Document:

Exhibit 10.2

                                January 31, 2005

Mr. Douglas S. Bennett
c/o National Lampoon, Inc.
10900 Wilshire Boulevard, Suite 1000
Los Angeles, California 90024

Dear Doug:

         The purpose of this letter is to set forth the terms of your employment
with National Lampoon, Inc. (the "Company").

         The Company will employ you as its President for a term of three years,
beginning on February 1, 2005 and ending on January 31, 2008. You will report to
the Company's Chief Executive Officer and to its Board of Directors.

         Your base salary will be $250,000. You will be entitled to participate
in any and all employment benefits that are in effect from time to time for
employees and executive officers of the Company generally. Such participation
shall be subject to the terms of the applicable plan documents and generally
applicable policies of the Company. During the term of this agreement, you will
continue to have at least four weeks paid vacation per year and 100% of the
premiums for your health insurance (so long as the Company continues to offer a
group health insurance plan to employees) will be paid by the Company. The
Company will reimburse your for all reasonable business expenses, including
travel expenses, incurred by you during your employment to the extent that the
expenses are in compliance with the Company's business expense reimbursement
policies and you provide such documentation and records as the Company will from
time to time require.

         As soon as practical after your acceptance of employment in accordance
with the terms of this letter, and thereafter annually for the term of this
agreement, you will meet with the Company's Chief Executive Officer and the
Board of Directors to agree on certain performance milestones that will allow
you to earn a bonus. The bonus will be paid bi-annually, based on performance
during the periods from February through July and from August through January.
The bonus, if earned, will be paid during the month following the conclusion of
each six month period, namely August and February. If all the performance
milestones are met during a bi-annual period, the minimum bonus to be paid will

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Mr. Douglas S. Bennett
January 31, 2005
Page 2

be $50,000. If the Company exceeds a particular performance milestone, then you
will receive an additional bonus amount computed on the excess. For example, if
your bonus is based solely on the Company earning x in revenues, and the Company
earns x plus 50% more than x, you would receive an additional bonus computed as
one-half of $50,000, or $25,000, which would be paid one-half in cash and
one-half in common stock. The common stock issued in payment of your bonus will
be issued from the J2 Communications Amended and Restated 1999 Stock Option,
Deferred Stock and Restricted Stock Plan, referred to in this letter agreement
as the "Plan".

         On January 31, 2006, January 31, 2007 and January 31, 2008, you will
receive an option to purchase 100,000 shares of the Company's common stock. The
options will be granted from the Plan. The exercise price of the options will
not exceed the fair market value of the common stock on the date on which the
option is granted. The options granted pursuant to this letter agreement will
vest immediately on the date of grant.

         Currently, you and the Company anticipate that you will continue to
commute to Los Angeles, California from your home in Northern California and the
Company will continue to pay your commuting expenses as it has in the past. If
the Company requires you to re-locate to Southern California, and you mutually
agree, you agree to do so subject to the condition set forth below, so long as
the Company provides you with relocation expenses which shall be defined as
approved expenses (including costs of transportation) of no more than three
trips to Southern California for the purpose of locating a suitable place to
live, the payment of reasonable closing costs relating to the purchase of a home
in Southern California and the expenses incurred in moving your household
furniture and furnishings to your home in Southern California. The requirement
that you relocate to Southern California is conditioned upon the sale of your
principal residence in Northern California.

         The Company may terminate your employment for cause at any time.
"Cause" is defined as a good faith termination by a majority of the Board of
Directors because you have (i) engaged in acts in violation of the law, (ii)
breached your fiduciary duty to the Company or your duties of loyalty or care to
the Company, or (iii) intentionally and persistently disobeyed the good faith,
lawful, substantive policies or instructions of the Board of Directors after
being given 30 days written notice and failing to cure such circumstances, or,
if such circumstances are not susceptible of cure during such 30 day period,
failing to initiate and diligently pursue actions reasonably calculated to
achieve and cure such circumstances as soon as reasonably practicable
thereafter.

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Mr. Douglas S. Bennett
January 31, 2005
Page 3

         If the Company terminates your employment without cause, or if you are
constructively terminated, or if you die or are disabled, you will be entitled
to receive the following severance benefits:

         (i) your base salary will be continued for a period of six months or
for the remaining term set forth in this letter agreement, whichever is longer,
following the date your termination becomes effective;

         (ii) your employee benefits will be continued as long as your base
salary is continued; and

         (iii) any unvested stock options you hold will continue to vest for a
period of six months or for the remaining term of your employment as set forth
in this letter agreement, whichever is longer, following the date on which your
termination becomes effective.

         The term "disabled" means your inability, during a single period of 60
days or for a total of 120 days during any 12 month period, by reason of injury,
illness or other similar cause, to perform a major part of your duties and
responsibilities in connection with the conduct of the business and affairs of
the Company, as determined reasonably and in good faith by the Company.

         You will be deemed to be "constructively terminated" if your duties are
materially diminished or if your title changes without your consent, your
reporting relationship changes without your consent, your pay is reduced without
your consent, or if there is any other involuntary change in the material terms
or conditions of your employment without your consent.

         By executing this letter, you agree that it is the entire agreement
between you and the Company with respect to the subject matter hereof and that
it supersedes all prior agreements between you and the Company with respect to
any related subject matter.

         No waiver of any provision of this letter agreement shall be effective
unless made in writing and signed by the waiving party. The failure of any party
to require the performance of any term or obligation of this letter agreement,
or the waiver by any party of any breach of this letter agreement, shall not
prevent any subsequent enforcement of such term or obligation or be deemed a
waiver of any subsequent breach.

         The terms of this letter agreement may be modified only in a writing
signed by the Chief Executive Officer and approved by the Company's Board of
Directors.

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Mr. Douglas S. Bennett
January 31, 2005
Page 4

         If the terms of this letter correctly set forth your agreement with the
Company, please countersign it at the space below and deliver it to Mr. Daniel
Laikin, Chief Executive Officer, no later than the close of business on January
31, 2005.

                                            Very truly yours,

                                            National Lampoon, Inc.

                                            By:
                                                --------------------------------
                                            Daniel S. Laikin

January 31, 2005

         I have read the above letter and agree to its terms.

                                            ------------------------------------
                                            Douglas S. BennettExhibit 10.3

                             SECURED PROMISSORY NOTE

                              Due January 28, 2006

                             NATIONAL LAMPOON, INC.

Issued:  January 28, 2005                                             $2,700,000

         FOR VALUE RECEIVED, the undersigned, National Lampoon, Inc.
(hereinafter, together with any successor, referred to as the "COMPANY"), hereby
promises to pay to N. Williams Family Investments, L.P. (hereinafter, together
with any successor or assign, referred to as the "HOLDER"), the principal sum of
Two Million Seven Hundred Thousand Dollars ($2,700,000) together with interest
thereon from the date hereof, payable on the terms set forth below.

         1.       PAYMENTS

                  1.1 Interest Rate.  Interest on the unpaid  principal  balance
outstanding from time to time shall accrue at the rate of seven percent (7%) per
annum;  provided,  however,  if any interest or principal owing hereunder is not
paid  when  due  (whether  upon  acceleration,  as  a  mandatory  prepayment  or
otherwise),  any accrued and unpaid  interest owing  hereunder shall be added to
the principal  indebtedness  and interest on all principal owing hereunder shall
thereafter  accrue at the rate of fifteen  percent (15%) per annum (the "DEFAULT
RATE")  until  all  principal  and  interest  are  paid  in  full.  The  Company
acknowledges  that the effect of this Default Rate  provision  could  operate to
compound  some of the interest  obligations  due, and Company  hereby  expressly
assents  to such  compounding  should it occur.  Notwithstanding  any  provision
contained herein to the contrary,  the interest rate hereunder shall include the
applicable interest rate described herein plus any additional charges, costs and
fees incident to the loan hereunder to the extent they are deemed to be interest
under  applicable  California law. Should the interest rate as calculated  under
this Secured Note at any time exceed that allowed by law, the interest rate will
be the maximum rate of interest allowed by applicable California law.

                  1.2 Interest  Payment.  Interest shall be paid on the Maturity
Date.

                  1.3 Maturity. The entire unpaid principal balance, all accrued
and unpaid interest,  and any other amounts payable hereunder and unpaid at such
time,  shall be paid in full on the earlier of the  following  dates  ("MATURITY
DATE"):  (A)  January  28,  2006 or (B) the date of the  closing  of any  Equity
Offering  consummated  after the date hereof in which the gross cash proceeds to
the Company equal or exceed $2,700,000 in the aggregate or (C) upon acceleration
of the Maturity  Date as provided in Section 6.2 of this Secured  Note.  As used
herein,  the term "EQUITY OFFERING" means an offering for cash by the Company of
its capital stock or convertible securities or options,  warrants or rights with
respect to its capital stock or convertible  securities,  other than pursuant to
the  exercise of stock  options  granted to  employees  in the normal  course of
business.

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                  1.4  Mandatory  Prepayment.  On the closing date of any Equity
Offering  consummated  after the date hereof in which the gross cash proceeds to
the Company are less than  $2,700,000,  the Company  shall be required to make a
mandatory prepayment under this Secured Note equal to the lesser of (i) the cash
proceeds of such Equity  Offering,  net of  underwriters'  or placement  agents'
fees, discounts or commissions and (ii) the entire unpaid principal balance, all
accrued and unpaid interest,  and any other amounts payable hereunder and unpaid
at such time.

                  1.5 Place of Payment.  The  Company  shall pay  principal  and
interest  in United  States  dollars to the Holder at the  Holder's  address for
notices or such other address at the Holder may designate in writing.

         2.       SUCCESSOR CORPORATION

                  2.1 When  Company  May Merge,  Etc.  The Company may not, in a
single transaction or through a series of related transactions, consolidate with
or merge with or into any other person, or, directly or indirectly, sell, lease,
assign, transfer or convey (by way of liquidation,  dissolution,  winding up, or
otherwise) all or substantially  all of its properties and assets as an entirety
or  substantially as an entirety  (computed on a consolidated  basis) to another
person  or  group  or  affiliated  persons,  unless  the  Company  shall  be the
continuing  person,  or the person (if other  than the  Company)  formed by such
consolidation  or  into  which  the  Company  is  merged  or  to  which  all  or
substantially all of the properties and assets of the Company are transferred as
an entirety or  substantially  as an entirety  (the Company or such other person
being  hereinafter  referred to as the  "SURVIVING  PERSON")  shall be an entity
organized and validly  existing under the laws of the United  States,  any State
thereof or the  District of Columbia and shall  expressly  assume in writing all
the obligations of the Company under this Secured Note; provided,  however, that
as a condition  to any such  transfer to a Surviving  Person,  the  consolidated
tangible net worth of such Surviving Person immediately following such transfer,
determined on a pro forma basis in accordance with generally accepted accounting
principles ("GAAP"), must equal or exceed the consolidated tangible net worth of
the Company immediately prior to such transfer.

                  2.2 Successor Corporation Substituted.  Upon any consolidation
or merger,  or any  transfer  of assets in  accordance  with  Section  2.1,  the
Surviving  Person  formed by such  consolidation  or into  which the  Company is
merged or to which such  transfer is made shall  succeed to, and be  substituted
for, and may exercise  every right and power of, the Company  under this Secured
Note with the same  effect as if such  Surviving  Person  had been  named as the
Company herein.

         3. SECURITY AND GUARANTY.  This Secured Note is secured by that certain
Security Agreement of even date herewith (the "SECURITY AGREEMENT")  encumbering
certain  "Collateral"  of the  "Grantors",  as such  terms  are  defined  in the
Security Agreement. This Secured Note is guaranteed by (i) that certain Guaranty
of even date  herewith  (the  "GUARANTY")  wherein  Daniel S. Laikin and Timothy
Durham are  guarantors,  and (ii) that certain  Repayment  Guaranty of even date
herewith (the "REPAYMENT  GUARANTY") wherein National Lampoon Networks,  Inc., a
Delaware   corporation,   and  National   Lampoon  Tours,   Inc.,  a  California
corporation,  are  guarantors.  This Secured  Note,  together  with the Security
Agreement,  the Guaranty,  the Repayment Guaranty, the Termination Agreement (as

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defined below) and any other  documents,  agreements or instruments  relating to
the loan  evidenced by this Secured  Note, or securing this Secured Note and the
Collateral, shall be collectively referred to herein as the "OBLIGATIONS".

         4. REPRESENTATIONS AND WARRANTIES.  The Company represents and warrants
that the following statements are true and correct:

                  4.1 Each of the  Grantors is a  corporation  duly and properly
incorporated,  validly  existing  and in good  standing  under  the  laws of its
jurisdiction  of  incorporation  and has all requisite  authority to conduct its
business in each  jurisdiction in which its business is conducted,  except where
the failure to be so  qualified  does not and would not have a material  adverse
effect on the business, properties or assets of the Grantors.

                  4.2 Each of the Grantors has the power and authority and legal
right to  execute  and  deliver  the  Obligations  to which it is a party and to
perform its obligations  thereunder.  The execution and delivery by each Grantor
of the Obligations to which it is a party and the performance of its obligations
hereunder and thereunder  have been duly authorized by proper  proceedings,  and
the  Obligations to which each Grantor is a party  constitute  legal,  valid and
binding  obligations  of each such Grantor  enforceable  against each of them in
accordance  with their  terms,  except as  enforceability  may be limited by (i)
bankruptcy,  insolvency, fraudulent conveyances,  reorganization or similar laws
relating to or affecting the enforcement of creditors'  rights  generally;  (ii)
general equitable principles (whether considered in a proceeding in equity or at
law); and (iii) requirements of reasonableness, good faith and fair dealing.

                  4.3  The  July  31,  2004   audited   consolidated   financial
statements and the October 31, 2004 unaudited  consolidated financial statements
of the  Company and its  subsidiaries  heretofore  delivered  to the Holder were
prepared  in  accordance  with GAAP in effect on the date such  statements  were
prepared and fairly present the consolidated  financial condition and operations
of the Company and its Subsidiaries at such date and the consolidated results of
their operations for the period then ended (subject to normal recurring year-end
adjustments in the cause of the unaudited financial statements). The Company and
its  subsidiaries  have no material  contingent  obligations not provided for or
disclosed in the financial statements referred to above.

                  4.4 The  Company  and its  subsidiaries  have filed all United
States  federal tax returns and all other tax returns  which are  required to be
filed and have paid all taxes due  pursuant  to said  returns or pursuant to any
assessment received by the Company or any of its Subsidiaries, except in respect
of such  taxes,  if any,  as are being  contested  in good faith and as to which
adequate reserves have been provided in accordance with GAAP. No liens have been
filed and no claims are being asserted with respect to such taxes.  The charges,
accruals  and  reserves  on the books of the  Company  and its  subsidiaries  in
respect of any taxes or other governmental charges are adequate.

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                  4.5  There  is  no   litigation,   arbitration,   governmental
investigation,  proceeding  or inquiry  pending or, to the  knowledge  of any of
their  officers,  threatened  against  or  affecting  the  Company or any of its
subsidiaries  which could  reasonably  be  expected  to have a material  adverse
effect on the  Company or any of its  subsidiaries  or which  seeks to  prevent,
enjoin or delay the making of the loan hereunder.

                  4.6 The shares of Common Stock that are being issued to Holder
hereunder,  when issued, sold and delivered in accordance with the terms of this
Secured Note in consideration of the loan being made hereunder, will be duly and
validly issued, fully paid, and nonassessable, and will be free and clear of all
liens,  encumbrances,  adverse  claims or  restrictions  on transfer  other than
restrictions on transfer under applicable state and federal securities laws.

                  4.7  Assuming  the  filing  of (i)  UCC  financing  statements
covering  the  Collateral  in the Office of the  Secretary  of State of Delaware
(and, in the case of National  Lampoon Tours,  Inc., the Office of the Secretary
of State of California) and (ii) the Notice of Security  Interest in Patents and
Trademarks  and the Notice of Security  Interest in  Copyrights  with the United
State Patent and Trademark  Office and the United States  Copyright  Office,  as
applicable,  the Security  Agreement creates a valid security interest in all of
the  Collateral  of the Grantors and secures the  Company's  performance  of the
Obligations;  and no other  action is  necessary  to  perfect  or  maintain  the
perfection  of such  security  interest  in favor of the  Holder  except for the
periodic filing of such UCC continuation statements as may be required by law.

                  4.8 No  authorization,  approval  or other  action  by, and no
notice  to or  filing  with,  any  governmental  authority  or  regulatory  body
(including,  without  limitation,  any  court)  is  required,  except  (i)  such
authorization  or approval as has already  been  obtained and (ii) the filing of
the UCC financing  statements and notices described in Section 4.7 above, either
for the grant by the Grantors of the security  interest  granted by the Security
Agreement or for the execution,  delivery or performance of this Secured Note by
the Company (including,  without limitation, the issuance of the Common Stock to
Holder  pursuant  hereto),  or for the  perfection  of, or the  exercise by, the
Holder of its rights and remedies hereunder.

                  4.9 Neither the  execution and delivery by the Grantors of the
Obligations  to which  such  person  is a  party,  nor the  consummation  of the
transactions herein or therein contemplated,  nor compliance with the provisions
hereof or thereof  will  violate (i) any law,  rule,  regulation,  order,  writ,
judgment,  injunction,  decree  or award  binding  on the  Grantors  or (ii) any
Grantor's articles or certificate of incorporation, by-laws, or other management
agreement or governing document,  as the case may be, or (iii) the provisions of
any  indenture,  instrument  or  agreement to which any Grantor is a party or is
subject, or by which it, or its property or assets, are bound, or conflict with,
or constitute a default  thereunder,  or result in, or require,  the creation or
imposition  of any lien in,  of or on the  property  or  assets  of any  Grantor
pursuant to the terms of, any such indenture, instrument or agreement.

                  4.10 The  execution  and  delivery of this Secured  Note,  the
filing of the  financing  statements  provided  for herein and the taking of any
other action required or contemplated  hereby shall not cause a default or event
of default  under any other  agreement or commitment to which the Company or any
other Grantor is a party or by which it is bound.

         5.       COVENANTS.

                  5.1 The Company will, and will cause each of its  subsidiaries
to,  carry on and conduct its business in  substantially  the same manner and in
substantially the same fields of enterprise as it is presently  conducted and do
all things necessary to remain duly incorporated or organized,  validly existing
and (to the extent such concept  applies to such  entity) in good  standing as a

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domestic   corporation,   partnership  or  limited   liability  company  in  its
jurisdiction of incorporation or organization,  as the case may be, as in effect
on the date hereof, and maintain all requisite authority to conduct its business
in each  jurisdiction  in which its business is conducted,  except to the extent
that the  failure to  maintain  any of the  foregoing  would not  reasonably  be
expected to have a material  adverse  effect on the Company or the rights of the
Holder under the Obligations.

                  5.2 The Company will, and will cause each of its  subsidiaries
to,  timely file  complete  and correct  United  States  federal and  applicable
foreign, state and local tax returns required by law and pay when due all taxes,
assessments and governmental  charges and levies upon it or its income,  profits
or property, except those which are being contested in good faith by appropriate
proceedings  and with respect to which adequate  reserves have been set aside in
accordance with generally accepted accounting principles.

                  5.3 The Company will, and will cause each of its  subsidiaries
to, comply in all material respects with all laws, rules,  regulations,  orders,
writs, judgments, injunctions, decrees or awards to which it may be subject.

                  5.4 The Company shall,  at its expense,  promptly  execute and
deliver all further instruments and documents, and take all further action, that
may be necessary or desirable,  or that Holder may reasonably  request, in order
to perfect,  protect and/or maintain the security  interest granted or purported
to be granted  herein in the  Collateral or to enable the Holder to exercise and
enforce  its rights  and  remedies  hereunder  with  respect to any  Collateral,
including, without limitation,  executing, delivering and/or filing, as the case
may be, and  obtaining  the  execution  and  delivery  by third  parties of, UCC
financing  or  continuation   statements  or  amendments   thereto,   and  other
agreements, instruments, bulk sales or other notices.

                  5.5 The  Company  shall,  at its  expense,  perform  all  acts
necessary to maintain,  preserve,  and protect the Collateral,  and not encumber
the Collateral in any way or grant any security interest or Lien thereon,  other
than (a) Liens for current taxes not delinquent or taxes being contested in good
faith and by  appropriate  proceedings  and as to which such  reserves  or other
appropriate  provisions  as may be  required by GAAP are being  maintained;  (b)
carriers',  warehousemen's,  mechanics',  materialmen's,  repairmen's, and other
like  statutory  Liens  arising  in the  ordinary  course of  business  securing
obligations which are not overdue or which are being contested in good faith and
by appropriate  proceedings  and as to which such reserves or other  appropriate
provisions  as may be  required  by GAAP are being  maintained;  (c)  pledges or
deposits in connection with workers'  compensation,  unemployment  insurance and
other social security legislation;  (d) Liens in connection with the acquisition
of property in the ordinary  course of business  after the date hereof by way of
purchase money mortgage,  conditional  sale or other title retention  agreement,
capitalized lease or other deferred payment contract,  and attaching only to the
property being acquired, if the indebtedness secured thereby does not exceed the
purchase  price of the  property  financed;  (e) Liens in favor of  Holder.  The
Company and its subsidiaries shall not incur any indebtedness for borrowed money
(including  any  guaranty)  that  ranks  senior to or pari  passu  with the loan
pursuant to this Secured Note (other than purchase money indebtedness arising in
the  ordinary  course of  business  that,  when  incurred,  does not  exceed the
purchase price of the asset(s) financed).  As used herein, the term "LIEN" means
any mortgage,  pledge,  hypothecation,  judgment lien or similar legal  process,

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title  retention  lien,  or  other  lien,   encumbrance  or  security  interest,
including,  without  limitation,  the interest of a vendor under any conditional
sale or other title  retention  agreement and the interest of a lessor under any
capitalized lease.

                  5.6  Immediately  upon  receipt  of the  proceeds  of the loan
hereunder,  the Company shall issue to James P. Jimirro a Notice of  Termination
in accordance with Section 4(f) of that certain 2002 Employment  Agreement dated
as of May 17, 2002 between J2 Communications  and James P. Jimirro and shall pay
the full  amount of the  "Required  Payment"  (as such term is  defined  in that
certain   Termination   of  Security   Agreement  of  even  date  herewith  (the
"TERMINATION AGREEMENT") between the Company and James P. Jimirro).

         6.       EVENTS OF DEFAULT AND REMEDIES

                  6.1  Events of  Default.  "EVENT OF  DEFAULT,"  wherever  used
herein,  means any one of the  following  events  (whatever  the reason for such
Event of Default and whether it shall be caused  voluntarily or involuntarily or
effected,  without limitation,  by operation of law or pursuant to any judgment,
decree  or  order  of  any  court  of  any  order,  rule  or  regulation  of any
administrative or governmental body):

                           6.1.1  default  in the  payment of any  principal  or
interest upon this Secured Note as and when the same becomes due and payable;

                           6.1.2  default  by  the  Company  under  any  of  its
covenants  under this Secured Note,  which  default is not cured within  fifteen
(15) days after  receipt  of written  notice of such  default  delivered  to the
Company by the Holder;

                           6.1.3 any event of  default  occurs  under any of the
Obligations;

                           6.1.4  the   Company   commences   a  case  or  other
proceeding,  or if an involuntary  case or other  proceeding  shall be commenced
against Company seeking liquidation, reorganization or other relief with respect
to its debts under any bankruptcy, insolvency or other similar debtor relief law
now or hereafter in effect or seeking the  appointment  of a trustee,  receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property,  and any such  involuntary  case or other  proceeding shall remain
undismissed and unstayed for a period of sixty (60) days;

                           6.1.5 the Company  shall make an  assignment  for the
benefit  of  creditors,  or admit in  writing  its  inability  to pay its  debts
generally as they become due;

                           6.1.6 a notice of lien,  levy or  assessment is filed
of record or given to Company with respect to all or any of the Company's assets
by any  federal,  state,  local  department  or agency,  and such lien,  levy or
assessment is not released or paid within a reasonable  period of time but in no
event longer than twenty (20) days from the date such lien,  levy or  assessment
is filed,  or such longer  period of time as is  appropriate  in the case of any
such  lien,  levy or  assessment  that is being  contested  in good faith and by
appropriate proceedings;

                           6.1.7 Holder, in good faith, believes the prospect of
payment  or  performance  by  Company  under  this  Secured  Note  or any  other
Obligations  is  impaired  and if  Company  is unable or  unwilling  to  provide

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adequate written assurances to Holder of its ability to fully perform under this
Secured Note within thirty (30) days following delivery of written notice; or

                           6.1.8 Any  representation  or  warranty of Company in
the Obligations is not materially true, correct and complete, or if any material
statement,  report or certificate  made or delivered by Company or its officers,
employees or agents is not true, correct and complete when made.

                  6.2  Acceleration of Maturity Date;  Rescission and Annulment.
If an Event of  Default  (other  than an Event of Default  specified  in Section
6.1.5 or 6.1.6) occurs and is continuing,  then, and in every such case,  unless
the  principal of this  Secured Note shall have already  become due and payable,
the Holder by a notice in writing to the Company (an "ACCELERATION NOTICE"), may
declare  all of the  principal  of this  Secured  Note,  together  with  accrued
interest  thereon,  to be due and  payable  immediately.  If an Event of Default
specified  in  Section  6.1.5 or 6.1.6  occurs,  all  principal  of and  accrued
interest on this Secured Note ipso facto shall become and be immediately due and
payable without any declaration or other act on the part of the Holder.

                  6.3  Rights  and  Remedies  Cumulative.  Except  as  otherwise
provided with respect to the  replacement  or payment of  mutilated,  destroyed,
lost or stolen note, no right or remedy herein conferred upon or reserved to the
Holder is intended to be exclusive of any other right or remedy, and every right
and remedy shall, to the extent  permitted by law, be cumulative and in addition
to every other right and remedy given hereunder or now or hereafter  existing at
law or in equity or  otherwise.  The  assertion  or  employment  of any right or
remedy hereunder,  or otherwise,  shall not prevent the concurrent  assertion or
employment of any other appropriate right or remedy.

                  6.4 Waiver. No delay or omission by the Holder to exercise any
right or remedy  arising upon any Event of Default  shall impair the exercise of
any such right or remedy or  constitute  a waiver of any such Event of  Default.
Every  right and remedy  given by this  Section 6 or by law to the Holder may be
exercised  from time to time,  and as often as may be deemed  expedient,  by the
Holder. No provision of this Secured Note may be waived unless in writing signed
by the Holder, and waiver of any one provision of this Secured Note shall not be
deemed to be a waiver of any other provision.

         7. REPLACEMENT  NOTE. If this Secured Note is mutilated and surrendered
to the  Company  or if the  Holder  claims and  submits  an  affidavit  or other
evidence,  satisfactory  to the Company to the effect that this Secured Note has
been lost,  destroyed or wrongfully taken, the Company shall issue a replacement
note if the Company's reasonable requirements are met, including, if required by
the Company, provision by the Holder of indemnity, sufficient in the judgment of
the  Company,  to protect the Company  from any loss which it may suffer if this
Secured Note is replaced.

         8. ISSUANCE OF COMMON STOCK.  As a further  inducement to the Holder to
make the loan  evidenced by this Secured  Note,  upon receipt of the proceeds of
the loan  hereunder,  the Company shall  transfer to the Holder Eighty  Thousand
(80,000)  shares of the  Company's  Common  Stock,  $0.001  par  value  ("COMMON
STOCK"),  free and clear of any liens, . The Holder  understands that the Common

                                      -7-
<PAGE>

Stock shall not be registered or qualified under any federal or state securities
laws and shall bear the following legend:

         These securities have not been registered with the Securities and
         Exchange Commission or the securities commission of any state in
         reliance upon an exemption from registration under the Securities Act
         of 1933, as amended (the "Securities Act"), and, accordingly, may not
         be offered or sold except pursuant to an effective registration
         statement under the Securities Act or pursuant to an available
         exemption from, or in a transaction not subject to, the registration
         requirements of the Securities Act and in accordance with applicable
         state securities laws as evidenced by a legal opinion of counsel to the
         transferor to such effect, the substance of which shall be reasonably
         acceptable to the Company.

         9.       MISCELLANEOUS

                  9.1 Successors.  The terms and conditions of this Secured Note
shall be binding  upon and inure to the benefit of the  parties to this  Secured
Note and their respective successors, heirs and personal representatives.

                  9.2 Assignment.  The Company may not assign this Secured Note,
and any  attempted or purported  assignment  or any  delegation of its duties or
obligations  arising under this Secured Note to any person shall be deemed to be
null and void,  and shall  constitute  a material  breach by the  Company of its
duties and obligations under this Secured Note.

                  9.3 Governing Law. This Secured Note has been made and entered
into in the State of California  and shall be construed in  accordance  with the
laws of the State of  California  without  giving  effect to the  principles  of
conflicts of law thereof.

                  9.4  Captions.  The various  captions of this Secured Note are
for  reference  only and shall not be  considered  or referred  to in  resolving
questions of interpretation of this Secured Note.

                  9.5  Notices.  Any  notice,  authorization,  request or demand
required or  permitted  to be given  hereunder  shall be in writing and shall be
deemed to have been duly given when received by an overnight delivery service or
when sent by facsimile addressed as follows:

                           To the Company:

                           National Lampoon, Inc.
                           10850 Wilshire Boulevard, Suite 1000
                           Los Angeles, California 90024
                           Fax:
                           Attn:  Douglas S. Bennett, President

                           To the Holder:

                           N. Williams Family Investments, L.P.
                           c/o Lake City Bank
                           P. O. Box 11053
                           Fort Wayne, Indiana 46855
                           Fax:
                           Attn: Keith Davis, Trust Officer

                                      -8-
<PAGE>

                  9.6  Severability.  Whenever  possible each  provision of this
Secured Note shall be  interpreted  in such manner as to be effective  and valid
under  applicable  law,  but if any  provision  of this Secured Note shall be or
become  prohibited or invalid under  applicable  law,  such  provision  shall be
ineffective to the extent of such prohibition or invalidity without invalidating
the  remainder of such  provision or the  remaining  provisions  of this Secured
Note.

                  9.7  Attorneys'  Fees.  In the event the Holder  utilizes  the
services of an attorney in attempting to collect the amounts due hereunder or to
enforce the terms hereof or of any agreements  related to this  indebtedness  or
any other  Obligation,  or if any holder  hereof (or any trustee or affiliate of
any holder  hereof)  becomes party  plaintiff or defendant in any action,  suit,
arbitration  or other  proceeding  in relation to the property  described in any
instrument  securing  this Secured Note or for the recovery or protection of the
indebtedness evidenced hereby or that otherwise arises out of or relates to this
Secured Note or the transactions  contemplated hereby,  Borrower, its successors
and  assigns,  shall  repay to such  holder  hereof,  on  demand,  all costs and
expenses so incurred,  including those costs, expenses and reasonable attorneys'
fees  incurred in any and all appeals or petitions  from any such action,  suit,
arbitration  or other  proceeding or incurred after the filing by or against the
Borrower or any other Grantor of any proceeding under any chapter of the federal
bankruptcy  code, or similar federal or state statute,  and whether  incurred in
connection with the involvement of the Holder as creditor in such proceedings or
otherwise.  As used in this Section,  reasonable attorneys' fees shall be deemed
to mean the full and actual costs of any legal  services  actually  performed in
connection  with the matters  involved  calculated on the basis of the usual fee
charged by the attorney performing such services.

                  9.8  Noncircumvention.  The Company  will not, by amendment of
its charter or through reorganization,  consolidation, merger, dissolution, sale
of assets or any other voluntary  action,  avoid or seek to avoid the observance
or  performance  of any of the terms of this Secured Note, but will at all times
in good faith  assist in the carrying out of all such terms and in the taking of
all such  action as may be  necessary  or  appropriate  in order to protect  the
rights of the Holder of this Secured Note against impairment.

                  9.9 Prepayment. The Company shall have the right to prepay any
portion of the principal without prepayment penalty or premium or discount.  Any
optional  prepayment  pursuant  to  this  Section  9.9 or  mandatory  prepayment
pursuant to Section 1.4 shall be applied  first to accrued  interest and then to
principal.

                         [SIGNATURES ON FOLLOWING PAGE]

                                      -9-
<PAGE>

         IN WITNESS WHEREOF, the Company has caused this Secured Note to be
executed and issued on its behalf by the officer thereto duly authorized.

                                        NATIONAL LAMPOON, INC.

                                        By:
                                            --------------------------------
                                            Name:
                                            Title:

Accepted and Agreed:

N. WILLIAMS FAMILY INVESTMENTS, L.P.

By:
    --------------------------------
    Name:
    Title:

                                      -10-

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