Document:

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                                                                     EXHIBIT 4.4

                                                                       EXHIBIT D
                                                TO SECURITIES PURCHASE AGREEMENT

                  WARRANT SHARES REGISTRATION RIGHTS AGREEMENT

        WARRANT SHARES REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated
as of 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 (i) warrants (the "WARRANTS") to purchase shares of the
Company's common stock, $0.001 par value (the "COMMON STOCK"). The shares of
Common Stock issuable upon exercise of the Warrants issued on the Closing Date
under the Securities Purchase Agreement are referred to herein as the "WARRANT
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 the Initial Investors' further to the Securities Purchase Agreement to
purchase additional shares of Common Stock and Warrants (all as more fully
described in Exhibit B to the Securities Purchase Agreement).

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                      (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 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 Warrant
Shares, (ii) any shares of Common Stock issuable upon exercise of Warrants
purchased upon exercise of the Additional Investment Rights (the "Additional
Investment Right Warrant Shares"), (iii) any Warrant Shares or Additional
Investment Right Warrant Shares issuable pursuant to the anti-dilution
provisions of the Warrants and the Additional Investment Right Warrants,
respectively, and (iv) 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 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, Warrant Shares or Additional Investment Right Warrant
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
Warrant Shares and any Additional Investment Right Warrant Shares issued upon
exercise of the Additional Investment Rights, which Registration Statement, to
the extent allowable under the Securities Act and the rules promulgated
thereunder shall state that such Registration Statement also covers such
indeterminate number of additional shares of Common Stock as may become issuable
upon exercise of the Warrants to prevent dilution resulting from stock splits,
stock dividends or similar transactions (the "INITIAL REGISTRATION STATEMENT").
The Registrable Securities included in the Initial Registration Statement shall
be registered on behalf of the

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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 two (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"), 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. The Company shall use its reasonable
efforts to cause each Registration Statement required to be filed pursuant to
this Section 2(a) to become effective as soon as practicable, but, as to the
Initial Registration Statement filed pursuant to this Section 2(a), in no event
later than the ninetieth (90th) calendar day after the Closing Date, and as to
any Uncovered Shares Amendment or Uncovered Shares Registration Statement, in no
event later than the 60th day after the Uncovered Shares Filing Deadline.

               b. 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

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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 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).

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               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 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

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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 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

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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 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.

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        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 any damages to such
Investor) 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 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, (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

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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 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

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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 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

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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:

               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

                                       11
<PAGE>
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, the
Securities Purchase Agreement or the Warrants, the Warrant 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 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

                                       12
<PAGE>
                      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 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

                                       13
<PAGE>
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.

               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-one percent (51%) of the Registrable Securities (determined as
if all Warrants then outstanding had been exercised by the payment of cash) 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

                                       14
<PAGE>
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, (A) the number of Registrable Securities held by an Investor shall be
determined as if all Warrants then outstanding and held by an Investor were
exercised and (B) 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:
     ----------------------------
Title:
      ---------------------------<PAGE>
                                                                    EXHIBIT 10.1

                          SECURITIES PURCHASE AGREEMENT

        SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as of January
29, 2004, by and among BAM! ENTERTAINMENT, INC., a corporation organized under
the laws of the State of Delaware (the "COMPANY"), and the purchasers (the
"PURCHASERS") set forth on the execution pages hereof (the "EXECUTION PAGES").

        WHEREAS:

        A. The Company and each Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D ("REGULATION D"), as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "SECURITIES ACT").

        B. Each Purchaser desires to purchase, severally and not jointly,
subject to the terms and conditions stated in this Agreement, (i) shares of the
Company's common stock, $0.001 par value (the "COMMON STOCK"), (ii) warrants in
the form attached hereto as Exhibit A (including any warrants issued in
replacement thereof, the "WARRANTS"), to acquire shares of Common Stock; and
(iii) additional investment rights in the form attached hereto as Exhibit B (the
"Additional Investment Rights"). The shares of Common Stock issuable upon
exercise of or otherwise pursuant to the Warrants are referred to herein as the
"WARRANT SHARES." The shares of Common Stock issuable upon exercise of the
Additional Investment Rights are referred to herein as the "ADDITIONAL
INVESTMENT RIGHT SHARES." The warrants issuable upon exercise of the Additional
Investment Rights are referred to herein as the "ADDITIONAL INVESTMENT RIGHT
WARRANTS." The shares of Common Stock issuable upon exercise of or otherwise
pursuant to the Additional Investment Right Warrants are referred to herein as
the "ADDITIONAL INVESTMENT RIGHT WARRANT SHARES."

        C. Contemporaneous with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Common Stock Registration
Rights Agreement in the form attached hereto as Exhibit C (the "COMMON STOCK
REGISTRATION RIGHTS AGREEMENT"), and a Warrant Shares Registration Rights
Agreement in the form attached hereto as Exhibit D (the "WARRANT SHARES
REGISTRATION RIGHTS AGREEMENTS" and collectively with the Common Stock
Registration Rights Agreement the "REGISTRATION RIGHTS AGREEMENTS") pursuant to
which the Company has agreed to provide certain registration rights under the
Securities Act and the rules and regulations promulgated thereunder, and
applicable state securities laws.

        NOW, THEREFORE, the Company and the Purchasers hereby agree as follows:

1. CERTAIN DEFINITIONS.

        For purposes of this Agreement, the following terms shall have the
meanings ascribed to them as provided below:

<PAGE>
        "AFFILIATE" or "AFFILIATES" means, with respect to any Person, any other
Person that directly or indirectly controls, is controlled by, or is under
common control with, such Person.

        "BUSINESS DAY" shall mean any day on which the principal United States
securities exchange or trading market on which the Common Stock is listed or
traded.

        "COMMON STOCK EQUIVALENTS" means, collectively, Options and Convertible
Securities.

        "CONVERTIBLE SECURITIES" means any stock or securities (other than
Options) convertible into or exercisable or exchangeable for Common Stock.

        "INVESTMENT AMOUNT" shall mean the dollar amount to be invested in the
Company at the Closing pursuant to this Agreement by a Purchaser, as set forth
on the Execution Page hereto executed by such Purchaser.

        "LIEN" means any lien, charge, claim, security interest, encumbrance,
right of first refusal or other restriction.

        "MATERIAL ADVERSE EFFECT" shall mean an event that (i) adversely affect
the legality, validity or enforceability of any Transaction Document, (ii) have
or result in a material adverse effect on the results of operations, assets,
prospects, business or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) adversely impair the Company's ability
to perform fully on a timely basis its obligations under any of the Transaction
Document; provided, that none of the following alone shall be deemed, in and of
itself, to constitute a Material Adverse Effect: (i) a change in the market
price or trading volume of the Common Stock or (ii) changes in general economic
conditions or changes affecting the industry in which the Company operates
generally (as opposed to Company-specific changes) so long as such changes do
not have a disproportionate effect on the Company and its Subsidiaries taken as
a whole.

        "OPTIONS" means any rights, warrants or options to subscribe for or
purchase Common Stock or Convertible Securities.

        "PERSON" means an individual, corporation, partnership, limited
liability company, trust, business trust, association, joint stock company,
joint venture, sole proprietorship, unincorporated organization, governmental
authority or any other form of entity not specifically listed herein.

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

        "PRO RATA PERCENTAGE" shall mean, with respect to any Purchaser, a
percentage computed by dividing such Purchaser's Investment Amount by the
aggregate Investment Amounts of all Purchasers.

                                       2
<PAGE>
        "SECURITIES" shall mean the Shares, the Warrants, the Warrant Shares,
the Additional Investment Rights, the Additional Investment Right Shares and the
Additional Investment Right Warrant Shares.

        "SHARES" means the shares of Common Stock to be issued and sold by the
Company and purchased by the Purchasers at the Closing.

        "SUBSIDIARY" or "SUBSIDIARIES," when used with respect to subsidiaries
of the Company in Section 4 of this Agreement, means or includes only a
"Significant Subsidiary" as defined in Rule 405 of Regulation C under the
Securities Act.

        "TRANSACTION DOCUMENTS" means this Agreement, the Warrants, the
Additional Investment Rights, the Registration Rights Agreements, the Transfer
Agent Instructions and any other documents or agreements executed in connection
with the transactions contemplated hereunder.

        "TRANSFER AGENT" means American Stock Transfer & Trust Company, or any
other transfer agent selected by the Company.

        "TRANSFER AGENT INSTRUCTIONS" means the Transfer Agent Instructions, in
the form of Exhibit E, executed by the Company and delivered to and acknowledged
in writing by the Transfer Agent.

2. PURCHASE AND SALE OF SHARES AND WARRANTS.

        a. Generally. Except as otherwise provided in this Section 2 and subject
to the satisfaction (or waiver) of the conditions set forth in Section 6 and
Section 7 below, each Purchaser shall purchase the number of Shares, Warrants
and Additional Investment Rights determined as provided in this Section 2, and
the Company shall issue and sell such number of Shares, Warrants and Additional
Investment Rights to each Purchaser for such Purchaser's Investment Amount as
provided below. The Company's agreement with each of the Purchasers is a
separate agreement, and the sale of the Securities to each of the Purchasers is
a separate sale.

        b. Number of Closing Shares and Warrants; Form of Payment; Closing Date.

               i. On the Closing Date (as defined below), the Company shall sell
and each Purchaser shall buy (A) the number of Shares as is equal to the
quotient of (I) such Purchaser's Investment Amount divided by (II) $0.92, (B)
Warrants exercisable for a number of shares of Common Stock equal to 60% of the
number of Shares referred to in subclause (A) above and (C) an Additional
Investment Right to purchase that number of Additional Investment Right Shares
and Additional Investment Rights Warrants, each as set forth on Exhibit F
hereto. On the Closing Date, each Purchaser shall pay the Company an amount
equal to such Purchaser's Investment Amount.

               ii. On the Closing Date, each Purchaser shall pay its Investment
Amount by wire transfer to the Company, in accordance with the Company's written
wiring instructions against delivery of certificates representing the Shares and
duly executed Warrants and Additional Investment Rights being purchased by such
Purchaser, and the Company shall deliver

                                       3
<PAGE>
such Shares, Warrants and Additional Investment Rights against delivery of the
such Purchaser's Investment Amount.

               iii. Subject to the satisfaction (or waiver) of the conditions
thereto set forth in Section 6 and Section 7 below, the date and time of the
sale of the Shares, Warrants and Additional Investment Rights pursuant to this
Agreement (the "CLOSING") shall be 3:00 p.m. California time on January 29, 2004
or such other date or time as the Purchasers and the Company may mutually agree
("CLOSING DATE"). The Closing shall occur at Proskauer Rose LLP, or at such
other place as Purchasers and the Company may otherwise mutually agree.

3. THE PURCHASER'S REPRESENTATIONS AND WARRANTIES.

        Each Purchaser severally and not jointly represents and warrants to the
Company as follows:

        a. Purchase for Own Account. The Purchaser is purchasing the Securities
for the Purchaser's own account and not with a present view towards the
distribution thereof. The Purchaser understands that the Purchaser must bear the
economic risk of this investment indefinitely, unless the Securities are
registered pursuant to the Securities Act and any applicable state securities or
blue sky laws or an exemption from such registration is available, and that the
Company has no present intention of registering any such Securities other than
as contemplated by the Registration Rights Agreements. Notwithstanding anything
in this Section 3(a) to the contrary, by making the foregoing representation,
the Purchaser does not agree to hold the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an exemption from
registration under the Securities Act and any applicable state securities laws;
provided, that in the case of any transfer of the Securities pursuant to an
exemption, such transfer is made in accordance with the provisions of Section
3(e).

        b. Information. The Purchaser has been furnished all materials
(excluding any material nonpublic information) relating to the business,
finances and operations of the Company and its Subsidiaries and materials
relating to the offer and sale of the Securities that have been requested by the
Purchaser. The Purchaser has been afforded the opportunity to ask questions of
the Company and has received what the Purchaser believes to be satisfactory
answers to any such inquiries. The Purchaser understands that its investment in
the Securities involves a high degree of risk.

        c. Governmental Review. The Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities.

        d. Authorization; Enforcement. The Purchaser has the requisite power and
authority to enter into and perform its obligations under this Agreement and to
purchase the Securities in accordance with the terms hereof. This Agreement has
been duly and validly authorized, executed and delivered on behalf of the
Purchaser and is a valid and binding agreement of the Purchaser enforceable
against the Purchaser in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
other laws affecting

                                       4
<PAGE>
creditors' rights and remedies generally and to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in
equity).

        e. Transfer or Resale. The Purchaser understands that (i) except as
provided in the Registration Rights Agreements, the Securities have not been and
are not being registered under the Securities Act or any state securities laws,
and may not be transferred unless (a) subsequently registered thereunder or sold
pursuant to Rule 144(k) under the Securities Act, or (b) the Purchaser shall
have delivered to the Company an opinion of counsel reasonably acceptable to the
Company (which opinion shall be in form, substance and scope customary for
opinions of counsel in comparable transactions) to the effect that the
Securities to be sold or transferred may be sold or transferred under an
exemption from such registration, and (ii) neither the Company nor any other
Person is under any obligation to register such Securities under the Securities
Act or any state securities laws or to comply with the terms and conditions of
any exemption thereunder, in each case, other than pursuant to the Registration
Rights Agreements.

        f. Legends. The Purchaser understands that the Securities may bear a
restrictive legend in substantially the following form:

               [NEITHER] THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE
               SECURITIES ARE EXERCISABLE] HAVE [NOT] BEEN REGISTERED WITH THE
               SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
               OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION
               UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
               ACT"), 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.

        Certificates evidencing Securities shall not be required to contain such
legend or any other legend (i) while a Registration Statement covering the
resale of such Securities is effective under the Securities Act provided the
Purchasers at the time any of the Purchasers request a removal of the Legend on
any certificate evidencing all or any portion of any of the Securities or to
transfer any of the same, it (or a broker acting on such Purchaser's behalf)
provides to the Company (or to the Transfer Agent on the Company's behalf),
reasonable written assurances to the effect that any of the Securities, sold or
to be sold by such Purchasers have been, or will be, sold in accordance with the
plan of distribution set forth in the Prospectus and in compliance

                                       5
<PAGE>
with the prospectus delivery requirements under the Securities Act., or (ii)
following any sale of such Securities pursuant to Rule 144, or (iii) if such
Securities are eligible for sale under Rule 144(k), or (iv) if such legend is
not required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the Staff of the SEC). The
Company shall cause its counsel to issue the legal opinion included in the
Transfer Agent Instructions to the Transfer Agent on the Effective Date.
Following the Effective Date or at such earlier time as a legend is no longer
required for certain Securities, the Company will no later than three Business
Days following the delivery by a Purchaser to the Company or the Transfer Agent
of a legended certificate representing such Securities, deliver or cause to be
delivered to such Purchaser a certificate representing such Securities that is
free from all restrictive and other legends. The Company may not make any
notation on its records or give instructions to any transfer agent of the
Company that enlarge the restrictions on transfer set forth in this Section.

        The Company acknowledges and agrees that a Purchaser may from time to
time pledge or grant a security interest in some or all of the Securities in
connection with a bona fide margin agreement or other loan or financing
arrangement secured by the Securities and, if required under the terms of such
agreement, loan or arrangement, such Purchaser may transfer pledged or secured
Securities to the pledgees or secured parties. Such a pledge or transfer would
not be subject to approval of the Company and no legal opinion of the pledgee,
secured party or pledgor shall be required in connection therewith, but such
legal opinion may be required in connection with a subsequent transfer following
default by the Purchaser transferee of the pledge. Further, no notice shall be
required of such pledge. At the appropriate Purchaser's expense, the Company
will execute and deliver such reasonable documentation as a pledgee or secured
party of Securities may reasonably request in connection with a pledge or
transfer of the Securities, including the preparation and filing of any required
prospectus supplement under Rule 424(b)(3) of the Securities Act or other
applicable provision of the Securities Act to appropriately amend the list of
selling stockholders thereunder.

        g. Investor Status. The Purchaser is an "ACCREDITED INVESTOR" within the
meaning of Rule 501 Regulation D under the Securities Act. In the normal course
of its business, it invests in or purchases securities similar to the Securities
and it has such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of purchasing the Securities. The
Purchaser is not a registered broker dealer or an Affiliate of any broker or
dealer registered under Section 15(a) of the Exchange Act, or a member of the
National Association of Securities Dealers, Inc. or a Person engaged in the
business of being a broker dealer.

        h. Restricted Securities. The Purchaser understands that the Securities
are characterized as "restricted securities" under the U.S. federal securities
laws inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act only
in certain limited circumstances.

        i. No Short Positions or Stock Ownership. Except as previously disclosed
to the Company in writing, each Purchaser has not, prior to the 30 Business Days
prior to the Closing Date, entered into any Short Sales. For purposes of this
Section 3.2(i), a "SHORT SALE" by a Purchaser means a sale of Common Stock that
is marked as a short sale and that is executed at a time when such Purchaser has
no equivalent offsetting long position in the Common Stock. For

                                       6
<PAGE>
purposes of determining whether a Purchaser has an equivalent offsetting long
position in the Common Stock, all Common Stock and all Common Stock that would
be issuable upon conversion or exercise in full of all Options then held by such
Purchaser (assuming that such Options were then fully convertible or
exercisable, notwithstanding any provisions to the contrary, and giving effect
to any conversion or exercise price adjustments scheduled to take effect in the
future) shall be deemed to be held long by such Purchaser.

4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

        The Company represents and warrants to each Purchaser as follows:

        a. Organization and Qualification. Each of the Company and its
Subsidiaries is a corporation duly organized and existing under the laws of the
jurisdiction in which it is incorporated, and has the requisite corporate power
to own its properties and to carry on its business as now being conducted. Each
of the Company and its Subsidiaries is duly qualified as a foreign corporation
to do business and is in good standing in every jurisdiction in which the nature
of the business conducted by it makes such qualification necessary and where the
failure so to qualify would have a Material Adverse Effect. The Company has no
direct or indirect Subsidiaries other than those listed in Schedule 4(a). Except
as disclosed in Schedule 4 (a), the Company owns, directly or indirectly, all of
the capital stock or comparable equity interests of each Subsidiary free and
clear of any Lien, and all the issued and outstanding shares of capital stock or
comparable equity interests of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights.

        b. Authorization; Enforcement. (i) The Company has the requisite
corporate power and authority to enter into and perform its obligations under
this Agreement, the Warrants, the Additional Investment Rights, the Additional
Investment Right Warrants and the Registration Rights Agreements, to issue and
sell the Shares, the Warrants, the Additional Investment Rights, the Additional
Investment Right Shares and the Additional Investment Right Warrants in
accordance with the terms hereof and to issue the Warrant Shares and the
Additional Investment Right Warrant Shares upon exercise of the Warrants and the
Additional Investment Right Warrants, respectively, in accordance with the terms
of said warrants; (ii) the execution, delivery and performance of this
Agreement, the Warrants, the Additional Investment Rights, the Additional
Investment Right Warrants and the Registration Rights Agreements by the Company
and the consummation by it of the transactions contemplated hereby and thereby
(including, without limitation, the reservation for issuance and issuance of the
Shares and the Additional Investment Rights Shares and the issuance of the
Warrants, the Additional Investment Rights and the Additional Investments Right
Warrants and the reservation for issuance and issuance of the Warrant Shares and
the Additional Investment Right Warrants Shares) have been duly authorized by
the Company's Board of Directors and no further consent or authorization of the
Company, its Board of Directors or its shareholders is required; (iii) this
Agreement has been duly executed and delivered by the Company; and (iv) this
Agreement constitutes, and, upon execution and delivery by the Company and the
other parties thereto to the extent required of the Registration Rights
Agreements, the Warrants, the Additional Investment Rights, and the Additional
Investments Rights Warrants, such agreements will constitute, valid and binding
obligations of the Company enforceable against the Company in accordance with
their respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other

                                       7
<PAGE>
laws affecting creditors' rights and remedies generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).

        c. Capitalization. The capitalization of the Company as of the date
hereof is set forth on Schedule 4(c), including the authorized capital stock,
the number of shares issued and outstanding, the number of shares issuable and
reserved for issuance pursuant to the Company's stock option plans, the number
of shares issuable and reserved for issuance pursuant to securities exercisable
for, or convertible into or exchangeable for any shares of capital stock. All of
such outstanding shares of the Company's capital stock have been, or upon
issuance will be, validly issued, fully paid and nonassessable. Except as set
forth on Schedule 4(c), no shares of capital stock of the Company (including the
Shares, the Warrant Shares, the Additional Investment Right Shares and the
Additional Investment Right Warrant Shares) or any of the Subsidiaries are
subject to preemptive rights or any other similar rights of the shareholders of
the Company or any liens or encumbrances. Except for the Securities and as
disclosed in Schedule 4(c), as of the date of this Agreement, (i) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever to which the Company or any of its
Subsidiaries is a party relating to the issuance by the Company or any of its
Subsidiaries of securities or rights convertible into or exercisable or
exchangeable for, any shares of capital stock of the Company or any of its
Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is
or may become bound to issue additional shares of capital stock of the Company
or such Subsidiaries, and (ii) there are no agreements or arrangements under
which the Company or any of its Subsidiaries is obligated to register the sale
of any of its or their securities under the Securities Act (except the
Registration Rights Agreements). Except as set forth on Schedule 4(c), there are
no securities or instruments containing antidilution or similar provisions that
may be triggered by the issuance of the Securities in accordance with the terms
of this Agreement, the Warrants, the Additional Investment Rights, the
Additional Investment Right Warrants or the Registration Rights Agreements and
the holders of the securities and instruments listed on such Schedule 4(c) have
waived any rights they may have under such antidilution or similar provisions in
connection with the issuance of the Securities in accordance with the terms of
this Agreement, the Warrants, the Additional Investment Rights, the Additional
Investment Right Warrants or the Registration Rights Agreements. The Company has
made available to each Purchaser true and correct copies of the Company's
Certificate of Incorporation as in effect on the date hereof ("CERTIFICATE OF
INCORPORATION"), the Company's By-laws as in effect on the date hereof (the
"BY-LAWS") and all other instruments and agreements governing securities
convertible into or exercisable or exchangeable for capital stock of the
Company, except for stock options granted under any benefit plan of the Company.

        d. Issuance of Shares. The Shares are duly authorized and when issued
and paid for in accordance with the terms hereof, will be validly issued, fully
paid and non-assessable, and free from all taxes and Liens (other than those
imposed through acts or omissions of the Purchaser thereof) and will not be
subject to preemptive rights or other similar rights of shareholders of the
Company. The Warrant Shares, the Additional Investment Right Shares and the
Additional Investment Rights Warrant Shares are duly authorized and reserved for
issuance, and, upon exercise of the Warrants, the Additional Investment Rights
and/or the Additional Investment Right Warrants, as the case may be, in
accordance with the terms thereof, will be validly issued, fully paid and
non-assessable and free from all taxes and Liens (other than those imposed
through acts or omissions of the Purchaser thereof) and will not be subject to
preemptive rights or other similar rights of shareholders of the Company.

                                       8
<PAGE>
        e. No Conflicts. The execution, delivery and performance of this
Agreement, the Registration Rights Agreements, the Warrants and the Additional
Investment Rights by the Company, and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
reservation for issuance and issuance of the Shares, the Warrant Shares, the
Additional Investment Right Shares and the Additional Investment Right Warrant
Shares and the issuance of the Warrants, the Additional Investment Rights and
the Additional Investment Right Warrants) will not (i) conflict with or result
in a violation of the Certificate of Incorporation or By-laws or (ii) conflict
with, or constitute a default (or an event which, with notice or lapse of time
or both, would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of any agreement, indenture
or instrument to which the Company or any of its Subsidiaries is a party, or
result in a violation of any law, rule, regulation, order, judgment or decree
(including (assuming the accuracy of the representations and warranties of the
Purchasers) the United States federal and state securities laws and regulations)
applicable to the Company or any of its Subsidiaries or by which any property or
asset of the Company or any of its Subsidiaries is bound or affected (except,
with respect to clause (ii), for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect). Neither the
Company nor any of its Subsidiaries is in violation of its Certificate of
Incorporation, By-laws and other organizational documents and neither the
Company nor any of its Subsidiaries is in default (and no event has occurred
which, with notice or lapse of time or both, would put the Company or any of its
Subsidiaries in default) under, nor has there occurred any event giving others
(with notice or lapse of time or both) any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its Subsidiaries is a party, except for actual or possible
violations, defaults or rights as would not, individually or in the aggregate,
have a Material Adverse Effect. The businesses of the Company and its
Subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any governmental entity, except for actual or possible violations,
if any, the sanctions for which either singly or in the aggregate would not have
a Material Adverse Effect. Except as specifically contemplated by this Agreement
and as required under the Securities Act and any applicable state securities
laws and assuming the accuracy of the representations and warranties of the
Purchasers, the Company is not required to obtain any consent, approval,
authorization or order of, or make any filing or registration with, any court or
governmental agency or any regulatory or self regulatory agency in order for it
to execute, deliver or perform any of its obligations under this Agreement
including without limitation the issuance and sale of the Shares, Warrants and
the Additional Investment Rights as provided hereby), the Warrants and the
Additional Investment Rights Warrants (including without limitation the issuance
of the Warrant Shares and the Additional Investment Right Warrant Shares) or the
Registration Rights Agreements, in each case in accordance with the terms hereof
or thereof. The Company is not currently in violation of the listing or
maintenance requirements of The Nasdaq Stock Market. The Company does not
reasonably anticipate that the Common Stock will be delisted by The Nasdaq Stock
Market in the twelve month period following the Closing Date based on its rules
(and interpretations thereof) as currently in effect.

        f. SEC Documents; Financial Statements. Since September 1, 2002, the
Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and has filed all
registration statements and other documents required to be filed by it with

                                       9
<PAGE>
the SEC pursuant to the Securities Act (all of the foregoing filed prior to the
date hereof, and all exhibits included therein and financial statements and
schedules thereto and documents incorporated by reference therein, being
hereinafter referred to herein as the "SEC DOCUMENTS"). The Company has made
available to each Purchaser via the SEC's Electronic Data Gathering, Analysis
and Retrieval (EDGAR) system true and complete copies of the SEC Documents. As
of their respective dates, the SEC Documents complied in all material respects
with the requirements of the Exchange Act or the Securities Act, as the case may
be, and the rules and regulations of the SEC promulgated thereunder applicable
to the SEC Documents, and none of the SEC Documents, at the time they were filed
with the SEC, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Any statements made in any such SEC Documents that are or
were required to be updated or amended under applicable law have been so updated
or amended. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC applicable with respect thereto. Such financial statements have been
prepared in accordance with United States 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 fairly present
in all material respects the consolidated financial position of the Company and
its Subsidiaries as of the dates thereof and the results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal and recurring year-end audit adjustments). Except as set
forth in the SEC Documents, the Company has no liabilities, contingent or
otherwise, other than (i) liabilities incurred in the ordinary course of
business subsequent to the date of such SEC Documents and (ii) obligations under
contracts and commitments incurred in the ordinary course of business and not
required under generally accepted accounting principles to be reflected in such
SEC Documents, which liabilities and obligations referred to in clauses (i) and
(ii), individually or in the aggregate, would not have a Material Adverse
Effect.

        g. Absence of Certain Changes. Since the date of the latest audited
financial statements included within the SEC Documents, except as specifically
disclosed in the SEC Documents, (i) there has been no event, occurrence or
development that, individually or in the aggregate, has had or that could result
in a Material Adverse Effect, (ii) the Company has not incurred any liabilities
(contingent or otherwise) other than (A) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past practice and
(B) liabilities not required to be reflected in the Company's financial
statements pursuant to generally accepted accounting principals or required to
be disclosed in filings made with the SEC, (iii) the Company has not altered its
method of accounting or the identity of its auditors, (iv) the Company has not
declared or made any dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock, and (v) the Company has not issued any equity
securities to any officer, director or Affiliate, except pursuant to existing
Company stock option and stock purchase plans.

        h. Absence of Litigation. Except as disclosed in the SEC Documents,
there is no action, suit, proceeding, inquiry or investigation before or by any
court, public board,

                                       10
<PAGE>
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company, threatened against or affecting the Company, or any of
its Subsidiaries, or any of their directors or officers in their capacities as
such which would have a Material Adverse Effect.

        i. Intellectual Property. The Company and each of its Subsidiaries owns
or is licensed to use all patents, patent applications, trademarks, trademark
applications, trade names, service marks, copyrights, copyright applications,
licenses, permits, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures) and
other similar rights and proprietary knowledge (collectively, "INTANGIBLES")
necessary for the conduct of its business as now being conducted and as proposed
to be conducted. Except as disclosed in the SEC Documents, neither the Company
nor any of its Subsidiaries has received written notice that it is infringing
upon or in conflict with any third party Intangibles. Except as disclosed in the
SEC Documents, neither the Company nor any of its Subsidiaries has entered into
any consent, indemnification, forbearance to sue or settlement agreements with
respect to the validity of the Company's or such Subsidiary's ownership or right
to use its Intangibles. The Intangibles are valid and enforceable, and, without
the Company intending to allow such result, no registration relating thereto has
lapsed, expired or been abandoned or canceled or is the subject of cancellation
or other adversarial proceedings, and all applications therefor are pending and
in good standing. The Company has complied with its contractual obligations
relating to the protection of the Intangibles used pursuant to licenses with
such exceptions that would not and will not have a Material Adverse Effect. To
the Company's knowledge, no Person is infringing on or violating the Intangibles
owned or used by the Company.

        j. Environment. Except as disclosed in the SEC Documents (i) there is no
environmental liability, nor factors likely to give rise to any environmental
liability, affecting any of the properties of the Company or any of its
Subsidiaries that, individually or in the aggregate, would have a Material
Adverse Effect and (ii) neither the Company nor any of its Subsidiaries has
violated any environmental law applicable to it now or previously in effect,
other than such violations or infringements that, individually or in the
aggregate, have not had and will not have a Material Adverse Effect.

        k. Title. The Company and each of its Subsidiaries has good title in fee
simple to all real property and good title to all personal property owned by it
which is material to its business, free and clear of all liens, encumbrances and
defects except for such defects in title that, individually or in the aggregate,
would not have a Material Adverse Effect. Any real property and facilities held
under lease by the Company or any of its Subsidiaries are held by the Company or
such Subsidiary under valid, subsisting and enforceable leases with such
exceptions which have not had and will not have a Material Adverse Effect.

        l. Insurance. Except as disclosed in the SEC Documents, the Company and
its Subsidiaries maintain such insurance relating to their business, operations,
assets, key-employees and officers and directors as is appropriate to their
business, assets and operations, in such amounts and against such risks as are
customarily carried and insured against by owners of comparable businesses,
assets and operations, and such insurance coverages will be continued in full
force and effect to and including the Closing Date other than those insurance
coverages in respect of which the failure to continue in full force and effect
would not reasonably be expected to have a Material Adverse Effect.

                                       11
<PAGE>
        m. Acknowledgment Regarding the Purchasers' Purchase of the Securities.
The Company acknowledges and agrees that no Purchaser is acting as a financial
advisor or is acting as a fiduciary of the Company (or in any similar capacity)
with respect to this Agreement or the transactions contemplated hereby, and the
relationship between the Company and the Purchasers is "arms length" and that
any statement made by any Purchaser or any of its Affiliates, representatives or
agents in connection with this Agreement and the transactions contemplated
hereby is not advice or a recommendation and is merely incidental to such
Purchaser's purchase of Securities and has not been relied upon by the Company,
its officers or directors in any way except for the Purchaser's representations
and warranties in Section 3 hereof. The Company further represents to the
Purchaser that the Company's decision to enter into this Agreement has been
based solely on an independent evaluation by the Company and its
representatives.

        n. No Brokers. Except as described in Schedule 4(n), all of which are
payable at the Closing, to the knowledge of the Company, to registered
broker-dealers, no brokerage or finder's fees or commissions are or will be
payable by the Company to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person with respect to the
transactions contemplated by this Agreement, and the Company has not taken any
action that would cause any Purchaser to be liable for any such fees or
commissions.

        o. Tax Status. The Company and each of its Subsidiaries has made or
filed all material federal, state and local income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject
(unless and only to the extent that the Company or the applicable Subsidiary has
set aside on its books provisions adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provisions adequate for the payment of all taxes
for periods subsequent to the periods to which such returns, reports or
declarations apply. There are no material unpaid taxes claimed to be due by the
taxing authority of any jurisdiction. The Company has not executed a waiver with
respect to any statute of limitations relating to the assessment or collection
of any federal, state or local tax. None of the Company's tax returns have been
or is being audited by any taxing authority.

        p. No General Solicitation. Neither the Company nor to the knowledge of
the Company any Person participating on the Company's behalf in the transactions
contemplated hereby has conducted any "general solicitation" or "general
advertising" as such terms are used in Regulation D, with respect to any of the
Securities being offered hereby; provided, however, that the Company makes no
representation or warranty with respect to the activities of any of the
placement agents or any Affiliate of any of them engaged by the Company in
connection with the transactions contemplated by this Agreement (collectively
the "PLACEMENT AGENTS").

        q. Securities Laws. Neither the Company, nor any Affiliate of the
Company, nor any Person acting on its behalf or on behalf of such Affiliate,
has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security under circumstances that would require
registration of the Securities being offered hereby under the Securities Act or
cause this offering of Securities to be integrated with any prior offering of
securities of the Company for purposes of the Securities Act provided, however,
that the Company makes no representation or warranty with respect to the
activities of any of the Placement Agents or any of

                                       12
<PAGE>
Affiliate of any of them. Assuming the truth and accuracy of the Purchasers'
representations and warranties, the offer, sale and delivery of shares of Common
Stock upon exercise of the Warrants will be exempt from the registration
requirements of Section 5 of the Securities Act.

        r. Form S-3 Eligibility. The Company is currently eligible to register
the resale of its Common Stock on a registration statement on Form S-3 under the
Securities Act. The Company is not aware of any facts or circumstances
(including without limitation any required approvals or waivers of 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 (as defined in
the Registration Rights Agreements) 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.

        s. Disclosure. The Company confirms that neither it nor any other Person
acting on its behalf has provided any of the Purchasers or their agents or
counsel with any information that constitutes or might constitute material,
nonpublic information. The Company understands and confirms that each of the
Purchasers will rely on the foregoing representations in effecting transactions
in securities of the Company. All disclosure provided to the Purchasers
regarding the Company, its business and the transactions contemplated hereby,
including the Schedules to this Agreement, furnished by or on behalf of the
Company are true and correct and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. No event or circumstance has occurred or information
exists with respect to the Company or any of its Subsidiaries or its or their
business, properties, prospects, operations or financial conditions, which,
under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed, except, until such time as the press release is issued as
contemplated by Section 5(i), the execution of this Agreement. The Company
acknowledges and agrees that no Purchaser makes or has made any representations
or warranties with respect to the transactions contemplated hereby other than
those specifically set forth in Section 3.

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

        u. Internal Accounting Controls. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i)

                                       13
<PAGE>
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

        v. Transactions With Affiliates and Employees. Except as set forth on
Schedule 4(v), none of the officers or directors of the Company and, to the
knowledge of the Company, none of the employees of the Company is presently a
party to any transaction with the Company or any Subsidiary (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.

5. COVENANTS AND OTHER AGREEMENTS.

        a. Satisfaction of Conditions. The parties shall use their reasonable
efforts to satisfy in a timely manner each of the conditions set forth in
Section 6 and Section 7 of this Agreement.

        b. Form D; Blue Sky Laws. The Company agrees to file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof to each Purchaser promptly after such filing. The Company shall, on or
before the Closing Date, take such action as the Company shall reasonably
determine is necessary to qualify the Securities for sale to the Purchasers
pursuant to this Agreement under applicable securities or "blue sky" laws of the
states of the United States or obtain exemption therefrom, and shall provide
evidence of any such action so taken to each Purchaser on or prior to the
Closing Date.

        c. Reporting Status. So long as a Purchaser beneficially owns any
Securities or has the right to acquire any Securities pursuant to this
Agreement, the Company shall use its reasonable efforts to timely file all
reports required to be filed with the SEC pursuant to the Exchange Act, and
shall not terminate its status as an issuer required to file reports under the
Exchange Act even if the Exchange Act or the rules and regulations thereunder
would permit such termination.

        d. Use of Proceeds. The Company shall use the net proceeds from the sale
of the Shares, the Warrants and the Additional Investment Rights, including
proceeds received upon exercise of the Additional Investment Rights, for general
corporate purposes and working capital, but in no event shall the Company use
such net proceeds to repurchase any outstanding securities of the Company.

        e. Financial Information. For the Registration Period (as defined in the
Registration Rights Agreements), the Company agrees to send to each Purchaser
within ten days after the filing with the SEC, to the extent not available
through the SEC's EDGAR system, a copy of its Annual Report on Form 10-K, its
Quarterly Reports on Form 10-Q, its proxy and information statements and any
Current Reports on Form 8-K.

                                       14
<PAGE>
        f. Reservation of Shares. The Company has and shall at all times have
authorized and reserved for the purpose of issuance a sufficient number of
shares of Common Stock to provide for the issuance of the Shares as provided in
Section 2 hereof, and the full exercise of the Warrants, the Additional
Investment Rights and the Additional Investment Right Warrants and the issuance
of the Warrant Shares, the Additional Investment Right Shares and the Additional
Investment Right Warrants Shares in connection therewith and as otherwise
required hereby and thereby. The Company shall not reduce the number of shares
of Common Stock reserved for issuance under this Agreement (except as a result
of the issuance of the Shares hereunder), the Warrants (except as a result of
the issuance of the Warrant Shares upon the exercise of the Warrants), the
Additional Investment Rights (except as a result of the issuance of Additional
Investment Right Shares upon exercise of the Additional Investment Rights and
except as a result of the issuance of the Additional Investment Right Warrant
Shares upon the exercise of the Additional Investment Right Warrants) or the
Registration Rights Agreements, without the consent of the Purchasers.

        g. Listing. The Company will apply for the listing of the Shares,
Warrant Shares, the Additional Investment Right Shares and the Additional
Investment Right Warrants Shares, in each case, upon each national securities
exchange and automated quotation system, if any, upon which shares of Common
Stock are then listed or quoted and shall maintain, so long as any other shares
of Common Stock shall be so listed, such listing of all Shares and Additional
Investment Rights Shares from time to time issuable hereunder and under the
Additional Investment Rights, respectively, and all Warrant Shares and
Additional Investment Right Warrant Shares from time to time issuable upon
exercise of the Warrants and the Additional Investment Right Warrants,
respectively. The Company shall use its reasonable efforts to include its shares
of Common Stock in The Nasdaq Stock Market at the earliest practical date and,
in any event, by the date the first registration statement covering the resale
of the Shares is declared effective by the SEC and will comply in all respects
with the Company's reporting, filing and other obligations under the bylaws or
rules of The Nasdaq Stock Market.

        h. No Integrated Offerings. The Company shall not make any offers or
sales of any security (other than the Securities) under circumstances that would
require registration of the Securities being offered or sold hereunder under the
Securities Act or cause this offering of Securities to be integrated with any
other non-exempt offering of securities other than the Additional Investment
Rights and securities issuable thereunder, warrants issuable to any of the
Placement Agents in connection with the transactions contemplated by this
Agreement and the shares of common stock issuable upon exercise of such
warrants.

        i. Securities Laws Disclosure; Publicity. The Company shall, on or
before 9:30 a.m., Eastern Standard Time, on January 29, issue a press release
reasonably acceptable to the Purchasers disclosing the transactions contemplated
hereby. No later than the first Business Day following the Closing Date, the
Company shall file a Current Report on Form 8-K with the SEC (the "8-K FILING")
describing the transactions contemplated by the Transaction Documents and
including as exhibits to such Current Report on Form 8-K this Agreement and the
form of Warrants, in the form required by the Exchange Act. Thereafter, the
Company shall timely make any filings and notices required by the SEC or
applicable law with respect to the transactions contemplated hereby and provide
copies thereof to the Purchasers promptly after filing. Except with respect to
the 8-K Filing and the press release referenced above (a copy of which will be

                                       15
<PAGE>
provided to the Purchasers for their review as early as practicable prior to its
filing), the Company shall, at least two Business Days prior to the filing or
dissemination of any disclosure required by this paragraph, provide a copy
thereof to the Purchasers for their review. The Company and the Purchasers shall
consult with each other in issuing any press releases or otherwise making public
statements or filings and other communications with the SEC or any regulatory
agency or The Nasdaq Stock Market with respect to the transactions contemplated
hereby, and neither party shall issue any such press release or otherwise make
any such public statement, filing or other communication without the prior
consent of the other, except if such disclosure is required by law, in which
case the disclosing party shall promptly provide the other party with prior
notice of such public statement, filing or other communication. Notwithstanding
the foregoing, the Company shall not publicly disclose the name of any
Purchaser, or include the name of any Purchaser in any filing with the SEC or
any regulatory agency or The Nasdaq Stock Market, without the prior written
consent of such Purchaser, except to the extent such disclosure (but not any
disclosure as to the controlling Persons thereof) is required by law or The
Nasdaq Stock Market regulations, in which case the Company shall provide the
Purchasers with prior notice of such disclosure. The Company shall not, and
shall cause each of its Subsidiaries and its and each of their respective
officers, directors, employees and agents not to, provide any Purchaser with any
material nonpublic information regarding the Company or any of its Subsidiaries
from and after the filing of the 8-K Filing without the express written consent
of such Purchaser. No Purchaser shall have any liability to the Company, its
Subsidiaries, or any of its or their respective officers, directors, employees,
stockholders or agents for any such disclosure. Subject to the foregoing,
neither the Company nor any Purchaser shall issue any press releases or any
other public statements with respect to the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without the prior
approval of any Purchaser, to make any press release or other public disclosure
with respect to such transactions (i) in substantial conformity with the 8-K
Filing and contemporaneously therewith and (ii) as is required by applicable law
and regulations (provided that in the case of clause (i) the Purchasers shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release). Each press release disseminated in the
United States to the public generally during the 12 months preceding the date of
this Agreement did not at the time of release contain any untrue statement of a
material fact.

        j. Furnishing of Information. As long as any Purchaser owns Securities,
the Company covenants to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to the Securities and Exchange Act of
1933, as amended (the "EXCHANGE Act"). Upon the request of any Purchaser, the
Company shall deliver to such Purchaser a written certification of a duly
authorized officer as to whether it has complied with the preceding sentence.
During the earlier of (i) the date two years from the Closing Date or (ii) as
long as any Purchaser owns Securities, if the Company is not required to file
reports pursuant to such laws, it will prepare and furnish to the Purchasers and
make publicly available in accordance with paragraph (c) of Rule 144 such
information as is required for the Purchasers to sell the Securities under Rule
144. The Company further covenants that it will take such further action as any
holder of Securities may reasonably request to satisfy the provisions of Rule
144 applicable to the issuer of securities relating to transactions for the sale
of securities pursuant to Rule 144.

        k. Integration. The Company shall not, and shall use its best efforts to
ensure that no Affiliate of the Company shall, sell, offer for sale or solicit
offers to buy or otherwise negotiate

                                       16
<PAGE>
in respect of any security (as defined in Section 2 of the Securities Act) that
would be integrated with the offer or sale of the Securities in a manner that
would require the registration under the Securities Act of the sale of the
Securities to the Purchasers, or that would be integrated with the offer or sale
of the Securities for purposes of the rules and regulations of The Nasdaq Stock
Market.

        l. Subsequent Placements.

        (1) From the date hereof until the Registration Statement (as defined in
the Registration Rights Agreements) is declared effective by the SEC (the
"BLOCKOUT PERIOD"), the Company will not, directly or indirectly, offer, sell,
grant any option to purchase, or otherwise dispose of (or announce any offer,
sale, grant or any option to purchase or other disposition of) any of its or the
Subsidiaries' equity or equity equivalent securities, including without
limitation any debt, preferred stock or other instrument or security that is, at
any time during its life and under any circumstances, convertible into or
exchangeable or exercisable for Common Stock or Common Stock Equivalents (any
such offer, sale, grant, disposition or announcement being referred to as a
"SUBSEQUENT PLACEMENT"). The restrictions contained in this Section 5(l) shall
not apply to Excluded Stock (as defined below).

        (2) The restrictions contained in paragraph 5(l)(1) of this Section
shall not apply to any of the following "EXCLUDED SECURITIES:" (A) the Shares,
(B) the Warrants, (C) the Additional Investment Rights, (D) the Additional
Investment Right Warrants, (E) any warrants issued to any of the Placement
Agents, (F) any shares of Common Stock issued upon exercise of the Warrants, the
Additional Investment Rights, the Additional Investment Right Warrants or any
warrants issued to any of the Placement Agents or (G) any Common Stock issued
(1) upon exercise or conversion of any options or other securities described in
Schedule 4(c) (provided that such exercise or conversion occurs in accordance
with the terms thereof, without amendment or modification, and that the
applicable exercise or conversion price or ratio is described in such schedule),
(2) in connection with any grant of options, warrants or the issuance of
additional securities to employees, officers, directors or consultants of the
Company pursuant to a stock option plan or stock purchase plan duly adopted by
the Company's board of directors or in respect of the issuance of Common Stock
upon exercise of any such options or warrants, (C) pursuant to a bona fide firm
commitment underwritten public offering through any investment banker (excluding
any equity line) in an aggregate offering amount greater than $5,000,000, or (D)
in connection with a bona fide joint venture or development agreement or
strategic partnership or to an independent Person, the primary purpose of which
is not to raise equity capital.

        m. Reimbursement. If any Purchaser or any of its Affiliates or any
officer, director, partner, controlling Person, employee or agent of a Purchaser
or any of its Affiliates (a "RELATED PERSON") becomes involved in any capacity
in any Proceeding brought by or against any Person in connection with or as a
result of any misrepresentation, breach or inaccuracy of any representation,
warranty, covenant or agreement made by the Company in any Transaction
Documents, the Company will indemnify and hold harmless such Purchaser or
Related Person for its reasonable legal and other expenses (including the costs
of any investigation, preparation and travel) and for any Losses incurred in
connection therewith, as such expenses or Losses are incurred, excluding only
Losses that result directly from such Purchaser's or Related Person's gross
negligence or willful misconduct. The conduct of any Proceedings for which

                                       17
<PAGE>
indemnification is available under this paragraph shall be governed by Section 6
of the Registration Rights Agreements. The indemnification obligations of the
Company under this paragraph shall be in addition to any liability that the
Company may otherwise have and shall be binding upon and inure to the benefit of
any successors, assigns, heirs and personal representatives of the Purchasers
and any such Related Persons. The Company also agrees that neither the
Purchasers nor any Related Persons shall have any liability to the Company or
any Person asserting claims on behalf of or in right of the Company in
connection with or as a result of the transactions contemplated by the
Transaction Documents, except to the extent that any Losses incurred by the
Company result from the gross negligence or willful misconduct of the applicable
Purchaser or Related Person in connection with such transactions. If the Company
breaches its obligations under any Transaction Document, then, in addition to
any other liabilities the Company may have under any Transaction Document or
applicable law, the Company shall pay or reimburse the Purchasers on demand for
all costs of collection and enforcement (including reasonable attorneys fees and
expenses). Without limiting the generality of the foregoing, the Company
specifically agrees to reimburse the Purchasers on demand for all costs of
enforcing the indemnification obligations in this paragraph.

6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

        The obligation of the Company hereunder to issue and sell Shares,
Warrants and Additional Investment Rights to a Purchaser at the Closing
hereunder is subject to the satisfaction, at or before the Closing Date, of each
of the following conditions thereto; provided, however, that these conditions
are for the Company's sole benefit and may be waived by the Company at any time
in its sole discretion.

        a. The applicable Purchaser shall have executed the signature page to
this Agreement and the Registration Rights Agreements, and delivered the same to
the Company.

        b. The applicable Purchaser shall have delivered such Purchaser's
Investment Amount in accordance with Section 2(b) above.

        c. The representations and warranties of the applicable Purchaser shall
be true and correct in all material respects as of the date when made and as of
the Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date, which representations and
warranties shall be true and correct as of such date), and the applicable
Purchaser shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the applicable Purchaser at or prior to
the Closing Date.

        d. No statute, rule, regulation, executive order, decree, ruling,
injunction, action, proceeding or interpretation shall have been enacted,
entered, promulgated, endorsed or adopted by any court or governmental authority
of competent jurisdiction or any self-regulatory organization, or the staff of
any thereof, having authority over the matters contemplated hereby which
questions the validity of, or challenges or prohibits the consummation of, any
of the transactions contemplated by this Agreement.

                                       18
<PAGE>
7. CONDITIONS TO EACH PURCHASER'S OBLIGATION TO PURCHASE SHARES AND WARRANTS.

        The obligation of each Purchaser hereunder to purchase Shares, Warrants
and Additional Investment Rights to be purchased by it hereunder is subject to
the satisfaction, at or before the Closing Date, of each of the following
conditions, provided, however, that these conditions are for such Purchaser's
sole benefit and may be waived by such Purchaser at any time in such Purchaser's
sole discretion:

        a. The Company shall have executed the signature pages to this Agreement
and the Registration Rights Agreements, and delivered the same to the Purchaser.

        b. The Company shall have delivered to the Purchaser duly executed
certificates representing the number of Shares, duly executed Warrants and duly
executed Additional Investment Rights as provided in Section 2(b) above.

        c. The representations and warranties of the Company shall be true and
correct in all material respects as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties that
speak as of a specific date, which representations and warranties shall be true
and correct as of such date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing Date. The Purchaser shall have received a
certificate, executed on behalf of the Company by its Chief Executive Officer or
Chief Financial Officer, dated as of the Closing Date, to the foregoing effect
and attaching true and correct copies of the resolutions adopted by the
Company's Board of Directors authorizing the execution, delivery and performance
by the Company of its obligations under this Agreement, the Warrants, the
Additional Investment Rights and the Registration Rights Agreements.

        d. No statute, rule, regulation, executive order, decree, ruling,
injunction, action, proceeding or interpretation shall have been enacted,
entered, promulgated, endorsed or adopted by any court or governmental authority
of competent jurisdiction or any self-regulatory organization, or the staff of
any thereof, having authority over the matters contemplated hereby which
questions the validity of, or challenges or prohibits the consummation of, any
of the transactions contemplated by this Agreement.

        e. From the date of this Agreement through the Closing Date, there shall
not have occurred any Material Adverse Effect.

        f. The Purchasers shall have received an opinion of the Company's
counsel, dated as of the Closing Date, relating to the matters set forth in
Exhibit F attached hereto.

        g. The Company shall have delivered a duly executed Transfer Agent
Instructions acknowledged by the Transfer Agent.

                                       19
<PAGE>
8. GOVERNING LAW MISCELLANEOUS.

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

        b. Counterparts. 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 Execution Page(s)
hereof to be physically delivered to the other party within five (5) days of the
execution hereof.

        c. Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.

        d. Severability. 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.

        e. Entire Agreement; Amendments; Waiver. This Agreement and the
instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the

                                       20
<PAGE>
Company nor the Purchasers make any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this Agreement may be
waived or amended other than by an instrument in writing signed by the Company
and, by the Purchasers as provided in Section 8(m) hereof. Notwithstanding the
preceding sentence, the parties hereto recognize that certain amendments may be
requested by the Nasdaq Trading and Market Services in order that the Shares and
Warrant Shares issued hereunder be accepted for listing on The Nasdaq Stock
Market and agree that approval for such amendments shall be given. Any waiver by
the Purchasers, on the one hand, or the Company, on the other hand, of a breach
of any provision of this Agreement shall not operate as or be construed to be a
waiver of any other breach of such provision of or any breach of any other
provision of this Agreement. The failure of the Purchasers, on the one hand, or
the Company, on the other hand to insist upon strict adherence to any term of
this Agreement on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.

        f. Notices. 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 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 the Purchaser, to the address set forth under the Purchaser's name on the
Execution Page hereto executed by such Purchaser.

Each party hereto may from time to time change its address or facsimile number
for notices under this Section 8(f) by giving at least ten (10) days' prior
written notice of such changed address or facsimile number, in the case of the
Purchasers to the Company, and in the case of the Company to all of the
Purchasers.

                                       21
<PAGE>
        g. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers. Any Purchaser may assign
its rights under this Agreement to any Person to whom such Purchaser assigns or
transfers any Securities, provided such transferee agrees in writing to be
bound, with respect to the transferred Securities, by the provisions hereof that
apply to the "Purchasers." Notwithstanding anything to the contrary herein,
Securities may be assigned to any Person in connection with a bona fide margin
account or other loan or financing arrangement secured by such Securities.

        h. Third Party Beneficiaries. This Agreement is intended for the benefit
of the parties hereto and their respective successors and permitted assigns and
is not for the benefit of, nor may any provision hereof be enforced by, any
other Person, except that each Related Person is an intended third party
beneficiary and (in each case) may enforce the indemnity provisions directly
against the parties with obligations thereunder.

        i. Survival. The representations and warranties of the Company and the
agreements and covenants of the Company shall survive the Closing
notwithstanding any due diligence investigation conducted by or on behalf of the
Purchasers. Moreover, none of the representations and warranties made by the
Company herein shall act as a waiver of any rights or remedies a Purchaser may
have under applicable federal or state securities laws.

        j. Further Assurances. 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.

        k. Termination. In the event that the Closing Date shall not have
occurred on or before January 31, 2004, unless the parties agree otherwise, this
Agreement shall terminate at the close of business on such date. Notwithstanding
any termination of this Agreement, any party not in breach of this Agreement
shall preserve all rights and remedies it may have against another party hereto
for a breach of this Agreement prior to or relating to the termination hereof.

        l. Joint Participation in Drafting. Each party to this Agreement has
participated in the negotiation and drafting of this Agreement, the Registration
Rights Agreements and the Warrants. As such, the language used herein and
therein shall be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction will be applied
against any party to this Agreement, the Registration Rights Agreements or the
Warrants.

        m. Determinations. All consents, approvals and other determinations to
be made by the Purchasers pursuant to this Agreement and all waivers and
amendments to or of any provisions in this Agreement prior to the Closing Date
to be binding upon a Purchaser shall be made by such Purchaser and except as
otherwise expressly provided herein, all consents, approvals and other
determinations to be made by the Purchasers pursuant to this Agreement and all
waivers and amendments to or of any provisions in this Agreement after the
Closing Date

                                       22
<PAGE>
shall be made by Purchasers that have invested more than fifty-one percent (51%)
of the aggregate Investment Amounts invested by all Purchasers.

        n. Fees and Expenses. At Closing, the Company shall pay to Vertical
Ventures, LLC an aggregate of $15,000 for their legal fees and expenses incurred
in connection with the preparation and negotiation of the Transaction Documents.
In lieu of the $15,000 payment, Vertical Ventures, LLC may retain such amount at
the Closing or require the Company to pay such amount directly to Proskauer Rose
LLP. Except as expressly set forth in the Transaction Documents to the contrary,
each party shall pay the fees and expenses of its advisers, counsel, accountants
and other experts, if any, and all other expenses incurred by such party
incident to the negotiation, preparation, execution, delivery and performance of
this Agreement. The Company shall pay all transfer agent fees, stamp taxes and
other taxes and duties levied in connection with the issuance of the Securities.

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

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

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

        r. Payment Set Aside. To the extent that the Company makes a payment or
payments to any Purchaser hereunder or pursuant to the Warrants or any Purchaser
enforces or exercises its rights hereunder or thereunder, and such payment or
payments or the proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company by a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof

                                       23
<PAGE>
originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such enforcement or setoff
had not occurred.

        s. Adjustments in Share Numbers and Prices. In the event of any stock
split, subdivision, dividend or distribution payable in shares of Common Stock
(or other securities or rights convertible into, or entitling the holder thereof
to receive directly or indirectly shares of Common Stock), combination or other
similar recapitalization or event occurring after the date hereof, each
reference in any Transaction Document to a number of shares or a price per share
shall be amended to appropriately account for such event.

        t. Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. The decision of each Purchaser to
purchase Shares pursuant to this Agreement has been made by such Purchaser
independently of any other Purchaser and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company or of the Subsidiary which may have been
made or given by any other Purchaser or by any agent or employee of any other
Purchaser, and no Purchaser or any of its agents or employees shall have any
liability to any other Purchaser (or any other Person) relating to or arising
from any such information, materials, statements or opinions. Nothing contained
herein or in any Transaction Document, and no action taken by any Purchaser
pursuant thereto, shall be deemed to constitute the Purchasers as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Document. Each Purchaser acknowledges that no other Purchaser has
acted as agent for such Purchaser in connection with making its investment
hereunder and that no other Purchaser will be acting as agent of such Purchaser
in connection with monitoring its investment hereunder. Each Purchaser shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchasers to
be joined as an additional party in any proceeding for such purpose.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       24
<PAGE>
        IN WITNESS WHEREOF, the undersigned Purchasers and the Company have
caused this Agreement to be duly executed as of the date first above written.

                                       COMPANY:

                                       BAM! ENTERTAINMENT, INC.

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

                                       25
<PAGE>
                                      THE PURCHASERS:

                                      AS CAPITAL PARTNERS, LLC

                                      By:
                                         ------------------------------------
                                      Name:
                                           ----------------------------------
                                      Title:
                                            ---------------------------------
                                      Investment Amount: $ 150,000
                                      Address:       120 Broadway, 9th Floor
                                                     New York, NY  10271
                                      Telephone No.: (212) 433-7163
                                      Telecopy No.:  (212) 433-7069
                                      Attention:     Michael Coyl
                                      Email Address:
                                                    -------------------------

                                      BASSO EQUITY OPPORTUNITY HOLDING FUND LTD.

                                      By:
                                         ------------------------------------
                                      Name:
                                           ----------------------------------
                                      Title:
                                            ---------------------------------
                                      Investment Amount: $ 92,000
                                      Address:       1266 East Main Street
                                                     Stamford, CT  06902
                                      Telephone No.: (203) 324-8420
                                      Telecopy No.:  (212) 324-8498
                                      Attention:     Marc Seidenberg
                                      Email Address:
                                                    -------------------------

                                      BRISTOL INVESTMENT FUND, LTD.

                                      By:
                                         ------------------------------------
                                      Name:
                                           ----------------------------------
                                      Title:
                                            ---------------------------------
                                      Investment Amount: $ 200,000
                                      Address:       6363 Sunset Boulevard,
                                                     Fifth Floor
                                                     Hollywood, CA  90028
                                      Telephone No.: (323) 769-2493
                                      Telecopy No.:  (323) 468-8307
                                      Attention:     Amy Wang, Esq.
                                      Email Address:
                                                    -------------------------

                                       26
<PAGE>
                                      CRANSHIRE CAPITAL, L.P.

                                      By:
                                         ------------------------------------
                                      Name:
                                           ----------------------------------
                                      Title:
                                            ---------------------------------
                                      Investment Amount: $ 500,000
                                      Address:       666 Dundee Road, Suite 1901
                                                     Northbrook, IL 60062
                                      Telephone No.: (847) 562-9030
                                      Telecopy No.:  (847) 562-9031
                                      Attention:     Mitchell P. Kopin
                                      Email Address:
                                                    -------------------------

                                      CRESCENT INTERNATIONAL LTD

                                      By:
                                         ------------------------------------
                                      Name:
                                           ----------------------------------
                                      Title:
                                            ---------------------------------
                                      Investment Amount: $ 404,800
                                      Address:       84 AV Louis-Casai
                                                     CH 1216 Cointrin, Geneva
                                                     Switzerland
                                      Telephone No.: (___)
                                      Telecopy No.:  (___)
                                      Attention:      M. Crawl M. Brezzi
                                      Email Address:
                                                     ------------------------

                                      OMICRON MASTER TRUST

                                      By:
                                         ------------------------------------
                                      Name:
                                           ----------------------------------
                                      Title:
                                            ---------------------------------
                                      Investment Amount: $ 300,000
                                      Address:       810 Seventh Ave.,
                                                     39th Floor
                                                     New York, NY 10019
                                      Telephone No.: (212) 803-5263
                                      Telecopy No.:  (212) 803-5269
                                      Attention:     Bruce Bernstein
                                      Email Address:
                                                    -------------------------

                                       27
<PAGE>

                                      SRG CAPITAL, LLC

                                      By:
                                         ------------------------------------
                                      Name:
                                           ----------------------------------
                                      Title:
                                            ---------------------------------
                                      Investment Amount: $150,000
                                      Address:       120 Broadway
                                                     New York, NY  10271
                                      Telephone No.: (212) 571-1244
                                      Telecopy No.:  (212) 571-1274
                                      Attention:     Andrew J. Turchin
                                      Email Address:
                                                    -------------------------

                                      TRUK INTERNATIONAL FUNDS, LLC

                                      By:
                                         ------------------------------------
                                      Name:
                                           ----------------------------------
                                      Title:
                                            ---------------------------------
                                      Investment Amount: $ 5,520
                                      Address:       45 Rockefeller Plaza,
                                                     Suite 2000
                                                     New York, NY  10111
                                      Telephone No.: (212) 332-5050
                                      Telecopy No.:  (212) 332-5051
                                      Attention:     Stephen Saltzstein
                                      Email Address:
                                                    -------------------------

                                      TRUK OPPORTUNITY FUNDS, LLC

                                      By:
                                         ------------------------------------
                                      Name:
                                           ----------------------------------
                                      Title:
                                            ---------------------------------
                                      Investment Amount: $ 27,600
                                      Address:       45 Rockefeller Plaza,
                                                     Suite 2000
                                                     New York, NY  10111
                                      Telephone No.: (212) 332-5050
                                      Telecopy No.:  (212) 332-5051
                                      Attention:     Stephen Saltzstein
                                      Email Address:
                                                    -------------------------

                                       28
<PAGE>

                                      VERTICAL VENTURES LLC

                                      By:
                                         ------------------------------------
                                      Name:
                                           ----------------------------------
                                      Title:
                                            ---------------------------------
                                      Investment Amount: $ 500,000
                                      Address:       641 Lexington Ave.,
                                                     26th Floor
                                                     New York, NY 10022
                                      Telephone No.: (212) 974-3070
                                      Telecopy No.:  (212) 207-3452
                                      Attention:     Bruce Bernstein
                                      Email Address:
                                                    -------------------------

                                       29

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