
Contributions .





(a)
Lampoon hereby contributes to the Company the right to use the National Lampoon
name as provided in the Letter Agreement and as hereinafter provided. Emmons
shall not make any initial capital contribution other than in the form of
services rendered. As additional investor Members are admitted, their initial
capital contributions shall be recorded on Exhibit A hereto.





(b)
Except as provided above, no Member shall be required (i) to make any additional
contributions to the capital of the Company, (ii) to make any loan, or (iii) to
guarantee any loan for the Company. Except as provided in this Agreement, no
Member may withdraw his or her capital contribution.





2.2  Capital
Accounts . The
Company shall establish an individual capital account (“Capital Account”) for
each Member. The Company shall determine and maintain each Capital Account in
accordance with Treasury Regulations Section 1.704-l(b)(2)(iv) and this
Agreement. Upon a valid transfer of a Member’s entire right, title and interest
in and to the Company (such interest of any Member is sometimes referred to
herein as the “Membership Interest”) in accordance with Article VI, such
Member’s Capital Account shall carry over to the new owner. Each Member
recognizes, agrees, and intends that for federal income tax purposes the Company
will be classified as a partnership.





2.3  No
Interest . No
interest shall accrue on capital contributions.





2.4  Percentage
Interests . Each
Member’s “Percentage Interest” for purposes of this Agreement shall be as
follows. The initial Percentage Interest of Lampoon shall be 25%. The initial
percentage interest of Emmons shall be 75%. Percentage interests granted to
investor members who contribute the first $2.5 million in investment capital to
the Company shall reduce only Emmons’ Percentage Interest and shall not affect
the Percentage Interest of Lampoon. The first 5% of Percentage Interest granted
to key employees and advisory board members shall reduce only Emmons’ Percentage
Interest and shall not affect the Percentage Interest of Lampoon. If Percentage
Interests in excess of 5% are granted to key employees or advisory board
members, then Emmons shall in its sole discretion either (i) obtain the approval
of Lampoon, in which case such additional Percentage Interests shall dilute the
Percentage Interests of all Members on a pro rata basis, or (ii) grant such
additional Percentage Interests without obtaining the approval of Lampoon, in
which case such additional Percentage Interests shall reduce only Emmons’
Percentage Interest and shall not affect the Percentage Interests of any other
Members. Except as provided above, all additional Percentage Interests that may
be granted to any Members, including, without limitation, investors of capital
beyond the initial $2.5 million and strategic partners, shall dilute the
Percentage Interests of all Members on a pro rata basis.




-4-




ARTICLE
III


MEMBERS





3.1  Admission
of Additional Members . Except
as otherwise provided in Article VI hereof, additional Members may be admitted
to the Company (i) as determined by K-Tahoe with respect to investor members who
contribute the first $2.5 million in investment capital to the Company, key
employees and advisory board members who receive Percentage Interests up to 5%
and any other Member whose Percentage Interest reduces only the Percentage
Interest of Emmons, as provided in section 2.4 above, and (ii) as determined by
K-Tahoe and Lampoon and a majority vote of the then existing Members with
respect to any other additional Member. Additional Members will participate in
“Company Profits”, “Company Losses” (as such terms are defined in Section 5.1
below), and distributions of the Company as provided in Article VI
hereof.




ARTICLE
IV


MANAGEMENT
AND CONTROL OF THE COMPANY





4.1  Management . The
business of the Company shall be managed by K-Tahoe. K-Tahoe and its designees
shall be responsible for the day-to-day management of the Company and shall have
the right and power to enter into agreements on behalf of the Company, to
exercise or not exercise options and other rights held by the Company and to do
or refrain from such other acts as K-Tahoe may determine to be necessary or
appropriate for the operation of the Company. Any transaction involving
guaranteed revenues or unconditionally committed expenditures in excess of
$50,000 must be approved by K-Tahoe and Lampoon. Additionally, the Members by
majority vote and each of K-Tahoe and Lampoon have approval rights over the
following”:





(a)  Use of
the Company’s capital or funds in any way other than for Company
business;





(b)  Any act
in contravention of this Agreement;





(c)  Any act
which would make it impossible to carry on the ordinary business of the
Company;





(d)  Except as
otherwise provided in Articles III and VI hereof, admission of a person or any
other entity as a Member of the Company;





(e)  Amendment
of this Agreement; or.




(f) Any
action out of the ordinary course of business of the Company;





4.2Corporate
Conversion. K-Tahoe
and Lampoon may at any time upon their mutual agreement in their sole discretion
cause the Company to be reorganized as a corporation. Such reorganization may be
accomplished by sale of assets, purchase of membership interests or such other
method as K-Tahoe and Lampoon may determine in good faith to be in the best
interests of the Members. The surviving corporation shall have the same
percentage ownership interests as the Company and shall managed in substantially
the same manner as the Company, subject to such adjustments as may be required
by the change in corporate form. The timing, precise corporate form, state of
incorporation and all other matters relating to such reorganization and
surviving corporation shall be determined by K-Tahoe and Lampoon upon their
mutual agreement in their sole discretion.





-5-





4.3  Specific
Management Duties of K-Tahoe . Without
limiting the generality of the management rights and responsibilities of K-Tahoe
provided elsewhere in this Agreement, it is specifically agreed that K-Tahoe
shall provide the following: (i) the build-out, management, staffing,
programming and operation of the Company, (ii) licensing and cross-licensing
deals for content, and (iii) syndication sales of the products. The individuals
and entities who will be charged with the specific execution of the foregoing
and the compensation payable to them for such services shall be determined by
K-Tahoe in its sole discretion.





4.4  Creative
Control . Lampoon
and K-Tahoe shall have mutual approval over material creative relating to the
business of the Company, with such control to be exercised in good faith in a
manner that does not frustrate the business of the Company or cause the Company
to incur material costs or experience material delays. In the event of any
creative matter in which an inability to agree appears likely to or does cause
the Company to incur material costs or experience material delays the decision
of K-Tahoe shall be final and binding, subject to the other provisions of this
Agreement.





4.5  Member
Approval . No
annual or regular meetings of the Members are required to be held, but may be
requested by any Member from time to time. If such meetings are held, such
meetings shall be noticed, held and conducted pursuant to the Act. In any
instance in which the approval of the Members is required under this Agreement,
such approval may be obtained in any manner permitted by the Act or as provided
in Paragraph 12.6 below. When the phrases “approved by the Members” or “on the
approval of the Members” or “majority vote of the Members” are used in this
Agreement, such phrases shall mean approval by Members holding a majority of the
Percentage Interests set forth in Exhibit A,and when in addition to the approval
of the Members, the approval of K-Tahoe and Lampoon is required, each of K-Tahoe
and Lampoon shall be required to approve the action in question. .


4.6  Loans
to the Company . Nothing
in this Agreement shall prevent a Member from loaning money to the Company on a
promissory note or similar evidence of indebtedness for a reasonable rate of
interest. Any Member loaning money to the Company shall have the same rights and
risks regarding the loan as would any person or entity making the loan who is
not a Member of the Company.





4.7  Officers . The
Company will have a CEO, President, Secretary and at least one Vice President,
who may, but need not be Members. Officers shall serve until they resign or are
removed or are replaced. Lampoon will have the right to designate one Vice
President, who shall be subject to the approval of the Company, not to be
unreasonably withheld; all other officers shall be designated by K-Tahoe. The
Vice President designated by Lampoon shall be actively involved in the general
management, operational management and creative development and execution areas
of the Company under the direction and control of the CEO and President. K-Tahoe
may designate addi-tional officers of the Company, and may alter the powers,
duties, and compensation of the President and of all other officers, provided,
however, that the Lampoon designated Vice President shall continue to have
involvement in management as provided above. The CEO and President shall attend
any Meet-ings of Members called pursuant to Section 4.2. The initial officers
shall be:




-6-




KENT
EMMONS CEO





SHARI
GIBBONS President
and Secretary





BARRY
LAYNE Vice
President





Kent
Emmons will perform all of the customary duties of a CEO and will be engaged for
an initial term of two years with the requirement that he commit on average at
least 75% of regular business hours to his work for the Company. In the event
that Kent Emmons’ services are terminated for any reason, the Company shall
select a successor with comparable experience in the radio business and such
successor shall be subject to the approval of K-Tahoe and Lampoon and a majority
vote of the Members.





4.8Title
to Property. Title
to any property acquired by the Members related to the Company shall be taken in
the name of the Company, and, if any such property should for any reason be
temporarily in the name of a Member, such Member shall hold same as agent and
trustee for the use and benefit of the Company and in accordance with the terms
hereof.





4.9  Competing
Activities . Except
as provided below, the Members and their Affiliates may engage or invest in any
activity. Neither the Company nor any Member shall have any right in or to such
other activities or to the income or proceeds derived therefrom. No Member shall
be obligated to present any investment opportunity to the Company, even if the
opportunity is of the character that, if presented to the Company, could be
taken by the Company. Neither Lampoon nor K-Tahoe may directly or indirectly
invest in, license or otherwise transfer rights to or otherwise have any active
involvement with any other business or programming in the arena of Audio
Broadcasting that is competitive with the Format. Outside of the arena of Audio
Broadcasting, neither Lampoon nor K-Tahoe may directly or indirectly invest in,
license or otherwise transfer rights to or otherwise have any active involvement
with any other business or programming that is directly competitive with the
business or programming of the Company.. It is acknowledged that Kent Emmons is
presently a shareholder in the comedy radio programming service known as All
Comedy Radio and that his interest in All Comedy Radio shall in no event be
deemed to be a breach of his obligations hereunder. However, for as long Kent
Emmons is the CEO of the Company, he shall have no active operating involvement
in All Comedy Radio without the prior approval of Lampoon.





4.10  Devotion
of Time . Each
Member shall devote whatever time or effort as it deems appropriate for the
furtherance of the Company’s business.




-7-




ARTICLE
V


ALLOCATIONS
OF PROFITS AND LOSSES AND DISTRIBUTIONS





5.1  Allocations
of Profits and Losses .





(a)  Definitions .
“Company Profits” and “Company Losses” shall mean the income, gain, loss,
deductions, and credits of the Company in the aggregate or separately stated, as
appropriate, determined in accordance with the method of accounting at the close
of each fiscal year employed on the Company’s information tax return filed for
federal income tax purposes and in accordance with the Internal Revenue Code
(the “Code”).





(b)  Adjustment
of Allocations . If the
allocations set forth below are adjusted by the Internal Revenue Services, such
allocations shall be deemed to be amended to the minimum extent necessary to
conform with section 704 of the Code, while preserving the intent of the
foregoing allocations to the maximum possible extent and by making such
adjustments to the allocations as are necessary to allow distributions to be
made in accordance with Section 5.5 below.





(c)  Qualified
Income Offset . If any
Member unexpectedly receives any adjustment, allocation or distribution
described in Treasury Regulation section 1.704-1(b)(2)(ii)(d)(4), (5) or (6),
items of Company income and gain shall be specially allocated to such Member in
an amount and manner sufficient to eliminate any deficit in its Capital Account
created by such adjustment, allocation or distribution as quickly as possible.
This Section 5.1(c) is intended to constitute a "qualified income offset" within
the meaning of Treasury Regulation section 1.704-1(b)(2)(ii)(d)(3).





(d)  Additional
Allocations .
Notwithstanding the foregoing, if, upon the final dissolution and termination of
the Company and after taking into account all allocations of Company Losses and
Company Profits (and other tax items) under Sections 5.2 and 5.3 below, the
distributions to be made in accordance with the positive Capital Account
balances would result in a distribution that would be different from a
distribution under Section 5.5 below, then gross items of income and gain (and
other tax items) for the taxable year of the final dissolution and termination
(and, to the extent permitted under section 761(c) of the Code, gross items of
income and gain (and other tax items) for the immediately proceeding taxable
year) shall be allocated to the Members to increase or decrease Capital Account
balances, as the case may be, so that the final distribution will occur in the
same manner as a distribution under Section 5.5 below.





5.2  Allocation
of Company Losses . Company
Losses with respect to any fiscal year shall be allocated among the Members in
the following order:





(a)  First,
Company Losses shall be allocated among the Members to the extent of the
positive balances of the Members’ Capital Accounts until such balances are
reduced to zero.





(b)  Second,
Company Losses for each fiscal year shall be allocated in proportion to the
Members’ Percentage Interests as of the last day of such year.




-8-




5.3  Allocation
of Company Profits . Company
Profits with respect to any fiscal year shall be allocated among the Members in
the following order:





(a)  First,
Company Profits shall be allocated among the Members in proportion to and to the
extent of any negative balances in the Members’ Capital Accounts until such
negative balances are reduced to zero.





(b)  Second,
Company Profits shall be allocated among the Members in proportion to and to the
extent of the relative amounts of net cumulative Company Losses (net of Company
Profits) theretofore allocated to each Member’s Capital Account pursuant to
Section 5.2 above until the aggregate amount of Company Profits so allocated
equals the total amount of net cumulative Company Losses theretofore allocated
to the Members’ Capital Accounts.





(c)  Third,
the remainder of Company Profits, if any, shall be allocated to the Members in
proportion to their respective Percentage Interests as of the last day of such
year.





5.4  Tax
Payments . In the
event that any Member is required to report as its gross income for federal
income tax purposes resulting from allocations hereunder in any year, an amount
in excess of the total cash distributions received by such Member for that year
("Non-Cash Income"), then the following provision shall apply, notwithstanding
anything in Section 5.5 to the contrary. The Company shall distribute to each
Member in proportion to their Percentage Interests, within ninety (90) days
after the end of each fiscal year, an amount of cash equal to the product of (a)
such Non-Cash Income for the fiscal year; and (b) the highest applicable
composite marginal rate borne by any Member for U.S. federal, state and local
taxes for such fiscal year.





5.5  Distributions . Except
as provided in Section 5.4 above or in connection with dissolution pursuant to
Article IX below, all distributions to the Members shall be in the sole
discretion of K-Tahoe. All distributions to the Members that K-Tahoe may elect
to make shall be in accordance with the Percentage Interests of the
Members.





5.6  Accounting
for Distributions . The
amount of any distributions made to a Member shall be charged against such
Member’s Capital Account.





ARTICLE
VI


ADDITIONAL
MEMBERS AND CAPITAL CONTRIBUTIONS; TRANSFER AND ASSIGNMENT OF
INTERESTS





6.1  Additional
Members and Capital Contributions . As part
of its responsibility for day to day activities, K-Tahoe shall be entitled, as
K-Tahoe determines to be necessary or appropriate to for the business of the
Company, to accept additional capital contributions from the Members and to
admit new Members contributing capital to the Company. Before the Company
accepts any additional capital contributions beyond the initial $2.5 million,
Existing Members shall have a period of ten (10) business days in which to
commit to contribute a pro rata share of any additional capital that may be
required beyond the initial $2.5 million so as to maintain the same Percentage
Interest which such Member had immediately prior to the contribution of the
additional capital. Any new Members so admitted shall be required to sign and
agree to be bound by this Operating Agreement, and their names and capital
contributions shall be added to Exhibit A. The dollar amounts of the capital
contributions set forth in Exhibit A shall also be increased by the amount of
any such additional capital contributions from existing Members. Following the
addition of any such new Members or receipt of such additional capital
contributions from existing Members, the percentages set forth in Exhibit A
shall be adjusted as provided in Section 2.4 above.




-9-




6.2  Transfer
and Assignment of Interests . Except
as otherwise specifically provided in this Article VI and Article VII, no Member
may transfer, assign, convey, sell, encumber or in any way alienate all or any
part of his Membership Interest without the prior approval of all Members, which
approval may be given or withheld in the sole discretion of the
Members.





6.3  Permitted
Transfers .
Notwithstanding the provisions of Section 6.1 above, any Member who is a natural
person may transfer his or her Membership Interest to (a) a trust established by
such Member for the benefit of such Member, or for the benefit of anyone
designated by such Member so long as such Member remains the sole Trustee of his
or her trust during the lifetime of such Member, or (b) upon the death of a
Member to any heir(s) of the Member.





6.4  Substitution
of Members . A
transferee of a Membership Interest shall have the right to become a substitute
Member only if (i) consent of the Members is given in accordance with Section
6.1 or the Transfer is permitted by Section 6.2, (ii) such person executes an
instrument satisfactory to the Members accepting and adopting the terms and
provisions of this Agreement, and (iii) such person pays any reasonable expenses
in connection with his admission as a new Member. The admission of a substitute
Member shall not release the Member who assigned the Membership Interest from
any liability that such Member may have to the Company.





ARTICLE
VII


BUY SELL
AGREEMENT OF MEMBERS





7.1  Sale
of Company .  In the
event that a third party proposes in writing to purchase the Company or
substantially all of its assets on terms which the Members desire to accept, the
Company shall give Lampoon written notice in the form of a non-binding draft
term sheet of the terms that Company desires to accept, and Lampoon shall have a
period of fifteen (15) business days in which to agree to purchase the Company
or its assets on all of the same terms set forth therein. If Lampoon does not
accept such proposal within the fifteen (15) business day period, Company shall
be free to proceed with the third party on terms that are the same as or more
favorable to the Company than the terms contained in the draft term sheet with
no further obligation to Lampoon.. However, in the event Lampoon does not accept
such proposal and Company accepts a third party offer, if the third party does
not assume in writing all of the limitations and restrictions contained in this
agreement with respect to the use of Lampoon’s name and trademarks, Lampoon
shall have the right at any time prior to the closing of the sale to inform such
third party whether or not it will agree to allow the third party the use of its
Mark.






-10-




ARTICLE
XIII


ACOUNTING,
RECORDS, REPORTING BY MEMBERS





8.1  Bank
Accounts . The
Members shall maintain the funds of the Company in one or more separate bank
accounts in the name of the Company, and shall not permit the funds of the
Company to be commingled in any fashion with the funds of any other person. The
Members are authorized to endorse checks, drafts, and other evidences of
indebtedness made payable to the order of the Company, but only for the purpose
of deposit into the Company’s accounts. All checks, drafts, and other
instruments obligating the Company to pay money shall be signed on behalf of the
Company as provided in the Co-Production Agreement.





8.2  Books
and Records . The
books and records of the Company shall be kept in accordance with the accounting
methods followed for federal income tax purposes. The Company shall maintain at
its principal office in Delaware all of the following:





(a)  A current
list of the full name and last known business or residence address of each
Member set forth in alphabetical order, together with the capital contributions,
capital account and Percentage Interest of each Member;





(b)  A copy of
the Certificate and any and all amendments thereto together with executed copies
of any powers of attorney pursuant to which the Certificate or any amendments
thereto have been executed;





(c)  Copies of
the Company’s federal, state, and local income tax or information returns and
reports, if any, for the six (6) most recent taxable years;





(d)  A copy of
this Agreement and any and all amendments thereto together with executed copies
of any powers of attorney pursuant to which this Agreement or any amendments
thereto have been executed;





(e)  Copies of
the financial statements of the Company, if any, for the six (6) most recent
fiscal years; and





(f)  The
Company’s books and records as they relate to the internal affairs of the
Company for at least the current and past four (4) fiscal years.





8.3  Fiscal
Year . The
Company fiscal year shall close on the 31st day of December of each
year.





8.4  Reports . The
Company shall cause to be filed, in accordance with the Act, all reports and
documents required to be filed with any governmental agency. The Company shall
cause to be prepared at least annually information concerning the Company’s
operations necessary for the completion of the Members’ federal and state income
tax returns. The Company shall send or cause to be sent to each Member within
seventy-five (75) days after the end of each taxable year (i) such information
as is necessary to complete the Members’ federal and state income tax or
information returns and (ii) a copy of the Company’s federal, state, and local
income tax or information returns for the year.




-11-




8.5  Tax
Matters for the Company . K-Tahoe
is designated as “Tax Matters Partner” (as defined in Code Section 6231), to
represent the Company (at the Company’s expense) in connection with all
examinations of the Company’s affairs by tax authorities and to expend Company
funds for professional services and costs associated therewith.





8.6  Inspection
and Audit Rights . Each
Member has the right upon reasonable request, for purposes reasonably related to
the interest of that Member, at its expense to inspect and copy during normal
business hours any of the Company books and records required to be maintained in
accordance with Section 8.2. Such right may be exercised by the Member or by
that Member's agent or attorney. The determination of the Officers as to
adjustments to the financial reports, books, records and returns of the Company,
in the absence of fraud or gross negligence, shall be final and binding upon the
Company and all of the Members.







-12-





ARTICLE
IX


DISSOLUTION
AND WINDING UP





9.1  Conditions
of Dissolution . The
Company shall dissolve and terminate upon the occurrence of any of the following
events:





(a)  The
expiration of the term of existence of the Company;





(b)  Upon the
entry of a decree of judicial dissolution pursuant to the provisions of the
General Corporation Law of the State of Delaware;





(c)  Upon the
written agreement of the Members to dissolve the Company;





(d)  Upon the
occurrence of any event which makes it unlawful for the Company business to
continue;





(e)  Upon the
sale of all of the assets of the Company





(f)  Upon
written notice from National Lampoon given within 90 days after the applicable
date, in the event that the Company fails to have at least $700,000 in net
operating capital by June 1, 2005 or fails to have at least $1,800,000 in net
operating capital by December 31, 2005. “Net Operating Capital” shall mean (i)
monies raised from investors or (ii) short term cash, cash equivalents, and
receivables obtained from operations in excess of short term liabilities and
obligations as determined in good faith by the Company’s
accountants.





9.2  Winding
Up Affairs and Distribution on Dissolution . Upon
the dissolution of the Company for any reason, the affairs of the Company shall
be wound up and completed. In such event, the Members shall take full account of
the Company’s assets and liabilities, and the Company’s receivables shall be
collected and the Company’s assets shall be liquidated as promptly as is
consistent with obtaining the fair market value thereof; provided, however, that
the Company may distribute all or any portion of the assets of the Company in
kind with the approval of all Members. During such dissolution, the Company
shall engage in no further business other than is necessary to collect its
receivables, liquidate its assets, or perform any other functions necessary to
prevent the Company from being in breach of any binding agreement with a third
party. The proceeds from liquidation of the assets of the Company and the
collection of the receivables of the Company, together with assets distributed
in kind, to the extent sufficient therefor, shall first be applied to the
payment (or reasonable reserve for payment) of all debts, liabilities, taxes,
and contingent liabilities of the Company, and amounts remaining thereafter, if
any, shall be distributed to the Members in accordance with their percentage
interests.





9.3  Limitations
on Payments Made in Dissolution . Except
as otherwise specifically provided in this Agreement, each Member shall be
entitled to look only to the assets of the Company for the return of its
positive Capital Account balance and shall have no recourse for its capital
contribution and/or share of Company Profits against any other Member except as
provided in Article IX.




-13-




9.4  Certificates . The
Company shall file with the Delaware Secretary of State a Certificate of
Dissolution upon the dissolution of the Company and a Certificate of
Cancellation upon the completion of the winding up of the Company’s
affairs.





ARTICLE
X


INDEMNIFICATION





10.1  Indemnification
in General . The
Company shall have the power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding by reason of the fact that he or she is or was a Member,
officer, employee or other agent of the Company or that, being or having been
such a Member, officer, employee or agent, he or she is or was serving at the
request of the Company as a manager, officer, employee or other agent of another
limited liability company, corporation, partnership, joint venture, trust or
other enterprise to the fullest extent permitted by applicable law in effect on
the date hereof and to such greater extent as applicable law may hereafter from
time to time permit.





10.2  Indemnification
of Members and Officers . Without
limiting the generality of Section 10.1 above, the Company shall indemnify all
Members and Officers from and against any liabilities incurred and payments
made, including legal fees and expenses and any amounts paid in settlement, by
reason of any act or omission on behalf of the Company or in furtherance of the
Company’s business; provided, however, no Member or Officer shall be entitled to
such indemnification for any liability incurred by such Member or Officer as a
result of gross negligence, willful or wanton misconduct, or a breach of its
fiduciary duty.





ARTICLE
XI


INVESTMENT
REPRESENTATIONS





Each
Member hereby represents and warrants to, and agrees with, the other Members and
the Company as follows:





11.1  Preexisting
Relationship or Experience . Such
Member has a preexisting personal or business relationship with the other
Members, or by reason of its business or financial experience, or by reason of
the business or financial experience of his or her financial advisor who is
unaffiliated with and who is not compensated, directly or indirectly, by the
Company or any affiliate or selling agent of the Company, such Member is capable
of evaluating the risks and merits of an investment in the Company and of
protecting his or her own interests in connection with this
investment.





11.2  Investment
Intent . Such
Member is acquiring the Membership Interest for investment purposes for its own
account only and not with a view to or for sale in connection with any
distribution of all or any part of the Membership Interest. No other person will
have any direct or indirect beneficial interest in or right to the Membership
Interest. Such Member agrees that its membership interest will not be sold or
distributed in violation of the Securities Act of 1933, as amended (the
"Securities Act"), or applicable state law or the rules or regulations under
either. Such Member understands that the membership interests of the Company
have not been registered under the Securities Act, by reason of the reliance by
the Company on an exemption from the registration requirements of the Securities
Act, nor registered under state law pursuant to similar exemptions, and that the
membership interests must be held indefinitely unless a subsequent disposition
thereof is registered under the Securities Act and applicable state law or is
exempt from registration. Such Member’s financial condition is such that the
Member is able to bear all risks of holding the interest in the Company for an
indefinite period of time, has no need for liquidity with respect thereto. Such
Member has such knowledge and experience in financial and business matters that
such Member is capable of evaluating the merits and risks of acquisition of the
membership interests hereunder and of making an informed investment decision
with respect thereto. Such Member represents that it is an "accredited investor"
as such term is defined under Rule 501 of the regulations under the Securities
Act. .




-14-




11.3  Risk
Factors .  Such
Member acknowledges that. the membership interests in the Company are not registered
under the Securities Act and cannot be readily sold or liquidated and that there
are no assurances that they will be registered or otherwise be sold or
liquidated and that no assurances, representations or warranties of any type or
nature have been made to the Members regarding the value of such membership
interests, including with regard to any level of performance and/or commercial
success of the Company, and the Members specifically acknowledge that the
business of owning and operating comedy radio stations is a risky and
speculative activity and that the proceeds, if any, received in connection with
the investment in the Company may in fact be insufficient to recoup the costs of
the business or all or any portion of the Members’ investments and that they may
lose all or a substantial portion of their capital contributions to the Company.
The Members further acknowledge that they have received all disclosures and
disclaimers provided by the Company to its investors, that they are relying
solely on the disclosures and disclaimers provided by the Company (and not on
any other statement or representation made by the Company or Emmons) in
determining the advisability of their investment in the Company, that they will
look solely to the Company with respect to any question, claim, liability or
loss relating to the accuracy or completeness of the information provided by the
Company








ARTICLE
XII


NATIONAL
LAMPOON NAME





12.1  Company
Branding .  The
Company and its business shall be branded as “National Lampoon Radio,” unless
otherwise decided by the Members and subject to Lampoon’s written
approval.





12.2  License .  Lampoon
hereby grants, licenses, assigns and transfers to the Company for the full term
of existence of the Company and of any successor or assignee of the Company’s
assets for as long as the business of the Company continues to be operated by
the successor entity which assumes the Company’s obligations to Lampoon, as
provided in Paragraph 7.1 hereof, the full use of the “National Lampoon” name,
all trademarks and service marks utilizing such name throughout the world
(including, without limitation, US Trademark # 72362163) and any
and all logos and graphical representations now existing or hereafter adopted
which utilize such name (the “Mark”) worldwide in all forms of audio broadcast
medium now known or hereafter devised, including but not limited to internet
radio, satellite radio, terrestrial radio, and cable radio, and non-exclusive
use of Lampoon branding items, including, without limitation, the National
Lampoon logo and the right to advertise, promote and exploit the licensed uses
in all media now known or hereafter devised. Lampoon will not authorize or
permit any use of the Mark in connection with any business or programming as to
which Lampoon’s involvement is restricted pursuant to Section 4.9 above. Except
as expressly provided in this Agreement the rights of Company in the Mark shall
be irrevocable and shall not be subject to termination. However, Lampoon may use
the audio broadcast medium to advertise, promote or refer to any of its reserved
rights in any manner that is not competitive or confusing with or derogatory of
any of the rights granted to the Company hereunder. Lampoon shall register and
maintain all domain names reasonably required by Company that use the Mark
including all variations and misspellings thereof and hereby licenses to Company
on the same terms as the license of the Mark the right to use such domain names
and to operate websites relating to the business of Company in connection
therewith. . The Company shall also have the non-exclusive right to use all of
the foregoing in any business which is ancillary or subsidiary to the principal
business of the Company, including without limitation, merchandising, commercial
tie-ins, publications, websites, audio and audio visual recordings featuring the
“National Lampoon Radio” name, all subject to prior written approval of Lampoon
as hereinafter provided. All
products using the Mark that are sold or distributed to the public and/or any
related packaging, copy, literary text, promotional and/or advertising
materials, including the quality and style thereof, and/or any printed or visual
advertising or promotional materials for Company’s business which feature the
Mark shall be approved by Lampoon in writing prior to any distribution, sale or
publication by Company hereunder. Once a particular use has been approved,
subsequent reproduction and use of the approved item, including non-material
variations thereof, shall not require a further approval from Lampoon. Such
approvals or disapprovals are within Lampoon’s sole discretion, but will be
exercised in good faith in a manner so as not to frustrate the Company’s
business, provided that the granting of the requested approval would not be
harmful to the Mark. Lampoon will respond in writing to requests for approval of
such uses of the Mark within five business days after Company’s request, and in
the case of disapproval the response will include a statement of corrective
measures required for approval. Lampoon and Company will work together to
develop guidelines for the on air audio use of the Mark, and Company shall not
be required to obtain separate approvals for uses within such
guidelines.




-15-




Lampoon
can continue to use audio clips for other purposes outside of the audio
broadcast medium as well as for promotional uses in the audio broadcast medium
as provided above. The rights of Company shall be subject to the terms of that
certain agreement between Lampoon and the Harvard Lampoon, Inc, dated October 1,
1998, a copy of which is attached hereto as Exhibit A. Lampoon represents and
warrants that it is the successor in interest to all right, title and interest
of J2 Communications under such agreement, and that such agreement has not been
modified and remains in full force and effect.





Company
acknowledges that the Mark is valuable, contains a substantial amount of
goodwill, and that Lampoon is the sole owner of the Mark. Company acknowledges
and agrees that it shall not acquire any rights in and to the Mark, except as
expressly licensed hereunder. Company shall not, during the Term, any extension
and/or renewal thereof, or at any time thereafter, dispute or contest, directly
or indirectly, Lampoon’s ownership in and to the Mark, Lampoon’s exclusive right
(subject to the rights granted in this Agreement) to use and/or exploit the
Mark; the validity of any of the copyrights or trademarks pertaining thereto or
Lampoon’s ownership thereof, nor shall Company assist or aid others whether
directly or indirectly in doing so. Company shall not adopt or seek to register
or take any action to use or establish rights in any name, mark, word (in any
language), symbol, letter, or design which is confusingly similar to the Mark
The form of legal notice to be used in conjunction with the Mark shall be as
follows:





Copyright:  ©
[date]____ National Lampoon. All Rights Reserved. (to be used only where the
graphic logo form of the Mark is used)





Trademark:  ®
National Lampoon. All Rights Reserved (or ® NL, where space requirements dictate
a shorter notice)





Or
otherwise as NL advises Company in writing,  in which
case the Company shall exercise reasonable efforts to use such form as advised
by Lampoon on a prospective basis


12.3  License
Fee .  The
Company shall pay Lampoon a licensing fee equal to *** of the gross
receipts received by the Company in United States dollars in the United States,
net of taxes, bad debts, collection and remittance costs, from all sources in
connection with any use of the Mark by or under the authority of Company.
License fee payments shall not be deemed to be distributions to a Member. The
Company shall account to Lampoon for its license fee on a quarterly basis, with
accounting statements and payments to be rendered to Lampoon within sixty days
after the close of each calendar quarter in which any gross receipts are
received by the Company. Lampoon shall not have any lien or charge on the assets
of the Company to secure such payment, and Company shall not be required to
segregate funds in connection with such payments.





12.4  Trademark
Usage:  Throughout
the term of its rights in the Mark, the Company agrees that it
shall:





(i)  not do
any act which reasonably would be expected to jeopardize or invalidate any
registration of or the right or title of Lampoon to the Mark, nor apply to
oppose, vary, cancel or void the Mark nor do any act which reasonably might be
expected to remove the Mark from any register;





(ii)  not use
in its business or assist or authorize others to use any other trademark,
service mark, logo or trade dress which so nearly resembles the Mark as to be
likely to cause deception or confusion;





(iii)  not do or
authorize to be done any act which reasonably would be expected to jeopardize or
invalidate any of the goodwill attached to or associated with the
Mark;





(iv)  at the
request and expense of Lampoon provide such information as to its use of the
Mark and to execute such documents (including, without limitation, registered
user or similar agreements) as Lampoon reasonably may require to register and
maintain the Mark in force in any territory and will otherwise render any proper
assistance, at Lampoon’s expense, reasonably required by Lampoon in maintaining
the Mark in force in any territory;






*** The
Registrant has omitted this portion of this exhibit pursuant to a request for
confidential treatment. The omitted material has been filed with the Securities
and Exchange Commission.





-16-





(v)  receive,
handle and respond to all consumer complaints concerning the Mark in accordance
with such standards as may be reasonably required to protect the
Mark;





(vi)  ensure
that the goods and services of the Company using the Mark shall comply with the
standards of quality used in the manufacture of other comparable goods and
services of Lampoon. Lampoon shall be provided with samples of such products for
Lampoon’s approval as provided above;





(vii)  in the
event that the Company obtains information showing that the Mark has been
infringed, promptly notify Lampoon of such infringement;





Company
will provide legal notice(s) on all product created hereunder bearing any
reproductions or use of the Mark, as provided above. Upon receipt of written
notice from Lampoon of any error in such legal notices, Company will exercise
reasonable commercial efforts to correct such notice on a prospective basis.





-17-


12.5  Infringement.





(i)  Claim
By a Party . Company
shall immediately notify Lampoon of any infringement of the Mark of which
Company becomes aware. Lampoon shall have the exclusive right (but not the
obligation), acting in its sole discretion, to defend or prosecute or otherwise
maintain such actions as Lampoon determines to be appropriate to protect the
right, title and interest of Lampoon in and to the Mark . At
Lampoon’s request and sole expense, Company shall cooperate with Lampoon and
assist fully in preventing any infringement or un-fair use by any third party of
the Mark. Lampoon, in its sole discretion, shall determine what course of
action, if any, it elects to pursue in regard to said infringement or unfair use
and shall be under no obligation whatsoever to take action at Company’s
request, provided, however, that in the event Lampoon fails to initiate (or having
initiated, thereafter fails to diligently prosecute) legal action to remedy any
third party infringement of the Mark of which Lampoon becomes aware, which
infringement materially adversely affects Company’s business, and such failure
continues more than thirty (30) days after written notice of such failure is
sent by Company to Lampoon, then and thereafter for so long as such failure
continues, Company shall be entitled to initiate and prosecute such actions, at
its own risk, cost and expense, provided that Company does so diligently and
reasonably, using counsel reasonably acceptable to Lampoon.


.





(ii)  -Claim
Against a Party . Company
shall immediately notify Lampoon if Company is made a party to a legal or
similar proceeding, or is otherwise made aware of any claim or demand, which is
based in whole or in part on a claim that the use of the Mark by Company
hereunder infringes upon or dilutes any trademark, service mark or trade name of
a third party, or otherwise constitutes unfair competition.





12.6  Lampoon’s
Representations, Warranties and Indemnities . Lampoon
represents and warrants that i) Lampoon owns and possesses all right, title and
interest in and to the Mark for use in connection with this Agreement; ii) the
Mark is and will be at all times during the term of Company’s rights in the Mark
free and clear of all liens, claims and encumbrances that could adversely affect
Company’s rights hereunder and is and will be free and clear of any limitations
or restrictions, except as expressly provided in this Agreement, iii) there are
currently no liens, claims or encumbrances affecting the Mark other than as
granted pursuant to the Security Agreement dated January 28, 2005 among Lampoon,
National Lampoon Networks, Inc., National Lampoon Tours, Inc., and N. Williams
family Investment, L.P.(the “Security Agreement”), iv) nothing in the Security
Agreement prohibits or requires the consent of the secured party to this
Agreement or any of the rights herein licensed and nothing in the Security
Agreement will adversely affect any of Company’s right hereunder, v)  Lampoon
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, ; vi) Lampoon has full corporate power
and authority to conduct its business as now being conducted and as
contemplated; vii) there is
no litigation pending or threatened that could affect the licensed rights, that
Lampoon has the rights to grant the license herein contained, vii) to the best
of Lampoon’s knowledge obtained in the exercise of reasonable diligence (except
as otherwise referred to herein) there is no agreement with any other person,
firm or corporation which conflicts with any rights granted under this
Agreement; and viii) to the best of Lampoon’s knowledge obtained in the exercise
of reasonable diligence no use of the Mark licensed hereunder violates the
rights of any person, firm or corporation. Lampoon shall defend, indemnify and
hold harmless the Company, Emmons, the other members of the Company, the
officers, directors, shareholders, members, partners, agents and employees of
each of them, and their respective parent, subsidiary and related entities and
the heirs, successors, licensees and assignees of each of them from and against
any and all claims, liabilities, damages, costs and expenses of every kind
(including reasonable outside attorneys’ fees and costs) arising in connection
with any breach or alleged breach of Lampoon’s representations, warranties and
agreements hereunder.




-18-




12.7  K-Tahoe’s Representations,
Warranties and Indemnities. K-Tahoe represents,
warrants and agrees that: i) it is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Nevada; has full
power and authority to conduct its business as now being conducted and as
contemplated hereby; and holds or will hold all necessary licenses and permits
from all government entities for the proper conduct of said business; ii) it has
the unrestricted right, power and authority to enter into this Agreement and to
perform its obligations hereunder, and neither the execution and delivery of
this Agreement nor the consummation of the actions contemplated hereby will (a)
violate any provisions of its charter documents, (b) violate, conflict with or
constitute a default under any contract to which it is a party or (c) violate
any law binding on it. K-Tahoe
shall defend, indemnify and hold harmless the Company, Lampoon, the other
members of the Company, the officers, directors, shareholders, members,
partners, agents and employees of each of them, and their respective parent,
subsidiary and related entities and the heirs, successors, licensees and
assignees of each of them from and against any and all claims, liabilities,
damages, costs and expenses of every kind (including reasonable outside
attorneys’ fees and costs) arising in connection with any breach or alleged
breach of K-Tahoe’s representations, warranties and agreements
hereunder.





12.8  Company
Representations, Warranties and Indemnity . The
Company represents and warrants that i) it
will comply with all applicable laws, regulations, ordinances and other
requirements involving the use of the Mark and the conduct of Company’s business
in connection therewith; and ii) it will not harm, misuse or bring disrepute to
the Mark.  The
Company hereby indemnifies and agrees to defend and hold harmless each of the
Members and their respective agents, representatives, employees, attorneys,
successors and assigns from and against any and all claims, demands, losses,
costs and expenses (including outside attorneys’ fees) investigations, damages,
judgments, penalties and liabilities of any kind or nature whatsoever, directly
or indirectly arising out of, resulting from, relating to or connected with: i)
any unauthorized use by Company of the Mark; ii) any breach of any
representation, warranty or covenant of Company hereunder; iii) any defect in or
use by any person or entity of the Mark in connection with this Agreement or the
activities contemplated hereby; iv) any defamation by Company or invasion of the
right of privacy, publicity or other personal or property right; v) any breach
by Company of any confidentiality or trade secret provision or agreement; vi)
any infringement by Company of any copyright or trademark not licensed hereunder
by Lampoon. Company shall promptly upon receipt of notice of any such claim
defend such claim at Company’s sole cost and expense.or the applicable
indemnitee, at its option, may engage counsel and defend such claim at the
Company’s sole cost and expense for which the Company shall pay ten (10)
business days upon being invoiced therefore. No settlement of any claim for
which indemnity shall be made hereunder shall be made by the Company without the
prior written consent of Lampoon




-19-




12.9  Further
Assurances . Lampoon
will do such acts and execute such further documents as the Company may
reasonably require to evidence or effectuate the rights licensed hereunder and
to protect and maintain the Mark, and in the event that Lampoon fails to do so
within ten days after Company’s request, Company is hereby irrevocably appointed
Lampoon’s attorney in fact to execute such documents and do such acts in
Lampoon’s name. Company is authorized to bring suit or other legal proceedings
in its own name and/or Lampoon’s name to protect the rights licensed hereunder
and any recovery in any such suit or proceeding shall be the sole property of
the Company.





12.10  Sales
Responsibility .  Lampoon
shall be responsible for generating the sales revenue for the Company, including
all ad and promotional sales. Lampoon shall retain 12% as commission on all
sales generated through its sales efforts. If the sales revenue does not meet
reasonable expectations, it is hereby agreed that the parties may make necessary
adjustments to achieve reasonable sales revenue.





ARTICLE
XIII


MISCELLANEOUS





13.1  No
Third Party Beneficiaries . This
Agreement shall in no event be construed as a third party beneficiary agreement
or in any other respect as having been entered into by the parties for the
benefit of any third person.





13.2  Mediation
and Arbitration . In the
event of a controversy or dispute between the parties arising out of this
Agreement or related in any way to the Company, the parties agree that they will
first make a good faith attempt to settle the controversy or dispute by
mediation under the rules of the American Arbitration Association, before
resorting to litigation or any other alternative dispute resolution procedures.
In the event the controversy or dispute is not resolved by mediation, the
parties hereby agree to submit to binding arbitration of any dispute arising out
of this Agreement or related in any way to the Company.





(a)  A party
or the Company may initiate and require arbitration by giving notice to the
other parties specifying the matter to be arbitrated.





(b)  Except as
provided to the contrary in these provisions on arbitration, the arbitration
shall be conducted by a three-arbitrator panel in conformity with and subject to
applicable rules and procedures of the American Arbitration Association (or any
successor thereto). If the American Arbitration Association is not then in
existence and there is no successor, or if for any reason the American
Arbitration Association fails or refuses to act, the arbitration shall be in
conformity with and subject to the provisions of applicable Delaware statutes
(if any) relating to arbitration at the time of the notice.





(c)  The
location of the arbitration shall be Los Angeles County, California unless
parties to the arbitration otherwise agree.




-20-




(d)  The
arbitrators shall be bound by this Agreement and all related agreements.
Pleadings in any action pending on the same matter shall, if arbitration is
required as aforesaid, be deemed amended to limit the issues to those
contemplated by the rules prescribed above.





(e)  Each
Member shall pay the costs of arbitration, including arbitrator's fees, as
awarded by the arbitrator.





(f)  The
selection of the arbitrator shall be in accordance with the rules prescribed
above, except that (i) one arbitrator shall be appointed by each side to the
dispute (the arbitrators so appointed, the "Party Arbitrators"); (ii) the Party
Arbitrators shall select a neutral arbitrator who is familiar with the principal
subject matter of the issues to be arbitrated (the "Neutral Arbitrator"), (iii)
the testimony of witnesses shall be given under oath, and (iv) the provisions of
Section 1283.05 of Delaware Code of Civil Procedure are hereby expressly
incorporated herein by reference and made a part hereof (with respect to
paragraph (e) of such Section 1283.05, only the Neutral Arbitrator shall have
the power to grant leave to have depositions for discovery taken).





(g)  The
arbitrators may grant any relief or remedy provided under Delaware law, except
that the arbitrators shall have no power to impose any damages for the sake of
example or by way of punishing any party. In addition, any party may seek
provisional remedies in a court of law located within Los Angeles County as
provided by the Delaware Arbitration Act. Each of the parties hereby knowingly,
intentionally, and voluntarily waives its right to any exemplary or punitive
damages and acknowledge that none of the other parties nor any Person acting on
behalf of such other parties has made any representation of fact to induce this
waiver of exemplary or punitive damages or in any way to modify or nullify its
effect. Each party further acknowledges that it has read and understands the
meaning and ramifications of this waiver provision.





(h)  A
judgment to enforce any award rendered by the arbitrators may be entered in
either the applicable state courts of Delaware or the United States District
Court for Delaware. Each of the parties hereby expressly agrees to subject to
the personal jurisdiction of said courts for any purpose related to the
arbitration pursuant hereto.





13.3  Governing
Law . The
validity, construction, interpretation and effect of this Agreement and all
questions and controversies arising hereunder, shall be governed by the laws of
the State of Delaware applicable to agreements executed and entirely performed
in said State.





13.4  Entire
Agreement . This
Agreement constitutes the entire agreement among the parties hereto and
supersedes any prior written or oral agreements among them respecting the
subject matter contained herein. All prior negotiations, understandings and
agreements are merged herein. This Agreement may not be varied, amended, altered
or modified except by a written instrument signed by each of the
parties.





13.5  Notices . Except
as may be otherwise specifically provided in this Agreement, all notices
required or permitted hereunder shall be in writing and shall be deemed to be
given when personally delivered or when sent by facsimile transmission or
overnight courier or three days following deposit in the United States mail,
postage prepaid, registered or certified mail, return receipt requested,
addressed to the parties at their respective addresses set forth below their
signatures hereto or as otherwise specified by written notice delivered in
accordance herewith.





-21-


13.6  Approvals . Except
where shorter periods are otherwise provided in this Agreement, the failure to
respond to a notice given hereunder or to approve or disapprove any action which
requires approval hereunder within three (3) weeks after any such notice is
given and such approval is requested, specifically stating that there is a three
(3) week deadline to respond, shall be deemed disapproval of the matter or such
notice or such request.





13.7  Further
Assurances . The
parties hereto covenant and agree that they will execute and deliver such other
and further instruments and documents as are or may become necessary or
convenient to effectuate and carry out the purposes of this
Agreement.





13.8  Parties
Bound . This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective heirs, executors, administrators, legal
representatives, successors, and assigns where permitted by this
Agreement.





13.9  Severability . In case
any one or more of the provisions contained in this Agreement shall, for any
reason, be held to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other provision
hereof and this Agreement shall be construed as if such invalid, illegal, or
unenforceable provision had never been contained herein.





13.10  Interpretation . All
pronouns shall be deemed to refer to the masculine, feminine, or neuter,
singular or plural, as the context in which they are used may require. All
headings herein are inserted only for convenience and ease of reference and are
not to be considered in the interpretation of any provision of this Agreement.
Numbered or lettered Certificate, sections and subsections herein contained
refer to Certificate, sections and subsections of this Agreement unless
otherwise expressly stated. In the event any claim is made by any Member
relating to any conflict, omission or ambiguity in this Agreement, no
presumption or burden of proof or persuasion shall be implied by virtue of the
fact that this Agreement was prepared by or at the request of a particular
Member or its counsel.





13.11  Multiple
Counterparts . This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which shall constitute one and the same
instrument.





13.12  Remedies
Cumulative . The
remedies under this Agreement are cumulative and shall not exclude any other
remedies to which any person may be lawfully entitled.





13.13  Waiver . No
failure by any party to insist upon the strict performance of any covenant,
duty, agreement or condition of this Agreement or to exercise any right or
remedy consequent upon a breach thereof shall constitute a waiver of any such
breach or any other covenant, duty, agreement or condition.





-22-





WITNESS
WHEREOF, the parties have executed this Agreement, effective as of the date
first written above.








K-TAHOE
INVESTMENTS, LTD.








By /s/
Kent Emmons





Title  GP





FRONT ROW
FILMS, INC.








By /s/
Sheri Gibbons





Title  President








NATIONAL
LAMPOON, INC.








By /s/
Douglas S. Bennett





Title  President













-23-





**EXHIBIT
“A”**





**INITIAL
CAPITAL CONTRIBUTIONS AND PERCENTAGE INTERESTS**






Capital
Contribution
    Trademark licenseK-Tahoe Investments, Ltd.
    Services rendered
    37.5%Front Row Films, Inc.
    Services rendered
    37.5%National Lampoon, Inc.
    Trademark license
    25%





-24-