Document:

SECURITIES PURCHASE AGREEMENT

      This  Securities  Purchase  Agreement  (this  "Agreement")  is dated as of
December  15,  2004,  among   Workstream  Inc.,  a  Canadian   corporation  (the
"Company"),  and each purchaser  identified on the signature pages hereto (each,
including  its  successors  and assigns,  a  "Purchaser"  and  collectively  the
"Purchasers").

      WHEREAS,  subject to the terms and  conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act (as defined below),  and Rule
506  promulgated  thereunder,  the  Company  desires  to issue  and sell to each
Purchaser,  and each Purchaser,  severally and not jointly,  desires to purchase
from the Company,  in the  aggregate,  (a) up to $15,000,000 of shares of Common
Stock of the  Company on the  Closing  Date and (b)  warrants  to purchase up to
$7,500,000  of shares of Common  Stock of the Company  (the  "Warrants")  on the
Closing Date.

      NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement,  and for  other  good and  valuable  consideration  the  receipt  and
adequacy of which are hereby acknowledged,  the Company and each Purchaser agree
as follows:

                                   ARTICLE I.
                                   DEFINITIONS

      1.1  Definitions.  In  addition  to the terms  defined  elsewhere  in this
Agreement,  for all purposes of this  Agreement,  the  following  terms have the
meanings indicated in this Section 1.1:

            "Action"  shall have the  meaning  ascribed  to such term in Section
      3.1(j).

            "Affiliate"  means any Person that,  directly or indirectly  through
      one or more  intermediaries,  controls  or is  controlled  by or is  under
      common control with a Person as such terms are used in and construed under
      Rule 144.  With respect to a  Purchaser,  any  investment  fund or managed
      account that is managed on a  discretionary  basis by the same  investment
      manager  as such  Purchaser  will be  deemed  to be an  Affiliate  of such
      Purchaser.

            "Closing"  means the closing of the  purchase and sale of the Common
      Stock pursuant to Section 2.1.

            "Closing  Date" means the  Trading  Day when all of the  Transaction
      Documents  have been  executed  and  delivered by the  applicable  parties
      thereto, and all conditions  precedent to (i) the Purchasers'  obligations
      to pay the  Subscription  Amount  and (ii) the  Company's  obligations  to
      deliver the Securities have been satisfied or waived.

            "Commission" means the Securities and Exchange Commission.

            "Common Stock" means the common shares of the Company, no par value,
      and any  securities  into  which  such  common  shares  may  hereafter  be
      reclassified.

            "Common Stock  Equivalents"  means any  securities of the Company or
      the Subsidiaries  which would entitle the holder thereof to acquire at any
      time Common  Stock,  including  without  limitation,  any debt,  preferred
      stock, rights,  options,  warrants or other instrument that is at any time
      convertible  into or  exchangeable  for, or otherwise  entitles the holder
      thereof to receive, Common Stock.

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<PAGE>

            "Company Counsel" means  Perley-Robertson,  Hill & McDougall LLP or,
      with respect to United States securities law matters, Cozen O'Connor.

            "Disclosure  Schedules"  means  the  Disclosure  Schedules  attached
      hereto.

            "Effective Date" means the date that the  Registration  Statement is
      first declared effective by the Commission.

            "Exchange  Act"  means  the  Securities  Exchange  Act of  1934,  as
      amended.

            "Intellectual  Property  Rights" shall have the meaning  ascribed to
      such term in Section 3.1(o).

            "Liens" means a lien, charge, security interest,  encumbrance, right
      of first refusal, preemptive right or other restriction.

            "Material  Adverse  Effect" shall have the meaning  ascribed to such
      term in Section 3.1(b).

            "Material  Permits" shall have the meaning  ascribed to such term in
      Section 3.1(m).

            "Per Share Purchase  Price" equals $3.00,  subject to adjustment for
      reverse and forward stock splits, stock dividends,  stock combinations and
      other similar  transactions  of the Common Stock that occur after the date
      of this Agreement and prior to or on the Closing Date.

            "Person"  means an individual or  corporation,  partnership,  trust,
      incorporated  or  unincorporated   association,   joint  venture,  limited
      liability  company,  joint  stock  company,  government  (or an  agency or
      subdivision thereof) or other entity of any kind.

            "Proceeding"  means  an  action,   claim,  suit,   investigation  or
      proceeding  (including,  without  limitation,  an investigation or partial
      proceeding, such as a deposition), whether commenced or threatened.

            "Registration   Rights  Agreement"  means  the  Registration  Rights
      Agreement,  dated as of the date of this Agreement,  among the Company and
      each Purchaser, in the form of Exhibit A hereto.

            "Registration  Statement" means a registration statement meeting the
      requirements set forth in the  Registration  Rights Agreement and covering
      the resale by the Purchasers of the Shares.

            "Required Approvals" shall have the meaning ascribed to such term in
      Section 3.1(e).

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<PAGE>

            "Rule 144" means Rule 144 promulgated by the Commission  pursuant to
      the Securities  Act, as such Rule may be amended from time to time, or any
      similar rule or  regulation  hereafter  adopted by the  Commission  having
      substantially the same effect as such Rule.

            "SEC  Reports"  shall  have the  meaning  ascribed  to such  term in
      Section 3.1(h).

            "Securities"  means  the  shares of  Common  Stock and the  Warrants
      issued to each Purchaser pursuant to this Agreement.

            "Securities Act" means the Securities Act of 1933, as amended.

            "Shares"  means shares of the Common Stock issued to the  Purchasers
      pursuant  to this  Agreement,  together  with any  shares of Common  Stock
      issued   upon   a   stock   split,   dividend   or   other   distribution,
      recapitalization  or similar event with respect to the foregoing following
      the Closing  Date,  and any shares of Common Stock into which the Warrants
      are exercised from time to time.

            "Subscription  Amount" means, as to each  Purchaser,  the amount set
      forth below such Purchaser's signature block on the signature page hereto,
      in United States dollars and in immediately available funds.

            "Subsidiaries"  shall mean the subsidiaries of the Company,  if any,
      set forth on Schedule 3.1(a).

            "Trading  Day" means a day on which the Common  Stock is traded on a
      Trading Market.

            "Trading  Market" means the following  markets or exchanges on which
      the Common  Stock is listed or quoted for trading on the date in question:
      the Nasdaq  SmallCap  Market,  the American Stock  Exchange,  the New York
      Stock Exchange or the Nasdaq National Market.

            "Transaction  Documents"  means this Agreement and the  Registration
      Rights  Agreement  and any  other  documents  or  agreements  executed  in
      connection with the transactions contemplated hereunder.

            "VWAP" means, for any date, the price determined by the first of the
      following clauses that applies:  (a) if the Common Stock is then listed or
      quoted on a Trading Market, the daily volume weighted average price of the
      Common Stock for such date (or the nearest  preceding date) on the Trading
      Market on which the Common  Stock is then  listed or quoted as reported by
      Bloomberg  Financial L.P.  (based on a Trading Day from 9:30 a.m.  Eastern
      Time to 4:02  p.m.  Eastern  Time);  (b) if the  Common  Stock is not then
      listed or quoted on a Trading  Market and if prices  for the Common  Stock
      are then quoted on the OTC Bulletin  Board,  the volume  weighted  average
      price of the Common Stock for such date (or the nearest preceding date) on
      the OTC  Bulletin  Board;  (c) if the Common  Stock is not then  listed or
      quoted on the OTC  Bulletin  Board and if prices for the Common  Stock are
      then  reported in the "Pink  Sheets"  published by the National  Quotation
      Bureau Incorporated (or a similar organization or agency succeeding to its
      functions of reporting prices), the most recent bid price per share of the
      Common Stock so reported; or (c) in all other cases, the fair market value
      of a share of  Common  Stock as  determined  by an  independent  appraiser
      selected in good faith by the Purchasers and reasonably  acceptable to the
      Company.

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<PAGE>

            "Warrant  Shares"  means the Shares of Common  Stock issued upon the
      exercise of the Warrants.

            "Warrants"  shall  have the  meaning  ascribed  to such  term in the
      recitals hereto.

                                  ARTICLE II.
                                PURCHASE AND SALE

      2.1 Closing.  On the Closing Date,  each Purchaser shall purchase from the
Company,  severally and not jointly with the other  Purchasers,  and the Company
shall  issue and sell to each  Purchaser,  (a) a number of Shares  equal to such
Purchaser's  Subscription Amount divided by the Per Share Purchase Price and (b)
a number of Warrants equal to such  Purchaser's  Subscription  Amount divided by
the product  obtained by  multiplying  the Per Share  Purchase Price by two. The
aggregate  Subscription  Amounts  for  Shares  sold  hereunder  shall  be  up to
$15,000,000.  Upon  satisfaction of the conditions set forth in Section 2.2, the
Closing  shall  occur at the  offices of Cozen  O'Connor,  1900  Market  Street,
Philadelphia,  PA 19103,  or such other  location as the parties shall  mutually
agree.

      2.2 Deliveries.

            (a) On the Closing  Date,  the Company  shall deliver or cause to be
      delivered to each Purchaser the following:

                  (i) this Agreement duly executed by the Company;

                  (ii) a certificate evidencing a number of Shares equal to such
            Purchaser's  Subscription  Amount  divided by the Per Share Purchase
            Price, registered in the name of such Purchaser;

                  (iii) a warrant  certificate,  in the form attached  hereto as
            Exhibit B, evidencing a number of Warrants equal to such Purchaser's
            Subscription  Amount divided by the product  obtained by multiplying
            the Per Share Purchase Price by two,  registered in the name of such
            Purchaser;

                  (iv) the  Registration  Rights  Agreement duly executed by the
            Company;

                  (v) a  certificate  of the  Secretary of the Company as to the
            Company's  Articles  of  Incorporation,   as  amended,  By-Laws,  as
            amended,  and  resolutions  of the Board of Directors of the Company
            approving  the   transactions   contemplated   by  the   Transaction
            Documents; and

                  (vi) a  legal  opinion  of  Company  Counsel,  in the  form of
            Exhibit C attached hereto.

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<PAGE>

            (b) On the Closing Date, each Purchaser shall deliver or cause to be
      delivered to the Company the following:

                  (i) this Agreement duly executed by such Purchaser;

                  (ii) such Purchaser's  Subscription Amount by wire transfer to
            the account as specified in writing by the Company; and

                  (iii) the Registration  Rights Agreement duly executed by such
            Purchaser.

      2.3 Closing Conditions.

            (a) The obligations of the Company  hereunder in connection with the
      Closing are subject to the following conditions being met:

                  (i) the accuracy in all material respects when made and on the
            Closing Date of the representations and warranties of the Purchasers
            contained herein;

                  (ii)  all   obligations,   covenants  and  agreements  of  the
            Purchasers  required to be performed at or prior to the Closing Date
            shall have been performed; and

                  (iii) the delivery by the Purchasers of the items set forth in
            Section 2.2(b) of this Agreement.

            (b)  The  respective  obligations  of the  Purchasers  hereunder  in
      connection with the Closing are subject to the following  conditions being
      met:

                  (i) the accuracy in all material  respects on the Closing Date
            of the  representations  and  warranties  of the  Company  contained
            herein;

                  (ii) all obligations,  covenants and agreements of the Company
            required to be  performed at or prior to the Closing Date shall have
            been performed;

                  (iii) the  delivery  by the  Company of the items set forth in
            Section 2.2(a) of this Agreement;

                  (iv) there  shall have been no  Material  Adverse  Effect with
            respect to the Company since the date hereof; and

                  (v) from the date hereof to the Closing  Date,  trading in the
            Common Stock shall not have been suspended by the Commission (except
            for any suspension of trading of limited  duration  agreed to by the
            Company, which suspension shall be terminated prior to the Closing),
            and, at any time prior to the Closing  Date,  trading in  securities
            generally as reported by Bloomberg  Financial Markets shall not have
            been  suspended  or limited,  or minimum  prices shall not have been
            established on securities whose trades are reported by such service,
            or on any Trading Market,  nor shall a banking  moratorium have been
            declared  either by the United States or New York State  authorities
            nor shall there have occurred any material outbreak or escalation of
            hostilities  or other  national  or  international  calamity of such
            magnitude in its effect on, or any material  adverse  change in, any
            financial market which, in each case, in the reasonable  judgment of
            each Purchaser,  makes it  impracticable  or inadvisable to purchase
            the Securities at the Closing.

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<PAGE>

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

      3.1  Representations  and  Warranties of the Company.  Except as set forth
under the  corresponding  section of the Disclosure  Schedules which  Disclosure
Schedules  shall  be  deemed  a  part  hereof,  the  Company  hereby  makes  the
representations and warranties set forth below to each Purchaser:

            (a)  Subsidiaries.  All of the  majority  owned  direct and indirect
      Subsidiaries of the Company are set forth on Schedule 3.1(a).  The Company
      owns,  directly or  indirectly,  all of the capital  stock or other equity
      interests  of each  Subsidiary  free and clear of any  Liens,  and all the
      issued and  outstanding  shares of capital  stock of each  Subsidiary  are
      validly issued and are fully paid,  non-assessable  and free of preemptive
      and similar rights to subscribe for or purchase securities. If the Company
      has no subsidiaries,  then references in the Transaction  Documents to the
      Subsidiaries will be disregarded.

            (b)  Organization  and  Qualification.  Each of the  Company and the
      Subsidiaries  is an  entity  duly  incorporated  or  otherwise  organized,
      validly  existing and in good standing under the laws of the  jurisdiction
      of its  incorporation or organization (as applicable),  with the requisite
      power and authority to own and use its  properties and assets and to carry
      on its  business  as  currently  conducted.  Neither  the  Company nor any
      Subsidiary  is in  violation  or default of any of the  provisions  of its
      respective  articles or  certificate  of  incorporation,  by-laws or other
      organizational  or  charter  documents.   Each  of  the  Company  and  the
      Subsidiaries is duly qualified to conduct business and is in good standing
      as a foreign corporation or other entity in each jurisdiction in which the
      nature  of the  business  conducted  or  property  owned by it makes  such
      qualification necessary, except where the failure to be so qualified or in
      good  standing,  as the  case may be,  could  not  have or  reasonably  be
      expected  to  result in (i) a  material  adverse  effect on the  legality,
      validity or  enforceability of any Transaction  Document,  (ii) a material
      adverse effect on the results of operations, assets, business or financial
      condition of the Company and the Subsidiaries,  taken as a whole, or (iii)
      a  material  adverse  effect on the  Company's  ability  to perform in any
      material  respect on a timely basis its obligations  under any Transaction
      Document (any of (i), (ii) or (iii), a "Material  Adverse  Effect") and no
      Proceeding  has  been  instituted  in any  -------------------------  such
      jurisdiction revoking,  limiting or curtailing or seeking to revoke, limit
      or curtail such power and authority or qualification.

            (c)  Authorization;  Enforcement.  The  Company  has  the  requisite
      corporate  power  and  authority  to  enter  into  and to  consummate  the
      transactions  contemplated  by  each  of  the  Transaction  Documents  and
      otherwise  to carry out its  obligations  thereunder.  The  execution  and
      delivery  of each of the  Transaction  Documents  by the  Company  and the
      consummation by it of the transactions contemplated thereby have been duly
      authorized  by all  necessary  action  on the part of the  Company  and no
      further  action is required by the Company in connection  therewith  other
      than in connection with the Required Approvals.  Each Transaction Document
      has been (or upon  delivery  will have been) duly  executed by the Company
      and, when delivered in accordance  with the terms hereof,  will constitute
      the valid and binding  obligation of the Company  enforceable  against the
      Company  in  accordance  with its terms  except  (i) as limited by general
      equitable    principles    and    applicable    bankruptcy,    insolvency,
      reorganization, moratorium and other laws of general application affecting
      enforcement  of  creditors'  rights  generally,  (ii) as  limited  by laws
      relating to the availability of specific performance, injunctive relief or
      other  equitable  remedies,  and  (iii)  insofar  as  indemnification  and
      contribution may be limited by applicable law.

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<PAGE>

            (d) No Conflicts.  The  execution,  delivery and  performance of the
      Transaction  Documents  by the  Company,  the  issuance  and  sale  of the
      Securities,  the issuance of Warrant  Shares and the  consummation  by the
      Company of the other transactions contemplated thereby do not and will not
      (i)  conflict  with or  violate  any  provision  of the  Company's  or any
      Subsidiary's  articles or certificate of  incorporation,  by-laws or other
      organizational or charter documents,  or (ii) conflict with, or constitute
      a default  (or an event  that with  notice or lapse of time or both  would
      become a default)  under,  result in the  creation of any Lien upon any of
      the  properties  or assets of the  Company or any  Subsidiary,  or give to
      others any rights of termination,  amendment, acceleration or cancellation
      (with or without notice, lapse of time or both) of, any agreement,  credit
      facility,  debt or other  instrument  (evidencing  a Company or Subsidiary
      debt or otherwise) to which the Company or any Subsidiary is a party or by
      which any property or asset of the Company or any  Subsidiary  is bound or
      affected,  or (iii)  subject to the Required  Approvals,  conflict with or
      result in a  violation  of any law,  rule,  regulation,  order,  judgment,
      injunction,  decree  or other  restriction  of any  court or  governmental
      authority  to which the  Company or a  Subsidiary  is  subject  (including
      federal  and  state  securities  laws and  regulations),  or by which  any
      property or asset of the Company or a Subsidiary is bound or affected,  or
      (iv)  conflict  with or violate  the terms of any  agreement  by which the
      Company or any  Subsidiary  is bound or to which any  property or asset of
      the Company or any Subsidiary is bound or affected;  except in the case of
      each of clauses (ii), (iii) and (iv), such as could not have or reasonably
      be expected to result in a Material Adverse Effect.

            (e) Filings,  Consents and Approvals. The Company is not required to
      obtain any consent, waiver, authorization or order of, give any notice to,
      or make any  filing or  registration  with,  any  court or other  federal,
      state, local or other governmental authority or other Person in connection
      with  the  execution,  delivery  and  performance  by the  Company  of the
      Transaction Documents, other than (i) filings required pursuant to Section
      4.4 of  this  Agreement,  (ii)  the  filing  with  the  Commission  of the
      Registration Statement and any amendments thereto, (iii) application(s) to
      the  applicable  Trading  Market for the listing of the Shares for trading
      thereon in the time and manner  required  thereby,  and (iv) the filing of
      Form D with the  Commission  and such  filings as are  required to be made
      under  applicable  state  securities  laws  (collectively,  the  "Required
      Approvals").

            (f)  Issuance  of Shares.  The  Securities  issued  pursuant to this
      Agreement are duly authorized and the Shares,  when issued and paid for in
      accordance  with  the  Transaction  Documents,  will be duly  and  validly
      issued, fully paid and nonassessable,  free and clear of all Liens imposed
      by the Company  other than  restrictions  on transfer  provided for in the
      Transaction  Documents.  Any Warrant  Shares,  when issued and paid for in
      accordance with the warrant certificate, will be duly authorized and, when
      the  Warrants  are  properly  exercised  in  accordance  with the  warrant
      certificates,  will be duly and  validly  issued  issued,  fully  paid and
      nonassessable,  free and clear of all Liens  imposed by the Company  other
      than restrictions on transfer  provided for in the Transaction  Documents.
      The  Company  has  reserved  from its duly  authorized  capital  stock the
      maximum  number  of  shares  of Common  Stock  issuable  pursuant  to this
      Agreement.

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<PAGE>

            (g)  Capitalization.   The  capitalization  of  the  Company  is  as
      described in Schedule 3.1(g).  Except as set forth in Schedule 3.1(g), the
      Company has not issued any capital stock since the date of its most recent
      SEC Report other than  pursuant to the exercise of employee  stock options
      under the Company's  stock option plans,  the issuance of shares of Common
      Stock to employees  pursuant to the Company's employee stock purchase plan
      and pursuant to the  conversion  or exercise of  outstanding  Common Stock
      Equivalents.  No Person has any right of first refusal,  preemptive right,
      right  of  participation,  or any  similar  right  to  participate  in the
      transactions contemplated by the Transaction Documents. Except as a result
      of the  purchase and sale of the  Securities  and as set forth on Schedule
      3.1(g),  there are no  outstanding  options,  warrants,  script  rights to
      subscribe to, calls or  commitments of any character  whatsoever  relating
      to, or securities,  rights or obligations convertible into or exchangeable
      for,  or giving any  Person any right to  subscribe  for or  acquire,  any
      shares of Common  Stock,  or  contracts,  commitments,  understandings  or
      arrangements by which the Company or any Subsidiary is or may become bound
      to issue  additional  shares  of Common  Stock,  or  securities  or rights
      convertible  or  exchangeable  into shares of Common Stock.  The issue and
      sale of the Securities and Warrant Shares will not obligate the Company to
      issue shares of Common Stock or other securities to any Person (other than
      the  Purchasers)  and will not  result in a right of any holder of Company
      securities  to adjust the  exercise,  conversion,  exchange or reset price
      under such securities.  All of the outstanding  shares of capital stock of
      the Company are validly issued,  fully paid and  nonassessable,  have been
      issued in compliance with all federal and state  securities laws, and none
      of such  outstanding  shares was  issued in  violation  of any  preemptive
      rights or similar  rights to  subscribe  for or  purchase  securities.  No
      further  approval  or  authorization  of any  stockholder,  the  Board  of
      Directors  of the Company or others is required  for the issuance and sale
      of the Securities or the issuance of Warrant  Shares.  Except as disclosed
      in  the  SEC  Reports,  there  are  no  stockholders  agreements,   voting
      agreements  or other  similar  agreements  with  respect to the  Company's
      capital  stock to which the Company is a party or, to the knowledge of the
      Company, between or among any of the Company's stockholders.

            (h) SEC  Reports;  Financial  Statements.  The Company has filed all
      reports  required  to be  filed  by it under  the  Securities  Act and the
      Exchange Act,  including  pursuant to Section 13(a) or 15(d) thereof,  for
      the two years  preceding  the date hereof (or such  shorter  period as the
      Company  was  required  by law  to  file  such  material)  (the  foregoing
      materials,  including the exhibits thereto, being collectively referred to
      herein as the "SEC  Reports")  on a timely  basis or has  received a valid
      extension of such time of filing and has filed any such SEC Reports  prior
      to the expiration of any such extension. As of their respective dates, the
      SEC Reports complied in all material respects with the requirements of the
      Securities  Act and the Exchange Act and the rules and  regulations of the
      Commission  promulgated  thereunder,  and  none of the SEC  Reports,  when
      filed,  contained  any untrue  statement of a material  fact or omitted to
      state a material fact required to be stated  therein or necessary in order
      to make the statements  therein, in light of the circumstances under which
      they were made, not  misleading.  The financial  statements of the Company
      included  in  the  SEC  Reports  comply  in  all  material  respects  with
      applicable  accounting  requirements  and the rules and regulations of the
      Commission with respect  thereto as in effect at the time of filing.  Such
      financial  statements  have been prepared in accordance with United States
      generally  accepted  accounting  principles  applied on a consistent basis
      during the periods involved ("GAAP"), except as may be otherwise specified
      in  such  financial  statements  or the  notes  thereto  and  except  that
      unaudited  financial  statements may not contain all footnotes required by
      GAAP, and fairly present in all material  respects the financial  position
      of the Company and its  consolidated  subsidiaries as of and for the dates
      thereof and the results of operations  and cash flows for the periods then
      ended,  subject,  in  the  case  of  unaudited   statements,   to  normal,
      immaterial, year-end audit adjustments.

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<PAGE>

            (i) Material Changes. Since the date of the latest audited financial
      statements  included  within  the  SEC  Reports,  except  as  specifically
      disclosed in the SEC Reports,  (i) there has been no event,  occurrence or
      development that has had or that could reasonably be expected to result in
      a  Material  Adverse  Effect,  (ii)  the  Company  has  not  incurred  any
      liabilities  (contingent  or otherwise)  other than (A) trade payables and
      accrued  expenses  incurred in the ordinary course of business  consistent
      with past practice and (B) liabilities not required to be reflected in the
      Company's  financial  statements  pursuant  to  GAAP  or  required  to  be
      disclosed in filings made with the  Commission  or incurred in  connection
      with acquisitions  disclosed in the SEC Reports, (iii) the Company has not
      altered its method of  accounting,  (iv) the  Company has not  declared or
      made  any  dividend  or  distribution  of cash or  other  property  to its
      stockholders or purchased,  redeemed or made any agreements to purchase or
      redeem any shares of its capital  stock and (v) the Company has not issued
      any equity  securities  to any  officer,  director  or  Affiliate,  except
      pursuant to existing Company stock option plans. The Company does not have
      pending before the Commission  any request for  confidential  treatment of
      information.

            (j) Litigation.  Except as set forth on Schedule 3.1(j), there is no
      action,  suit, inquiry,  notice of violation,  proceeding or investigation
      pending  or, to the  knowledge  of the  Company,  threatened  against  the
      Company, any Subsidiary or any of their respective properties before or by
      any court, arbitrator, governmental or administrative agency or regulatory
      authority (federal,  state,  county, local or foreign)  (collectively,  an
      "Action") which (i) adversely affects or challenges the legality, validity
      or enforceability of any of the Transaction  Documents,  the Securities or
      Warrant Shares or (ii) could, if there were an unfavorable decision,  have
      or reasonably be expected to result in a Material Adverse Effect.  Neither
      the Company nor any Subsidiary,  nor, to the knowledge of the Company, any
      director  or  officer  thereof,  is or has been the  subject of any Action
      involving a claim of  violation  of or  liability  under  federal or state
      securities  laws or a claim of breach  of  fiduciary  duty.  There has not
      been,  and to the  knowledge  of the  Company,  there  is not  pending  or
      contemplated,  any  investigation by the Commission  involving the Company
      or, to the  knowledge  of the Company,  any current or former  director or
      officer of the Company.  The  Commission  has not issued any stop order or
      other order suspending the  effectiveness  of any  registration  statement
      filed by the  Company  or any  Subsidiary  under the  Exchange  Act or the
      Securities Act.

                                       9
<PAGE>

            (k) Labor  Relations.  No material  labor dispute  exists or, to the
      knowledge of the Company, is imminent with respect to any of the employees
      of the Company which could  reasonably be expected to result in a Material
      Adverse Effect.

            (l)  Compliance.  Neither the Company nor any  Subsidiary  (i) is in
      default  under or in violation of (and no event has occurred  that has not
      been waived that, with notice or lapse of time or both,  would result in a
      default by the Company or any  Subsidiary  under),  nor has the Company or
      any Subsidiary  received  notice of a claim that it is in default under or
      that it is in violation of, any indenture, loan or credit agreement or any
      other agreement or instrument to which it is a party or by which it or any
      of its  properties is bound  (whether or not such default or violation has
      been waived),  (ii) is in violation of any order of any court,  arbitrator
      or  governmental  body,  or (iii) is in violation of any statute,  rule or
      regulation of any governmental authority, including without limitation all
      foreign,  federal,  state and local laws applicable to its business except
      in each case as could not have a Material Adverse Effect.

            (m) Regulatory Permits. The Company and the Subsidiaries possess all
      certificates,   authorizations  and  permits  issued  by  the  appropriate
      federal,  state,  local or foreign  regulatory  authorities  necessary  to
      conduct  their  respective  businesses  as  described  in the SEC Reports,
      except  where  the  failure  to  possess  such  permits  could not have or
      reasonably be expected to result in a Material  Adverse Effect  ("Material
      Permits"),  and neither the Company nor any  Subsidiary  has  received any
      notice of proceedings  relating to the revocation or  modification  of any
      Material Permit.

            (n) Title to Assets.  Except as described  in the SEC  Reports,  the
      Company and the Subsidiaries  have good and marketable title in fee simple
      to all real property owned by them that is material to the business of the
      Company and the Subsidiaries and good and marketable title in all personal
      property owned by them that is material to the business of the Company and
      the  Subsidiaries,  in each case free and clear of all  Liens,  except for
      Liens as do not  materially  affect the value of such  property and do not
      materially  interfere  with the use made and  proposed  to be made of such
      property by the Company and the  Subsidiaries and Liens for the payment of
      federal,  state or other taxes, the payment of which is neither delinquent
      nor subject to  penalties.  Any real  property and  facilities  held under
      lease by the Company and the  Subsidiaries  are held by them under  valid,
      subsisting   and   enforceable   leases  of  which  the  Company  and  the
      Subsidiaries  are in  compliance,  except  as could  not  have a  Material
      Adverse Effect.

            (o) Patents and Trademarks.  The Company and the Subsidiaries  have,
      or have  rights to use,  all  patents,  patent  applications,  trademarks,
      trademark applications,  service marks, trade names, copyrights,  licenses
      and other similar rights  necessary or material for use in connection with
      their respective  businesses as described in the SEC Reports and which the
      failure to so have could have a Material Adverse Effect (collectively, the
      "Intellectual  Property  Rights").  Neither the Company nor any Subsidiary
      has received a written notice that the  Intellectual  Property Rights used
      by the Company or any Subsidiary  violates or infringes upon the rights of
      any  Person.  To the  knowledge  of the  Company,  all  such  Intellectual
      Property Rights are  enforceable and there is no existing  infringement by
      another Person of any of the Intellectual Property Rights of others.

                                       10
<PAGE>

            (p)  Insurance.  The  Company  and the  Subsidiaries  are insured by
      insurers of recognized  financial  responsibility  against such losses and
      risks and in such amounts as are prudent and  customary in the  businesses
      in which the  Company and the  Subsidiaries  are  engaged.  To the best of
      Company's  knowledge,  such insurance  contracts and policies are accurate
      and  complete.  Neither the Company nor any  Subsidiary  has any reason to
      believe that it will not be able to renew its existing  insurance coverage
      as and when such  coverage  expires  or to obtain  similar  coverage  from
      similar  insurers as may be necessary  to continue its business  without a
      significant increase in cost.

            (q) Transactions With Affiliates and Employees.  Except as set forth
      in the SEC Reports, to the knowledge of the Company,  none of the officers
      or directors  of the Company and none of the  employees of the Company are
      presently a party to any  transaction  with the Company or any  Subsidiary
      (other than for services as employees, officers and directors),  including
      any contract,  agreement or other arrangement providing for the furnishing
      of services to or by, providing for rental of real or personal property to
      or from, or otherwise requiring payments to or from any officer,  director
      or such employee or, to the knowledge of the Company,  any entity in which
      any officer,  director, or any such employee has a substantial interest or
      is an officer,  director,  trustee or  partner,  in each case in excess of
      $60,000,  other  than (i) for  payment  of salary or  consulting  fees for
      services  rendered,  (ii) reimbursement for expenses incurred on behalf of
      the Company and (iii) for other employee benefits,  including stock option
      agreements under any stock option plan of the Company.

            (r) Sarbanes-Oxley;  Internal Accounting Controls. The Company is in
      material  compliance with all provisions of the Sarbanes-Oxley Act of 2002
      which are  applicable  to it as of the Closing  Date.  The Company and the
      Subsidiaries  maintain a system of internal accounting controls sufficient
      to provide  reasonable  assurance  that (i)  transactions  are executed in
      accordance  with  management's  general or specific  authorizations,  (ii)
      transactions are recorded as necessary to permit  preparation of financial
      statements in conformity  with GAAP and to maintain asset  accountability,
      (iii) access to assets is permitted only in accordance  with  management's
      general or specific  authorization,  and (iv) the recorded  accountability
      for assets is compared with the existing  assets at  reasonable  intervals
      and  appropriate  action is taken  with  respect to any  differences.  The
      Company has established  disclosure controls and procedures (as defined in
      Exchange Act Rules  13a-15(e) and  15d-15(e)) for the Company and designed
      such   disclosure   controls  and   procedures  to  ensure  that  material
      information relating to the Company,  including its Subsidiaries,  is made
      known  to  the  certifying  officers  by  others  within  those  entities,
      particularly  during the period in which the Company's most recently filed
      periodic  report  under  the  Exchange  Act,  as the case may be, is being
      prepared.   The  Company's   certifying   officers   have   evaluated  the
      effectiveness  of the Company's  disclosure  controls and procedures as of
      the date  prior to the filing  date of the most  recently  filed  periodic
      report under the  Exchange Act (such date,  the  "Evaluation  Date").  The
      Company  presented in its most recently  filed  periodic  report under the
      Exchange  Act  the  conclusions  of  the  certifying  officers  about  the
      effectiveness  of the disclosure  controls and  procedures  based on their
      evaluations as of the Evaluation  Date.  Since the Evaluation  Date, there
      have been no significant  changes in the Company's  internal  controls (as
      such term is defined in Item 307(b) of  Regulation  S-K under the Exchange
      Act)  or,  to  the  Company's  knowledge,  in  other  factors  that  could
      significantly affect the Company's internal controls.

                                       11
<PAGE>

            (s) Certain Fees. No brokerage or finder's fees or  commissions  are
      or will be payable  by the  Company to any  broker,  financial  advisor or
      consultant,  finder,  placement agent,  investment  banker,  bank or other
      Person with respect to the  transactions  contemplated  by this Agreement.
      The Purchasers shall have no obligation  (other than with respect to their
      own  actions)  with respect to any fees or with respect to any claims made
      by or on behalf of other Persons for fees of a type  contemplated  in this
      Section that may be due in connection with the  transactions  contemplated
      by this Agreement.

            (t) Private  Placement.  Assuming  the  accuracy of the  Purchasers'
      representations  and warranties set forth in Section 3.2, no  registration
      under  the  Securities  Act is  required  for the  offer  and  sale of the
      Securities  by the Company to the  Purchasers  or the  issuance of Warrant
      Shares as  contemplated  hereby.  The issuance and sale of the  Securities
      hereunder  does  not,  and  the  issuance  of  Warrant  Shares  will  not,
      contravene the rules and regulations of the Trading Market.

            (u) Investment Company.  The Company is not, and is not an Affiliate
      of, and immediately after receipt of payment for the Securities,  will not
      be or be an Affiliate of, an  "investment  company"  within the meaning of
      the Investment Company Act of 1940, as amended.  The Company shall conduct
      its  business  in a  manner  so that it will  not  become  subject  to the
      Investment Company Act.

            (v) Registration Rights.  Except as set forth on Schedule 3.1(v), no
      Person has any right to cause the Company to effect the registration under
      the Securities Act of any securities of the Company.

            (w) Listing and Maintenance Requirements. The Company's Common Stock
      is  registered  pursuant to Section  12(g) of the  Exchange  Act,  and the
      Company  has taken no action  designed  to, or which to its  knowledge  is
      likely to have the effect of,  terminating the  registration of the Common
      Stock under the Exchange Act nor has the Company received any notification
      that the Commission is contemplating  terminating such  registration.  The
      Company  has not, in the 12 months  preceding  the date  hereof,  received
      notice  from any Trading  Market on which the Common  Stock is or has been
      listed or quoted to the effect that the Company is not in compliance  with
      the  listing or  maintenance  requirements  of such  Trading  Market.  The
      Company  is,  and  has no  reason  to  believe  that  it  will  not in the
      foreseeable future continue to be, in compliance with all such listing and
      maintenance requirements.

            (x) Application of Takeover  Protections.  The Company and its Board
      of Directors have taken all necessary  action,  if any, in order to render
      inapplicable any control share acquisition,  business combination,  poison
      pill  (including  any  distribution  under a  rights  agreement)  or other
      similar   anti-takeover   provision   under  the  Company's   Articles  of
      Incorporation  (or similar charter  documents) or the laws of its place of
      incorporation  that is or could become  applicable to the  Purchasers as a
      result of the Purchasers and the Company  fulfilling their  obligations or
      exercising their rights under the Transaction Documents, including without
      limitation the Company's issuance of the Securities and Warrant Shares and
      the Purchasers' ownership of the Securities and Warrant Shares.

                                       12
<PAGE>

            (y) Disclosure.  The Company confirms that,  neither the Company nor
      any other Person  acting on its behalf has provided any of the  Purchasers
      or their agents or counsel with any information  that constitutes or might
      constitute material,  non-public information.  The Company understands and
      confirms that the  Purchasers  will rely on the foregoing  representations
      and covenants in effecting  transactions in securities of the Company. All
      disclosure provided to the Purchasers  regarding the Company, its business
      and  the  transactions   contemplated  hereby,  including  the  Disclosure
      Schedules to this Agreement, furnished by or on behalf of the Company with
      respect to the  representations  and  warranties  made herein are true and
      correct with respect to such  representations  and  warranties  and do not
      contain  any  untrue  statement  of a  material  fact or omit to state any
      material fact necessary in order to make the statements  made therein,  in
      light of the circumstances under which they were made, not misleading. The
      Company  acknowledges  and agrees that no Purchaser  makes or has made any
      representations   or   warranties   with   respect  to  the   transactions
      contemplated hereby other than those specifically set forth in Section 3.2
      hereof.

            (z) No Integrated Offering. Assuming the accuracy of the Purchasers'
      representations  and  warranties  set forth in Section  3.2,  neither  the
      Company, nor any of its Affiliates,  nor any Person acting on its or their
      behalf  has,  directly  or  indirectly,  made any  offers  or sales of any
      security or solicited any offers to buy any security,  under circumstances
      that would cause this offering of the  Securities  to be  integrated  with
      prior  offerings by the Company for purposes of the  Securities Act or any
      applicable shareholder approval provisions, including, without limitation,
      under the rules and  regulations  of any exchange or  automated  quotation
      system  on which  any of the  securities  of the  Company  are  listed  or
      designated.

            (aa) Solvency. Based on the financial condition of the Company as of
      the Closing Date after giving  effect to the receipt by the Company of the
      proceeds from the sale of the Securities hereunder, (i) the Company's fair
      saleable  value of its assets  exceeds the amount that will be required to
      be paid  on or in  respect  of the  Company's  existing  debts  and  other
      liabilities (including known contingent  liabilities) as they mature; (ii)
      the Company's assets do not constitute unreasonably small capital to carry
      on its  business  for the  current  fiscal  year as now  conducted  and as
      proposed to be conducted  including  its capital needs taking into account
      the  particular  capital  requirements  of the  business  conducted by the
      Company,  and  projected  capital  requirements  and capital  availability
      thereof; and (iii) the current cash flow of the Company, together with the
      proceeds  the  Company  would  receive,  were it to  liquidate  all of its
      assets,  after taking into account all anticipated uses of the cash, would
      be  sufficient  to pay all  amounts on or in respect of its debt when such
      amounts  are  required to be paid.  The  Company  does not intend to incur
      debts  beyond its  ability to pay such debts as they mature  (taking  into
      account  the timing and  amounts of cash to be payable on or in respect of
      its debt).

                                       13
<PAGE>

            (bb) Form S-3  Eligibility.  The Company is eligible to register the
      resale of its Common Stock by the  Purchasers  under Form S-3  promulgated
      under the Securities  Act and the Company  hereby  covenants and agrees to
      use its best efforts to maintain its eligibility to use Form S-3 until the
      Registration  Statement  covering the resale of the Shares shall have been
      filed with, and declared effective by, the Commission.

            (cc) Taxes.  Except for matters that would not,  individually  or in
      the  aggregate,  have or  reasonably  be  expected to result in a Material
      Adverse  Effect,  the Company and each Subsidiary have filed all necessary
      federal,  state and foreign income and franchise tax returns and have paid
      or  accrued  all  taxes  shown  as due  thereon,  and the  Company  has no
      knowledge  of a tax  deficiency  which  has been  asserted  or  threatened
      against the Company or any Subsidiary.

            (dd) General Solicitation. Neither the Company nor any person acting
      on behalf of the Company has offered or sold any of the  Securities by any
      form of general  solicitation  or general  advertising.  The  Company  has
      offered the  Securities  for sale only to the Purchasers and certain other
      "accredited investors" within the meaning of Rule 501 under the Securities
      Act.

            (ee) Foreign  Corrupt  Practices.  Neither the  Company,  nor to the
      knowledge  of the Company,  any agent or other person  acting on behalf of
      the Company,  has (i) directly or  indirectly,  used any corrupt funds for
      unlawful  contributions,  gifts,  entertainment or other unlawful expenses
      related to foreign or domestic political activity,  (ii) made any unlawful
      payment to foreign or domestic government officials or employees or to any
      foreign or domestic  political  parties or campaigns from corporate funds,
      (iii) failed to disclose  fully any  contribution  made by the Company (or
      made by any  person  acting on its  behalf of which the  Company is aware)
      which is in violation of law, or (iv) violated in any material respect any
      provision of the Foreign Corrupt Practices Act of 1977, as amended.

            (ff)     Accountants.      The     Company's     accountants     are
      PricewaterhouseCoopers  LLP. To the Company's knowledge, such accountants,
      who the  have  expressed  their  opinion  with  respect  to the  financial
      statements  included in the  Company's  Annual Report on Form 10-K for the
      year ended May 31, 2004,  are  independent  accountants as required by the
      Securities Act.

            (gg) Acknowledgment  Regarding  Purchasers'  Purchase of Securities.
      The Company  acknowledges and agrees that each of the Purchasers is acting
      solely in the  capacity of an arm's length  purchaser  with respect to the
      Transaction  Documents  and  the  transactions  contemplated  hereby.  The
      Company  further  acknowledges  that no Purchaser is acting as a financial
      advisor or  fiduciary  of the Company (or in any  similar  capacity)  with
      respect to this Agreement and the transactions contemplated hereby and any
      advice given by any Purchaser or any of their  respective  representatives
      or  agents  in  connection  with  this  Agreement  and  the   transactions
      contemplated  hereby is merely  incidental to the Purchasers'  purchase of
      the Securities.  The Company further represents to each Purchaser that the
      Company's  decision to enter into this  Agreement has been based solely on
      the independent evaluation of the transactions  contemplated hereby by the
      Company and its representatives.

                                       14
<PAGE>

      3.2  Representations  and  Warranties of the  Purchasers.  Each  Purchaser
hereby, for itself and for no other Purchaser, represents and warrants as of the
date hereof and as of the Closing Date to the Company as follows:

            (a)  Organization;  Authority.  Such  Purchaser  is an  entity  duly
      organized,  validly  existing and in good  standing  under the laws of the
      jurisdiction of its organization with full right, corporate or partnership
      power and  authority  to enter  into and to  consummate  the  transactions
      contemplated by the  Transaction  Documents and otherwise to carry out its
      obligations  thereunder.  The execution,  delivery and performance by such
      Purchaser of the  transactions  contemplated  by this  Agreement have been
      duly  authorized by all necessary  corporate or similar action on the part
      of such Purchaser.  Each  Transaction  Document to which it is a party has
      been duly executed by such Purchaser, and when delivered by such Purchaser
      in accordance with the terms hereof, will constitute the valid and legally
      binding obligation of such Purchaser, enforceable against it in accordance
      with its terms, except (i) as limited by general equitable  principles and
      applicable bankruptcy,  insolvency,  reorganization,  moratorium and other
      laws of general  application  affecting  enforcement of creditors'  rights
      generally,  (ii)  as  limited  by laws  relating  to the  availability  of
      specific  performance,  injunctive relief or other equitable  remedies and
      (iii)  insofar  as  indemnification  and  contribution  provisions  may be
      limited by applicable law.

            (b) Purchaser  Representation.  Such Purchaser  understands that the
      Securities  are, and the Warrant Shares will be,  "restricted  securities"
      and have not been  registered  under the  Securities Act or any applicable
      state  securities  law and is  acquiring  the  Securities  and any Warrant
      Shares  as  principal  for its own  account  and not with a view to or for
      distributing  or reselling  such  Securities,  Warrant  Shares or any part
      thereof,  has no present  intention of distributing any of such Securities
      or Warrant Shares and has no arrangement or  understanding  with any other
      persons  regarding the  distribution  of such Securities or Warrant Shares
      (this  representation  and warranty not limiting such Purchaser's right to
      sell  the  Securities  or  Warrant  Shares  pursuant  to the  Registration
      Statement or otherwise in  compliance  with  applicable  federal and state
      securities laws). Such Purchaser is acquiring the Securities hereunder and
      any Warrant Shares in the ordinary course of its business.  Such Purchaser
      does not have any agreement or understanding, directly or indirectly, with
      any Person to distribute any of the Securities or any Warrant Shares.

            (c)  Purchaser  Status.  At the time such  Purchaser was offered the
      Securities, it was, and at the date hereof it is, an "accredited investor"
      as defined in Rule 501(a) under the Securities  Act. Such Purchaser is not
      required  to be  registered  as a  broker-dealer  under  Section 15 of the
      Exchange Act.

            (d) Experience of Such Purchaser.  Such  Purchaser,  either alone or
      together with its representatives,  has such knowledge, sophistication and
      experience  in  business  and  financial  matters  so as to be  capable of
      evaluating  the  merits  and risks of the  prospective  investment  in the
      Securities,  and has so evaluated the merits and risks of such investment.
      Such  Purchaser is able to bear the economic  risk of an investment in the
      Securities  and, at the present time, is able to afford a complete loss of
      such investment.

                                       15
<PAGE>

            (e) General  Solicitation.  Such  Purchaser  is not  purchasing  the
      Securities  as a result  of any  advertisement,  article,  notice or other
      communication   regarding  the  Securities  published  in  any  newspaper,
      magazine  or  similar  media  or  broadcast  over  television  or radio or
      presented  at any  seminar or any other  general  solicitation  or general
      advertisement.  (f) Securities  Filings.  The Purchasers  acknowledge that
      they have been  provided  with copies of and have  reviewed the  following
      documents,  which  have  been  filed by the  Company  with the  Commission
      pursuant to the Exchange Act (collectively,  the "Disclosure Reports" and,
      and,  together  with this  Agreement and the  Disclosure  Schedule to this
      Agreement, the "Disclosure Materials"): (i) the Company's Annual Report on
      Form 10-K,  as amended,  for the fiscal year ended May 31, 2004;  (ii) the
      Company's  Quarterly Reports on Form 10-Q for the quarter ended August 31,
      2004 and (iii) the  Company's  proxy  statement  with  respect to its 2004
      annual meeting.

            (g)  Offering   Exemption.   The  Purchasers   understand  that  the
      Securities are being offered and sold in reliance upon specific exemptions
      from the  registration  requirements  of United  States  federal and state
      securities  laws  and that the  Company  is  relying  upon the  truth  and
      accuracy of the representations,  warranties, agreements, acknowledgements
      and   understandings   set  forth  herein  in  order  to   determine   the
      applicability  of such exemptions and the suitability of the Purchasers to
      acquire the Securities.

            (h) Access to Information. The Purchasers acknowledge that they have
      reviewed  the  Disclosure   Materials  and  have  been  afforded  (i)  the
      opportunity to ask such questions as they have deemed necessary of, and to
      receive answers from,  representatives of the Company concerning the terms
      and  conditions of the offering of the Securities and the merits and risks
      of  investing  in the  Securities;  (ii) access to  information  about the
      Company and the  Subsidiaries and their  respective  financial  condition,
      results of  operations,  business,  properties,  management  and prospects
      sufficient  to  enable  it to  evaluate  its  investment;  and  (iii)  the
      opportunity  to  obtain  such  additional  information  that  the  Company
      possesses or can acquire  without  unreasonable  effort or expense that is
      necessary  to make an informed  investment  decision  with  respect to the
      investment.

      The Company  acknowledges  and agrees that each Purchaser does not make or
has not made any  representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 3.2.

                                  ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

      4.1 Transfer Restrictions.

            (a) The Securities and any Warrant Shares may only be disposed of in
      compliance with state and federal  securities laws. In connection with any
      transfer of  Securities  and  Warrant  Shares,  other than  pursuant to an
      effective  registration  statement,  pursuant to Rule 144  (subject to the
      Company's receipt of routine backup  documentation  from the Purchaser) or
      to the Company,  the Company may require the transferor thereof to provide
      to the  Company  an  opinion of counsel  selected  by the  transferor  and
      reasonably  acceptable  to the  Company,  the form and  substance of which
      opinion shall be  reasonably  satisfactory  to the Company,  to the effect
      that such  transfer  does not  require  registration  of such  transferred
      Securities or Warrant Shares under the  Securities  Act. As a condition of
      transfer,  any such  transferee  shall agree in writing to be bound by the
      terms of this  Agreement  and shall have the rights of a  Purchaser  under
      this Agreement and the Registration Rights Agreement.

                                       16
<PAGE>

            (b) The Purchasers  agree to the imprinting,  so long as is required
      by this Section  4.1(b),  of a legend on any  certificates  evidencing the
      Shares in the following form:

            THE  SECURITIES   EVIDENCED  BY  THIS   CERTIFICATE  HAVE  NOT  BEEN
            REGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  HAVE BEEN TAKEN FOR
            INVESTMENT  AND MAY  NOT BE  SOLD  OR  OFFERED  FOR  SALE  UNLESS  A
            REGISTRATION  STATEMENT UNDER THE FEDERAL SECURITIES ACT OF 1933, AS
            AMENDED,  OR UNDER THE SECURITIES LAWS OF ANY APPLICABLE  STATE WITH
            RESPECT TO THESE SHARES,  IS THEN IN EFFECT OR AN EXEMPTION FROM THE
            REGISTRATION  REQUIREMENTS  OF  THE  ACT  OR  THE  APPLICABLE  STATE
            SECURITIES LAWS ARE THEN IN FACT APPLICABLE TO THE OFFER OR SALE.

            The Company  acknowledges  and agrees that a Purchaser may from time
      to time pledge pursuant to a bona fide margin  agreement with a registered
      broker-dealer  or  grant  a  security  interest  in  some  or  all  of the
      Securities  and any Warrant Shares to a financial  institution  that is an
      "accredited  investor" as defined in Rule 501(a) under the  Securities Act
      and who agrees to be bound by the  provisions  of this  Agreement  and the
      Registration  Rights  Agreement  and, if required  under the terms of such
      arrangement,   such   Purchaser  may  transfer  such  pledged  or  secured
      Securities or Warrant  Shares to the pledgees or secured  parties.  Such a
      pledge or transfer  would not be subject to approval of the Company and no
      legal  opinion of legal  counsel of the pledgee,  secured party or pledgor
      shall be required in connection with the pledge.  Further, no notice shall
      be required of such pledge. At the appropriate  Purchaser's  expense,  the
      Company  will  execute  and deliver  such  reasonable  documentation  as a
      pledgee or secured party of Securities  or Warrant  Shares may  reasonably
      request in  connection  with a pledge or  transfer  of the  Securities  or
      Warrant Shares, including, if the Securities or Warrant Shares are subject
      to  registration  pursuant  to  the  Registration  Rights  Agreement,  the
      preparation and filing of any required  prospectus  supplement  under Rule
      424(b)(3)  under the Securities Act or other  applicable  provision of the
      Securities  Act to  appropriately  amend the list of selling  stockholders
      thereunder.

            (c) Certificates  evidencing the Shares shall not contain any legend
      (including  the  legend  set  forth  in  Section  4.1(b)),   (i)  while  a
      registration statement (including the Registration Statement) covering the
      resale of such  Shares is  effective  under the  Securities  Act,  or (ii)
      following  any sale of such Shares  pursuant to Rule 144, or (iii) if such
      Shares are  eligible  for sale under Rule  144(k)  (subject  to receipt of
      routine backup documentation  demonstrating eligibility for such rule), or
      (iv) if such legend is not required under  applicable  requirements of the
      Securities  Act (including  judicial  interpretations  and  pronouncements
      issued  by the  Staff of the  Commission).  The  Company  shall  cause its
      counsel to issue a legal opinion to the Company's  transfer agent promptly
      after the Effective  Date if required by the Company's  transfer  agent to
      effect the  removal of the  legend  hereunder.  The  Company  agrees  that
      following the  Effective  Date or at such time as such legend is no longer
      required  under this Section  4.1(c),  it will, no later than five Trading
      Days following the delivery by a Purchaser to the Company or the Company's
      transfer  agent  of  a  certificate  representing  Shares  issued  with  a
      restrictive  legend (such date,  the "Legend  Removal  Date"),  deliver or
      cause to be delivered to such  Purchaser a certificate  representing  such
      Shares  that is free  from  all  restrictive  and  other  legends.  Unless
      required  under  applicable  law, the Company may not make any notation on
      its records or give instructions to any transfer agent of the Company that
      enlarge the restrictions on transfer set forth in this Section.

                                       17
<PAGE>

            (d) In addition to such Purchaser's  other available  remedies,  the
      Company shall pay to a Purchaser,  in cash, as partial  liquidated damages
      and not as a penalty,  for each $1,000 of Shares (based on the VWAP of the
      Common  Stock on the date  such  Shares  are  submitted  to the  Company's
      transfer agent) subject to Section 4.1(c),  $1 per Trading Day (increasing
      to $2 per Trading Day five (5) Trading  Days after such damages have begun
      to accrue) for each  Trading Day after the Legend  Removal Date until such
      certificate  is  delivered.  Nothing  herein shall limit such  Purchaser's
      right to pursue  actual  damages  for the  Company's  failure  to  deliver
      certificates  representing  any  Shares  as  required  by the  Transaction
      Documents,  and such Purchaser shall have the right to pursue all remedies
      available  to it at law or in  equity  including,  without  limitation,  a
      decree of specific performance and/or injunctive relief.

            (e)  Each  Purchaser,  severally  and not  jointly  with  the  other
      Purchasers,  agrees  that  the  removal  of the  restrictive  legend  from
      certificates  representing  Shares  as set  forth in this  Section  4.1 is
      predicated  upon the Company's  reliance that the Purchaser  will sell any
      Shares pursuant to either the registration  requirements of the Securities
      Act,  including any applicable  prospectus  delivery  requirements,  or an
      exemption therefrom, which Purchaser hereby covenants to do.

            (f) Until the date that each  Purchaser  holds  less than 20% of the
      Shares initially purchased hereunder by such Purchaser,  the Company shall
      not undertake a reverse or forward stock split or  reclassification of the
      Common Stock without the prior written consent of the Purchasers holding a
      majority in interest of the Shares,  except in connection  with seeking to
      satisfy listing and maintenance requirements of the Trading Market.

      4.2 Furnishing of Information. As long as any Purchaser owns Securities or
Warrant Shares,  the Company  covenants to timely file (or obtain  extensions in
respect  thereof  and file  within the  applicable  grace  period)  all  reports
required  to be filed by the  Company  after  the date  hereof  pursuant  to the
Exchange Act. As long as any  Purchaser  owns  Securities or Warrant  Shares and
until the  Purchaser  is  eligible  to use Rule  144(k),  if the  Company is not
required to file  reports  pursuant  to the  Exchange  Act, it will  prepare and
furnish to the  Purchasers and make publicly  available in accordance  with Rule
144(c) such information as is required for the Purchasers to sell the Securities
or Warrant  Shares under Rule 144. The Company  further  covenants  that it will
take such  further  action as any holder of  Securities  or  Warrant  Shares may
reasonably request,  all to the extent required from time to time to enable such
Person to sell such Securities or Warrant Shares without  registration under the
Securities Act within the limitation of the exemptions provided by Rule 144.

                                       18
<PAGE>

      4.3  Integration.  The Company  shall not sell,  offer for sale or solicit
offers to buy or  otherwise  negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the  Securities  in a manner that would  require the  registration  under the
Securities  Act of the sale of the Securities to the Purchasers or that would be
integrated  with the offer or sale of the  Securities  for purposes of the rules
and  regulations  of any Trading  Market such that it would require  shareholder
approval  prior to the  closing of such  other  transaction  unless  shareholder
approval is obtained before the closing of such subsequent transaction.

      4.4 Securities Laws Disclosure; Publicity. The Company shall, by 8:30 a.m.
Eastern time on the Trading Day following the date hereof, issue a press release
or file a Current Report on Form 8-K, in each case reasonably acceptable to each
Purchaser disclosing the material terms of the transactions contemplated hereby.
The  Company and each  Purchaser  shall  consult  with each other in issuing any
other press releases with respect to the transactions  contemplated  hereby, and
neither  the  Company nor any  Purchaser  shall issue any such press  release or
otherwise  make any such  public  statement  without  the prior  consent  of the
Company,  with  respect to any press  release of any  Purchaser,  or without the
prior  consent  of each  Purchaser,  with  respect  to any press  release of the
Company,  which  consent  shall not  unreasonably  be  withheld,  except if such
disclosure is required by law, in which case the disclosing party shall promptly
provide  the  other  party  with  prior  notice  of  such  public  statement  or
communication.  Notwithstanding  the  foregoing,  the Company shall not publicly
disclose the name of any Purchaser,  or include the name of any Purchaser in any
filing with the Commission or any regulatory  agency or Trading Market,  without
the prior written consent of such  Purchaser,  except (i) as required by federal
securities law in connection with the registration statement contemplated by the
Registration Rights Agreement and (ii) to the extent such disclosure is required
by other law or Trading  Market  regulations,  in which case the  Company  shall
provide the  Purchasers  with prior notice of such  disclosure  permitted  under
subclause (i) or (ii).

      4.5  Shareholders  Rights  Plan.  No claim will be made or enforced by the
Company or, to the knowledge of the Company, any other Person that any Purchaser
is an "Acquiring  Person" under any shareholders  rights plan or similar plan or
arrangement in effect or hereafter adopted by the Company, or that any Purchaser
could be deemed to trigger the  provisions of any such plan or  arrangement,  by
virtue of receiving Securities or Warrant Shares under the Transaction Documents
or under any other agreement between the Company and the Purchasers. The Company
shall conduct its business in a manner so that it will not become subject to the
Investment Company Act.

      4.6 Non-Public Information.  The Company covenants and agrees that neither
it nor any other Person  acting on its behalf will provide any  Purchaser or its
agents or counsel with any  information  that the Company  believes  constitutes
material non-public information,  unless prior thereto such Purchaser shall have
executed  a written  agreement  regarding  the  confidentiality  and use of such
information.  The Company  understands and confirms that each Purchaser shall be
relying on the foregoing representations in effecting transactions in securities
of the Company.

                                       19
<PAGE>

      4.7 Use of Proceeds.  Except as set forth on Schedule 4.7 attached hereto,
the Company shall use the net proceeds from the sale of the Securities hereunder
and  the  exercise  of  Warrants  for  working  capital  purposes  and  for  the
satisfaction  of any portion of the Company's debt (including but not limited to
the payment of trade payables in the ordinary  course of the Company's  business
and prior practices).

      4.8  Indemnification  of  Purchasers.  Subject to the  provisions  of this
Section  4.8,  the Company  will  indemnify  and hold the  Purchasers  and their
directors,  officers,  shareholders,  partners,  employees and agents  (each,  a
"Purchaser Party") harmless from any and all losses,  liabilities,  obligations,
claims,  contingencies,  damages,  costs and expenses,  including all judgments,
amounts paid in  settlements,  court costs and  reasonable  attorneys'  fees and
costs of  investigation  that any such Purchaser  Party may suffer or incur as a
result  of or  relating  to (a)  any  breach  of  any  of  the  representations,
warranties,  covenants or agreements made by the Company in this Agreement or in
the  other  Transaction  Documents  or  (b)  any  action  instituted  against  a
Purchaser, or any of them or their respective Affiliates,  by any stockholder of
the Company who is not an  Affiliate of such  Purchaser,  with respect to any of
the transactions  contemplated by the Transaction  Documents (unless such action
is based  upon a  breach  of such  Purchaser's  representations,  warranties  or
covenants  under the Transaction  Documents or any agreements or  understandings
such  Purchaser  may have with any such  stockholder  or any  violations  by the
Purchaser of state or federal  securities  laws or any conduct by such Purchaser
which constitutes fraud,  gross negligence,  willful misconduct or malfeasance).
If any action shall be brought  against any Purchaser  Party in respect of which
indemnity may be sought pursuant to this  Agreement,  such Purchaser Party shall
promptly notify the Company in writing,  and the Company shall have the right to
assume the defense thereof with counsel of its own choosing. Any Purchaser Party
shall  have  the  right to  employ  separate  counsel  in any  such  action  and
participate  in the defense  thereof,  but the fees and expenses of such counsel
shall be at the expense of such  Purchaser  Party  except to the extent that (i)
the  employment  thereof  has been  specifically  authorized  by the  Company in
writing, (ii) the Company has failed after a reasonable period of time to assume
such  defense and to employ  counsel or (iii) in such action there is a material
conflict  on any  material  issue  between  the  position of the Company and the
position  of such  Purchaser  Party.  The  Company  will  not be  liable  to any
Purchaser Party under this Agreement (i) for any settlement by a Purchaser Party
effected  without  the  Company's  prior  written  consent,  which  shall not be
unreasonably  withheld or delayed; or (ii) to the extent, but only to the extent
that a loss, claim, damage or liability is attributable to any Purchaser Party's
breach of any of the representations,  warranties,  covenants or agreements made
by the Purchasers in this Agreement or in the other Transaction Documents.

      4.9  Reservation of Common Stock.  As of the date hereof,  the Company has
reserved  and the Company  shall  continue to reserve and keep  available at all
times, free of preemptive  rights, a sufficient number of shares of Common Stock
for the  purpose of  enabling  the  Company  to issue  Shares  pursuant  to this
Agreement.

      4.10  Listing  of Common  Stock.  The  Company  hereby  agrees to use best
efforts to maintain the listing of the Common Stock on the Trading  Market,  and
as soon as reasonably  practicable following the Closing (but not later than the
earlier of the Effective Date and the first  anniversary of the Closing Date) to
list all of the Shares on the Trading Market. The Company further agrees, if the
Company applies to have the Common Stock traded on any other Trading Market,  it
will include in such application all of the Shares  (including only those Shares
into which the  Purchasers  have  exercised  their  Warrants at the time of such
application),  and will take such  other  action  as is  necessary  to cause the
Shares to be listed on such other  Trading  Market as promptly as possible.  The
Company  will take all action  reasonably  necessary to continue the listing and
trading of its Common Stock on a Trading  Market and will comply in all material
respects with the Company's  reporting,  filing and other  obligations under the
bylaws or rules of the Trading Market.

                                       20
<PAGE>

      4.11 Equal Treatment of Purchasers.  No consideration  shall be offered or
paid to any  person  to amend or  consent  to a waiver  or  modification  of any
provision of any of the Transaction  Documents unless the same  consideration is
also  offered  to  all  of  the  parties  to  the  Transaction  Documents.   For
clarification  purposes,  this provision constitutes a separate right granted to
each Purchaser by the Company and negotiated  separately by each Purchaser,  and
is intended to treat for the Company the  Purchasers as a class and shall not in
any way be  construed  as the  Purchasers  acting in  concert or as a group with
respect to the purchase,  disposition  or voting of Securities or Warrant Shares
or otherwise.

      4.12 Delivery of Securities After Closing.  The Company shall deliver,  or
cause to be delivered,  the respective Securities purchased by each Purchaser to
such Purchaser within 3 Trading Days of the Closing Date.

                                   ARTICLE V.
                                  MISCELLANEOUS

      5.1 Fees and Expenses.  Except as otherwise  set forth in this  Agreement,
each party shall pay the fees and expenses of its advisers, counsel, accountants
and  other  experts,  if any,  and all other  expenses  incurred  by such  party
incident to the negotiation, preparation, execution, delivery and performance of
this  Agreement.  The  Company  shall pay all stamp and other  taxes and  duties
levied in connection with the sale of the Securities.

      5.2  Entire  Agreement.  The  Transaction  Documents,  together  with  the
exhibits and schedules thereto,  contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

      5.3 Notices.  Any and all notices or other  communications  or  deliveries
required or permitted to be provided  hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of  transmission,  if
such notice or  communication is delivered via facsimile at the facsimile number
set forth on the signature  pages  attached  hereto prior to 6:30 p.m. (New York
City  time)  on a  Trading  Day,  (b) the next  Trading  Day  after  the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading
Day, (c) the second  Trading Day following the date of mailing,  if sent by U.S.
nationally  recognized  overnight courier service, or (d) upon actual receipt by
the party to whom such  notice is  required  to be given.  The  address for such
notices and communications shall be as set forth on the signature pages attached
hereto.

      5.3 Amendments;  Waivers.  No provision of this Agreement may be waived or
amended except in a written instrument  signed, in the case of an amendment,  by
the Company and each Purchaser or, in the case of a waiver, by the party against
whom  enforcement  of any such waiver is sought.  No waiver of any default  with
respect to any provision,  condition or  requirement of this Agreement  shall be
deemed to be a  continuing  waiver in the  future or a waiver of any  subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise  any right  hereunder in
any manner impair the exercise of any such right.

                                       21
<PAGE>

      5.4  Construction.  The headings herein are for  convenience  only, do not
constitute a part of this  Agreement  and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent,  and no
rules of strict construction will be applied against any party.

      5.5 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their  successors and permitted  assigns.  The
Company may not assign this  Agreement  or any rights or  obligations  hereunder
without the prior written  consent of each  Purchaser.  Any Purchaser may assign
any or all of its  rights  under  this  Agreement  to any  Person  to whom  such
Purchaser  assigns or transfers any Securities or Warrant Shares,  provided such
transferee  agrees in  writing  to be bound,  with  respect  to the  transferred
Securities  or  Warrant  Share , by the  provisions  hereof  that  apply  to the
Purchasers.

      5.6 No  Third-Party  Beneficiaries.  This  Agreement  is intended  for the
benefit of the parties  hereto and their  respective  successors  and  permitted
assigns and is not for the benefit of, nor may any provision  hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.8.

      5.7 Governing Law. All questions  concerning the  construction,  validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance  with the internal laws of the State of
New York,  without  regard to the  principles of conflicts of law thereof.  Each
party hereby irrevocably submits to the exclusive  jurisdiction of the state and
federal  courts  sitting in the City of New York,  borough of Manhattan  for the
adjudication  of any dispute  hereunder  or in  connection  herewith or with any
transaction  contemplated  hereby or discussed herein (including with respect to
the enforcement of any of the  Transaction  Documents),  and hereby  irrevocably
waives,  and agrees not to assert in any suit,  action or proceeding,  any claim
that it is not personally  subject to the  jurisdiction of any such court,  that
such suit,  action or  proceeding  is  improper or  inconvenient  venue for such
proceeding. Each party hereby irrevocably waives personal service of process and
consents  to process  being  served in any such suit,  action or  proceeding  by
mailing a copy thereof via  registered or certified  mail or overnight  delivery
(with  evidence of  delivery) to such party at the address in effect for notices
to it under this  Agreement and agrees that such service shall  constitute  good
and sufficient  service of process and notice thereof.  Nothing contained herein
shall be  deemed to limit in any way any right to serve  process  in any  manner
permitted  by law. The parties  hereby  waive all rights to a trial by jury.  If
either party shall commence an action or proceeding to enforce any provisions of
the  Transaction  Documents,  then  the  prevailing  party  in  such  action  or
proceeding  shall be reimbursed by the other party for its  attorneys'  fees and
other  costs and  expenses  incurred  with the  investigation,  preparation  and
prosecution of such action or proceeding.

                                       22
<PAGE>

      5.8 Survival.  The representations and warranties herein shall survive for
three years following the Closing and delivery of the Securities.

      5.9 Execution. This Agreement may be executed in two or more counterparts,
all of which when taken  together shall be considered one and the same agreement
and shall become effective when  counterparts have been signed by each party and
delivered to the other  party,  it being  understood  that both parties need not
sign the same  counterpart.  In the event that any  signature  is  delivered  by
facsimile  transmission,  such  signature  shall  create  a  valid  and  binding
obligation  of the  party  executing  (or on  whose  behalf  such  signature  is
executed)  with the same force and effect as if such  facsimile  signature  page
were an original thereof.

      5.10  Severability.  If any  provision  of  this  Agreement  is held to be
invalid or unenforceable in any respect,  the validity and enforceability of the
remaining  terms  and  provisions  of  this  Agreement  shall  not in any way be
affected or impaired  thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor,  and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

      5.11  Rescission and  Withdrawal  Right.  Notwithstanding  anything to the
contrary  contained in (and  without  limiting  any similar  provisions  of) the
Transaction  Documents,  whenever  any  Purchaser  exercises a right,  election,
demand or option  under a  Transaction  Document and the Company does not timely
perform its related  obligations within the periods therein provided,  then such
Purchaser  may rescind or  withdraw,  in its sole  discretion  from time to time
prior to the  Company's  performance  upon written  notice to the  Company,  any
relevant notice, demand or election in whole or in part without prejudice to its
future actions and rights.

      5.12   Replacement  of  Securities.   If  any  certificate  or  instrument
evidencing any Securities is mutilated,  lost, stolen or destroyed,  the Company
shall  issue or cause to be issued in  exchange  and  substitution  for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument,  but only upon receipt of evidence reasonably satisfactory to the
Company  of such  loss,  theft  or  destruction  and  customary  and  reasonable
indemnity,  if requested.  The  applicants  for a new  certificate or instrument
under  such  circumstances  shall  also  pay any  reasonable  third-party  costs
associated with the issuance of such replacement Securities.

      5.13  Remedies.  In  addition to being  entitled  to  exercise  all rights
provided herein or granted by law,  including  recovery of damages,  each of the
Purchasers  and the Company will be entitled to specific  performance  under the
Transaction  Documents.  The  parties  agree that  monetary  damages  may not be
adequate  compensation  for  any  loss  incurred  by  reason  of any  breach  of
obligations  described in the  foregoing  sentence and hereby agrees to waive in
any action for specific  performance  of any such  obligation the defense that a
remedy at law would be adequate.

      5.14 Payment Set Aside.  To the extent that the Company makes a payment or
payments to any Purchaser  pursuant to any  Transaction  Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such  enforcement  or exercise or any part thereof are  subsequently
invalidated,  declared to be fraudulent or  preferential,  set aside,  recovered
from, disgorged by or are required to be refunded,  repaid or otherwise restored
to the  Company,  a  trustee,  receiver  or  any  other  person  under  any  law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable  cause of action),  then to the extent of any such  restoration
the  obligation  or part thereof  originally  intended to be satisfied  shall be
revived and  continued  in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

                                       23
<PAGE>

      5.15  Independent  Nature  of  Purchasers'  Obligations  and  Rights.  The
obligations of each Purchaser under any Transaction Document are several and not
joint with the  obligations of any other  Purchaser,  and no Purchaser  shall be
responsible  in any way for the  performance  of the  obligations  of any  other
Purchaser under any Transaction  Document.  Nothing  contained  herein or in any
Transaction  Document,  and no action taken by any Purchaser  pursuant  thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint  venture  or any other kind of entity,  or create a  presumption  that the
Purchasers  are in any way acting in concert or as a group with  respect to such
obligations or the transactions  contemplated by the Transaction Documents. Each
Purchaser  shall be  entitled to  independently  protect and enforce its rights,
including without limitation, the rights arising out of this Agreement or out of
the other  Transaction  Documents,  and it shall not be necessary  for any other
Purchaser  to be  joined  as an  additional  party  in any  proceeding  for such
purpose.  Each Purchaser has been  represented by its own separate legal counsel
in their review and  negotiation of the Transaction  Documents.  The Company has
elected to provide all Purchasers with the same terms and Transaction  Documents
for the  convenience of the Company and not because it was required or requested
to do so by the Purchasers.

      5.16  Liquidated  Damages.  The Company's  obligations  to pay any partial
liquidated  damages or other amounts owing under the Transaction  Documents is a
continuing  obligation of the Company and shall not  terminate  until all unpaid
partial liquidated damages and other amounts have been paid  notwithstanding the
fact that the instrument or security  pursuant to which such partial  liquidated
damages or other amounts are due and payable shall have been canceled.

                            (Signature Page Follows)

                                       24
<PAGE>

      IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this  Securities
Purchase   Agreement  to  be  duly  executed  by  their  respective   authorized
signatories as of the date first indicated above.

WORKSTREAM INC.                                       Address for Notice:
                                                      -------------------

By: /s/ Michael Mullarkey                             2600 Lake Lucien Drive
   ----------------------                             Suite 410
     Name:  Michael Mullarkey                         Maitland, Florida 32751
     Title: Chief Executive Officer

With a copy to (which shall not constitute notice):

Perley-Robertson, Hill and McDougall LLP
90 Sparks Street, 4th Floor
Ottawa, Ontario
K1P 1E2
Attention: Michael Gerrior
Facsimile:  (613) 238-8775

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                     SIGNATURE PAGES FOR PURCHASERS FOLLOW]

                                       25
<PAGE>

          [PURCHASER SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]

      IN WITNESS WHEREOF,  the undersigned have caused this Securities  Purchase
Agreement to be duly executed by their respective  authorized  signatories as of
the date first indicated above.

Name of Investing Entity: Rubicon Master Fund
                          ------------------------------------------------------

Signature  of  Authorized  Signatory  of
Investing  Entity:                            /s/ Jeffrey  Eugene Brummette
                                              ----------------------------------

Name of Authorized Signatory:  Jeffrey Eugene Brummette
                              --------------------------------------------------

Title of Authorized Signatory:  Partner
                              --------------------------------------------------

Email Address of Authorized Entity:
                                   ---------------------------------------------

Address for Notice of Investing Entity:

Address for Delivery of Securities for Investing Entity (if not same as above):

Subscription Amount: $7,500,000

Securities:  2,500,000 shares of Common Stock of Workstream Inc. and warrants to
        purchase 1,250,000 shares of Common Stock at a price of $3.50

EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

                                       26
<PAGE>

          [PURCHASER SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]

      IN WITNESS WHEREOF,  the undersigned have caused this Securities  Purchase
Agreement to be duly executed by their respective  authorized  signatories as of
the date first indicated above.

Name of Investing Entity:  Union Spring Fund Ltd.
                          ------------------------------------------------------

Signature of Authorized Signatory of Investing Entity: /s/ Steven R. Crane
                                                       -------------------------

Name of Authorized Signatory:  Steven R. Crane
                              --------------------------------------------------

Title of Authorized Signatory:  Director
                               -------------------------------------------------

Email Address of Authorized Entity:
                                   ---------------------------------------------

Address for Notice of Investing Entity:

Address for Delivery of Securities for Investing Entity (if not same as above):

Subscription Amount: $2,500,000
Securities:
EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

                                       27
<PAGE>

          [PURCHASER SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]

         IN WITNESS WHEREOF, the undersigned have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

Name of Investing Entity: Sunrise Equity Partners LP
                          ------------------------------------------------------

Signature of Authorized Signatory of Investing Entity: /s/ Marilyn Adler
                                                       -------------------------

Name of Authorized Signatory: Marilyn Adler
                             ---------------------------------------------------

Title of Authorized Signatory: Manager of Level Counter, LLC, the general
                               partner of Sunrise Equity Parnters, LP
--------------------------------------------------------------------------------

Email Address of Authorized Entity:
                                   ---------------------------------------------

Address for Notice of Investing Entity:

Address for Delivery of Securities for Investing Entity (if not same as above):

Subscription Amount: $2,000,000
Securities: common stock and warrants

EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]
<PAGE>

          [PURCHASER SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]

         IN WITNESS WHEREOF, the undersigned have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

Name of Investing Entity: Sunrise Foundation Trust
                          ------------------------------------------------------

Signature of Authorized Signatory of Investing Entity: /s/ Nathan A. Low
                                                       -------------------------

Name of Authorized Signatory: Nathan A. Low
                             ---------------------------------------------------

Title of Authorized Signatory: -------------------------------------------------

Email Address of Authorized Entity:
                                   ---------------------------------------------

Address for Notice of Investing Entity:

Address for Delivery of Securities for Investing Entity (if not same as above):

Subscription Amount: $1,000,002
Securities: 333,334 shares of Common Stock of Workstream, Inc. and warrants
to purchase 166,667 shares of Common Stock at a price of $3.50

EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]
<PAGE>

          [PURCHASER SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]

         IN WITNESS WHEREOF, the undersigned have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

Name of Investing Entity: Nathan A. Low
                          ------------------------------------------------------

Signature of Authorized Signatory of Investing Entity: /s/ Nathan A. Low
                                                       -------------------------

Name of Authorized Signatory: Nathan A. Low
                             ---------------------------------------------------

Title of Authorized Signatory: -------------------------------------------------

Email Address of Authorized Entity:
                                   ---------------------------------------------

Address for Notice of Investing Entity:

Address for Delivery of Securities for Investing Entity (if not same as above):

Subscription Amount: $1,000,002
Securities: 333,334 shares of Common Stock of Workstream, Inc. and warrants
to purchase 166,667 shares of Common Stock at a price of $3.50

EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]
<PAGE>

                                       28EXHIBIT 10.1

--------------------------------------------------------------------------------

                             NATIONAL LAMPOON, INC.

                  SERIES C PREFERRED STOCK AND WARRANT PURCHASE
                                   AGREEMENT

                      (Dated as of ____________ ____, 2004)

--------------------------------------------------------------------------------
<PAGE>

                                TABLE OF CONTENTS

ARTICLE 1. AUTHORIZATION AND SALE..............................................1

   Section 1.1 Authorization of the Series C Preferred and the Warrants........1
   Section 1.2 Purchase and Sale of the Series C Preferred.....................1
   Section 1.3 Warrants........................................................1

ARTICLE 2. CLOSING DELIVERIES AND ACTIONS......................................2

   Section 2.1 Company Deliveries..............................................2
   Section 2.2 Purchase Price Payment..........................................2
   Section 2.3 Concurrent Actions..............................................2

ARTICLE 3. COVENANTS...........................................................3

   Section 3.1 Current Public Information......................................3
   Section 3.2 Compliance with Agreements......................................3
   Section 3.3 Reservation of Common Stock.....................................3
   Section 3.4 Quotation on the OTC Bulletin Board.............................3

ARTICLE 4. TRANSFER OF RESTRICTED SECURITIES...................................3

   Section 4.1 Opinion Delivery................................................3
   Section 4.2 Legend Removal..................................................4

ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................4

   Section 5.1 Organization....................................................4
   Section 5.2 Corporate Power; Authority......................................4
   Section 5.3 Series C Preferred..............................................5
   Section 5.4 Financial Information...........................................5
   Section 5.5 Absence of Certain Changes or Events............................5
   Section 5.6 Compliance......................................................5
   Section 5.7 No Litigation...................................................5
   Section 5.8 No Consents.....................................................5
   Section 5.9 Non-Contravention...............................................5
   Section 5.10 Capitalization.................................................6
   Section 5.11 Registration Rights Previously Granted.........................6
   Section 5.12 Intellectual Property..........................................6
   Section 5.13 Disclosure.....................................................7

ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF PURCHASER.........................7

   Section 6.1 Legend..........................................................7
   Section 6.2 Authority Relative to Agreement.................................7
   Section 6.3 Accredited Investor Status......................................7
   Section 6.4 Projections.....................................................8
   Section 6.5 Securities......................................................8
   Section 6.6 Restrictive Legends.............................................8
<PAGE>

ARTICLE 7. MISCELLANEOUS.......................................................9

   Section 7.1 Consent to Amendments...........................................9
   Section 7.2 Survival of Representations and Warranties......................9
   Section 7.3 Successors and Assigns..........................................9
   Section 7.4 Severability....................................................9
   Section 7.5 Counterparts....................................................9
   Section 7.6 Descriptive Headings; Interpretation............................9
   Section 7.7 Governing Law..................................................10
   Section 7.8 Notices........................................................10
   Section 7.9 Understanding Among the Purchasers.............................10
   Section 7.10 No Strict Construction........................................10
   Section 7.11 Consent to Series B Changes...................................11
   Section 7.12 Integration...................................................11

ARTICLE 8. DEFINITIONS........................................................11

List of Schedules

List of Exhibits

                                       ii
<PAGE>

                             NATIONAL LAMPOON, INC.

                 PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT

      THIS  PREFERRED  STOCK  AND  WARRANT  PURCHASE  AGREEMENT  is  made  as of
___________ ___, 2004,  between NATIONAL LAMPOON,  INC., a Delaware  corporation
(the "COMPANY"), and  ______________________________________  (the "PURCHASER").
Except as otherwise indicated herein,  capitalized terms used herein are defined
in ARTICLE 8.

                                   AGREEMENTS

      In  consideration  of the mutual covenants herein contained and other good
and  valuable  consideration,  the receipt and  sufficiency  of which are hereby
acknowledged, the parties agree as follows:

ARTICLE 1. AUTHORIZATION AND SALE

      SECTION 1.1 AUTHORIZATION OF THE SERIES C PREFERRED AND THE WARRANTS.  The
Company  has  authorized  the  issuance  and sale to the  Purchasers,  and other
purchasers,  an aggregate of Two Hundred Fifty Thousand  (250,000) shares of its
Series C Convertible Preferred Stock, par value $0.0001 per share (the "SERIES C
PREFERRED"),  having the rights and  preferences set forth in EXHIBIT A attached
hereto,  and the  Warrants  referred  to in SECTION  1.3  hereof.  Each Series C
Preferred is  convertible  into ten shares of the Company's  Common  Stock,  par
value $0.0001 per share (the "COMMON STOCK").

      SECTION 1.2 PURCHASE  AND SALE OF THE SERIES C  PREFERRED.  Subject to the
terms  and  conditions  hereof,  and  in  reliance  upon  the   representations,
warranties  and  agreements  contained  herein,  the Company does hereby sell to
Purchaser and Purchaser does hereby  purchase from the Company,  ________ shares
of Series C  Preferred  and a Warrant  (as  defined  in  SECTION  1.3  below) to
purchase _____ shares of Common Stock at a price per share of Series C Preferred
in the amount of $40.00 per share or the average share price of Company's common
stock in the  public  market  during the 30 day  period  prior to this  purchase
multiplied by ten, whichever is lower, but in no case shall the price per Series
C Preferred share be less than $35.50 (the "PURCHASE PRICE").

      SECTION 1.3 WARRANTS.  Subject to the terms and conditions  hereof, and in
reliance upon the  representations,  warranties and agreements contained herein,
the  Company  is  issuing  to each  Purchaser  of Series C  Preferred  a warrant
substantially  in the form of EXHIBIT B hereto (the "WARRANT") for no additional
consideration.  The holder of the  Warrant  will have the right to acquire  five
shares of Common Stock for each share of Series C Preferred  purchased  pursuant
hereto.  The  initial  exercise  price for each share of Common  Stock under the
Warrant will be $4.00 per share or the average  share price or Company's  common
stock in the public  market  during the 30 day  period  prior to this  purchase,
whichever is lower, but in no case shall the price per share be less than $3.55.
The Warrant  will be  exercisable  at any time after the Closing and will expire
(unless  previously  exercised)  on the fourth  anniversary  of the Closing.  No
warrant shall be issued for less than whole shares.
<PAGE>

ARTICLE 2. CLOSING DELIVERIES AND ACTIONS

      SECTION  2.1  COMPANY  DELIVERIES.  The Series C  Preferred  offering  may
consist  of one or more  closings  and each  closing  may  occur at the time the
purchaser(s) agrees to purchase such Series C Preferred,  and the offering shall
have no minimum  enrollment.  At the Closing  (which is occurring on the date of
this Agreement) the Company has delivered to the Purchasers the following:

            (a) a certificate  to Purchaser  evidencing  the number of shares of
      Series C Preferred being purchased by such Purchaser hereunder;

            (b) a Warrant to Purchaser as described in Section 1.3;

            (c)  certified  copies  of  the  resolutions  duly  adopted  by  the
      Company's board of directors  authorizing (i) the execution,  delivery and
      performance of this Agreement,  the Series C Registration  Agreement,  and
      each  of the  other  agreements  to be  entered  into  by the  Company  as
      contemplated  hereby,  (ii) the designation of the Series C Preferred as a
      class of the Company's  preferred  stock with the rights,  privileges  and
      preferences  set  froth  in such  resolutions  and  the  filing  with  the
      Secretary  of  State  of  Delaware  of  a  Certificate   of   Designations
      establishing  the terms and the  relative  rights and  preferences  of the
      Series C  Preferred  in the  form  set  forth  in  EXHIBIT  A hereto  (the
      "CERTIFICATE OF DESIGNATIONS"),  (iii) the issuance and sale of the Series
      C Preferred  pursuant hereto,  (iv) the issuance of the Warrants,  (v) the
      reservation  for  issuance  upon  conversion  of the Series C Preferred or
      exercise of the Warrants of an aggregate of Three  Million  Seven  Hundred
      Fifty   Thousand   (3,750,000)   shares  of  Common  Stock  and  (vi)  the
      consummation of all other transactions and the taking of all other actions
      contemplated by this Agreement;

            (d) copies of the Company's  Certificate of Incorporation  certified
      by the Delaware Secretary of State,  including as an amendment thereto the
      Certificate of Designations,  and the Company's bylaws,  each as in effect
      at the Closing; and

            (e) an opinion of the Company's  counsel relating to the issuance of
      the Series C  Preferred  to the  Purchasers,  dated the date hereof and in
      mutually agreeable form.

      SECTION 2.2 PURCHASE PRICE PAYMENT.  At the Closing Purchaser shall pay to
the Company,  by wire transfer of immediately  available  funds to the Company's
account pursuant to wiring  instructions  provided by the Company,  the Purchase
Price for each share of Series C Preferred  being  purchased  by such  Purchaser
pursuant hereto. In the cases of Timothy Durham and Daniel Laikin, purchasers of
Series C Preferred,  the Purchase Price for their respective  shares of Series C
Preferred shall be paid by the  cancellation  of principal and accrued  interest
owed to them by the Company in the respective  amounts set forth on the Schedule
of Loans attached hereto with respect to each of them.

      SECTION  2.3  CONCURRENT  ACTIONS.   Concurrently  with  the  Closing  the
following actions are being taken:

            (a) the Company and the  Purchasers are entering into a registration
      rights  agreement in the form attached  hereto as Exhibit C (the "SERIES C
      REGISTRATION AGREEMENT");
<PAGE>

            (b) the Purchasers are entering into a voting  agreement in the form
      of Exhibit D attached hereto,  which voting agreement will be respected by
      the Company (the "SERIES C VOTING AGREEMENT");

            (c) various holders of the Company's Series B Convertible  Preferred
      Stock (the  "SERIES B  PREFERRED"),  who are all  parties to that  certain
      Voting  Agreement  among  them  dated May 17,  2002 (the  "SERIES B VOTING
      AGREEMENT"),  and including James P. Jimirro not only in his capacity as a
      holder of Series B Preferred  but also in his  individual  capacity  apart
      therefrom, in order to approve certain anticipated changes in the terms of
      the Series B Preferred and warrants  issued to the holders of the Series B
      Preferred and in order to consent to the issuance and sale of the Series C
      Preferred,  have executed and at, or prior to, the Closing are  delivering
      to the  Purchasers  copies of a Second  Amendment to Voting  Agreement and
      Consents  of Series B Holders  and  Others in the form of Exhibit E hereto
      (the "SECOND AMENDMENT");

            (d) the  holders of Series B  Preferred  who are not  parties to the
      Series B Voting  Agreement have executed and at the Closing are delivering
      to the Purchasers a copy of their written consent to the issuance and sale
      of the Series C Preferred and to certain other matters, all in the form of
      Exhibit F attached hereto (the "SERIES B CONSENT").

ARTICLE 3. COVENANTS

      SECTION 3.1 CURRENT  PUBLIC  INFORMATION.  From the date of this Agreement
until all applicable holding periods under Rule 144 of the Act have expired, the
Company shall maintain current public  information as required under Rule 144(c)
of the Securities Act.

      SECTION 3.2  COMPLIANCE  WITH  AGREEMENTS.  The Company  shall perform and
observe (i) all of its  obligations to each holder of the Series C Preferred and
the Warrants and all of its obligations to each holder of the Underlying  Common
Stock  set  forth  in the  Certificate  of  Incorporation,  the  Certificate  of
Designation  and the Company's  bylaws,  and (ii) all of its obligations to each
holder  of  Registrable  Securities  set  forth  in the  Series  C  Registration
Agreement.

      SECTION 3.3  RESERVATION  OF COMMON STOCK.  The Company shall at all times
reserve and keep available out of its  authorized but unissued  shares of Common
Stock,  solely for the purpose of issuance  upon the  conversion of the Series C
Preferred  and the  exercise  of the  Warrants,  such number of shares of Common
Stock issuable upon the conversion of all outstanding Series C Preferred and the
exercise of all outstanding  Warrants.  All shares of Common Stock, which are so
issuable,  shall,  when  issued,  be duly and  validly  issued,  fully  paid and
nonassessable and free from all taxes, liens and charges.

      SECTION 3.4 QUOTATION ON THE OTC BULLETIN BOARD.  The Company will use its
best  efforts  to keep its  Common  Stock  quoted on the OTC  Bulletin  Board or
better.

ARTICLE 4. TRANSFER OF RESTRICTED SECURITIES

      SECTION 4.1  OPINION  DELIVERY.  In  connection  with the  transfer of any
Restricted  Securities,  including  the Series C Preferred,  Warrants and Common
Stock subject to this Agreement, the holder thereof shall deliver written notice
to the  Company  describing  in  reasonable  detail  the  transfer  or  proposed
transfer, together with an opinion of counsel which (to the Company's reasonable
satisfaction) is knowledgeable in securities law matters to the effect that such
transfer of Restricted  Securities may be effected without  registration of such
Restricted  Securities  under the Securities Act. In addition,  if the holder of
the  Restricted  Securities  delivers to the Company an opinion of such  counsel
that  no  subsequent  transfer  of  such  Restricted  Securities  shall  require
registration  under the  Securities  Act, the Company  shall  promptly upon such
contemplated  transfer deliver new  certificates for such Restricted  Securities
which do not bear the  Securities  Act legend set forth in SECTION  6.1.  If the
Company is required to deliver new certificates  for such Restricted  Securities
bearing such legend,  the holder  thereof  shall not transfer the same until the
prospective  transferee has confirmed to the Company in writing its agreement to
be bound by the conditions contained in this SECTION and SECTION 6.1.
<PAGE>

      SECTION 4.2 LEGEND REMOVAL.  If any Restricted  Securities become eligible
for sale  pursuant to Rule 144(k),  the Company  shall,  upon the request of the
holder of such Restricted Securities, remove the legend set forth in SECTION 6.1
from the certificates for such Restricted Securities.

ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

      As a material  inducement to each  Purchaser to enter into this  Agreement
and purchase  the Series C Preferred  and the  Warrants  hereunder,  the Company
hereby represents and warrants as follows:

      SECTION 5.1  ORGANIZATION.  The Company is a corporation  duly  organized,
validly  existing  and in  good  standing  under  the  laws of  Delaware  and is
qualified  to do  business  in every  jurisdiction  in which the  failure  to so
qualify would  reasonably be expected to have a material  adverse  effect on the
financial condition, operating results, assets, operations or business prospects
of the Company.

      SECTION 5.2  CORPORATE  POWER;  AUTHORITY.  The Company has all  requisite
corporate  power and  authority  to enter into this  Agreement  and the  Related
Agreements,  to issue and sell the Series C Preferred and the Warrants, to issue
the Common Stock  initially  issuable upon  conversion of the Series C Preferred
and upon exercise of the Warrants,  and to carry out and perform its  obligation
sunder the terms of this  Agreement  and the Related  Agreements.  All corporate
action on the part of the Company, its directors and stockholders  necessary for
the due  authorization,  execution,  delivery and  performance by the Company of
this  Agreement and the Related  Agreements,  the approval,  adoption and filing
with the  Secretary  of State of the State of  Delaware  of the  Certificate  of
Designations and the consummation of the  transactions  contemplated  herein and
therein,  and the due  authorization,  issuance and delivery of the Warrants and
the Series C Preferred  and the shares of Common Stock  initially  issuable upon
conversion  of the Series C Preferred  and  exercise of the  Warrants,  has been
taken. This Agreement and the Series C Registration  Agreement are legal,  valid
and binding  obligations  of the Company  enforceable  in accordance  with their
respective terms, subject to applicable bankruptcy,  insolvency,  reorganization
and moratorium laws and other laws of general application  affecting enforcement
of creditors' rights generally.
<PAGE>

      SECTION  5.3 SERIES C  PREFERRED.  Upon  issuance,  sale and  delivery  as
contemplated  hereunder and payment of the applicable Purchase Price, the shares
of Series C Preferred and Warrants sold to the Purchasers hereunder will be duly
authorized,  validly  issued,  fully  paid  and  non-assessable,   free  of  all
preemptive and similar  rights and other  restrictions  on transfer,  other than
those arising under applicable state and federal securities laws.

      SECTION 5.4  FINANCIAL  INFORMATION.  The audited  consolidated  financial
statements  of the Company  and its  Subsidiaries  (including  the notes to such
financial  statements)  included in the Company's Annual Report on Form 10-K for
the year ended July 31, 2003 (the "FORM 10-K") filed  pursuant to the Securities
and  Exchange  Act (the  "ACT")  present  fairly  the  financial  condition  and
operating  results of the Company and its  Subsidiaries at the dates and for the
periods to which they  relate  (subject,  in the case of the  unaudited  interim
financial  statements,  to  normal  year-end  audit  adjustments  and any  other
adjustments  described  therein)  and have  been  prepared  in  accordance  with
generally  accepted  accounting   principles  ("GAAP")   consistently   followed
throughout the periods  involved  (except as may be indicated  therein or in the
notes thereto).

      SECTION 5.5 ABSENCE OF CERTAIN  CHANGES OR EVENTS.  Except as set forth on
Schedule 5.5, there have been no material adverse changes in the capitalization,
assets,  liabilities  or income of the  Company  since the  issuance of the Form
10-K.  No  reports  filed  within  the last  twelve  (12)  months  under the Act
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements  therein,
in light of the circumstances under which they were made, not misleading.

      SECTION 5.6  COMPLIANCE.  The Company is in material  compliance  with all
applicable  laws,  regulations,  judgments,  decrees and orders  material to the
conduct  of its  business  including,  without  limitation,  state  and  federal
securities  laws and the portions of the  Sarbanes-Oxley  Act  applicable to the
Company.

      SECTION 5.7 NO  LITIGATION.  There is no pending,  or, to the knowledge of
the Company,  threatened,  judicial,  administrative or arbitral action,  claim,
suit,   proceeding  or   investigation   which  might  affect  the  validity  or
enforceability  of this Agreement or the Related  Agreements,  or which involves
the Company and which if adversely  determined  could  reasonably be expected to
have a material adverse effect on the Company's  ability to perform hereunder or
thereunder.

      SECTION 5.8 NO  CONSENTS.  Except for filings  that may be required  under
federal or state securities laws, no consent or approval of, or exemption by, or
filing with, any party or  governmental  or public body or authority is required
in connection with the execution,  delivery and performance under this Agreement
or the Related Agreements or the taking of any action contemplated  hereunder or
thereunder.

      SECTION 5.9 NON-CONTRAVENTION.  The execution, delivery and performance by
the Company of this Agreement and the Related Agreements and the consummation of
the  transactions  contemplated  hereby and  thereby  will not:  (i) violate any
provision of the  Company's  Certificate  of  Incorporation  or Bylaws,  each as
currently in effect, (ii) violate,  conflict with or result in the breach of any
of the terms of, result in a material  modification of the effect of,  otherwise
give any other contracting party the right to terminate,  or constitute (or with
notice  or lapse of time or both  constitute)  a  default  under,  any  material
contract  or other  agreement  to which the Company is a party or by or to which
the  Company  or any of the  Company's  assets  or  properties  may be  bound or
subject,  other than the 2002 Employment Agreement between the Company and James
P. Jimirro dated May 17, 2002,  (iii) violate any order,  judgment,  injunction,
award or decree of any court,  arbitrator or  governmental or regulatory body by
which the Company,  or the assets or  properties of the Company,  are bound,  or
(iv) violate any federal,  California  or Delaware  statute,  law or  regulation
applicable to the Company.
<PAGE>

      SECTION  5.10  CAPITALIZATION.  The  Company's  authorized  capital  stock
consists of (a) fifteen million  (15,000,000)  shares of Common Stock, par value
$0.0001 per share,  of which one million five hundred thirty three thousand four
hundred eighteen (1,533,418) shares are issued and outstanding,  (b) two million
(2,000,000)  shares of  preferred  stock,  of which  sixty eight  thousand  four
hundred six (68,406) shares of Series B Preferred are authorized and sixty three
thousand six hundred seven (63,607)  shares thereof are issued and  outstanding,
and of which two hundred fifty thousand  (250,000)  shares of Series C Preferred
are authorized and up to such number of shares are to be issued pursuant to this
Agreement.  A number of shares of  Common  Stock  equal to the  number of issued
Series B Preferred Shares at the conversion rate of 28.169, or 1,791,746 shares,
and another  1,791,746  common  shares  reserved for the exercise of the warrant
attached to the Series B Preferred  units have been  reserved for issuance  upon
conversion  of the Series B Preferred  and three  million  seven  hundred  fifty
thousand (2,750,000) shares of Common Stock have been reserved for issuance upon
conversion of the Series C Preferred  and upon exercise of the Warrants.  All of
the aforesaid issued and outstanding  shares are (and will be in the case of the
Series  C  Preferred)  duly  authorized  and  validly  issued,  fully  paid  and
nonassessable,  and have been offered,  issued,  sold and delivered  (and in the
case of the Series C Preferred are being offered, issued, sold and delivered) by
the Company in compliance with all applicable federal and state securities laws.
Except as disclosed on Schedule 5.10,  there are no outstanding  (i) preemptive,
conversion or other rights, options, warrants or agreements granted or issued by
or binding upon the Company or any Subsidiary for the purchase or acquisition of
any shares of its capital  stock,  except with respect to the Series C Preferred
and Warrants in accordance with the provisions of this  Agreement,  (ii) phantom
equity, equity appreciation or similar rights which permit the holder thereof to
participate in the residual equity value of, or appreciation in the equity value
of the  Company,  or (iii) any  securities,  instruments  or rights  which  are,
directly or indirectly,  convertible into or exercisable or exchangeable for any
of the securities, instruments or rights described in clauses (i) or (ii) above.

      SECTION  5.11  REGISTRATION  RIGHTS  PREVIOUSLY  GRANTED.  In  addition to
entering  into the Series C  Registration  Agreement  with the  Purchasers,  the
Company has previously  granted  registration  rights with respect to certain of
its securities as described on Schedule  5.11. The  information on Schedule 5.11
is a summary of the rights granted under the agreements mentioned therein and no
representation  is made that such  summary  is  complete  in all  respects  with
respect to the terms and  conditions of the  registration  rights granted by the
Company.  The information on Schedule 5.11 accurately describes what the Company
believes to be the material terms of the registration rights agreements referred
to therein.
<PAGE>

      SECTION 5.12  INTELLECTUAL  PROPERTY.  Schedule 5.12 sets forth a complete
list of all material  intellectual property and proprietary rights owned or used
by  the  Company,  including,  without  limitation,  all  franchises,   permits,
licenses, software, trademarks, service marks, domain names, trade rights, trade
dress,   patents,   patent  applications  and  copyrights,   but  excluding  any
off-the-shelf  software  (together  with  all  inventions,  know-how  and  other
confidential  information,   "INTELLECTUAL   PROPERTY").   Except  as  otherwise
disclosed on Schedule  5.12,  the Company is the  exclusive  owner of all right,
title  and  interest  in  and/or  has  the  valid  and  legal  right  to use all
Intellectual  Property  necessary  or  desirable  to conduct its business as now
being  conducted  and as  planned  to be  conducted  without  conflict  with  or
infringement  upon any valid  rights  of  others  except  for  infringements  or
conflicts  which could not have a material  adverse  effect on the Company.  The
Company has not received  any notice that the conduct of the business  infringes
upon or conflicts  with the asserted  rights of others and has no knowledge that
any person is infringing upon or in conflict with its asserted rights.

      SECTION 5.13 DISCLOSURE.  The representations  made by the Company in this
Article 5 of this  Agreement  and the  Schedules  relating  thereto,  taken as a
whole, do not contain any untrue statement of a material fact and do not omit to
state a  material  fact  necessary  in order to make  the  statements  contained
therein or herein not misleading.

ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF PURCHASER

      Each  Purchaser  hereby  severally  represents and warrants to the Company
that:

      SECTION 6.1 LEGEND. Each certificate or instrument representing Restricted
Securities shall be imprinted with a legend in substantially the following form:

      THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE  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 "ACT"). BY THE ACCEPTANCE  HEREOF,
      THE  HOLDER  AGREES  THAT THESE  SECURITIES  MAY NOT BE  OFFERED,  SOLD OR
      TRANSFERRED  WITHOUT AN EFFECTIVE  REGISTRATION  STATEMENT FOR SUCH SHARES
      UNDER  THE ACT AND  APPLICABLE  STATE  SECURITIES  LAWS OR AN  OPINION  OF
      COUNSEL  REASONABLY  SATISFACTORY  TO THE ISSUER THAT  REGISTRATION IS NOT
      REQUIRED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS.

      SECTION 6.2 AUTHORITY  RELATIVE TO AGREEMENT.  Purchaser has all requisite
power and authority to enter into this Agreement and to perform its  obligations
hereunder.  If applicable,  the undersigned signatory on behalf of Purchaser has
all necessary authorization and authority to execute this Agreement on behalf of
such  Purchaser.  The execution and delivery by Purchaser of this  Agreement and
the  consummation  of  the  transactions  contemplated  hereby  have  been  duly
authorized by all necessary action on the part of Purchaser.  This Agreement has
been duly  executed and  delivered by Purchaser  and  constitutes  the valid and
binding  obligations of Purchaser,  enforceable  against Purchaser in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization and
moratorium laws and other laws of general application  affecting  enforcement of
creditors' rights generally.

      SECTION  6.3  ACCREDITED  INVESTOR  STATUS.  Purchaser  is an  "accredited
investor"  as that term is defined in Rule 501(a) of  Regulation  D  promulgated
under the Securities Act.  Purchaser is acquiring the Series C Preferred and the
Warrants  (collectively,  the  "SECURITIES")  for Purchaser's  own account,  for
investment  purposes only and without a view toward the further  distribution of
the Securities.  Purchaser: (i) is able to bear the loss of the entire principal
amount of Purchaser's  investment in the Securities without any material adverse
effect on Purchaser's business, operations or prospects, (ii) has such knowledge
and  experience in financial and business  matters that  Purchaser is capable of
evaluating  the  merits  and  risks  of  making  Purchaser's  investment  in the
Securities,  (iii)  realizes that  Purchaser's  investment in the  Securities is
subject to significant risks, including those identified in the reports filed by
the Company under the Securities  Exchange Act, if any, and/or provided directly
to Purchaser,  and (iv)  understands  that the documents,  including the reports
filed by the Company under the Securities  Exchange Act, if any, and/or provided
to Purchaser in connection with the transactions contemplated hereby may contain
forward-looking  statements that involve risk and uncertainties that could cause
actual results to differ materially from those stated.
<PAGE>

      SECTION 6.4 PROJECTIONS.  Purchaser  acknowledges  that (a) the forecasted
financial  statements  included in the materials provided to the Purchasers were
prepared  internally by management of the Company  without the  assistance of an
outside  accounting firm, (b) while the forecasts  represent  management's  best
estimate of the potential future financial results of the Company, forecasts, by
their nature,  are highly  speculative,  and there can be no assurance  that the
forecasts will be, in any respect, reliable or accurate predictors of the future
financial  results of the Company,  (c)  although the Company  utilized its best
efforts to identify the most appropriate  assumptions for its business model and
proposed future operations, there may be other important assumptions and factors
that were not  considered,  and (d) the timing of any  entertainment  project is
subject to change and may change due to factors outside the Company.

      SECTION 6.5  SECURITIES.  Purchaser  understands  that the  Securities are
characterized  as  "restricted  securities"  under the federal  securities  laws
inasmuch as they are being or will be acquired from Company in a transaction not
involving a public offering and that under such laws and applicable  regulations
such Securities may be resold without  registration under the Securities Act and
applicable  state law only in certain  limited  circumstances.  In this  regard,
Purchaser  represents that Purchaser is familiar with Rule 144 of the Securities
Act, as presently in effect,  and  understands  the resale  limitations  imposed
thereby and by the  Securities  Act.  Purchaser  represents  that  Purchaser  is
acquiring  the  Securities  for  investment  purposes  only and without the view
toward  the  further  distribution  of  such  Securities  except  pursuant  to a
registration statement that may be effective permitting the public offer or sale
of such Securities,  or pursuant to an exemption from registration under federal
and applicable state laws. Purchaser agrees not to sell any of the Securities to
a non-affiliate within the first year after execution of this Agreement.  In the
event Purchaser does attempt to offer or sell the Securities,  Purchaser will do
so only in accordance with the requirements of federal and applicable state laws
and interpretations thereof.

      SECTION  6.6  RESTRICTIVE  LEGENDS.   Until  such  time,  if  ever,  as  a
registration  statement  covering  all of the  Securities  is filed and declared
effective by the Securities and Exchange  Commission,  or the applicable holding
periods under Rule 144 under the  Securities Act expire,  Purchaser  understands
that the certificates evidencing the Securities will bear a legend substantially
in form provided under SECTION 6.1 of this Agreement.
<PAGE>

      ARTICLE 7. MISCELLANEOUS

      SECTION 7.1 CONSENT TO AMENDMENTS.  Except as otherwise expressly provided
herein, the provisions of this Agreement may be amended and the Company may take
any action herein  prohibited,  or omit to perform any act herein required to be
performed  by it, only if the Company has  obtained  the written  consent of the
holders of at least a majority  of the  outstanding  Restricted  Securities.  No
other  course of dealing  between the  Company and the holder of any  Restricted
Securities  or any  delay in  exercising  any  rights  hereunder  or  under  the
Certificate of  Incorporation  or Certificate of Designation  shall operate as a
waiver of any rights of any such holders. For purposes of this Agreement, shares
of Restricted  Securities held by the Company or any  Subsidiaries  shall not be
deemed to be outstanding. If the Company pays any consideration to any holder of
Restricted  Securities for such holder's consent to any amendment,  modification
or waiver  hereunder,  the Company shall also pay each other holder granting its
consent  hereunder  equivalent  consideration  computed on a pro rata basis. For
purposes of calculating  the requisite  consent under this SECTION 7.1, a holder
of a Warrant shall be entitled to that number of votes equal to the whole number
of shares of Common Stock issuable upon exercise of the Warrant.

      SECTION   7.2   SURVIVAL   OF   REPRESENTATIONS   AND   WARRANTIES.    All
representations and warranties  contained herein or made in writing by any party
in  connection  herewith  shall  survive  the  execution  and  delivery  of this
Agreement  and  the  consummation  of  the  transactions   contemplated  hereby,
regardless of any investigation made by a Purchaser or on a Purchaser's behalf.

      SECTION 7.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the  parties  hereto  shall  bind  and  inure  to the  benefit  of the
respective  successors and assigns of the parties hereto whether so expressed or
not. In addition,  and whether or not any express  assignment has been made, the
provisions of this Agreement which are for Purchaser's benefit as a Purchaser or
holder of Series C Preferred or Underlying Common Stock are also for the benefit
of, and enforceable by, any subsequent holder of such Series C Preferred or such
Underlying Common Stock.

      SECTION  7.4  SEVERABILITY.  Whenever  possible,  each  provision  of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable  law, but if any provision of this Agreement is held to be prohibited
by or invalid under  applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.

      SECTION 7.5 COUNTERPARTS. This Agreement may be executed simultaneously in
two or more  counterparts,  any one of which need not contain the  signatures of
more than one party, but all such  counterparts  taken together shall constitute
one and the same Agreement.

      SECTION 7.6 DESCRIPTIVE HEADINGS; INTERPRETATION. The descriptive headings
of this  Agreement  are inserted for  convenience  only and do not  constitute a
substantive  part of this  Agreement.  The use of the word  "INCLUDING"  in this
Agreement shall be by way of example rather than by limitation.
<PAGE>

      SECTION 7.7  GOVERNING  LAW.  The  corporate  law of the State of Delaware
shall  govern  all issues  and  questions  concerning  the  relative  rights and
obligations of the Company and its stockholders.  All other issues and questions
concerning the construction,  validity,  enforcement and  interpretation of this
Agreement  and the  exhibits  and  schedules  hereto  shall be governed  by, and
construed in accordance with, the laws of the State of Delaware,  without giving
effect to any choice of law or conflict of law rules or  provisions  (whether of
the  State  of  Delaware  or  any  other  jurisdiction)  that  would  cause  the
application of the laws of any jurisdiction other than the State of Delaware.

      SECTION 7.8 NOTICES.  All notices,  demands or other  communications to be
given or delivered  under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when  delivered  personally
to the recipient,  sent to the recipient by reputable  overnight courier service
(charges  prepaid) or mailed to the recipient by certified or  registered  mail,
return receipt  requested and postage prepaid.  Such notices,  demands and other
communications  shall be sent to the Purchasers at their addresses  indicated on
the Schedule of Purchasers:

         If to Company:                     NATIONAL LAMPOON, INC.
                                            10850 Wilshire Boulevard, Suite 1000
                                            Los Angeles, CA 90024
                                            Telephone No.: 310-474-5252
                                            Fax No.: 310-474-1219
                                            Attn.: Chief Executive Officer

         If to Lender:                      _______________________________
                                            _______________________________
                                            _______________________________
                                            _______________________________

or to such  other  address  or to the  attention  of such  other  person  as the
recipient party has specified by prior written notice to the sending party.

      SECTION 7.9 UNDERSTANDING AMONG THE PURCHASERS.  The determination of each
Purchaser  to  purchase  the Series C  Preferred  and  Warrant  pursuant to this
Agreement has been made by such Purchaser independent of any other Purchaser and
independent  of any  statements  or  opinions  as to the  advisability  of  such
purchase or as to the properties, business, prospects or condition (financial or
otherwise) of the Company and its Subsidiaries which may have been made or given
by any other Purchaser or by any agent or employee of any other Purchaser.

      SECTION 7.10 NO STRICT CONSTRUCTION.  The parties hereto have participated
jointly in the  negotiation  and  drafting  of this  Agreement.  In the event an
ambiguity or question of intent or interpretation  arises,  this Agreement shall
be construed as if drafted jointly by the parties hereto,  and no presumption or
burden of proof shall arise favoring or  disfavoring  any party by virtue of the
authorship of any of the provisions of this Agreement.
<PAGE>

SECTION 7.11 CONSENT TO SERIES B CHANGES.

            (a) In connection with the issuance of the Series C Stock, the Board
      of  Directors  of the  Company  has  approved  the  amendment  of, and has
      recommended  and  proposed to the  stockholders  of the  Company  that the
      Company amend, its Certificate of Incorporation by filing a Certificate of
      Amendment  with the Secretary of State of Delaware,  substantially  in the
      form attached hereto as EXHIBIT G (the "SERIES B FILING"), for the purpose
      of  amending  the rights and  privileges  of the Series B  Preferred.  The
      Purchasers  herby  consent to and approve the  amendment of the  Company's
      Certificate of Incorporation by the making of such filing.  The Purchasers
      also hereby  consent to and approve the Company's  taking of all corporate
      actions reasonably  required to enable the Company to amend the rights and
      privileges of the Series B Preferred as provided in the Series B Filing.

            (b) In connection with the sale of the Company's  Series B Preferred
      on or about May 17, 2002, the purchasers  thereof were issued  warrants to
      purchase  shares of Common Stock (the "SERIES B  WARRANTS").  The Board of
      Directors of the Company has  authorized and approved the amendment of the
      Series B  Warrants  to extend  the time for the  exercise  thereof  to the
      expiration date for the exercise of the Warrants being issued to the fifth
      anniversary of the first sale of Series C Preferred  Stock. The Purchasers
      hereby consent to the extension of the Series B Warrants and agree that no
      adjustment to the conversion price or number of shares with respect to the
      Series C Preferred or the exercise  price or number of shares with respect
      to the Warrants shall result from such extension.

      SECTION  7.12  INTEGRATION.  This  Agreement,  together  with the  related
exhibits  and the other  agreements,  documents,  and  instruments  executed  in
connection with the foregoing,  reflect the entire  understanding of the parties
with  respect  to  the  transactions   contemplated  hereby  and  shall  not  be
contradicted or qualified by any other  agreement,  oral or written,  before the
date hereof..

ARTICLE 8. DEFINITIONS

      "CLOSING"  means the  consummation of the purchase and sale of one or more
Series C Preferred and Warrants pursuant hereto on the date hereof.

      "RELATED  AGREEMENTS"  means  the  Series C  Registration  Agreement,  the
Certificate of Designations and the Warrants.

      "RESTRICTED SECURITIES" means (i) the Series C Preferred issued hereunder,
(ii) the Warrants  issued pursuant to SECTION 1.3, (iii) the Common Stock issued
upon  conversion of Series C Preferred or upon exercise of the Warrants and (iv)
any securities issued with respect to the securities referred to in clauses (i),
(ii) or (iii) above by way of a stock  dividend or stock split or in  connection
with a combination of shares,  recapitalization,  merger, consolidation or other
reorganization.  As to any particular  Restricted  Securities,  such  securities
shall  cease to be  Restricted  Securities  when they have (a) been  effectively
registered  under the  Securities  Act and  disposed of in  accordance  with the
registration statement covering them, (b) been distributed to the public through
a broker,  dealer or market maker pursuant to Rule 144 (or any similar provision
then in force) under the Securities Act or become  eligible for sale pursuant to
Rule 144(k) (or any similar provision then in force) under the Securities Act or
(c) been otherwise  transferred  and new  certificates  for them not bearing the
Securities  Act  legend  set forth in  SECTION  6.1 have been  delivered  by the
Company in accordance with SECTION 4.2. Whenever any particular securities cease
to be  Restricted  Securities,  the holder  thereof shall be entitled to receive
from the Company,  without  expense,  new securities of like tenor not bearing a
Securities Act legend of the character set forth in SECTION 6.1.
<PAGE>

      "SECURITIES  ACT" means the  Securities  Act of 1933,  as amended,  or any
similar federal law then in force.

      "SECURITIES AND EXCHANGE  COMMISSION"  includes any  governmental  body or
agency succeeding to the functions thereof.

      "SECURITIES  EXCHANGE ACT" means the  Securities  Exchange Act of 1934, as
amended, or any similar federal law then in force.

      "SUBSIDIARY"  means  any  corporation  of which  the  securities  having a
majority of the ordinary voting power in electing the board of directors are, at
the time as of which  any  determination  is being  made,  owned by the  Company
either directly or through one or more Subsidiaries.

      "UNDERLYING  COMMON  STOCK"  means (i) the Common Stock issued or issuable
upon  conversion  of the Series C Preferred or upon exercise of the Warrants and
(ii) any Common Stock issued or issuable with respect to the securities referred
to in clause (i) above by way of stock  dividend or stock split or in connection
with a combination of shares,  recapitalization,  merger, consolidation or other
reorganization.  For purposes of this  Agreement,  any Person who holds Series C
Preferred or Warrants shall be deemed to be the holder of the Underlying  Common
Stock  obtainable  upon  conversion of the Series C Preferred or exercise of the
Warrants  regardless of any  restriction  or limitation on the conversion of the
Series C Preferred or exercise of the  Warrants,  such  Underlying  Common Stock
shall be  deemed  to be in  existence,  and such  Person  shall be  entitled  to
exercise the rights of a holder of Underlying Common Stock hereunder.  As to any
particular  shares of  Underlying  Common  Stock,  such shares shall cease to be
Underlying Common Stock when they have been (a) effectively registered under the
Securities  Act and disposed of in accordance  with the  registration  statement
covering them, (b) distributed to the public through a broker,  dealer or market
maker pursuant to Rule 144 under the  Securities  Act (or any similar  provision
then in force) or (c) repurchased by the Company or any Subsidiary.

                  [Remainder of Page Intentionally Left Blank]
<PAGE>

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

                                            "COMPANY"

                                            NATIONAL LAMPOON, INC.

                                            By: _______________________________
                                                Douglas S. Bennett
                                                Executive Vice President

                                            "PURCHASER"

                                            ___________________________________
<PAGE>

                                LIST OF SCHEDULES

Schedule of Purchasers

Schedule of Loans (Durham)

Schedule of Loans (Laikin)

Schedule 5.5  Material Adverse Changes

Schedule 5.10 Options, Warrants, Etc.

Schedule 5.11 Registration Rights Previously Granted

Schedule 5.12 Intellectual Property
<PAGE>

                             SCHEDULE OF PURCHASERS

<TABLE>
<CAPTION>
                                                                    No. of Shares               Total Purchase
                                         No. of Shares             of Common Stock                 Price for
            Names and                     of Series C              Receivable Upon            Series C Preferred
            Addresses                      Preferred             Exercise of Warrant              and Warrant

<S>                                       <C>                        <C>                         <C>
Timothy S. Durham                         __________                 __________                  $__________*
Suite 4800
111 Monument Circle
Indianapolis IN 46204

Daniel S. Laikin                          __________                 __________                  $__________*
9920 Towne Road
Carmel IN  46032

                                          __________                 __________                   __________
TOTAL                                                                                          $
</TABLE>

*Paid by the  cancellation  and conversion to Series C Preferred and warrants of
the aggregate  principal of and accrued  interest on loans made by the Purchaser
to the Company on the dates and in the amounts noted on the attached Schedule of
Loans.

           [TO BE REVISED FROM TIME TO TIME TO ADD NAMES OF ADDITIONAL
                                  PURCHASERS]
<PAGE>

                                SCHEDULE OF LOANS

                               (TIMOTHY S. DURHAM)

--------------------------------------------------------------------------------
     DATE                  AMOUNT      ACCRUED INTEREST       BALANCE CONVERTED
     ----                  ------      ----------------       -----------------
--------------------------------------------------------------------------------
                                                                          0.00
--------------------------------------------------------------------------------
    3/3/2003              75,000.00                                  75,000.00
--------------------------------------------------------------------------------
    3/5/2003              50,000.00                                 125,000.00
--------------------------------------------------------------------------------
   3/17/2003              98,000.00                                 223,000.00
--------------------------------------------------------------------------------
   4/30/2003              50,000.00                                 273,000.00
--------------------------------------------------------------------------------
    5/1/2003              39,000.00                                 312,000.00
--------------------------------------------------------------------------------
   5/15/2003              50,000.00                                 362,000.00
--------------------------------------------------------------------------------
   5/17/2003              39,000.00                                 401,000.00
--------------------------------------------------------------------------------
    7/2/2003              47,125.00                                 448,125.00
--------------------------------------------------------------------------------
   7/15/2003              41,500.00                                 489,625.00
--------------------------------------------------------------------------------
   7/21/2003               8,500.00                                 498,125.00
--------------------------------------------------------------------------------
    8/1/2003              55,000.00                                 553,125.00
--------------------------------------------------------------------------------
    8/5/2003              34,500.00                                 587,625.00
--------------------------------------------------------------------------------
   8/15/2003              78,000.00                                 665,625.00
--------------------------------------------------------------------------------
   8/20/2003              19,750.00                                 685,375.00
--------------------------------------------------------------------------------
   8/29/2003              18,794.81                                 704,169.81
--------------------------------------------------------------------------------
   8/29/2003             124,750.00                                 828,919.81
--------------------------------------------------------------------------------
   9/15/2003              60,000.00                                 888,919.81
--------------------------------------------------------------------------------
   9/23/2003              37,500.00                                 926,419.81
--------------------------------------------------------------------------------
   9/30/2003             115,250.00                               1,041,669.81
--------------------------------------------------------------------------------
   10/09/2003             31,500.00                               1,073,169.81
--------------------------------------------------------------------------------
   10/15/2003             44,500.00                               1,117,669.81
--------------------------------------------------------------------------------
   10/20/2003             43,000.00                               1,160,669.81
--------------------------------------------------------------------------------
   10/30/2003             85,750.00                               1,246,419.81
--------------------------------------------------------------------------------
   11/07/2003             32,750.00                               1,279,169.81
--------------------------------------------------------------------------------
   11/14/2003             44,000.00                               1,323,169.81
--------------------------------------------------------------------------------
   11/18/2003             54,000.00                               1,377,169.81
--------------------------------------------------------------------------------
   11/25/2003             78,650.00                               1,455,819.81
--------------------------------------------------------------------------------
<PAGE>

--------------------------------------------------------------------------------
   12/02/2003             33,250.00                               1,489,069.81
--------------------------------------------------------------------------------
   12/16/2003             85,000.00                               1,574,069.81
--------------------------------------------------------------------------------
   12/26/2003             58,750.00                               1,632,819.81
--------------------------------------------------------------------------------
   1/15/2004              81,000.00                               1,713,819.81
--------------------------------------------------------------------------------
   2/03/2004             155,000.00                               1,868,819.81
--------------------------------------------------------------------------------
   2/13/2004              80,000.00                               1,948,819.81
--------------------------------------------------------------------------------
   2/27/2004              87,100.00                               2,035,919.81
--------------------------------------------------------------------------------
   3/03/2004              13,500.00                               2,049,419.81
--------------------------------------------------------------------------------
   3/16/2004              27,351.50                               2,076,771.31
--------------------------------------------------------------------------------
                       2,076,771.31                               2,076,771.31
                       ============                               ============
--------------------------------------------------------------------------------
<PAGE>

                                SCHEDULE OF LOANS

                               (DANIEL S. LAIKIN)

--------------------------------------------------------------------------------
       DATE                 AMOUNT     ACCRUED INTEREST   BALANCE CONVERTED
       ----                 ------     ----------------   -----------------
--------------------------------------------------------------------------------
                                                                       0.00
--------------------------------------------------------------------------------
     3/3/2003             75,000.00                               75,000.00
--------------------------------------------------------------------------------
     3/5/2003             50,000.00                              125,000.00
--------------------------------------------------------------------------------
     3/17/2003            98,000.00                              223,000.00
--------------------------------------------------------------------------------
     4/30/2003            50,000.00                              273,000.00
--------------------------------------------------------------------------------
     5/1/2003             39,000.00                              312,000.00
--------------------------------------------------------------------------------
     5/15/2003            50,000.00                              362,000.00
--------------------------------------------------------------------------------
     5/17/2003            39,000.00                              401,000.00
--------------------------------------------------------------------------------
     7/2/2003             47,125.00                              448,125.00
--------------------------------------------------------------------------------
     7/15/2003            41,500.00                              489,625.00
--------------------------------------------------------------------------------
     7/21/2003             8,500.00                              498,125.00
--------------------------------------------------------------------------------
     8/1/2003             55,000.00                              553,125.00
--------------------------------------------------------------------------------
     8/5/2003             34,500.00                              587,625.00
--------------------------------------------------------------------------------
     8/15/2003            78,000.00                              665,625.00
--------------------------------------------------------------------------------
     8/20/2003            19,750.00                              685,375.00
--------------------------------------------------------------------------------
     8/29/2003            18,794.81                              704,169.81
--------------------------------------------------------------------------------
     8/29/2003           124,750.00                              828,919.81
--------------------------------------------------------------------------------
     9/15/2003            60,000.00                              888,919.81
--------------------------------------------------------------------------------
     9/23/2003            37,500.00                              926,419.81
--------------------------------------------------------------------------------
     9/30/2003           115,250.00                            1,041,669.81
                         ----------                            ------------
--------------------------------------------------------------------------------
    10/09/2003            31,500.00                            1,073,169.81
--------------------------------------------------------------------------------
    10/15/2003            44,500.00                            1,117,669.81
--------------------------------------------------------------------------------
    10/20/2003            43,000.00                            1,160,669.81
--------------------------------------------------------------------------------
    10/30/2003            85,750.00                            1,246,419.81
--------------------------------------------------------------------------------
    11/07/2003            32,750.00                            1,279,169.81
--------------------------------------------------------------------------------
    11/14/2003            44,000.00                            1,323,169.81
--------------------------------------------------------------------------------
    11/18/2003            54,000.00                            1,377,169.81
--------------------------------------------------------------------------------
    11/25/2003            78,650.00                            1,455,819.81
--------------------------------------------------------------------------------
<PAGE>

--------------------------------------------------------------------------------
    12/02/2003            33,250.00                            1,489,069.81
--------------------------------------------------------------------------------
    12/16/2003            85,000.00                            1,574,069.81
--------------------------------------------------------------------------------
    12/26/2003            58,750.00                            1,632,819.81
--------------------------------------------------------------------------------
     1/15/2004            81,000.00                            1,713,819.81
--------------------------------------------------------------------------------
     2/03/2004           155,000.00                            1,868,819.81
--------------------------------------------------------------------------------
     2/13/2004            80,000.00                            1,948,819.81
--------------------------------------------------------------------------------
     2/27/2004            87,100.00                            2,035,919.81
--------------------------------------------------------------------------------
     3/03/2004            13,500.00                            2,049,419.81
--------------------------------------------------------------------------------
     3/10/2004           114,254.98                            2,163,674.79
--------------------------------------------------------------------------------
     3/16/2004            27,351.50                            2,191,026.29
--------------------------------------------------------------------------------
     3/19/2004            15,000.00                            2,206,026.29
--------------------------------------------------------------------------------
                       2,206,026.29                            2,206,026.29
                       ============                            ============
--------------------------------------------------------------------------------
<PAGE>

                                  SCHEDULE 5.5

                            MATERIAL ADVERSE CHANGES

NONE
<PAGE>

                                  SCHEDULE 5.10

                             OPTIONS, WARRANTS, ETC.
<PAGE>

                                  SCHEDULE 5.11

                     REGISTRATION RIGHTS PREVIOUSLY GRANTED

                           JIMIRRO REGISTRATION RIGHTS

      National Lampoon, Inc. has granted registration rights to James P. Jimirro
("JIMIRRO") under the Jimirro  Registration  Rights Agreement dated May 17, 2002
(the "JIMIRRO AGREEMENT").  Pursuant to the Jimirro Agreement,  National Lampoon
has granted  Jimirro two general  demand  registration  rights and an  unlimited
number of  "short-form"  demand  registration  rights (i.e.,  Form S-2 or S-3 or
comparable  successor form).  Except for the NLAG Registration  Rights Agreement
described  below, the Jimirro  Agreement  prohibits the company from granting to
any shareholder or prospective  shareholder  registration rights with respect to
securities  which  are  senior or pari  passu to the  rights  granted  under the
Jimirro Agreement.  The Jimirro Agreement also provides piggyback  registrations
rights.  In a registered  sale of  securities by National  Lampoon,  the Jimirro
securities are second in priority together with the NLAG securities, behind only
securities  of the Company.  In a sale of  securities by NLAG pursuant to demand
registration  rights,  the Jimirro securities are second in priority behind only
the securities of NLAG.

                            NLAG REGISTRATION RIGHTS

      National  Lampoon  has  also  granted  registration  rights  to  the  NLAG
shareholders ("NLAG") under the NLAG Registration Rights Agreement dated May 17,
2002 (the "NLAG  AGREEMENT").  Pursuant to the NLAG Agreement,  National Lampoon
has granted the NLAG shareholders two general demand  registration rights and an
unlimited number of "short-form"  demand  registration rights (i.e., Form S-2 or
S-3 or comparable  successor form).  Except for the Jimirro  Registration Rights
Agreement,  the NLAG  Agreement  prohibits  the  company  from  granting  to any
shareholder  or  prospective  shareholder  registration  rights with  respect to
securities  which are senior or pari passu to the rights  granted under the NLAG
Agreement.  The NAG Agreement also provides piggyback registrations rights. In a
registered  sale of  securities by National  Lampoon,  the NLAG  securities  are
second in priority together with the Jimirro securities,  behind only securities
of  the  Company.  In a  sale  of  securities  by  Jimirro  pursuant  to  demand
registration  rights, the NLAG securities are second in priority behind only the
securities of Jimirro.

                        CONSTELLATION REGISTRATION RIGHTS

      National  Lampoon  has  also  granted  piggyback  registration  rights  to
Constellation  Venture  Capital  LP  under  the  Piggyback  Registration  Rights
Agreement among the Company and Constellation Venture Capital LP dated September
3,  2002  (the   "CONSTELLATION   AGREEMENT").   The   Constellation   piggyback
registration rights come behind securities National Lampoon proposes to sell and
behind  the  Jimirro  securities  and the  NLAG  securities.  The  Constellation
securities participate with pari passu registerable securities.

                          VANDEMAN REGISTRATION RIGHTS

      Pursuant to a Warrant for the Purchase of 50,000  Shares of Common  Stock,
National  Lampoon  has  granted to George  Vandeman  and his  assigns  piggyback
registration  rights. The Vandeman securities  participate with other securities
with similar registration rights.
<PAGE>

                                  SCHEDULE 5.12

                              INTELLECTUAL PROPERTY

                             NATIONAL LAMPOON, INC.

               SCHEDULE OF REGISTERED INTELLECTUAL PROPERTY RIGHTS

1.    Federal Patent Registrations and Applications:

      None.

2.    Federal Copyright Registrations:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
Heidi Miller's body sculpting            National  Lampoon,  Inc. with a         PA-386-058            08/15/1988
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
How to have a moneymaking garage sale    National  Lampoon,  Inc. with a         PA-387-814            08/15/1988
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Smart cookies don't crumble              National  Lampoon,  Inc. with a         PA-388-027            08/15/1988
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Chef Paul Prudhomme's Louisiana kitchen  National  Lampoon,  Inc. with a         PA-388-030            08/15/1988
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Franco Columbu's Superset shape-up       National  Lampoon,  Inc. with a         PA-388-031            08/15/1988
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Tracy Scoggins' Tough stuff              National  Lampoon,  Inc. with a         PA-410-491            08/15/1988
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
Teen Steam                               National  Lampoon,  Inc. with a         PA-411-068            08/15/1988
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Ball talk:  baseball's voices of summer  National  Lampoon,  Inc. with a         PA-418-830            04/25/1989
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Stand-up Reagan                          National  Lampoon,  Inc. with a         PA-418-867            04/25/1989
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Debby Boone's Hug-a-long songs           National  Lampoon,  Inc. with a         PA-455-172            02/19/1989
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Cybercops:  episode 1.                   National  Lampoon,  Inc. with a        PA-1-000-987           08/02/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Gunnerville High.                        National  Lampoon,  Inc. with a        PA-1-003-663           08/02/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Ain't no time.                           National  Lampoon,  Inc. with a       PAu-1-742-811           02/25/1993
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Rainbow TV: the all-inclusive network.   National  Lampoon,  Inc. with a         SR-276-732            01/20/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
Gunnerville High School.                 National  Lampoon,  Inc. with a         SR-276-734            01/20/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Editor's rant.                           National  Lampoon,  Inc. with a         SR-276-735            01/20/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Apocalyptic Al.                          National  Lampoon,  Inc. with a         SR-276-746            01/20/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Or we'll shoot this dog.                 National  Lampoon,  Inc. with a         SR-276-747            01/20/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Jenni.cam                                National  Lampoon,  Inc. with a         SR-276-748            01/20/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
NLBS.                                    National  Lampoon,  Inc. with a         SR-276-750            01/20/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Fantasy loser's league.                  National  Lampoon,  Inc. with a         SR-276-751            01/20/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National  Lampoon  totally  true facts:  National  Lampoon,  Inc. with a        TX-3-984-295           12/12/1994
a   brand-new   collection   of  absurd  security   interest   held   by
but-true real-life funny stuff           James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
National    Lampoon's   truly   twisted  National  Lampoon,  Inc. with a        TX-4-051-392           11/02/1995
cartoons:  if it's  tasteless,  it's in  security   interest   held   by
here                                     James P. Jimirro
----------------------------------------------------------------------------------------------------------------------

National  Lampoon  presents true facts:  National  Lampoon,  Inc. with a        TX-4-171-211           12/22/1995
the    big    book:    the    complete,  security   interest   held   by
unexpurgated  assembly of amazing  ads,  James P. Jimirro
stupefying    signs,    weird   wedding
announcements,         and        other
absurd-but-true  samples  of  real-life
funny stuff
----------------------------------------------------------------------------------------------------------------------
National Lampoon's white bread snaps.    National  Lampoon,  Inc. with a        TX-4-254-012           10/17/1995
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National   lampoon  virtual   candidate  National  Lampoon,  Inc. with a        TX-5-054-405           02/10/2000
2000.                                    security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Trash tattoo.                            National  Lampoon,  Inc. with a        TX-5-067-799           02/28/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Smash & grab.                            National  Lampoon,  Inc. with a        TX-5-357-156           01/28/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Jenni.cam.                               National  Lampoon,  Inc. with a        TX-5-357-157           01/28/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
News on the march.                       National  Lampoon,  Inc. with a        TX-5-357-158           01/28/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Virtual candidate 2000.                  National  Lampoon,  Inc. with a        VA-1-021-500           02/10/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Enter this site or we'll shoot this dog  National  Lampoon,  Inc. with a        VA-1-058-221           01/28/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Gunnerville High School.                 National  Lampoon,  Inc. with a        VA-1-058-222           01/28/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Flashbacks.                              National  Lampoon,  Inc. with a        VA-1-058-223           01/28/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Editor's rant.                           National  Lampoon,  Inc. with a        VA-1-058-224           01/28/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Apocalyptic Al                           National  Lampoon,  Inc. with a        VA-1-058-225           01/28/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Adelphian Lodge.                         National  Lampoon,  Inc. with a        VA-1-058-226           01/28/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
Stick it to em.                          National  Lampoon,  Inc. with a        VA-1-058-227           01/28/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Jenni.cam                                National  Lampoon,  Inc. with a        VA-1-058-228           01/28/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Rainbow TV - the all-inclusive network.  National  Lampoon,  Inc. with a        VA-1-058-229           01/28/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Worldwide waste of time.                 National  Lampoon,  Inc. with a        VA-1-058-230           01/28/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Voyercam.                                National  Lampoon,  Inc. with a        VA-1-058-231           01/28/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Trash tattoo.                            National  Lampoon,  Inc. with a        VA-1-058-232           01/28/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Cybercops.                               National  Lampoon,  Inc. with a        VA-1-058-233           01/28/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Gunnerville High School.                 National  Lampoon,  Inc. with a        VA-1-058-234           01/28/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
NLBS.                                    National  Lampoon,  Inc. with a        VA-1-058-235           01/28/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Fantasy Loser's League.                  National  Lampoon,  Inc. with a        VA-1-058-236           01/28/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Smash & grab.                            National  Lampoon,  Inc. with a        VA-1-058-237           01/28/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
The dregs                                National  Lampoon,  Inc. with a        TX 5-092-744           01/28/2000
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a         B: 578989
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 581764
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 594460
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 596546
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
National Lampoon                         National  Lampoon,  Inc. with a          B 606623
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 611489
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 624921
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 618430
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 633959
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 633958
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 639914
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 668972
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
National Lampoon                         National  Lampoon,  Inc. with a          B 668973
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 668974
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 668975
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 674274
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 688090
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 688714
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 697369
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 709177
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
National Lampoon                         National  Lampoon,  Inc. with a          B 711551
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 717768
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 725263
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 735998
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 740465
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 745276
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 757418
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 758587
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
National Lampoon                         National  Lampoon,  Inc. with a          B 767782
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 773307
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 782489
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 785901
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 801588
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 803007
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 809087
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 818221
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
National Lampoon                         National  Lampoon,  Inc. with a          B 825730
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 834403
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 837511
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 848924
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 855812
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 860635
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 871008
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 874933
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
National Lampoon                         National  Lampoon,  Inc. with a          B 884387
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 891302
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 902787
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 918610
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 918611
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 925057
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 935241
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 937733
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
National Lampoon                         National  Lampoon,  Inc. with a          B 958315
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 958316
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 971823
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 973535
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 984166
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 988340
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 996475
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a           B 4297
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
National Lampoon                         National  Lampoon,  Inc. with a          B 12808
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 21720
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 25065
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 33125
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 40529
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 48703
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 57325
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 64185
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
National Lampoon                         National  Lampoon,  Inc. with a          B 74832
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 81754
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 85384
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 137088
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 156295
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 152103
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 156296
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 164353
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
National Lampoon                         National  Lampoon,  Inc. with a          B 170216
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 177760
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 233599
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 248569
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 248570
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 265694
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 273054
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a          B 281437
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
National Lampoon.  The Best of Number 4  National  Lampoon,  Inc. with a          B 907480
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
The Best of National Lampoon No. 1       National  Lampoon,  Inc. with a          A 336334
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
The Best of National Lampoon No. 3       National  Lampoon,  Inc. with a          A 423189
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Letters  From the  Editor  of  National  National  Lampoon,  Inc. with a          A 420415
lampoon                                  security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National   Lampoon:    This   Side   of  National  Lampoon,  Inc. with a          A 532080
Parodies                                 security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Would You By a Used Car From This Man?   National  Lampoon,  Inc. with a          A 317995
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon:  a Dirty Book          National  Lampoon,  Inc. with a          A 728026
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Art Poster Book                          National  Lampoon,  Inc. with a          A 694476
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
National Lampoon:  The Best of No. 6     National  Lampoon,  Inc. with a          A 764189
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National  Lampoon  Presents  the  Naked  National  Lampoon,  Inc. with a          A 854544
and the Nude                             security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National    Lampoon,    the   Paperback  National  Lampoon,  Inc. with a          A 578840
Conspiracy                               security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National  Lampoon:  the Best of  Number  National  Lampoon,  Inc. with a          A 529031
4, Vol. 1, No. 5                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National   Lampoon:   The   Gentleman's  National  Lampoon,  Inc. with a          A 681033
Bathroom Companion                       security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
The 199th Birthday Book                  National  Lampoon,  Inc. with a          A 741350
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
The Job of Sex:  A  Workingman's  Guide  National  Lampoon,  Inc. with a          A 550712
to Productive Lovemaking                 security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Missing White House Tapes;  Impeachment  National  Lampoon,  Inc. with a          DU 89349            01/30/1974
Day Ceremonies Script                    security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
National   Lampoon   1964  High  School  National  Lampoon,  Inc. with a          A 541513
Yearbook Parody                          security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National   Lampoon   Presents   the  Up  National  Lampoon,  Inc. with a          A 828588
Yourself Book                            security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
The  Breast  of  National  Lampoon;   a  National  Lampoon,  Inc. with a          A 377706
Collection of Sexual Humor               security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon Comics                  National Lampoon, Inc.                   A 572874
----------------------------------------------------------------------------------------------------------------------

The National  Lampoon  Encyclopedia  of  National  Lampoon,  Inc. with a          A 479368
Humor                                    security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon comedy playoffs.        National  Lampoon,  Inc. with a       PAu-1-434-923          09/20/1990
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon, another dirty book     National  Lampoon,  Inc. with a         TX-232-406           03/29/1979
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National   Lampoon   Sunday   newspaper  National  Lampoon,  Inc. with a         TX-347-662           08/31/1979
parody                                   security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
National  Lampoon,  slightly  higher in  National  Lampoon,  Inc. with a         TX-365-426           11/07/1979
Canada:  an  unassuming   anthology  of  security   interest   held   by
Canadian-type  material  from the pages  James P. Jimirro
of the National Lampoon
----------------------------------------------------------------------------------------------------------------------
The  Iron  on  book:  sixteen  original  National  Lampoon,  Inc. with a         TX-379-403           08/31/1979
designs for your chest                   security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
The  National  Lampoon's  Animal  house  National  Lampoon,  Inc. with a         TX-384-974           11/19/1979
book                                     security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National  Lampoon's  Cartoons  even  we  National  Lampoon,  Inc. with a         TX-396-473           11/05/1979
wouldn't  dare print:  a collection  of  security   interest   held   by
thoroughly reprehensible cartoons        James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Jeff Greenfield's Book of books          National  Lampoon,  Inc. with a         TX-402-260           11/16/1979
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National  Lampoon's  tenth  anniversary  National  Lampoon,  Inc. with a         TX-540-642           03/25/1980
anthology                                security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon foto funnies            National  Lampoon,  Inc. with a         TX-544-611           07/08/1980
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon true facts              National  Lampoon,  Inc. with a         TX-808-981           12/03/1981
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
Hitler's favorite cartoons               National  Lampoon,  Inc. with a         TX-907-682           04/21/1982
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National   Lampoon  peekers  and  other  National  Lampoon,  Inc. with a         TX-945-741           06/23/1982
true facts                               security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National  Lampoon son of cartoons  even  National  Lampoon,  Inc. with a        TX-1-622-171          07/25/1985
we wouldn't dare print II:  a sequel     security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon dirty joke book         National  Lampoon,  Inc. with a        TX-1-797-519          04/15/1986
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National   Lampoon   true   facts  1991  National  Lampoon,  Inc. with a        TX-2-906-982          08/07/1990
calendar                                 security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National  Lampoon  presents true facts:  National  Lampoon,  Inc. with a        TX-3-159-281          04/26/1991
the book                                 security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National   Lampoon   true   facts  1992  National  Lampoon,  Inc. with a        TX-3-223-950          09/12/1991
calendar                                 security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National  Lampoon  presents  More  true  National  Lampoon,  Inc. with a        TX-3-273-518          03/17/1992
facts:   an   all-new   collection   of  security   interest   held   by
absurd-but-true real-life funny stuff    James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
National   Lampoon's   Truly  tasteless  National  Lampoon,  Inc. with a        TX-3-462-011          10/23/1992
cartoons:  the best of the worst         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
That's  sick:  The  National  lampoon's  National  Lampoon,  Inc. with a        TX-3-799-435          04/14/1994
rudest and crudest cartoons              security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a         TX 244-608           03/14/1979
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                 TX 244-607           03/14/1979
                                                                                --------------------------------------

                                                                                 TX 244-606           03/14/1979
                                         -----------------------------------------------------------------------------

                                                                                 TX 244-605           03/14/1979
                                                                                --------------------------------------

                                                                                 TX 244-604           03/14/1979
                                                                                --------------------------------------

                                                                                 TX 244-603           03/14/1979
                                                                                --------------------------------------

                                                                                 TX 244-600           03/14/1979
                                                                                --------------------------------------

                                                                                 TX 244-601           03/14/1979
                                                                                --------------------------------------

                                                                                 TX 244-602           03/14/1979
----------------------------------------------------------------------------------------------------------------------

National Lampoon                         National  Lampoon,  Inc. with a         TX 347-663           03/14/1979
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                 TX 347-668           03/14/1979
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
                                                                                 TX 347-672           03/14/1979
                                                                                --------------------------------------

                                                                                 TX 347-669           05/03/1979
                                                                                --------------------------------------

                                                                                 TX 347-667           05/03/1979
                                                                                --------------------------------------

                                                                                 TX 347-666           05/01/1979
                                                                                --------------------------------------

                                                                                 TX 347-673           05/01/1979
                                                                                --------------------------------------

                                                                                 TX 347-674           05/01/1979
                                                                                --------------------------------------

                                                                                 TX 347-664           09/04/1979
                                                                                --------------------------------------

                                                                                 TX 347-665           09/04/1979
                                                                                --------------------------------------

                                                                                 TX 347-670           09/05/1979
                                                                                --------------------------------------

                                                                                 TX 347-671           09/05/1979
                                                                                --------------------------------------

                                                                                 TX 360-828           10/19/1979
                                                                                --------------------------------------

                                                                                 TX 360-829           10/19/1979
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a         TX 418-860           12/14/1979
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                 TX 418-861           02/21/1980
                                         -----------------------------------------------------------------------------

                                                                                 TX 418-862           02/21/1980
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
                                                                                 TX 424-859           02/21/1980
                                                                                --------------------------------------

                                                                                 TX 483-274           03/24/1980
                                                                                --------------------------------------

                                                                                 TX 486-569           05/29/1980
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a         TX 509-660           04/21/1980
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                 TX 521-123           07/07/1980
                                                                                --------------------------------------

                                                                                 TX 518-472           07/28/1980
                                                                                --------------------------------------

                                                                                 TX 537-416           09/08/1980
                                                                                --------------------------------------

                                                                                 TX 592-060           12/05/1980
                                                                                --------------------------------------

                                                                                 TX 581-606           11/10/1980
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a         TX 644-795           12/01/1980
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                 TX 644-828           01/05/1981
                                                                                --------------------------------------

                                                                                 TX 675-911           04/23/1981
                                                                                --------------------------------------

                                                                                 TX 644-829           01/26/1981
                                                                                --------------------------------------

                                                                                 TX 671-101           03/03/1981
                                                                                --------------------------------------

                                                                                 TX 675-910           03/30/1981
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
                                                                                 TX 689-192           05/01/1981
                                                                                --------------------------------------

                                                                                 TX 706-321           05/22/1981
                                                                                --------------------------------------

                                                                                 TX 718-965           06/25/1981
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a         TX 740-533           07/27/1981
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                 TX 750-923           08/24/1981
                                                                                --------------------------------------

                                                                                 TX 775-880           09/28/1981
                                         -----------------------------------------------------------------------------

                                                                                 TX 789-928           10/23/1981
                                                                                --------------------------------------

                                                                                 TX 823-506           12/30/1981
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a         TX 871-131           01/21/1982
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                 TX 854-039           02/26/1982
                                                                                --------------------------------------

                                                                                 TX 879-048           03/31/1982
                                                                                --------------------------------------

                                                                                 TX 895-622           04/21/1982
                                                                                --------------------------------------

                                                                                 TX 916-440           05/24/1982
                                                                                --------------------------------------

                                                                                 TX 923-569           06/23/1982
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a         TX 808-982           11/27/1981
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
                                                                                 TX 938-965           07/26/1982
                                                                                --------------------------------------

                                                                                 TX 973-106           08/25/1982
                                                                                --------------------------------------

                                                                                TX 1-004-476          09/27/1982
                                                                                --------------------------------------

                                                                                TX 1-004-477          10/25/1982
                                                                                --------------------------------------

                                                                                TX 1-011-809          11/26/1982
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a        TX 1-054-013          12/27/1982
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                TX 1-053-080          01/28/1983
                                                                                --------------------------------------

                                                                                TX 1-062-587          03/01/1983
                                                                                --------------------------------------

                                                                                TX 1-089-298          04/05/1983
                                                                                --------------------------------------

                                                                                TX 1-106-578          04/25/1983
                                                                                --------------------------------------

                                                                                TX 1-119-853          05/27/1983
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a        TX 1-190-353          06/24/1983
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                TX 1-194-913          07/25/1983
                                                                                --------------------------------------

                                                                                TX 1-193-077          08/25/1983
                                                                                --------------------------------------

                                                                                TX 1-204-103          10/03/1983
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
                                                                                TX 1-230-792          10/31/1983
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a        TX 1-251-409          12/09/1983
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                TX 1-272-725          01/06/1984
                                                                                --------------------------------------

                                                                                TX 1-275-407          01/30/1984
                                                                                --------------------------------------

                                                                                TX 1-303-745          03/05/1984
                                                                                --------------------------------------

                                                                                TX 1-326-005          03/29/1984
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a        TX 1-349-455          04/26/1984
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                TX 1-352-688          05/29/1984
                                                                                --------------------------------------

                                                                                TX 1-383-533          06/28/1984
                                                                                --------------------------------------

                                                                                TX 1-394-294          07/26/1984
                                                                                --------------------------------------

                                                                                TX 1-408-020          08/24/1984
                                                                                --------------------------------------

                                                                                TX 1-425-928          09/26/1984
                                                                                --------------------------------------

                                                                                TX 1-456-819          10/29/1984
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a        TX 1-476-774          11/26/1984
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                TX 1-497-995          01/14/1985
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
                                                                                TX 1-515-582          01/29/1985
                                                                                --------------------------------------

                                                                                TX 1-527-380          03/12/1985
                                                                                --------------------------------------

                                                                                TX 1-553-740          04/03/1985
                                                                                --------------------------------------

                                                                                TX 1-566-445          05/02/1985
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a        TX 1-582-633          05/29/1985
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                TX 1-617-807          06/25/1985
                                                                                --------------------------------------

                                                                                TX 1-634-940          07/29/1985
                                                                                --------------------------------------

                                                                                TX 1-658-436          08/28/1985
                                                                                --------------------------------------

                                                                                TX 1-662-714          09/20/1985
                                                                                --------------------------------------

                                                                                TX 1-688-882          10/28/1985
                                                                                --------------------------------------

                                                                                TX 1-702-932          12/02/1985
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a        TX 1-723-939          12/23/1985
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                TX 1-744-842          01/27/1986
                                                                                --------------------------------------

                                                                                TX 1-791-363          02/26/1986
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
                                                                                TX 1-794-559          04/07/1986
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a        TX 1-858-428          05/27/1986
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                TX 1-841-564          06/09/1986
                                                                                --------------------------------------

                                                                                TX 1-885-884          08/13/1986
                                                                                --------------------------------------

                                                                                TX 1-890-213          08/13/1986
                                                                                --------------------------------------

                                                                                TX 1-919-800          09/22/1986
                                                                                --------------------------------------

                                                                                TX 1-936-540          10/20/1986
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a        TX 2-001-853          12/30/1986
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a        TX 2-142-606          09/21/1987
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                TX 2-165-789          10/07/1987
                                                                                --------------------------------------

                                                                                TX 2-171-738          10/28/1987
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a        TX 2-280-402          04/11/1988
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                TX 2-280-401          04/11/1988
                                                                                --------------------------------------

                                                                                TX 2-215-857          12/21/1987
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
                                                                                TX 2-218-600          12/24/1987
                                                                                --------------------------------------

                                                                                TX 2-246-544          02/18/1988
                                                                                --------------------------------------

                                                                                TX 2-299-669          04/18/1988
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a        TX 2-368-614          03/25/1988
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                TX 2-368-620          03/25/1988
                                                                                --------------------------------------

                                                                                TX 2-336-235          06/13/1988
                                                                                --------------------------------------

                                                                                TX 2-376-066          08/22/1988
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a        TX 2-502-608          02/24/1989
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                TX 2-526-863          11/02/1988
                                                                                --------------------------------------

                                                                                TX 2-466-526          12/23/1988
                                                                                --------------------------------------

                                                                                TX 2-465-327          12/23/1988
                                                                                --------------------------------------

                                                                                TX 2-499-560          02/23/1989
                                                                                --------------------------------------

                                                                                TX 2-528-082          04/14/1989
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a        TX 2-579-005          06/14/1989
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                TX 2-620-993          08/18/1989
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
                                                                                TX 2-670-005          10/27/1989
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a        TX 2-708-426          12/29/1989
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                TX 2-811-501          04/23/1990
                                                                                --------------------------------------

                                                                                TX 2-811-500          04/23/1990
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a        TX 2-858-033          07/17/1990
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                TX 2-878-499          08/24/1990
                                                                                --------------------------------------

                                                                                TX 2-924-929          10/30/1990
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a        TX 3-032-465          04/03/1991
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                TX 3-032-466          04/03/1991
                                                                                --------------------------------------

                                                                                TX 3-034-811          04/03/1991
----------------------------------------------------------------------------------------------------------------------
National Lampoon                         National  Lampoon,  Inc. with a        TX 3-097-183          05/01/1991
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                TX 3-128-004          08/27/1991
                                                                                --------------------------------------

                                                                                TX 3-132-814          08/21/1991
                                                                                --------------------------------------

                                                                                TX 3-136-111          08/28/1991
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
National Lampoon best of number . . .    National  Lampoon,  Inc. with a         TX 347-661           08/31/1979
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon best of number . . .    National  Lampoon,  Inc. with a         TX 418-992           08/31/1979
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National Lampoon best of number . . .    National  Lampoon,  Inc. with a         TX 810-136           12/10/1981
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Gentleman's bathroom companion . . .     National  Lampoon,  Inc. with a         TX 418-991           08/31/1979
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
National  Lampoon  .  .  .  anniversary  National  Lampoon,  Inc. with a         TX 521-124           06/19/1980
anthology                                security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                 TX 580-087           11/06/1980
----------------------------------------------------------------------------------------------------------------------

National  Lampoon  All-new true facts .  National  Lampoon,  Inc. with a        TX 1-937-589          10/21/1986
.. .                                      security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
The National Lampoon Treasury of Humor   National  Lampoon,  Inc. with a        TX 3-243-157          02/12/1992
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
That's  sick:  The  National  Lampoon's  National  Lampoon,  Inc. with a        TX 3-799-435          04/14/1994
rudest and crudest cartoons              security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Heavy Metal                              National  Lampoon,  Inc. with a         TX 141-752           03/10/1978
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
                                                                                 TX 141-751           03/10/1978
                                                                                --------------------------------------

                                                                                 TX 141-750           03/10/1978
                                                                                --------------------------------------

                                                                                 TX 113-307           08/01/1978
                                                                                --------------------------------------

                                                                                 TX 117-728           09/28/1978
----------------------------------------------------------------------------------------------------------------------
Heavy Metal                              National  Lampoon,  Inc. with a         TX 230-188           07/03/1978
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                 TX 230-189           07/03/1978
                                                                                --------------------------------------

                                                                                 TX 230-190           07/03/1978
                                                                                --------------------------------------

                                                                                 TX 230-191           07/03/1978
                                                                                --------------------------------------

                                                                                 TX 212-254           08/30/1978
                                                                                --------------------------------------

                                                                                 TX-212-253           11/15/1978
                                                                                --------------------------------------

                                                                                 TX-240-977           05/04/1979
                                                                                --------------------------------------

                                                                                 TX 263-685           02/01/1979
                                                                                --------------------------------------

                                                                                 TX-254-991           02/08/1979
                                                                                --------------------------------------

                                                                                 TX 277-479           07/03/1979
----------------------------------------------------------------------------------------------------------------------
Heavy Metal                              National  Lampoon,  Inc. with a         TX 307-041           05/04/1979
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
                                                                                 TX 330-366           09/14/1979
                                                                                --------------------------------------

                                                                                 TX 288-211           05/15/1979
                                                                                --------------------------------------

                                                                                 TX 342-498           10/05/1979
                                                                                --------------------------------------

                                                                                 TX 342-499           10/05/1979
                                                                                --------------------------------------

                                                                                 TX 315-700           08/15/1979
                                                                                --------------------------------------

                                                                                 TX 321-276           09/04/1979
                                                                                --------------------------------------

                                                                                 TX 345-419           10/05/1979
                                                                                --------------------------------------

                                                                                 TX 362-170           11/05/1979
----------------------------------------------------------------------------------------------------------------------
Heavy Metal                              National  Lampoon,  Inc. with a         TX 461-212           11/19/1979
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                 TX 403-640           01/10/1980
                                                                                --------------------------------------

                                                                                 TX 444-814           03/25/1980
                                                                                --------------------------------------

                                                                                 TX 461-213           03/24/1980
                                                                                --------------------------------------

                                                                                 TX 444-813           03/25/1980
                                                                                --------------------------------------

                                                                                 TX 463-862           04/21/1980
                                                                                --------------------------------------

                                                                                 TX 474-389           05/19/1980
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
Heavy Metal                              National  Lampoon,  Inc. with a         TX 510-133           06/19/1980
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                 TX-529-905           08/11/1980
----------------------------------------------------------------------------------------------------------------------
Heavy Metal                              National  Lampoon,  Inc. with a         TX 628-621           10/31/1980
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                 TX 628-620           10/31/1980
                                                                                --------------------------------------

                                                                                 TX 628-619           10/31/1980
                                                                                --------------------------------------

                                                                                 TX 716-913           04/03/1981
                                                                                --------------------------------------

                                                                                 TX 716-914           04/03/1981
                                                                                --------------------------------------

                                                                                 TX 716-912           04/03/1981
                                                                                --------------------------------------

                                                                                 TX 705-631           04/01/1981
                                                                                --------------------------------------

                                                                                 TX 720-512           06/19/1981
                                                                                --------------------------------------

                                                                                 TX 718-850           06/18/1981
----------------------------------------------------------------------------------------------------------------------
Heavy Metal                              National  Lampoon,  Inc. with a         TX 744-974           04/01/1981
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                 TX 752-833           07/28/1981
                                                                                --------------------------------------

                                                                                 TX 760-062           09/08/1981
                                                                                --------------------------------------

                                                                                 TX 772-506           09/28/1981
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
                                                                                 TX 808-343           11/23/1981
                                                                                --------------------------------------

                                                                                 TX 803-073           11/23/1981
----------------------------------------------------------------------------------------------------------------------
Heavy Metal                              National  Lampoon,  Inc. with a         TX 826-660           12/17/1981
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                 TX 844-264           01/27/1982
                                                                                --------------------------------------

                                                                                 TX 853-885           02/16/1982
                                                                                --------------------------------------

                                                                                 TX 888-162           04/12/1982
                                                                                --------------------------------------

                                                                                 TX 905-724           05/13/1982
                                                                                --------------------------------------

                                                                                 TX 921-984           06/17/1982
----------------------------------------------------------------------------------------------------------------------
Heavy Metal                              National  Lampoon,  Inc. with a         TX 956-852           08/09/1982
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                 TX 965-368           09/08/1982
                                                                                --------------------------------------

                                                                                 TX 961-553           08/26/1982
                                                                                --------------------------------------

                                                                                 TX 980-776           09/23/1982
----------------------------------------------------------------------------------------------------------------------
Heavy Metal                              National  Lampoon,  Inc. with a        TX 1-074-929          10/15/1982
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                TX 1-116-447          05/19/1983
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
                                                                                TX 1-051-494          01/21/1983
                                                                                --------------------------------------

                                                                                TX 1-124-575          05/19/1983
----------------------------------------------------------------------------------------------------------------------
Heavy Metal                              National  Lampoon,  Inc. with a        TX 1-136-605          11/16/1982
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                TX 1-143-785          02/14/1983
                                                                                --------------------------------------

                                                                                TX 1-133-247          04/25/1983
                                                                                --------------------------------------

                                                                                TX 1-133-248          04/25/1983
                                                                                --------------------------------------

                                                                                TX 1-167-089          07/19/1983
                                                                                --------------------------------------

                                                                                TX 1-162-199          07/18/1983
                                                                                --------------------------------------

                                                                                TX 1-203-083          09/23/1983
                                                                                --------------------------------------

                                                                                TX 1-203-088          09/23/1983
----------------------------------------------------------------------------------------------------------------------
Heavy Metal                              National  Lampoon,  Inc. with a        TX 1-256-837          12/07/1983
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                TX 1-249-255          12/05/1983
                                                                                --------------------------------------

                                                                                TX 1-281-944          02/03/1984
                                                                                --------------------------------------

                                                                                TX 1-284-550          02/03/1984
                                                                                --------------------------------------

                                                                                TX 1-299-064          02/03/1984
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
Heavy Metal                              National  Lampoon,  Inc. with a        TX 1-395-577          05/21/1984
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                TX 1-352-273          05/21/1984
                                                                                --------------------------------------

                                                                                TX 1-352-250          05/21/1984
                                                                                --------------------------------------

                                                                                TX 1-392-501          07/20/1984
                                                                                --------------------------------------

                                                                                TX 1-433-721          09/24/1984
                                                                                --------------------------------------

                                                                                TX 1-398-583          07/20/1984
                                                                                --------------------------------------

                                                                                TX 1-451-520          10/12/1984
                                                                                --------------------------------------

                                                                                TX 1-446-273          10/12/1984
                                                                                --------------------------------------

                                                                                TX 1-451-513          10/15/1984
----------------------------------------------------------------------------------------------------------------------
Heavy Metal                              National  Lampoon,  Inc. with a        TX 1-560-747          04/25/1985
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
                                                                                TX 1-571-973          04/25/1985
----------------------------------------------------------------------------------------------------------------------

                                                                                TX 1-566-298          04/25/1985
----------------------------------------------------------------------------------------------------------------------

                                                                                TX 1-566-297          04/25/1985
----------------------------------------------------------------------------------------------------------------------

                                                                                TX 1-562-352          04/25/1985
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
Heavy Metal                              National  Lampoon,  Inc. with a        TX 1-624-872          07/12/1985
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Heavy Metal                              National  Lampoon,  Inc. with a        TX 1-948-492          11/28/1986
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                TX 1-948-493          11/28/1986
----------------------------------------------------------------------------------------------------------------------
Heavy Metal                              National  Lampoon,  Inc. with a        TX 1-954-688          12/03/1986
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                TX 1-954-653          12/03/1986
                                                                                --------------------------------------

                                                                                TX 1-986-533          12/03/1986
                                                                                --------------------------------------

                                                                                TX 1-986-532          12/03/1986
                                                                                --------------------------------------

                                                                                TX 1-954-150          12/01/1986
                                                                                --------------------------------------

                                                                                TX 1-954-149          12/01/1986
                                                                                --------------------------------------

                                                                                TX 1-964-852          12/15/1986
                                                                                --------------------------------------

                                                                                TX 1-964-855          12/16/1986
                                                                                --------------------------------------

                                                                                TX 1-964-853          12/15/1986
----------------------------------------------------------------------------------------------------------------------
Heavy Metal                              National  Lampoon,  Inc. with a        TX 2-130-268          08/19/1987
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                TX 2-136-702          08/19/1987
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
                                                                                TX 2-134-966          08/19/1987
----------------------------------------------------------------------------------------------------------------------
Heavy Metal                              National  Lampoon,  Inc. with a        TX 2-879-177          08/06/1990
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                TX 2-882-592          08/06/1990
                                                                                --------------------------------------

                                                                                TX 2-879-582          08/06/1990
                                                                                --------------------------------------

                                                                                TX 2-938-906          09/26/1990
----------------------------------------------------------------------------------------------------------------------
Heavy Metal                              National  Lampoon,  Inc. with a         TX 19-219            03/09/1978
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                TX 3-020-452          01/23/1991
                                                                                --------------------------------------

                                                                                TX 2-988-990          01/23/1991
                                                                                --------------------------------------

                                                                                TX 3-041-468          01/23/1991
                                                                                --------------------------------------

                                                                                TX 3-041-467          01/23/1991
                                                                                --------------------------------------

                                                                                TX 3-003-884          01/23/1991
                                                                                --------------------------------------

                                                                                TX 2-995-258          01/23/1991
                                                                                --------------------------------------

                                                                                TX 3-020-454          01/23/1991
                                                                                --------------------------------------

                                                                                TX 3-020-453          01/23/1991
                                                                                --------------------------------------

                                                                                TX 3-055-982          02/12/1991
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                 TITLE                              CLAIMANT                      REG. NO.             REG. DATE
----------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                     <C>                   <C>
                                                                                TX 3-003-108          02/12/1991
                                                                                --------------------------------------

                                                                                TX 3-064-954          05/20/1991
----------------------------------------------------------------------------------------------------------------------
Heavy Metal                              National  Lampoon,  Inc. with a        TX 3-087-955          06/05/1991
                                         security   interest   held   by
                                         James P. Jimirro
                                                                                --------------------------------------
                                                                                TX 3-137-047          09/05/1991
                                                                                --------------------------------------

                                                                                TX 3-162-297          09/30/1991
----------------------------------------------------------------------------------------------------------------------
The Best Of Heavy Metal                  National  Lampoon,  Inc. with a        TX 2-134-970          08/19/1987
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
My bod is for God                        National  Lampoon,  Inc. with a        PAu-424-054           07/29/1982
                                         security   interest   held   by
                                         James P. Jimirro
----------------------------------------------------------------------------------------------------------------------
Apocalypso now                           National  Lampoon,  Inc. with a        PAu-424-055           07/29/1982
                                         security   interest   held   by
                                         James P. Jimirro
</TABLE>
<PAGE>

3.    Federal Trademark and Service Mark Registrations:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
     TRADEMARK/SERVICE          REGISTRANT         DESCRIPTION OF          REGISTRATION NO.       REGISTRATION DATE
            MARK                                   GOODS/SERVICES

----------------------------------------------------------------------------------------------------------------------
<S>                           <C>              <C>                             <C>                   <C>
NATIONAL LAMPOON              National         Magazine             in         907,211               02/02/1971
                              Lampoon,   Inc.  International Class 16
                              with          a
                              security
                              interest   held
                              by   James   P.
                              Jimirro

                              National

                              Lampoon,   Inc.  Burly      Bear     and
NATIONAL                      with          a  National        Lampoon
                              security         Networks shows
LAMPOON                       interest   held
                              by   James   P.
                              Jimirro

----------------------------------------------------------------------------------------------------------------------
</TABLE>

4.    Internet domain name registrations:

      nationallampoon.com -- registered by J2 Communications

      nationalampoon.com -- registered by J2 Communications
<PAGE>

                                LIST OF EXHIBITS

Exhibit A        Certificate of Designations (Series C)

Exhibit B        Form of Common Stock Purchase Warrant

Exhibit C        Series C Registration Agreement

Exhibit D        Series C Voting Agreement

Exhibit E        Second Amendment to Voting Agreement

Exhibit F        Consent of Series B Holders

Exhibit G        Certificate of Amendment

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00076-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00076-of-00352.parquet"}]]