Document:

exv10w20

 

Exhibit 10.20

ASSET PURCHASE AGREEMENT

by and between

FUN-4-ALL CORP., Debtor and Debtor-in-Possession

and

CENTRALINK INVESTMENTS LIMITED

Dated as of July 22, 2004

 

 

ASSET PURCHASE AGREEMENT

     THIS ASSET PURCHASE AGREEMENT, dated as of July 22, 2004, is made by and
between FUN-4-ALL CORP., Debtor and Debtor-in-Possession (“Seller”), and
CENTRALINK INVESTMENTS LIMITED, as buyer (“Purchaser”).

R E C I T A L S

     A. Seller is a developer and distributor of Licensed Products (hereinafter
defined);

     B. Seller is obligated and indebted to Purchaser for loans, advances,
accrued interest and other costs and expenses (the “Obligations”) as evidenced
by a Promissory Note dated July 31, 2003, in the original principal amount of
$3,000,000 (the “Note”);

     C. To secure Seller’s Obligations to Purchaser, Seller has granted to
Purchaser a first priority lien and security interest in Seller’s personal
property assets pursuant to and to the extent set forth in an Amended and
Restated Security Agreement dated as of July 31, 2003;

     D. Purchaser desires to purchase from Seller, and Seller desires to sell,
convey, assign and transfer to Purchaser, the Transferred Assets (hereinafter
defined), and in connection therewith, Purchaser desires to assume certain
specified obligations and liabilities of Seller relating thereto, all in the
manner and subject to the terms and conditions set forth herein and in
accordance with Sections 105, 363 and 365 of the Bankruptcy Code (collectively,
the “Transaction”); and

     E. The parties desire to consummate the Transaction as promptly as
practical after the entry of the Sale Order (as defined below) approving the
Transaction in the voluntary case (the “Bankruptcy Case”) filed by Seller under
Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”) in the
United States Bankruptcy Court for the Southern District of New York (the
“Bankruptcy Court”), as Case Number 04-13943 (SMB).

A G R E E M E N T

     In consideration of the premises, the mutual covenants herein contained
and other good and valuable consideration (the receipt and sufficiency of which
is hereby acknowledged), the parties hereto, subject to the terms and
conditions contained herein, intending to be legally bound, hereby agree as
follows:

ARTICLE I

DEFINITIONS

     Section 1.1 Definitions. The following terms, as used in this Agreement, shall
have the following meanings:

     “Acquisition Documents” shall mean, collectively, this Agreement, the Bill
of Sale, the Assignment and Assumption Agreement, Purchaser Release, Seller
Release and all agreements,

 

 

instruments, certificates and other documents executed and delivered in
connection herewith or contemplated hereby.

     “Action” shall mean any claim, dispute, demand, cause of action or action
asserted in any arbitration, litigation, adversary proceeding, mediation, suit,
investigation or other proceeding and any appeal therefrom.

     “Affiliate” shall mean, with respect to any Person, any Person which,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. As used in this
definition, the term “control” (including the terms “controlled by” and “under
common control with”) means the possession, directly or indirectly, of the
power to (i) vote one-third (1/3) or more of the voting power of the
outstanding voting securities of such Person, or (ii) otherwise direct the
management policies of such Person by contract or otherwise.

     “Agreement” shall mean this Asset Purchase Agreement and shall include all
of the Schedules and Exhibits attached hereto.

     “Allocation” shall have the meaning ascribed to such term in Section 2.6
hereof.

     “Approval” shall mean any approval, authorization, consent, license,
franchise, order or permit of or by, notice to, or filing or registration with,
a Person.

     “Assets” shall mean both the Transferred Assets and the Excluded Assets.

     “Assignment and Assumption Agreement” shall mean the Assignment and
Assumption Agreement, substantially in the form attached hereto as Exhibit A.

     “Assumed Liabilities” shall have the meaning ascribed to such term in
Section 2.3 hereof.

     “Bachrach Release” shall mean the release in the form of Exhibit F hereto,
pursuant to which Scott Bachrach releases all claims against, inter alia,
Purchaser and certain other parties.

     “Bankruptcy Case” shall have the meaning ascribed to such term in the
recitals to this Agreement.

     “Bankruptcy Code” shall have the meaning ascribed to such term in the
recitals to this Agreement.

     “Bankruptcy Court” shall have the meaning ascribed to such term in the
recitals to this Agreement.

     “B&S” shall mean Binney & Smith Properties, Inc.

     “Bill of Sale” shall mean the bill of sale transferring to Purchaser the
Transferred Assets, substantially in the form attached hereto as Exhibit B.

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     “Books and Records” shall have the meaning ascribed to such term in
Section 2.1(g) hereof.

     “Business Day” shall mean a day that is not a Saturday, a Sunday or a day
on which banks in the State of New York are required or authorized to close for
regular banking business.

     “Claims” shall mean all claims, causes of action, chooses in action,
rights of recovery and rights of set-off of whatever kind or description
against any Person arising out of or relating to the Transferred Assets, or
relating to Seller.

     “Closing” shall mean the consummation of the transactions contemplated by
this Agreement.

     “Closing Date” shall mean the Business Day that is two (2) Business Days
after the date that all the conditions to Closing described in Articles IX and
X hereof have been fully satisfied or waived by the appropriate party or
parties or such other date as Purchaser and Seller may mutually agree upon.

     “Contract” shall mean each instrument, contract, license and other
agreement, including real property leases, operating leases, capital leases,
unexpired leases of personal property and other leases, in each case relating
to the Licensed Products, to which Seller is a party or by which it or any of
the Transferred Assets is bound.

     “Cure Amounts” shall have the meaning ascribed to such term in Section 2.8
hereof.

     “Designated Contracts” shall have the meaning ascribed to such term in
Section 2.7 hereof.

     “Drop Dead Date” shall have the meaning ascribed to such term in Section
12.1(f) hereof.

     “Effective Time” shall mean 12:01 a.m. on the Closing Date.

     “Eligible Accounts Receivable” shall mean accounts receivable created by
Seller if:

          (i) such accounts receivable arose from bona fide sales of Inventory in
the ordinary course of business;

          (ii) such accounts receivable are not unpaid for more than ninety days
after the date of the original invoice for them;

          (iii) such accounts receivable do not contain any terms under which
payment may be conditional or contingent;

          (iv) the account debtor is located in the United States; and

          (v) to Seller’s knowledge, the account debtor has not asserted a
counterclaim, defense or dispute, and does not have a right of setoff against
such accounts receivable; and

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     “Excluded Assets” shall have the meaning ascribed to such term in Section
2.2 hereof.

     “Excluded Liabilities” shall have the meaning ascribed to such term in
Section 2.4 hereof.

     “Exclusivity Period” shall have the meaning ascribed to such term in
Section 6.3 hereof.

     “GAAP” shall mean generally accepted accounting principles in the United
States.

     “Governmental Authority” shall mean any foreign, federal, state, local or
other governmental, quasi-governmental, administrative or regulatory authority,
body, agency, branch, commission, court, tribunal or similar entity including
any arbitrator or arbitration panel, including, without limitation, the
Bankruptcy Court.

     “Grand Release” shall mean the release in the form of Exhibit G hereto,
pursuant to which Scott Bachrach releases all claims against, inter alia,
Purchaser and certain other parties.

     “Intellectual Property” shall mean all of the following whether patented
or patentable or not and whether or not such items have been reduced to
written, computer-readable or other tangible form and irrespective of where any
of the same were issued, are pending or exist that are owned by, issued to or
licensed by Seller and that relate to the Licensed Products: United States and
foreign patents of any description, and applications therefor, utility models
and utility model applications (whether owned or licensed), including any
equivalents, divisionals, continuations, continuations-in-part, reissues,
registrations, additions or extensions thereof, as well as any further patents,
patent applications, utility models and utility model applications (whether
owned or licensed); United States (federal and state) and foreign trademarks
(and goodwill associated therewith) and other trade names, service marks,
logos, labels, trade dress, advertising and package designs, and other trade
rights, whether or not registered and all applications therefor; United States
and foreign copyrights, whether or not registered and all applications therefor
(including copyrights in computer software and computer software documentation,
source code and systems documentation), websites, know-how, show-how, trade
secrets, business leads, research and results thereof, technology, techniques,
data, methods, processes, instructions, drawings and specifications,
inventions, discoveries, improvements, designs, processes, formulae, recipes,
shop rights and license agreements and other agreements of every kind and
character relating to any of the foregoing, and all claims and causes of action
relating to any of the foregoing, other than claims or causes of action for
past infringement.

     “Inventory” shall have the meaning set forth in Section 2.1(e) hereof.

     “Inventory Receivables” shall have the meaning set forth in Section 2.1(e)
hereof.

     “Knowledge” (i) with respect to Seller, the actual knowledge, after due
inquiry, of the executive officers of Seller, and (ii) with respect to
Purchaser, the actual knowledge, after due inquiry, of the executive officers
of Purchaser.

     “Law” shall mean any law, statute, rule, regulation, ordinance, standard,
requirement, administrative ruling, order or process promulgated by any
Governmental Authority as in effect

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from time to time (including, without
limitation, any zoning or land use law or ordinance,
building code, securities, blue sky, civil rights or occupational health
and safety law or regulation and any court, administrative agency or
arbitrator’s order or process).

     “Liability” shall mean any debt, liability, commitment, guaranty, warranty
or obligation of any kind, character or nature whatsoever, whether known or
unknown, secured or unsecured, direct or indirect, accrued, fixed, absolute,
potential, contingent or otherwise, and whether due or to become due.

     “License” shall mean the Crayola® License Agreement dated as of December
31, 2002 (the “License”) between Seller and B&S.

     “Licensed Products” shall mean the products developed by Seller pursuant
to the License.

     “Lien” shall mean any lien, statutory lien, pledge, mortgage, security
interest, charge, easement, right of way, covenant, claim, hypothecation,
restriction, right, option, conditional sale or other title retention
agreement, or encumbrance of any kind or nature.

     “Material Adverse Change” shall mean any event, change or occurrence that
has, has had or, to Seller’s Knowledge, could reasonably be expected to result
in a material adverse change or effect on the Transferred Assets taken as a
whole prior to the Closing Date other than any adverse change, event or
occurrence (i) resulting from the commencement or pendency of the Bankruptcy
Cases, (ii) resulting from the entry into this Agreement or the public
announcement thereof, (iii) attributable to changes in general economic
conditions, or financial markets or conditions affecting the industry in which
Seller operates, (iv) arising from or relating to any change in accounting
requirements or principles or any change in applicable laws, rules or
regulations or the interpretation thereof, or (vi) arising from or relating to
actions required to be taken under applicable laws, rules, regulations,
contracts or agreements.

     “Permitted Exceptions” means imperfections of title, restrictions or
encumbrances, if any, that (i) would not involve material costs to correct or
remove, (ii) do not impair the use and operation of such asset in the
manufacture of the Licensed Products as currently conducted or (iii) are caused
solely by Purchaser.

     “Person” shall mean any individual, general or limited partnership,
corporation, limited liability company, joint stock company, estate,
unincorporated organization, association, trust, joint venture, Governmental
Authority, business entity or other entity of any kind or nature.

     “Petition Date” shall mean the date the Bankruptcy Case was filed with the
Bankruptcy Court by Seller.

     “Purchase Price” shall have the meaning ascribed to such term in Section
2.5(a) hereof.

     “Purchaser Release” shall mean the release in the form of Exhibit C
hereto, pursuant to which Purchaser releases all claims against, inter alia,
Seller and other parties referenced therein.

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     “Purchaser” shall have the meaning ascribed to such term in the preamble
to this Agreement.

     “Representative” shall mean, with respect to a Person, any employee,
officer, director, stockholder, partner, accountant, attorney, investment
banker, broker, finder, investor, subcontractor, consultant or other authorized
agent or representative of such Person.

     “Required Approvals” shall have the meaning ascribed to such term in
Section 4.7 hereof.

     “Restricted Assets” shall have the meaning ascribed to such term in
Section 3.3 hereof.

     “Sale Hearing” shall have the meaning ascribed to such term in Section
8.2(c) hereof.

     “Sale Order” shall mean an order of the Bankruptcy Court substantially in
the form of Exhibit D hereto.

     “Schedules” shall mean the schedules annexed hereto and made a part
hereof.

     “Seller” shall have the meaning ascribed to such term in the preamble to
this Agreement.

     “Seller Release” shall mean the release in the form of Exhibit E hereto,
pursuant to which Seller releases all claims against, inter alia, Purchaser and
certain other parties.

     “Subsidiary” shall mean, with respect to any Person, any corporation,
limited liability company, partnership, association, or other business entity
of which (i) if a corporation, a majority of the total voting power of shares
of stock entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers, or trustees thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more of
the other Subsidiaries of that Person or a combination thereof or (ii) if a
limited liability company, partnership, association, or other business entity
(other than a corporation), a majority of partnership or other similar
ownership interest thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more Subsidiaries of that Person or a
combination thereof and for this purpose, a Person or Persons own a majority
ownership interest in such a business entity (other than a corporation) if such
Person or Persons shall be allocated a majority of such business entity’s gains
or losses or shall be or control any managing director or general partner of
such business entity (other than a corporation). The term “Subsidiary” shall
include all Subsidiaries of such Subsidiary.

     “Tax” or “Taxes” shall mean all taxes, assessments, charges, duties, fees,
levies, imposts or other governmental charges, including, without limitation,
all federal, state, local, municipal, county, foreign and other income,
franchise, profits, capital gains, capital stock, capital structure, transfer,
gross receipt, sales, use, transfer, service, occupation, ad valorem, property,
excise, severance, windfall profits, premium, stamp, license, payroll,
employment, social security, unemployment, disability, environmental (including
taxes under Tax Code Section 59A), alternative, minimum, add-on, value-added,
withholding and other taxes, assessments, charges, duties, fees, levies,
imposts or other governmental charges of any kind whatsoever (whether

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payable
directly or by withholding and whether or not requiring the filing of a Tax
Return), and all estimated taxes, deficiency assessments, additions to tax,
additional amounts imposed by any governmental authority (domestic or foreign),
penalties and interest.

     “Tax Code” shall mean the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.

     “Tax Return” shall mean any return, report, declaration, claim for refund,
estimate, election, or information statement or return relating to any Tax,
including any schedule or attachment thereto, and any amendment thereof.

     “Transaction” shall have the meaning ascribed to such term in the recitals
to this Agreement.

     “Transfer” shall mean any sale, transfer, conveyance, assignment, delivery
or other disposition, and “Transfer” or “Transferred,” used as a verb, shall
each have a correlative meaning.

     “Transferred Assets” shall have the meaning ascribed to such term in
Section 2.1 hereof.

     “Treasury Regulation” shall mean a regulation promulgated by the Treasury
Department under the Tax Code, including a temporary regulation and a proposed
regulation to the extent that, by reason of their actual or proposed effective
date, would or could, as of the date of any determination or opinion as to the
Tax consequences of any action or proposed action or transaction, be applied to
the Transferred Assets.

     Section 1.2 Additional Definitions. In addition to the foregoing defined
terms, other capitalized terms appearing in this Agreement shall have the
respective meanings ascribed to such terms where they first appear in the text
of this Agreement.

     Section 1.3 Headings. The headings contained in this Agreement are for
convenience of reference only and shall not constitute a part hereof or define,
limit or otherwise affect the meaning of any of the terms or provisions hereof.

     Section 1.4 References to Articles, Etc. All references herein to Articles,
Sections, Exhibits and Schedules shall be to Articles and Sections of and
Exhibits and Schedules to this Agreement.

     Section 1.5 References to “Herein,” Etc. As used in this Agreement, the words
“herein,” “hereof,” “hereby” and “hereunder” shall refer to this Agreement as a
whole, and not to any particular section, provision or subdivision of this
Agreement.

ARTICLE II

PURCHASE AND SALE OF THE ASSETS; PURCHASE PRICE

     Section 2.1 Purchase and Sale of the Assets. Subject to the terms and
conditions of this Agreement, at and as of the Effective Time, Seller shall
Transfer to (or cause to be

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Transferred to) Purchaser, and Purchaser shall
purchase and accept from Seller, all of Seller’s right, title and interest in
and to the following assets (the “Transferred Assets”):

          (a) the License;

          (b) the tooling listed and described on Schedule 2.1(b) attached hereto
located at Red Eagle Toys Factory (China) Ltd., Zhenan Road, Shangiiao
District, Changan Town, Dongguan, Guangdong, P.R. China (0769)5412191-2 (the
“Tooling”);

          (c) all orders for purchases of Licensed Products;

          (d) the Intellectual Property, whether owned or licensed, related to the
Licensed Products;

          (e) all of the raw materials, work in process and finished goods inventory
owned by Seller, in each case of Licensed Products, wherever located, including
without limitation the inventory located at Jam’n Logistics of California, 3414
Garfield Avenue, Los Angeles, California 90040 (collectively, “Inventory”),
which finished goods Inventory, as of the date hereof, is itemized on Schedule
2.1(e) attached hereto;

          (f) except as set forth in Section 2.2, all rights of Seller under
Designated Contracts, whether accruing before or after the Effective Time;

          (g) all amounts due to Seller from Grand Toys International, Inc. related
to a consignment sale of certain goods to Walmart US (the “Receivable”) in the
current amount of $582,000;

          (h) all accounts receivable and proceeds thereof (if any) derived from a
sale of the Inventory after the date hereof (the “Inventory Receivables”); and

          (i) originals or copies of all books, data, files, papers, financial and
other records and information which has been reduced to written, recorded or
encoded form, including, without limitation, sales and promotional literature,
manuals and data, correspondence, personnel and employment records, customer
lists, vendor lists, catalogs, research material, operating guidelines and
practices, purchasing material and records, accounting records, research and
development files, mailing lists, distribution lists, historical cost and
pricing information, business plans and other similar property, in each case to
the extent related to the Licensed Products (collectively, the “Books and
Records”).

     Section 2.2 Excluded Assets. Notwithstanding anything to the contrary contained herein, including in
Section 2.1 above, Seller shall retain (i) all of its right, title and interest
in and to, and shall not Transfer to Purchaser, any of its other Assets
(collectively, the “Excluded Assets”) and (ii) the rights of indemnification,
and the right to assert any defenses or claims for reimbursement, under the
Designated Contracts with respect to claims against Seller which accrued or
arise before the Effective Time.

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  Section 2.3 Assumption of Liabilities.

          (a) Subject to the terms and conditions of this Agreement, at and as of
the Effective Time, Purchaser shall assume and agree to pay, perform, discharge
and satisfy when due in accordance with their terms the following Liabilities:

               (i) Liabilities as of the Effective Time owing to Licensor related to the
License, the current amount of which is $27,262.00;

               (ii) Liabilities under any of the Designated Contracts, or arising out of
any Transferred Assets, accruing, arising out of or relating to periods after
the Effective Time (other than Liabilities resulting from breaches of
Designated Contracts by Seller prior to the Effective Time);

               (iii) Liabilities as of the date hereof to each of the Persons listed and
described on Schedule 2.3(a)(iii) attached hereto, in an amount not to exceed
$1,141,587 in the aggregate (inclusive of the amounts due to Binney & Smith
(i.e., Licensor) and Jam’n Logistics which are also referred to in Section
2.3(a)(i) and 2.3(a)(iv) hereof, respectively). Seller’s records indicate that
the amount of such Liabilities are as set forth under the heading Seller’s
Records on Schedule 2.3(a)(iii) hereto. The records of certain of the Persons
identified on Schedule 2.3(a)(iii) indicate that the amount of such liabilities
are as set forth under the heading Creditors’ Records on Schedule 2.3(a)(iii).
The amount by which each such Person’s records exceed Seller’s records is
referred to as the “Excess Amount”. In the event the Purchaser disputes the
Excess Amount of any such Person, such Person shall have the right to (i) agree
that such Person’s Excess Amount shall not be included in the Assumed
Liabilities, in which case such Excess Amount shall be deemed to be an
unsecured claim against Seller in the Bankruptcy Case or (ii) submit the
disputed amount to Cornerstone Management Consultants and M.J. Renick
Associates LLC who shall jointly determine the propriety of the Excess Amount
and if found due and owing, then such Excess Amount shall be included as part
of the Assumed Liabilities. The costs concerning the resolution of such
dispute shall be borne by such Person and Purchaser.

               (iv) Liabilities as of the Petition Date to Jam’n Logistics as described
on Schedule 2.3(a)(iv) but only to the extent that any such Liabilities
constitute a valid, non-avoidable warehousemen’s lien on the Inventory of the
Licensed Products, together with storage, pick and pack and other charges
accruing from and after the Petition Date to the Effective Time in the ordinary
course of business with respect to the Inventory; and

               (v) all commissions, royalties, override payments and shipping costs
incurred in connection with the sale of Inventory generating the Inventory
Receivables.

The Liabilities described in the foregoing clauses (i), (ii), (iii), (iv) and
(v) are collectively defined herein as the “Assumed Liabilities”.

          (b) From the date hereof through the Closing Date, Seller shall use
commercially reasonable efforts to obtain settlements or stipulations (but
without any obligation

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of Seller to pay any amount in respect of such
settlements) with B & S to the extent it objects to the assumption and
assignment of the License or any related cure amount.

     Section 2.4 Excluded Liabilities(a) . Except for the Assumed Liabilities
and the Cure Amounts as set forth in Section 2.8, Purchaser shall not assume,
and shall have no liability or obligation for other Liabilities of Seller
(collectively, the “Excluded Liabilities”).

     Section 2.5 Purchase Price. The aggregate consideration for the Transferred
Assets and the Seller Release (the “Purchase Price”) shall be the outstanding
amount of the Obligations, as of the Effective Time, the current amount of
which is $3,000,000, plus interest, default interest, costs and fees
(including, without limitation, legal fees), which shall be paid at Closing by
crediting of such amount against the Obligations, whereupon the Obligations
shall be deemed to be satisfied in full, and other consideration as provided
for in this Agreement.

     Section 2.6 Allocation of the Purchase Price. Prior to the Closing, Purchaser
and Seller shall agree as to the allocation of the Purchase Price pursuant to
Section 1060 of the Code and the treasury regulations promulgated thereunder
substantially in accordance with Schedule 2.6. In the event that the
transaction contemplated by this Agreement is determined to be taxable,
Purchaser and Seller agree to reflect such allocation on IRS Form 8594: Asset
Acquisition Statement under Section 1060, including any required amendments or
supplements thereto. In that event, Form 8594 shall be prepared jointly by
Purchaser and Seller and shall be signed by the parties on the Closing Date. In
that event, the parties hereto further agree that: (i) the agreed upon
allocation of Purchase Price shall be used in filing all required forms under
Section 1060 of the Code and all tax returns; and (ii) they will not take any
position inconsistent with such allocation upon any examination of any such tax
return, in any refund claim or in any tax litigation.

     Section 2.7 Contract Rejection and Assumption. The agreements identified on
Schedule 2.7 attached hereto are referred to herein collectively as the
(“Designated Contracts”). The Designated Contracts are included within the
Transferred Assets, and at the Closing, subject to Section 365 of the
Bankruptcy Code, Seller shall assign the License and all of the Designated
Contracts to Purchaser, on the terms and subject to the conditions of this
Agreement.

     Section 2.8 Cure of Defaults. Subject to the prior approval of the Bankruptcy Court, and only to the
extent required under Section 2.3, Purchaser shall, on or prior to the Closing,
in addition to the Purchase Price, pay to Seller the aggregate amount necessary
to cure (the “Cure Amounts”) any and all monetary defaults and breaches under
the License and Designated Contracts so that the License and Designated
Contracts may be assumed by Seller and assigned to Purchaser in accordance with
the provisions of Section 365 of the Bankruptcy Code and this Agreement.

ARTICLE III

THE CLOSING

     Section 3.1 Time and Place of Closing. The Closing shall take place at 10:00
a.m., New York time, on the Closing Date at the offices of Katten Muchin Zavis
Rosenman, 575 Madison Avenue, New York, New York 10022 as soon as practicable
following the satisfaction

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or due waiver of the last to occur of the closing
conditions set forth in Articles IX and X hereof and after such time as the
Sale Order is entered and not subject to any stay, or on such other date as is
mutually agreeable to Purchaser and Seller. The Closing, the Transfer of the
Transferred Assets, the effectiveness of the documents, agreements and
certificates delivered in accordance with this Agreement, and the consummation
of the transactions contemplated hereby shall be deemed to occur at the
Effective Time.

  Section 3.2 Deliveries at Closing.

          (a) Deliveries by Purchaser to Seller. At the Closing, Purchaser shall deliver
to Seller the following:

               (i) the Note marked cancelled;

               (ii) the Assignment and Assumption Agreement;

               (iii) a certificate of an executive officer of Purchaser to evidence
compliance with the conditions set forth in Sections 10.1 through 10.2 hereof
and any other certificates to evidence compliance with the conditions set forth
in Article X hereof as may be reasonably requested by Seller or its counsel;

               (iv) Purchaser Release and the Grand Release duly executed by all parties
thereto; and

               (v) a UCC-3 statements terminating any and all liens and security
interests in any and all assets and/or property of Seller.

          (b) Deliveries by Seller. At or prior to the Closing, Seller (or its Affiliate, if applicable) shall deliver to Purchaser the following:

               (i) the Bill of Sale;

               (ii) copies of all unpaid invoices and supporting books and records for the Inventory Receivables;

               (iii) the Assignment and Assumption Agreement;

               (iv) all Required Approvals;

               (v) a certificate of an executive officer of Seller to evidence compliance with the conditions set forth in Sections 9.1 through 9.2 hereof and any other certificates to evidence compliance with the conditions set forth in Article IX hereof as may be reasonably requested by Purchaser or its counsel;

               (vi) Seller Release and the Bachrach Release duly executed by all parties thereto; and

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               (vii) such further instruments of sale, transfer, conveyance, assignment
or delivery covering the Transferred Assets or any part thereof as Purchaser
may reasonably require to assure the full and effective sale, transfer,
conveyance, assignment or delivery to it of the Transferred Assets, free and
clear of all Liens, except for the Permitted Exceptions.

               (viii) a written acknowledgement from Talentoy in form and content
reasonably acceptable to Purchaser that the Tooling is owned by Seller and upon
payment by Purchaser to Talentoy of the amounts set forth in Schedule
2.3(a)(iii), shall be owned by Purchaser and its assigns free and clear of all
Liens of Talentoy and its Affiliates and that Talentoy shall transfer
possession and control of the Tooling to Purchaser.

     Section 3.3 Assignment of Designated Contracts, Etc. Anything contained herein
to the contrary notwithstanding, this Agreement shall not effect the Transfer
of any Designated Contract listed on Schedule 2.7 or any claim, right, or
benefit arising thereunder or resulting therefrom, if, notwithstanding the
provisions of Sections 363 and 365 of the Bankruptcy Code, a Transfer thereof,
without the Approval of the non-debtor party thereto, would excuse the
non-debtor party thereto from accepting performance from Purchaser, constitute
a breach thereof or in any way affect the rights of Seller or Purchaser, as the
case may be, thereunder (collectively, “Restricted Assets”). Any Transfer to
Purchaser of any Restricted Asset which shall, notwithstanding the provisions
of Sections 363 and 365 of the Bankruptcy Code, require the Approval of any
non-debtor party for such Transfer as aforesaid shall be made subject to such
Approval being obtained and such approval shall be a condition precedent to
Purchasers obligation to close.

     Section 3.4 Sales, Use and Other Taxes. Any sales, use, purchase, transfer,
stamp, or documentary stamp Taxes which may be payable by reason of the sale of
the Transferred Assets under this Agreement for the transactions contemplated
herein and any and all claims, charges, interest or penalties assessed, imposed
or asserted in relation to any such taxes, shall be the responsibility and
obligation of and timely paid by Seller. In no event shall any party to this
Agreement be responsible for the income Taxes of any other party that arise as
a consequence of the transactions consummated hereunder. Within ninety days
after the Closing Date, Purchaser shall deliver to Seller a copy of a resale
certificate or other evidence that these transactions are exempt from tax. If
Purchaser fails to do so, it shall be responsible for the Taxes set forth in
the first sentence hereof to the extent such Taxes would not be payable had the
Purchaser provided such resale certificate or evidence.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE SELLER AND PARENT

     As an inducement to Purchaser to enter into this Agreement, Seller
represents and warrants as follows:

     Section 4.1 Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and, except as affected by the pendency of the Bankruptcy Case,
has the requisite power and authority to own, operate and lease its properties
and assets and to conduct the business of producing for sale and selling the

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Licensed Products as it is now being conducted. The business of developing and
distributing the Licensed Products is conducted solely through Seller or
through subcontractors identified on Schedule 4.1 hereto.

     Section 4.2 Power and Authority. Subject to Bankruptcy Court approval pursuant
to the Sale Order, (i) Seller has the requisite corporate power and authority
to execute and deliver this Agreement and the other Acquisition Documents to
which it is a party and to perform its obligations hereunder and thereunder and
consummate the transactions contemplated hereby and thereby, (ii) the execution
and delivery by Seller of this Agreement and the other Acquisition Documents to
which it is a party, the performance of its obligations hereunder and
thereunder and the consummation by it of the transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate actions on the
part of Seller, and (iii) this Agreement and each other Acquisition Document to
which Seller is a party will constitute, upon the execution and delivery
thereof by Seller, the legal, valid and binding obligation of Seller,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting creditors generally and by
general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

     Section 4.3 No Violation. Neither the execution and delivery by Seller of this Agreement or any of the
other Acquisition Documents to which it is a party, the performance by it of
its obligations hereunder or thereunder, nor the consummation by it of the
transactions contemplated hereby or thereby, will (i) contravene any provision
of the certificate of incorporation or bylaws of Seller; (ii) result in the
creation or imposition of any Lien upon any of the Transferred Assets of
Seller, or (iii) violate, conflict with or require any Approval, other than
Required Approvals, under, any Law or any judgment, decree or order of any
Governmental Authority to which Seller is subject or by which it or any of the
Transferred Assets are bound.

     Section 4.4 Actions. There is no Action pending or, to the Knowledge of
Seller, threatened, against Seller before any Governmental Authority relating
to the development and distribution or sale of the Licensed Products or any
Transferred Assets, or that questions or challenges the validity of this
Agreement or the other Acquisition Documents or any action taken or proposed to
be taken by Seller pursuant hereto or thereto or in connection with the
transactions contemplated hereby or thereby.

     Section 4.5 Compliance with Laws. Except as excused by the Bankruptcy Code or
in connection with the Bankruptcy Case, (A) to the Knowledge of Seller, Seller
is not in violation of any material Laws relating to the development and
distribution of the Licensed Products or the Transferred Assets, (B) Seller has
not been notified in writing nor has any Knowledge that it has been charged
with or threatened in writing with, any charge concerning any violation of any
provision of any Law relating to the business of developing and distributing
the Licensed Products or the Transferred Assets that has not already been
resolved, and (C) to the knowledge of Seller, Seller is not in violation of, or
in default under, and no event has occurred which, with the lapse of time or
the giving of notice, or both, would result in the violation of or default
under, the terms of any judgment, decree, order, injunction or writ of any
Governmental Authority

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binding on Seller and relating to the Transferred Assets
or the business of developing and distributing the Licensed Products.

     Section 4.6 Title to Property. Seller has, and at the Closing will transfer to
Purchaser, title to all of the Transferred Assets free and clear of all Liens
(other than Permitted Exceptions) subject to satisfaction of the Assumed
Liabilities.

     Section 4.7 Approvals. Except for (i) Approval of the Bankruptcy Court, (ii)
consent of B&S (and the satisfaction of Liabilities to the Persons listed on
Schedule 2.3(a)(iii)), and (iii) for Approvals set forth on Schedule 4.7
(“Required Approvals”), no Approval of any Governmental Authority or other
Person is required to be made, obtained or given by or with respect to Seller
in connection with the execution or delivery by Seller of this Agreement and
the other Acquisition Documents to which Seller is a party, the performance by
Seller of its obligations hereunder or thereunder or the consummation by Seller
of the transactions contemplated hereby or thereby, including, without
limitation, the Transfer of the Transferred Assets to Purchaser.

     Section 4.8 Broker’s or Finder’s Fees. Seller has not authorized any Person to
act as broker, finder, banker, consultant, intermediary or in any other similar
capacity which would entitle such Person to any investment banking, brokerage,
finder’s or similar fee in connection with the transactions contemplated by
this Agreement or any of the other Acquisition Documents.

     Section 4.9 Contracts To the Knowledge of Seller, true and complete copies of
each written Contract (or written summaries of the terms of any oral Contract)
related to the Transferred Assets have been previously made available to
Purchaser or will be made available concurrently with the execution of this
Agreement. A list of such Contracts are set forth on Schedule 4.9 hereof.
There are no Contracts to which Seller or its Affiliates are parties that are
material to the Intellectual Property relating to the Licensed Products, or
otherwise material to the business of developing and distributing the Licensed
Products, other than as set forth on Schedule 4.9 hereof or the arrangements
with the Persons set forth on Schedule 2.3(a)(iii) hereof. All Designated
Contracts as of the date hereof, are valid, binding and enforceable in
accordance with their terms and are in full force and effect.

Upon the cure of defaults in accordance with Section 2.8, Seller will have
cured in all material respects the obligations required pursuant to the License
and each Designated Contract and the Bankruptcy Court to have been performed by
it through the Closing Date. Other than the defaults to be cured in accordance
with Section 2.8, there has not occurred any material default under the License
or any Designated Contract as of the date hereof on the part of Seller or any
of its Affiliates or, to the Knowledge of Seller, any other party to the
License or any Designated Contract, nor has Seller or any of its Affiliates
received notice of default under the License or any of the Designated Contracts
as of the date hereof from any other party to the License or any of the
Designated Contracts or, except in accordance with the Bankruptcy Code, sent
notice of default under the License or any of the Designated Contracts as of
the date hereof to any other party to the License or any of the Designated
Contracts. Other than the defaults to be cured in accordance with Section 2.8,
no event has occurred that, with the giving of notice or the lapse of

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time, or both, could constitute a material default on the part of Seller or any of its
Affiliates under the License or any of the Designated Contracts as of the date
hereof nor, to the Knowledge of Seller, has any event occurred which with the
giving of notice or the lapse of
time, or both, could reasonably be expected to
constitute a default on the part of any other party to the License or any of
the Designated Contracts as of the date hereof.

     Section 4.10 Inventory. The Inventory consists of the items listed and
described on Schedule 2.1(e) attached hereto. All such Inventory consists of
items of a quality and condition, usable and, with respect to finished goods,
saleable in the ordinary course of business. The Inventory is valued on the
books and records of Seller at the lower of cost or market value.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

     As an inducement to Seller to enter into this Agreement, Purchaser hereby
represents and warrants as follows:

     Section 5.1 Organization and Good Standing. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the British
Virgin Islands and has the requisite corporate power and authority to own,
operate and lease its properties and assets and to conduct its business as they
are now being owned, operated, leased and conducted.

     Section 5.2 Power and Authority. Purchaser has the requisite corporate power
and authority to execute and deliver this Agreement and the other Acquisition
Documents, perform its obligations hereunder and thereunder and consummate the
transactions contemplated hereby and thereby. The execution and delivery by
Purchaser of this Agreement and the other Acquisition Documents to which it is
a party, the performance by it of its obligations hereunder and thereunder and
the consummation by it of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate actions on the part of
Purchaser. This Agreement and each other Acquisition Document to which
Purchaser is a party will constitute upon the mutual execution and delivery
thereof by Purchaser the legal, valid and binding obligation of Purchaser,
enforceable against it in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws
now or hereafter in effect relating to creditors’ rights generally and subject
to general principles of equity.

     Section 5.3 No Violation. Neither the execution and delivery by Purchaser of
this Agreement or any of the other Acquisition Documents to which it is a
party, the performance by it of its obligations hereunder or thereunder, nor
the consummation by it of the transactions contemplated hereby or thereby, will
(i) contravene any provision of the organizational documents of Purchaser or
(ii) violate, conflict with or require any Approval, other than Approval by the
Bankruptcy Court, under, any Law or any judgment, decree or order of any
Governmental Authority to which Purchaser is subject or by which it or any of
its assets or properties are bound.

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     Section 5.4 Broker’s or Finder’s Fees. Neither Purchaser nor any of its
Affiliates has authorized any Person to act as broker, finder, banker,
consultant, intermediary or in any other similar capacity which would entitle
such Person to any investment banking, brokerage, finder’s or similar fee in
connection with the transactions contemplated by this Agreement or any of the
other Acquisition Documents, except where any fee or payment due such Persons
would be solely the obligation of Purchaser or its Affiliates.

ARTICLE VI

COVENANTS OF THE SELLER

     Seller hereby covenants and agrees that, subject to the orders and
direction of the Bankruptcy Court and except as otherwise consented to in
writing by Purchaser or as otherwise contemplated by this Agreement or as
necessary to effect the transactions contemplated by this Agreement, from and
after the date hereof until the Closing:

     Section 6.1 Conduct of Business. Seller shall, subject to the requirements and
obligations under the Bankruptcy Code, (i) conduct its business with respect to
the Licensed Products substantially in the ordinary course consistent with past
practice of Seller, (ii) use commercially reasonable efforts to preserve intact
its business organizations and relationships with employees and Persons having
dealings with the Licensed Products; (iii) not, without Purchaser’s prior
written approval (which approval shall not be unreasonably withheld), enter
into any material contract or agreement relating to the Transferred Assets to
which Seller would be a party or by which Seller would be bound or materially
amend any existing material contract or agreement relating to the Transferred
Assets to which Seller is a party or by which Seller is bound; (vii) operate
its business relating to the Transferred Assets in material compliance with all
Laws applicable to Seller; (viii) promptly advise Purchaser in writing of any
Material Adverse Change that has occurred or that Seller reasonably believes
will occur with respect to the Transferred Assets; and (ix) not agree or commit
to take any of the actions prohibited by the foregoing clauses; provided, that
the foregoing shall not prevent Seller from rejecting Contracts that are not
the Designated Contracts being assumed by Purchaser hereunder.

     Section 6.2 [Intentionally Omitted].

     Section 6.3 [Intentionally Omitted].

     Section 6.4 Access to Seller. Seller shall use reasonable efforts to afford
Purchaser and its Representatives reasonable access during normal business
hours throughout any period from and after the date hereof until the Closing
Date, upon three (3) Business Day’s prior notice to the Books and Records,
files, pleadings, data base, documents, properties, facilities and employees of
Seller relating to the business of developing and distributing the Licensed
Products or the Transferred Assets, as Purchaser may reasonably request;
provided that such reasonable access shall not unreasonably or unduly interfere
with Seller’s ongoing business, operations or obligations relating to the
Bankruptcy Cases.

     Section 6.5 Jam’n Logistics Warehouseman’s Lien. In the event that
Purchaser determines that the warehouseman’s lien of Jamn Logistics is
avoidable, Seller shall reasonably
cooperate with Purchaser, at Purchaser’s expense, in contesting the
warehouseman’s lien and

16

 

shall, at Purchaser’s expense, take all reasonable
steps required by Purchaser in connection therewith. For the avoidance of
doubt, it is agreed that if Purchaser determines that the foregoing lien is
avoidable, neither such determination nor any unsuccessful contest of such lien
shall constitute a failure of Seller to satisfy any condition to Closing or
give Purchaser a right to delay the Closing hereunder or terminate this
Agreement.

     Section 6.6 Service on Interested Parties. Seller shall notify all
parties with an interest in the Transferred Assets and the Assumed Liabilities
of Seller’s intent to sell the Transferred Assets (and assume and assign the
License and Designated Contracts) under Bankruptcy Rule 2002, including without
limitation, all parties owning, claiming or asserting a Lien in or to any of
the Transferred Assets, or pursuant to Bankruptcy Court Order.

ARTICLE VII

COVENANTS OF THE PURCHASER

     Purchaser hereby covenants and agrees that, except as otherwise consented
to in writing by Seller, from and after the date hereof until the Closing:

     Section 7.1 Adequate Assurance. Purchaser shall be responsible for providing
evidence and argument in support of the Sale Order in order to establish its
ability to provide “adequate assurance of future performance” (within the
meaning of Section 365(f)(2)(B) of the Bankruptcy Code) of any Contract
identified as a Designated Contract. Seller agrees to use their commercially
reasonable efforts to cooperate with Purchaser in the presentation of such
evidence and argument. Notwithstanding the foregoing, the Bankruptcy Court’s
refusal to approve the assumption by Purchaser of any Contract on the grounds
that “adequate assurance of future performance” by Purchaser of such Contract
has not been provided shall constitute grounds for termination pursuant to
Section 12.1(b) hereof.

     Section 7.2 Confidentiality. Purchaser hereby covenants and agrees to hold
in confidence, and not to disclose to any Person (other than its
representatives and Affiliates as to whom Purchaser shall use its commercially
reasonable efforts to advise them to abide by the terms hereof and shall remain
responsible for any breach of the provisions hereof by such parties), or use
for any reason or purpose other than to evaluate and consummate the
transactions contemplated by the Agreement and the other Acquisition Documents,
any non-public information regarding Seller or the Transferred Assets
delivered, disclosed or made available to Purchaser or its Representatives by
Seller or its Representatives (“Confidential Information”). The term
“Confidential Information” does not include information which (i) was
voluntarily provided to Purchaser or its Representatives by Seller prior to the
date hereof other than under the terms of a written agreement to maintain the
confidentiality of such information, (ii) is or becomes generally available to
the public other than as a result of a breach of this Agreement by Purchaser or
Purchaser’s Representatives, (iii) was within Purchaser’s possession prior to
its being furnished to Purchaser by Seller, provided that the source of such
information was not known by Purchaser to be bound by a confidentiality
agreement with, or other contractual, legal
or fiduciary obligation of confidentiality to, Seller, (iv) is or becomes
available to Purchaser on a non-confidential basis from a source other than
Seller or any of its Representatives, provided that such source was not known
by Purchaser to be bound by a confidentiality agreement with or

17

 

other
contractual, legal or fiduciary obligation of confidentiality to Seller or any
other party with respect to such information, or (v) is disclosed under
operation of law, in which case Purchaser will provide Seller with prompt
notice thereof prior to any such disclosure so that Seller may seek a
protective order or other remedy; in the event that such protective order or
other remedy is not obtained, Purchaser will furnish only that portion of the
Confidential Information that it is legally required. The provisions of this
Section 7.2 shall survive any termination or expiration of this Agreement. If
this Agreement is terminated for any reason, Purchaser shall either destroy or
return to Seller, as directed by Seller, all Confidential Information and in
Purchaser’s possession, custody or control.

ARTICLE VIII

AGREEMENTS OF PURCHASER AND SELLER

     Section 8.1 Required Approvals; Restricted Assets. After the date hereof,
Purchaser and Seller shall utilize their commercially reasonable efforts to
obtain all Required Approvals to validly Transfer the Restricted Assets.

     Section 8.2 Bankruptcy Court Sale Order.

          (a) Seller hereby confirms that in light of the deterioration in Seller’s
business and the terms of this Agreement, Seller believes that it is in the
best interests of its estate and creditors that it proceed to sell the
Transferred Assets by means of a private sale pursuant to Sections 363 and 365
of the Bankruptcy Code. Seller believes that there is no realistic possibility
that any third party will be willing to provide greater consideration for the
Transferred Assets than is being provided by Purchaser and that the
solicitation of higher and better offers would needlessly delay the sale
hereunder and potentially jeopardize the continued viability of the Seller’s
business. Seller has consulted with the Official Committee of Unsecured
Creditors appointed in Seller’s Chapter 11 case and confirms that the Committee
has advised it that it has no objection to the sale of the Transferred Assets
pursuant to this Agreement proceeding by such a private sale.

          (b) On or before ten (10) Business Days after the execution of this
Agreement, Seller shall file a motion (the “Sale Motion”) with the Bankruptcy
Court to set a hearing to consider entry of the Sale Order in substantially the
form of Exhibit D hereto, among other things, approving this Agreement, the
sale of the Transferred Assets to Purchaser and the Seller Release.

          (c) Seller shall use its reasonable efforts to obtain the Bankruptcy
Court’s entry of a Sale Order no later than twenty-five (25) days after the
filing of the Sale Motion.

          (d) In the event an appeal is taken, or a stay pending appeal is requested
or reconsideration is sought from the Sale Order, Seller shall immediately
notify Purchaser of such appeal or stay request and shall promptly provide to
Purchaser a copy of the related notice of appeal or order of stay or
application for reconsideration. Seller shall also provide Purchaser with
copies of any other or further notice of appeal, motion or application filed in
connection

18

 

with any appeal from or application for reconsideration of either of
such orders and any related briefs. Seller agrees to take all steps as may be
reasonable and appropriate to defend against such appeal, petition or motion
and to use its reasonable efforts to obtain an expedited resolution of such
appeal, provided that nothing herein shall preclude the parties hereto from
consummating the transactions contemplated herein if the Sale Order shall have
been entered and not been stayed and Purchaser (in its sole discretion) has
waived in writing the condition set forth in Section 9.3(b).

ARTICLE IX

CONDITIONS PRECEDENT TO THE PURCHASER’S OBLIGATIONS

     The obligations of Purchaser to purchase and accept transfer and delivery
of the Transferred Assets are subject to the satisfaction on the Closing Date
of the following conditions, except to the extent that any such condition may
have been waived in writing by Purchaser on or prior to the Closing Date:

     Section 9.1 Representations and Warranties. The representations and warranties
of Seller contained in Article IV of this Agreement that are not qualified by
materiality shall have been true and correct in all material respects when made
and shall be true and correct in all material respects at and as of the Closing
Date, and the representations and warranties of Seller contained in Article IV
of this Agreement that are qualified by materiality shall have been true and
correct in all respects when made and shall be true and correct in all respects
at and as of the Closing Date.

     Section 9.2 Performance. Seller shall have performed and complied in all
material respects with the covenants and obligations required by this Agreement
to be performed or complied with by Seller at or prior to the Closing Date.

     Section 9.3 Sale Order.

          (a) The Sale Order shall have been entered and shall be in full force and
effect and not stayed as of the Closing Date.

          (b) The Sale Order shall be in full force and effect and not stayed as of
the Closing Date and shall find and provide, among other things, that (i)
Seller is authorized and directed to enter into the transactions contemplated
by this Agreement and the Acquisition Documents and to execute and deliver all
documents and perform all acts necessary or appropriate to effectuate the sale
of the Transferred Assets to Purchaser; (ii) the transactions contemplated by
this Agreement are undertaken by Purchaser in good faith, as that term is used
in Section 363(m) of the Bankruptcy Code, and Purchaser shall have all of
the benefits of such section; (iii) the Transferred Assets sold to Purchaser
pursuant to this Agreement shall be transferred to Purchaser free and clear of
all interests and Liens (except Permitted Exceptions) and Liabilities of any
Person, such interests, Liens and Liabilities to attach to the Purchase Price
payable pursuant to Article III, and that Purchaser otherwise shall be entitle
to the full extent of the benefits provided to a purchaser of assets under
Section 363(f) of the Bankruptcy Code; (iv) this Agreement was negotiated,
proposed and entered into by the parties without collusion, in good faith and
from arm’s length bargaining positions; (v) the License and all Designated

19

 

Contracts shall be assumed by Purchaser pursuant to Section 365 of the
Bankruptcy Code and, as required by this Agreement and Purchaser shall have no
obligation to pay, or any Liability for, such Cure Amounts except as otherwise
provided in this Agreement, and Seller shall have no further Liability under
such Designated Contracts pursuant to Section 365(k) of the Bankruptcy Code
except as otherwise provided in this Agreement, (vi) Purchaser is not acquiring
or assuming any of Seller’s or any other Person’s Liabilities except as
expressly provided in this Agreement; (vii) the Bankruptcy Court retains
jurisdiction to resolve any controversy or claim arising out of or relating to
this Agreement, or the breach hereof, and (viii) this Agreement and the
transactions and instruments contemplated hereby shall be specifically
performable and enforceable against and binding upon, and not subject to
rejection or avoidance by, Seller or any Chapter 7 or Chapter 11 trustee of any
Seller or its estate.

     Section 9.4 Required Approvals; Permits. All Required Approvals shall have
been received or waived by Purchaser.

     Section 9.5 Material Adverse Change. There shall not have occurred a Material
Adverse Change since June 22, 2004.

     Section 9.6 No Litigation. There shall not be pending or threatened in writing
by any Governmental Authority any proceeding (i) challenging or seeking to
restrain, prohibit, alter or materially delay the sale and purchase of the
Transferred Assets or any of the other transactions contemplated by this
Agreement, or seeking to obtain from Purchaser or any of its Affiliates in
connection with the sale and purchase of the Transferred Assets to be acquired
by Purchaser any material damages, or (ii) seeking to prohibit Purchaser or any
of its Affiliates from effectively controlling or operating any portion of the
Business or the Transferred Assets to be acquired by Purchaser.

     Section 9.7 Closing Deliveries. Seller shall have delivered to Purchaser the
documents and instruments required to be delivered pursuant to Section 3.2(b).

ARTICLE X

CONDITIONS PRECEDENT TO THE SELLER’S OBLIGATIONS

     The obligations of Seller to sell, transfer and deliver the Transferred
Assets are subject to the satisfaction on the Closing Date of the following
conditions, except to the extent that any such condition may have been waived
in writing by Seller on or prior to the Closing Date:

     Section 10.1 Representations and Warranties. The representations and
warranties of Purchaser contained in Article V of this Agreement that are not
qualified by materiality shall have been true and correct in all material
respects when made and shall be true and correct in all material respects at
and as of the Closing Date, and the representations and warranties of Purchaser
contained in Article V of this Agreement that are qualified by materiality
shall have been true and correct in all respects when made and shall be true
and correct in all respects at and as of the Closing Date.

20

 

     Section 10.2 Performance. Purchaser shall have performed and complied in all
material respects with the covenants and obligations required by this Agreement
to be performed or complied with by Purchaser at or prior to the Closing Date.

     Section 10.3 Sale Order. The Sale Order shall have been entered and shall be
in full force and effect and not stayed as of the Closing Date.

     Section 10.4 Closing Deliveries. Purchaser shall have delivered to Seller all
documents and instruments required to be delivered pursuant to Sections 3.2(a).

     Section 10.5 Required Approvals. All Required Approvals shall have been
received or waived by Seller.

     Section 10.6 No Litigation. There shall not be pending or threatened in
writing by any Governmental Authority any proceeding (i) challenging or seeking
to restrain, prohibit, alter or materially delay the sale and purchase of the
Transferred Assets or any of the other transactions contemplated by this
Agreement, or seeking to obtain from Seller or any of its Affiliates in
connection with the sale and purchase of the Transferred Assets to be acquired
by Purchaser any material damages, or (ii) seeking to prohibit Purchaser or any
of its Affiliates from effectively controlling or operating any portion of the
Business or the Transferred Assets to be acquired by Purchaser.

ARTICLE XI

COVENANTS AND AGREEMENTS SUBSEQUENT TO THE CLOSING

     Section 11.1 Further Assurances. In addition to the actions, documents, files,
pleadings and instruments specifically required to be taken or delivered by
this Agreement or the other Acquisition Documents, whether on or before or from
time to time after the Closing, and without further consideration, each party
hereto shall make commercially reasonable efforts to take such other actions,
and execute and/or deliver such other documents, data, pleadings, files,
information and instruments, as the other party hereto or its counsel may
reasonably request in order to effectuate and perfect the transactions
contemplated by this Agreement and the other Acquisition Documents, including
without limitation, such actions as may be necessary to Transfer to Purchaser
and to place Purchaser in possession or control of, all of the rights,
properties, assets and businesses intended to be sold, Transferred, conveyed,
assigned and delivered hereunder, or to assist in the collection of any and all
such rights, properties and assets or to enable Purchaser to exercise and enjoy
all rights and benefits of Seller with respect thereto.

ARTICLE XII

TERMINATION

     Section 12.1 Termination. This Agreement may be terminated at any time prior
to the Closing:

          (a) by the mutual written consent of Purchaser and Seller;

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          (b) by Purchaser upon written notice in the event of a material breach of
any covenant or agreement to be performed or complied with by Seller pursuant
to the terms of this Agreement or any of the Acquisition Documents, which
material breach would result in a condition to Closing set forth in Article IX
hereof becoming incapable of fulfillment (which condition has not been waived
by Purchaser in writing), and which material breach, if capable of being
remedied, shall remain unremedied for a period equal to the shorter of five
days after written notice is given by Purchaser to Seller or the Drop Dead
Date, except that the right of termination under this clause (b) shall not be
available if the effect of the Sale Order is to remedy any such breach,

          (c) by Seller upon written notice in the event of a material breach of any
covenant or agreement to be performed or complied with by Purchaser pursuant to
the terms of this Agreement or any of the Acquisition Documents, which material
breach would result in a condition to Closing set forth in Article X hereof
becoming incapable of fulfillment or cure (which condition has not been waived
by Seller in writing) and which material breach, if capable of being remedied,
shall remain unremedied for a period equal to the shorter of ten days after
written notice is given by Purchaser to Seller or the Drop Dead Date, except
that the right of termination under this clause (c) shall not be available if
the effect of the Sale Order is to remedy any such breach;

          (d) by either Purchaser or Seller if any Governmental Authority having
competent jurisdiction shall have issued a final, non-appealable order, decree,
ruling or injunction (other than a temporary restraining order) restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement or the other Acquisition Documents; provided, however, that the right
to terminate this Agreement under this Section 12.1(d) shall not be available
to any party who shall not have complied with its obligations, if any, under
Articles VI, VII or VIII, as the case may be, to avoid the issuance of such
order, decree, ruling or injunction;

          (e) [INTENTIONALLY OMITTED]; or

          (f) by either Seller or Purchaser if (i) the Bankruptcy Court has not
entered the Sale Order on or before the thirtieth (30th) day after the date of
this Agreement; or (ii) the Closing shall not have occurred on or before the
third Business Day after entry of the Sale Order which has become a final order
of the Bankruptcy Court (the “Drop Dead Date”); provided, however, Purchaser
shall have the right, in its sole discretion, to have a Closing hereunder
notwithstanding that the Sale Order has not become final so long as there is no
stay of Closing then in effect; and provided further, that the right to
terminate this Agreement under this Section 12.1(f) shall not be available to
any party whose failure to fulfill any obligation under this Agreement shall
have been the cause of, or shall have resulted in, the failure of the Closing
to occur on or prior to such date (for purposes of this subsection (f) the
failure or refusal by any party to provide any waiver that under the terms
hereof may be given or withheld in such party’s discretion shall not be deemed
a failure to fulfill any obligation under this Agreement).

22

 

     Section 12.2 Effect of Termination.

          (a) In the event of the termination of this Agreement under Section 12.1,
except with respect to this Section 12.2 and Article XIII hereof, (i) this
Agreement shall forthwith become void, and (ii) there shall be no liability on
the part of Seller, Purchaser or any of their respective Representatives. For
the avoidance of doubt, the right of termination shall be the sole remedy
available to the parties for any of the circumstances set forth in Section
12.1(a) through (c) hereof. Notwithstanding the foregoing, the provisions of
Section 7.2 hereof shall remain in full force and effect.

ARTICLE XIII

MISCELLANEOUS

     Section 13.1 Public Announcements. Other than statements made in the
Bankruptcy Court (or in pleadings filed therein), Purchaser and Seller shall
consult with each other before issuing any press release or making any public
statement or other public communication with respect to this Agreement or the
Transaction. Purchaser and Seller shall not issue any such press release or
make any such public statement or public communication without the prior
written consent of the other party, which shall not be unreasonably withheld or
delayed; provided, however, that a party may, without the prior consent of the
other party, issue such press release or make such public statement as may,
upon
the advice of counsel, be required by applicable Law, any Governmental
Authority with competent jurisdiction or any listing agreement with any
national securities exchange.

     Section 13.2 Amendment; Waiver. Neither this Agreement, nor any of the terms
or provisions hereof, may be amended, modified, supplemented or waived except
by a written instrument signed by all of the parties hereto (or, in the case of
a waiver, by the party granting such waiver). No waiver of any of the terms or
provisions of this Agreement shall be deemed to be or shall constitute a waiver
of any other term or provision hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver. No failure of a party hereto to insist
upon strict compliance by another party hereto with any obligation, covenant,
agreement or condition contained in this Agreement shall operate as a waiver
of, or estoppel with respect to, any subsequent or other failure. Whenever
this Agreement requires or permits consent by or on behalf of a party hereto,
such consent shall be given in a manner consistent with the requirements for a
waiver of compliance as set forth in this Section 13.2.

     Section 13.3 Survival. In the absence of actual fraud, the representations and
warranties of Seller set forth in Article IV hereof and Purchaser set forth in
Article V hereof shall not survive the Closing. All covenants and agreements
of Seller and Purchaser hereunder, including without limitation, Section 7.2
hereof, shall survive the Closing.

     Section 13.4 Fees and Expenses. Except as otherwise expressly provided in this
Agreement, including Section 6.5, or in the Note and the other documents
related thereto, each of the parties hereto shall bear and pay all fees, costs
and expenses incurred by it or any of its Affiliates in connection with the
origin, preparation, negotiation, execution and delivery of this Agreement and
the other Acquisition Documents and completing the transactions contemplated

23

 

hereby or thereby (whether or not such transactions are consummated) and the
performance of their respective obligations under this Agreement, including,
without limitation, any fees, expenses or commissions of any of its
Representatives.

     Section 13.5 Notices.

          (a) All notices, requests, demands and other communications required or
permitted under this Agreement shall be in writing and mailed or facsimiled or
delivered by hand or courier service:

	 	 	 	 	 
	

	 	(i)
	 	If to Seller, to:
	 
	 	 	 	 
	

	 	 	 	Fun-4-All Corp.
	

	 	 	 	16 West 19th Street
	

	 	 	 	New York, New York 10011
	

	 	 	 	Fax: (775) 871-9554
	

	 	 	 	Attention: Scott Bachrach
	 
	 	 	 	 
	

	 	 	 	With a copy to:
	 
	 	 	 	 
	

	 	 	 	Esanu Katsky Korins & Siger, LLP
	

	 	 	 	Attn: Meryl Lynn Unger and Steven H. Newman
	

	 	 	 	605 Third Avenue
	

	 	 	 	16th Floor
	

	 	 	 	New York, New York 10158
	

	 	 	 	Fax: (212) 953-6899
	 
	 	 	 	 
	

	 	 	 	and
	 
	 	 	 	 
	

	 	 	 	Douglas J. Pick, P.C.
	

	 	 	 	350 Fifth Avenue, Suite 3000
	

	 	 	 	New York, New York 10118
	

	 	 	 	Fax: (212) 695-6007

24

 

	 	 	 	 	 
	

	 	(ii)
	 	If to Purchaser, to:
	 
	 	 	 	 
	

	 	 	 	Grand Toys International, Ltd.
	

	 	 	 	Room UG 202, Floor UG2,
	

	 	 	 	Chinachem Golden Plaza
	

	 	 	 	77 Mody Road
	

	 	 	 	Tsimshatsui East
	

	 	 	 	Kowloon, Hong Kong
	

	 	 	 	Attention: Mr. Henry Hu
	

	 	 	 	Facsimile No.: 852-2520-5515
	 
	 	 	 	 
	

	 	 	 	With a copy, which shall not constitute notice, to:
	 
	 	 	 	 
	

	 	 	 	Katten Muchin Zavis Rosenman
	

	 	 	 	575 Madison Avenue
	

	 	 	 	New York, New York 10022
	

	 	 	 	Fax: (212) 894-5511
	

	 	 	 	Attention: Paul J. Pollock

          (b) All notices and other communications required or permitted under this
Agreement which are addressed as provided in this Section 13.5 (i) if delivered
personally against proper receipt or by confirmed facsimile transmission shall
be effective upon delivery and (ii) if delivered (A) by certified or registered
mail with postage prepaid shall be effective five (5) Business Days or (B) by
overnight Federal Express or similar courier service with courier fees paid by
the sender, shall be effective two (2) Business Days following the date when
mailed or given to the courier, as the case may be. Any party hereto may from
time to time change its address for the purpose of notices to such party by a
similar notice specifying a new address, but no such change shall be deemed to
have been given until it is actually received by the party sought to be charged
with its contents.

     Section 13.6 Assignment. This Agreement and all of the terms and provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns. Prior to the Effective Time,
neither this Agreement nor any of the rights, interests or obligations
hereunder may be assigned by Seller, provided that, Purchaser shall have the
right to assign this Agreement to a Subsidiary formed for the purpose of making
the acquisition and, with the consent of B&S, Purchaser or such Subsidiary may
assign its rights under this Agreement to any Person which assignment shall not
relieve Purchaser or such Subsidiary of its obligations hereunder. Any
assignment made in contravention of the terms of this Section 13.6 shall be
void ab initio.

     Section 13.7 Governing Law; Consent to Jurisdiction.

          (a) This Agreement and the legal relations among the parties hereto shall
be governed by and interpreted in accordance with the laws of the State of New
York applicable to agreements made and to be performed entirely within such
State.

25

 

          (b) Each party hereto (i) irrevocably elects as the sole judicial forum
for the adjudication of any matters arising under or in connection with the
Agreement, and consent to the exclusive jurisdiction of, the Bankruptcy Court;
(ii) expressly waives any defense or objection to jurisdiction or venue based
on the doctrine of forum non-conveniens; and (iii) stipulates that the
Bankruptcy Court shall have in personam jurisdiction and venue over such party.

     Section 13.8 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER ACQUISITION DOCUMENTS.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT AND THE OTHER ACQUISITION AGREEMENTS, AS APPLICABLE,
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION
13.8.

     Section 13.9 Entire Agreement. This Agreement and the other Acquisition
Documents, together with any agreement by or among the parties hereto or their
Affiliates which purports to protect the confidentiality of information of
Seller, including without limitation, the confidentiality provisions contained
in that certain letter of intent dated February 26, 2003, as amended among the
Seller, Grand Toys International, Inc. and Cornerstone Overseas Investments,
Limited and the amendments thereto, and the provisions contained in any orders
entered by the Bankruptcy Court embody the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and
supersede all prior agreements, commitments, arrangements, negotiations or
understandings, whether oral or written, between the parties hereto, their
respective Affiliates or any of the Representatives of any of them with respect
thereto. There are no agreements, covenants or undertakings with respect to
the subject matter of this Agreement and the other Acquisition Documents other
than those expressly set forth or referred to herein or therein and no
representations or warranties of any kind or nature whatsoever, express or
implied, are made or shall be deemed to be made herein by the parties hereto
except those expressly made in this Agreement and the other Acquisition
Documents.

     Section 13.10 Severability. Each term and provision of this Agreement
constitutes a separate and distinct undertaking, covenant, term and/or
provision hereof. In the event that any term or provision of this Agreement
shall be determined to be unenforceable, invalid or illegal in any respect,
such unenforceability, invalidity or illegality shall not affect any other term
or provision hereof, but this Agreement
shall be construed as if such unenforceable, invalid or illegal term or
provision had never been contained herein. Moreover, if any term or provision
of this Agreement shall for any reason be held to be excessively broad as to
time, duration, activity, scope or subject, the parties request that it be
construed, by limiting and reducing it, so as to be enforceable to the fullest
extent permitted under applicable Law.

26

 

     Section 1.1 No Third Party Beneficiaries. Except as and to the extent
otherwise provided herein, nothing in this Agreement is intended, nor shall
anything herein be construed, to confer any rights, legal or equitable, in any
Person other than the parties hereto and their respective successors and
permitted assigns.

     Section 1.2 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which, when
taken together, shall constitute one and the same instrument and this Agreement
may be executed by facsimile.

[Signature Page Follows]

27

 

     IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase
Agreement to be duly executed as of the day and year first above written.

	 	 	 
	

	 	SELLER
	 
	 	 
	

	 	FUN-4-ALL CORP., Debtor and Debtor-in-Possession
	 
	 	 
	

	 	By: /s/ Scott Bachrach

	

	 	Name: Scott Bachrach
	

	 	Title: Chief Executive Officer
	 
	 	 
	

	 	PURCHASER
	 
	 	 
	

	 	CENTRALINK INVESTMENTS LIMITED
	 
	 	 
	

	 	By: /s/ Henry Hu

	

	 	Name: Henry Hu
	

	 	Title: Managing Director

28

 

LIST OF EXHIBITS AND SCHEDULES

	 	 	 
	Exhibits
	 	 	 
	Exhibit A

	 	Form of Assignment and Assumption Agreement
	Exhibit B

	 	Form of Bill of Sale

	 	 	 
	Schedules
	 	 	 
	Schedule 2.1(b)

	 	Tooling
	Schedule 2.1(e)

	 	Inventory
	Schedule 2.3(a)(iii)

	 	Assumed Liabilities
	Schedule 2.6

	 	Allocation of Purchase Price
	Schedule 2.7

	 	Designated Contracts
	Schedule 4.7

	 	Required Approvals
	Schedule 4.9

	 	Contracts

 

 

EXHIBIT A

FORM OF

ASSIGNMENT AND ASSUMPTION AGREEMENT

     For good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Fun-4-All Corp. (the “Seller”), does hereby assign, grant,
bargain, sell, convey and transfer to [PURCHASER], (the “Purchaser”), all of
Seller’s right, title and interest to the License and the Contracts listed on
Schedule I attached hereto together with all amendments, waivers, supplements
and other modifications of and to such agreements, contracts, licenses and
other instruments through the date hereof (collectively, the “Designated
Contracts”).

     Capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in that certain Asset Purchase Agreement, dated as of
[                                      ]2004, by and between Seller and Purchaser (the “Purchase
Agreement”).

     Upon the execution and delivery hereof, in consideration of the foregoing
assignment and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Purchaser hereby absolutely and
unconditionally assumes all duties, obligations and liabilities in respect of
the Assumed Liabilities (as such term is defined in Section 2.3(a) of the
Purchase Agreement), including, without limitation the Designated Contracts,
and agrees to be bound by the terms, conditions and covenants thereof, and to
perform all duties and obligations of Seller thereunder.

     This Assignment and Assumption Agreement shall be binding upon the
successors and assigns of the parties.

[Signature Page Follows]

 

 

EXHIBIT A

     Executed this                     day of                                       , 2004.

	 	 	 
	

	 	SELLER
	 
	 	 
	

	 	FUN-4-ALL CORP.
	 
	 	 
	

	 	By:
	

	 	Name:
	

	 	Title:
	 
	 	 
	

	 	PURCHASER
	 
	 	 
	

	 	[PURCHASER]
	 
	 	 
	

	 	By:
	

	 	Name:
	

	 	Title:

 

 

EXHIBIT B

FORM OF

BILL OF SALE

     For good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Fun-4-All Corp. (the “Seller”), does hereby grant,
bargain, transfer, sell, assign, convey and deliver to [PURCHASER], a
                                      corporation (the “Purchaser”), all right, title and interest in and
to the Transferred Assets as such term is defined in the Asset Purchase
Agreement, dated as of [                                      ], 2004 (the “Asset Purchase Agreement”), by
and between Seller and Purchaser. Capitalized terms used but not defined herein
shall have the meanings ascribed to such terms in the Asset Purchase Agreement.

     This Bill of Sale is being executed and delivered by Seller as of the                    
day of                                       , 2004 pursuant to the terms of the Asset Purchase Agreement.

[Signature Page Follows]

 

 

EXHIBIT B

     Executed this                     day of                                       , 2004.

	 	 	 
	

	 	SELLER
	 
	 	 
	

	 	FUN-4-ALL CORP.
	 
	 	 
	

	 	By:
	

	 	Name:
	

	 	Title
	 
	 	 
	

	 	PURCHASER
	 
	 	 
	

	 	CENTRALINK INVESTMENTS LIMITED
	 
	 	 
	

	 	By:
	

	 	Name:
	

	 	Title:

 

 

FUN-4-ALL CORP.:

SCHEDULE Schedule 2.3(a)(iii) — Assumed Liabilities — as of July 14th, 2004

	 	 	 	 	 	 	 	 	 	 	 	 	 
	VENDOR
	 	AMOUNT
	 	PURPOSE

	 	 	Creditors’	 	Seller’s	 	 	 	 
	 	 	Records
	 	Records
	 	 	 	 
	BINNEY & SMITH
	 	 	 	 	 	$	27,262	 	 	Royalty thru July 14th
	 
	TALENTOY
	 	$	717,000	 	 	$	682,802	 	 	Product
	 
	JAM’N LOGISTICS
	 	 	 	 	 	$	110,000	 	 	Warehouseman’s lien
	 
	KIDZCREATION
	 	$	48,000	 	 	$	41,974	 	 	Override due on Collections
	 
	NINE OAKS GROUP
	 	 	 	 	 	$	67,410	 	 	Override due on Collections
	 
	CAS MARKETING
	 	 	 	 	 	$	41,261	 	 	Override due on Collections
	 
	 	 	 	 	 	AND SEE	 	 	 	 
	 
	 	 	 	 	 	ATTACHED	 	 	 	 
	 
	 	 	 	 	 	SCHEDULE	 	 	 	 
	 
	MAINWIND SALES
	 	 	 	 	 	SEE ATTACHED	 	A commission amount will be due for open
	 
	 	 	 	 	 	SCHEDULE	 	orders, provided that Centralink ultimately
	 
	 	 	 	 	 	 	 	 	 	will ship the open orders and  collect on the
	 
	 	 	 	 	 	 	 	 	 	corresponding receivables.
	 
	SALES REPS:

	 	 	 	 	 	SEE ATTACHED	 	A commission amount will be due for open
	BDC OF OHIO — BRIAN COX

	 	 	 	 	 	SCHEDULE	 	orders, provided that Centralink ultimately
	CARROUSEL MARKETING

	 	 	 	 	 	 	 	 	 	will ship the open orders and  collect on the
	DIVERSE MARKETING

	 	 	 	 	 	 	 	 	 	corresponding receivables.
	FRAN
GOLDMAN & ASSOC.
	 	 	 	 	 	 	 	 	 	 	 	 
	JOE
PERFETTI & ASSOC.
	 	 	 	 	 	 	 	 	 	 	 	 
	NESCO SALES
	 	 	 	 	 	 	 	 	 	 	 	 
	S&F ASSOCIATES
	 	 	 	 	 	 	 	 	 	 	 	 
	TOYS PLUS
	 	 	 	 	 	 	 	 	 	 	 	 
	VISION SALES
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	SUBTOTAL (not including attached schedule)
	 	$	765,000	 	 	$	970,709	 	 	 	 	 
	 
	SUBTOTAL (attached schedules)
	 	 	 	 	 	$	170,878	 	 	 	 	 
	 
	TOTAL
	 	$	765,000	 	 	$	1,141,587	 	 	 	 	 

PROFORMA AMOUNT OWED TO

MAINWIND SALES, SALES REPS AND CAS MARKETING

BASED ON CURRENT OPEN ORDERS *

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	MAINWIND	 	SALES	 	CARROUSEL	 	CAS
	CURRENT	 	SALES	 	REPS	 	MARKETING	 	MARKETING
	OPEN ORDER	 	(2.5% on Mass	 	(3% on Non-	 	(5.5% AVG on	 	(1% on
	AMOUNT
	 	Market Sales)
	 	Int’l Sales)
	 	Int’l Sales)
	 	all Sales)

	$2,628,885	 	$	58,697	 	 	$	70,437	 	 	$	15,455	 	 	$	26,289	 

	*	 	Therefore, a commission amount will be due for open orders above,
provided that Centralink ultimately ships the above orders and collects
on the corresponding receivablesEXHIBIT 4.1

                          SECURITIES PURCHASE AGREEMENT

     Securities  Purchase  Agreement dated as of June 4, 2004 (this "AGREEMENT")
by  and  between  The  World  Golf  League,  Inc.,  a Delaware corporation, with
principal  executive  offices  located  at  258  East Altamonte Drive, Altamonte
Springs,  Florida  32701  (the  "COMPANY"),  and  Golden  Gate  Investors,  Inc.
("BUYER").

     WHEREAS,  Buyer  desires  to  purchase  from  the  Company, and the Company
desires to issue and sell to Buyer, upon the terms and subject to the conditions
of  this  Agreement,  the  Convertible Debenture of the Company in the aggregate
principal  amount  of  $250,000  (the  "DEBENTURE");  and

     WHEREAS,  in  conjunction  with  the  Debenture,  the  Company has issued a
Warrant  to  Purchase  Common  Stock  to  the  Buyer (the "WARRANT OR CONVERSION
WARRANT");  and

     WHEREAS,  upon  the  terms  and  subject to the conditions set forth in the
Debenture  and  the  Warrant,  the  Debenture  and  Warrant  are convertible and
exercisable,  respectively,  into  shares  of  the  Company's  Common Stock (the
"COMMON  STOCK");

     NOW,  THEREFORE,  in consideration of the premises and the mutual covenants
contained  herein,  the  parties  hereto,  intending to be legally bound, hereby
agree  as  follows:

     PURCHASE  AND  SALE  OF  DEBENTURE

     TRANSACTION.  Buyer  hereby  agrees  to  purchase from the Company, and the
Company  has  offered  and  hereby  agrees  to  issue  and  sell  to  Buyer in a
transaction exempt from the registration and prospectus delivery requirements of
the  Securities  Act  of 1933, as amended (the "SECURITIES ACT"), the Debenture.

     PURCHASE PRICE; FORM OF PAYMENT. The purchase price for the Debenture to be
purchased  by  Buyer  hereunder  shall  be  $250,000  (the  "PURCHASE  PRICE").
Simultaneously with the execution of this Agreement, Buyer shall pay $150,000 of
the  Purchase  Price  (the  "Initial  Purchase  Price")  by  wire  transfer  of
immediately available funds to the Company. Simultaneously with the execution of
this  Agreement,  the  Company  shall  deliver the Convertible Debenture and the
Conversion  Warrants (which shall have been duly authorized, issued and executed
I/N/O  Buyer  or,  if  the  Company  otherwise  has been notified, I/N/O Buyer's
nominee). Upon notification and verification that the Registration Statement for
the Conversion Shares (as defined below) and the shares of Common Stock issuable
upon  exercise  of  the  Conversion  Warrants  (the  "WARRANT  SHARES") has been
declared  effective  by  the Securities and Exchange Commission, and such shares
can  legally  be  issued  to  Buyer,  Buyer  shall immediately send via wire the
remainder  of  the  Purchase  Price.

     BUYER'S  REPRESENTATIONS  AND  WARRANTIES

     Buyer  represents and warrants to and covenants and agrees with the Company
as  follows:

     Buyer  is  purchasing  the  Debenture  and  the  Common Stock issuable upon
conversion  or  redemption  of  the  Debenture  (the  "CONVERSION  SHARES"  and,
collectively  with  the  Debenture and the Warrant Shares, the "SECURITIES") for
its  own account, for investment purposes only and not with a view towards or in
connection  with  the  public  sale  or distribution thereof in violation of the
Securities  Act.

<PAGE>

     Buyer  is  (i)  an  "accredited investor" within the meaning of Rule 501 of
Regulation D under the Securities Act, (ii) experienced in making investments of
the  kind  contemplated  by  this  Agreement,  (iii)  capable,  by reason of its
business  and  financial experience, of evaluating the relative merits and risks
of  an  investment  in  the  Securities, and (iv) able to afford the loss of its
investment  in  the  Securities.

     Buyer  understands  that  the  Securities are being offered and sold by the
Company  in  reliance  on an exemption from the registration requirements of the
Securities Act and equivalent state securities and "blue sky" laws, and that the
Company  is  relying  upon the accuracy of, and Buyer's compliance with, Buyer's
representations,  warranties  and  covenants  set  forth  in  this  Agreement to
determine  the  availability  of  such exemption and the eligibility of Buyer to
purchase  the  Securities;

     Buyer understands that the Securities have not been approved or disapproved
by  the  Securities  and  Exchange Commission (the "COMMISSION") or any state or
provincial  securities  commission.

     This Agreement has been duly and validly authorized, executed and delivered
by Buyer and is a valid and binding agreement of Buyer enforceable against it in
accordance  with  its  terms,  subject  to  applicable  bankruptcy,  insolvency,
fraudulent  conveyance,  reorganization,  moratorium  and similar laws affecting
creditors'  rights  and remedies generally and except as rights to indemnity and
contribution  may  be  limited by federal or state securities laws or the public
policy  underlying  such  laws.

     THE  COMPANY'S  REPRESENTATIONS

The  Company  represents  and  warrants  to  Buyer  that:

     CAPITALIZATION.

     The  authorized  capital stock of the Company consists of            shares
                                                               ----------
of  Common  Stock  and             shares  of  Series A Preferred Stock of which
                       -----------
            shares  and                 shares,  respectively,  are  issued  and
-----------             ---------------
outstanding  as  of  the  date  hereof and are fully paid and nonassessable. The
amount,  exercise, conversion or subscription price and expiration date for each
outstanding  option and other security or agreement to purchase shares of Common
Stock  is  accurately  set  forth  on  Schedule  III.A.1.
                                       ------------------

     The  Conversion  Shares  and  the Warrant Shares have been duly and validly
authorized  and  reserved  for  issuance by the Company, and, when issued by the
Company upon conversion of the Debenture, will be duly and validly issued, fully
paid  and  nonassessable  and  will  not  subject the holder thereof to personal
liability  by  reason  of  being  such  holder.

     Except  as  disclosed  on  Schedule  III.A.3.,  there  are  no  preemptive,
                                ------------------
subscription,  "call," right of first refusal or other similar rights to acquire
any  capital stock of the Company or other voting securities of the Company that
have  been  issued  or  granted  to  any  person and no other obligations of the
Company  to  issue,  grant,  extend or enter into any security, option, warrant,
"call," right, commitment, agreement, arrangement or undertaking with respect to
any  of  their  respective  capital  stock.

<PAGE>

     ORGANIZATION;  REPORTING  COMPANY  STATUS.

     The  Company  is a corporation duly organized, validly existing and in good
standing under the laws of the state or jurisdiction in which it is incorporated
and is duly qualified as a foreign corporation in all jurisdictions in which the
failure  so  to  qualify would reasonably be expected to have a material adverse
effect  on  the  business,  properties,  prospects,  condition  (financial  or
otherwise) or results of operations of the Company or on the consummation of any
of  the  transactions  contemplated  by  this  Agreement  (a  "MATERIAL  ADVERSE
EFFECT").

     The  Company  is  subject  to  the reporting requirements of the Securities
Exchange  Act  of  1934,  as  amended (the "EXCHANGE ACT").  The Common Stock is
traded  on  the  OTC  Bulletin  Board  service  of  the  National Association of
Securities  Dealers,  Inc. ("OTCBB") and the Company has not received any notice
regarding,  and  to  its  knowledge  there  is  no threat of, the termination or
discontinuance  of  the  eligibility  of  the  Common  Stock  for  such trading.

     AUTHORIZATION. The Company (i) has duly and validly authorized and reserved
for  issuance  shares  of  Common  Stock,  which  is a number sufficient for the
conversion  of the Debenture and the exercise of the Conversion Warrant and (ii)
at  all  times  from and after the date hereof shall have a sufficient number of
shares  of Common Stock duly and validly authorized and reserved for issuance to
satisfy  the  conversion  of  the  Debenture  in  full  and  the exercise of the
Conversion  Warrant.  The  Company  understands and acknowledges the potentially
dilutive effect on the Common Stock of the issuance of the Conversion Shares and
the  Warrant  Shares.  The  Company  further acknowledges that its obligation to
issue Conversion Shares upon conversion of the Debenture and the exercise of the
Conversion  Warrant and the Initial Warrant in accordance with this Agreement is
absolute  and unconditional regardless of the dilutive effect that such issuance
may  have  on  the  ownership interests of other stockholders of the Company and
notwithstanding  the  commencement  of any case under 11 U.S.C. Sec. 101 et seq.
                                                                         ------
(the  "BANKRUPTCY  CODE").  In  the  event  the  Company  is  a debtor under the
Bankruptcy  Code,  the Company hereby waives to the fullest extent permitted any
rights  to  relief  it  may  have  under  11  U.S.C.  Sec. 362 in respect of the
conversion  of  the  Debenture.  The  Company agrees, without cost or expense to
Buyer,  to  take or consent to any and all action necessary to effectuate relief
under  11  U.S.C.  Sec.  362.

     AUTHORITY;  VALIDITY  AND  ENFORCEABILITY.  The  Company  has the requisite
corporate  power  and  authority  to  enter  into the Documents (as such term is
hereinafter  defined)  and  to  perform  all  of  its  obligations hereunder and
thereunder  (including  the  issuance,  sale  and  delivery  to  Buyer  of  the
Securities).  The  execution,  delivery  and  performance  by the Company of the
Documents  and  the consummation by the Company of the transactions contemplated
hereby and thereby (including, without limitation, the issuance of the Debenture
and  the  issuance and reservation for issuance of the Conversion Shares and the
Warrant Shares) have been duly and validly authorized by all necessary corporate
action  on  the  part  of  the Company.  Each of the Documents has been duly and
validly  executed  and  delivered by the Company and each Document constitutes a
valid and binding obligation of the Company enforceable against it in accordance
with  its  terms,  subject  to  applicable  bankruptcy,  insolvency,  fraudulent
conveyance,  reorganization,  moratorium  and  similar laws affecting creditors'
rights and remedies generally and except as rights to indemnity and contribution
may  be  limited  by  federal  or  state  securities  laws  or the public policy
underlying  such laws.  The Securities have been duly and validly authorized for
issuance by the Company and, when executed and delivered by the Company, will be
valid  and  binding  obligations  of  the  Company  enforceable  against  it  in
accordance  with  their  respective  terms,  subject  to  applicable bankruptcy,
insolvency,  fraudulent  conveyance, reorganization, moratorium and similar laws
affecting  creditors'  rights  and  remedies  generally.  For  purposes  of this
Agreement,  the term "DOCUMENTS" means (i) this Agreement; (ii) the Registration
Rights  Agreement  dated as of even date herewith between the Company and Buyer,
(iii)  the  Debenture;  and  (iv)  the  Conversion  Warrant.

<PAGE>

     VALIDITY  OF  ISSUANCE  OF  THE  SECURITIES.  The Debenture, the Conversion
Shares  upon  their  issuance  in accordance with the Debenture, and the Warrant
Shares will be validly issued and outstanding, fully paid and nonassessable, and
not subject to any preemptive rights, rights of first refusal, tag-along rights,
drag-along  rights  or  other  similar  rights.

     NON-CONTRAVENTION.  The  execution  and  delivery  by  the  Company  of the
Documents,  the  issuance of the Securities, and the consummation by the Company
of the other transactions contemplated hereby and thereby do not, and compliance
with  the  provisions  of  this Agreement and other Documents will not, conflict
with, or result in any violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a material benefit under, or result in
the  creation  of any Lien (as such term is hereinafter defined) upon any of the
properties  or assets of the Company or any of its Subsidiaries under, or result
in  the termination of, or require that any consent be obtained or any notice be
given  with  respect  to  (i)  the  Articles  or Certificate of Incorporation or
By-Laws  of the Company or the comparable charter or organizational documents of
any  of its Subsidiaries, in each case as amended to the date of this Agreement,
(ii)  any loan or credit agreement, Debenture, bond, mortgage, indenture, lease,
contract  or  other agreement, instrument or permit applicable to the Company or
any  of  its  Subsidiaries or their respective properties or assets or (iii) any
Law (as such term is hereinafter defined) applicable to, or any judgment, decree
or  order  of any court or government body having jurisdiction over, the Company
or  any  of  its  Subsidiaries  or any of their respective properties or assets.

     APPROVALS.  No authorization, approval or consent of any court or public or
governmental  authority  is  required  to  be  obtained  by  the Company for the
issuance  and sale of the Securities to Buyer as contemplated by this Agreement,
except  such authorizations, approvals and consents as have been obtained by the
Company  prior  to  the  date  hereof.

     COMMISSION  FILINGS.  The  Company  has  properly and timely filed with the
Commission  all reports, proxy statements, forms and other documents required to
be filed with the Commission under the Securities Act and the Exchange Act since
becoming subject to such Acts (the "COMMISSION FILINGS"). As of their respective
dates,  (i)  the  Commission  Filings complied in all material respects with the
requirements  of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the Commission promulgated thereunder applicable to
such Commission Filings and (ii) none of the Commission Filings contained at the
time of its filing 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.  The  financial  statements  of  the  Company  included  in the
Commission Filings, as of the dates of such documents, were true and complete in
all  material  respects and complied with applicable accounting requirements and
the published rules and regulations of the Commission with respect thereto, were
prepared  in  accordance  with  generally  accepted accounting principles in the
United  States ("GAAP") (except in the case of unaudited statements permitted by
Form  10-Q  under  the  Exchange  Act)  applied on a consistent basis during the
periods  involved  (except  as may be indicated in the notes thereto) and fairly
presented  the  consolidated  financial  position  of  the  Company  and  its
Subsidiaries  as  of  the  dates  thereof  and the consolidated results of their
operations  and  cash  flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments that in the aggregate
are  not  material  and  to  any  other  adjustment  described  therein).

<PAGE>

     FULL  DISCLOSURE. There is no fact known to the Company (other than general
economic or industry conditions known to the public generally) that has not been
fully  disclosed in the Commission Filings that (i) reasonably could be expected
to  have  a  Material  Adverse  Effect  or  (ii) reasonably could be expected to
materially  and  adversely  affect  the  ability  of  the Company to perform its
obligations  pursuant  to  the  Documents.

     ABSENCE  OF  EVENTS  OF  DEFAULT.  No "EVENT OF DEFAULT" (as defined in any
agreement  or  instrument  to  which the Company is a party) and no event which,
with  notice, lapse of time or both, would constitute an Event of Default (as so
defined),  has  occurred  and  is  continuing.

     SECURITIES  LAW  MATTERS.  Assuming the accuracy of the representations and
warranties  of  Buyer set forth in Article II, the offer and sale by the Company
of  the  Securities  is exempt from (i) the registration and prospectus delivery
requirements  of  the  Securities  Act  and  the  rules  and  regulations of the
Commission  thereunder and (ii) the registration and/or qualification provisions
of  all  applicable  state  and  provincial securities and "blue sky" laws.  The
Company  shall  not directly or indirectly take, and shall not permit any of its
directors,  officers  or  Affiliates  directly or indirectly to take, any action
(including,  without limitation, any offering or sale to any person or entity of
any security similar to the Debenture) which will make unavailable the exemption
from  Securities Act registration being relied upon by the Company for the offer
and sale to Buyer of the Debenture, the Conversion Shares and the Warrant Shares
as  contemplated  by  this  Agreement.  No  form  of  general  solicitation  or
advertising  has  been used or authorized by the Company or any of its officers,
directors  or  Affiliates  in connection with the offer or sale of the Debenture
(and  the  Conversion  Shares)  as  contemplated  by this Agreement or any other
agreement  to  which  the  Company  is  a  party.

     REGISTRATION  RIGHTS.  Except  as  set  forth on Schedule III.L., no Person
                                                      ---------------
has,  and  as  of  the  Closing (as such term is hereinafter defined), no Person
shall  have,  any  demand,  "piggy-back" or other rights to cause the Company to
file  any registration statement under the Securities Act relating to any of its
securities  or  to  participate  in  any  such  registration  statement.

     INTEREST.  The  timely  payment  of  interest  on  the  Debenture  is  not
prohibited  by  the  Articles  or Certificate of Incorporation or By-Laws of the
Company,  in  each  case  as  amended  to  the  date  of  this Agreement, or any
agreement,  contract,  document  or  other undertaking to which the Company is a
party.

<PAGE>

     NO  MISREPRESENTATION.  No  representation  or  warranty  of  the  Company
contained  in  this Agreement or any of the other Documents, any schedule, annex
or  exhibit  hereto  or  thereto  or  any  agreement,  instrument or certificate
furnished by the Company to Buyer pursuant to this Agreement contains any untrue
statement  of  a  material fact or omits to state a material fact required to be
stated  therein  or  necessary  to  make  the statements therein not misleading.

     FINDER'S  FEE.  There  is  no  finder's  fee,  brokerage commission or like
payment  in  connection with the transactions contemplated by this Agreement for
which  Buyer  is  liable  or  responsible.

     CERTAIN  COVENANTS  AND  ACKNOWLEDGMENTS

     FILINGS.  The Company shall make all necessary Commission Filings and "blue
sky"  filings  required to be made by the Company in connection with the sale of
the  Securities to Buyer as required by all applicable Laws, and shall provide a
copy  thereof  to  Buyer  promptly  after  such  filing.

     REPORTING  STATUS.  So  long  as  Buyer  beneficially  owns  any  of  the
Securities, the Company shall timely file all reports required to be filed by it
with  the  Commission  pursuant  to  Section  13  or  15(d) of the Exchange Act.

     LISTING.  Except  to  the  extent the Company lists its Common Stock on The
New York Stock Exchange, The American Stock Exchange or The Nasdaq Stock Market,
the  Company  shall  use  its best efforts to maintain its listing of the Common
Stock  on  OTCBB.  If  the Common Stock is delisted from OTCBB, the Company will
use  its  best  efforts  to  list  the  Common Stock on the most liquid national
securities exchange or quotation system that the Common Stock is qualified to be
listed  on.

     RESERVED  CONVERSION COMMON STOCK.  The Company at all times from and after
the  date  hereof  shall  have  such  number  of shares of Common Stock duly and
validly  authorized  and  reserved  for  issuance as shall be sufficient for the
conversion  in full of the Debenture and the exercise of the Conversion Warrant.

     INFORMATION.  Each of the parties hereto acknowledges and agrees that Buyer
shall  not  be  provided  with,  nor be given access to, any material non-public
information  relating  to  the  Company.

     ACCOUNTING AND RESERVES.  The Company shall maintain a standard and uniform
system  of  accounting  and  shall keep proper books and records and accounts in
which  full, true, and correct entries shall be made of its transactions, all in
accordance  with GAAP applied on consistent basis through all periods, and shall
set aside on such books for each fiscal year all such reserves for depreciation,
obsolescence,  amortization, bad debts and other purposes in connection with its
operations  as  are  required  by  such  principles  so  applied.

     TRANSACTIONS  WITH  AFFILIATES.  So  long  as the Debenture is outstanding,
neither  the  Company nor any of its Subsidiaries shall, directly or indirectly,
enter  into any material transaction or agreement with any stockholder, officer,
director  or  Affiliate of the Company or family member of any officer, director
or Affiliate of the Company, unless the transaction or agreement is (i) reviewed
and  approved  by  a  majority  of  Disinterested  Directors  (as  such  term is
hereinafter  defined)  and (ii) on terms no less favorable to the Company or the
applicable  Subsidiary  than  those  obtainable  from a nonaffiliated person.  A
"DISINTERESTED DIRECTOR" shall mean a director of the Company who is not and has
not  been  an  officer or employee of the Company and who is not a member of the
family  of,  controlled  by  or  under  common control with, any such officer or
employee.

<PAGE>

     CERTAIN  RESTRICTIONS.  So  long  as  the  Debenture  is  outstanding,  no
dividends shall be declared or paid or set apart for payment nor shall any other
distribution  be  declared  or  made  upon any capital stock of the Company, nor
shall  any  capital  stock  of  the  Company be redeemed, purchased or otherwise
acquired  (other  than  a redemption, purchase or other acquisition of shares of
Common  Stock  made  for  purposes  of  an  employee  incentive  or benefit plan
(including  a  stock  option  plan)  of  the  Company  or pursuant to any of the
security  agreements  listed  on  Schedule  III.A,  for any consideration by the
                                  ---------------
Company,  directly  or  indirectly,  nor  shall  any  moneys  be paid to or made
available  for a sinking fund for the redemption of any Common Stock of any such
stock.

     I.     SHORT  SELLING.       So long as the Debenture is outstanding, Buyer
agrees  and covenants on its behalf and on behalf of its affiliates that neither
Buyer  nor  its  affiliates  shall  at  any  time engage in any short sales with
respect  to  the  Company's  Common  Stock,  or  sell  put  options  or  similar
instruments  with  respect  to  the  Company's  Common  Stock.

     ISSUANCE  OF  COMMON  STOCK

     The  Company  undertakes  and  agrees  that  no  instruction other than the
instructions  referred  to  in  this  Article  V  and  customary  stop  transfer
instructions  prior to the registration and sale of the Common Stock pursuant to
an  effective  Securities  Act  registration  statement  shall  be  given to its
transfer  agent  for  the  Conversion Shares and the Warrant Shares and that the
Conversion  Shares and the Warrant Shares shall otherwise be freely transferable
on  the  books  and records of the Company as and to the extent provided in this
Agreement,  the  Registration  Rights  Agreement  and  applicable  law.  Nothing
contained  in  this Section V.A. shall affect in any way Buyer's obligations and
agreement  to  comply  with  all  applicable securities laws upon resale of such
Common  Stock.

     Buyer  shall  have  the  right  to  convert  the Debenture and exercise the
Warrant by telecopying an executed and completed Conversion Notice (as such term
is  defined  in  the  Debenture)  or Warrant Notice of Exercise (as such term is
defined  in the Warrant) to the Company.  Each date on which a Conversion Notice
or  Warrant  Notice  of Exercise is telecopied to and received by the Company in
accordance with the provisions hereof shall be deemed a Conversion Date (as such
term  is  defined in the Debenture).  The Company shall cause the transfer agent
to  transmit  the  certificates  evidencing  the  Common  Stock  issuable  upon
conversion of the Debenture (together with a new debenture, if any, representing
the principal amount of the Debenture not being so converted) or exercise of the
Warrant  (together  with  a  new Warrant, if any, representing the amount of the
Warrant  not  being  so  exercised)  to  Buyer  via  express  courier,  or  if a
Registration  Statement covering the Common Stock has been declared effective by
the  SEC by electronic transfer, within three (3) business days after receipt by
the  Company  of  the  Conversion  Notice  or  Warrant  Notice  of Exercise (the
"DELIVERY  DATE").

<PAGE>

     Upon  the  conversion  of  the Debenture or exercise of the Warrant or part
thereof,  the  Company  shall,  at  its own cost and expense, take all necessary
action  (including  the  issuance  of  an opinion of counsel) to assure that the
Company's transfer agent shall issue stock certificates in the name of Buyer (or
its  nominee)  or  such  other  persons  as  designated  by  Buyer  and  in such
denominations to be specified at conversion representing the number of shares of
common  stock  issuable  upon  such conversion or exercise. The Company warrants
that  the Conversion Shares and Warrant Shares will be unlegended, free-trading,
and freely transferable, and will not contain a legend restricting the resale or
transferability  of  the Company Common Stock provided the Conversion Shares and
Warrant  Shares  are  being sold pursuant to an effective registration statement
covering  the  Common  Stock to be sold or is otherwise exempt from registration
when  sold.

     The Company understands that a delay in the delivery of the Common Stock in
the  form  required pursuant to this section, or the Mandatory Redemption Amount
described  in Section E hereof, beyond the Delivery Date or Mandatory Redemption
Payment  Date  (as  hereinafter  defined)  could  result in economic loss to the
Buyer.  As  compensation  to  the Buyer for such loss, the Company agrees to pay
late  payments  to  the  Buyer  for  late  issuance  of Common Stock in the form
required  pursuant  to Section C hereof upon Conversion of the Debenture or late
payment  of  the Mandatory Redemption Amount, in the amount of $100 per business
day  after  the  Delivery Date or Mandatory Redemption Payment Date, as the case
may  be,  for  each  $10,000  of  Debenture  principal amount being converted or
redeemed.  The  Company  shall  pay  any payments incurred under this Section in
immediately  available  funds upon demand. Furthermore, in addition to any other
remedies  which  may  be  available  to the Buyer, in the event that the Company
fails for any reason to effect delivery of the Common Stock by the Delivery Date
or  make  payment  by  the  Mandatory Redemption Payment Date, the Buyer will be
entitled  to  revoke all or part of the relevant Notice of Conversion or rescind
all  or  part  of  the notice of Mandatory Redemption by delivery of a notice to
such  effect  to  the  Company whereupon the Company and the Buyer shall each be
restored to their respective positions immediately prior to the delivery of such
notice,  except  that  late  payment  charges  described  above shall be payable
through  the  date  notice  of revocation or rescission is given to the Company.

     Mandatory  Redemption.  In the event the Company is prohibited from issuing
Common  Stock,  or  fails  to timely deliver Common Stock on a Delivery Date, or
upon  the occurrence of an Event of Default (as defined in the Debenture) or for
any  reason other than pursuant to the limitations set forth herein, or upon the
occurrence  of  an  Event  of  Default  as defined in the Debenture, then at the
Buyer's election, the Company must pay to the Buyer ten (10) business days after
request  by  the Buyer or on the Delivery Date (if requested by the Buyer) a sum
of money determined by multiplying up to the outstanding principal amount of the
Debenture  designated  by  the  Buyer  by 130%, together with accrued but unpaid
interest  thereon  ("Mandatory  Redemption  Payment").  The Mandatory Redemption
Payment  must  be  received  by the Buyer on the same date as the Company Common
Stock  otherwise  deliverable  or  within  ten (10) business days after request,
whichever  is  sooner ("Mandatory Redemption Payment Date"). Upon receipt of the
Mandatory Redemption Payment, the corresponding Debenture principal and interest
will  be  deemed  paid  and  no  longer  outstanding.

<PAGE>

     F.      Buy-In.  In addition to any other rights available to the Buyer, if
the  Company  fails  to  deliver  to  the  Buyer such Common Stock issuable upon
conversion  of  a Debenture or exercise of a Warrant by the Delivery Date and if
ten  (10)  days  after  the Delivery Date the Buyer purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by the Buyer of the Common Stock which the Buyer anticipated receiving upon
such  conversion  (a  "Buy-In"), then the Company shall pay in cash to the Buyer
(in addition to any remedies available to or elected by the Buyer) the amount by
which  (A) the Buyer's total purchase price (including brokerage commissions, if
any)  for  the  shares  of  Common  Stock so purchased exceeds (B) the aggregate
principal  and/or  interest  amount  of  the Debenture or Warrant for which such
conversion or exercise was not timely honored, together with interest thereon at
a  rate  of  15%  per annum, accruing until such amount and any accrued interest
thereon  is  paid  in full (which amount shall be paid as liquidated damages and
not  as  a  penalty). For example, if the Buyer purchases shares of Common Stock
having  a  total  purchase price of $11,000 to cover a Buy-In with respect to an
attempted  conversion  of  $10,000  of  Debenture  or  Warrant  principal and/or
interest,  the Company shall be required to pay the Buyer $1,000, plus interest.
The  Buyer  shall  provide  the  Company  written  notice indicating the amounts
payable  to  the  Buyer  in  respect  of  the  Buy-In.

     G.     The  Securities  shall  be  delivered  by  the  Company to the Buyer
pursuant  to  Section  I.B.  hereof on a "delivery-against-payment basis" at the
Closing.

     CLOSING  DATE

     The  Closing  shall  occur  by  the  delivery:  (i)  to  the  Buyer  of the
certificate  evidencing  the Debenture and all other Agreements, and (ii) to the
Company  the  Purchase  Price.

     CONDITIONS  TO  THE  COMPANY'S  OBLIGATIONS

     Buyer  understands  that  the Company's obligation to sell the Debenture on
the  Closing  Date  to  Buyer  pursuant  to  this Agreement is conditioned upon:

     Delivery  by  Buyer  to  the  Company  of  the  Initial  Purchase  Price;

     The  accuracy  on the Closing Date of the representations and warranties of
Buyer  contained  in  this  Agreement as if made on the Closing Date (except for
representations  and  warranties  which, by their express terms, speak as of and
relate  to a specified date, in which case such accuracy shall be measured as of
such specified date) and the performance by Buyer in all material respects on or
before  the Closing Date of all covenants and agreements of Buyer required to be
performed  by  it  pursuant to this Agreement on or before the Closing Date; and

     There  shall not be in effect any Law or order, ruling, judgment or writ of
any  court  or  public  or  governmental  authority  restraining,  enjoining  or
otherwise  prohibiting  any  of the transactions contemplated by this Agreement.

     CONDITIONS  TO  BUYER'S  OBLIGATIONS

     The  Company understands that Buyer's obligation to purchase the Securities
on  the  Closing  Date  pursuant  to  this  Agreement  is  conditioned  upon:

<PAGE>

     Delivery  by  the  Company of the Debenture, the Conversion Warrant and the
other  Agreements  (I/N/O  Buyer  or  I/N/O  Buyer's  nominee);

     The  accuracy  on the Closing Date of the representations and warranties of
the  Company  contained in this Agreement as if made on the Closing Date (except
for  representations  and  warranties which, by their express terms, speak as of
and relate to a specified date, in which case such accuracy shall be measured as
of such specified date) and the performance by the Company in all respects on or
before  the Closing Date of all covenants and agreements of the Company required
to  be performed by it pursuant to this Agreement on or before the Closing Date,
all  of  which shall be confirmed to Buyer by delivery of the certificate of the
chief  executive  officer  of  the  Company  to  that  effect;

     There  not  having  occurred  (i)  any general suspension of trading in, or
limitation  on prices listed for, the Common Stock on the OTCBB/Pink Sheet, (ii)
the declaration of a banking moratorium or any suspension of payments in respect
of  banks  in  the  United  States,  (iii)  the  commencement  of  a  war, armed
hostilities  or  other international or national calamity directly or indirectly
involving  the  United  States  or  any  of  its  territories,  protectorates or
possessions  or  (iv)  in the case of the foregoing existing at the date of this
Agreement,  a  material  acceleration  or  worsening  thereof;

     There  not  having  occurred  any  event or development, and there being in
existence  no condition, having or which reasonably and foreseeably could have a
Material  Adverse  Effect;

     The  Company  shall  have  delivered  to  Buyer  reimbursement  of  Buyer's
reasonable  out-of-pocket  costs  and  expenses  incurred in connection with the
transactions  contemplated  by  this  Agreement;

     There  shall  not  be in effect any Law, order, ruling, judgment or writ of
any  court  or  public  or  governmental  authority  restraining,  enjoining  or
otherwise  prohibiting  any  of the transactions contemplated by this Agreement;

     G.     The  Company  shall have obtained all consents, approvals or waivers
from  governmental  authorities  and  third persons necessary for the execution,
delivery  and  performance  of  the  Documents and the transactions contemplated
thereby,  all  without  material  cost  to  the  Company;

     H.     Buyer  shall  have received such additional documents, certificates,
payment,  assignments, transfers and other deliveries as it or its legal counsel
may  reasonably  request and as are customary to effect a closing of the matters
herein  contemplated;

     I.     Delivery by the Company of an enforceability opinion from its
outside counsel in form and substance satisfactory to Buyer;

     J.     Reimbursement  of  Buyer's  legal  fees  in  the  amount  of $5,000.

<PAGE>

     SURVIVAL;  INDEMNIFICATION

     The  representations,  warranties and covenants made by each of the Company
and  Buyer  in this Agreement, the annexes, schedules and exhibits hereto and in
each  instrument,  agreement  and certificate entered into and delivered by them
pursuant to this Agreement shall survive the Closing and the consummation of the
transactions  contemplated  hereby. In the event of a breach or violation of any
of  such  representations,  warranties  or  covenants,  the  party  to whom such
representations,  warranties  or  covenants have been made shall have all rights
and  remedies  for such breach or violation available to it under the provisions
of this Agreement or otherwise, whether at law or in equity, irrespective of any
investigation  made  by  or  on  behalf of such party on or prior to the Closing
Date.

     The  Company  hereby  agrees  to  indemnify  and  hold  harmless Buyer, its
affiliates  and  their  respective  officers,  directors,  partners  and members
(collectively,  the  "BUYER  INDEMNITEES")  from and against any and all losses,
claims,  damages,  judgments,  penalties,  liabilities  and  deficiencies
(collectively,  "LOSSES")  and  agrees  to  reimburse  Buyer Indemnitees for all
out-of-pocket  expenses  (including  the fees and expenses of legal counsel), in
each  case  promptly  as incurred by Buyer Indemnitees and to the extent arising
out  of  or  in  connection  with:

          any  misrepresentation,  omission  of  fact  or  breach  of any of the
     Company's  representations or warranties contained in this Agreement or the
     other Documents, or the annexes, schedules or exhibits hereto or thereto or
     any  instrument,  agreement or certificate entered into or delivered by the
     Company  pursuant  to  this  Agreement  or  the  other  Documents;

          any  failure  by  the  Company  to  perform  any  of  its  covenants,
     agreements,  undertakings or obligations set forth in this Agreement or the
     other Documents or any instrument, certificate or agreement entered into or
     delivered by the Company pursuant to this Agreement or the other Documents;

          the  purchase  of  the Debenture, the conversion of the Debenture, the
     payment  of  interest on the Debenture, the issuance of the Warrant Shares,
     the consummation of the transactions contemplated by this Agreement and the
     other  Documents,  the  use of any of the proceeds of the Purchase Price by
     the Company, the purchase or ownership of any or all of the Securities, the
     performance by the parties hereto of their respective obligations hereunder
     and  under  the  Documents  or  any  claim,  litigation,  investigation,
     proceedings  or  governmental  action  relating  to  any  of the foregoing,
     whether  or  not  Buyer  is  a  party  thereto;  or

          resales of the Common Stock by Buyer in the manner and as contemplated
     by  this  Agreement  and  the  Registration  Rights  Agreement.

<PAGE>

     Buyer  hereby  agrees  to  indemnify  and  hold  harmless  the Company, its
Affiliates  and  their  respective  officers,  directors,  partners  and members
(collectively,  the  "COMPANY INDEMNITEES") from and against any and all Losses,
and  agrees  to reimburse the Company Indemnitees for all out-of-pocket expenses
(including  the  fees  and  expenses of legal counsel), in each case promptly as
incurred  by  the  Company  Indemnitees  and  to the extent arising out of or in
connection  with:

          any  misrepresentation,  omission  of fact or breach of any of Buyer's
     representations  or  warranties  contained  in  this Agreement or the other
     Documents,  or  the annexes, schedules or exhibits hereto or thereto or any
     instrument,  agreement  or  certificate  entered into or delivered by Buyer
     pursuant  to  this  Agreement  or  the  other  Documents;  or

          any  failure  by  Buyer  to perform in any material respect any of its
     covenants,  agreements,  undertakings  or  obligations  set  forth  in this
     Agreement  or  the  other  Documents  or  any  instrument,  certificate  or
     agreement  entered into or delivered by Buyer pursuant to this Agreement or
     the  other  Documents.

     Promptly  after  receipt  by  either  party  hereto seeking indemnification
pursuant  to  this  Article  0 (an "INDEMNIFIED PARTY") of written notice of any
investigation,  claim,  proceeding  or  other  action  in  respect  of  which
indemnification  is  being  sought  (each,  a  "CLAIM"),  the  Indemnified Party
promptly  shall  notify  the party against whom indemnification pursuant to this
Article  0  is  being  sought  (the  "INDEMNIFYING  PARTY")  of the commencement
thereof,  but the omission so to notify the Indemnifying Party shall not relieve
it from any liability that it otherwise may have to the Indemnified Party except
to  the extent that the Indemnifying Party is materially prejudiced and forfeits
substantive rights or defenses by reason of such failure. In connection with any
Claim  as  to  which  both  the Indemnifying Party and the Indemnified Party are
parties, the Indemnifying Party shall be entitled to assume the defense thereof.
Notwithstanding  the  assumption of the defense of any Claim by the Indemnifying
Party,  the  Indemnified  Party  shall  have  the right to employ separate legal
counsel  and  to  participate in the defense of such Claim, and the Indemnifying
Party  shall  bear the reasonable fees, out-of-pocket costs and expenses of such
separate  legal  counsel  to  the  Indemnified  Party  if (and only if): (x) the
Indemnifying  Party  shall have agreed to pay such fees, out-of-pocket costs and
expenses,  (y) the Indemnified Party and the Indemnifying Party reasonably shall
have concluded that representation of the Indemnified Party and the Indemnifying
Party  by  the  same legal counsel would not be appropriate due to actual or, as
reasonably  determined  by  legal  counsel to the Indemnified Party, potentially
differing  interests  between such parties in the conduct of the defense of such
Claim, or if there may be legal defenses available to the Indemnified Party that
are  in  addition to or disparate from those available to the Indemnifying Party
or  (z)  the  Indemnifying  Party  shall  have  failed  to  employ legal counsel
reasonably  satisfactory  to the Indemnified Party within a reasonable period of
time  after  notice  of the commencement of such Claim. If the Indemnified Party
employs  separate  legal  counsel  in  circumstances  other than as described in
clauses  (x),  (y)  or  (z)  above,  the  fees, costs and expenses of such legal
counsel  shall be borne exclusively by the Indemnified Party. Except as provided
above,  the  Indemnifying  Party  shall not, in connection with any Claim in the
same  jurisdiction, be liable for the fees and expenses of more than one firm of
legal  counsel  for  the  Indemnified  Party  (together  with  appropriate local
counsel). The Indemnifying Party shall not, without the prior written consent of
the Indemnified Party (which consent shall not unreasonably be withheld), settle
or  compromise  any  Claim or consent to the entry of any judgment that does not
include  an  unconditional release of the Indemnified Party from all liabilities
with  respect  to  such  Claim  or  judgment.

<PAGE>

     In  the  event  one party hereunder should have a claim for indemnification
that  does  not  involve  a claim or demand being asserted by a third party, the
Indemnified  Party  promptly  shall  deliver  notice  of  such  claim  to  the
Indemnifying  Party.  If  the Indemnified Party disputes the claim, such dispute
shall  be  resolved  by  mutual  agreement  of  the  Indemnified  Party  and the
Indemnifying  Party  or  by binding arbitration conducted in accordance with the
procedures and rules of the American Arbitration Association.  Judgment upon any
award  rendered  by any arbitrators may be entered in any court having competent
jurisdiction  thereof.

     GOVERNING  LAW

     This  Agreement shall be governed by and interpreted in accordance with the
laws  of  the  State  of  California,  without  regard  to  the conflicts of law
principles  of  such  state.

     SUBMISSION  TO  JURISDICTION

     Each  of  the  parties hereto consents to the exclusive jurisdiction of the
federal  courts  whose  districts encompass any part of the City of San Diego or
the  state courts of the State of California sitting in the City of San Diego in
connection  with  any  dispute  arising  under  this  Agreement  and  the  other
Documents.  Each  party hereto hereby irrevocably and unconditionally waives, to
the  fullest  extent  it  may  effectively do so, any defense of an inconvenient
forum  or  improper venue to the maintenance of such action or proceeding in any
such court and any right of jurisdiction on account of its place of residence or
domicile.  Each  party  hereto  irrevocably  and unconditionally consents to the
service  of  any and all process in any such action or proceeding in such courts
by the mailing of copies of such process by registered or certified mail (return
receipt  requested),  postage prepaid, at its address specified in Article XVII.
Each  party hereto agrees that a final judgment in any such action or proceeding
shall  be  conclusive  and may be enforced in other jurisdictions by suit on the
judgment  or  in  any  other  manner  provided  by  law.

     WAIVER  OF  JURY  TRIAL

     TO  THE  FULLEST EXTENT PERMITTED BY LAW, EACH OF THE PARTIES HERETO HEREBY
KNOWINGLY,  VOLUNTARILY AND INTENTIONALLY WAIVES ITS RESPECTIVE RIGHTS TO A JURY
TRIAL  OF  ANY  CLAIM  OR  CAUSE  OF  ACTION  BASED  UPON OR ARISING OUT OF THIS
AGREEMENT  OR  ANY  OTHER  DOCUMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE
SUBJECT  MATTER  OF  THIS  AGREEMENT AND OTHER DOCUMENTS.  EACH PARTY HERETO (I)
CERTIFIES  THAT NEITHER OF THEIR RESPECTIVE REPRESENTATIVES, AGENTS OR ATTORNEYS
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT
OF  LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (II) ACKNOWLEDGES THAT
IT  HAS  BEEN  INDUCED  TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL  WAIVERS  AND  CERTIFICATIONS  HEREIN.

<PAGE>

     COUNTERPARTS;  EXECUTION

     This  Agreement  may  be  executed  in  counterparts, each of which when so
executed  and  delivered  shall  be  an original, but both of which counterparts
shall together constitute one and the same instrument.  A facsimile transmission
of  this  signed  Agreement  shall  be legal and binding on both parties hereto.

     HEADINGS

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

     SEVERABILITY

     In  the event any one or more of the provisions contained in this Agreement
or  in  the  other Documents should be held invalid, illegal or unenforceable in
any  respect,  the  validity,  legality  and  enforceability  of  the  remaining
provisions  contained  herein  or  therein  shall  not in any way be affected or
impaired  thereby.  The  parties  shall  endeavor  in good-faith negotiations to
replace  the invalid, illegal or unenforceable provisions with valid provisions,
the  economic effect of which comes as close as possible to that of the invalid,
illegal  or  unenforceable  provisions.

     ENTIRE  AGREEMENT;  REMEDIES,  AMENDMENTS  AND  WAIVERS

     This  Agreement  and  the Documents constitute the entire agreement between
the  parties  hereto  pertaining  to the subject matter hereof and supersede all
prior  agreements, understandings, negotiations and discussions, whether oral or
written,  of  such  parties.  No  supplement,  modification  or  waiver  of this
Agreement  shall  be  binding  unless  executed  in writing by both parties.  No
waiver  of  any  of  the  provisions  of this Agreement shall be deemed or shall
constitute  a waiver of any other provision hereof (whether or not similar), nor
shall  such  waiver  constitute  a  continuing waiver unless otherwise expressly
provided.

<PAGE>

     NOTICES

     Except  as  may  be  otherwise  provided  herein,  any  notice  or  other
communication  or  delivery  required or permitted hereunder shall be in writing
and  shall  be  delivered  personally,  or  sent  by  telecopier machine or by a
nationally  recognized overnight courier service, and shall be deemed given when
so  delivered  personally, or by telecopier machine or overnight courier service
as  follows:

if  to  the  Company,  to:

The  World  Golf  League,  Inc.
258  East  Altamonte  Drive
Altamonte  Springs,  FL  32701
Telephone:     407-331-6272
Facsimile:     407-331-6271

if  to  Buyer,  to:
Golden Gate Investors, Inc.
7817 Herschel Avenue, Suite 200
La Jolla, California 92037
Telephone:     858-551-8789
Facsimile:     858-551-8779

The  Company  or Buyer may change the foregoing address by notice given pursuant
to  this  Article  XVII.

     CONFIDENTIALITY

     Each  of  the  Company  and  Buyer  agrees  to keep confidential and not to
disclose  to  or  use  for  the  benefit  of  any  third party the terms of this
Agreement  or  any  other  information  which at any time is communicated by the
other  party  as  being  confidential  without the prior written approval of the
other  party;  provide,  however,  that  this  provision  shall  not  apply  to
information  which,  at  the  time  of disclosure, is already part of the public
domain (except by breach of this Agreement) and information which is required to
be  disclosed by law (including, without limitation, pursuant to Item 601(b)(10)
of  Regulation  S-K  under  the  Securities  Act  and  the  Exchange  Act).

     ASSIGNMENT

     This  Agreement  shall  not  be  assignable by either of the parties hereto
prior  to  the Closing without the prior written consent of the other party, and
any  attempted  assignment  contrary  to the provisions hereby shall be null and
void;  provided,  however,  that  Buyer  may  assign  its rights and obligations
hereunder,  in  whole  or  in  part,  to  any  affiliate  of  Buyer.

IN  WITNESS  WHEREOF,  the  parties hereto have duly caused this Agreement to be
executed  and  delivered  on  the  date  first  above  written.

The World Golf League, Inc.                   Golden Gate Investors, Inc.

By: /s/ MICHAEL S. PAGNANO                    By: /s/ TRAVIS WILLIAM HUFF
    ----------------------                        -----------------------

Title: President and CEO                      Title:
                                                    ---------------------

<PAGE>

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