STATE OF DELAWARE
FIRST AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
NATIONAL LAMPOON, INC.
FIRST: The Board of Directors of National Lampoon, Inc., a Delaware corporation
(the "Corporation"), duly adopted resolutions setting forth the proposed
amendment to the Certificate of Incorporation (the "Certificate") of said
Corporation, declaring said amendment to be in the best interests of the
Corporation and its stockholders. The resolutions setting forth the proposed
amendment are substantially as follows:
NOW, THEREFORE, BE IT RESOLVED, that Article 4 of the Certificate of
Incorporation of the Corporation be amended and restated in its entirety to read
as follows:
ARTICLE 4. STOCK. The aggregate number of shares of capital stock
that the Corporation shall have authority to issue is Sixty-Two Million
(62,000,000) shares, consisting of Sixty Million (60,000,000) shares of
common stock with a par value of $0.0001 per share ("Common Stock") and
Two Million (2,000,000) shares of preferred stock with a par value of
$0.0001 per share ("Preferred Stock").
NOW, THEREFORE, BE IT RESOLVED, that the Certificate of Incorporation of
the Corporation is hereby amended by striking out Sections 5.2.1, 5.2.3 and
5.2.4(d) thereof and by substituting in lieu of said sections the following new
Sections 5.2.1, 5.2.3 and 5.2.4(d), and by adding a new Section 5.2.7 to Article
5 of the Certificate of Incorporation, as follows:
SECTION 5.2.1 DIVIDEND RIGHTS. The Corporation shall have the right
to issue dividends and make distributions, whether cash, securities or
otherwise, whether or not any shares of the Series B Preferred Stock are
outstanding; provided, however, that the Corporation shall not issue any
dividends (other than dividends payable solely in Common Stock) or make
any distributions of cash or other assets until after the Payment
Satisfaction Date. To the extent dividends are declared and issued by the
Corporation prior to the earlier of (i) the date of a Liquidation Event or
(ii) the date on which the Series B Preferred Stock is converted
hereunder, the Corporation shall pay preferential dividends to the holders
of the Series B Preferred Stock as provided in this Section 5.2.1.
Dividends may be paid in cash or with shares of Common Stock. Dividends on
each share of the Series B Preferred Stock shall accrue on a daily basis,
whether or not declared, beginning July 19, 2004 and continuing to accrue
until the earlier of (i) the date of a Liquidation Event, or (ii) the date
on which such share of Series B Preferred Stock is converted hereunder, at
the rate of 9.0% per annum on the sum of (i) the Original Purchase Price
(as equitably adjusted for any stock splits, stock dividends,
recapitalizations, reverse stock splits or otherwise to prevent an
enlargement or diminution of rights), plus (ii) all accumulated and unpaid
dividends thereon (compounding annually). All accrued and unpaid dividends
on each share of Series B Preferred Stock shall be fully paid (pro rata
and pari passu with any class or series of preferred securities of the
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Corporation entitled to participate pro rata and pari passu as to
dividends with the Series B Preferred Stock) before any dividends or
distributions may be issued with respect to any Junior Securities. If a
share of Series B Preferred Stock is converted, then upon such conversion
any accumulated and unpaid dividends on such share of Series B Preferred
Stock shall be paid in the form of Common Stock at a price per share equal
to the price at which shares of Series C Convertible Preferred Stock of
the Corporation would be converted at the time assuming there were shares
of such stock actually being converted at that time. Except as otherwise
provided herein, if at any time the Corporation pays less than the total
amount of dividends then accrued with respect to the Series B Preferred
Stock and any class or series of preferred securities of the Corporation
entitled to participate pro rata and pari passu as to dividends or
distributions with the Series B Preferred Stock, such payment shall be
distributed ratably among the holders thereof based upon the aggregate
accrued but unpaid dividends on the Series B Preferred Stock and any class
or series of preferred securities of the Corporation entitled to
participate pro rata and pari passu as to dividends or distributions with
the Series B Preferred Stock.
SECTION 5.2.3 LIQUIDATION RIGHTS. Not less than thirty (30) days
prior to the payment date stated therein, the Corporation shall mail
written notice of any Liquidation Event to each record holder of Series B
Preferred Stock setting forth in reasonable detail the amount of proceeds
to be paid with respect to each share of (a) Series B Preferred Stock, (b)
Common Stock and (c) any class or series of preferred securities of the
Corporation entitled to priority over or to participate pro rata and pari
passu as to dividends or distributions with the Series B Preferred Stock,
in connection with such Liquidation Event. Upon any liquidation,
dissolution, or winding up of the Corporation, whether voluntary or
involuntary, the holders of Series B Preferred Stock shall be entitled to
receive payment of all accrued and unpaid dividends with respect thereto
prior to the making of any distributions to the holders of Common Stock,
and after the payment of such dividends (and any other dividends or
amounts payable to the holders of the Corporation's preferred securities
entitled to priority with respect thereto) the assets of the Corporation
legally available for distribution, if any, shall be distributed ratably
to the holders of the Common Stock and the Series B Preferred Stock, along
with the holders of all other securities of the Corporation entitled to
participate therein, with all holders of Series B Preferred Stock being
treated as if they were holders of the number of shares of Common Stock
into which their shares of Series B Preferred Stock could be converted in
accordance with Section 5.2.4.
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SECTION 5.2.4 CONVERSION RIGHTS.
(D) FRACTIONAL SHARES. No fractional shares of Common Stock shall be
issued upon conversion of Series B Preferred Stock. All shares of Common
Stock (including fractions thereof) issuable upon conversion of more than
one share of Series B Preferred Stock by a holder thereof shall be
aggregated for purposes of determining whether the conversion would result
in the issuance of any fractional share. If, after the aforementioned
aggregation, the conversion would result in the issuance of any fractional
share, the Corporation shall, in lieu of issuing any fractional share, pay
cash equal to the product of such fraction multiplied by the Market Price
of the Common Stock on the date of conversion.
SECTION 5.2.7 DEFINITIONS. As used in this Article 5, the following
defined terms have the meanings set forth below:
"COMMON STOCK" means the Corporation's Common Stock, par value of
$0.0001 per share.
"JUNIOR SECURITIES" means the Common Stock and any other capital
stock or other equity securities of the Corporation (including, without
limitation, warrants, options and other rights to acquire such capital
stock or other equity securities), except for the Series B Preferred Stock
and such other series or classes of securities having priority over the
Series B Preferred Stock, or having the right to participate pro rata and
pari passu with the Series B Preferred Stock, as to current or liquidating
dividends or other distributions and as to which the holders of a majority
of the Series B Preferred Stock have affirmatively approved the issuance
thereof.
"LIQUIDATION EVENT" means any of the following: (i) the liquidation,
dissolution or winding up of the Corporation (whether voluntary or
involuntary), (ii) the sale, lease, transfer or other disposition of all
or substantially all of the property or assets of the Corporation, (iii)
any merger, consolidation or reorganization to which the Corporation is a
party, except for a merger, consolidation or reorganization as to which,
after giving effect to such merger, consolidation or reorganization, the
holders of the Corporation's outstanding capital stock (on a fully-diluted
basis) immediately prior to the merger, consolidation or reorganization,
own capital stock holding a majority of the voting power (under ordinary
circumstances), and (iv) any sale or related series of sales of shares of
the Corporation's capital stock by the Corporation which results in any
Person or group of affiliated Persons (other than the owners of the
Company's capital stock immediately prior to such sale or related series
of sales) owning capital stock holding a majority of the voting power of
the Company.
"MARKET PRICE" of the Common Stock means the average of the closing
prices of the Common Stock's sales on all securities exchanges on which
the Common Stock may at the time be listed, or, if there have been no
sales on any such exchange on any day, the average of the highest bid and
lowest asked prices on all such exchanges at the end of such day, or, if
on any day the Common Stock is not so listed, the average of the
representative bid and asked prices quoted in the NASDAQ System as of 4:00
P.M., New York time, or, if on any day the Common Stock is not quoted in
the NASDAQ System, the average of the closing or last prices of such
stock's sales each day (whether sales occurred each day or not) in the
domestic over the counter market as reported by the National Quotation
Bureau, Incorporated, or any similar successor organization, in each such
case averaged over a period of twenty-one (21) business days consisting of
the day as of which "Market Price" is being determined and the twenty (20)
consecutive business days immediately prior to such day. If at any time
the Common Stock is not listed on any securities exchange or quoted in the
NASDAQ System or the over the counter market, the "Market Price" shall be
the fair value thereof determined in the reasonable good faith judgment of
the Corporation's Board of Directors.
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"ORIGINAL PURCHASE PRICE" shall mean with respect to each share of
Series B Preferred Stock the amount paid to the Corporation for the
issuance thereof (with accompanying warrants or options if applicable).
"PAYMENT SATISFACTION DATE" means the date following the termination
of the employment of James P. Jimirro ("JIMIRRO") with the Corporation as
of which the following condition (whichever is applicable) has been
satisfied: (i) if Jimirro's employment with the Corporation has been
terminated by the Corporation for "Cause" pursuant to Section 4(e) of the
Employment Agreement between Jimirro and the Corporation dated May 17,
2002 (the "EMPLOYMENT AGREEMENT") or by Jimirro otherwise than for an
Executive Good Reason Termination Event pursuant to Section 4(g) of the
Employment Agreement, then upon full payment of all compensation
(excluding payments with respect to the movie "National Lampoon's Van
Wilder") owed to Jimirro under the Employment Agreement; or (ii) if
Jimirro's employment with the Corporation has been terminated by reason of
Jimirro's death or disability, by the Corporation for "Convenience"
pursuant to Section 4(f) of the Employment Agreement, or by Jimirro for an
Executive Good Reason Termination Event pursuant to Section 4(g) of the
Employment Agreement, then upon the later of (A) full payment to Jimirro
of all compensation (including payments under the Severance Note (as
defined in the Employment Agreement) but excluding payments with respect
to the movie "National Lampoon's Van Wilder") owed to Jimirro under the
Employment Agreement, and (B) thirteen (13) months after the payment to
Jimirro of the "Cash Severance Payment" pursuant to, and as defined in,
Section 5(d)(i) of the Employment Agreement.
SECOND: That acting by written consent, the holders of at least a majority of
the issued and outstanding shares of the Corporation's capital stock, including
the Series B Preferred Stock, consented to the foregoing resolutions and this
First Amendment of Certificate of Incorporation in accordance with Section
228(a) of the Delaware General Corporation Law.
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THIRD: That the resolutions and this First Amendment of Certificate of
Incorporation was duly adopted in accordance with the provisions of Section
242(b)(1) of the Delaware General Corporation Law.
FOURTH: That the capital of said Corporation shall not be reduced under or by
reason of said amendment.
IN WITNESS WHEREOF, the undersigned Corporation has caused this First
Amendment to Certificate of Incorporation to be signed by a duly authorized
officer as of October 15, 2004.
By: /s/ Douglas Bennett
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Douglas Bennett,
Executive Vice President
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