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                                                                     EXHIBIT 4.2

                                                                       EXHIBIT B
                                                TO SECURITIES PURCHASE AGREEMENT

NEITHER THESE SECURITIES NOR THE SECURITIES FOR WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE
SECURITIES OR BLUE SKY LAWS. NOTWITHSTANDING THE FOREGOING, THESE SECURITIES AND
THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
SECURITIES.

                            BAM! ENTERTAINMENT, INC.

                           ADDITIONAL INVESTMENT RIGHT

Additional Investment Right No. 1                        Dated: January 29, 2004

        Bam! Entertainment, Inc., a Delaware corporation (the "COMPANY"), hereby
certifies that, for value received, ______________ or its registered assigns
(the "HOLDER"), is entitled to purchase from the Company (a) up to a total of
_____________ shares of common stock, $.001 par value per share (the "COMMON
STOCK"), of the Company (each such share, an "ADDITIONAL INVESTMENT RIGHT SHARE"
and all such shares, the "ADDITIONAL INVESTMENT RIGHT SHARES") at an exercise
price equal to $0.92 per share (as adjusted from time to time as provided in
Section 9, the "EXERCISE PRICE"), and (b) only as part of and in connection with
the purchase of the Additional Investment Right Shares, warrants in the form
attached hereto as Exhibit 1 to purchase up to _______________ shares of Common
Stock (including any warrants issued in replacement thereof, the "ADDITIONAL
INVESTMENT RIGHT WARRANTS"), at any time and from time to time from and after
the date hereof and through and including the 45th Business Day following the
effective date of the Registration Statement (the "EFFECTIVE DATE") (the
"EXPIRATION DATE"), and subject to the following terms and conditions. This
Additional Investment Right (this "ADDITIONAL INVESTMENT RIGHT") is one of a
series of similar additional investment rights issued pursuant to that certain
Securities Purchase Agreement, dated as of the date hereof, by and among the
Company and the Purchasers identified therein (the "PURCHASE AGREEMENT"). All
such additional investment rights are referred to herein, collectively, as the
"ADDITIONAL

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INVESTMENT RIGHTS." Common Stock issuable upon exercise of the Additional
Investment Right Warrants shall be known herein as the "ADDITIONAL INVESTMENT
RIGHT WARRANT SHARES". Concurrently with the issuance of Additional Investment
Right Shares to the Holders further to the exercise of this Additional
Investment Right, the Holder shall be issued Additional Investment Right
Warrants exercisable for a number of Additional Investment Right Warrant Shares
equal to 90% of the number of Additional Investment Right Shares so issued to
the Holder upon such exercise. The term "Registration Statement" as used in this
paragraph shall have the meaning set forth on the Common Stock Registration
Rights Agreement between the Company and the Initial Investors therein of even
date herewith.

        1. Definitions. In addition to the terms defined elsewhere in this
Additional Investment Right, capitalized terms that are not otherwise defined
herein have the meanings given to such terms in the Purchase Agreement.

        2. Registration of Additional Investment Right. The Company shall
register this Additional Investment Right, upon records to be maintained by the
Company for that purpose (the "ADDITIONAL INVESTMENT RIGHT REGISTER"), in the
name of the record Holder hereof from time to time. The Company may deem and
treat the registered Holder of this Additional Investment Right as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the contrary.

        3. Registration of Transfers. The Company shall register the assignment
and transfer of any portion of this Additional Investment Right in the
Additional Investment Right Register, upon surrender of this Additional
Investment Right, with the Form of Assignment attached hereto duly completed and
signed, to the Transfer Agent or to the Company at its address specified herein.
Upon any such registration or transfer, a new additional investment right to
purchase Common Stock, in substantially the form of this Additional Investment
Right (any such new additional investment right, a "NEW ADDITIONAL INVESTMENT
RIGHT"), evidencing the portion of this Additional Investment Right so
transferred shall be issued to the transferee and a New Additional Investment
Right evidencing the remaining portion of this Additional Investment Right not
so transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New Additional Investment Right by the transferee thereof
shall be deemed the acceptance by such transferee of all of the rights and
obligations of a holder of an Additional Investment Right.

        4. Exercise and Duration of Additional Investment Right.

               (a) This Additional Investment Right shall be exercisable by the
registered Holder at any time and from time to time on or after the date hereof
to and including the Expiration Date. At 6:30 P.M., New York City time on the
Expiration Date, the portion of this Additional Investment Right not exercised
prior thereto shall be and become void and of no value.

               (b) The Holder may exercise this Additional Investment Right by
delivering to the Company (i) an exercise notice, in the form attached hereto
(the "EXERCISE NOTICE"), appropriately completed and duly signed, and (ii)
payment of the Exercise Price for the number of Additional Investment Right
Shares and Additional Investment Right Warrants as to which

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this Additional Investment Right is being exercised (which may take the form of
a "cashless exercise" if so indicated in the Exercise Notice and if a "cashless
exercise" may occur at such time pursuant to this Section 10 below), and the
date such items are delivered to the Company (as determined in accordance with
the notice provisions hereof) is an "EXERCISE DATE." The Holder shall not be
required to deliver the original Additional Investment Right in order to effect
an exercise hereunder. Execution and delivery of the Exercise Notice shall have
the same effect as cancellation of the original Additional Investment Right and
issuance of a New Additional Investment Right evidencing the right to purchase
the remaining number of Additional Investment Right Shares and Additional
Investment Right Warrants.

        5. Delivery of Additional Investment Right Shares and Additional
Investment Right Warrants.

               (a) Upon exercise of this Additional Investment Right, the
Company shall promptly (but in no event later than three Trading Days after the
Exercise Date) issue or cause to be issued and cause to be delivered to or upon
the written order of the Holder and in such name or names as the Holder may
designate, a certificate for the Additional Investment Right Shares and
Additional Investment Right Warrants issuable upon such exercise, free of
restrictive legends unless a registration statement covering the resale of the
Additional Investment Right Shares or the Additional Investment Right Warrant
Shares, respectively, and naming the Holder as a selling stockholder thereunder
is not then effective and the Additional Investment Right Shares or the
Additional Investment Right Warrant Shares, respectively, are not freely
transferable without volume restrictions pursuant to Rule 144 under the
Securities Act. The Holder, or any Person so designated by the Holder to receive
Additional Investment Right Shares and Additional Investment Right Warrants,
shall be deemed to have become holder of record of such Additional Investment
Right Shares and Additional Investment Right Warrants as of the Exercise Date.
The Company shall, upon request of the Holder, use its best efforts to deliver
Additional Investment Right Shares hereunder electronically through the
Depository Trust Corporation or another established clearing corporation
performing similar functions.

               (b) This Additional Investment Right is exercisable, either in
its entirety or, from time to time, for a portion of the number of Additional
Investment Right Shares and Additional Investment Right Warrants further to
terms set forth in the first paragraph of the Additional Investment Right. Upon
surrender of this Additional Investment Right following one or more partial
exercises, the Company shall issue or cause to be issued, at its expense, a New
Additional Investment Right evidencing the right to purchase the remaining
number of Additional Investment Right Shares and Additional Investment Right
Warrants.

               (c) In addition to any other rights available to a Holder, if the
Company fails to deliver to the Holder a certificate representing Additional
Investment Right Shares on the date on which delivery of such certificate is
required by this Additional Investment Right, such Holder may notify the Company
via facsimile, mail or any other means, of its failure to deliver the
certificate (a "DELIVERY FAILURE NOTICE"). If the Company fails to deliver to
the Holder a certificate representing Additional Investment Right Shares by the
fifth Business Day after delivery of the Delivery Failure Notice by the Holder
and if after such fifth Business Day after the delivery of the Delivery Failure
Notice the Holder purchases (in an open market transaction or otherwise) shares
of Common Stock to deliver in satisfaction of a sale by the Holder of the

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Additional Investment Right Shares that the Holder anticipated receiving from
the Company (a "BUY-IN"), then the Company shall, within three Trading Days
after the Holder's request and in the Holder's discretion, either (i) pay cash
to the Holder in an amount equal to the Holder's total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so purchased (the
"BUY-IN PRICE"), at which point the Company's obligation to deliver such
certificate (and to issue such Common Stock) shall terminate, or (ii) promptly
honor its obligation to deliver to the Holder a certificate or certificates
representing such Common Stock and pay cash to the Holder in an amount equal to
the excess (if any) of the Buy-In Price over the product of (A) such number of
shares of Common Stock, times (B) the Closing Price on the date of the event
giving rise to the Company's obligation to deliver such certificate.
Notwithstanding anything to the contrary, this Section 5(c) shall not apply if
the Company has used its best efforts to deliver the certificates, but such
certificates were not delivered due to the Transfer Agent's failure to deliver
the certificates in accordance with timely instructions from the Company.

               (d) The Company's obligations to issue and deliver Additional
Investment Right Shares and Additional Investment Right Warrants in accordance
with the terms hereof are absolute and unconditional, irrespective of any action
or inaction by the Holder to enforce the same, any waiver or consent with
respect to any provision hereof, the recovery of any judgment against any Person
or any action to enforce the same, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by the Holder or any
other Person of any obligation to the Company or any violation or alleged
violation of law by the Holder or any other Person, and irrespective of any
other circumstance which might otherwise limit such obligation of the Company to
the Holder in connection with the issuance of Additional Investment Right
Shares. Nothing herein shall limit a Holder's right to pursue any other remedies
available to it hereunder, at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief with respect to the
Company's failure to timely deliver certificates representing shares of Common
Stock upon exercise of the Additional Investment Right as required pursuant to
the terms hereof.

        6. Charges, Taxes and Expenses. Issuance and delivery of certificates
for shares of Common Stock and the Additional Investment Right Warrants upon
exercise of this Additional Investment Rights shall be made without charge to
the Holder for any issue or transfer tax, withholding tax, transfer agent fee or
other incidental tax or expense in respect of the issuance of such certificates,
all of which taxes and expenses shall be paid by the Company; provided, however,
that the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the registration of any certificates for
Additional Investment Right Shares, Additional Investment Rights or any
Additional Investment Right Warrants in a name other than that of the Holder or
an Affiliate thereof. The Holder shall be responsible for all other tax
liability that may arise as a result of holding or transferring this Additional
Investment Right or receiving Additional Investment Right Shares and Additional
Investment Right Warrants upon exercise hereof.

        7. Replacement of Additional Investment Right. If this Additional
Investment Right is mutilated, lost, stolen or destroyed, the Company shall
issue or cause to be issued in exchange and substitution for and upon
cancellation hereof, or in lieu of and substitution for this Additional
Investment Right, a New Additional Investment Right, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or
destruction and customary

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and reasonable indemnity, if requested. Applicants for a New Additional
Investment Right under such circumstances shall also comply with such other
reasonable regulations and procedures and pay such other reasonable third-party
costs as the Company may prescribe.

        8. Reservation of Additional Investment Right Shares and Additional
Investment Right Warrant Shares. The Company covenants that it will at all times
reserve and keep available out of the aggregate of its authorized but unissued
and otherwise unreserved Common Stock, solely for the purpose of enabling it to
issue Additional Investment Right Shares upon exercise of this Additional
Investment Right and Additional Investment Right Warrant Shares upon exercise of
the Additional Investment Right Warrants as herein provided and as provided in
the Additional Investment Right Warrants, the number of Additional Investment
Right Shares which are then issuable and deliverable upon the exercise of this
entire Additional Investment Right and the number of Additional Investment Right
Warrant Shares which are then issuable and deliverable upon the exercise of any
Additional Investment Right Warrants, free from preemptive rights or any other
contingent purchase rights of persons other than the Holder (taking into account
the adjustments and restrictions of Section 9). The Company covenants that all
Additional Investment Right Shares and Additional Investment Right Warrant
Shares so issuable and deliverable shall, upon issuance and the payment of the
applicable exercise price in accordance with the terms hereof, or the Additional
Investment Warrants, as the case may be, be duly and validly authorized, issued
and fully paid and nonassessable. The Company will take all such action as may
be necessary to assure that such shares of Common Stock may be issued as
provided herein and further to the Additional Investment Right Warrants without
violation of any applicable law or regulation, or of any requirements of any
securities exchange or automated quotation system upon which the Common Stock
may be listed.

        9. Certain Adjustments. The Exercise Price and number of Additional
Investment Right Shares issuable upon exercise of this Additional Investment
Right are subject to adjustment from time to time as set forth in this Section
9. The exercise price and number of Additional Investment Right Warrant Shares
issuable upon exercise of the Additional Investment Right Warrants shall be
subject to adjustment further to Section 4 of said Additional Investment Right
Warrants and the Additional Investment Right Warrants.

               (a) Stock Dividends and Splits. If the Company, at any time while
this Additional Investment Right is outstanding, (i) pays a stock dividend on
its Common Stock or otherwise makes a distribution on any class of capital stock
that is payable in shares of Common Stock, (ii) subdivides outstanding shares of
Common Stock into a larger number of shares, or (iii) combines outstanding
shares of Common Stock into a smaller number of shares, then in each such case
the Exercise Price shall be multiplied by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding immediately before
such event and of which the denominator shall be the number of shares of Common
Stock outstanding immediately after such event. Any adjustment made pursuant to
clause (i) of this paragraph shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or
distribution, and any adjustment pursuant to clauses (ii) or (iii) of this
paragraph shall become effective immediately after the effective date of such
subdivision or combination.

               (b) Pro Rata Distributions. If the Company, at any time while
this Additional Investment Right is outstanding, distributes to holders of
Common Stock (i) evidences of its

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indebtedness, (ii) any security (other than a distribution of Common Stock
covered by the preceding paragraph), (iii) rights or warrants to subscribe for
or purchase any security, or (iv) any other asset (in each case, "DISTRIBUTED
PROPERTY"), then in each such case the Exercise Price in effect immediately
prior to the record date fixed for determination of stockholders entitled to
receive such distribution shall be adjusted (effective on such record date) to
equal the product of such Exercise Price times a fraction of which the
denominator shall be the average of the Closing Prices for the five Trading Days
immediately prior to (but not including) such record date and of which the
numerator shall be such average less the then fair market value of the
Distributed Property distributed in respect of one outstanding share of Common
Stock, as determined by the Company's independent certified public accountants
that regularly examine the financial statements of the Company (an "APPRAISER").
In such event, the Holder, after receipt of the determination by the Appraiser,
shall have the right to select an additional appraiser (which shall be a
nationally recognized accounting firm), in which case such fair market value
shall be deemed to equal the average of the values determined by each of the
Appraiser and such appraiser. As an alternative to the foregoing adjustment to
the Exercise Price, at the request of the Holder delivered before the 90th day
after such record date, the Company will deliver to such Holder, within five
Trading Days after such request (or, if later, on the effective date of such
distribution), the Distributed Property that such Holder would have been
entitled to receive in respect of the Additional Investment Right Shares for
which this Additional Investment Right could have been exercised immediately
prior to such record date. If such Distributed Property is not delivered to a
Holder pursuant to the preceding sentence, then upon expiration of or any
exercise of the Additional Investment Right that occurs after such record date,
such Holder shall remain entitled to receive, in addition to the Additional
Investment Right Shares otherwise issuable upon such exercise (if applicable),
such Distributed Property.

               (c) Fundamental Transactions. If, at any time while this
Additional Investment Right is outstanding, (i) the Company effects any merger
or consolidation of the Company with or into another Person, (ii) the Company
effects any sale of all or substantially all of its assets in one or a series of
related transactions, (iii) any tender offer or exchange offer (whether by the
Company or another Person) is completed pursuant to which holders of Common
Stock are permitted to tender or exchange their shares for other securities,
cash or property, or (iv) the Company effects any reclassification of the Common
Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property
(other than as a result of a subdivision or combination of shares of Common
Stock covered by Section 9(a) above) (in any such case, a "FUNDAMENTAL
TRANSACTION"), then the Holder shall have the right thereafter to receive, upon
exercise of this Additional Investment Right, the same amount and kind of
securities, cash or property as it would have been entitled to receive upon the
occurrence of such Fundamental Transaction if it had been, immediately prior to
such Fundamental Transaction, the holder of the number of Additional Investment
Right Shares then issuable upon exercise in full of this Additional Investment
Right (the "ALTERNATE CONSIDERATION"). The aggregate Exercise Price for this
Additional Investment Right will not be affected by any such Fundamental
Transaction, but the Company shall apportion such aggregate Exercise Price among
the Alternate Consideration in a reasonable manner reflecting the relative value
of any different components of the Alternate Consideration. If holders of Common
Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given the same choice as
to the Alternate Consideration it receives upon any exercise of this Additional

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Investment Right following such Fundamental Transaction. At the Holder's
request, any successor to the Company or surviving entity in such Fundamental
Transaction shall issue to the Holder a new additional investment right
consistent with the foregoing provisions and evidencing the Holder's right to
purchase the Alternate Consideration for the aggregate Exercise Price upon
exercise thereof. The terms of any agreement pursuant to which a Fundamental
Transaction is effected shall include terms requiring any such successor or
surviving entity to comply with the provisions of this paragraph (c) and
insuring that the Additional Investment Right (or any such replacement security)
will be similarly adjusted upon any subsequent transaction analogous to a
Fundamental Transaction. If any Fundamental Transaction constitutes or results
in a Change of Control (as defined below), then at the request of the Holder
delivered before the 90th day after such Fundamental Transaction, the Company
(or any such successor or surviving entity) will purchase the Additional
Investment Right from the Holder for a purchase price, payable in cash within
five Business Days after such request (or, if later, on the effective date of
the Fundamental Transaction), equal to the Black Scholes value of the remaining
unexercised portion of this Additional Investment Right on the date of such
request. For the purposes of this Section 9(c), "CHANGE OF CONTROL" means the
consummation of a "Rule 13e-3 transaction" as defined in Rule 13e-3 under the
Exchange Act with respect to the Company that is initiated or agreed to by a
member of the Company's management.

               (d) Number of Additional Investment Right Shares. Simultaneously
with any adjustment to the Exercise Price pursuant to paragraphs (a) or (b) of
this Section, the number of Additional Investment Right Shares that may be
purchased upon exercise of this Additional Investment Right shall be increased
or decreased proportionately, so that after such adjustment the aggregate
Exercise Price payable hereunder for the increased or decreased number of
Additional Investment Right Shares shall be the same as the aggregate Exercise
Price in effect immediately prior to such adjustment.

               (e) Calculations. All calculations under this Section 9 shall be
made to the nearest cent or the nearest 1/100th of a share, as applicable. The
number of shares of Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Company, and the disposition
of any such shares shall be considered an issue or sale of Common Stock.

               (f) Notice of Adjustments. Upon the occurrence of each adjustment
pursuant to this Section 9, the Company at its expense will promptly compute
such adjustment in accordance with the terms of this Additional Investment Right
and prepare a certificate setting forth such adjustment, including a statement
of the adjusted Exercise Price and adjusted number or type of Additional
Investment Right Shares or other securities issuable upon exercise of this
Additional Investment Right (as applicable), describing the transactions giving
rise to such adjustments and showing in detail the facts upon which such
adjustment is based. Upon written request, the Company will promptly deliver a
copy of each such certificate to the Holder and to the Company's Transfer Agent.

               (g) Notice of Corporate Events. If the Company (i) declares a
dividend or any other distribution of cash, securities or other property in
respect of its Common Stock, including, without limitation, any granting of
rights or warrants to subscribe for or purchase any capital stock of the Company
or any Subsidiary, (ii) authorizes or approves, enters into any agreement

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contemplating or solicits stockholder approval for any Fundamental Transaction
or (iii) authorizes the voluntary dissolution, liquidation or winding up of the
affairs of the Company, then the Company shall deliver to the Holder a notice
describing the material terms and conditions of such transaction, at least
fifteen (15) days prior to the applicable record or effective date on which a
Person would need to hold Common Stock in order to participate in or vote with
respect to such transaction, and the Company will take all steps reasonably
necessary in order to insure that the Holder is given the practical opportunity
to exercise this Additional Investment Right prior to such time so as to
participate in or vote with respect to such transaction; provided, however, that
the failure to deliver such notice or any defect therein shall not affect the
validity of the corporate action required to be described in such notice.

        10. Payment of Exercise Price. The Holder shall pay the Exercise Price
in immediately available funds; provided, however, if the Registration Statement
did not become effective on or before Required Effectiveness Date and is not
continuously effective through the Expiration Date, the Holder may satisfy its
obligation to pay the Exercise Price through a "cashless exercise," in which
event the Company shall issue to the Holder the number of Additional Investment
Right Shares determined as follows:

                                    X = Y [(A-B)/A]
               where:
                                    X = the number of Additional Investment
                                    Right Shares to be issued to the Holder.

                                    Y = the number of Additional Investment
                                    Right Shares with respect to which this
                                    Additional Investment Right is being
                                    exercised.

                                    A = the average of the Closing Prices for
                                    the five Trading Days immediately prior to
                                    (but not including) the Exercise Date.

                                    B = the Exercise Price.

        For purposes of Rule 144 promulgated under the Securities Act, it is
intended, understood and acknowledged that the Additional Investment Right
Shares issued in a cashless exercise transaction shall be deemed to have been
acquired by the Holder, and the holding period for the Additional Investment
Right Shares shall be deemed to have commenced, on the date this Additional
Investment Right was originally issued pursuant to the Purchase Agreement.

        11. Limitation on Exercise. Notwithstanding anything to the contrary
contained herein, the number of shares of Common Stock that may be acquired by
the Holder upon any exercise of this Additional Investment Right (or otherwise
in respect hereof) shall be limited to the extent necessary to insure that,
following such exercise (or other issuance), the total number of shares of
Common Stock then beneficially owned by such Holder and its Affiliates and any
other Persons whose beneficial ownership of Common Stock would be aggregated
with the Holder's for purposes of Section 13(d) of the Exchange Act, does not
exceed 4.999% (the "MAXIMUM PERCENTAGE") of the total number of issued and
outstanding shares of Common

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Stock (including for such purpose the shares of Common Stock issuable upon such
exercise). For such purposes, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. Each delivery of an Exercise Notice hereunder will
constitute a representation by the Holder that it has evaluated the limitation
set forth in this paragraph and determined that issuance of the full number of
Additional Investment Right Shares requested in such Exercise Notice is
permitted under this paragraph. The Company's obligation to issue shares of
Common Stock in excess of the limitation referred to in this Section shall be
suspended (and shall not terminate or expire notwithstanding any contrary
provisions hereof) until such time, if any, as such shares of Common Stock may
be issued in compliance with such limitation. By written notice to the Company,
the Holder may waive the provisions of this Section or increase or decrease the
Maximum Percentage to any other percentage specified in such notice, but (i) any
such waiver or increase will not be effective until the 61st day after such
notice is delivered to the Company, and (ii) any such waiver or increase or
decrease will apply only to the Holder and not to any other holder of Additional
Investment Rights.

        12. Fractional Shares. The Company shall not be required to issue or
cause to be issued fractional Additional Investment Right Shares or Additional
Investment Right Warrants to purchase fractional Additional Investment Right
Warrant Shares on the exercise of this Additional Investment Right. If any
fraction of a Additional Investment Right Share or if any Additional Investment
Right Warrant to purchase a fraction of an Additional Investment Right Warrant
Share would, except for the provisions of this Section, be issuable upon
exercise of this Additional Investment Right, the number of Additional
Investment Right Shares and/or Additional Investment Right Warrant Shares
issuable upon exercise of the Additional Investment Right Warrants, as the case
may be, to be issued will be rounded up to the nearest whole share or right to
purchase the nearest whole share, as the case may be.

        13. Notices. Any and all notices or other communications or deliveries
hereunder (including without limitation any Exercise Notice) shall be in writing
and shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section prior to 6:30 p.m. (New York City
time) on a Trading Day, (ii) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section on a day that is not a Trading Day or
later than 6:30 p.m. (New York City time) on any Trading Day, (iii) the Trading
Day following the date of deposit with a nationally recognized overnight courier
service, or (iv) upon actual receipt by the party to whom such notice is
required to be given. The address and facsimile numbers for such notices or
communications shall be as set forth in the Purchase Agreement.

        14. Additional Investment Right Agent. The Company shall serve as
additional investment right agent under this Additional Investment Right. Upon
30 days' notice to the Holder, the Company may appoint a new additional
investment right agent. Any corporation into which the Company or any new
additional investment right agent may be merged or any corporation resulting
from any consolidation to which the Company or any new additional investment
right agent shall be a party or any corporation to which the Company or any new
additional investment right agent transfers substantially all of its corporate
trust or shareholders services business shall be a successor additional
investment right agent under this Additional

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Investment Right without any further act. Any such successor additional
investment right agent shall promptly cause notice of its succession as
additional investment right agent to be mailed (by first class mail, postage
prepaid) to the Holder at the Holder's last address as shown on the Additional
Investment Right Register.

        15. Miscellaneous.

               (a) Subject to the restrictions on transfer set forth on the
first page hereof, this Additional Investment Right may be assigned by the
Holder. This Additional Investment Right may not be assigned by the Company
except to a successor in the event of a Fundamental Transaction. This Additional
Investment Right shall be binding on and inure to the benefit of the parties
hereto and their respective successors and assigns. Subject to the preceding
sentence, nothing in this Additional Investment Right shall be construed to give
to any Person other than the Company and the Holder any legal or equitable
right, remedy or cause of action under this Additional Investment Right. This
Additional Investment Right may be amended only in writing signed by the Company
and the Holder and their successors and assigns.

               (b) The Company will not, by amendment of its governing documents
or through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this
Additional Investment Right, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Holder against
impairment. Without limiting the generality of the foregoing, the Company (i)
will not increase the par value of any Additional Investment Right Shares or
Additional Investment Right Warrant Shares above the amount payable therefor on
such exercise, (ii) will take all such action as may be reasonably necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable Additional Investment Right Shares or Additional Investment
Right Warrant Shares on the exercise of this Additional Investment Right and the
Additional Investment Right Warrants, respectively, and (iii) will not close its
shareholder books or records in any manner which interferes with the timely
exercise of this Additional Investment Right.

               (c) GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL. THE CORPORATE
LAWS OF THE STATE OF DELAWARE SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE
RIGHTS OF THE COMPANY AND ITS STOCKHOLDERS. ALL QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS ADDITIONAL
INVESTMENT RIGHT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK. 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. 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

                                       10
<PAGE>
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 COMPANY HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY.

               (d) The headings herein are for convenience only, do not
constitute a part of this Additional Investment Right and shall not be deemed to
limit or affect any of the provisions hereof.

               (e) In case any one or more of the provisions of this Additional
Investment Right shall be invalid or unenforceable in any respect, the validity
and enforceability of the remaining terms and provisions of this Additional
Investment Right shall not in any way be affected or impaired thereby and the
parties will attempt in good faith to agree upon a valid and enforceable
provision which shall be a commercially reasonable substitute therefor, and upon
so agreeing, shall incorporate such substitute provision in this Additional
Investment Right.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
                             SIGNATURE PAGE FOLLOWS]

                                       11
<PAGE>
        IN WITNESS WHEREOF, the Company has caused this Additional Investment
Right to be duly executed by its authorized officer as of the date first
indicated above.

                                    BAM! ENTERTAINMENT, INC.

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

                                       12
<PAGE>
                             FORM OF EXERCISE NOTICE

(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Additional Investment Right)

To:  BAM! ENTERTAINMENT, INC.

The undersigned is the Holder of Additional Investment Right No. _______ (the
"ADDITIONAL INVESTMENT RIGHT") issued by BAM! ENTERTAINMENT, INC., a Delaware
corporation (the "Company"). Capitalized terms used herein and not otherwise
defined have the respective meanings set forth in the Additional Investment
Right.

1.      The Additional Investment Right is currently exercisable to purchase a
        total of ______ Additional Investment Right Shares and _______
        Additional Investment Right Warrants.

2.      The undersigned Holder hereby exercises its right to purchase ________
        Additional Investment Right Shares and Additional Investment Right
        Warrants exercisable for ______ shares of Common Stock (which number of
        shares underlying said Additional Investment Right Warrants shall be
        equal to 90% of the Additional Investment Right Shares so issued upon
        exercise of the Additional Investment Right).

2.      The Holder intends that payment of the Exercise Price shall be made as
        (check one):

                             ____   "Cash Exercise"

                             ____   "Cashless Exercise"

3.      If the holder has elected a Cash Exercise, the holder shall pay the sum
        of $____________ to the Company in accordance with the terms of the
        Additional Investment Right.

4.      Pursuant to this exercise, the Company shall deliver to the holder
        _______________ Additional Investment Right Shares and Additional
        Investment Right Warrants exercisable for ______ shares of Common Stock
        (which number of shares underlying said Additional Investment Right
        Warrants shall be equal to 90% of the Additional Investment Right Shares
        so issued upon exercise of the Additional Investment Right).

5.      Following this exercise, the Additional Investment Right shall be
        exercisable to purchase a total of ______________ Additional Investment
        Right Shares and Additional Investment Right Warrants exercisable for
        _____ shares of Common Stock (which number of shares underlying said
        Additional Investment Right Warrants shall be equal to 90% of said
        remaining Additional Investment Right Shares).

Date:                 ,                            Name of Holder:
     ----------------  -----

                                                   (Print)
                                                          ----------------------
                                                   By:
                                                      --------------------------
                                                   Name:
                                                        ------------------------
                                                   Title:
                                                         -----------------------

                                                   (Signature must conform in
                                                   all respects to name of
                                                   holder as specified on the
                                                   face of the Additional
                                                   Investment Right)

<PAGE>
                               FORM OF ASSIGNMENT

        [To be completed and signed only upon transfer of Additional Investment
Right]

        FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the within
Additional Investment Right to purchase ____________ shares of Common Stock and
warrants to purchase shares of the Common Stock (which number of shares
underlying said warrants shall be equal to 90% of the shares so sold, assigned
and transferred) of BAM! ENTERTAINMENT, INC. to which the within Additional
Investment Right relates and appoints ________________ attorney to transfer said
right on the books of BAM! ENTERTAINMENT, INC. with full power of substitution
in the premises.

Dated:                ,
      ---------------  ----

                                        ----------------------------------------
                                        (Signature must conform in all respects
                                        to name of holder as specified on the
                                        face of the Additional Right)

                                        ----------------------------------------
                                        Address of Transferee

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

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

In the presence of:

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

<PAGE>
                                                                       EXHIBIT 1
                                                  TO ADDITIONAL INVESTMENT RIGHT

        VOID AFTER 5:00 P.M., CALIFORNIA TIME,
        ON JANUARY 29, 2009

        NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES
        ARE EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
        COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
        EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
        (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE
        UNITED STATES. THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED OR
        SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
        SECURITIES UNDER APPLICABLE SECURITIES LAWS UNLESS OFFERED, SOLD OR
        TRANSFERRED UNDER AN AVAILABLE EXEMPTION FROM THE REGISTRATION
        REQUIREMENTS OF THOSE LAWS. NOTWITHSTANDING THE FOREGOING, THESE
        SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES
        MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
        LOAN OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES.

January 29, 2004
                            BAM! ENTERTAINMENT, INC.
               ADDITIONAL INVESTMENT RIGHT STOCK PURCHASE WARRANT

        THIS CERTIFIES THAT, for value received, ______________________, or its
registered assigns, is entitled to purchase from BAM! ENTERTAINMENT, INC., a
corporation organized under the laws of the State of Delaware (the "COMPANY"),
at any time or from time to time during the period specified in Section 2
hereof, _______ fully paid and nonassessable shares of the Company's common
stock, $0.001 par value (the "COMMON STOCK"), at an exercise price per share
(the "EXERCISE PRICE") equal to the greater of (i) $1.40 and (ii) the lesser of
(x) the closing bid price of the Company's Common Stock on the Nasdaq Stock
Market on the Business Day immediately preceding the exercise date of the
Additional Investment Right, and (y) the average of the closing bid price of the
Company's Common Stock on the Nasdaq Stock Market for the five (5) Business Days
immediately preceding the exercise date of the Additional Investment Right. The
number of shares of Common Stock purchasable hereunder (the "WARRANT SHARES")
and the Exercise Price are subject to adjustment as provided in Section 4
hereof. The term "WARRANTS" means this Warrant and the other Warrants of the
Company issued further to the exercise of Additional Investment Rights issued
pursuant to that certain Securities Purchase Agreement, dated as of January 29,
2004, by and among the Company and the other signatories thereto (the
"SECURITIES PURCHASE AGREEMENT"). Capitalized terms used herein but not defined
shall have the meaning ascribed to them in the Securities Purchase Agreement.

<PAGE>
        This Warrant is subject to the following terms, provisions and
conditions:

        1. (a) Manner of Exercise; Issuance of Certificates. Subject to the
provisions hereof, including, without limitation, the limitations contained in
Section 7 hereof, this Warrant may be exercised at any time during the Exercise
Period (as defined below) by the holder hereof, in whole or in part, by delivery
of a completed exercise agreement in the form attached hereto (the "EXERCISE
AGREEMENT"), to the Company by 5 p.m. California time on any Business Day at the
Company's principal executive offices (or such other office or agency of the
Company as it may designate by notice to the holder hereof) and upon payment to
the Company as provided in Section 1(b) below of the applicable Exercise Price
for the Warrant Shares specified in the Exercise Agreement. The Warrant Shares
so purchased shall be deemed to be issued to the holder hereof or such holder's
designee, as the record owner of such shares, as of the close of business on the
date on which this Warrant shall have been surrendered and the completed
Exercise Agreement shall have been delivered and payment shall have been made
for such shares as set forth above or, if such day is not a Business Day, on the
next succeeding Business Day. The Warrant Shares so purchased, representing the
aggregate number of shares specified in the Exercise Agreement, shall be
delivered to the holder hereof within a reasonable time, not exceeding five (5)
Business Days, after this Warrant shall have been so exercised (the "DELIVERY
PERIOD"). If the Company's transfer agent is participating in the Depository
Trust Company ("DTC") Fast Automated Securities Transfer program, and so long as
the certificates therefor do not require a legend and the holder is not
obligated to return such certificate for the placement of a legend thereon, the
Company shall cause its transfer agent to electronically transmit the Warrant
Shares so purchased to the holder by crediting the account of the holder or its
nominee with DTC through its Deposit Withdrawal Agent Commission system ("DTC
TRANSFER"). If the aforementioned conditions to a DTC Transfer are not
satisfied, the Company shall deliver to the holder physical certificates
representing the Warrant Shares so purchased. Further, the holder may instruct
the Company to deliver to the holder physical certificates representing the
Warrant Shares so purchased in lieu of delivering such shares by way of DTC
Transfer. Any certificates so delivered shall be in such denominations as may be
requested by the holder hereof, shall be registered in the name of such holder
or such other name as shall be designated by such holder and, following the date
on which the Warrant Shares may be sold by the holder pursuant to Rule 144(k)
promulgated under the Securities Act (or a successor rule), shall not bear any
restrictive legend. If this Warrant shall have been exercised only in part,
then, unless this Warrant has expired, the Company shall, at its expense, at the
time of delivery of such certificates, deliver to the holder a new Warrant
representing the number of shares with respect to which this Warrant shall not
then have been exercised.

               (b) Payment of Exercise Price. The holder shall pay the Exercise
Price in immediately available funds; provided, however, if the Registration
Statement did not become effective on or before the Registration Deadline (as
defined in that certain Common Stock Registration Rights Agreement of even date
herewith between the Company and the Initial Investors set forth therein) and is
not effective at the time holder exercises this Warrant, the holder hereof may
satisfy its obligation to pay the Exercise Price through a "cashless exercise,"
in which event the Company shall issue to the holder hereof the number of
Warrant Shares determined as follows:

<PAGE>
                                        X = Y [(A-B)/A]

                      where:
                                        X = the number of Warrant Shares to be
                                    issued to the holder.

                                        Y = the number of Warrant Shares with
                                    respect to which this Warrant is being
                                    exercised.

                                        A = the average of the Closing Prices
                                    for the five Trading Days immediately prior
                                    to (but not including) the Exercise Date.

                                        B = the Exercise Price.

        For purposes of Rule 144 promulgated under the Securities Act, it is
intended, understood and acknowledged that the Warrant Shares issued in a
cashless exercise transaction shall be deemed to have been acquired by the
holder hereof, and the holding period for the Warrant Shares shall be deemed to
have commenced, on the date this Warrant was originally issued pursuant to the
Purchase Agreement.

        2. Period of Exercise. Except as set forth in Section 7(g) and (h)
below, this Warrant may be exercised at any time or from time to time (an
"EXERCISE DATE") during the period (the "EXERCISE PERIOD") beginning on (a) the
date hereof and ending (b) at 5:00 p.m., California time, on January 29, 2009.
Notwithstanding anything to the contrary herein, the Exercise Period shall be
extended for each day following the effective date that the that the holder
hereof may not sell shares under the Registration Statement (as defined in the
in that certain Warrant Share Registration Rights Agreement of even date
herewith between the Company and the Initial Investors set forth therein) or
pursuant to Rule 144(k) under the Securities Act if the holder effected a
"cashless exercise of this Warrant pursuant to Section .

        3. Certain Agreements of the Company. The Company hereby covenants and
agrees as follows:

               (a) Shares to be Fully Paid. All Warrant Shares will, upon
issuance in accordance with the terms of this Warrant, be validly issued, fully
paid and nonassessable and free from all taxes, liens, claims and encumbrances.

               (b) Reservation of Shares. During the Exercise Period, the
Company shall at all times have authorized, and reserved for the purpose of
issuance upon exercise of this Warrant,

<PAGE>
a sufficient number of shares of Common Stock to provide for the exercise in
full of this Warrant (without giving effect to the limitations on exercise set
forth in Section 7(g) or 7(h) hereof).

               (c) Listing. The Company has secured the listing of the shares of
Common Stock issuable upon exercise of or otherwise pursuant to this Warrant
upon each national securities exchange or automated quotation system, if any,
upon which shares of Common Stock are then listed or become listed (subject to
official notice of issuance upon exercise of this Warrant) and shall maintain,
so long as any other shares of Common Stock shall be so listed, such listing of
all shares of Common Stock from time to time issuable upon the exercise of or
otherwise pursuant to this Warrant; and the Company shall so list on each
national securities exchange or automated quotation system, as the case may be,
and shall maintain such listing of, any other shares of capital stock of the
Company issuable upon the exercise of or otherwise pursuant to this Warrant if
and so long as any shares of the same class shall be listed on such national
securities exchange or automated quotation system.

               (d) Certain Actions Prohibited. The Company will not, by
amendment of its charter or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issuance or sale of securities, or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed by it hereunder, but will at all times in
good faith assist in the carrying out of all the provisions of this Warrant.
Without limiting the generality of the foregoing, the Company (i) will not
increase the par value of any shares of Common Stock receivable upon the
exercise of this Warrant above the Exercise Price then in effect, and (ii) will
take all such actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant.

               (e) Successors and Assigns. This Warrant will be binding upon any
entity succeeding to the Company by merger, consolidation, or acquisition of all
or substantially all of the Company's assets.

               (f) Blue Sky Laws. The Company shall, on or before the date of
issuance of any Warrant Shares, take such actions as the Company shall
reasonably determine are necessary to qualify the Warrant Shares for, or obtain
exemption for the Warrant Shares for, sale to the holder of this Warrant upon
the exercise hereof under applicable securities or "blue sky" laws of the states
of the United States, and shall provide evidence of any such action so taken to
the holder of this Warrant prior to such date; provided, however, that the
Company shall not be required to qualify as a foreign corporation or file a
general consent to service of process in any such jurisdiction.

        4. Antidilution Provisions. During the Exercise Period, the Exercise
Price and the number of Warrant Shares issuable upon the exercise of the
Warrants, shall be subject to adjustment from time to time as provided in this
Section 4.

        In the event that any adjustment of the Exercise Price as required
herein results in a fraction of a cent, such Exercise Price shall be rounded up
or down to the nearest cent; provided that, in no event shall the Exercise Price
per share be reduced below $0.01.

               (a) Subdivision or Combination of Common Stock. If the Company,
at any time during the Exercise Period, subdivides (by any stock split, stock
dividend, recapitalization,

<PAGE>
reorganization, reclassification or otherwise) its shares of Common Stock into a
greater number of shares, then, after the date of record for effecting such
subdivision, the Exercise Price in effect immediately prior to such subdivision
will be proportionately reduced. If the Company, at any time during the Exercise
Period, combines (by reverse stock split, recapitalization, reorganization,
reclassification or otherwise) its shares of Common Stock into a smaller number
of shares, then, after the date of record for effecting such combination, the
Exercise Price in effect immediately prior to such combination will be
proportionately increased.

               (b) Adjustment in Number of Shares. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Section 4 other than a Company
Reduction as defined in Section 4(k), the number of shares of Common Stock
issuable upon exercise of this Warrant shall be increased or decreased to equal
the quotient obtained by dividing (i) the product of (A) the Exercise Price in
effect immediately prior to such adjustment, multiplied by (B) the number of
shares of Common Stock issuable upon exercise of this Warrant immediately prior
to such adjustment, by (ii) the adjusted Exercise Price .

               (c) Consolidation, Merger or Sale. In case of any consolidation
of the Company with, or merger of the Company into, any other entity, or in case
of any sale or conveyance of all or substantially all of the assets of the
Company other than in connection with a plan of complete liquidation of the
Company at any time during the Exercise Period, then as a condition of such
consolidation, merger or sale or conveyance, adequate provision will be made
whereby the holder of this Warrant will have the right to acquire and receive
upon exercise of this Warrant in lieu of the shares of Common Stock immediately
theretofore acquirable upon the exercise of this Warrant, such shares of stock,
securities, cash or assets as may be issued or payable with respect to or in
exchange for the number of shares of Common Stock immediately theretofore
acquirable and receivable upon exercise of this Warrant had such consolidation,
merger or sale or conveyance not taken place. In any such case, the Company will
make appropriate provision to insure that the provisions of this Section 4 will
thereafter be applicable as nearly as may be in relation to any shares of stock
or securities thereafter deliverable upon the exercise of this Warrant. The
Company will not effect any consolidation, merger or sale or conveyance unless
prior to the consummation thereof, the successor entity (if other than the
Company) assumes by written instrument the obligations under this Warrant and
the obligations to deliver to the holder of this Warrant such shares of stock,
securities or assets as, in accordance with the foregoing provisions, the holder
may be entitled to acquire. If a transaction constitutes or results in a Change
of Control, then at the request of the holder hereof delivered before the 90th
day after such transaction, the Company (or any such successor or surviving
entity) will purchase the Warrant from the holder of this Warrant for a purchase
price, payable in cash within five Business Days after such request (or, if
later, on the effective date of such transaction), equal to the Black-Scholes
value of the remaining unexercised portion of this Warrant on the date of such
request. For the purposes of this Section, "CHANGE OF CONTROL" means the
consummation of a "Rule 13e-3 transaction" as defined in Rule 13e-3 under the
Exchange Act with respect to the Company that is initiated or agreed to by a
member of the Company's management.

               (d) Distribution of Assets. In case the Company shall declare or
make any distribution of its assets (other than cash) (or rights to acquire its
assets (other than cash)) to all holders of Common Stock as a partial
liquidating dividend, stock repurchase, by way of return of capital or otherwise
(including any dividend or distribution to the Company's stockholders of shares
(or rights to acquire shares) of capital stock of a subsidiary) (a
"DISTRIBUTION"), at any

<PAGE>
time during the Exercise Period, then, upon exercise of this Warrant for the
purchase of any or all of the shares of Common Stock subject hereto, the holder
of this Warrant shall be entitled to receive its pro-rata amount of such assets
(or such rights) as would have been payable to the holder had such holder been
the holder of such shares of Common Stock on the record date for the
determination of stockholders entitled to such Distribution.

               (e) Notice of Adjustment. Upon the occurrence of any event which
requires any adjustment of the Exercise Price other than a Company Reduction as
defined in Section 4(k), then, and in each such case, the Company shall give
notice thereof to the holder of this Warrant, which notice shall state the
Exercise Price resulting from such adjustment and the increase or decrease in
the number of Warrant Shares issuable upon exercise of this Warrant, setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based. Such calculation shall be certified by the chief
financial officer of the Company.

               (f) Minimum Adjustment of the Exercise Price. No adjustment of
the Exercise Price shall be made in an amount of less than 1% of the Exercise
Price in effect at the time such adjustment is otherwise required to be made,
but any such lesser adjustment shall be carried forward and shall be made at the
time and together with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than 1% of such
Exercise Price.

               (g) No Fractional Shares. No fractional shares of Common Stock
are to be issued upon the exercise of this Warrant, but the Company shall pay a
cash adjustment in respect of any fractional share which would otherwise be
issuable in an amount equal to the same fraction of the closing bid price of a
share of Common Stock on the Principal Market on the date of such exercise.

               (h) Other Notices. In case at any time:

                      (i) the Company shall declare any dividend upon the Common
Stock payable in shares of stock of any class or make any other distribution
(other than dividends or distributions payable in cash out of retained earnings
consistent with the Company's past practices with respect to declaring dividends
and making distributions) to the holders of the Common Stock;

                      (ii) the Company shall offer for subscription pro rata to
the holders of the Common Stock any additional shares of stock of any class or
other rights;

                      (iii) there shall be any capital reorganization of the
Company, or reclassification of the Common Stock, or consolidation or merger of
the Company with or into, or sale of all or substantially all of its assets to,
another corporation or entity; or

                      (iv) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company;

then, in each such case, the Company shall give to the holder of this Warrant
(a) notice of the date or estimated date on which the books of the Company shall
close or a record shall be taken for determining the holders of Common Stock
entitled to receive any such dividend, distribution, or subscription rights or
for determining the holders of Common Stock entitled to vote in respect

<PAGE>
of any such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding-up and (b) in the case of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, notice of the date (or, if not then known, a
reasonable estimate thereof by the Company) when the same shall take place. Such
notice shall also specify the date on which the holders of Common Stock shall be
entitled to receive such dividend, distribution, or subscription rights or to
exchange their Common Stock for stock or other securities or property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation, or winding-up, as the case may be. Such notice
shall be given at least fifteen (15) days prior to the record date or the date
on which the Company's books are closed in respect thereto. Failure to give any
such notice or any defect therein shall not affect the validity of the
proceedings referred to in clauses (i), (ii), (iii) and (iv) above.
Notwithstanding the foregoing, the Company may publicly disclose the substance
of any notice delivered hereunder prior to delivery of such notice to the holder
of this Warrant.

               (i) Certain Events. If, at any time during the Exercise Period,
any event occurs of the type contemplated by the adjustment provisions of this
Section 4 but not expressly provided for by such provisions, the Company will
give notice of such event as provided in Section 4(e) hereof, and the Company's
Board of Directors will make an appropriate adjustment in the Exercise Price and
the number of shares of Common Stock acquirable upon exercise of this Warrant so
that the rights of the holder shall be neither enhanced nor diminished by such
event.

                (j) Certain Definitions.

                      (i) "BUSINESS DAY" means any day, other than a Saturday or
Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law, regulation or executive order to close.

                      (ii) "COMMON STOCK," for purposes of this Section 4,
includes the Common Stock and any additional class of stock of the Company
having no preference as to dividends or distributions on liquidation, provided
that the shares purchasable pursuant to this Warrant shall include only Common
Stock in respect of which this Warrant is exercisable, or shares resulting from
any subdivision or combination of such Common Stock, or in the case of any
reorganization, reclassification, consolidation, merger, or sale of the
character referred to in Section 4(c) hereof, the stock or other securities or
property provided for in such Section.

                      (iii) "PRINCIPAL MARKET" means the Nasdaq Stock Market or,
if the Common Stock is not traded on the Nasdaq Stock Market, then the principal
securities exchange or trading market for the Common Stock.

        5. Issue Tax. The issuance of certificates for Warrant Shares upon the
exercise of this Warrant shall be made without charge to the holder of this
Warrant or such shares for any issuance tax or other costs in respect thereof,
provided that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than the holder of this Warrant.

        6. No Rights or Liabilities as a Stockholder. This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a stockholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the holder hereof to purchase Warrant

<PAGE>
Shares, and no mere enumeration herein of the rights or privileges of the holder
hereof, shall give rise to any liability of such holder for the Exercise Price
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.

        7. Transfer, Exchange, Redemption and Replacement of Warrant.

               (a) Restriction on Transfer. This Warrant and the rights granted
to the holder hereof are transferable in whole or in part, at any one time, upon
surrender of this Warrant, together with a properly executed assignment in the
form attached hereto, at the office or agency of the Company referred to in
Section 7(e) below, provided, however, that any transfer or assignment shall be
subject to the conditions set forth in Sections 7(f), 7(g) 7(h) and 8 hereof and
to the provisions of Sections 3(e) and 3(f) of the Securities Purchase
Agreement. Until due presentment for registration of transfer on the books of
the Company, the Company may treat the registered holder hereof as the owner and
holder hereof for all purposes, and the Company shall not be affected by any
notice to the contrary. Notwithstanding anything to the contrary contained
herein, the registration rights described in Section 8 hereof are assignable
only in accordance with the provisions of the Warrant Shares Registration Rights
Agreement.

               (b) Warrant Exchangeable for Different Denominations. This
Warrant is exchangeable, upon the surrender hereof by the holder hereof at the
office or agency of the Company referred to in Section 7(e) below, for new
Warrants of like tenor of different denominations representing in the aggregate
the right to purchase the number of shares of Common Stock which may be
purchased hereunder, each of such new Warrant to represent the right to purchase
such number of shares as shall be designated by the holder hereof at the time of
such surrender.

               (c) Replacement of Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant and, in the case of any such loss, theft, or destruction, upon
delivery of an indemnity agreement reasonably satisfactory in form and amount to
the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.

               (d) Cancellation; Payment of Expenses. Upon the surrender of this
Warrant in connection with any transfer, exchange, or replacement as provided in
this Section 7, this Warrant shall be promptly canceled by the Company. The
Company shall pay all taxes (other than securities transfer taxes) and all other
expenses (other than legal expenses, if any, incurred by the holder or
transferees) and charges payable in connection with the preparation, execution,
and delivery of Warrants pursuant to this Section 7.

               (e) Warrant Register. The Company shall maintain, at its
principal executive offices (or such other office or agency of the Company as it
may designate by notice to the holder hereof), a register for this Warrant, in
which the Company shall record the name and address of the person in whose name
this Warrant has been issued, as well as the name and address of each transferee
and each prior owner of this Warrant.

               (f) Exercise or Transfer Without Registration. If, at the time of
the surrender of this Warrant in connection with any exercise, transfer, or
exchange of this Warrant, this Warrant (or, in the case of any exercise, the
Warrant Shares issuable hereunder), shall not be

<PAGE>
registered under the Securities Act and under applicable state securities or
blue sky laws, the Company may require, as a condition of allowing such
exercise, transfer, or exchange, (i) that the holder or transferee of this
Warrant, as the case may be, furnish to the Company a written opinion of counsel
(which opinion shall be reasonably acceptable to the Company and shall be in
form, substance and scope customary for opinions of counsel in comparable
transactions) to the effect that such exercise, transfer, or exchange may be
made without registration under the Securities Act and under applicable state
securities or blue sky laws, (ii) that the holder or transferee execute and
deliver to the Company an investment letter in form and substance reasonably
acceptable to the Company and (iii) that the transferee be an "ACCREDITED
INVESTOR" as defined in Rule 501(a) promulgated under the Securities Act;
provided that no such opinion, letter, or status as an "accredited investor"
shall be required in connection with a transfer pursuant to Rule 144 under the
Securities Act.

               (g) Additional Restrictions on Exercise or Transfer.
Notwithstanding anything in Section 1 or Section 3 hereof to the contrary, this
Warrant shall not be exercisable to the extent (but only to the extent) that (a)
the number of shares of Common Stock beneficially owned by the holder of this
Warrant and its affiliates (other than shares of Common Stock which may be
deemed beneficially owned through the ownership of the unexercised portion of
the Warrants or the unexercised or unconverted portion of any other securities
of the Company subject to a limitation on exercise or exercise analogous to the
limitation contained herein) and (b) the number of shares of Common Stock
issuable upon exercise of the Warrants (or portion thereof) with respect to
which the determination described herein is being made, would result in
beneficial ownership by such holder and its affiliates of more than 4.99% (the
"MAXIMUM PERCENTAGE") of the outstanding shares of Common Stock. To the extent
the above limitation applies, the determination of whether and to what extent
this Warrant shall be exercisable with respect to other securities owned by such
holder shall be in the sole discretion of the holder and submission of this
Warrant for full or partial exercise shall be deemed to be the holder's
determination of whether and the extent to which this Warrant is exercisable, in
each case subject to such aggregate percentage limitation. No prior inability to
exercise the Warrants pursuant to this Section shall have any effect on the
applicability of the provisions of this Section with respect to any subsequent
determination of exercisability. For purposes of the immediately preceding
sentence, beneficial ownership shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13D-G
thereunder, except as otherwise provided in clause (a) hereof. By written notice
to the Company, the holder may waive the provisions of this Section or increase
or decrease the Maximum Percentage to any other percentage specified in such
notice, but (i) any such waiver or increase will not be effective until the 61st
day after such notice is delivered to the Company, and (ii) any such waiver or
increase or decrease will apply only to the holder and not to any other holder
of Warrants.

               (h) Limitation on Number of Warrant Shares. Notwithstanding any
provision hereof to the contrary, the Company shall not be obligated to issue
any Warrant Shares upon exercise of the Warrants if the issuance of such shares
would exceed that number of shares which the Company may issue upon exercise of
the Warrants (the "Exchange Cap") without breaching the Company's obligations
under the rules and regulations of the Principal Market, except that such
limitation shall not apply in the event that the Company obtains the approval of
its stockholders as required by the applicable rules of the Principal Market (or
any successor rule or regulation) for issuances of Shares in excess of such
amount. Until such approval is obtained, no purchaser of the Warrants pursuant
to the Securities Purchase Agreement (the "Purchasers")

<PAGE>
shall be issued, upon exercise of the Warrants, Shares in an amount greater than
the product of (i) the Exchange Cap amount then in effect multiplied by (ii) a
fraction, the numerator of which is the number of shares of Common Stock issued
to such Purchaser pursuant to the Securities Purchase Agreement and the
denominator of which is the aggregate number of shares of Common Stock issued to
all Purchases pursuant to the Securities Purchase Agreement (the "Cap Allocation
Amount"). In the event that any Purchaser shall sell or otherwise transfer any
of such Purchaser's Warrants, the transferee shall be allocated a pro rata
portion of such Purchaser's Cap Allocation Amount. In the event that any holder
of the Warrants shall convert and exercise, as the case may be, all of such
holder's Warrants into a number of Shares which, in the aggregate, is less than
such holder's Cap Allocation Amount, then the difference between such holder's
Cap Allocation Amount and the number of Shares actually issued to such holder
shall be allocated to the respective Cap Allocation Amounts of the remaining
holders of Warrants on a pro rata basis in proportion to the number of Shares
then issuable under the Warrants then held by each such holder. The restrictions
contained in this Section 7(h) may not be amended without the consent of the
holder of this Warrant and the holders of a majority of the Company's
outstanding Common Stock (excluding the holder of this Warrant to the extent
(and only to the extent) at the record date for determining stockholders
entitled to vote thereon, such holder holds any of the Company's Common Stock
purchased pursuant to the Securities Purchase Agreement or upon exercise of the
any Warrants sold thereunder).

        8. Registration Rights. The initial holder of this Warrant (and certain
assignees thereof) are entitled to the benefit of such registration rights in
respect of the Warrant Shares as are set forth in the Warrant Shares
Registration Rights Agreement, including the right to assign such rights to
certain assignees, as set forth therein.

        9. Notices. Any notices required or permitted to be given under the
terms of this Warrant shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier or by confirmed
telecopy, and shall be effective five days after being placed in the mail, if
mailed, or upon receipt or refusal of receipt, if delivered personally or by
courier, or by confirmed telecopy, in each case addressed to a party. The
addresses for such communications shall be:

                      If to the Company:

                      BAM! Entertainment, Inc.
                      333 West Santa Clara Street, Suite 716
                      San Jose, CA 95113
                      Telephone No.: (408) 298-7500
                      Facsimile No.:  (408) 298-9600
                      Attention: Raymond Musci
                                 President

                      With a copy to:

                      Kirkpatrick & Lockhart LLP
                      10100 Santa Monica Blvd, 7th Floor
                      Los Angeles, California 90067
                      Telephone (310) 552-5000

<PAGE>
                      Fax (310) 552-5001
                      Attention:  Thomas Poletti, Esq.

        If to the holder, at such address as such holder shall have provided in
writing to the Company, or at such other address as such holder furnishes by
notice given in accordance with this Section 10, and, for any notice under
Section 3.

        10. Governing Law; Venue; Waiver Of Jury Trial. All questions concerning
the construction, validity, enforcement and interpretation of this warrant shall
be governed by and construed and enforced in accordance with the laws of the
state of New York. 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. 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 Company hereby waives all rights to a trial by jury.

        11. Miscellaneous.

               (a) Amendments. Except as provided in Section 8(g) hereof, this
Warrant and any provision hereof may only be amended by an instrument in writing
signed by the Company and the holder hereof.

               (b) Descriptive Headings. The descriptive headings of the several
Sections of this Warrant are inserted for purposes of reference only, and shall
not affect the meaning or construction of any of the provisions hereof.

               (c) In case any one or more of the provisions of this Warrant
shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.

               (d) Subject to the restrictions on transfer set forth on the
first page hereof, this Warrant may be assigned by the holder. This Warrant may
not be assigned by the Company. This Warrant shall be binding on and inure to
the benefit of the parties hereto and their respective successors and assigns.
Subject to the preceding sentence, nothing in this Warrant shall be construed to
give to any Person other than the Company and the holder any legal or equitable
right, remedy or cause of action under this Warrant.

               (e) The Company will not, by amendment of its governing documents
or through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of

<PAGE>
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the holder hereof against impairment. Without limiting the generality of the
foregoing, the Company (i) will not increase the par value of any Warrant Shares
above the amount payable therefor on such exercise, (ii) will take all such
action as may be reasonably necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable Warrant Shares on the
exercise of this Warrant, and (iii) will not close its stockholder books or
records in any manner which interferes with the timely exercise of this Warrant.

               (f) In addition to any other rights available to a holder hereof,
if the Company fails to deliver to the holder hereof a certificate representing
Warrant Shares by the fifth Business Day after the date on which delivery of
such certificate is required by this Warrant, and if after such fifth Business
Day the holder hereof purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the holder hereof
of the Warrant Shares that the holder hereof anticipated receiving from the
Company (a "Buy-In"), then the Company shall, within three Business Days after
the holder hereof requests and in the discretion of the holder hereof, either
(i) pay cash to the holder hereof in an amount equal to the holder's total
purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased (the "Buy-In Price"), at which point the Company's
obligation to deliver such certificate (and to issue such Common Stock) shall
terminate, or (ii) promptly honor its obligation to deliver to the holder hereof
a certificate or certificates representing such Common Stock and pay cash to the
holder hereof in an amount equal to the excess (if any) of the Buy-In Price over
the product of (A) such number of shares of Common Stock, times (B) the Closing
Price on the date of the event giving rise to the Company's obligation to
deliver such certificate. Notwithstanding anything to the contrary, this Section
11(f) shall not apply if the Company has used its best efforts to deliver the
certificates, but such certificates were not delivered due to the Transfer
Agent's failure to deliver the certificates in accordance with timely
instructions from the Company.

               (g) The Company's obligations to issue and deliver Warrant Shares
in accordance with the terms hereof are absolute and unconditional, irrespective
of any action or inaction by the holder hereof to enforce the same, any waiver
or consent with respect to any provision hereof, the recovery of any judgment
against any Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the holder hereof or any other Person of any obligation to the Company
or any violation or alleged violation of law by the holder hereof or any other
Person, and irrespective of any other circumstance which might otherwise limit
such obligation of the Company to the holder hereof in connection with the
issuance of Warrant Shares. Nothing herein shall limit a right of the holder
hereof to pursue any other remedies available to it hereunder, at law or in
equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company's failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE>
        IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.

                                    BAM! ENTERTAINMENT, INC.

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:
<PAGE>
FORM OF EXERCISE AGREEMENT

(TO BE EXECUTED BY THE HOLDER IN ORDER TO EXERCISE THE WARRANT)

        To:    BAM! Entertainment, Inc.
               333 West Santa Clara Street, Suite 716
               San Jose, CA 95113
               Telephone No.: (408) 298-7500
               Facsimile No.:  (408) 298-9600
               Attention: Raymond Musci
                          President

The undersigned hereby irrevocably exercises the right to purchase _____________
shares of the Common Stock of BAM! ENTERTAINMENT, INC., a corporation organized
under the laws of the State of Delaware (the "COMPANY"), and tenders herewith
payment of the Exercise Price in full, in the amount of $_____________, in cash,
by certified or official bank check or by wire transfer for the account of the
Company or exercises this Warrant pursuant to the "cashless exercise" provisions
thereof; or

        The undersigned agrees not to offer, sell, transfer or otherwise dispose
of any Common Stock obtained on exercise of the Warrant, except under
circumstances that will not result in a violation of the Securities Act of 1933,
as amended, or any state securities laws.

[ ]     The undersigned requests that the Company cause its transfer agent to
        electronically transmit the Common Stock issuable pursuant to this
        Exercise Agreement to the account of the undersigned or its nominee
        (which is _________________) with DTC through its Deposit Withdrawal
        Agent Commission System ("DTC TRANSFER").

[ ]     In lieu of receiving the shares of Common Stock issuable pursuant to
        this Exercise Agreement by way of DTC Transfer, the undersigned hereby
        requests that the Company cause its transfer agent to issue and deliver
        to the undersigned physical certificates representing such shares of
        Common Stock.

        The undersigned requests that a Warrant representing any unexercised
portion hereof be issued, pursuant to the Warrant, in the name of the Holder and
delivered to the undersigned at the address set forth below:

Dated:
      ------------------------              ------------------------------------
                                            Signature of Holder

                                           -------------------------------------
                                            Name of Holder (Print)
                                            Address:

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

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

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

<PAGE>
FORM OF ASSIGNMENT

        FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
all the rights of the undersigned under the attached Warrant, with respect to
the number of shares of Common Stock covered thereby issuable pursuant to the
attached Warrant set forth hereinbelow, to:

Name of Assignee                    Address                      No of Shares
----------------                    -------                      ------------

, and hereby irrevocably constitutes and appoints_______________________________
as agent and attorney-in-fact to transfer said Warrant on the books of the
within-named corporation, with full power of substitution in the premises.

Dated:                      ,
      ---------------------- ----

In the presence of

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

                                     Name:
                                          --------------------------------

                                          Signature:
                                                    ----------------------
                                          Title of Signing Officer or
                                          Agent (if any):
                                                         -----------------
                                          Address:
                                                    ----------------------

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

                                          Note:  The above signature should
                                                 correspond exactly with the
                                                 name on the face of the within
                                                 Warrant.<PAGE>
                                                                     EXHIBIT 4.3

                                                                       EXHIBIT C
                                                TO SECURITIES PURCHASE AGREEMENT

                   COMMON STOCK REGISTRATION RIGHTS AGREEMENT

        COMMON STOCK REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as
January 29, 2004, by and among BAM! ENTERTAINMENT, INC., a corporation organized
under the laws of the State of Delaware (the "COMPANY"), and the undersigned
(the "INITIAL INVESTORS").

        WHEREAS:

        A. The Company and the Initial Investors have entered into a Securities
Purchase Agreement dated the date hereof (the "SECURITIES PURCHASE AGREEMENT;"
capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Securities Purchase Agreement). In
connection with the Securities Purchase Agreement, the Company has agreed, upon
the terms and subject to the conditions contained therein, to issue and sell to
the Initial Investors shares of the Company's common stock, $0.001 par value
(the "COMMON STOCK"). The shares of Common Stock issued on the Closing Date
under the Securities Purchase Agreement are referred to herein as the "SHARES."

        B. To induce the Initial Investors to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"SECURITIES ACT"), and applicable state securities laws;

        NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Initial Investors, intending to be legally bound, hereby agree as follows:

        1. DEFINITIONS.

               As used in this Agreement, the following terms shall have the
following meanings:

                      (i) "ADDITIONAL INVESTMENT RIGHTS" shall mean rights
issued to Initial Investors' further to the Securities Purchase Agreement to
purchase additional shares of Common Stock and warrants to purchase Common Stock
(all as more fully described in Exhibit B to the Securities Purchase Agreement).

                      (ii) "INVESTORS" means the Initial Investors and any
transferees or assignees who agree to become bound by the provisions of this
Agreement in accordance with

<PAGE>
Section 9 hereof.

                      (iii) "REGISTER," "REGISTERED," and "REGISTRATION" refer
to a registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous basis ("RULE 415"), and the declaration or ordering of effectiveness
of such Registration Statement by the United States Securities and Exchange
Commission (the "SEC").

                      (iv) "REGISTRABLE SECURITIES" means (i) the Shares, (ii)
any shares of Common Stock issuable upon exercise of the Additional Investment
Rights (the "Additional Investment Right Shares") and (iii) any shares of
capital stock issued or issuable, from time to time (with any adjustments), as a
distribution on or in exchange for or otherwise with respect to any of the
foregoing; provided, however, that the treatment of these securities as
Registrable Securities shall terminate if and when such securities can be resold
under Rule 144(k) under the Securities Act and provided further however, that
any shares of capital stock issued or issuable, from time to time (with any
adjustments), in exchange for or otherwise with respect to any Shares or
Additional Investment Right Shares shall not be considered Registrable
Securities to the extent such shares of capital stock are covered by another,
current and effective registration statement permitting the resale without
restriction of such shares.

                      (v) "REGISTRATION STATEMENT" means one or more
registration statements of the Company under the Securities Act registering all
of the Registrable Securities, including the Initial Registration Statement, any
Uncovered Shares Amendments and Uncovered Shares Registration Statements (each,
as defined below).

        2. REGISTRATION.

               a. Mandatory Registration. The Company shall file with the United
States Securities and Exchange Commission ("SEC"), on the date which is on or
before thirty (30) calendar days after the Closing Date (the "FILING DEADLINE")
a Registration Statement on Form S-3 (or, if Form S-3 is not then available, on
such form of Registration Statement as is then available to effect a
registration of all of the Registrable Securities) covering the resale of the
Shares and any Additional Investment Right Shares issued upon exercise of the
Additional Investment Rights (the "INITIAL REGISTRATION STATEMENT"). The
Registrable Securities included in the Initial Registration Statement shall be
registered on behalf of the Investors as set forth in Section 11(k) hereof. The
Initial Registration Statement (and each amendment or supplement thereto, and
each request for acceleration of effectiveness thereof) shall be provided to the
Initial Investors and their counsel at least 2 Business Days prior to its filing
or other submission. If for any reason (including, but not limited to, a
determination by the staff of the SEC that all or any portion of the Registrable
Securities cannot be included in the Initial Registration Statement (an "SEC
Determination")) the Initial Registration Statement declared effective by the
SEC does not include all of the Registrable Securities (any such shares that are
not included being the "UNCOVERED SHARES"), the Company shall prepare and file
with the SEC, as soon as practicable, but in any event prior to the tenth (10th)
Business Day after becoming aware of the existence of any Uncovered Shares (such
date referred to herein as the "UNCOVERED SHARE FILING DEADLINE"),

                                       2
<PAGE>
either (a) an amendment (the "UNCOVERED SHARES AMENDMENT") to the Initial
Registration Statement effecting a registration of the Uncovered Shares or (b) a
registration statement which registers the Uncovered Shares (the "UNCOVERED
SHARES REGISTRATION STATEMENT"). The Uncovered Shares Amendment or the Uncovered
Shares Registration Statement (and each amendment or supplement thereto, and
each request for acceleration of effectiveness thereof) shall be provided to the
Initial Investors and their counsel at least concurrently with its filing or
other submission. The Company shall use its reasonable efforts to cause each of
the Initial Registration Statement and the Uncovered Shares Amendment or the
Uncovered Shares Registration Statement to become effective as soon as
practicable after the filing thereof.

               b. Payments by the Company. The Company shall use its reasonable
efforts to cause each Registration Statement required to be filed pursuant to
Section 2(a) hereof to become effective as soon as practicable, but, as to the
Initial Registration Statement filed pursuant to Section 2(a), in no event later
than the ninetieth (90th) calendar day after the Closing Date (the "REGISTRATION
DEADLINE"), and as to any Uncovered Shares Amendment or Uncovered Shares
Registration Statement, in no event later than the ninetieth (90th) day after
the Uncovered Share Filing Deadline (the "UNCOVERED SHARE REGISTRATION
DEADLINE"). If the Registration Statement(s) covering the Registrable Securities
required to be filed by the Company pursuant to Section 2(a) hereof is not filed
with the SEC by the Filing Deadline or the Uncovered Share Filing Deadline, as
applicable, or declared effective by the SEC on or before the Registration
Deadline or the Uncovered Share Registration Deadline, as applicable, or if,
after a Registration Statement has been declared effective by the SEC, sales of
all the Registrable Securities required to be included therein (except, in the
case of the Initial Registration Statement, for Uncovered Shares which are the
subject of an SEC Determination) cannot be made pursuant to the Registration
Statement, then the Company will make payments to the Investors in such amounts
and at such times as shall be determined pursuant to this Section 2(c) as
partial relief for the damages to the Investors by reason of any such delay in
or reduction of their ability to sell the Registrable Securities (which remedy
shall be exclusive of any other remedies available at law or in equity).

               c. The Company shall pay to each Investor an amount equal to (i)
the Investment Amount (as defined in the Securities Purchase Agreement) paid by
such Investor pursuant to the Securities Purchase Agreement (or if such Investor
is not an Initial Investor, the Investment Amount paid by such Investor's
transferor or assignor pursuant to the Securities Purchase Agreement (the
"Aggregate Purchase Price"), multiplied by (ii) one percent (1%) (with respect
to the period commencing on the Filing Deadline, the Uncovered Filing Deadline,
the Registration Deadline or the Uncovered Share Registration Deadline, as
applicable, multiplied by (iii) the sum of (x) the quotient calculated by
dividing (A) the number of days after the Filing Deadline or Uncovered Share
Filing Deadline, as applicable, and prior to the date the Registration Statement
or Uncovered Share Amendment or Uncovered Share Registration Statement, as
applicable, in each case as required to be filed pursuant to Section 2(a), is
filed with the SEC by (B) thirty, plus (y) the quotient calculated by dividing
(A) the number of days after the Registration Deadline or Uncovered Share
Registration Deadline, as applicable, and prior to the date the Registration
Statement or Uncovered Share Amendment or Uncovered Share Registration
Statement, as applicable, in each case as filed pursuant to Section 2(a), is
declared effective by the SEC by (B) thirty, plus (z) the quotient calculated by
dividing (A) the sum of the

                                       3
<PAGE>
number of additional days that sales of any Registrable Securities required to
be included in a Registration Statement (except, in the case of the Initial
Registration Statement, for any Uncovered Shares which are the subject of an SEC
Determination) cannot be made pursuant to a Registration Statement after such
Registration Statement has been declared effective; provided, however, however,
that the total amount of payments pursuant to this Section 2(c) shall not
exceed, when aggregated with all such payments paid to all Investors under the
Securities Purchase Agreement $35,000. For example, if the Initial Registration
Statement is filed within the Filing Deadline but becomes effective thirty (30)
days after the Registration Deadline, the Company would pay $10,000 for each
$1,000,000 of Aggregate Purchase Price. If the Company is unable to pay all
amounts due and payable with respect to the penalties, the Company will pay the
Investors such amounts pro rata based upon the total amounts payable to each
Investor as a percentage of the total amounts payable to all Investors.

               d. Eligibility for Form S-3. The Company represents and warrants
that it is eligible to register the resale of Registrable Securities on a
registration statement on Form S-3 under the Securities Act, and that the
Company is not aware of any facts or circumstances (including without limitation
any required approvals or waivers or any circumstances that may delay or prevent
the obtaining of accountant's consents) that would prohibit or delay the
preparation and filing of a registration statement on Form S-3 with respect to
the Registrable Securities provided that such registration is not deemed a
"primary offering", in which case the Company could face potential qualification
problems regarding the requirement of having an aggregate market value held by
non-affiliates of $75 million or more. The Company shall use its reasonable
efforts to file all reports required to be filed by the Company with the SEC in
a timely manner so as to maintain or, if applicable, regain its eligibility for
the use of Form S-3.

        3. OBLIGATIONS OF THE COMPANY.

        In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:

               a. The Company shall prepare and file with the SEC, on or before
the Filing Deadline or the Uncovered Share Filing Deadline, as applicable, the
applicable Registration Statement required by Section 2(a) and shall use its
reasonable efforts to cause such Registration Statement to become effective as
soon as practicable after such filing. The Company shall use its best efforts to
keep such Registration Statement effective pursuant to Rule 415 for a period of
12 months from the date it became effective (the "REGISTRATION PERIOD"). In the
event that the sale of Registrable Securities by one or more Investors is
determined by the SEC to constitute a primary offering, upon the written request
from time to time of any such Investor, the Company shall as promptly as
practicable cause a Registration Statement to be amended and/or one or more
additional Registration Statements (which may be requested on a sequential
basis) to be filed (as specified by the applicable Investors) and to be declared
effective; and take all other actions reasonably requested by such Investors to
effectuate the offering of Registrable Securities. If the Initial Registration
Statement is not filed on Form S-3, the Company shall, as soon as it is eligible
to do so, file a post-effective amendment on Form S-3 to the Initial
Registration Statement to the extent permitted by the SEC or, if not so
permitted, file a new Registration Statement on Form S-3 to permit sales of the
Registrable Securities pursuant to Rule

                                       4
<PAGE>
429 under the Securities Act; and the Company shall use its reasonable efforts
to cause such post-effective amendment or Registration Statement to become
effective as soon as possible. Each Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein and all
documents incorporated by reference therein) filed pursuant to this Agreement
(i) shall comply in all material respects with the requirements of the
Securities Act and the rules and regulations of the SEC promulgated thereunder
and (ii) shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein, or necessary to make the
statements therein not misleading. The financial statements of the Company
included in the Registration Statement or incorporated by reference therein will
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC applicable with
respect thereto. Such financial statements shall be prepared in accordance with
U.S. generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed or
summary statements) and shall fairly present in all material respects the
consolidated financial position of the Company and its consolidated subsidiaries
as of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to immaterial year-end adjustments).

               b. The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to the
Registration Statement and the prospectus used in connection with the
Registration Statement as may be necessary to keep the Registration Statement
effective at all times during the Registration Period, and, during such period,
comply with the provisions of the Securities Act with respect to the disposition
of all Registrable Securities of the Company covered by the Registration
Statement. Notwithstanding any provision in this Agreement to the contrary, the
Company's obligations hereunder to file a Registration Statement, to have the
same declared effective and to keep a registration statement continuously in
effect under the Securities Act shall be suspended (a "Grace Period") if the
fulfillment of such obligations would require the Company to make a disclosure
that would, in the reasonable judgment of the Company's Board of Directors, have
a Material Adverse Effect (as such term is defined in the Securities Purchase
Agreement) on the Company or a material adverse effect on the future prospects
of the Company or its stockholders; provided, that the Registration Statement
shall be suspended for a total of no more than ninety (90) days during any
twelve (12) month period. The provisions of Section 2(b) hereof shall not be
applicable during and shall be tolled as a result of any Grace Period.

               c. The Company shall furnish to each Investor whose Registrable
Securities are included in the Registration Statement (i) promptly after the
same is prepared and publicly distributed, filed with the SEC, or received by
the Company, one copy of the Registration Statement and any amendment thereto,
each preliminary prospectus and prospectus and each amendment or supplement
thereto. In the case of the Registration Statement referred to in Section 2(a),
the Company shall furnish to each Investor which requests (i) a copy of any
request to accelerate the effectiveness of any Registration Statement or
amendment thereto, (ii) on the date of effectiveness of the Registration
Statement or any amendment thereto, a notice stating that the Registration
Statement or amendment has been declared effective, and (iii) such number

                                       5
<PAGE>
of copies of a prospectus, including a preliminary prospectus, and all
amendments and supplements thereto and such other documents as such Investor may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Investor. In responding to comments from the staff of
the SEC, the Company shall cooperate with any Investor that notifies the Company
that it desires to be consulted with respect to such process. Such cooperation
shall solely consist of providing any such Investor with: a reasonable
opportunity to comment on the text and substance of proposed written responses
to the extent such comment relates to such investor or its plan of distribution
of the Registrable Securities. To the extent that issues raised by the staff of
the SEC have an impact primarily on any such investor rather than the Company,
the Company shall give reasonable deference to such Investor's requests with
respect to the process and substance of responses with respect to such issues.

               d. The Company shall use its reasonable efforts to (i) register
and qualify the Registrable Securities covered by the Registration Statement
under such other securities or "blue sky" laws of such jurisdictions in the
United States as each Investor who holds Registrable Securities being offered
reasonably requests, (ii) prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (a) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(d), (b) subject itself to general taxation in any such
jurisdiction, (c) file a general consent to service of process in any such
jurisdiction, (d) provide any undertakings that cause the Company undue expense
or burden, or (e) make any change in its certificate of incorporation or bylaws,
which in each case the Board of Directors of the Company determines to be
contrary to the best interests of the Company and its stockholders.

               e. As promptly as practicable after becoming aware of such event,
the Company shall notify each Investor by telephone or facsimile of the
happening of any event, of which the Company has knowledge, as a result of which
the prospectus included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and use its reasonable efforts promptly to prepare a supplement
or amendment to the Registration Statement to correct such untrue statement or
omission and deliver such number of copies of such supplement or amendment to
each Investor as such Investor may reasonably request.

               f. The Company shall use its reasonable efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, and, if such an order is issued, to obtain the
withdrawal of such order at the earliest practicable date (including in each
case by amending or supplementing such Registration Statement) and to notify
each Investor who holds Registrable Securities being sold of the issuance of
such order and the resolution thereof (and if such Registration Statement is
supplemented or amended, deliver such number of copies of such supplement or
amendment to each Investor as such Investor may

                                       6
<PAGE>
reasonably request).

               g. The Company shall make available for inspection by (i) any
Investor whose Registrable Securities are included in a Registration Statement
and (ii) one firm of attorneys and one firm of accountants or other agents
retained by the Investors (collectively, the "INSPECTORS") all pertinent
financial and other records, and pertinent corporate documents and properties of
the Company, as shall be reasonably deemed necessary by each Inspector to enable
each Inspector to exercise its due diligence responsibility, and cause the
Company's officers, directors and employees to supply all information which any
Inspector may reasonably request for purposes of such due diligence.

               h. The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the Company unless
(i) disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction, (iv) such
information has been made generally available to the public other than by
disclosure in violation of this Agreement, or (v) such Investor consents to the
form and content of any such disclosure. The Company agrees that it shall, upon
learning that disclosure of such information concerning an Investor is sought in
or by a court or governmental body of competent jurisdiction or through other
means, give prompt notice to such Investor prior to making such disclosure, and
allow the Investor, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.

               i. The Company shall use its reasonable efforts to promptly
either (i) secure the designation and quotation, of all the Registrable
Securities covered by the Registration Statement on The Nasdaq Stock Market, or
(ii) cause all the Registrable Securities covered by the Registration Statement
to be listed on the NYSE or the AMEX or another national securities exchange and
on each additional national securities exchange on which securities of the same
class or series issued by the Company are then listed, if any, if the listing of
such Registrable Securities is then permitted under the rules of such exchange.

               j. The Company shall provide a transfer agent and registrar,
which may be a single entity, for the Registrable Securities not later than the
effective date of the Registration Statement.

               k. The Company shall cooperate with the Investors who hold
Registrable Securities being offered to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends) representing
Registrable Securities to be offered pursuant to the Registration Statement and
enable such certificates to be in such denominations or amounts, as the case may
be, as the Investors may reasonably request and registered in such names as the
Investors may request.

               l. At the request of an Initial Investor or Investors who holds a
majority-in-interest of the Registrable Securities, the Company shall prepare
and file with the SEC such

                                       7
<PAGE>
amendments (including post-effective amendments) and supplements to a
Registration Statement and the prospectus used in connection with the
Registration Statement each as approved by the Company, which approval shall not
be unreasonably withheld or delayed, as may be necessary in order to change the
plan of distribution set forth in such Registration Statement.

               m. The Company shall comply with applicable federal and state
securities laws and regulations related to a Registration Statement and offering
and sale of securities.

               n. From and after the date of this Agreement, the Company shall
not, and shall not agree to, allow the holders of any securities of the Company
(except (i) to the extent existing agreements may otherwise provide or (ii) in
the case of the Common Stock underlying the warrants to be issued to HDB as
placement agent or its co-placement agents of the financing contemplated by the
Securities Purchase Agreement) to include any of their securities in any
Registration Statement under Section 2(a) hereof or any amendment or supplement
thereto under Section 3(b) hereof without the consent of the holders of a
majority in interest of the Registrable Securities.

        4. OBLIGATIONS OF THE INVESTORS.

        In connection with the registration of the Registrable Securities, the
Investors shall have the following obligations:

               a. It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with respect to
the Registrable Securities of a particular Investor (or to make any payments or
other damages to such investor pursuant to Section 2(b)) that such Investor
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request. At least five (5)
Business Days prior to the first anticipated filing date of the Registration
Statement, the Company shall notify each Investor of any information the Company
requires from each such Investor.

               b. Each Investor, by such Investor's acceptance of the
Registrable Securities, agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of the
Registration Statement hereunder, unless such Investor has notified the Company
in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement.

        5. EXPENSES OF REGISTRATION.

        The Company shall pay (or reimburse the Purchasers for) all fees and
expenses incident to the performance of or compliance with this Agreement by the
Company, including without limitation (a) all registration and filing fees and
expenses, including without limitation those related to filings with the
Commission, any trading market and in connection with applicable state
securities or Blue Sky laws, (b) printing expenses (including without limitation
expenses of

                                       8
<PAGE>
printing certificates for Registrable Securities and of printing prospectuses
requested by the Purchasers), (c) messenger, telephone and delivery expenses,
(d) fees and disbursements of counsel for the Company and up to $5,000 in the
aggregate for Proskauer Rose LLP, counsel to Vertical Ventures, LLC, (e) fees
and expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement, and (f) all
listing fees to be paid by the Company to the trading market.

        6. INDEMNIFICATION.

        In the event any Registrable Securities are included in a Registration
Statement under this Agreement:

               a. To the extent permitted by law, the Company will indemnify,
hold harmless and defend (i) each Investor who holds such Registrable
Securities, and (ii) the directors, officers, partners, members, employees and
agents of such Investor and each person who controls any Investor within the
meaning of Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), if any (each, an
"INDEMNIFIED PERSON"), against any joint or several losses, claims, damages,
liabilities or expenses (collectively, together with actions, proceedings or
inquiries by any regulatory or self-regulatory organization, whether commenced
or threatened, in respect thereof, "Claims") to which any of them may become
subject insofar as such Claims arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in a Registration
Statement or the omission or alleged omission to state therein a material fact
required to be stated or necessary to make the statements therein not
misleading, (ii) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus if used prior to the effective date
of such Registration Statement, or contained in the final prospectus (as amended
or supplemented, if the Company files any amendment thereof or supplement
thereto with the SEC) or the omission or alleged omission to state therein any
material fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities (the matters in the
foregoing clauses (i) through (iii) being, collectively, "VIOLATIONS"). Subject
to the restrictions set forth in Section 6(c) with respect to the number of
legal counsel, the Company shall reimburse the Investors and each other
Indemnified Person, promptly as such expenses are incurred and are due and
payable, for any reasonable legal fees or other reasonable expenses incurred by
them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a): (i) shall not apply to a Claim arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by such Indemnified Person
expressly for use in the Registration Statement or any such amendment thereof or
supplement thereto; (ii) shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without an unconditional release of the
Company and all of its controlling persons, employees and agents, or without the
prior written consent of the Company, which consent shall not be unreasonably
withheld; and (iii) with respect to any prospectus, shall not inure to the
benefit of any Indemnified Person if the untrue statement or omission of
material fact contained in such

                                       9
<PAGE>
prospectus was corrected on a timely basis in the prospectus, as then amended or
supplemented, if such corrected prospectus was timely made available by the
Company pursuant to Section 3(c) hereof, and the Indemnified Person was promptly
advised in writing not to use the incorrect prospectus prior to the use giving
rise to a Violation and such Indemnified Person, notwithstanding such advice,
used it. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall survive
the transfer of the Registrable Securities by the Investors pursuant to Section
9.

               b. In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees severally and not jointly
to indemnify, hold harmless and defend, to the same extent and in the same
manner set forth in Section 6(a), the Company, each of its directors, each of
its officers who signs the Registration Statement, its employees, agents,
attorneys and each person, if any, who controls the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act, and any
other stockholder selling securities pursuant to the Registration Statement or
any of its directors or officers or any person who controls such stockholder
within the meaning of the Securities Act or the Exchange Act (collectively and
together with an Indemnified Person, an "INDEMNIFIED PARTY"), against any Claim
to which any of them may become subject, under the Securities Act, the Exchange
Act or otherwise, insofar as such Claim arises out of or is based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly for use in connection with
such Registration Statement; and subject to Section 6(c) such Investor will
reimburse any reasonable legal or other expenses (promptly as such expenses are
incurred and are due and payable) reasonably incurred by them in connection with
investigating or defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without an unconditional
release of such Investor and all of its controlling persons, employees and
agents, or without the prior written consent of such Investor, which consent
shall not be unreasonably withheld; provided, further, however, that the
Investor shall be liable under this Agreement (including this Section 6(b) and
Section 7) for only that amount as does not exceed the net proceeds actually
received by such Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the Registrable Securities
by the Investors pursuant to Section 9. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 6(b)
with respect to any preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact by the
Investor contained in the preliminary prospectus was corrected on a timely basis
in the prospectus, as then amended or supplemented, and the Indemnified Party
failed to utilize such corrected prospectus.

               c. Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is made against any indemnifying
party under this Section 6, deliver to the indemnifying party a written notice
of the commencement thereof, and the indemnifying party shall have the right to
assume control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and

                                       10
<PAGE>
the Indemnified Person or the Indemnified Party, as the case may be; provided,
however, that such indemnifying party shall not be entitled to assume such
defense and an Indemnified Person or Indemnified Party shall have the right to
retain its own counsel with the reasonable fees and expenses to be paid by the
indemnifying party, if, in the reasonable opinion of counsel retained by the
indemnifying party, the representation by such counsel of the Indemnified Person
or Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential conflicts of interest between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding or the actual or potential defendants in, or targets of, any such
action include both the Indemnified Person or the Indemnified Party and the
indemnifying party and any such Indemnified Person or Indemnified Party
reasonably determines that there may be legal defenses available to such
Indemnified Person or Indemnified Party which are in conflict with those
available to such indemnifying party. The indemnifying party shall pay for only
one separate legal counsel for all Indemnified Persons or the Indemnified
Parties, as applicable, and such legal counsel shall be selected by Investors
holding a majority-in-interest of the Registrable Securities included in the
Registration Statement to which the Claim relates, if the Investors are entitled
to indemnification hereunder, or by the Company, if the Company is entitled to
indemnification hereunder, as applicable. The failure to deliver written notice
to the indemnifying party within a reasonable time of the commencement of any
such action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is actually prejudiced in its ability to
defend such action. The indemnification required by this Section 6 shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.

        7. CONTRIBUTION.

        To the extent any indemnification by an indemnifying party is prohibited
or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that
(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 6, (ii) no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any other person who was not guilty of such fraudulent
misrepresentation, and (iii) contribution (together with any indemnification or
other obligations under this Agreement) by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.

        8. REPORTS UNDER THE EXCHANGE ACT.

        With a view to making available to the Investors the benefits of Rule
144 promulgated under the Securities Act or any other similar rule or regulation
of the SEC that may at any time permit the Investors to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees to:

                                       11
<PAGE>
               a. file with the SEC in a timely manner and make and keep
available all reports and other documents required of the Company under the
Securities Act and the Exchange Act so long as the Company remains subject to
such requirements (it being understood that nothing herein shall limit the
Company's obligations under Section 5(c) of the Securities Purchase Agreement)
and the filing and availability of such reports and other documents as is
required for the applicable provisions of Rule 144; and

               b. furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
Securities Act and the Exchange Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested to
permit the Investors to sell such securities pursuant to Rule 144 without
registration.

        9. ASSIGNMENT OF REGISTRATION RIGHTS.

        The rights of the Investors hereunder, including the right to have the
Company register Registrable Securities pursuant to this Agreement, shall be
assignable by each Investor to any transferee of all or any portion of the
Registrable Securities if: (i) the Investor agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company after such assignment, (ii) the Company is furnished
with written notice of (a) the name and address of such transferee or assignee
and (b) the securities with respect to which such registration rights are being
transferred or assigned, (iii) following such transfer or assignment, the
further disposition of such securities by the transferee or assignee is
restricted under the Securities Act and applicable state securities laws, (iv)
the transferee or assignee agrees in writing with the Company to be bound by all
of the provisions contained herein, and (v) such transfer shall have been made
in accordance with the applicable requirements of the Securities Purchase
Agreement. In addition, and notwithstanding anything to the contrary contained
in this Agreement or the Securities Purchase Agreement, the Shares may be
pledged, and all rights of the Investors under this Agreement or any other
agreement or document related to the transaction contemplated hereby may be
assigned, without further consent of the Company, to a bona fide pledgee in
connection with an Investor's margin or brokerage accounts.

        10. AMENDMENT OF REGISTRATION RIGHTS.

        Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), by Investors who hold fifty-one percent (51%)
in interest of the Registrable Securities or, in the case of a waiver, with the
written consent of the party charged with the enforcement of any such provision.
Any amendment or waiver effected in accordance with this Section 10 shall be
binding upon each Investor and the Company.

        11. MISCELLANEOUS.

               a. A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company

                                       12
<PAGE>
receives conflicting instructions, notices or elections from two or more persons
or entities with respect to the same Registrable Securities, the Company shall
act upon the basis of instructions, notice or election received from the
registered owner of such Registrable Securities.

               b. Any notices required or permitted to be given under the terms
of this Agreement shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier or by confirmed telecopy, and
shall be effective five (5) days after being placed in the mail, if mailed, or
upon receipt or refusal of receipt, if delivered personally or by courier or
confirmed telecopy, in each case addressed to a party. The addresses for such
communications shall be:

                      If to the Company:

                      BAM! Entertainment, Inc.
                      333 West Santa Clara Street, Suite 716
                      San Jose, CA 95113
                      Telephone No.: (408) 298-7500
                      Facsimile No.: (408) 298-9600
                      Attention: Raymond Musci
                                 President

                      With a copy to:

                      Kirkpatrick & Lockhart LLP
                      10100 Santa Monica Blvd, 7th Floor
                      Los Angeles, California 90067
                      Telephone (310) 552-5000
                      Fax (310) 552-5001
                      Attention: Thomas Poletti, Esq.

                      If to an Investor, at such address as such Investor shall
have provided in writing to the Company or such other address as such Investor
furnishes by notice given in accordance with this Section 11(b).

        Each party hereto may from time to time change its address or facsimile
number for notices under this Section 11(b) by giving at least ten (10) days'
prior written notice of such changed address or facsimile number, in the case of
the Investors to the Company, and in the case of the Company to all of the
Investors.

               c. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.

               d. Governing Law; Venue; Waiver Of Jury Trail. ALL QUESTIONS
CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS
AGREEMENT SHALL BE GOVERNED BY AND

                                       13
<PAGE>
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE
COMPANY AND PURCHASERS HEREBY IRREVOCABLY SUBMIT 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 BROUGHT BY THE COMPANY OR ANY
PURCHASER HEREUNDER, 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 WAIVE, AND AGREE NOT TO
ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE COMPANY OR ANY
PURCHASER, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF
ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. 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 COMPANY AND PURCHASERS HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.

               e. This Agreement, the Securities Purchase Agreement and the
Warrants (including all schedules and exhibits thereto) constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
thereof. There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein and therein. This Agreement, the
Securities Purchase Agreement and the Warrants supersede all prior agreements
and understandings among the parties hereto and thereto with respect to the
subject matter hereof and thereof.

               f. Subject to the requirements of Section 9 hereof, this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.

               g. The headings in this Agreement are for convenience of
reference only and shall not form part of or effect the interpretation of this
Agreement.

               h. This Agreement may be executed in two or more counterparts,
all of which 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. This Agreement, once executed by a party, may be delivered to the
other parties hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement. In the event
any signature is delivered by facsimile transmission, the party using such means
of delivery shall cause the manually executed signature page(s) hereof to be
physically delivered to the other party within five (5) days of the execution
hereof.

                                       14
<PAGE>
               i. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

               j. All consents, approvals and other determinations to be made by
the Investors pursuant to this Agreement shall be made by the Investors holding
more than fifty percent (50%) of the Registrable Securities then held by all
Investors.

               k. The initial number of Registrable Securities included on any
Registration Statement and each increase to the number of Registrable Securities
included thereon shall be registered on behalf of each Investor pro rata based
on the number of Registrable Securities held by each Investor at the time of
such establishment or increase, as the case may be. In the event an Investor
shall sell or otherwise transfer any of such holder's Registrable Securities,
each transferee shall be deemed to have registered on its behalf a pro rata
portion of the number of Registrable Securities included on a Registration
Statement for such transferor. Any shares of Common Stock included on a
Registration Statement on behalf of any person or entity which does not hold any
Registrable Securities shall be deemed registered on behalf of the remaining
Investors, pro rata based on the number of shares of Registrable Securities then
held by such Investors. For the avoidance of doubt, no provision of this
subsection shall operate to reduce the number of Registrable Securities
registered on behalf of any Investor pursuant to the first sentence of this
subsection.

               l. For purposes of this Agreement, the term "Business Day" means
any day other than a Saturday or Sunday or a day on which banking institutions
in the State of New York or California are authorized or obligated by law,
regulation or executive order to close.

               m. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.

               n. This Agreement is intended for the benefit of the parties
hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by any other person.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       15
<PAGE>
        IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.

BAM! ENTERTAINMENT, INC.

By:
   --------------------------
Name:
     ------------------------
Its:
    -------------------------

INITIAL INVESTORS:

By:
   --------------------------
Name:
     ------------------------
Its:
    -------------------------

                                       16

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