Document:

<PAGE>
                                                                    EXHIBIT 10.6

                     TRADEMARK COLLATERAL SECURITY AGREEMENT

        THIS AGREEMENT is made on the 25th day of February, 2002, by and between
BAM! ENTERTAINMENT, INC., a Delaware corporation, formerly known as Bay Area
Multimedia, Inc., a Delaware corporation, having a mailing address at 333 W.
Santa Clara Street, #716, San Jose, California 95113 ("Borrower") and CENTURY
BUSINESS CREDIT CORPORATION , having a mailing address at 333 South Grand
Avenue, Suite 4150, Los Angeles, California 90071 ("Lender").

                                   BACKGROUND

        Borrower and Lender have entered into a Factoring Agreement of even date
herewith (as amended and supplemented from time to time, the "Factoring
Agreement"). In order to induce Lender to execute and deliver the Factoring
Agreement, Borrower agreed to execute and deliver to Lender this Trademark
Collateral Security Agreement ("Security Agreement"). This Security Agreement,
covering Trademarks (as hereinafter defined), is being executed
contemporaneously with the Factoring Agreement under which Lender is granted a
lien on and security interest in, inter alia, machinery, equipment formulations,
manufacturing procedures, quality control procedures and product specifications
("Other Assets") relating to products sold under the Trademarks, whereby Lender
shall have the right to foreclose simultaneously on the Trademarks and the Other
Assets in the event of the occurrence and continuance of a default hereunder or
an event of default under the Factoring Agreement.

        NOW, THEREFORE, in consideration of the premises, Borrower and Lender
hereby agree as follows:

        1. Defined Terms. Unless otherwise defined herein, terms defined in the
Factoring Agreement shall have their defined meanings when used herein and the
following terms shall have the following meanings, unless the context otherwise
requires:

            "Account" shall have the meaning assigned to it under the Code;

            "Code" shall mean the Uniform Commercial Code as the same may from
time to time be in effect in the State of California.

            "Collateral" shall have the meaning assigned to it in Section 2 of
this Security Agreement.

            "Event of Default" shall mean an event of default under the
Factoring Agreement.

            "General Intangibles" shall have the meaning assigned to it under
the Code.

<PAGE>

            "Licenses" shall mean the trademark license agreements of Borrower
designated on Schedule I hereto, as any of the same may from time to time be
amended or supplemented.

            "Obligations" shall have the meaning assigned to it in the Factoring
Agreement.

            "Proceeds" shall have the meaning assigned to it under the Code, and
in any event, shall include, but not be limited to, (i) any and all proceeds of
any insurance, indemnity, warranty or guarantee payable to Borrower from time to
time with respect to any of the Collateral, (ii) any and all payments (in any
form whatsoever) made or due and payable to Borrower from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any governmental body,
authority, bureau or agency (or any person acting under color of governmental
authority), and (iii) any and all other amounts from time to time paid or
payable under or in connection with any of the Collateral.

            "Receivables" shall have the meaning assigned to it in the Factoring
Agreement.

            "Security Agreement" shall mean this Security Agreement, as the same
may from time to time be amended or supplemented.

            "Trademarks" shall mean the U.S. registered trademarks and pending
applications shown in the attached Schedule A, and those trademarks which are
hereafter adopted or acquired by Borrower, and all right, title and interest
therein and thereto, and all registrations, applications, and recordings
thereof, including, without limitation, applications, registrations and
recordings in the United States Patent and Trademark Office or in any similar
office or agency of the United States, and any State thereof, all whether now
owned or hereafter acquired by Borrower.

        2. Grant of Security Interest. As collateral security for the prompt
payment of the Obligations, Borrower hereby grants and conveys to Lender a
security interest in and to (a) the entire right, title and interest of Borrower
in and to the Trademarks, including the registrations and applications
appurtenant thereto, listed in Schedule A hereto (as the same may be amended
pursuant hereto from time to time), and in and to any and all trademarks, and
registrations and applications appurtenant thereto, hereafter acquired or filed
by Borrower, including without limitation all renewals thereof, all proceeds of
infringement suits, the rights to sue for past, present and future infringements
and all rights corresponding thereto in the United States and the goodwill of
the business to which each of the Trademarks relates and (b) all of Borrower's
right, title and interest in, to and under the following:

<PAGE>

            (i) all Licenses;

            (ii) all Receivables, contract rights and General Intangibles
arising under or relating to each and every License (including, without
limitation, (A) all moneys due and to become due under any License, (B) any
damages arising out of or for breach or default in respect of any such License,
(C) all other amounts from time to time paid or payable under or in connection
with any such License, and (D) the right of Borrower to terminate any such
License or to perform and to exercise all remedies thereunder); and,

            (iii) to the extent not otherwise included, all Proceeds and
products of any or all of the foregoing. All of the property referred to in this
paragraph 2 is hereinafter collectively called the "Collateral."

        3. Representations and Warranties. Borrower covenants and warrants that
as of the date of this Security Agreement:

            (a) The Trademarks are subsisting and have not been adjudged invalid
or unenforceable;

            (b) To the best of Borrower's knowledge, each of the Trademarks is
valid and enforceable;

            (c) There is no outstanding claim that the use of any of the
Trademarks violates the rights of any third person;

            (d) Borrower is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to each of the Trademarks, free
and clear of any liens, charges and encumbrances, (including without limitation
pledges, assignments, licenses, registered user agreements and covenants by
Borrower not to sue third persons), except for the Licenses referred to in
Schedule I attached hereto;

            (e) Borrower has the right to enter into this Security Agreement and
perform its terms;

            (f) Borrower has used, and will continue to use for the duration of
this Security Agreement, proper statutory notice, where appropriate, in
connection with its use of the Trademarks; and

            (g) Borrower has used, and will continue to use for the duration of
this Security Agreement, consistent standards of quality in its manufacture of
products sold under the Trademarks.

<PAGE>

        4. Right of Inspection. Borrower hereby grants to Lender and its
employees and agents the right to visit Borrower's plants and facilities which
manufacture, inspect or store products sold under any of the Trademarks, and to
inspect the products and quality control relating thereto at reasonable times
during regular business hours. Borrower shall use its best efforts to do any and
all acts required by Lender to ensure Borrower's compliance with paragraph 3(g)
above.

        5. New Trademarks. (a) If, before the Obligations shall have been paid
in full, Borrower shall obtain rights to any new trademarks, the provisions of
paragraph 2 shall automatically apply thereto and Borrower shall give Lender
prompt written notice thereof. (b) Borrower grants Lender a power-of-attorney,
irrevocable so long as the Factoring Agreement is in existence, to modify this
Security Agreement by amending Schedule A to include any future trademarks,
including trademark registrations or applications appurtenant thereto covered by
this Security Agreement.

        6. Covenants. Borrower covenants and agrees with Lender that from and
after the date of this Security Agreement and until the Obligations are fully
satisfied:

            (a) Further Documentation; Pledge of Instruments. At any time and
from time to time, upon the written request of Lender, Borrower will promptly
and duly execute and deliver any and all such further instruments and documents
and take such further action as Lender may reasonably deem desirable in
obtaining the full benefits of this Security Agreement and of the rights and
powers herein granted, including, without limitation, the filing of any
financing or continuation statements under the Code with respect to the liens
and security interests granted hereby. Borrower also hereby authorizes Lender to
file any such financing or continuation statement without the signature of
Borrower to the extent permitted by applicable law. If any amount payable under
or in connection with any of the Collateral shall be or become evidenced by any
promissory note or other instrument, such note or instrument shall be
immediately pledged to Lender hereunder, duly endorsed in a manner satisfactory
to Lender.

            (b) Maintenance of Trademarks. Borrower will not do any act, or omit
to do any act, whereby the Trademarks or any registration or application
appurtenant thereto, may become abandoned, invalidated, unenforceable, avoided,
avoidable, or will otherwise diminish in value, and shall notify Lender
immediately if it knows of any reason or has reason to know of any ground under
which this result may occur. Borrower shall take appropriate action at its
expense to halt the infringement of the Trademarks and shall properly exercise
its duty to control the nature and quality of the goods offered by any licensees
in connection with the Licenses set forth in Schedule I.

            (c) Indemnification. (A) Borrower assumes all responsibility and
liability arising from the use of the Trademarks, and Borrower hereby
indemnifies and holds Lender harmless from and against any claim, suit, loss,
damage or expense (including reasonable attorneys' fees) arising out of
Borrower's operations of its business from the use of the

<PAGE>

Trademarks. (B) In any suit, proceeding or action brought by Lender under any
License for any sum owing thereunder, or to enforce any provisions of such
License, Borrower will indemnify and keep Lender harmless from and against all
expense, loss or damage suffered by reason of any defense, set off,
counterclaim, recoupment or reduction or liability whatsoever of the obligee
thereunder, arising out of a breach of Borrower of any obligation thereunder or
arising out of any other agreement, indebtedness or liability at any time owing
to or in favor of such obligee or its successors from Borrower, and all such
obligations of Borrower shall be and remain enforceable against and only against
Borrower and shall not be enforceable against Lender.

            (d) Limitation of Liens on Collateral. Borrower will not create,
permit or suffer to exist, and will defend the Collateral against and take such
other action as is necessary to remove any lien, security interest, encumbrance,
claim or right, in or to the Collateral, and will defend the right, title and
interest of Lender in and to any of Borrower's rights under the Licenses and to
the Proceeds thereof against the claims and demands of all persons whomever.

            (e) Limitations on Modifications of Licenses. Borrower will not (i)
amend, modify, terminate or waive any provision of any License in any manner
which might materially adversely affect the value of such License or the
Trademarks as Collateral, without the written consent of Lender, (ii) fail to
exercise promptly and diligently each and every material right which it may have
under each License (other than any right of termination), without the prior
written consent of Lender, or (iii) fail to deliver to Lender a copy of each
material demand, notice or document sent or received by it relating in any way
to any License or Trademark.

            (f) Notices. Borrower will advise Lender promptly, in reasonable
detail, (i) of any lien or claim made or asserted against any of the Collateral,
(ii) of any material change in the composition of the Collateral, and (iii) of
the occurrence of any other event which would have a material adverse effect on
the value of any of the Collateral or on the security interests created
hereunder.

            (g) Limitation on Further Uses of Trademarks. Borrower will not
assign, sell, mortgage, lease, transfer, pledge, hypothecate, grant a security
interest in or lien upon, encumber, grant an exclusive or non-exclusive license,
or otherwise dispose of any of the Collateral, without prior written consent of
Lender.

        7. Lender's Appointment as Attorney-in-Fact.

            (a) Borrower hereby irrevocably constitutes and appoints Lender and
any officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in- fact with full irrevocable power and authority in the place
and stead of Borrower and in the name of Borrower or in its own name, from time
to time in Lender's discretion, for the purposes of carrying out the terms of
this Security Agreement, to take any and all appropriate action and to execute
any and all documents and instruments which may be necessary or desirable to

<PAGE>

accomplish the purposes of this Security Agreement and, without limiting the
generality of the foregoing, hereby gives Lender the power and right, on behalf
of Borrower, to do the following:

                (i) Upon the occurrence and continuance of an Event of Default,
to ask, demand, collect, receive and give acquittances and receipts for any and
all moneys due and to become due under any License and, in the name of Borrower
or its own name or otherwise, to take possession of and endorse and collect any
checks, drafts, notes, acceptances or other instruments for the payment of
moneys due under any License and to file any claim or to take any other action
or proceeding in any court of law or equity or otherwise deemed appropriate by
Lender for the purpose of collecting any and all such moneys due under any
License whenever payable;

                (ii) To pay or discharge taxes, liens, security interests or
other encumbrances levied or placed on or threatened against the Collateral, to
effect any repairs or any insurance called for by the terms of this Security
Agreement and to pay all or any part of the premiums therefor and the costs
thereof; and

                (iii) Upon the occurrence and continuance of an Event of
Default, (A) to direct any party liable for any payment under any of the
Licenses to make payment of any and all moneys due and to become due thereunder
directly to Lender or as Lender shall direct; (B) to receive payment of and
receipt for any and all moneys, claims and other amounts due and to become due
at any time in respect of or arising out of any Collateral; (C) to commence and
prosecute any suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any part thereof and to
enforce any other right in respect of any Collateral; (D) to defend any suit,
action or proceeding brought against Borrower with respect to any Collateral;
(E) to settle, compromise, or adjust any suit, action or proceeding described
above and, in connection therewith, to give such discharges or releases as
Lender may deem appropriate; and (F) generally to sell, transfer, pledge, make
any agreement with respect to or otherwise deal with any of the Collateral as
fully and completely as though Lender were the absolute owner thereof for all
purposes, and to do, at Lender's option all acts and things which Lender deems
necessary to protect, preserve or realize upon the Collateral and Lender's
security interest therein, in order to effect the intent of this Security
Agreement, all as fully and effectively as Borrower might do.

        This power of attorney is a power coupled with an interest and shall be
irrevocable. Notwithstanding the foregoing, Borrower further agrees to execute
any additional documents which Lender may require in order to confirm this power
of attorney, or which Lender may deem necessary to enforce any of its rights
contained in this Security Agreement.

            (b) The powers conferred on Lender hereunder are solely to protect
its interests in the Collateral and shall not impose any duty upon it to
exercise any such powers. Lender shall be accountable only for amounts that it
actually receives as a result of the exercise of such powers and neither it nor
any of its officers, directors, employees or agents shall be

<PAGE>

responsible to Borrower for any act or failure to act, except for its own gross
negligence or willful misconduct.

            (c) Borrower also authorizes Lender to execute, in connection with
the sale provided for in paragraph 10(b) of this Security Agreement, any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral.

        8. Execution of Power of Attorney. Concurrently with the execution and
delivery hereof, Borrower is executing and delivering to Lender, in the form of
Schedule II hereto, ten (10) originals of a Power of Attorney for the
implementation of the assignment, sale or other disposal of the Trademarks
pursuant to paragraph 7 hereof.

        9. Performance by Lender of Borrower's Obligations. If Borrower fails to
perform or comply with any of its agreements contained herein and Lender, as
provided for by the terms of this Security Agreement, shall itself perform or
comply, or otherwise cause performance or compliance, with such agreement, the
expenses of Lender incurred in connection with such performance or compliance
shall be payable by Borrower to Lender on demand and shall constitute
Obligations secured hereby.

        10. Remedies, Rights Upon Event of Default.

            (a) If an Event of Default shall occur and be continuing:

                (i) All payments received by Borrower under or in connection
with any of the Collateral shall be held by Borrower in trust for Lender, shall
be segregated from other funds of Borrower and shall forthwith upon receipt by
Borrower, be turned over to Lender, in the same form as received by Borrower
(duly endorsed by Borrower to Lender, if required); and

                (ii) Any and all such payments so received by Lender (whether
from Borrower or otherwise) may, in the sole discretion of Lender, be held by
Lender as collateral security for, and/or then or at any time thereafter applied
in whole or in part by Lender against all or any part of the Obligations in such
order as Lender shall elect. Any balance of such payments held by Lender and
remaining after payment in full of all the Obligations shall be paid over to
Borrower or to whomsoever may be lawfully entitled to receive the same.

            (b) If any Event of Default shall occur and be continuing, Lender
may exercise in addition to all other rights and remedies granted to it in this
Security Agreement and in any other instrument or agreement securing, evidencing
or relating to the Obligations, all rights and remedies of a secured party under
the Uniform Commercial Code. Borrower shall remain liable for any deficiency if
the proceeds of any sale or disposition of the Collateral are insufficient to
pay

<PAGE>

all amounts to which Lender is entitled. Borrower shall also be liable for the
reasonable fees of any attorneys employed by Lender to collect any such
deficiency and also as to any reasonable attorney's fees incurred by Lender with
respect to the collection of any of the Obligations and the enforcement of any
of Lender's respective rights hereunder.

        11. Termination. At such time as Borrower shall completely pay in full
all of the Obligations and the Factoring Agreement is terminated, this Security
Agreement shall terminate and Lender shall execute and deliver to Borrower all
such releases, deeds, assignments and other instruments as may be necessary or
proper to re-vest in Borrower full title to the Trademarks, subject to any
disposition thereof which may have been made by Lender pursuant hereto.

        12. Notices. Any notice to Lender shall be deemed to have been duly
given when deposited in the mail, first class, postage prepaid, addressed to
Lender at 333 South Grand Avenue, Suite 4150, Los Angeles, California 90071,
Attention: Account Manager/BAM! Entertainment, Inc. Any notice to Borrower
hereunder shall be deemed to have been duly given when deposited in the mail,
first class postage prepaid, addressed to BAM! Entertainment, Inc. at 333 W.
Santa Clara Street, #716, San Jose, California 95113 Attention: President.

        13. No Waiver. No course of dealing between Borrower and Lender, nor any
failure to exercise, nor any delay in exercising, on the part of Lender, any
right, power or privilege hereunder or under the Factoring Agreement shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or thereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.

        14. Cumulative Remedies. All of Lender's rights and remedies with
respect to the Collateral, whether established hereby or by the Factoring
Agreement, or by any other agreements or by law, shall be cumulative and may be
exercised singularly or concurrently.

        15. Severability. The provisions of this Security Agreement are
severable, and if any clause or provision shall be held invalid and
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof, in
such jurisdiction, and shall not in any manner affect such clause or provision
in any other jurisdiction, or any other clause or provision of this Agreement in
any jurisdiction.

        16. No Modification Except in Writing. This Security Agreement is
subject to modification only by a writing signed by the parties, except as
provided in paragraphs 5 and 7.

        17. Successors and Assigns. The benefits and burdens of this Security
Agreement shall inure to the benefit of and be binding upon the respective
successors and permitted assigns of the parties.

<PAGE>

        18. Governing Law. The validity and interpretation of this Security
Agreement and the rights and obligations of the parties shall be governed by the
laws of the State of California.

        IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the day and year first above written.

WITNESS:                       BAM! ENTERTAINMENT, INC.,
                               a Delaware corporation,
                               formerly known as Bay Area Multimedia, Inc., a
                               Delaware corporation

                               By:  /s/ RAYMOND MUSCI
----------------------------       --------------------------------------------
                               Its:  C.E.O.
                                    -------------------------------------------

        WITNESS:               CENTURY BUSINESS CREDIT
                               CORPORATION

 /s/ ILLEGIBLE                 By:   /s/ ILLEGIBLE
----------------------------       --------------------------------------------
                               Its:   President
                                    -------------------------------------------

<PAGE>

                                   SCHEDULE A

Schedule A to a Trademark Collateral Security Agreement dated February 25, 2002,
by and between BAM! ENTERTAINMENT, INC., a Delaware corporation, formerly known
as Bay Area Multimedia, Inc., a Delaware corporation, and CENTURY BUSINESS
CREDIT CORPORATION.

<TABLE>
<CAPTION>
Reg. No. or                                                       Reg. or
Application No.         Mark                 Country              Filing Date
---------------         ----                 -------              -----------
<S>                     <C>                  <C>                  <C>
76-354,534              STONE MONKEYS        U.S.A.               12/27/01

76-353,024              BAM!                 U.S.A.               12/26/01

76-031,629              BAM !
                        ENTERTAINMENT        U.S.A.               04/20/00

76-030,209              BAY AREA
                        MULTIMEDIA           U.S.A.               04/18/00

76-030,008              BAM 4                U.S.A.               04/18/00

76,030,007              BAM !
                        ENTERTAINMENT        U.S.A.               04/18/00

75-981,425              BAM !
                        ENTERTAINMENT        U.S.A.               04/20/00

75-981,004              BAM !
                        ENTERTAINMENT        U.S.A.               04/18/00

75-981,003              BAM 4                U.S.A.               04/18/00
</TABLE>

<PAGE>

STATE OF CALIFORNIA   )
                : ss.:
COUNTY OF SANTA CLARA )

        Before me, the undersigned, on this 6 day of February, 2002, personally
appeared, Raymond C. Musci, to me known personally, and who being by me duly
sworn, deposes and says that he is the CEO of BAM! Entertainment, Inc., and that
said instrument was signed on behalf of said corporation by authority of its
Board of Directors, and he acknowledged said instrument to be the free act and
deed of said corporation.

                                              /s/ MARTIN ECKSTEIN
[STAMP OF NOTARY PUBLIC]                      ----------------------------------
                                              Notary Public
                                              My Commission Expires:

STATE OF NEW YORK  )
             : ss.:
COUNTY OF NEW YORK )

        Before me, the undersigned, on this 27th day of February, 2002,
personally appeared Thomas V. Pizzo, to me known personally, and who being by
me duly sworn, deposes and says that he is the President of Century Business
Credit Corporation, and that said instrument was signed on behalf of said
corporation by authority of its Board of Directors, and he acknowledged said
instrument to be the free act and deed of said corporation.

                                              /s/ JUNE S. CHENG
[STAMP OF NOTARY PUBLIC]                      ----------------------------------
                                              Notary Public
                                              My Commission Expires:

<PAGE>

                                   SCHEDULE I

<TABLE>
<CAPTION>
Reg. No. or                                                       Reg. or
Application No.         Mark                 Country              Filing Date
---------------         ----                 -------              -----------
<S>                     <C>                  <C>                  <C>
</TABLE>

<PAGE>

                                   SCHEDULE II

                            SPECIAL POWER OF ATTORNEY

STATE OF CALIFORNIA   )
                : ss.:
COUNTY OF SANTA CLARA )

        KNOW ALL MEN BY THESE PRESENTS, that BAM! ENTERTAINMENT, INC., a
corporation formed under the laws of Delaware, formerly known as Bay Area
Multimedia, Inc., a corporation formed under the laws of Delaware, with its
principal office at 333 W. Santa Clara Street, #716, San Jose, California 95113
(hereafter called "Borrower"), pursuant to a Trademark Collateral Security
Agreement, dated the date hereof (the "Security Agreement"), hereby appoints and
constitutes CENTURY BUSINESS CREDIT CORPORATION, a New York corporation, with
offices at 333 South Grand Avenue, Suite 4150, Los Angeles, California 95113
(hereafter called the "Lender"), its true and lawful attorney, with full power
of substitution, and with full power and authority to perform the following acts
on behalf of Borrower:

        1.     Assigning, selling or otherwise disposing of all right, title and
               interest of Borrower in and to the Trademarks listed on Schedule
               A of the Security Agreement, and including those trademarks which
               are added to the same subsequent hereto, and all registrations
               and recordings thereof, and all pending applications therefor,
               and for the purpose of the recording, registering and filing of,
               or accomplishing any other formality with respect to the
               foregoing, and to execute and deliver any and all agreements,
               documents, instruments of assignment or other papers necessary or
               advisable to effect such purpose;

        2.     To execute any and all documents, statements, certificates or
               other papers necessary or advisable in order to obtain the
               purposes described above as Lender may in its sole discretion
               determine.

<PAGE>

        This power of attorney is made pursuant to the Security Agreement, dated
the date hereof, between Borrower and Lender and may not be revoked until the
payment in full of all Obligations as defined in such Security Agreement.

                                                  BAM ENTERTAINMENT, INC.,
                                                  a Delaware corporation,
                                                  formerly known as
                                                  Bay Area Multimedia, Inc.,
                                                  a Delaware corporation

                                                  By: /s/ RAYMOND MUSCI
                                                     ---------------------------
                                                  Title: C.E.O.
                                                        ------------------------

<PAGE>

STATE OF CALIFORNIA )
                : ss.:
COUNTY OF SANTA CLARA)

        On this 6 day of February, 2002, before me personally came Raymond C.
Musci, to me known, who, being by me duly sworn, did depose and say that he is
the CEO of BAM! Entertainment, Inc., the corporation described in and which
executed the foregoing instrument; and that he signed his name thereto by order
of the Board of Directors of said corporation.

[STAMP OF NOTARY PUBLIC]                               /s/ MARTIN ECKSTEIN
                                                       -------------------------
                                                       Notary Public<PAGE>

                                                                    EXHIBIT 10.7

                 SUPPLEMENT TO FACTORING OR SECURITY AGREEMENT

          SECURITY INTEREST IN INVENTORY UNDER UNIFORM COMMERCIAL CODE

Century Business Credit Corporation
333 South Grand Avenue, Suite 4150
Los Angeles, California 90071

                          RE: BAM! ENTERTAINMENT, INC.

Gentlemen:

        This is a supplement to our Factoring or Security Agreement (Accounts
Receivable-Financing) or both, as the case may be, with you effective the date
hereof (the "Agreement"). It is hereby incorporated therein, shall have a term
concurrent therewith and is a part thereof.

        1. In addition to your other security, we hereby grant you a continuing
security interest in all Inventory now and hereafter owned by us wherever
located, all contract rights with respect thereto and all documents representing
the same (all herein referred to as "Collateral") and all proceeds of the
Collateral. The term "Inventory" means and includes all goods intended for sale
or lease by us, or to be furnished by us under contracts of service and all raw
materials, goods in process, finished goods, materials and supplies of every
nature used or useable in connection with the manufacture, packing, shipping,
advertising, selling, leasing or furnishing of such goods.

        2. Your security interest in the Inventory shall continue through all
stages of manufacture and shall, without further act, attach to raw materials,
to goods in process, to the finished goods, to the Receivables (as defined in
the Agreement) or other proceeds resulting from the sale or other disposition
thereof and to all such Inventory as may be held for us by agents or processors.
We represent, warrant and covenant that all Inventory is and will be owned by
us, free of all other liens and encumbrances, shall be kept by us at the
location identified on Schedule 1 hereto and that we shall not (without your
prior written approval) remove the Inventory therefrom except for the purposes
of sale in the regular course of business.

        3. The collateral and all proceeds thereof shall be security for all
obligations owing to you including but not limited to loans and advances to the
undersigned under the Agreement, as originally existing and as hereby and at any
time heretofore or hereafter supplemented or amended as well as for all other
loans and advances to us or for our account by you or your parent or your
subsidiaries and for all commissions, obligations, indebtedness, interest,
charges and expenses chargeable to our account or due from us from time to time,
however arising, and whether or not evidenced by notes or other instruments.
Until all obligations have been fully satisfied, your security interest in the
Collateral and all proceeds thereof shall continue in full force and effect and
you will at all times have the right to take physical possession of the
Inventory and to maintain such possession on our premises or to remove the
Inventory or any part thereof to such other places as you may desire. If you
exercise your right to take possession of the Inventory, we shall, upon your
demand, assemble the Inventory and make it available to you at a place
reasonably convenient to you. In addition, with respect to all Collateral and

                                       1
<PAGE>

proceeds, as well as all Receivables and other security, you shall have all of
the rights and remedies set forth in the Agreement and all the rights and
remedies provided in the Uniform Commercial Code.

        4. Upon our request you may make loans or advances to us prior to our
sale of Inventory. Any such loans or advances will be made at your sole
discretion, will be charged by you to our account and will bear interest payable
in the manner and at the rate specified in the Agreement and shall in all
respects be governed thereby. All such loans or advances shall be payable on
demand and recourse to any security held therefor shall not be required. The
amounts of any such loans or advances and their relation to the Inventory shall
be determined by you in your sole discretion.

        5. Except for sales made in the regular course of our business, we shall
not sell, encumber, grant a security interest in or dispose of or permit the
sale, encumbrance or disposal of any Collateral without your prior written
consent. If sales are made for cash, we shall immediately deliver to you the
identical checks, cash or other forms of payment which we receive. As sales are
made in the regular course of business, we shall, in accordance with the
provisions of the Agreement, immediately execute and deliver to you schedules
and assignments of all Receivable created thereby. All payments received by you
on account of Receivables or other proceeds or on account of cash sales of
Inventory will be credited to our account in accordance with the provisions of
the Agreement.

        6. We shall perform any and all steps requested by you to perfect your
security interest in the Collateral, such as leasing warehouses to you or your
designee, placing and maintaining signs, appointing custodians, executing and
filing financing or continuation statements in form and substance satisfactory
to you, maintaining stock records and transferring Inventory to warehouses. If
any Inventory is in the possession or control of any of our agents or
processors, we shall notify such agents or processors of your security interest
therein, and upon request instruct them to hold all such Inventory for your
account and subject to your instructions. You shall have the right (but shall
not be obligated) to complete any Inventory in order to dispose of same or
otherwise enforce your rights upon our default hereunder, including the right to
pay and to charge to our account at any time any dyeing, finishing, processing
or warehousing charges, landlord's bills or other claims against or liens upon
the Inventory or any of the Collateral, whether before or after our default. A
physical listing of all Inventory, wherever located, shall be taken by us at
least every three months and whenever requested by you, and a copy of each such
physical listing shall be supplied to you. You may examine and inspect the
Inventory at any time. All excise, floor, sales and any other taxes that may be
assessed upon or paid by you with respect to any of the Inventory shall be
charged to and paid by us, and we agree to indemnify you against loss by reason
of any such taxes.

                                       2
<PAGE>

        7. We shall insure the Inventory in your name against loss or damage by
fire, theft, burglary, pilferage, loss in transit and such other hazards as you
shall specify, in amounts and under policies by insurers acceptable to you, and
all premiums thereon shall be paid by us and the policies delivered to you. If
we fail to do so, you may procure such insurance and charge the cost to our
account.

                                         Very truly yours,

                                         BAM! ENTERTAINMENT, INC.

                                         By:    /s/ RAYMOND MUSCI
                                            -----------------------------------

                                         Title:   C.E.O.
                                               --------------------------------

Accepted at Los Angeles, California
on February 25, 2002

CENTURY BUSINESS CREDIT CORPORATION

By:    /s/ ILLEGIBLE
   -----------------------------------

Title:  President
      --------------------------------

                                       3
<PAGE>

                                   SCHEDULE 1

333 W. Santa Clara Street, #716, San Jose, California 95113

3335 Arden Road, Hayward, California 94545

909 Whitaker Road, Suite A, Plainfield, Indiana 46168

                                       4
<PAGE>

INVENTORY CERTIFICATE

To:  Century Business Credit Corporation      Certificate No.:_________________
     333 South Grand Avenue, Suite 4150       Certificate Date:________________
     Los Angeles, California 90071            Based on Inventory As of:________

                            BAM! ENTERTAINMENT, INC.
          333 W. Santa Clara Street, #716, San Jose, California 95113

<TABLE>
<CAPTION>
                                                                         Dollar    Percentage
                                                                         Value      Presold
                                                                         ------    ----------
<S>                                                     <C>           <C>          <C>
INVENTORY
1.  Eligible Finished Inventory
a)  Finished Goods in approved locations Current-
    90 Days*                                            $                                 %
                                                         ----------                  -----
b)  In transit finished goods where documents are in
    control of Century or drawn to its order*
c)  Total finished goods in Bond in approved
    locations*
                                                         ----------
    (i)  Landed Cost
                                                         ----------
    (ii) Unpaid Duty
                                                         ----------                  -----

TOTAL ELIGIBLE FINISHED INVENTORY                                     $
                                                                       ==========
d)  LESS FINISHED GOODS
    (i)   Prior season finished goods
                                                         ----------                  -----
          (a) 91-180 days*
                                                         ----------                  -----
          (b) 181 + days*
                                                         ----------                  -----
    (ii)  Not readily marketable
                                                         ----------                  -----
    (iii) Not Located at approved locations
                                                         ----------                  -----
    (iv)  Other ineligibles
                                                         ----------                  -----
    (v)   Unpaid Duty
                                                         ----------                  -----

TOTAL INELIGIBLE FINISHED INVENTORY ITEMS                            ($          )
                                                                       ----------

NET ELIGIBLE FINISHED INVENTORY                                       $
                                                                       ----------
2.  Ineligible Inventory
a)  Piece Goods (list each location separately)
                                                         ----------
b)  WIP (list each location separately
                                                         ----------
c)  Piece Goods under undrawn L/C's
                                                         ----------
TOTAL INELIGIBLE ITEMS                                                $
                                                                       ----------
3.  Letter of Credit Inventory
a)  Finished Goods under undrawn L/C's*                                                   %
                                                         ----------                  -----
TOTAL LETTER OF CREDIT INVENTORY                                                          %
                                                                                     -----
</TABLE>

                                       5
<PAGE>

If Inventory is purchased on open account or
   under documents against acceptance

(a) Payable Balance                                      $
                                                          ----------
(b) D/A Balance                                          $
                                                          ----------

If Licensed Inventory, the undersigned represents and warrants that:

a) The undersigned is not in breach of the terms and conditions of the License
   Agreement.

b) The Licensor has executed and delivered to Century a Licensor Waiver
   Agreement.

Value is determined at the lower of cost or market on a first-in, first out
basis. The undersigned represents and warrants that the foregoing information is
true, complete and correct, and is in accordance with the Factoring Agreement
between the undersigned and Century Business Credit Corporation, dated February
__, 2002, and any supplements and amendments, thereto.

Borrower:      BAM! Entertainment, Inc.

Authorized Signature:
                     ---------------------
                             Title

Date:
     -------------------------

*Break out category by Regular Goods, Licensed Inventory (list by each license)
and Private Label Goods.

                                       6

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