SEC Info - Bam Entertainment Inc - ‘8-K’ for 9/30/03

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Bam Entertainment Inc – ‘8-K’ for 9/30/03 – EX-10.1

On: Thursday, 10/2/03, at 5:28pm ET · For: 9/30/03 · Accession #: 950148-3-2408 · File #: 0-32989

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

10/02/03  Bam Entertainment Inc             8-K:5,7     9/30/03    5:156K                                   Bowne of Century City/FA

Current Report — Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                      HTML     19K 
 2: EX-4.1      Instrument Defining the Rights of Security Holders    16     66K 
 3: EX-10.1     Material Contract                                     34    148K 
 4: EX-99.1     Miscellaneous Exhibit                                  1      7K 
 5: EX-99.2     Miscellaneous Exhibit                                  2±     9K

EX-10.1 — Material Contract
Exhibit Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Company Purchasers, The The Purchasers
1	1st Page - Filing Submission
27	Company
28	The Purchasers

EX-10.1 1st Page of 34 TOC ↑Top Previous Next ↓Bottom Just 1st
 
                                                                    EXHIBIT 10.1

 SECURITIES PURCHASE AGREEMENT

         SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as of September
30, 2003, 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:                                    

    "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.                                               

EX-10.1 2nd Page of 34 TOC 1st Previous Next ↓Bottom Just 2nd
        "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.                                 

       "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.                                     

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        "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) $0.96,   
(B) Warrants exercisable for a number of shares of Common Stock equal to 90% 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 such    
Shares, Warrants and Additional Investment Rights against delivery of the such  
Purchaser's Investment Amount.                                                  

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           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 October 1, 
2003 or such other date or time as the Purchasers and the Company may mutually  
agree ("CLOSING DATE"). The Closing shall occur at the 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 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).                                              

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        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 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                             

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(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 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                                           

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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 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).                                                                        

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      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.       

        e.       No Conflicts. The execution, delivery and performance of this
Agreement, the Registration Rights Agreements, the Warrants and the Additional  
Investment Rights by the                                                        

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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 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                                                  

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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, 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.

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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.                                                                         

   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                                                  

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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 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.                                                          

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     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) 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,  

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(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.                                            

        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                                                       

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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 September 30, 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  
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                                 

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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 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                                               

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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(1) shall  
not apply to Excluded Stock (as defined below).                                 

 (2)      From the end of the Blockout Period until the one year
anniversary thereof, the Company will not, directly or indirectly, effect any   
Subsequent Placement unless the Company shall have first complied with this     
Section 5(1)(2).                                                                

       (i)      The Company shall deliver to each Purchaser a written notice
(the "OFFER") of any proposed or intended issuance or sale or exchange of the   
securities being offered (the "OFFERED SECURITIES") in a Subsequent Placement,  
which Offer shall (w) identify and describe the Offered Securities, (x) describe
the price and other terms upon which they are to be issued, sold or exchanged,  
and the number or amount of the Offered Securities to be issued, sold or        
exchanged, (y) identify the Persons or entities (if known) to which or with     
which the Offered Securities are to be offered, issued, sold or exchanged and   
(z) offer to issue and sell to or exchange with each Purchaser the Offered      
Securities, based on such Purchaser's pro rata portion of the aggregate purchase
price paid by the Purchasers for all of the Shares purchased hereunder (the     
"BASIC AMOUNT"), and with respect to each Purchaser that elects to purchase its 
Basic Amount, any additional portion of the Offered Securities attributable to  
the Basic Amounts of other Purchasers as such Purchaser shall indicate it will  
purchase or acquire should the other Purchasers subscribe for less than their   
Basic Amounts (the "UNDERSUBSCRIPTION AMOUNT").                                 

    (ii)     To accept an Offer, in whole or in part, a Purchaser must
deliver a written notice to the Company prior to the end of the five (5)        
Business Day period of the Offer, setting forth the portion of the Purchaser's  
Basic Amount that such Purchaser elects to purchase and, if such Purchaser shall
elect to purchase all of its Basic Amount, the Undersubscription Amount, if any,
that such Purchaser elects to purchase (in either case, the "NOTICE OF          
ACCEPTANCE"). If the Basic Amounts subscribed for by all Purchasers are less    
than the total of all of the Basic Amounts, then each Purchaser who has set     
forth an Undersubscription Amount in its Notice of Acceptance shall be entitled 
to purchase, in addition to the Basic Amounts subscribed for, the               
Undersubscription Amount it has subscribed for; provided, however, that if the  
Undersubscription Amounts subscribed for exceed the difference between the total
of all the Basic Amounts and the Basic Amounts subscribed for (the "AVAILABLE   
UNDERSUBSCRIPTION AMOUNT"), each Purchaser who has subscribed for any           
Undersubscription Amount shall be entitled to purchase on that portion of the   
Available Undersubscription Amount as the Basic Amount of such Purchaser bears  
to the                                                                          

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total Basic Amounts of all Purchasers that have subscribed for Undersubscription
Amounts, subject to rounding by the Board of Directors to the extent its deems  
reasonably necessary                                                            

 (iii)    The Company shall have ten (10) Business Days from the
expiration of the period set forth in Section 5(1)(2)(ii) above to issue, sell  
or exchange all or any part of such Offered Securities as to which a Notice of  
Acceptance has not been given by the Purchasers (the "REFUSED SECURITIES"), but 
only to the offerees described in the Offer (if so described therein) and only  
upon terms and conditions (including, without limitation, unit prices and       
interest rates) that are not more favorable to the acquiring Person or Persons  
or less favorable to the Company than those set forth in the Offer.             

       (iv)     In the event the Company shall propose to sell less than all
the Refused Securities (any such sale to be in the manner and on the terms      
specified in Section 5(1)(2)(iii) above), then each Purchaser may, at its sole  
option and in its sole discretion, reduce the number or amount of the Offered   
Securities specified in its Notice of Acceptance to an amount that shall be not 
less than the number or amount of the Offered Securities that the Purchaser     
elected to purchase pursuant to Section 5(l)(2) (ii) above multiplied by a      
fraction, (i) the numerator of which shall be the number or amount of Offered   
Securities the Company actually proposes to issue, sell or exchange (including  
Offered Securities to be issued or sold to Purchasers pursuant to Section       
5(1)(2) (ii) above prior to such reduction) and (ii) the denominator of which   
shall be the original amount of the Offered Securities. In the event that any   
Purchaser so elects to reduce the number or amount of Offered Securities        
specified in its Notice of Acceptance, the Company may not issue, sell or       
exchange more than the reduced number or amount of the Offered Securities unless
and until such securities have again been offered to the Purchasers in          
accordance with Section 5(l)(2)(i) above.                                       

       (v)      Upon the closing of the issuance, sale or exchange of all or
less than all of the Refused Securities, the Purchasers shall acquire from the  
Company, and the Company shall issue to the Purchasers, the number or amount of 
Offered Securities specified in the Notices of Acceptance, as reduced pursuant  
to Section 5(1)(2)(iv) above if the Purchasers have so elected, upon the terms  
and conditions specified in the Offer. The purchase by the Purchasers of any    
Offered Securities is subject in all cases to the preparation, execution and    
delivery by the Company and the Purchasers of a purchase agreement relating to  
such Offered Securities reasonably satisfactory in form and substance to the    
Purchasers and their respective counsel.                                        

         (vi)     Any Offered Securities not acquired by the Purchasers or other
Persons in accordance with Section 5(1)(2)(iii) above may not be issued, sold or
exchanged until they are again offered to the Purchasers under the procedures   
specified in this Agreement.                                                    

      (vii)    The restrictions contained in paragraphs 5(1)(1) and (2) 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       

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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 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.                                                            

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         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.                             

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.                                                              

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         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.                          

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                 

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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 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

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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.                                                                     

       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 October 4, 2003, 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                                    

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

      n.iii    Fees and Expenses. At the Closing, the Company shall pay to
Vertical Ventures, LLC an aggregate of $20,000 for their legal fees and expenses
incurred in connection with the preparation and negotiation of the Transaction  
Documents. In lieu of the foregoing 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.                    

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         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 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                                         

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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]

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     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: /s/ Raymond C. Musci
                                      --------------------------------
                      Name: Raymond C. Musci
          Title: CEO

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THE PURCHASERS: VERTICAL VENTURES, LLC      

By: /s/ JOSHUA SILVERMAN  
                 -----------------------------------
Name: JOSHUA SILVERMAN    
Title: Partner            
  Investment Amount: $ 758,000
                Residence: 641, LEXINGTON AVENUE, 26th FL.
        NY, NY 10022
Address:                  
                     -------------------------------
             ---------------------------------------
             ---------------------------------------
  Telephone No.: (212)974-3070
  Telecopy No.:  (212)207-3452
 Attention: JOSHUA SILVERMAN
Email Address:            
                           -------------------------

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THE PURCHASERS:                             

CRESCENT INTERNATIONAL LTD                  

By: /s/ MAXI BREZZI       
                 -----------------------------------
Name: MAXI BREZZI         
 Title: AUTHORIZED SIGNATORY
 Investment Amount: $315,000
Residence: BERMUDA        

            Address: C/O GREENLIGHT(SWITZERLAND)SA
84 AV.LOUIS-CASAI         
CH 1216 COINTRIN, GENEVA  
SWITZERLAND               

     Telephone No.: ( )+4122 7917256
      Telecopy No.:  ( )+4122 92450394
Attention: MCRAW/M.BREZZI 
         Email Address: MBREZZI@DMITRUST.COM

    with copies of all notices to:

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

Telephone No.:  ( )       
                                --------------------
Telecopy No.:   ( )       
                                --------------------
Attention:                
                       -----------------------------
Email Address:            
                           -------------------------

EX-10.1 30th Page of 34 TOC 1st Previous Next ↓Bottom Just 30th
THE PURCHASERS:                             

SMITHFIELD FIDUCIARY LLC  

By: /s/ Adam J.Chill      
               -------------------------------------
Name : Adam J.Chill       
 Title: Authorized Signatory
    Investment Amount: $225,000.00
Residence:  Cayman Islands
     Address: c/o Highbridge Capital
Management, LLC           
    9 West 57th Street, 27th Floor
New York, New York 10019  
  Telephone No.: (212)287-4720
  Telecopy No.:  (212)751-0755
              Attention: Ari J. Storch / Adam J. Chill
         Email Address: ari.storch@hcmny.com
adam.chill@hcmny.com      

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THE PURCHASERS:           

                  Truk Opportunity Fund, LLC

                  By: /s/ Stephen Saltzstein
                      ----------------------
                Name: Stephen Saltzstein
        Title: Principal
                   Investment Amount: $ 22,080
                   Residence: ----------------
                   ---------------------------
                   ---------------------------
                                 Address: 45 Rockefeller Plaza, Suite 2000
            New York, N.Y. 10111
                   ---------------------------
                     Telephone No.: (212) 332-5050
                     Telecopy No.:  (212) 332-5051
                     Attention: Stephen Saltzstein
                     Email Address:---------------

                      with copies of all notices to:

 Mike Fein
            MFein@RAMCapital.com
                    ----------------------------
                    ----------------------------

                    Telephone No.: (212)332-5050
                     Telecopy No.:  (212) 332-5051
            Attention: Mike Fein
                           Email Address: MFein@RAMCapital.com

29

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THE PURCHASERS:           

           JAS Securities, LLC

               By: JAS Securities, LLC
                  ------------------
                                   Name: Michael Coughlan /s/ Michael Coughlan
  Title: CFO
                                 Investment Amount: $ 85,440=89,000 Shares
  Residence:
               120 Broadway, 9th Floor
    NY, NY 10271
Address:
               120 Broadway, 9th Floor
    NY, NY 10271
                     Telephone No.: (212) 433-7163
                     Telecopy No.:  (212) 433-7069
                Attention: Mike Coughlan
                      Email Address: cogmike@aol.com

                      with copies of all notices to:

           JAS Securities, LLC
               120 Broadway, 9th Floor
    NY, NY 10271

                     Telephone No.: (212) 433-7163
                     Telecopy No.:  (212) 433-7069
                Attention: Mike Coughlan
                      Email Address: cogmike@aol.com

30

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THE PURCHASERS:           

                  AIG DKR SOUNDSHORE PRIVATE
                   INVESTORS HOLDING FUND LTD.

              By: /s/ Barbara Burger
                     ---------------------
            Name: Barbara Burger
                 Title: Alternate Director
                   Investment Amount: $ 96,000
                      Address: 1281 East Main Street
          Stamford, CT 06902

                     Telephone No.: (203) 324-8400
                     Telecopy No.:  (203) 324-8492
                 Attention: Barbara Burger
                             Email Address: bburger@dkrcapital.com

                      with copies of all notices to:

       Marc Seidenberg
               (same address as above)
                     Telephone No.: (203) 324-8429
                     Telecopy No.:  (203) 324-8498

31

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THE PURCHASERS:           

             OTARE Investments LLC

           By: /s/ [ILLEGIBLE]
                  ------------------
Name:   
                   -----------------
              Title: General Counsel
                                   Investment Amount: $ 300,000-288,000 Shares

                    Residence:------------------
                    ----------------------------
                    ----------------------------

                       Address: One Manhattenville Rd.
          Purchase, NY 10577

                     Telephone No.: (914) 694-5887
                     Telecopy No.:  (914) 694-6335
                           Attention: Rick Borden/Paul Masters
                         Email Address: Rick.Borden@ox.com
                                         Paul.Masters@ox.com

                      with copies of all notices to:

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

                    Telephone No.: (   ) -------
                    Telecopy No.:  (   ) -------
                    Attention: -----------------
                    Email Address:--------------

32

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘8-K’ Filing	Date	First	Last	Other Filings

	10/4/03	23		S-8
Filed on:	10/2/03
	10/1/03	4
For Period End:	9/30/03	1		10-K, 10-Q, 10-Q/A, 8-K, 8-K/A, NT 10-K
	9/1/02	9
				List all Filings

↑Top

Filing Submission 0000950148-03-002408 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Bam Entertainment Inc – ‘8-K’ for 9/30/03 – EX-10.1

On: Thursday, 10/2/03, at 5:28pm ET · For: 9/30/03 · Accession #: 950148-3-2408 · File #: 0-32989

Previous ‘8-K’: ‘8-K’ on / for 9/30/03 · Next: ‘8-K/A’ on 10/3/03 for 9/30/03 · Latest: ‘8-K’ on 10/15/04 for 10/13/04

Current Report — Form 8-KFiling Table of Contents

EX-10.1 — Material ContractExhibit Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Current Report — Form 8-K
Filing Table of Contents

EX-10.1 — Material Contract
Exhibit Table of Contents