ASSET PURCHASE AGREEMENT

Exhibit 2.1

ASSET PURCHASE AGREEMENT

Relating to Certain Assets

of

McARTHUR TOWEL AND SPORTS, INC.
an Arizona Corporation

ii

SCHEDULES

iv

ASSET PURCHASE AGREEMENT

      AGREEMENT (“Agreement”) made and entered into this ___day of September, 2005, by and among McARTHUR PROPERTIES, LLC, a Wisconsin limited liability company (“Buyer”), and McARTHUR TOWEL AND SPORTS, INC., an Arizona corporation (“Company”).

RECITALS

     A. Company operates a business under the name of McARTHUR TOWEL AND SPORTS (the “Business”).

     B. Buyer desires to buy, and Company desires to sell, certain assets owned by Company and used in the Business.

      NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants, agreements and conditions hereinafter set forth, and intending to be legally bound hereby, the parties hereto agree as follows:

1. PURCHASE AND SALE OF ASSETS.

     1.1 Assets to be Transferred . Subject to the terms and conditions of this Agreement, on the Closing Date (as defined below), Company hereby sells, transfers, conveys, assigns and delivers to Buyer, and Buyer hereby purchases and accepts from Company, the following assets of the Company used in the operation of the Business (collectively the “Purchased Assets”):

          (a) Inventory . All inventories identified by class as follows:

Class A (green class)
Class A2 (black class)
Class B (blue class)
Class C (red class)

          (b) Accounts Receivable . All accounts receivable outstanding as of the Closing Date and identified on Schedule 1.1(b) of the Disclosure Schedule .

          (c) Prepaid Expenses . The following prepaid expenses outstanding as of the Closing Date and identified on Schedule 1.1(c) of the Disclosure Schedule :

Prepaid trade show expenses and deposits.
Prepaid software maintenance expense.
Prepaid NFL Co-Op fees.
Prepaid NBA properties licensing/royalty fees.
Prepaid Ohio State University licensing/royalties fees.
Prepaid CLC licensing/royalties fees.

          (d) Fixed Assets . All machinery, equipment, office furniture, fixtures, computer equipment and software identified on Schedule 1.1(d) of the Disclosure Schedule.

          (e) Records and Files . All records, files, invoices, customer lists, sales literature, promotional literature, catalogs and similar materials used in the operation of the Business.

          (f) Unemployment History . To the extent transferable, the unemployment compensation experience of the Company.

          (g) Contracts . All contracts, leases, purchase orders and sales orders of Company relating to the Business, as listed on Schedule 1.1(g) of the Disclosure Schedule (the “Contracts”), including without limitation, the professional sports licensing agreements listed thereon (the “Professional Sports Licensing Agreements”). To the extent that any contract for which assignment to Buyer is provided herein is not assignable without the consent of another party, this Agreement shall not constitute an assignment or an attempted assignment thereof if such assignment or attempted assignment would constitute a breach thereof.

          (h) Other Assets . Miscellaneous business assets related to the operation of the Business, including trade names, business phone numbers, web sites, domain names and email addresses, all as listed on Schedule 1.1(h) of the Disclosure Schedule hereto.

     1.2 Excluded Assets . The provisions of Section 1.1 notwithstanding, Company is not selling, and Buyer is not purchasing, any assets of Company other than those specified in Section 1.1 and/or listed on the Schedules to Section 1.1. All assets of Company that are not specifically identified as Purchased Assets in Section 1.1 shall be referred to herein as “Excluded Assets,” and include, without limitation, the following:

          (a) Consideration and Rights . The consideration delivered by Buyer to Company pursuant to this Agreement, together with all rights of Company under this Agreement.

          (b) Tax Credits . Any and all federal, state and local income and franchise tax credits and tax refund claims of Company.

          (c) Corporate Franchise and Record Books . Company’s franchise to be a corporation, its certificate of incorporation, corporate name, corporate seal, stock books, minute books and other corporate records having exclusively to do with the corporate organization and capitalization of Company, a copy of Company’s general ledger and originals of Company’s invoices, sales records, and other material business records; provided, that Buyer and its designated agents shall have reasonable access to such books and records and may make excerpts therefrom and copies thereof.

          (d) Tax Records . Company’s income and franchise tax returns and tax records; provided, that Buyer and its designated agents shall have reasonable access to such books and records and may make excerpts therefrom and copies thereof.

          (e) Cash and Cash Equivalents . All cash and cash equivalents of Company as of the Closing.

2. ASSUMPTION OF LIABILITIES; EXCLUDED LIABILITIES.

     2.1 Assumed Liabilities . Subject to Section 2.2 below, upon the sale and purchase of the Purchased Assets, Buyer hereby assumes and agrees to pay or discharge when due or perform in accordance with their respective terms only the following liabilities of Company and no other liabilities (collectively, the “Assumed Liabilities”):

          (a) Current Liabilities . All of the following liabilities or obligations of Company:

               (i) Accrued vendor trade payables (accrued purchase order liabilities), as set forth on Schedule 2.1(a)(i) of the Disclosure Schedule ;

               (ii) Accrued royalty fees or guarantees under the Professional Sports Licensing Agreements, as set forth on Schedule 2.1(a)(ii) of the Disclosure Schedule ;

               (iii) Accrued real and personal property taxes, as set forth on Schedule 2.1(a)(iii) of the Disclosure Schedule ;

               (iv) Accrued freight expenses, as set forth on Schedule 2.1(a)(iv) of the Disclosure Schedule ; and

               (v) Other accrued expenses, as set forth on Schedule 2.1(a)(v) of the Disclosure Schedule .

          (b) Liabilities Under Contracts . All of the liabilities or obligations for payment or performance arising after the Closing Date under the Contracts.

     2.2 Excluded Liabilities . Except for the Assumed Liabilities, Buyer shall not assume any liabilities of Company, including, without limitation, any liabilities of Company for unpaid royalties or guarantees incurred prior to the Closing Date under any of the Professional Sports Licensing Agreements that are not set forth on Schedule 2.1(a)(ii) of the Disclosure Schedule (all liabilities of Company, other than the Assumed Liabilities, are referred to herein as the “Excluded Liabilities”). All of such Excluded Liabilities (including, without limitation, any such liabilities relating to taxes, employee compensation, pension, profit-sharing, vacation pay, health insurance, disability insurance or other employee benefits programs, worker’s compensation, breach or negligent performance of any contract, or breach of warranty relating thereto, liabilities resulting from breach of contract, torts, illegal activity, unlawful employment or business practice or any other liability or obligation whatsoever) shall remain the responsibility of Company.

3. PURCHASE PRICE AND PAYMENT.

     3.1 Calculation of Purchase Price . In consideration of the sale by Company to Buyer of the Purchased Assets, and upon the assumption by Buyer of the Assumed Liabilities, Buyer shall pay to Company an amount equal to the sum of the amounts specified in Sections 3.1(a)-(c) below, less the sum of the Assumed Liabilities specified in described in Section 2.1(a) above

(collectively, the “Purchase Price”). An example calculation of the Purchase Price is set forth on Appendix A hereto.

          (a) For the Purchased Assets described in Section 1.1(a), the sum of the verified amounts thereof, as follows:

For purposes of the foregoing, the term “Book Value” shall mean the book value of the foregoing Purchased Assets as reflected on Company’s balance sheet as of July 31, 2005 (the “July Balance Sheet”), as previously provided to Buyer and included as Schedule 3.1(a) of the Disclosure Schedule .

          (b) For the accounts receivable described in Section 1.1(b) (the “Accounts Receivable”), 96% of the total face value of such Accounts Receivable as reflected on the July Balance Sheet (the “AR Purchase Price”).

          (c) For the prepaid amounts described in Section 1.1(c), 100% of the total amount thereof as reflected on the July Balance Sheet.

          (d) For the assets described in Sections 1.1(d), 1.1(e), 1.1(f), 1.1(g) and 1.1(h), there is to be no charge or consideration.

     3.2 Payment of Purchase Price . Subject to Section 3.4 below, Buyer shall pay to Company the Purchase Price less the Holdback Amount (as defined below) by wire transfer of immediately funds to an account designated in writing by Company.

     3.3 Holdback Amount; Disbursement . Buyer shall withhold the sum of $250,000 (the “Holdback Amount”) from the Purchase Price for a period of one hundred eighty (180) days following the Closing Date (the “Holdback Period”), which Holdback Amount shall secure the collection of the Accounts Receivable and Company’s indemnification obligations under Section 10 below.

          (a) With respect to the Accounts Receivable, (i) if, as of the date which is one hundred twenty (120) days following the Closing Date (the “AR Determination Date”) the AR Purchase Price paid by Buyer at the Closing less the amount collected by Buyer with respect to the Accounts Receivable delivered by Company to Buyer at the Closing is equal to or greater than $50,000, then Buyer shall (A) provide Company with written notice of the Accounts Receivable that remain uncollected at such date together with a description of Buyer’s efforts to collect such Accounts Receivable during the period from the Closing Date to the AR Determination Date, and (B) thereafter, Buyer shall be entitled to offset the amount of such difference against the Holdback Amount, or (ii) if, as of the date which is one hundred twenty (120) days following the Closing Date, the AR Purchase Price paid by Buyer at the Closing less the amount collected by Buyer with respect to the Accounts Receivable delivered by Company to Buyer at the Closing is less than $50,000, then Buyer shall not be entitled to any portion of the

Holdback Amount under this Section 3.3. In either case, Buyer shall promptly transfer to Company any Accounts Receivable that have not been collected by Buyer prior to the AR Determination Date and with respect to which Buyer has made or seeks to make an offset against the Holdback Amount.

          (b) The Holdback Amount, less any portion of the Holdback Amount retained by Buyer under Section 3.3(a) above, and less any amounts subject to written claims for indemnification made by Buyer prior to the Expiration Date under Section 10.1 below, shall be delivered by Buyer to Company by wire transfer of immediately available funds immediately upon the expiration of the Holdback Period.

     3.4 Final Accounting Adjustment . In connection with the Closing, the parties will prepare an accounting of the cash receipts and disbursements of the Business from July 31, 2005 through the Closing Date, with the intent of providing both Company and Buyer a “true up” of customer receipts collected, vendor payments made and employee payroll and benefits paid by Company on behalf of the Buyer, in each case during the period from July 31, 2005 through the Closing Date. In the event cash receipts collected by Company with respect to the Business during such period exceed cash disbursements made, the net difference will be credited to Buyer toward the payment of the Purchase Price. In the event cash disbursements made by Company with respect to the Business exceed cash receipts collected by Buyer during such period, the net difference will be paid to Company by Buyer at Closing.

     3.5 Allocation of Purchase Price . Buyer and Company agree to allocate the Purchase Price (and all other relevant amounts) among the Purchased Assets in accordance with the provisions of Section 1060 of the Internal Revenue Code of 1986, as amended (the “Code”). Buyer and Company shall agree upon a definitive allocation, and shall set forth such definitive allocation in writing, as soon as practicable but in any event within 180 days after the Closing Date, and shall use such allocation in satisfying any and all reporting requirements of the Internal Revenue Service and any state, local or other taxing authority. Buyer and Company also each agree to file IRS Form 8594 consistently with the foregoing and in accordance with Section 1060 of the Code.

4. REPRESENTATIONS AND WARRANTIES OF COMPANY.

     Company makes the following representations and warranties to Buyer.

     4.1 Organization.

          (a) Organization . Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Arizona.

          (b) Corporate Power . Company has all requisite corporate power and authority to own, operate and lease its properties, to carry on its business as and where such business is now being conducted, to enter into this Agreement and the other documents and instruments to be executed and delivered by Company pursuant hereto and to carry out the transactions contemplated hereby and thereby.

          (c) Qualification . Company is duly licensed or qualified to do business as a foreign corporation in each jurisdiction where the nature of the activities presently conducted by it makes such qualification necessary, except any such jurisdiction where the failure to be so licensed or qualified would not be reasonably likely to have a material adverse effect on Company.

     4.2 Authority . The execution and delivery of this Agreement and other documents and instruments to be executed and delivered by Company pursuant hereto and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary action of Company. No other corporate action or proceeding on the part of Company is necessary to authorize this Agreement or the other documents and instruments to be executed and delivered by Company pursuant hereto or to consummate the transactions contemplated hereby and thereby. This Agreement constitutes, and each other document and instrument to be executed and delivered by Company pursuant hereto when so executed and delivered will constitute, a valid and binding agreement of Company, enforceable in accordance with its respective terms, except as such may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors and subject to general equitable principles.

     4.3 No Violation . Except as set forth in Schedule 4.3 of the Disclosure Schedule , neither the execution and delivery of this Agreement or the other documents and instruments to be executed and delivered by Company pursuant hereto, nor the consummation by Company of the transactions contemplated hereby and thereby (a) will violate, in any material respect, any statute or law or any rule, regulation, order, writ, injunction or decree of any court or governmental authority applicable to Company, (b) will require from Company any authorization, consent, approval, exemption or other action by or notice to any court, administrative or governmental agency, instrumentality, commission, or other governmental authority, board or body, (c) subject to obtaining the consents referred to in Schedule 4.3 of the Disclosure Schedule , will violate or conflict with, or constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in the creation of a