-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UgXWfUknVl1YhL4fNUsGLdwQzBhrX0rx64l95zp+Q1wW5B4o+FBkeuoAP6jLyz0+ 2VyIChMxLSxb3g5JIhRNpw== 0000921895-02-000081.txt : 20020414 0000921895-02-000081.hdr.sgml : 20020414 ACCESSION NUMBER: 0000921895-02-000081 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20020212 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SPORTING MAGIC INC CENTRAL INDEX KEY: 0001071991 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PERSONAL SERVICES [7200] IRS NUMBER: 954675095 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-57295 FILM NUMBER: 02535247 BUSINESS ADDRESS: STREET 1: 17337 VENTURA BLVD STREET 2: SUITE 224 CITY: ENCINO STATE: CA ZIP: 91316 BUSINESS PHONE: 8187840040 MAIL ADDRESS: STREET 1: 17337 VENTURA BLVD STREET 2: SUITE 224 CITY: ENCINO STATE: CA ZIP: 91316 FORMER COMPANY: FORMER CONFORMED NAME: ADVANCED KNOWLEDGE INC DATE OF NAME CHANGE: 19981013 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: COOKE DANNY F CENTRAL INDEX KEY: 0001166929 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 6430 COBBLE LANE CITY: HARRISON STATE: TN ZIP: 37341 BUSINESS PHONE: 4233449955 MAIL ADDRESS: STREET 1: 6430 COBBLE LANE CITY: HARRISON STATE: TN ZIP: 37341 SC 13D/A 1 form13d105313_02112002.htm sec document 

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                 --------------

                                  SCHEDULE 13D

                 INFORMATION TO BE INCLUDED IN STATEMENTS FILED
                    PURSUANT TO RULE 13d-1(a) AND AMENDMENTS
                     THERETO FILED PURSUANT TO RULE 13d-2(a)

                               (Amendment No. 1)1

                              SPORTING MAGIC, INC.
- --------------------------------------------------------------------------------
                                (Name of issuer)

                     COMMON STOCK, $.001 PAR VALUE PER SHARE
- --------------------------------------------------------------------------------
                         (Title of class of securities)

                                   84916X 20 3
- --------------------------------------------------------------------------------
                                 (CUSIP number)

                            ROBERT H. FRIEDMAN, ESQ.
               OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP
                                 505 Park Avenue
                            New York, New York 10022
                                 (212) 753-7200
- --------------------------------------------------------------------------------
                  (Name, address and telephone number of person
                authorized to receive notices and communications)

                                February 1, 2002
- --------------------------------------------------------------------------------
             (Date of event which requires filing of this statement)

            If the filing  person has  previously  filed a statement on Schedule
13G to report the acquisition  which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e),  13d-1(f) or 13d-1(g),  check the
following box / /

            Note.  Schedules  filed  in  paper  format  shall  include  a signed
original and five copies of the schedule, including all exhibits. SEE Rule 13d-7
for other parties to whom copies are to be sent.

                         (Continued on following pages)

                               (Page 1 of 4 Pages)

- --------
1 The remainder of this cover page shall be filled out for a reporting  person's
initial filing on this form with respect to the subject class of securities, and
for  any  subsequent   amendment   containing   information  which  would  alter
disclosures provided in a prior cover page.

            The  information  required on the remainder of this cover page shall
not be deemed to be "filed"  for the  purpose  of  Section 18 of the  Securities
Exchange Act of 1934 or otherwise  subject to the liabilities of that section of
the Act but shall be subject to all other  provisions of the Act  (however,  SEE
the NOTES).





- ----------------------------                       -----------------------------
CUSIP No. 84916X 20 3                13D              Page 2 of 4 pages
- ----------------------------                       -----------------------------


================================================================================
     1         NAME OF REPORTING PERSONS
               I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)

               Danny F. Cooke
- --------------------------------------------------------------------------------
     2         CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*         (a) / /
                                                                         (b) / /
- --------------------------------------------------------------------------------
     3         SEC USE ONLY
- --------------------------------------------------------------------------------
     4         SOURCE OF FUNDS*
                     PF
- --------------------------------------------------------------------------------
     5         CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
               PURSUANT TO ITEM 2(d) OR 2(e)                                 / /
- --------------------------------------------------------------------------------
     6         CITIZENSHIP OR PLACE OR ORGANIZATION

                     United States of America
- --------------------------------------------------------------------------------
 NUMBER OF         7      SOLE VOTING POWER
  SHARES
BENEFICIALLY                    3,000,000
  OWNED BY
     EACH
   REPORTING
 PERSON WITH   -----------------------------------------------------------------
                   8      SHARED VOTING POWER

                                0
               -----------------------------------------------------------------
                   9      SOLE DISPOSITIVE POWER

                                3,000,000
               -----------------------------------------------------------------
                  10      SHARED DISPOSITIVE POWER

                                0
- --------------------------------------------------------------------------------
     11        AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
               PERSON

                     3,000,000
- --------------------------------------------------------------------------------
     12        CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
               CERTAIN SHARES*
- --------------------------------------------------------------------------------
     13        PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

                     31.6%
- --------------------------------------------------------------------------------
     14        TYPE OF REPORTING PERSON*

                     IN
================================================================================

                      *SEE INSTRUCTIONS BEFORE FILLING OUT!




- ----------------------------                       -----------------------------
CUSIP No. 84916X 20 3                13D              Page 3 of 4 pages
- ----------------------------                       -----------------------------


The  following  constitutes  Amendment  No. 1 to the  Schedule  13D filed by the
undersigned (the "Schedule 13D").

Item 7.     Materials to be Filed as Exhibits.
            ---------------------------------

                        Exhibit No.      Description
                        -----------      -----------

                        99.1             The Exchange Agreement,  dated December
                                         21, 2001, by and among Sporting  Magic,
                                         Inc., Buddy Young, Next, Inc., Danny F.
                                         Cooke,   William  B.  Hensley  and  the
                                         William  B. III and  Cindy  S.  Hensley
                                         Living Trust.

                        99.2             Amendment   No.   1  to  the   Exchange
                                         Agreement,  dated July 18,  2002 by and
                                         among  Sporting  Magic,   Inc.,   Buddy
                                         Young,  Next,  Inc.,  Danny  F.  Cooke,
                                         William B.  Hensley  and the William B.
                                         III and Cindy S. Hensley Living Trust.

                        99.3             Amendment   No.   2  to  the   Exchange
                                         Agreement,  dated  February 1, 2002, by
                                         and among Sporting Magic,  Inc.,  Buddy
                                         Young,  Next,  Inc.,  Danny  F.  Cooke,
                                         William B.  Hensley  and the William B.
                                         III and Cindy S. Hensley Living Trust.




- ----------------------------                       -----------------------------
CUSIP No. 84916X 20 3                13D              Page 4 of 4 pages
- ----------------------------                       -----------------------------



                                   SIGNATURES

            After due inquiry and to the best of his knowledge and belief,  each
of the undersigned certifies that the information set forth in this statement is
true, complete and correct.

Dated:  February 11, 2002


                                             /s/ Danny F. Cooke
                                             ------------------
                                             Danny F. Cooke
EX-99 3 ex99102112002.htm sec document 
                               EXCHANGE AGREEMENT

                                  BY AND AMONG

                       SPORTING MAGIC, INC., BUDDY YOUNG,

               NEXT, INC., DANNY F. COOKE, WILLIAM B. HENSLEY AND

              THE WILLIAM B. III AND CINDY S. HENSLEY LIVING TRUST



                                DECEMBER 21, 2001






                                TABLE OF CONTENTS

                                                                         PAGE

Article I       Exchange Of Shares.........................................1

Article II      Sporting Magic Representations And Warranties..............2

Article III     Next Representations And Warranties........................7

Article IV      Next Stockholders Representations And Warranties..........10

Article V       Next Covenants............................................11

Article VI      Sporting Magic Covenants..................................12

Article VII     Additional Covenants......................................13

Article VIII    Conditions Of Sporting Magic..............................14

Article IX      Conditions Of Next........................................15

Article X       Indemnification...........................................17

Article XI      Post-Closing Matters......................................18

Article XII     Miscellaneous.............................................19








SCHEDULES:
Schedule 1.2.................................List of post-Closing stock holdings
Schedule 1.5.................................... Young Non-Competition Agreement
Schedule 2.4(a)............................Sporting Magic Foreign Qualifications
Schedule 2.11..........................Sporting Magic Employees and Compensation
Schedule 2.14...........................................Sporting Magic Contracts
Schedule 3.5(b).....................................Next Options, Warrants, etc.
Schedule 3.6(c)...............................Exceptions to Financial Statements
Schedule 3.7(a)...................................................Next Conflicts
Schedule 3.8.....................................................Next Litigation
Schedule 3.10........................................Next Employee Benefit Plans
Schedule 3.11............................................Next Material Contracts
Schedule 5.4..............................................Permitted Indebtedness
Schedule 7.6........................Registration for Resale of Consultant Shares
Schedule 8.7................Opinion of Olshan Grundman Frome Rosenzweig &Wolosky
Schedule 9.10.....................................Opinion of L. Stephen Albright
Schedule 9.11............................................Young Lock-Up Agreement
Schedule 12.3....................................... Brokerage and Finder's Fees


                               EXCHANGE AGREEMENT

            THIS  EXCHANGE  AGREEMENT  (the  "AGREEMENT")  is entered into as of
December 21, 2001, by and among  Sporting  Magic,  Inc., a Delaware  corporation
("SPORTING  MAGIC");  Buddy Young,  the principal  stockholder of Sporting Magic
("YOUNG");  Next,  Inc., a Delaware  corporation  ("NEXT");  and Danny F. Cooke,
William B.  Hensley,  and The William B. III and Cindy S. Hensley  Living trust,
the sole stockholders of Next (together, the "NEXT STOCKHOLDERS").

                              W I T N E S S E T H :

            WHEREAS,   the  parties  intend  that,  subject  to  the  terms  and
conditions  hereinafter set forth, Sporting Magic will acquire all of the issued
and  outstanding  equity capital of Next from the Next  Stockholders in exchange
(the  "EXCHANGE")  for shares of Sporting  Magic common stock,  $0.001 par value
(the "SPORTING MAGIC COMMON STOCK"); and

            WHEREAS,  the parties desire that the  transactions  contemplated by
this  Agreement  constitute a tax-free  reorganization  under Section 368 of the
Internal Revenue Code of 1986, as amended (the "CODE").

            NOW,  THEREFORE,  in  consideration  of the  premises and the mutual
covenants and agreements herein contained,  the parties do hereby agree, subject
to the terms and conditions hereinafter set forth, as follows:

                                    Article I

                               Exchange Of Shares

            1.1  CLOSING  DATE.  Subject to  termination  of this  Agreement  as
provided in Section 12.1, the closing of the  transactions  and the consummation
of the  Exchange  (the  "CLOSING")  will  take  place at the  offices  of Olshan
Grundman Frome Rosenzweig & Wolosky LLP ("OLSHAN"),  505 Park Avenue,  New York,
New York 10022,  or at such other  location as the parties  hereto may  mutually
agree upon in writing,  at 10:00 a.m. on such date, on or before the Termination
Date (as defined in Section 12.1),  as the parties hereto mutually agree upon in
writing.

            1.2  THE EXCHANGE.

            Subject  to the  terms  and  conditions  set  forth  herein,  at the
Closing:

                (a) the Next Stockholders  shall irrevocably assign and transfer
to Sporting Magic all of the outstanding  equity capital of Next,  consisting of
13,000,000 shares of common stock, $0.0001 par value per share (the "NEXT COMMON
STOCK");

                (b)  Sporting  Magic shall issue to the Next  Stockholders,  pro
rata,  13,000,000  shares of Sporting Magic Common Stock as outlined in Schedule
1.2 (the "EXCHANGE CONSIDERATION"); and

                                       1

                (c)  Sporting  Magic shall issue  instructions  to its  transfer
agent  to  issue  certificates  for  the  Exchange  Consideration  to  the  Next
Stockholders.

            1.3  FURTHER  ASSURANCES.  If, at any time  after the  Closing,  the
parties  hereto  consider or are advised  that any further  instruments,  deeds,
assignments or assurances  are  reasonably  necessary or desirable to consummate
the  Exchange or to carry out the purposes of this  Agreement,  then the parties
shall execute and deliver all such proper deeds,  assignments,  instruments  and
assurances  and do all other things  necessary or  desirable to  consummate  the
Exchange and to carry out the purposes and intent of this Agreement.

            1.4  RESIGNATIONS  OF PRESENT  DIRECTORS AND EXECUTIVE  OFFICERS AND
DESIGNATION OF NEW DIRECTORS AND EXECUTIVE OFFICERS. At the Closing, the present
directors and executive officers of Sporting Magic shall designate the directors
and  executive  officers  nominated by the Next  Stockholders  to serve in their
place and stead,  until the next respective  annual meetings of the stockholders
and the Board of Directors of the reorganized  Sporting  Magic,  and until their
respective  successors  shall be elected and qualified or until their respective
prior  resignations  or  terminations,  and  then,  the  current  directors  and
executive officers shall resign, in seriatim. Prior to the Closing, the Board of
Directors  of  Sporting  Magic  shall adopt  resolutions  specified  by the Next
Stockholders  directing the issuance of the Exchange  Consideration  to the Next
Stockholders  so that the issuance of such shares is exempt from liability under
Section 16 of the  Securities  Exchange Act of 1934,  as amended (the  "EXCHANGE
ACT").

            1.5 YOUNG NON-COMPETE.  As of the Closing Date, Sporting Magic shall
enter into a non-compete  agreement with Young,  in the form attached  hereto as
Schedule  1.5 (the "YOUNG  NON-COMPETITION  AGREEMENT"),  in exchange for which,
Sporting  Magic shall (i) issue to Young 300,000 shares of Sporting Magic Common
Stock at the Closing and (ii) assume the obligation to pay to Young $350,000. As
of the date hereof, Young has already received $25,000 of this consideration and
Young shall receive an  additional  $100,000 no later than 72 hours prior to the
scheduled Closing Date. Young shall receive the remaining  $225,000 on or before
the date that is 90 days following the Closing Date.

            1.6 TAX-FREE REORGANIZATION.  The parties intend for the Exchange to
be a tax-free "reorganization" within the meaning of Section 368 of the Code.

                                   Article II

                  Sporting Magic Representations And Warranties

            Sporting  Magic  represents  and  warrants  to  Next  and  the  Next
Stockholders, as follows:

            2.1 POWER AND AUTHORITY.  Sporting Magic has the corporate power and
authority,  to  enter  into  this  Agreement  and to carry  out its  obligations
hereunder.  The execution and delivery of this Agreement and the consummation of
the transactions  contemplated  hereby have been duly authorized by the Board of
Directors of Sporting  Magic and no other  corporate  proceedings on the part of
Sporting Magic are necessary to authorize  this  Agreement and the  transactions
contemplated hereby.


                                       2


            2.2  SPORTING MAGIC FINANCIAL STATEMENTS.  Sporting Magic has
heretofore  delivered to Next its audited  financial  statements  for the fiscal
year ended August 31, 2001 and its unaudited  financial  statements  for the two
month period  ended  October 31, 2001  (collectively,  the  "SPORTING  FINANCIAL
STATEMENTS"). The Sporting Financial Statements have been prepared in accordance
with  generally  accepted  accounting  principles,  and  fairly  present  in all
material  respects,  the  financial  condition  of  Sporting  Magic  as  at  the
respective dates thereof, and the results of operation of Sporting Magic for the
periods then ended.  At October 31, 2001,  there were no  liabilities,  unknown,
accrued, absolute, contingent or otherwise of Sporting Magic that were not shown
or reserved  against on the balance  sheets  included in the Sporting  Financial
Statements.

            2.3 NO MATERIAL  ADVERSE EFFECT.  Since October 31, 2001,  there has
not been any material  adverse change in the business,  operations,  properties,
assets, condition, financial or otherwise, or prospects of Sporting Magic.

            2.4  DUE  ORGANIZATION;   POWER;  QUALIFICATION;   SUBSIDIARIES  AND
AFFILIATES, ETC.

                (a) Sporting  Magic is a  corporation  duly  organized,  validly
existing,  and in good standing  under the laws of the state of Delaware and has
the  corporate  power to own its  property  and to carry on its  business as now
conducted.  Sporting Magic is qualified to do business as a foreign  corporation
in each jurisdiction  where the failure to qualify would have a material adverse
effect on Sporting Magic.  Schedule 2.4(a) sets forth the jurisdictions in which
Sporting Magic is qualified.

                (b) Sporting  Magic has no  subsidiaries  or affiliates (as that
term is defined in the regulations promulgated under the Securities Act of 1933,
as amended (the "SECURITIES ACT")).

            2.5  CAPITALIZATION.

                (a) The  authorized  capital  stock of Sporting  Magic  consists
entirely of 25,000,000 shares of Sporting Magic Common Stock, of which 1,529,814
shares are issued and  outstanding.  All of the  outstanding  shares of Sporting
Magic Common Stock have been, and all of the  outstanding  Sporting Magic Common
Stock as of the Closing Date will be, duly authorized and validly issued and are
fully paid and  non-assessable.  None of the  outstanding  Sporting Magic Common
Stock is  subject  to  pre-emptive  rights  or was  issued in  violation  of any
pre-emptive rights.

                (b) There are not  presently,  and, on the Closing  Date,  there
will not be any outstanding subscriptions,  options, warrants, contracts, calls,
puts, agreements, demands or other commitments or rights of any type to purchase
or  acquire  any  securities  of  Sporting  Magic,  nor  are  there  outstanding
securities of Sporting Magic which are convertible  into, or  exchangeable  for,
any  shares of  capital  stock of  Sporting  Magic,  and  Sporting  Magic has no
obligation of any kind to issue any additional securities.



                                       3


            2.6  TAX MATTERS.

                (a)  Sporting  Magic has  filed or  caused to be filed  with the
appropriate federal,  state, county, local and foreign governmental  agencies or
instrumentalities, all tax returns and tax reports required to be filed, and all
taxes, assessments,  fees and other government charges have been fully paid when
due (subject to any extensions filed on a timely basis).

                (b) There is not pending nor, to the best  knowledge of Sporting
Magic,  is there any  threatened  federal,  state or local tax audit of Sporting
Magic.  There is no agreement with any federal,  state or local taxing authority
by Sporting  Magic that may affect the  subsequent  tax  liabilities of Sporting
Magic.

                (c) Without  limiting the generality of the  foregoing:  (a) the
Sporting  Financial  Statements  include  adequate  provisions  for  all  taxes,
assessments,  fees, penalties and governmental charges which have been or in the
future may be assessed  against  Sporting  Magic with respect to the period then
ended and all periods prior thereto; and (b) on the date hereof,  Sporting Magic
is not liable for any taxes, assessments, fees or governmental charges.

            2.7 NO  CONFLICT  OR  DEFAULT;  ENFORCEABILITY;  CORPORATE  RECORDS;
COMPLIANCE WITH LAW.

                (a) Neither the  execution and delivery of this  Agreement,  nor
compliance with the terms and provisions  hereof,  including without  limitation
the  consummation  of the  transactions  contemplated  hereby,  will violate any
statute, regulation or ordinance of any governmental authority, or conflict with
or result in the  material  breach of any term,  condition  or  provision of the
Certificate  of  Incorporation,  By-laws or other charter  documents of Sporting
Magic, nor of any agreement, deed, contract,  mortgage,  indenture, writ, order,
decree,  legal obligation or instrument to which Sporting Magic is a party or by
which its assets or  properties  are or may be bound;  or  constitute a material
default (or an event which,  with the lapse of time or the giving of notice,  or
both,  would  constitute  a  material  default)  thereunder,  nor  result in the
creation or imposition or any lien, charge or encumbrance, or restriction of any
nature  whatsoever  with respect to any properties or assets of Sporting  Magic,
nor give to others any  interest  or rights,  including  rights of  termination,
acceleration  or  cancellation  in or  with  respect  to any of the  properties,
assets, contracts or business of Sporting Magic.

            (b)  This  Agreement and all other  agreements
and documents  delivered by Sporting  Magic in connection  herewith are, or when
executed by Sporting  Magic will be, valid and binding  obligations  of Sporting
Magic, enforceable in accordance with their respective terms. Sporting Magic has
permitted Next to examine  Sporting  Magic's  corporate minute and stock records
books.  The corporate  minute books contain the  Certificate  of  Incorporation,
By-laws and other charter  documents of Sporting  Magic as in effect on the date
hereof, contain a true and complete record of all actions by and meetings of the
directors (and committees  thereof) and stockholders of Sporting Magic since the
date of its  incorporation and accurately  reflect all transactions  referred to
therein.  Sporting  Magic is not in  violation  of any  outstanding  arbitration
award, judgment, order or decree; or in violation of any statute,  regulation or
ordinance  ("LAW"),  including,  but not  limited  to, any  anti-discrimination,
hazardous  and  toxic  substances,   wage,


                                       4


hour, working condition, payroll withholding,  pension, building, zoning and tax
Law. There have been no allegations of or inquiries concerning any violations of
Law by Sporting Magic within the past ten years.

            2.8  LITIGATION.  There are no actions,  suits,  investigations,  or
proceedings pending, nor, to the knowledge of Sporting Magic, threatened against
Sporting  Magic,  the  performance  of the terms and conditions  hereof,  or the
consummation  of the  transactions  contemplated  hereby,  in any court or by or
before any governmental body or agency,  including without limitation any claim,
proceeding or litigation for the purpose of challenging, enjoining or preventing
the execution, delivery or consummation of this Agreement. Sporting Magic is not
subject to any order, judgment,  decree, stipulation or consent or any agreement
issued by any governmental body or agency.

            2.9 SECURITIES FILINGS. The Sporting Magic Common Stock is quoted on
the NASD OTC Electronic  Bulletin Board.  Sporting Magic has heretofore provided
to Next true and correct copies of its annual report on Form 10-KSB for the year
ended August 31, 2001,  and its quarterly  reports on Form 10-QSB dated November
30, 2000,  February 28, 2001,  and May 31, 2001. In all material  respects,  all
such reports are true, correct and accurate as of the dates of filing and do not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein in order to make the statements  therein, in light
of the  circumstances  under which they were made, not  misleading.  No material
adverse  change in the business,  financial  condition or operations of Sporting
Magic has occurred  since the date of such reports.  Sporting Magic will have on
the Closing Date,  made all filings  required to be made with the Securities and
Exchange  Commission (the  "COMMISSION")  and any state securities  authorities.
Sporting Magic does not know of any reason why a registration statement filed on
its behalf after the Closing would not be declared  effective by the  Commission
and why any  Sporting  Magic  Common  Stock  issued to or  issuable  to the Next
Stockholders  would not be eligible  for public  resale under Rule 144 after the
Closing.

            2.10  GOVERNMENTAL  AND  OTHER  APPROVAL.  To the  best of  Sporting
Magic's  knowledge,  Sporting  Magic  has  all  permits,  licenses,  orders  and
approvals of all federal,  state,  local or foreign  governmental  or regulatory
bodies  required  for  Sporting  Magic to  conduct  its  business  as  presently
conducted.  All such permits,  licenses,  orders and approvals are in full force
and effect and no suspension or cancellation  of any of them is threatened,  and
none of such  permits,  licenses,  orders or  approvals  will be affected by the
consummation of the transactions  contemplated by this Agreement. No approval or
authorization  of or  filing  with any  governmental  authority,  including  the
Commission,  or any other  person or  entity  on the part of  Sporting  Magic is
required as a condition to the execution  and delivery of this  Agreement or the
consummation of the  transactions  contemplated  hereby other than the filing of
any documents  contemplated by this  Agreement.  Sporting Magic does not know of
any reason why the NASD will not accept  Sporting Magic Common Stock for trading
on any other  market or exchange  operated  by the NASD,  subject to meeting the
qualifications of such listing.

            2.11  SALARIES.  There  is set  forth  on  Schedule  2.11 a true and
complete list, as of the date of this Agreement, of all persons who are employed
by Sporting Magic, together with their


                                       5


compensation  (including bonuses) for the calendar year ended December 31, 2000,
and the rate of compensation (including bonus arrangements) currently being paid
to each such employee.

            2.12 ACCRUED  COMPENSATION;  BENEFITS.  Sporting Magic does not have
any outstanding liability for payment of wages, vacation pay (whether accrued or
otherwise),  salaries,  bonuses, pensions or contributions and does not have any
responsibility  for providing  medical  insurance or medical  benefits under any
labor or employment  contract,  whether oral or written, or pursuant to any law,
rule or  regulation  or by  reason of any past  practices  with  respect  to its
current or former  officers,  directors or employees based upon or accruing with
respect to services of its present or former officers, directors or employees.

            2.13 EMPLOYEE BENEFIT PLANS.  Sporting Magic does not have, maintain
or contribute to and never has had,  maintained or  contributed  to, any pension
plan,  profit  sharing plan or  employee's  savings  plan,  and is not otherwise
subject to any applicable  provisions of the Employee Retirement Income Security
Act of 1974 ("ERISA").

            2.14  MATERIAL  CONTRACTS,  ETC.  Schedule 2.14 contains an accurate
list of all contracts, commitments, leases, instruments, agreements, licenses or
permits,  written or oral, to which  Sporting Magic is a party or by which it or
its properties are bound (including without limitation contracts with customers,
joint venture or partnership agreements, contracts with any labor organizations,
employment  agreements,  consulting  agreements,  loan agreements,  indemnity or
guaranty agreements,  bonds, mortgages, options to purchase land, liens, pledges
or other security agreements).  Each such agreement is legally valid and binding
and in full force and effect.

            2.15 TITLE AND  AUTHORITY.  Sporting  Magic has  delivered to Next a
stockholder list dated November 7, 2001 (the "NOVEMBER  STOCKHOLDER  List"). The
stockholders listed on the November Stockholder List are together the holders of
record and, to the knowledge of Sporting Magic,  the sole  beneficial  owners of
all of the outstanding Sporting Magic Common Stock.

            2.16 INSIDER  TRANSACTIONS.  All transactions between Sporting Magic
and its employees,  officers,  directors and stockholders,  and between Sporting
Magic and Young,  including any issuance of Sporting  Magic Common  Stock,  have
been or will be, as the case may be, made on an arm's  length basis on terms and
conditions comparable to what Sporting Magic would have given to unrelated third
parties. No director, officer or employee of Sporting Magic has any claim of any
nature against Sporting Magic.

            2.17  ENVIRONMENTAL.  There are no environmental  liens,  actions or
proceedings,  nor is there  any cause for any such  lien,  action or  proceeding
related to the business operations of Sporting Magic. There are no substances or
conditions  which may support a claim or cause of action against  Sporting Magic
or any of Sporting  Magic's  current or former  officers,  directors,  agents or
employees,   whether  by  a  governmental  agency  or  body,  private  party  or
individual,  under  any  Law  or  Hazardous  Materials  Regulations.  "HAZARDOUS
MATERIALS"  means  any oil or  petrochemical  products,  PCB's,  asbestos,  urea
formaldehyde,  flammable explosives,  radioactive materials,  solid or hazardous
wastes,  chemicals,  toxic substances or related materials,  including,  without
limitation,  any  substances  defined  as  or  included  in  the  definition  of
"hazardous  substances,"  "hazardous  wastes,"  "hazardous  materials" or "toxic
substances"  under  any



                                       6


applicable   federal  or  state  laws  or  regulations.   "HAZARDOUS   MATERIALS
REGULATIONS"  means any  regulations  governing the use,  generation,  handling,
storage,  treatment,  disposal  or release  of  hazardous  materials,  including
without limitation, the Comprehensive  Environmental Response,  Compensation and
Liability Act, the Resource  Conversation and Recovery Act and the Federal Water
Pollution Control Act.

            2.18 NO LIQUIDATION OF NEXT. Sporting Magic has no plan or intention
to (i) liquidate Next, (ii) merge Next into any other  corporation,  (iii) cause
Next to sell or  otherwise  dispose any of its assets,  except for  dispositions
made in the ordinary  course of business,  or (iv) sell or otherwise  dispose of
any of the Next Common Stock acquired pursuant to this Agreement.

            2.19 NO REACQUISITION OF SPORTING MAGIC COMMON STOCK. Sporting Magic
has no plan or intention to reacquire any of the Exchange Consideration.

            2.20  NO  INVESTMENT  COMPANY  PARTIES.  Sporting  Magic  is  not an
"investment  company" as defined in Sections  368(a)(2)(F)(iii)  and (iv) of the
Code.

            2.21  MATERIAL  MISSTATEMENTS.  The  representation  and  warranties
contained  herein do not contain an untrue  statement of a material fact or omit
to state a material fact  necessary in order to make the  statements  therein in
light of the circumstances under which they were made, not misleading.

                                   Article III

                       Next Representations And Warranties

            Next represents and warrants to Sporting Magic and Young as follows:

            3.1  POWER  AND AUTHORITY.  Next has the corporate  power and
authority  to  enter  into  this  Agreement  and to  carry  out its  obligations
hereunder.  The execution and delivery of this Agreement and the consummation of
the transactions  contemplated  hereby have been duly authorized by the Board of
Directors of Next, and, no other  corporate  proceedings on the part of Next are
necessary to authorize this Agreement and the transactions  contemplated hereby,
other than a vote of the Next Stockholders.

            3.2 NEXT  FINANCIAL  STATEMENTS.  Next has  heretofore  delivered to
Sporting Magic its unaudited  combined  financial  statements for the year ended
December 31, 2000 and its unaudited combined  financial  statements for the nine
month  period  ended  September  30,  2001  (collectively,  the "NEXT  FINANCIAL
STATEMENTS").  The Next  Financial  Statements  have been prepared in accordance
with  generally  accepted  accounting  principles,  and fairly  present,  in all
material  respects,  the financial  condition of Next as at the respective dates
thereof,  and the results of operations  of Next for the periods then ended.  At
September 30, 2001, there were no material  liabilities,  absolute or contingent
of Next that were not shown or reserved  against on the balance sheets  included
in the Next Financial  Statements,  except  obligations  under the contracts set
forth therein. Since September 30, 2001, Next has not sold or otherwise disposed
of or



                                       7


encumbered  any of the  properties  or assets  reflected  on the Next  Financial
Statements, or other assets owned or leased by it, except in the ordinary course
of business.

            3.3  NO  MATERIAL  ADVERSE  EFFECT.  Since September 30, 2001
there has not been any  material  adverse  change in the  business,  operations,
properties, assets, condition, financial or otherwise of Next.

            3.4  DUE  ORGANIZATION;   POWER;  QUALIFICATION.  Next  is  a
corporation  duly organized,  validly  existing,  and in good standing under the
laws of the State of Delaware  and has the  corporate  power to own its property
and to carry on its business as now conducted.  Next is qualified to do business
as a foreign corporation in each jurisdiction where the failure to qualify would
have a material adverse effect on Next.

            3.5  CAPITALIZATION.

            (a) The  authorized  capital  stock  of Next  consists  entirely  of
50,000,000  shares of common stock,  $0.0001 par value per share, and 10,000,000
shares of preferred  stock,  of which  13,000,000  shares of common stock and no
shares of preferred stock are issued and outstanding. All the outstanding shares
of Next Common Stock have been duly authorized and validly issued, and are fully
paid and non-assessable. Next does not own the capital stock of any other entity
other than Next Marketing Inc., a Delaware  corporation,  and Blue Sky Graphics,
Inc., a Delaware  corporation,  as to each of which Next owns all of the capital
stock.

            (b) There are not presently,  and on the Closing Date there will not
be any outstanding options, warrants,  convertible securities or rights that may
require  Next to issue  additional  shares of its  capital  stock  other than as
listed on Schedule 3.5(b).

            3.6  TAX MATTERS.

            (a)  Next has  filed or  caused  to be  filed  with the  appropriate
federal,   state,   county,   local  and   foreign   governmental   agencies  or
instrumentalities  all tax returns and tax reports required to be filed, and all
taxes,  assessments,  fees and other  governmental  charges have been fully paid
when due (subject to any extensions filed on a timely basis).

            (b) There is not pending  nor,  to the best  knowledge  of Next,  is
there any  threatened  federal,  state or local  tax audit of Next.  There is no
agreement with any federal,  state or local taxing authority that may affect the
subsequent tax liabilities of Next.

            (c) Without limiting the generality of the foregoing,  except as set
forth on Schedule  3.6(c),  (i) the Next Financial  Statements  include adequate
provisions for all taxes, assessments,  fees, penalties and governmental charges
which have been or in the future may be assessed  against  Next with  respect to
the period then ended and all periods  prior  thereto;  and (ii) Next is not, on
the  date  hereof,  liable  for any  taxes,  assessments,  fees or  governmental
charges.



                                       8


            3.7 NO  CONFLICT  OR  DEFAULT;  ENFORCEABILITY;  CORPORATE  RECORDS;
COMPLIANCE WITH LAW.

            (a) Except as set forth on Schedule  3.7(a),  neither the  execution
and delivery of this  Agreement,  nor  compliance  with the terms and provisions
hereof,  including  without  limitation  the  consummation  of the  transactions
contemplated  hereby,  will violate any statute,  regulation or ordinance of any
governmental authority, or conflict with or result in the material breach of any
term,  condition or provision of the Certificate of  Incorporation or By-laws of
Next, nor of any agreement,  deed, contract,  mortgage,  indenture, writ, order,
decree,  legal  obligation or instrument to which Next is a party or by which it
or any of its respective assets or properties are or may be bound; or constitute
a material  default (or an event which,  with the lapse of time or the giving of
notice, or both, would constitute a material default) thereunder,  nor result in
the creation of imposition of any lien, charge or encumbrance, or restriction of
any nature whatsoever with respect to any properties or assets of Next, nor give
to others any interest of rights, including rights of termination,  acceleration
or cancellation in or with respect to any of the properties,  assets,  contracts
or business of Next.

            (b) This Agreement and each other  agreement and document  delivered
by Next in connection  herewith are, or when executed by Next will be, valid and
binding  obligations of Next,  enforceable in accordance  with their  respective
terms. Next has permitted  Sporting Magic to examine Next's corporate minute and
stock records  books.  The corporate  minute books  contain the  Certificate  of
Incorporation,  By-laws and other charter  documents of Next as in effect on the
date hereof and a true and complete record of all actions by and meetings of the
directors  (and  committees  thereof) and  stockholders  of Next and  accurately
reflect all transactions referred to therein.

            (c) Next is not in violation of any outstanding  arbitration  award,
judgment,  order or  decree;  or in  violation  of any Law,  including,  but not
limited to, any anti-discrimination, hazardous and toxic substances, wage, hour,
working condition,  payroll withholding,  pension, building, zoning and tax Law.
There have been no allegations of or inquiries  concerning any violations of Law
by Next within the past three years.

            3.8  LITIGATION.  Except as set forth on Schedule 3.8,  there are no
actions, suits, investigations, or proceedings pending, nor, to the knowledge of
Next,  threatened,  against Next,  the  performance  of the terms and conditions
hereof,  or the consummation of the  transactions  contemplated  hereby,  in any
court  or by or  before  any  governmental  body or  agency,  including  without
limitation any claim,  proceeding or litigation for the purpose of  challenging,
enjoining  or  preventing  the  execution,  delivery  or  consummation  of  this
Agreement.  Next is not subject to any order, judgment,  decree,  stipulation or
consent or any agreement with any governmental  body or agency which affects its
business or operations.

            3.9  GOVERNMENTAL  AND  OTHER  APPROVAL.  To the  best of its
knowledge, Next has all permits,  licenses, orders and approvals of all federal,
state,  local or foreign  governmental or regulatory bodies required for Next to
conduct its  business as  presently  conducted.  Except as set forth on Schedule
3.9, all such  permits,  licenses,  orders and  approvals  are in full force and
effect and no suspension or cancellation of any of them is threatened,  and none
of  such  permits,  licenses,  orders  of  approvals  will  be  affected  by the
consummation of the transactions  contemplated by this Agreement. No approval or
authorization of or filing with any



                                       10


governmental  authority  or any  other  person  or entity on the part of Next is
required as a condition to the execution  and delivery of this  Agreement or the
consummation of the  transactions  contemplated  hereby other than the filing of
documents contemplated by this Agreement.

            3.10  EMPLOYEE  BENEFIT  PLANS.  Next  does not  have,  maintain  or
contribute  to, and never has had,  maintained  or  contributed  to, any pension
plan, profit sharing plan or employees'  savings plan, and Next is not otherwise
subject to any  applicable  provisions  of ERISA except as set forth on Schedule
3.10.

            3.11  MATERIAL  CONTRACTS,  ETC.  Schedule 3.11 contains an accurate
list of all contracts, commitments, leases, instruments, agreements, licenses or
permits,  written  or  oral,  to  which  Next is a party  or by  which it or its
properties are bound  (including  without  limitation  contracts with customers,
joint venture or partnership agreements, contracts with any labor organizations,
employment  agreements,  consulting  agreements,  loan agreements,  indemnity or
guaranty agreements,  bonds, mortgages, options to purchase land, liens, pledges
or  other  security  agreements)  that  (i)  may  give  rise to  obligations  or
liabilities  exceeding  $50,000,  or (ii) generate  revenues or income exceeding
$50,000 (collectively,  the "MATERIAL CONTRACTS"). Next is not in default of any
Material Contract.

            3.12 TITLE AND  AUTHORITY.  The Next  Stockholders  are together the
holders  of record  and the sole  beneficial  owners  of all of the  outstanding
shares of Next capital stock being exchanged pursuant to this Agreement.

            3.13  MATERIAL  MISSTATEMENTS.  The  representation  and  warranties
contained  herein do not contain an untrue  statement of a material fact or omit
to state a material fact  necessary in order to make the  statements  therein in
light of the circumstances under which they were made, not misleading.



                                   Article IV

                Next Stockholders' Representation and Warranties

            The Next  Stockholders  represent and warrant to Sporting  Magic and
Young as follows:

            4.1  INVESTMENT  INTENT.  Each  Next  Stockholder  does not have any
present  plan,  intention,  or  arrangement  to dispose  of any of the  Exchange
Consideration  and each Next  Stockholder is acquiring such stock for investment
purposes  and  not  with a view  towards  distribution.  Each  Next  Stockholder
acknowledges  that the Exchange  Consideration has not been registered under the
Securities  Act, or under any state  securities laws and,  therefore,  cannot be
sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed
of unless  registered  under the Securities Act and applicable  state securities
laws or unless an exemption from registration is available and, as a result, the
Next  Stockholders  must  bear  the  risk  of  an  investment  in  the  Exchange
Consideration  for a period of time.  Each Next  Stockholder  is an




                                       10


"accredited  investor"  as defined in Rule 501(a) of  Regulation  D  promulgated
under the  Securities  Act.  Each Next  Stockholder  has (i) such  knowledge and
experience in financial and business matters that he is capable of independently
evaluating  the risks and merits of acquiring the Exchange  Consideration;  (ii)
independently   evaluated  the  risks  and  merits  of  acquiring  the  Exchange
Consideration and has independently  determined that the Exchange  Consideration
is a suitable  investment for him; and (iii) sufficient  financial  resources to
bear the loss of his entire investment in the Exchange Consideration.

                                    Article V

                                 Next Covenants

            Next agrees that prior to the Closing Date:

            5.1 No  dividend  shall be  declared  or paid by other  distribution
(whether  in cash,  stock,  property  or any  combination  thereof)  or  payment
declared  or made in  respect to Next  Common  Stock,  nor shall Next  purchase,
acquire or redeem or split,  combine  or  reclassify  any shares of its  capital
stock unless prior to the record date for such dividend or the effective date of
such split,  combination or  reclassification,  it tenders to Sporting Magic its
agreement to amend this Agreement so as to effect an  appropriate  adjustment in
the number of shares deliverable upon the Closing Date.

            5.2 No change shall be made in the number of shares of authorized or
issued Next Common Stock; nor shall any option, warrant, call, right, commitment
or  agreement  of any  character  be  granted  or made by Next  relating  to its
authorized or issued Next Common Stock; nor shall Next issue,  grant or sell any
securities  or  obligations  convertible  into or  exchangeable  for Next Common
Stock.

            5.3 Next will not take,  agree to take,  or  knowingly  permit to be
taken any action or do or knowingly permit to be done anything in the conduct of
the  business of Next or  otherwise,  which would be contrary to or in breach of
any of the terms or  provisions of this  Agreement,  or which would cause any of
Next's  representations  contained herein to be or become untrue in any material
respect at the Closing Date.

            5.4 Except in the ordinary  course of business,  as  contemplated by
Article I hereof and as set forth in Schedule  5.4,  Next will not (i) incur any
indebtedness for borrowed money; (ii) assume,  guarantee,  endorse, or otherwise
become liable or responsible  (whether directly,  contingently or otherwise) for
the obligations of any other individual,  firm or corporation, or (iii) make any
loans,  advances  or  capital  contributions  to or  investments  in,  any other
individual,  firm or corporation, in any such case in excess of $100,000, except
with the  consent of  Sporting  Magic which  consent  shall not be  unreasonably
withheld.

            5.5 Except as  contemplated in the Next Financial  Statements,  Next
will not make,  alter or change any employment or other contract with any of its
personnel  or  make,  adapt,  alter,  revise,  or  amend  any  pension,   bonus,
profit-sharing  or other employee  benefit plan, or grant any salary increase or
bonus to any person without the prior written consent of Sporting Magic,



                                       11


except for normal  year-end or  anniversary  salary  adjustments  for employees,
excluding  officers,  except with the consent of  Sporting  Magic which  consent
shall not be unreasonably withheld.

                                   Article VI

                            Sporting Magic Covenants

            Sporting  Magic (and Young with  respect to Section 6.6) agrees that
prior to the Closing Date:

            6.1 Except as  provided  in this  Agreement,  no  dividend  shall be
declared or paid or other distribution  (whether in cash, stock, property or any
combination  thereof) or payment  declared or made in respect of Sporting  Magic
Common Stock,  nor shall  Sporting Magic  purchase,  acquire or redeem or split,
combine or reclassify any shares of its capital stock.

            6.2 Except as provided in this Agreement, no change shall be made in
the number of authorized or issued shares of Sporting  Magic Common Stock (other
than pursuant to this Agreement);  nor shall any option,  warrant,  call, right,
commitment or agreement  (other than this Agreement) of any character be granted
or made by  Sporting  Magic  relating  to its  authorized  or  issued  shares of
Sporting Magic Common Stock;  nor shall Sporting Magic issue,  grant or sell any
securities or obligations  convertible  into or exchangeable  for Sporting Magic
Common Stock.

            6.3 Sporting Magic will not take, agree to take, or knowingly permit
to be taken any action,  nor do or knowingly  permit to be done  anything in the
conduct of the business of Sporting Magic or otherwise,  which would be contrary
to or in breach of any of the terms or  provisions of this  Agreement,  or which
would cause any of Sporting  Magic's  representations  and warranties  contained
herein to be or become  untrue  in any  material  respect  at the  Closing  Date
including  without  limitation  amending  Sporting Magic's charter documents and
By-laws, except as otherwise provided hereby.

            6.4 Sporting Magic will not make,  alter or change any employment or
other  contract  with any of its  management  personnel or make,  adopt,  alter,
revise,  or amend any pension,  bonus,  profit-sharing or other employee benefit
plan,  or grant any salary  increase  or bonus to any person  without  the prior
written consent of Next.

            6.5 Sporting Magic shall transfer all of its assets and  liabilities
to an entity controlled by Young.

            6.6 Young shall satisfy, without any recourse to or against Sporting
Magic, all liabilities of Sporting Magic,  including,  without  limitation,  all
costs incurred by Sporting Magic incident to this Agreement;  PROVIDED, HOWEVER,
that Young shall not be  responsible  for any costs incurred by Next incident to
this Agreement.


                                       12



                                   Article VII

                              Additional Covenants

            7.1  DIRECTORS'  MEETING.  Each of Next and Sporting Magic will take
all actions  necessary in accordance  with applicable law and its Certificate of
Incorporation  and By-laws to convene a meeting or obtain the written consent of
its  directors  and,  with  respect to Next,  its  stockholders  as  promptly as
practicable  to  consider  and  vote  upon  the  approval  of  the  transactions
contemplated by this Agreement.

            7.2 CONDUCT OF BUSINESS  PENDING THE  CLOSING.  Prior to the Closing
Date,  unless  Sporting Magic and Next shall  otherwise  agree in writing,  each
company  shall not (i)  operate  its  business  otherwise  than in the  ordinary
course,  or (ii)  authorize,  recommend  or propose any  merger,  consolidation,
acquisition  of  assets,   disposition  of  assets,   material   change  in  its
capitalization  or any comparable  event, not in the ordinary course of business
(in each case, other than the transactions  contemplated hereby and transactions
as to which written  notice has been given to the other  companies  prior to the
date hereof), provided, however, that Next shall be able to undertake any of the
foregoing  with the  consent  of  Sporting  Magic  which  consent  shall  not be
unreasonably withheld.

            7.3 DISCLOSURE.  Each party acknowledges that it has, and will have,
possession of important confidential  information  ("CONFIDENTIAL  INFORMATION")
regarding the other  parties.  Each party hereto shall not use any  Confidential
Information  except in furtherance of the transactions  contemplated  hereby and
shall not divulge,  communicate,  furnish or make  accessible  any  Confidential
Information to any person,  firm,  partnership,  corporation or other entity. No
party hereto  shall make any public  statement  from the date of this  Agreement
forward,  including without  limitation any press release,  with respect to this
Agreement and the transactions  contemplated  hereby,  without the prior written
consent of the other parties (which consent may not be  unreasonably  withheld),
except as may be required by law, in which case the parties  shall  consult with
each  other as to the  nature  and  scope  of the  required  disclosure  and any
protective measures which should be taken to preserve the confidentiality of the
disclosed  information.  If any party  becomes  legally  compelled  to  disclose
information  relating  to this  Agreement,  such party  shall  provide the other
parties  hereto  with notice of such  requirement  to allow such party to seek a
protective  order or other remedy.  If such protective  order or other remedy is
not obtained,  or if compliance hereof is waived, each party shall disclose only
that portion of  information  that is legally  required to be  disclosed  and to
permit  the other  parties  at their  expense  to take all  reasonable  steps to
preserve the confidentiality of the transactions hereunder.

            7.4 ACCESS. Prior to the Closing, Next shall afford to the officers,
attorneys,  accountants,  and other authorized representatives of Sporting Magic
free and full  access to the  premises,  books and records of Next in order that
Sporting  Magic may make such  investigation  as it may desire of the affairs of
Next,  provided such access is not  unreasonably  disruptive to Next's business.
Prior to the Closing,  Sporting  Magic shall afford to the officers,  attorneys,




                                       13


accountants,  and other authorized  representatives of Next free and full access
to the  premises,  books and records of Sporting  Magic so that it may make such
investigations as it may desire of the affairs of Sporting Magic,  provided such
access is not unreasonably disruptive to Sporting Magic.

            7.5  NO  SOLICITATION.  Except  as  provided  in the  Young  Lock-Up
Agreement (as defined in Section 9.11),  prior to the Closing,  neither Next nor
Sporting  Magic may (nor will either of them permit any agent or  affiliate  to)
solicit, initiate or encourage any Acquisition Proposal (as hereinafter defined)
or furnish any information to, or cooperate with, any person, corporation,  firm
or  other  entity  with  respect  to an  Acquisition  Proposal.  As used  herein
"ACQUISITION  PROPOSAL"  means  a  proposal  for  a  merger  or  other  business
combination involving such entity or for the acquisition of a substantial equity
interest  in, or a  substantial  portion of the assets of such entity other than
the transaction  contemplated  hereby.  Young shall not sell any of the Sporting
Magic Common Stock held by him and shall not agree to an Acquisition Proposal.

            7.6  REGISTRATION   OF   SHARES.   As  soon   as   reasonably
practicable following the Closing Date, Sporting Magic shall file a registration
statement with the  Commission to register for resale up to 2,400,000  shares of
Sporting  Magic  Common  Stock  issued to  consultants  for  ongoing  consulting
services related to acquisitions,  to the parties and in the amounts provided on
Schedule 7.6.

                                  Article VIII

                     Conditions Of Sporting Magic and Young

            The  obligations of Sporting  Magic to consummate  the  transactions
contemplated  by this Agreement are subject to the  satisfaction  of each of the
following conditions:

            8.1  No  action  shall  have  been  taken,  and  no  statute,  rule,
regulation or order shall have been promulgated,  enacted,  entered, enforced or
deemed applicable to the transactions  contemplated hereby by any federal, state
or foreign  government or  governmental  authority or by any court,  domestic or
foreign, including entry of a preliminary or permanent injunction,  which would,
in  the  reasonable  opinion  of  Sporting  Magic,  (a)  make  the  transactions
contemplated hereby illegal, or (b) if the transactions  contemplated hereby are
consummated,  subject any officer,  director,  or employee of Sporting  Magic to
criminal  penalties or to civil liabilities not adequately  covered by insurance
or enforceable indemnification maintained by Sporting Magic.

            8.2 No  action  or  proceeding  before  any  court  or  governmental
authority,  domestic or foreign, by any government or governmental  authority or
by any other person,  domestic or foreign,  shall be  threatened,  instituted or
pending which would  reasonably be expected to result in any of the consequences
referred to in clauses (a) or (b) of paragraph 8.1 above.

            8.3 Next shall  have  complied  in all  material  respects  with its
agreements and covenants herein, and all  representations and warranties of Next
herein shall be true and correct in all material respects at the time of Closing
as if made at that  time,  except  to the  extent  they



                                       14


expressly  relate to an earlier date,  and Sporting  Magic shall have received a
certificate  to that effect to the best of the knowledge of Next,  signed by the
President of Next.

            8.4 Each  Next  Stockholder  shall  have  complied  in all  material
respects with its agreements and covenants herein, and all  representations  and
warranties  of each Next  Stockholder  herein  shall be true and  correct in all
material  respects at the time of the Closing as if made at that time, except to
the extent they  expressly  relate to an earlier date,  and Sporting Magic shall
have  received a certificate  to that effect to the best  knowledge of each Next
Stockholder, signed by each Next Stockholder.

            8.5 Next shall  have  delivered  to  Sporting  Magic  good  standing
certificates of Next,  Next Marketing Inc. and Blue Sky Graphics Inc.,  dated no
more than 7 days  prior to the  Closing  Date,  from the  Secretary  of State of
Delaware or Indiana, as the case may be.

            8.6 Each Next  Stockholder  shall  have  delivered  to the  Transfer
Agent, certificates representing such Next Stockholder's Next Common Stock which
is being transferred hereunder,  which certificate shall have been duly endorsed
in blank by such Next Stockholder or with blank stock powers attached, in proper
form for transfer to Sporting Magic.

            8.7 Olshan shall have  delivered an opinion in the form set forth on
Schedule 8.7.

            8.8 The Young Non-Competition Agreement shall have been executed and
delivered.

            8.9 $100,000 shall have been delivered by Next to Young.

            8.10  Next  shall  have   provided   Sporting   Magic  with  audited
consolidated  financial  statements for the year ended December 31, 2000 and the
eleven month period ended November 30, 2001.

                                   Article IX

                               Conditions Of Next

            The obligations of Next and the Next  Stockholders to consummate the
transactions  contemplated hereby are subject to the satisfaction of each of the
following conditions:

            9.1 The  directors  of Sporting  Magic shall have duly  approved the
transactions contemplated hereby in accordance with applicable law.

            9.2  No  action  shall  have  been  taken,  and  no  statute,  rule,
regulation or order shall have been promulgated,  enacted,  entered, enforced or
deemed applicable to the transactions  contemplated hereby by any federal, state
or foreign  government or  governmental  authority or by any court,  domestic or
foreign,  including the entry of a preliminary  or permanent  injunction,  which
would (a) make the  transactions  contemplated  hereby illegal,  (b) require the
divestiture by Next or any subsidiary of Next of the shares of any company or of
a  material  portion of the  business  of Next and its  subsidiaries  taken as a
whole, (c) impose material limits on the ability of




                                       15


Next to  effectively  control  the  business of Next and its  subsidiaries,  (d)
otherwise materially adversely affect Next and its subsidiaries taken as a whole
or any Next  Stockholder,  or (e) if the  transactions  contemplated  hereby are
consummated,  subject  any  officer,  director  or  employee of Next to criminal
penalties  or to civil  liabilities  not  adequately  covered  by  insurance  or
enforceable indemnification maintained by Next.

            9.3  No action or proceeding before any court or governmental
authority,  domestic or foreign, by any government or governmental  authority or
by any other person,  domestic or foreign,  shall be  threatened,  instituted or
pending which would  reasonably be expected to result in any of the consequences
referred to in clauses (a) through (e) of paragraph 9.2 above;

            9.4 Sporting Magic shall have complied in all material respects with
its agreements and covenants herein, and all  representations  and warranties of
Sporting Magic herein shall be true and correct in all material  respects at the
time of  Closing as if made at that time,  except to the extent  they  expressly
relate to an earlier date,  and Next shall have  received a certificate  to that
effect, signed by the President of Sporting Magic;

            9.5 Young shall have  complied  in all  material  respects  with his
agreements and covenants herein;

            9.6  Sporting  Magic shall have  delivered  to Next a good  standing
certificate  of Sporting  Magic,  dated no more than 7 days prior to the Closing
Date, from the Secretary of State of Delaware;

            9.7  All  necessary  third  party  and  governmental   consents  and
approvals  required  for  transactions   contemplated  hereby  shall  have  been
obtained;

            9.8 Sporting  Magic shall have  delivered  to the Next  Stockholders
certificates representing the Exchange Consideration; and

            9.9 The  conditions  set forth in Article I shall have been complied
with by the appropriate parties.

            9.10 L. Stephen  Albright  shall have delivered of an opinion in the
form set forth on Schedule 9.10.

            9.11  Young  shall  have  signed a  lock-up  agreement,  in the form
attached  hereto as Schedule 9.11 (the "YOUNG  LOCK-UP"),  limiting his right to
sell any of his equity  interest in Sporting Magic for six months  following the
Closing.

            9.12   Sporting   Magic  shall  have  no  material   assets  and  no
liabilities,  and all costs incurred by Sporting Magic incident to the Agreement
shall have been paid or satisfied.

            9.13 Sporting Magic shall have filed the notice required pursuant to
Rule  14f-1 of the  Exchange  Act and  shall  have  mailed  such  notice  to its
stockholders.



                                       16


            9.14 The Young  Non-Competition  Agreement  shall have been executed
and delivered.

            9.15 Sporting Magic shall have delivered to Next a stockholder  list
dated the Closing Date. Except to reflect Sporting Magic's dividend distribution
scheduled  for  December 21, 2001,  the list of  stockholders  set forth on such
stockholder  list shall not differ in any  material  respect  from the  November
Stockholder  List,  and  with  regards  to L.  Stephen  Albright,  Young  or any
affiliates of Young it shall not differ at all.

                                    Article X

                                 Indemnification

            10.1  INDEMNIFICATION  BY  SPORTING  MAGIC.   Sporting  Magic  shall
indemnify  and hold harmless  Next and its agents,  representatives,  employees,
officers,   directors,   stockholders,   controlling   persons  and   affiliates
(collectively,  the "NEXT  INDEMNIFIED  PERSONS"),  and shall reimburse the Next
Indemnified Persons for, any loss, liability, claim, damage, expense (including,
but not limited to, costs of investigation and defense and reasonable attorneys'
fees) or  diminution  of value,  whether or not  involving a  third-party  claim
(collectively,  "DAMAGES") arising from or in connection with (a) any inaccuracy
in any of the representations and warranties of Sporting Magic in this Agreement
or in any  certificate or document  delivered by Sporting Magic pursuant to this
Agreement,  or any actions,  omissions or state of facts  inconsistent  with any
such representation or warranty, (b) any failure by Sporting Magic to perform or
comply with any covenant in this  Agreement,  or (c) any claim by any person for
brokerage or finder's fees or  commissions  or similar  payments  based upon any
agreement  or  understanding  alleged to have been made by any such  person with
Sporting  Magic (or any person  acting on its  behalf) in  connection  with this
Agreement.

            10.2 INDEMNIFICATION BY NEXT. Next shall indemnify and hold harmless
Sporting Magic, and its agents, representatives, employees, officers, directors,
stockholders,  controlling persons and affiliates  (collectively,  the "SPORTING
MAGIC  INDEMNIFIED  PERSONS") and shall reimburse the Sporting Magic Indemnified
Persons for, any Damages  arising from or in connection  with (a) any inaccuracy
in any of the representations and warranties of Next in this Agreement or in any
certificate  delivered  by Next  pursuant  to this  Agreement,  or any  actions,
omissions  or state  of facts  inconsistent  with  any  such  representation  or
warranty, (b) any failure by Next to perform or comply with any covenant in this
Agreement,  or (c) any claim by any Person for  brokerage  or  finder's  fees or
commissions  or similar  payments  based  upon any  agreement  or  understanding
alleged to have been made by such Person with Next (or any Person  acting on its
behalf)  in  connection  with  any  of the  transactions  contemplated  by  this
Agreement.

            10.3 LIMITATIONS AS TO AMOUNT. Neither Sporting Magic nor Next shall
have any  liability  (for  indemnification  or  otherwise)  with  respect to the
matters described in clause Sections 10.1 or 10.2, respectively, until the total
of all Damages with respect thereto exceeds $50,000.

            10.4 In case any action shall be commenced  involving  any person in
respect of which  indemnity may be sought  pursuant to Section 10.1 or 10.2 (the
"INDEMNIFIED  PARTY"),  the  Indemnified  Party shall promptly notify the person
against whom such indemnity may be sought



                                       17


(the  "INDEMNIFYING  PARTY") in  writing.  A delay in giving  notice  shall only
relieve the Indemnifying Party of liability to the extent the Indemnifying Party
suffers actual prejudice because of the delay. The Indemnifying Party shall have
the right,  at its option and expense,  to  participate in the defense of such a
proceeding or claim,  but not to control the defense,  negotiation or settlement
thereof,  which  control  shall at all times  rest with the  Indemnified  Party,
unless the  proceeding  or claim  involves  only  money  damages or relates to a
corporate  restructuring,  recapitalization  or,  not  an  injunction  or  other
equitable relief, and unless the Indemnifying Party:

            (a) irrevocably  acknowledges in writing complete responsibility for
and shall indemnify the Indemnified Party, and

            (b)  furnishes  satisfactory  evidence of the  financial  ability to
indemnify the Indemnified Party,

in which case the Indemnifying  Party may assume such control through counsel of
its choice and at its expense,  but the Indemnified Party shall continue to have
the right to be  represented,  at its own  expense,  by counsel of its choice in
connection with the defense of such a proceeding or claim.  If the  Indemnifying
Party does not assume control of the defense of such a proceeding or claim,  (i)
the entire defense of the proceeding or claim by the Indemnified Party, (ii) any
settlement made by the Indemnified  Party, and (iii) any judgment entered in the
proceeding  or claim shall be deemed to have been  consented to by, and shall be
binding on, the  Indemnifying  Party as fully as though it alone had assumed the
defense  thereof and a judgment had been entered in the  proceeding  or claim in
the  amount  of such  settlement  or  judgment,  except  that  the  right of the
Indemnifying   Party  to  contest  the  right  of  the   Indemnified   Party  to
indemnification  under the  Agreement  with respect to the  proceeding  or claim
shall not be extinguished.  If the Indemnifying Party does assume control of the
defense of such a proceeding  or claim,  it will not,  without the prior written
consent of the  Indemnified  Party settle the  proceeding or claim or consent to
entry  of  any  judgment   relating   thereto  which  does  not  include  as  an
unconditional term thereof the giving by the claimant to the Indemnified Party a
release from all liability in respect of the  proceeding  or claim.  The parties
hereto shall  cooperate  fully with each other in  connection  with the defense,
negotiation or settlement of any such proceeding or claim.

            10.5  The  parties  agree  that  all  of  the   representations  and
warranties contained herein shall survive the Closing and continue to be binding
regardless of any investigation made at any time by any party.

                                   Article XI

                              Post-Closing Matters

            11.1 At the Closing,  subject to the Next Stockholders  being deemed
to be stockholders of record of the reorganized  Sporting Magic,  Sporting Magic
will cause all of its officers and  directors to resign from office and to cause
to be  elected  to the  Board of  Directors  of  Sporting  Magic  those  persons
designated by Next to wit: Danny F. Cooke,  William B. Hensley,  Ronald Metz, G.
Michael Cross and Salvatore Geraci.




                                       18


            11.2  Absent the prior  written  consent of Young,  for the one year
period following the Closing Date, Sporting Magic shall not consummate a reverse
split  of the  Sporting  Magic  Common  Stock  unless  required  to do so by the
underwriter of a $3 million or greater public offering.

                                   Article XII

                                  Miscellaneous

            12.1 TERMINATION.  With respect to each company,  this Agreement may
be terminated and the transactions  contemplated  hereby may be abandoned (i) by
the mutual  consent of  Sporting  Magic and Next at any time,  or (ii) by either
Next or Sporting  Magic if the  transactions  contemplated  hereby have not been
consummated prior to January 31, 2002 (the  "TERMINATION  DATE") for any reason,
or (iii) by either Next or Sporting Magic if either  discovers a material breach
of a  representation,  warranty,  covenant  or  agreement  by the other and such
breach is not cured within ten (10) days of the breaching  party's  receipt of a
notice  from the  non-breaching  party.  In the  event of such  termination  and
abandonment,  none of Sporting Magic,  Next, Young nor the Next Stockholders (or
any of their  respective  directors  or  officers)  shall have any  liability or
further  obligation  to any other party to this  Agreement,  except that nothing
herein will  relieve  any party from  liability  for any willful  breach of this
Agreement.

            12.2  EXPENSES.  Whether or not the  transactions  contemplated  are
consummated,  all  out-of-pocket  costs and expenses incurred in connection with
the this Agreement and the transactions  contemplated  will be paid by the party
incurring such expenses.

            12.3  BROKERS.  Except as set forth on Schedule  12.3,  no broker or
finder is entitled to any  brokerage or finder's fee or other  commission or fee
from any  company or based upon  arrangements  made by or on behalf of any party
with respect to the transactions contemplated by this Agreement.

            12.4 ARBITRATION.  Any controversy  arising out of, connected to, or
relating to any transactions herein contemplated,  or this Agreement,  including
the  indemnification   provisions  contained  herein,  or  the  breach  thereof,
including,  but not limited to any claims of violations of Federal  and/or state
securities acts, banking statutes,  consumer protection statutes, federal and/or
state  anti-racketeering (e.g. RICO) claims as well as any common law claims and
any state law claims of fraud, negligence, negligent misrepresentations,  and/or
conversion and any disputes as to the  arbitrability  of any such claim shall be
settled by  arbitration  in the State of  Delaware  and in  accordance  with the
commercial  rules  of  the  American   Arbitration   Association  by  three  (3)
arbitrators  appointed  in  accordance  with such  rules.  Any  judgment  on the
arbitrator's award may be entered in any court having jurisdiction  thereof. The
arbitrators   shall  hear  and  determine  the  matter  and  shall  execute  and
acknowledge its award, in writing,  and if requested by either party, shall make
findings of fact and conclusions of law. Any award determined by the arbitrators
shall  be  final  and  binding  on the  parties,  however,  in the  event of any
misconduct,  partiality,  corruption or the like of any arbitrator,  the parties
shall  retain  any rights of appeal to which they may be  entitled  pursuant  to
applicable law. The cost and expense of  arbitration,  including the fees of the
arbitrator,  and the reasonable  legal and  accounting  fees and expenses of the
parties,




                                       19


shall be divided  between the parties in such  proportion as the arbitrators may
determine,  and  may  be  assessed  against  one  party  if the  arbitrators  so
determine.

            12.5 OTHER  ACTIONS.  Each of the parties  hereto shall  execute and
deliver such other documents, certificates, agreements and other writings and to
take such other  actions as may be  necessary or  desirable  to  consummate  the
transactions contemplated by this Agreement.

            12.6 ENTIRE  AGREEMENT;  WAIVER AND AMENDMENT.  This Agreement,  the
exhibits and schedules hereto contain the entire agreement by and among Sporting
Magic,  Next, Young and the Next  Stockholders  with respect to the transactions
contemplated  hereby. Any and all prior discussions,  negotiations,  commitments
and  understandings  relating  to the  subject  matter  of  this  Agreement  are
superseded by this  Agreement.  This  Agreement may not be modified,  amended or
terminated  except  by  a  written  agreement  specifically  referring  to  this
Agreement  signed by all of the  parties  hereto.  No  waiver  of any  breach or
default  hereunder  shall be  considered  valid unless in writing  signed by the
party  giving such  waiver,  and no such waiver  shall be deemed a waiver of any
subsequent breach or default of the same or similar nature.

            12.7  APPLICABLE  LAW.  This  Agreement  shall  be  governed  by and
construed in accordance with the laws of the State of Delaware without regard to
its principles of conflicts of laws.

            12.8  DESCRIPTIVE   HEADINGS.   The  descriptive  headings  are  for
convenience  of  reference  only and shall not affect in any way the  meaning or
interpretation of this Agreement.

            12.9 NOTICES. All notices or other communications hereunder shall be
in writing and shall be deemed to have been duly given if  delivered  personally
or sent by registered or certified mail postage prepaid, addressed as follows:

If to Sporting Magic

Sporting Magic, Inc.
Attn:  Mr. Buddy Young, President and CEO
17337 Ventura Boulevard, Suite 224
Encino, CA  91316

with a copy to:

L. Stephen Albright, Esq.
17337 Ventura Boulevard, Suite 224
Encino, CA  91316

If to Next, Next Marketing or Blue Sky:

Next, Inc.
Attn:  Dan Cooke, Chairman
6430 Cobble Lane
Harrison, TN  37341




                                       20


with a copy to:

Robert H. Friedman, Esq.
Olshan Grundman Frome Rosenzweig & Wolosky LLP
505 Park Avenue
New York, New York 10022

W. Scott McGinness, Jr., Esq.
Miller & Martin LLP
Suite 1000 Volunteer Building
832 Georgia Avenue
Chattanooga, TN  37402

            12.10 COUNTERPARTS.  This Agreement may be executed in any number of
counterparts,  each of which shall be deemed to be an original, but all of which
together shall constitute but one agreement.

            12.11 PUBLICITY. All public announcements relating to this Agreement
or the transactions  contemplated hereby will be made only as may be agreed upon
by Sporting Magic and Next or as required by Law. If public disclosure or notice
is required by Law, the  disclosing  party will use its best efforts to give the
other prior written notice of the disclosure to be made.

            12.12 GENDER;  NUMBER.  The use of a particular pronoun herein shall
not be restrictive as to gender, and the use of the singular or plural shall not
be  restrictive  as to  number,  but  shall be  interpreted  in all cases as the
context may require.

            12.13  SCHEDULES.  The Schedules  attached  hereto and/or  delivered
herewith are an integral part of this Agreement as if fully re-written herein.

            12.14 BINDING  EFFECT.  This Agreement will be binding upon and will
inure to the  benefit  of the  parties  and  their  respective  heirs,  personal
representatives, successors and permitted assigns. Except as herein provided, no
party  will have the  right to assign  this  Agreement,  or any of such  party's
rights hereunder, without the prior written consent of the other parties.

                          SIGNATURES ON FOLLOWING PAGE


                                       21


            IN  WITNESS  WHEREOF,  this  Agreement  has been duly  executed  and
delivered by the duly  authorized  officers of the parties hereto as of the date
first herein above written.

                                 SPORTING MAGIC, INC.

                                 By: /S/ BUDDY YOUNG
                                     --------------------------------------
                                      Buddy Young, President & CEO

                                 /S/ BUDDY YOUNG
                                 ------------------------------------------
                                 Buddy Young

                                 NEXT, INC.

                                 By: /S/ DANNY F. COOKE
                                     --------------------------------------
                                      Danny F. Cooke, Chairman

                                 THE WILLIAM B. III AND CINDY S. HENSLEY
                                 LIVING TRUST

                                 By: /S/ WILLIAM B. HENSLEY
                                     --------------------------------------
                                      Name:  William B. Hensley
                                      Title:    Trustee



                                 /S/ DANNY F. COOKE
                                 ------------------------------------------
                                 Danny F. Cooke

                                 /S/ WILLIAM B. HENSLEY
                                 ------------------------------------------
                                 William B. Hensley




                                       22

                                  SCHEDULE 1.2
                              TO EXCHANGE AGREEMENT

                       LIST OF POST CLOSING STOCK HOLDINGS

The  13,000,000  shares of Sporting  Magic Common Stock to be issued to the Next
Stockholders shall be distributed as follows

        NAME                                                 NO. OF SHARES
        ----                                                 -------------
        Danny F. Cooke                                       6,500,000
        William B. Hensley                                   3,250,000
        William B. III and Cindy S. Hensley Living Trust     3,250,000




                                  SCHEDULE 1.5
                              TO EXCHANGE AGREEMENT

                         YOUNG NON-COMPETITION AGREEMENT
                                 (SEE ATTACHED)


                            NON-COMPETITION AGREEMENT


            THIS NON-COMPETITION  AGREEMENT  ("AGREEMENT") is entered into as of
this __ day of December,  2001, by and between Sporting Magic,  Inc., a Delaware
corporation (the "SMI") and Buddy Young.

                                    RECITALS

            WHEREAS,  Buddy Young is the principal  stockholder of SMI and Danny
F. Cooke,  William B. Hensley and the William B. III and Cindy S. Hensley Living
Trust (the "TRUST") are the sole stockholders of Next, Inc. (together, the "NEXT
STOCKHOLDERS");

            WHEREAS, SMI, Next, Inc. ("NEXT"),  Mr. Young, Mr. Cooke Mr. Hensley
and the Trust are  parties an Exchange  Agreement  (the  "EXCHANGE  AGREEMENT"),
under which the Next Stockholders shall become the principal stockholders of SMI
and Mr. Young shall become a minority stockholder (the "REORGANIZATION"); and

            WHEREAS, in consideration for a payment of $350,000 and the issuance
of  300,000  shares of SMI common  stock,  par value  $0.001 per share  ("COMMON
STOCK"),  following the Reorganization Mr. Young has agreed to forego certain of
his rights to compete with a reorganized  SMI, subject to the conditions of this
Agreement.

            NOW,  THEREFORE,  in consideration of the premises above recited and
the  obligations  and  agreements  contained  in the Exchange  Agreement  and as
hereinafter set forth, the parties hereto agree as follows:

1.          NON-COMPETE.

            Mr. Young  covenants and agrees that for a period of nine (9) months
after the date of this Agreement, he shall not :

                        (i) directly or indirectly,  own, manage, operate, join,
control, finance or participate in the ownership, management, operation, control
or financing  of, or be connected as an officer,  director,  employee,  partner,
principal, agent, representative, consultant or otherwise with, or use or permit
his name to be used in  connection  with,  any business or  enterprise  which is
engaged in any business that is  competitive  with any business or enterprise in
which SMI or any affiliate of SMI is engaged on the date hereof, or had plans or
intentions to engage in as of the date hereof,  including,  without  limitation,
the manufacture,  distribution and marketing of apparel and promotional products
and  all  other  actions  contemplated  by the  Exchange  Agreement.  Mr.  Young
acknowledges  that SMI  operates on a national  basis (in the United  States and
Canada) and that this covenant  cannot be





limited  to a service  area in which SMI and its  affiliates  do  business.  The
foregoing  restrictions  shall not be construed to prohibit the ownership by Mr.
Young of less  than ten  percent  (10%) of any  class of  securities  or  equity
interest  of any  corporation  or other  business  entity  which is engaged in a
competitive  business  having a class of securities  registered  pursuant to the
Securities  Exchange Act of 1934, but neither Mr. Young nor any group of persons
including Mr. Young may in any way,  either  directly or  indirectly,  manage or
exercise  control  of any  such  corporation  or  entity,  guarantee  any of its
financial  obligations,  or otherwise  take any part in its business  other than
exercising rights as a stockholder; or

                        (ii) directly or  indirectly,  either for himself or any
other person (A) solicit or induce, or attempt to solicit or induce any employee
of,  or  sales  agent,  independent  sales  organization  or  other  independent
contractor  providing  services  to,  SMI or any  affiliate  of SMI to leave the
employ of or to cease to  provide  services,  in whole or in part to, SMI or any
affiliate of SMI, or to terminate or fail or refuse to renew or renegotiate, any
contract for services with SMI or any affiliate of SMI, whether such contract is
written or oral, (B) in any way interfere with the  relationship  between SMI or
any  affiliate  of SMI and an  employee  of or sales  agent,  independent  sales
organization  or  independent  contractor  of SMI or any  affiliate  of SMI, (C)
employ,  or otherwise  engage as an employee,  sales  agent,  independent  sales
organization or independent contractor,  consultant or otherwise,  any employee,
sales agent,  independent sales organization or independent contractor of SMI or
any affiliate of SMI (this  subsection  (ii) shall not apply to any person after
18 months have elapsed subsequent to the date on which such person's  employment
by or association with SMI has  terminated),  or (D) induce or attempt to induce
any customer,  supplier,  licensee, or business relation of SMI or any affiliate
of SMI,  to  cease  doing  business  with SMI or such  affiliate,  or in any way
interfere with the relationship  between any customer,  supplier,  licensee,  or
business relation of SMI or any affiliate of SMI.

            In the event of a breach by Mr.  Young of any of the  covenants  set
forth above,  the term of such  covenant  shall be extended by the period of the
duration of such breach.

2.          CONSIDERATION.

            On the date  hereof,  SMI (i) shall issue  300,000  shares of Common
Stock,  to Mr.  Young and (ii)  assume  Next's  obligation  to pay to Mr.  Young
$350,000 as set forth in Section 1.5 of the Exchange Agreement.

3.          REMEDIES.

            If Mr. Young breaches any of the covenants set forth above, SMI will
be entitled to the following remedies:




            (a)  Damages  from Mr.  Young,  including  the  recovery  of actual,
consequential,  incidental,  and other  damages,  as may be  appropriate  in the
circumstances, plus reasonable costs and attorney's fees incurred as a result of
the breach; and

            (b) In  addition  to  rights  to  damages  and any  other  legal  or
equitable  remedies,  to obtain injunctive or other equitable relief to restrain
any breach or threatened  breach,  and/or otherwise to specifically  enforce the
provisions  of Section 1 of this  Agreement,  it being agreed that money damages
alone would be inadequate to  compensate  SMI and would be an inadequate  remedy
for such breach.  Mr. Young  acknowledges  and agrees that a violation of any of
the provisions of Section 1 of this Agreement would cause irreparable  injury to
SMI. Mr. Young and SMI acknowledge and agree that any legal requirement that SMI
show or establish the existence of irreparable harm or injury shall be satisfied
by the introduction and receipt of this Agreement into evidence.

            (c) The rights and  remedies  of the parties to this  Agreement  are
cumulative and not alternative.

4.          SUCCESSORS AND ASSIGNS.

            This  Agreement  will be binding  upon the parties and will inure to
the benefit of SMI and its respective  successors and assigns, and Mr. Young and
his heirs,  representatives  and  assigns.  Neither  party may assign any of its
rights  under this  Agreement  without  the prior  written  consent of the other
party.  Notwithstanding the foregoing, SMI may assign this Agreement without Mr.
Young's consent in the event SMI is merged or consolidated  into or with another
corporation or in the event such corporation  acquires all or substantially  all
of SMI's assets.

5.          WAIVER.

            Neither  the failure  nor any delay by any party in  exercising  any
right,  power,  or  privilege  under  this  Agreement,  and no single or partial
exercise of any such right,  power, or privilege,  will operate as: (i) a waiver
of such right,  power,  or  privilege,  or (ii) the exercise of any other right,
power, or privilege. To the maximum extent permitted by applicable law:

                        (a) No claim or right arising out of this  Agreement can
be discharged by one party,  in whole or in part, by a waiver or renunciation of
the claim or right unless in writing and signed by the other party;

                        (b) No  waiver  that  may be  given  by a party  will be
applicable except in the specific instance for which it is given; and

                        (c) No notice  to or demand on one party  will be deemed
to be a waiver of any  obligation  of such  party,  or of the right of the party
giving such notice or demand, to take further action without notice or demand as
provided in this Agreement.





6.          GOVERNING LAW.

            This  Agreement  will  be  governed  by the  laws  of the  State  of
Tennessee  without  regard to conflicts of laws  principles.  Any legal  action,
including an original  complaint or third party claim, by or in the right of any
party  to  this  Agreement  or any  action  arising  under  or  related  to this
Agreement,  including  but  not  limited  to a  claim  for  payment  under  this
Agreement,  and also  including  any  non-contract  claim,  shall be brought and
maintained  exclusively in a state or federal court of competent  subject matter
jurisdiction in Harrison, Tennessee, and the parties hereby submit themselves to
the personal  jurisdiction and venue of those courts for the purpose of any such
actions and hereby waive any defense related to personal jurisdiction,  process,
or venue.

7.          SEVERABILITY.

            Whenever  possible each provision and term of this Agreement will be
interpreted  in a manner to be effective  and valid but if any provision or term
of this Agreement is held to be prohibited by or invalid, then such provision or
term will be ineffective  only to the extent of such  prohibition or invalidity,
without invalidating or affecting in any manner whatsoever the remainder of such
provision or term or the remaining provisions or terms of this Agreement. If any
of the  covenants  set  forth  in  Section  1 of this  Agreement  are held to be
unreasonable,  arbitrary,  or against public policy or otherwise  unenforceable,
such covenant(s) will be considered  divisible with respect to scope,  time, and
geographic area, and in such lesser scope,  time and geographic area, as will be
effective, binding and enforceable against Mr. Young.

8.          SECTION HEADINGS, CONSTRUCTION.

            The  headings  of  Sections  in  this  Agreement  are  provided  for
convenience  only and will not affect its  construction or  interpretation.  All
words used in this Agreement will be construed to be of such gender or number as
the circumstances require.

9.          NOTICES.

            All notices and other  communications  hereunder shall be in writing
and  shall be deemed  given  when  delivered  personally,  one day  after  being
delivered to an overnight  courier or when telecopied (with a confirmatory  copy
sent by overnight courier) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):

                        (a)         if to SMI:

                                    Sporting Magic, Inc.
                                    c/o Next, Inc.
                                    6430 Cobble Lane
                                    Harrison, TN  37341




                        (b)         if to Mr. Young:

                                    Buddy Young
                                    17337 Ventura Boulevard
                                    Suite 224
                                    Encino, CA  91316

10.         AMENDMENTS.

            This  Agreement  may not be  modified  or  amended,  except with the
mutual written consent of SMI and Mr. Young.

11.         ENTIRE AGREEMENT.

            This Agreement  constitutes  the entire  agreement among the parties
with respect to the specific  subject  matter  hereof and  supersedes  all prior
written and oral  agreements and  understandings  between SMI and Mr. Young with
respect to the subject matter of this Agreement.

            IN  WITNESS   WHEREOF,   the   parties   hereto   have  caused  this
Non-Competition  Agreement to be executed  and  delivered as of the day and year
first above written.

                                      Sporting Magic, Inc.


                                      By:________________________________
                                           Danny F. Cooke



                                         ________________________________
                                         Buddy Young



                                 SCHEDULE 2.4(A)
                              TO EXCHANGE AGREEMENT

                      SPORTING MAGIC FOREIGN QUALIFICATIONS

                                   California






                                  SCHEDULE 2.11
                              TO EXCHANGE AGREEMENT

                    SPORTING MAGIC EMPLOYEES AND COMPENSATION

NAME                  TITLE                                     COMPENSATION
- ----                  -----                                     ------------
Buddy Young           President and Chief Executive Officer     None








                                  SCHEDULE 2.14
                              TO EXCHANGE AGREEMENT

                            SPORTING MAGIC CONTRACTS


(1)  Qualification  to do  business  in the  State of  California  as a  foreign
     corporation dated July 27, 1998 (California  Secretary of State file number
     C2120976).






                                 SCHEDULE 3.5(B)
                              TO EXCHANGE AGREEMENT

                             NEXT OPTIONS, WARRANTS

     Triad Associates, Inc.        Such  number of shares as shall  equal  eight
                                   percent  (8%) of the issued  and  outstanding
                                   common  stock   immediately   following   the
                                   closing (See Item 3, Schedule 3.11)

     Olympic                       Capital Group 550,000  shares common stock to
                                   be issued immediately  following closing (See
                                   Item 3, Schedule 3.11)

     RAE & Company                 750,000  shares  common  stock  to be  issued
                                   immediately  following  closing  (See Item 7,
                                   Schedule 3.11)

     Employees, Directors
     and Consultants               513,000  shares  common  stock under  options
                                   with two year cliff vesting at a strike price
                                   of $0.025 per share

     M&J Holdings, Inc.            100,000  shares  common  stock  to be  issued
                                   following   completion   of  the  $1  million
                                   convertible note offering and upon closing of
                                   the Exchange  Agreement (See Item 4, Schedule
                                   3.11)

     Convertible Note Holders      1 million  shares  common  stock to be issued
                                   upon conversion of up to $1 million principal
                                   amount  Convertible Notes at closing at $1.00
                                   per share






                                 SCHEDULE 3.6(C)
                              TO EXCHANGE AGREEMENT

                       EXCEPTIONS TO FINANCIAL STATEMENTS


The Next Financial Statements do not include any provisions for corporate income
taxes,  as each of  Next  Marketing  Inc.  and  Blue  Sky  Graphics,  Inc.  have
historically elected to be treated as a "S" corporation.





                                 SCHEDULE 3.7(A)
                              TO EXCHANGE AGREEMENT

                                 NEXT CONFLICTS

              None, except as described in Item 5 of Schedule 3.11.






                                  SCHEDULE 3.8
                              TO EXCHANGE AGREEMENT

                                 NEXT LITIGATION

Bill Kinney, a photographer  whose photographs  appeared on the cover of Field &
Stream  magazine,   has  alleged  that  Blue  Sky  Graphics,   Inc.   improperly
incorporated  copies of his photographs on T-Shirts  marketed under the American
Wildlife brandname.  No litigation has been filed and Blue Sky Graphics is being
represented by Indianapolis counsel in negotiating a settlement of this matter.






                               SCHEDULE 3.10
                           TO EXCHANGE AGREEMENT

                        NEXT EMPLOYEE BENEFIT PLANS

                     Blue Sky Graphics, Inc. - Non Standardized 401(k)
                     Profit Sharing Plan and Trust - Norwest Bank Indiana, N.A.

                     Norwest Bank Indiana, N.A. Deferred Contribution
                     Plan and Trust






                                  SCHEDULE 3.11
                              TO EXCHANGE AGREEMENT

                             NEXT MATERIAL CONTRACTS

1.   Agreement dated July 24, 2001 with Triad Associates, Inc.

2.   Employment  Agreements  dated as of December  19, 2001 with Danny F. Cooke,
     William B. Hensley III, and David Gleason.

3.   Contract dated November 7, 2001 with Morgan,  Spaulding, Inc. with attached
     Term Sheet

4.   Contract dated November 8, 2001 with M&J Holdings, Inc.

5.   AmSouth Bank Loan and Security  Agreement dated April 19, 1999, as amended,
     together  with related  documentation  (as to which Next has  requested and
     received a  temporary  consent  that is valid  through  January 15, 2002 in
     connection with the transactions contemplated hereby).

6.   Engagement Agreement with Marcum & Kleigman LLP

7.   Consulting and Noncompetition Agreement with RAE & Company

8.   Note (Next,  Inc.) to First  Federal  Savings Bank of Wabash dated June 22,
     2001 in the original  principal  amount of  $495,974.56,  with related loan
     documentation

9.   Note (Next,  Inc.) to First Federal Savings Bank of Wabash dated January 4,
     2001 in the  original  principal  amount  of  $25,000,  with  related  loan
     documentation (Dunbrooke Worldwide)

10.  Note (Next,  Inc.) to First Federal Savings Bank of Wabash dated January 4,
     2001 in the  original  principal  amount  of  $25,000,  with  related  loan
     documentation (Alpha Shirts)

11.  Note (Next,  Inc.) to First Federal Savings Bank of Wabash dated January 4,
     2001 in the  original  principal  amount  of  $25,000,  with  related  loan
     documentation (Hartwell Sports)

12.  Note (Next,  Inc.) to First  Federal  Savings Bank of Wabash dated March 1,
     2001 in the  original  principal  amount of  $500,100,  with  related  loan
     documentation

13.  Note (Next, Inc.) to First Federal Savings Bank of Wabash dated January 17,
     2001 in the  original  principal  amount of  $300,000,  with  related  loan
     documentation.




14.  Note (Blue Sky  Graphics,  Inc.) to Frances  Slocum Bank and Trust  Company
     dated December 1, 1996 in the original  principal amount of $367,500,  with
     related loan documentation.






                                  SCHEDULE 5.4
                              TO EXCHANGE AGREEMENT

                             PERMITTED INDEBTEDNESS

1.   Indebtedness  incurred in the ordinary course of business  through draws on
     the existing AmSouth Bank line of credit (See Item 5, Schedule 3.11)

2.   Indebtedness  to be incurred  pursuant to the $1 million  convertible  note
     offering pursuant to the M&J Holdings,  Inc. Placement  Agreement (See Item
     4, Schedule 3.11)






                                  SCHEDULE 7.6
                              TO EXCHANGE AGREEMENT

                  REGISTRATION FOR RESALE OF CONSULTANT SHARES

     Triad Associates, Inc.       1.1  million  shares of  Sporting  Magic
                                  Common Stock

     Olympic Capital Group        550,000 shares of Sporting Magic Common Stock

     RAE & Company                750,000 shares of Sporting Magic Common Stock






                                  SCHEDULE 8.7
                              TO EXCHANGE AGREEMENT

     FORM OF LEGAL OPINION OF OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP
                                 (SEE ATTACHED)












                                December __, 2001





Sporting Magic, Inc.
17337 Ventura Boulevard
Suite 224
Encino, California 91316

                            Re: NEXT, INC.

Ladies and Gentlemen:

            We have acted as counsel to Next, Inc., a Delaware  corporation (the
"COMPANY"),  in connection  with the  transactions  contemplated by the Exchange
Agreement  dated as of December __, 2001 (the "EXCHANGE  AGREEMENT"),  among the
Company,  Dan Cooke, Bill Hensley,  Sporting Magic, Inc., a Delaware corporation
("SPORTING  MAGIC"),  and Buddy Young.  This  opinion is being  delivered to you
pursuant to Section 8.8 of the Exchange Agreement. Capitalized terms used herein
and not otherwise  defined shall have the meanings ascribed to such terms in the
Exchange Agreement.

            In connection with the opinions  expressed  herein, we have examined
originals  or copies  and,  to the extent we have  deemed  appropriate,  we have
relied upon the following:

                        (1) the Exchange Agreement;

                        (2) the Cash Escrow Agreement;

                        (3) the Stock Escrow Agreement;

                        (4) the Young Non-Competition Agreement;

                        (5) the Young lock-up agreement dated December __, 2001;

                        (6) the Written Action in Lieu of a Meeting of the Board
of Directors of the Company dated December __, 2001; and





                        (7) the  Written  Action  in Lieu  of a  Meeting  of the
stockholders of the Company dated December __, 2001.

                        As used herein, the term "BASIC DOCUMENTS" refers to the
documents listed in items 1-5 above.

                        We have also examined such other  documents,  agreements
and records and made such investigations and examinations of law as we have
deemed necessary or appropriate as a basis for the opinions set forth herein. As
to any facts material to this opinion, we have relied upon the corporate records
of the Company,  certifications,  statements and representations of officers and
other  representatives of the Company,  certificates of public officials and the
representations,  warranties  and  covenants  of the  parties  set  forth in the
Exchange Agreement, and are assuming that such certifications,  representations,
warranties  and covenants  were when made,  and on the date hereof are, true and
complete.  We  have  made  no  independent  investigation  of  the  accuracy  or
completeness of such matters.

                        Any   reference   herein  to  "our   knowledge"  or  any
derivation  thereof  shall mean the actual  knowledge  of  attorneys in the firm
actually  involved in the  transactions  contemplated by the Exchange  Agreement
without any special or additional  investigation  undertaken for the purposes of
this opinion.

                        In our  examination,  we have assumed the genuineness of
all signatures,  the legal capacity of natural  persons,  the  completeness  and
authenticity  of all documents  submitted to us as originals,  the conformity to
original documents of all documents  submitted to us as certified or photostatic
copies,  and the  authenticity  of the originals of such copies,  which facts we
have not independently verified. We have further assumed without any independent
investigation  (i) the due  organization and valid existence of each party other
than the Company, (ii) the full power and authority of each party other than the
Company to execute,  deliver and perform each document heretofore,  or hereafter
to be,  executed  and  delivered  or to be  done by such  party,  (iii)  the due
authorization,  execution  and  delivery by each party other than the Company of
each  document  heretofore,  or hereafter to be,  executed and delivered by such
party and (iv) the legality,  validity,  binding effect and enforceability as to
each party other than the Company of each document  heretofore,  or hereafter to
be, executed and delivered and of each other act heretofore, or hereafter to be,
done by such party.

                        Based upon the foregoing and upon such  investigation as
we have deemed necessary, we are of the following opinion:

                        1. The  Company  is a  corporation  duly  organized  and
validly existing under the laws of the State of Delaware and is in good standing
under  such laws.  The  Company  has the  requisite  corporate  power to own the
properties owned by it and to carry on its business as presently conducted.





                        2. The Company  has all  requisite  corporate  power and
authority  to  execute  and  deliver  the Basic  Documents  and to carry out and
perform its obligations under the terms of the Basic Documents.

                        3. The Company's authorized capital consists entirely of
______________ shares of Next Common Stock.

                        4. The Next Common  Stock to be exchanged on the Closing
Date, pursuant to the Exchange  Agreement,  has been duly and validly authorized
and issued, is fully paid and non-assessable and, to our knowledge,  free of any
liens, encumbrances and preemptive or similar rights.

                        5. All corporate action on the part of the Company,  its
directors and stockholders necessary for the authorization,  execution, delivery
and  performance  of the Basic  Documents and the  performance  of the Company's
obligations  under  the  Basic  Documents  has  been  taken.  Each of the  Basic
Documents,  when executed and  delivered by the Company,  as  applicable,  shall
constitute the valid and binding obligations of the Company, enforceable against
it in  accordance  with  their  respective  terms,  except  to the  extent  that
enforceability  thereof  may be limited by  applicable  bankruptcy,  insolvency,
reorganization,  fraudulent conveyance, fraudulent transfer, moratorium or other
similar  laws  affecting  creditors'  rights  generally  or  by  the  principles
governing the availability of equitable remedies.

                        6.  The  execution,  delivery  and  performance  of  and
compliance  by the Company with the terms of the Basic  Documents do not violate
any provision of the Company's  Certificate of Incorporation  or Bylaws,  or any
provision of any applicable federal, state or local law, rule or regulation.

                        7.  No  consent,   approval  or   authorization   of  or
designation,  declaration or filing with any governmental  authority on the part
of the Company is required in connection  with the valid  execution and delivery
of the Exchange Agreement and the other agreements contemplated thereby.


                        We are  authorized  to practice  law in the State of New
York and we do not purport to be experts on, or to express any opinion hereunder
concerning,  any law other  than the law of the State of New York,  the  General
Corporation Law of the State of Delaware (the "DGCL") and the federal law of the
United  States of America.  In rendering  our opinion in the second  sentence of
paragraph (5) above,  we have assumed that the laws of the State of Delaware are
the same as the laws of the State of New York.





                        The  opinions  expressed  herein are  rendered as of the
date hereof only in connection with the Exchange Agreement and are solely for
your benefit.  These opinions may not be relied upon for any other purpose,  and
may not be furnished  to, quoted to or relied upon in any manner for any purpose
by any other person, firm or corporation.  Our opinions are expressly limited to
matters  set forth  above and we render no opinion,  whether by  implication  or
otherwise,  as to any  other  matters  relating  to the  Company.  We  assume no
obligation to advise you of facts,  circumstances,  events or developments  that
hereafter may be brought to our attention and which may alter,  affect or modify
the opinions expressed herein.


                                    Very truly yours,



                                    OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP








                                  SCHEDULE 9.10
                              TO EXCHANGE AGREEMENT

                  FORM OF LEGAL OPINION OF L. STEPHEN ALBRIGHT
                                 (SEE ATTACHED)












                                December __, 2001





Next, Inc.
6430 Cobble Lane
Harrison, Tennessee  37341

                            Re: SPORTING MAGIC, INC.

Ladies and Gentlemen:

                        I have  acted as  counsel  to  Sporting  Magic,  Inc.  a
Delaware  corporation  (the  "COMPANY"),  in  connection  with the  transactions
contemplated  by the  Exchange  Agreement  dated as of  December  __,  2001 (the
"EXCHANGE  AGREEMENT"),  among the Company,  Buddy Young, Next, Inc., a Delaware
corporation,  Dan Cooke and Bill  Hensley.  This  opinion  is  furnished  to you
pursuant  to Section  9.11 of the  Exchange  Agreement.  Capitalized  terms used
herein and not otherwise  defined shall have the meanings ascribed to such terms
in the Purchase Agreement.

                        In connection with the opinions expressed herein, I have
examined originals or copies and, to the extent I have deemed appropriate, I
have relied upon the following:

                        (1) the Exchange Agreement;

                        (2) the Cash Escrow Agreement;

                        (3) the Stock Escrow Agreement;

                        (4) the Young Non-Competition Agreement;

                        (5) the Young  lock-up  agreement  dated  December  __,
2001; and

                        (6) the  Written  Action  in Lieu of a  Meeting  of the
Board of Directors of the Company dated December __, 2001.





                        As used herein, the term "BASIC DOCUMENTS" refers to the
documents listed in items 1-5 above.

                        I have also  examined such other  documents,  agreements
and records and made such investigations and examinations of law as I have
deemed necessary or appropriate as a basis for the opinions set forth herein. As
to any facts material to this opinion,  I have relied upon the corporate records
of the Company,  certifications,  statements and representations of officers and
other  representatives of the Company,  certificates of public officials and the
representations,  warranties  and  covenants  of the  parties  set  forth in the
Exchange Agreement,  and am assuming that such certifications,  representations,
warranties  and covenants  were when made,  and on the date hereof are, true and
complete.  I  have  made  no  independent   investigation  of  the  accuracy  or
completeness of such matters.

                        In my examination, I have assumed the genuineness of all
signatures, the legal capacity of natural persons, the completeness and
authenticity  of all documents  submitted to me as originals,  the conformity to
original documents of all documents  submitted to me as certified or photostatic
copies, and the authenticity of the originals of such copies, which facts I have
not  independently  verified.  I have further  assumed  without any  independent
investigation  (i) the due  organization and valid existence of each party other
than the Company, (ii) the full power and authority of each party other than the
Company to execute,  deliver and perform each document heretofore,  or hereafter
to be,  executed  and  delivered  or to be  done by such  party,  (iii)  the due
authorization,  execution  and  delivery by each party other than the Company of
each  document  heretofore,  or hereafter to be,  executed and delivered by such
party and (iv) the legality,  validity,  binding effect and enforceability as to
each party other than the Company of each document  heretofore,  or hereafter to
be, executed and delivered and of each other act heretofore, or hereafter to be,
done by such party.

                        Based upon the foregoing and upon such  investigation as
I have deemed necessary, I am of the following opinion:

                        1. The  Company  is a  corporation  duly  organized  and
validly existing under the laws of the State of Delaware and is in good standing
under  such laws.  The  Company  has the  requisite  corporate  power to own the
properties owned by it and to carry on its business as presently conducted.

                        2. The Company  has all  requisite  corporate  power and
authority to execute and deliver the Basic Documents,  and to issue the Exchange
Consideration,  and to carry out and perform its obligations  under the terms of
the Basic Documents.

                        3. The authorized  capital stock of the Company consists
entirely of 25,000,000 shares of Sporting Magic Common Stock.




                        4.  Immediately  after giving effect to the transactions
contemplated  by the Exchange  Agreement,  the Exchange  Consideration  sold and
issued on the Closing Date will have been duly and validly authorized and issued
and,  assuming  payment  therefor  against  delivery as provided in the Exchange
Agreement,  will be  fully  paid  and  non-assessable  and  free  of any  liens,
encumbrances and preemptive or similar rights.

                        5. All corporate action on the part of the Company,  its
directors and stockholders necessary for the authorization,  execution, delivery
and performance of the Basic Documents,  the authorization,  exchange,  issuance
and delivery of the Exchange  Consideration and the performance of the Company's
obligations  under  the  Basic  Documents  has  been  taken.  Each of the  Basic
Documents,  when executed and delivered by the Company and Young, as applicable,
shall constitute the valid and binding  obligations of the Company and Young, as
applicable,  enforceable against them in accordance with their respective terms,
except to the extent that  enforceability  thereof may be limited by  applicable
bankruptcy,  insolvency,   reorganization,   fraudulent  conveyance,  fraudulent
transfer, moratorium or other similar laws affecting creditors' rights generally
or by the principles governing the availability of equitable remedies.

                        6.  The  execution,  delivery  and  performance  of  and
compliance by the Company with the terms of the Basic Documents and the issuance
of the Exchange Consideration: (i) do not violate any provision of the Company's
Certificate  of  Incorporation  or Bylaws,  or any  provision of any  applicable
federal, state or local law, rule or regulation.

                        7.  Except as  provided in the  Exchange  Agreement  and
except for the filing of a Form D with the  Securities  and Exchange  Commission
and filings under state "Blue Sky" laws, no consent,  approval or  authorization
of or designation,  declaration or filing with any governmental authority on the
part of the Company or Young is required in connection  with the valid execution
and delivery of the Exchange  Agreement  and the other  agreements  contemplated
thereby or the offer,  sale or issuance of the  Exchange  Consideration,  or the
consummation of any other transaction contemplated on the part of the Company or
Young thereby.

                        8.  The  offer,   sale  and  issuance  of  the  Exchange
Consideration  to be  issued  in  conformity  with  the  terms  of the  Exchange
Agreement constitute  transactions exempt from the registration  requirements of
Section 5 of the Securities Act of 1933, as amended,  and the "Blue Sky" laws of
the various states (other than state notice filings).

                        I am are  authorized  to  practice  law in the  State of
California  and I do not  purport to be an expert on, or to express  any opinion
hereunder concerning, any law other than the law of the State of California, the
General  Corporation  Law of the State of Delaware  (the "DGCL") and the federal
law of the  United  States of  America.  In  rendering  my opinion in the second
sentence of  paragraph  (5) above,  I have assumed that the laws of the State of
Delaware are the same as the laws of the State of California.




                        The  opinions  expressed  herein are  rendered as of the
date hereof only in  connection  with the Exchange  Agreement and are solely for
your benefit.  These opinions may not be relied upon for any other purpose,  and
may not be furnished  to, quoted to or relied upon in any manner for any purpose
by any other person,  firm or  corporation.  My opinion is expressly  limited to
matters  set forth  above and I render no  opinion,  whether by  implication  or
otherwise,  as to any  other  matters  relating  to the  Company.  I  assume  no
obligation to advise you of facts,  circumstances,  events or developments  that
hereafter may be brought to my attention  and which may alter,  affect or modify
the opinions expressed herein.


                                Very truly yours,



                                L. Stephen Albright, Esq.







                                  SCHEDULE 9.11
                              TO EXCHANGE AGREEMENT

                         FORM OF YOUNG LOCK-UP AGREEMENT
                                 (SEE ATTACHED)





                                LOCKUP AGREEMENT

                                December __, 2001

Next, Inc.
6430 Cobble Lane
Harrison, TN 37341

Sports Magic, Inc.
6430 Cobble Lane
Harrison, TN 37341

            In  consideration   for  Sporting  Magic,   Inc.'s  (the  "COMPANY")
commitment to (i) issue the undersigned  300,000 shares of common stock and (ii)
assume  the  obligation  to pay  the  undersigned  $350,000  (the  "OBLIGATION")
pursuant to the terms and conditions set forth in the Exchange  Agreement by and
among the undersigned,  Company, Next, Inc. ("NEXT"), Danny F. Cooke, William B.
Hensley and the William B. III and Cindy S. Hensley  Living Trust (the "EXCHANGE
AGREEMENT"),  and for other good and  valuable  consideration,  the  receipt and
sufficiency of which is hereby acknowledged,  the undersigned hereby agrees that
he will not,  directly or indirectly,  sell,  offer,  contract or option to sell
(including without limitation any short sale),  pledge,  transfer,  establish an
open "put  equivalent  position"  within the meaning of Rule 16a-l(h)  under the
Securities  Exchange Act of 1934, as amended, or otherwise dispose of any of the
equity  securities of the Company (the  "SHARES")  held by the  undersigned,  or
publicly announce the undersigned's intention to do any of the foregoing,  for a
period  commencing on the date hereof and continuing for six months  thereafter;
PROVIDED,  HOWEVER,  that commencing on the three month  anniversary of the date
hereof,  the undersigned is permitted to sell up to 10,000 Shares per month. The
undersigned also agrees and consents to the entry of stop transfer  instructions
with the Company's  transfer agent and registrar against the transfer of Shares,
or securities  convertible into or exchangeable or exercisable for Shares,  held
by the undersigned except in compliance with the foregoing restrictions.

            This Agreement is irrevocable and will be binding on the undersigned
and his respective successors, heirs, personal representatives, and assigns.

            This Agreement, however, shall terminate immediately should (a) Next
or the Company  register any Shares with the Securities and Exchange  Commission
(the  "COMMISSION")  while  this  Agreement  is in effect  other than (i) Shares
registered  pursuant  to Section  7.6 of the  Exchange  Agreement,  (ii)  Shares
registered  pursuant to  acquisitions  made by the Company if the  recipients of
such Shares execute Lockup Agreements with terms substantially  similar to those
contained in this Agreement ("SIMILAR LOCKUP AGREEMENTS") or (iii) following the
payment  of the  Obligation,  Shares  registered  for Dan Cooke or Bill  Hensley
following their execution of Similar Lockup Agreements,  (b) Next or the Company
fail to timely file any mandatory  disclosure  documents  with the Commission or
(c) the Company  complete a reverse  stock split  following a $3 million  public
secondary offering.

                                       Very truly yours,


                                       Buddy Young






                                  SCHEDULE 12.3
                              TO EXCHANGE AGREEMENT

                           BROKERAGE AND FINDER'S FEES

                               See Schedule 3.5(a)
EX-99 4 exhibit992_21102.htm sec document 

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


                      AMENDMENT NO. 1 TO EXCHANGE AGREEMENT

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

                                  BY AND AMONG

                       SPORTING MAGIC, INC., BUDDY YOUNG,

               NEXT, INC., DANNY F. COOKE, WILLIAM B. HENSLEY AND

              THE WILLIAM B. III AND CINDY S. HENSLEY LIVING TRUST



                                JANUARY 18, 2002







                      AMENDMENT NO. 1 TO EXCHANGE AGREEMENT

            THIS AMENDMENT NO. 1 TO THE EXCHANGE AGREEMENT (this "AMENDMENT") is
entered  into as of January 18,  2002,  by and among  Sporting  Magic,  Inc.,  a
Delaware corporation  ("SPORTING MAGIC"); Buddy Young, the principal stockholder
of Sporting Magic ("YOUNG");  Next, Inc., a Delaware corporation  ("NEXT");  and
Danny F. Cooke,  William B. Hensley, and The William B. III and Cindy S. Hensley
Living trust, the sole stockholders of Next (together, the "NEXT STOCKHOLDERS").
Capitalized  terms used herein and not otherwise defined shall have the meanings
ascribed to them in the Exchange Agreement (as defined below).

                              W I T N E S S E T H :

            WHEREAS,  Sporting Magic,  Young, Next and the Next Stockholders are
parties to that certain Exchange Agreement dated as of December 21, 2001, a copy
of which is  attached  hereto  as  Exhibit  A (the  "EXCHANGE  AGREEMENT");  and


            WHEREAS,  the parties hereto wish to amend the Exchange Agreement as
set forth below.

            NOW,  THEREFORE,  in  consideration  of the  premises and the mutual
covenants and agreements herein contained,  the parties do hereby agree, subject
to the terms and conditions hereinafter set forth, as follows:

                                    ARTICLE I
                               EXCHANGE OF SHARES

            1.2         THE EXCHANGE.

            Sections 1.2(a) and (b) of the Exchange Agreement are hereby deleted
in their entirety and replaced with the following:

                        (a) the Next Stockholders  shall irrevocably  assign and
transfer  to  Sporting  Magic  all of the  outstanding  common  equity  of Next,
consisting of 6,000,000 shares of common stock, $0.0001 par value per share (the
"NEXT COMMON STOCK");

                        (b) Sporting Magic shall issue to the Next Stockholders,
pro rata,  6,000,000  shares of  Sporting  Magic  Common  Stock as  outlined  in
Schedule 1.2 (the "EXCHANGE CONSIDERATION")

            1.5         YOUNG NON-COMPETE.

            Section  1.5 of the  Exchange  Agreement  is hereby  deleted  in its
entirety and replaced with the following:



                                       1


            As  of  the  Closing  Date,   Sporting  Magic  shall  enter  into  a
non-compete  agreement with Young,  in the form attached  hereto as Schedule 1.5
(the "YOUNG  NON-COMPETITION  AGREEMENT"),  in exchange for which Sporting Magic
shall (i) cause Next to issue to Young 300,000  shares of Next  Preferred  Stock
(as defined in Section 3.5 hereof) at the Closing and (ii) assume the obligation
to pay to Young  $350,000.  As of the date  hereof,  Young has already  received
$25,000 of this consideration and Young shall receive an additional  $100,000 no
later than 72 hours prior to the scheduled Closing Date. Young shall receive the
remaining  $225,000 on or before the date that is 90 days  following the Closing
Date.

                                   ARTICLE III
                       NEXT REPRESENTATIONS AND WARRANTIES

3.5         CAPITALIZATION.

            Section  3.5(a) of the Exchange  Agreement is hereby  deleted in its
entirety and replaced with the following:

            (a) The  authorized  capital  stock  of Next  consists  entirely  of
50,000,000  shares of common stock,  $0.0001 par value per share, and 10,000,000
shares of  preferred  stock,  of which  6,000,000  shares  of  common  stock and
7,000,000 shares of Series A preferred  stock,  $0.0001 par value per share (the
"NEXT PREFERRED STOCK"), are issued and outstanding.  All the outstanding shares
of Next Common  Stock and Next  Preferred  Stock have been duly  authorized  and
validly  issued,  and are fully paid and  non-assessable.  Next does not own the
capital  stock of any other  entity other than Next  Marketing  Inc., a Delaware
corporation,  and Blue Sky Graphics, Inc., a Delaware corporation, as to each of
which Next owns all of the capital stock.

                                    ARTICLE V
                                 NEXT COVENANTS

            Section  5.1 of the  Exchange  Agreement  is hereby  deleted  in its
entirety and replaced with the following:

            5.1 No  dividend  shall be  declared  or paid by other  distribution
(whether  in cash,  stock,  property  or any  combination  thereof)  or  payment
declared or made in respect to Next Common Stock or Next  Preferred  Stock,  nor
shall Next  purchase,  acquire or redeem or split,  combine  or  reclassify  any
shares of its capital stock unless prior to the record date for such dividend or
the effective date of such split, combination or reclassification, it tenders to
Sporting  Magic  its  agreement  to amend  this  Agreement  so as to  effect  an
appropriate  adjustment  in the number of shares  deliverable  upon the  Closing
Date.

                                   ARTICLE XI
                              POST-CLOSING MATTERS

            The following  additional Section 11.3 is hereby inserted at the end
of Article XI of the Exchange Agreement:



                                       2


            11.3 As soon as  practicable  following the Closing,  Sporting Magic
shall  adopt and  approve a  certificate  of  designation  creating  a series of
preferred stock designated "Series A Preferred Stock," substantially in the form
attached hereto as Schedule 11.3.  Immediately upon the creation and approval of
this Sporting Magic Series A Preferred  Stock,  each  outstanding  share of Next
Preferred  Stock shall  automatically  convert into one share of Sporting  Magic
Series A Preferred Stock.

                            [Signature Page Follows]



                                       3


            IN  WITNESS  WHEREOF,  this  Amendment  has been duly  executed  and
delivered by the duly  authorized  officers of the parties hereto as of the date
first herein above written.

                                  SPORTING MAGIC, INC.

                                  By: /S/ BUDDY YOUNG
                                      ----------------------------------------
                                       Buddy Young, President & CEO

                                  /S/ BUDDY YOUNG
                                  --------------------------------------------
                                  Buddy Young

                                  NEXT, INC.

                                  By: /S/ DANNY F. COOKE
                                      ----------------------------------------
                                       Danny F. Cooke, Chairman

                                  THE WILLIAM B. III AND CINDY S. HENSLEY
                                  LIVING TRUST

                                  By: /S/ WILLIAM B. HENSLEY
                                      ----------------------------------------
                                       Name:  William B. Hensley
                                       Title:    Trustee


                                  /S/ DANNY F. COOKE
                                  --------------------------------------------
                                  Danny F. Cooke

                                  /S/ WILLIAM B. HENSLEY
                                  --------------------------------------------
                                  William B. Hensley



                                       4



                                                                   SCHEDULE 11.3
                           CERTIFICATE OF DESIGNATION

                           OF SERIES A PREFERRED STOCK

                                       OF

                              SPORTING MAGIC, INC.
                     --------------------------------------

                     Pursuant to Section 151 of the General
                    Corporation Law of the State of Delaware
                     --------------------------------------


            I, the  undersigned,  being the  President of Sporting  Magic,  Inc.
("CORPORATION"), hereby certify in accordance with the provisions of Section 151
of the  General  Corporation  Law of the  State of  Delaware  that the  Board of
Directors of the  Corporation  duly adopted the following  resolution on January
___, 2002:

            RESOLVED,  that pursuant to the authority  expressly  granted to and
vested in the Board of Directors of the  Corporation  by the  provisions  of the
Corporation's  Certificate  of  Incorporation,  this Board of  Directors  hereby
creates,  from the 10,000,000  shares of preferred stock,  $0.0001 par value per
share  (the  "PREFERRED  STOCK"),  of the  Corporation  authorized  to be issued
pursuant to the  Certificate of  Incorporation,  a series of the Preferred Stock
having the following terms and designations:

            Section 1. DESIGNATION AND AMOUNT.  The shares of such series having
a par value of $0.0001  per share  shall be  designated  as "Series A  Preferred
Stock" (the  "SERIES A PREFERRED  STOCK") and the number of shares  constituting
such series shall be 9,500,000. The relative rights, preferences and limitations
of the Series A Preferred  Stock shall be in all respects  identical,  share for
share,  to the Common Stock of the  Corporation,  except as  otherwise  provided
herein.

            Section  2.  DIVIDENDS.  Except  in the case of  distributions  in a
liquidation,  dissolution  or winding up of the  affairs of the  Corporation  as
provided for in Section 5 below, the holders of each share of Series A Preferred
Stock shall be entitled to receive  dividends,  out of assets legally available,
at the rate of $0.10  per share  per  annum  payable  solely in shares of Common
Stock (in an amount  equal to $0.10  divided by the Fair Market  Value  (defined
below) of the Common Stock).  Dividends of the Series A Preferred Stock shall be
fully  cumulative  and  shall  accrue,  without  interest,  from the date of the
original  issuance  of the  Series A  Preferred  Stock,  and  shall  be  payable
quarterly,  when and as declared by the Board of Directors on March 31, June 30,
September 30 and December 31 of each year,  commencing March 31, 2002, except if
such date is not a business day then such dividend shall be payable on the first
immediately  succeeding  business day (as used herein,  the term  "business day"
shall  mean  any  day  except  a  Saturday,  Sunday  or  day  on  which  banking
institutions are legally authorized to close in the City of New York). Each such
dividend  shall be paid to the holders of record of shares of Series A Preferred
Stock as they  appear on the stock  register of the  Corporation  on such record
date, not exceeding 30 days preceding the payment thereof,  as shall be fixed by
the Board of Directors of the  Corporation.  Dividends on account of arrears for
any  past  dividend  periods  may be  declared  and



                                       1


paid at any time,  without  reference to any regular  dividend  payment date, to
holders of record on such date, not exceeding 45 days preceding the payment date
thereof,  as may be fixed by the  Board of  Directors  of the  Corporation.  For
purposes of this Section 2, "FAIR MARKET VALUE" on any day shall mean (a) if the
Common  Stock is  listed  or  admitted  for  trading  on a  national  securities
exchange,  the reported  last sales price or, if no such reported sale occurs on
such day,  the average of the closing bid and asked  prices on such day, in each
case on the principal national  securities exchange on which the Common Stock is
listed or admitted to trading, (b) if the Common Stock is not listed or admitted
to trading on any national securities  exchange,  the average of the closing bid
and asked  prices in the  over-the-counter  market  on such day as  reported  by
NASDAQ or any comparable  system or, if not so reported,  as reported by any New
York Stock Exchange  member firm selected by the Corporation for such purpose or
(c) if no such  quotations are available on such day, the fair market value of a
share of Common  Stock on such day as  determined  in good faith by the Board of
Directors of the Corporation.

            Section  3.  VOTING  RIGHTS.  Except as  otherwise  provided  by the
General  Corporation Law of the State of Delaware,  the Series A Preferred Stock
and the Common Stock of the Corporation shall vote as one class, with the holder
of each  share of Series A  Preferred  Stock  entitled  to one vote per share of
Series A Preferred Stock.

            Section 4. REACQUIRED  SHARES.  Any shares of the Series A Preferred
Stock  redeemed or  purchased or otherwise  acquired by the  Corporation  in any
manner whatsoever shall be retired and cancelled  promptly after the acquisition
thereof.  All such shares shall upon their  cancellation  become  authorized but
unissued  shares  of  Preferred  Stock,  unless  otherwise  provided  for in the
Certificate of Incorporation of the Corporation,  and may be reissued as part of
a new series of Preferred  Stock to be created by resolution or  resolutions  of
the Board of Directors,  subject to the conditions or  restrictions  on issuance
set forth herein.

            Section 5. LIQUIDATION, DISSOLUTION OR WINDING UP.

            (a)  Upon  the  liquidation,   dissolution  or  winding  up  of  the
Corporation,  no distribution  shall be made (i) to the holders of stock ranking
junior (either as to dividends or upon  liquidation,  dissolution or winding up)
to the Series A Preferred Stock unless,  prior thereto,  the holders of Series A
Preferred Stock shall have received a liquidation  preference of $1.00 per share
(the "LIQUIDATION AMOUNT"), plus an amount equal to unpaid dividends thereon, if
any, to the date of such  payment or (ii) to the  holders of stock  ranking on a
parity (either as to dividends or upon  liquidation,  dissolution or winding up)
with the Series A Preferred  Stock,  except  distributions  made  ratably on the
Series A Preferred  Stock and all other such parity stock in  proportion  to the
total  amounts to which the  holders of all such shares are  entitled  upon such
liquidation,  dissolution or winding up. For purposes of this Certificate,  each
of (1) the sale, conveyance, exchange or transfer of all or substantially all of
the property and assets of the Corporation,  or (2) the  consolidation or merger
of the Corporation with or into any other corporation, in which the stockholders
of the Corporation  immediately prior to such event do not own a majority of the
outstanding  shares of the surviving  corporation  or (3) the sale of securities
pursuant  to a  registration  statement  filed  by  the  Corporation  under  the
Securities  Act of  1933,  as  amended,  in  connection  with the  initial  firm
commitment  underwritten offering of its securities to the general public, shall
be deemed to be a liquidation, dissolution or winding up of the Corporation.



                                       2


            (b) In the event of a liquidation,  dissolution or winding up of the
Corporation  within the meaning of subsection (a) above, then in connection with
each such  event the  Corporation  shall  send to the  holders  of the  Series A
Preferred Stock at least twenty days' prior written notice of the date when such
event shall take place.

            (c) For purposes of this  Certificate  the term "junior stock" shall
mean the Common Stock and any other class or series of shares of the Corporation
hereafter  authorized  over which  Series A Preferred  Stock has  preference  or
priority in the payment of  dividends  or in the  distribution  of assets on any
liquidation, dissolution or winding up of the Corporation.

            (d)  Upon  any  liquidation,   dissolution  or  winding  up  of  the
Corporation,  and after full payment as provided for in Section 5(a) above,  the
holders  of Series A  Preferred  Stock  shall  not be  entitled  to any  further
participation in any distribution of assets by the Corporation.

             Section 6.  RESERVATION OF CASH.  Prior to the  consummation of any
liquidation, dissolution or winding up as described in Section 5(a) hereof, each
corporation,  including this  Corporation,  which may be required to deliver any
cash to the holders of shares of the Series A Preferred  Stock shall assume,  by
written  instrument  delivered to each transfer  agent of the Series A Preferred
Stock,  the obligation to deliver to such holder such cash which,  in accordance
with the  provisions  of Section 5, such  holder may be  entitled  and each such
corporation shall have furnished to each such transfer agent or person acting in
a similar  capacity,  including the Corporation,  an opinion of counsel for such
corporation,  stating that such assumption agreement is legal, valid and binding
upon such corporation.

            Section 7. WAIVER.  Any right or privilege of the Series A Preferred
Stock may be waived  (either  generally or in a  particular  instance and either
retroactively  or  prospectively)  by and  only by the  written  consent  of the
holders of a majority of the Series A Preferred  Stock then  outstanding and any
such waiver shall be binding upon each holder of Series A Preferred Stock.

            Section 8.   NOTICES OF CORPORATE ACTION. In the event of:

            (a) any taking by the  Corporation of a record of the holders of its
Common Stock for the purpose of determining the holders thereof who are entitled
to  receive  any  dividend  or other  distribution,  or any right or  warrant to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right;

            (b) any capital reorganization, reclassification or recapitalization
of the  Corporation,  any  consolidation or merger involving the Corporation and
any other  person  (other than a  consolidation  or merger  with a  wholly-owned
subsidiary of the Corporation, provided that the Corporation is the surviving or
the continuing  corporation  and no change occurs in the Common  Stock),  or any
transfer of all or  substantially  all of the assets of the  Corporation  to any
other person; or

            (c) any voluntary or involuntary dissolution, liquidation or winding
up of the Corporation;

then,  and in each such case, the  Corporation  shall cause to be mailed to each
transfer agent for the shares of the Series A Preferred Stock and to the holders
of record of the outstanding shares of the Series A Preferred Stock, at least 20
days (or 10 days in case of any event  specified  in


                                       3


clause (a) above) prior to the applicable  record or effective date  hereinafter
specified,  a notice  stating  (i) the date or  expected  date on which any such
record is to be taken for the purpose of such  dividend,  distribution  or right
or,  (ii)  the  date  or  expected  date  to  which  any  such   reorganization,
reclassification,    recapitalization,    consolidation,    merger,    transfer,
dissolution,  liquidation  or winding  up is to take place and the time,  if any
such  time is to be  fixed,  as of which  the  holders  of  record  of  Series A
Preferred Stock shall be entitled to exchange their shares of Series A Preferred
Stock for the securities or other property deliverable upon such reorganization,
reclassification,    recapitalization,    consolidation,    merger,    transfer,
dissolution,  liquidation  or winding up, if any. The failure to give any notice
required by this Section 8, or any defect therein, shall not affect the legality
or validity of any such action requiring such notice.

            IN WITNESS  WHEREOF,  the Corporation has caused this Certificate to
be duly executed on its behalf, as of this ___ day of January, 2002.

                                    SPORTING MAGIC, INC.

                                    By:
                                        -----------------------------------
                                            Name:
                                            Title:
EX-99 5 exhibit993.htm sec document 
             -------------------------------------------------------


                      AMENDMENT NO. 2 TO EXCHANGE AGREEMENT

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

                                  By and Among

                       Sporting Magic, Inc., Buddy Young,

               Next, Inc., Danny F. Cooke, William B. Hensley and

              The William B. III and Cindy S. Hensley Living Trust



                                February 1, 2002







            THIS AMENDMENT NO. 2 TO THE EXCHANGE AGREEMENT (this "Amendment") is
entered  into as of February  1, 2002,  by and among  Sporting  Magic,  Inc.,  a
Delaware corporation  ("Sporting Magic"); Buddy Young, the principal stockholder
of Sporting Magic ("Young");  Next, Inc., a Delaware corporation  ("Next");  and
Danny F. Cooke,  William B. Hensley, and the William B. III and Cindy S. Hensley
Living Trust, the sole stockholders of Next (together, the "Next Stockholders").
Capitalized  terms used herein and not otherwise defined shall have the meanings
ascribed to them in the Exchange Agreement (as defined below).

                              W I T N E S S E T H :

            WHEREAS,  Sporting Magic,  Young, Next and the Next Stockholders are
parties to that certain Exchange  Agreement dated as of December 21, 2001 and as
amended on January 18, 2002 (the "Exchange Agreement"); and

            WHEREAS,  the parties hereto wish to amend the Exchange Agreement as
set forth below.

            NOW,  THEREFORE,  in  consideration  of the  premises and the mutual
covenants and agreements  contained herein, the parties do hereby agree, subject
to the terms and conditions hereinafter set forth, as follows:

                                    ARTICLE I
                               EXCHANGE OF SHARES

            Schedule  1.2 of the  Exchange  Agreement  is hereby  deleted in its
entirety  and  replaced  with the  following  as if  contained  in the  Exchange
Agreement upon its execution:

            "The 6,000,000 shares of Sporting Magic Common Stock to be issued to
the Next Stockholders shall be distributed as follows:

            Name                                            No. of shares
            ----                                            -------------
            Danny F. Cooke                                   3,000,000
            William B. Hensley                               1,500,000
            William B. III and Cindy S. Hensley Living Trust 1,500,000"

                                   ARTICLE III
                       NEXT REPRESENTATIONS AND WARRANTIES

            Section  3.3 of the  Exchange  Agreement  is hereby  deleted  in its
entirety and replaced with the following:

            "3.3 No  Material  Adverse  Effect.  Except as set forth on Schedule
            3.3,  since  September  30,  2001  there  has not been any  material
            adverse  change in the  business,  operations,  properties,  assets,
            condition, financial or otherwise of Next."

                                       1





            Schedule  3.5(b) of the Exchange  Agreement is hereby deleted in its
entirety  and  replaced  with the  following  as if  contained  in the  Exchange
Agreement upon its execution:

            "Gematria Trust             321,750 shares of Next  Preferred  Stock
                                        to be  issued on the  Closing  Date (See
                                        Item 3, Schedule 3.11)

             Brian Casteel              321,750 shares of Next  Preferred  Stock
                                        to be  issued on the  Closing  Date (See
                                        Item 3, Schedule 3.11)

             Olympic Capital Group      100,000 shares of Next  Preferred  Stock
                                        to be  issued on the  Closing  Date (See
                                        Item 3, Schedule 3.11)

             Employees, Directors
             and Consultants            513,000  shares  of  Next  Common  Stock
                                        under   options   with  two  year  cliff
                                        vesting at a strike  price of $0.025 per
                                        share

             M&J Holdings, Inc.         100,000  shares of Next Common  Stock to
                                        be issued following completion of the $1
                                        million  convertible  note  offering and
                                        the Closing (See Item 4, Schedule 3.11)

             Convertible Note Holders   1 million shares of Next Common Stock to
                                        be issued  upon  conversion  of up to $1
                                        million  principal  amount   Convertible
                                        Notes at closing at $1.00 per share"

                                   ARTICLE VII
                              ADDITIONAL COVENANTS

            Schedule  7.6 of the  Exchange  Agreement  is hereby  deleted in its
entirety  and  replaced  with the  following  as if  contained  in the  Exchange
Agreement upon its execution:

             "Gematria Trust            379,706  shares of Sporting Magic Common
                                        Stock;

             Brian Casteel              379,705  shares of Sporting Magic Common
                                        Stock;

             Olympic Capital Group      450,000  shares of Sporting Magic Common
                                        Stock;

                                       2



             RAE & Company              750,000  shares of Sporting Magic Common
                                        Stock"

                                   ARTICLE IX
                               CONDITIONS OF NEXT

            Section 9.11 of the Exchange  Agreement is amended such that Section
9.11 is hereby deleted in its entirety.

            Section  9.15 of the  Exchange  Agreement  is hereby  deleted in its
entirety and replaced with the following:

                        "9.15  Sporting  Magic  shall have  delivered  to Next a
            stockholder list dated December 31, 2001 (the "December  Stockholder
            List").  Except to reflect Sporting  Magic's  dividend  distribution
            scheduled for December 21, 2001, the list of stockholders  set forth
            on the  December  Stockholder  List shall not differ in any material
            respect from the November  Stockholder  List, and with regards to L.
            Stephen Albright,  Young or any affiliates of Mr. Albright or Young,
            it shall not differ at all."

                                   ARTICLE XI
                              POST-CLOSING MATTERS

            Section  11.3 of the  Exchange  Agreement  is hereby  deleted in its
entirety and replaced with the following:

                        "11.3  As soon as  practicable  following  the  Closing,
            Sporting  Magic shall adopt and approve a certificate of designation
            creating a series of preferred stock designated  "Series A Preferred
            Stock,"  substantially in the form attached hereto as Schedule 11.3.
            Immediately  upon the creation and approval of this  Sporting  Magic
            Series A  Preferred  Stock,  each  100  outstanding  shares  of Next
            Preferred  Stock  shall  automatically  convert  into  one  share of
            Sporting Magic Series A Preferred Stock."

            The following  additional Section 11.4 is hereby inserted at the end
of Article XI of the Exchange Agreement:

                        11.4.  Within  five  (5)  business  days  following  the
            Closing,  Sporting  Magic shall deliver to Next a  stockholder  list
            dated the Closing Date. The list of  stockholders  set forth on such
            stockholder  list shall not differ in any material  respect from the
            December  Stockholder List, and with regards to L. Stephen Albright,
            Young or any  affiliates  of Mr.  Albright  or  Young,  it shall not
            differ at all."

                                       3




                                   ARTICLE XII
                                  MISCELLANEOUS

                        Section 12.1 of the Exchange Agreement is hereby deleted
in its entirety and replaced with the following:

                        "12.1  Termination.  With respect to each company,  this
            Agreement may be terminated and the transactions contemplated hereby
            may be  abandoned  (i) by the mutual  consent of Sporting  Magic and
            Next at any time,  or (ii) by either Next or  Sporting  Magic if the
            transactions  contemplated hereby have not been consummated prior to
            February 4, 2002 (the  "Termination  Date") for any reason, or (iii)
            by either  Next or  Sporting  Magic if either  discovers  a material
            breach of a representation,  warranty,  covenant or agreement by the
            other  and such  breach  is not  cured  within  ten (10) days of the
            breaching party's receipt of a notice from the non-breaching  party.
            In the event of such termination and  abandonment,  none of Sporting
            Magic,  Next,  Young  nor the  Next  Stockholders  (or any of  their
            respective  directors  or  officers)  shall  have any  liability  or
            further obligation to any other party to this Agreement, except that
            nothing herein will relieve any party from liability for any willful
            breach of this Agreement."

                            [Signature Page Follows]

                                       4







            IN  WITNESS  WHEREOF,  this  Amendment  has been duly  executed  and
delivered by the duly  authorized  officers of the parties hereto as of the date
first herein above written.

                                   SPORTING MAGIC, INC.

                                   By: /s/ Buddy Young
                                       ---------------
                                       Buddy Young, President & CEO

                                   /s/ Buddy Young
                                   ---------------
                                   Buddy Young

                                   NEXT, INC.

                                   By: /s/ Danny F. Cooke
                                       ------------------
                                       Danny F. Cooke, Chairman

                                   THE WILLIAM B. III AND CINDY S.
                                   HENSLEY LIVING TRUST

                                   By: /s/ William B. Hensley
                                       ----------------------
                                       Name:  William B. Hensley
                                       Title: Trustee


                                   /s/ Danny F. Cooke
                                   ------------------
                                   Danny F. Cooke

                                   /s/ William B. Hensley
                                   ----------------------
                                   William B. Hensley


                                       5





                                                                    SCHEDULE 3.3
                                  SCHEDULE 3.3
                              TO EXCHANGE AGREEMENT

            On January  22,  2002,  Kmart Corp.  ("Kmart"),  a customer of Next,
filed for protection  under Chapter 11 of the U.S.  Bankruptcy Code. This action
by Kmart could result in a material adverse affect on the business of Next.


                                       1





                                                                   SCHEDULE 11.3

                           CERTIFICATE OF DESIGNATION

                           OF SERIES A PREFERRED STOCK

                                       OF

                              SPORTING MAGIC, INC.
                     --------------------------------------

                     Pursuant to Section 151 of the General
                    Corporation Law of the State of Delaware
                     --------------------------------------


            I, the  undersigned,  being the  President of Sporting  Magic,  Inc.
("Corporation"), hereby certify in accordance with the provisions of Section 151
of the  General  Corporation  Law of the  State of  Delaware  that the  Board of
Directors of the Corporation  duly adopted the following  resolution on February
___, 2002:

            RESOLVED,  that pursuant to the authority  expressly  granted to and
vested in the Board of Directors of the  Corporation  by the  provisions  of the
Corporation's  Certificate  of  Incorporation,  this Board of  Directors  hereby
creates,  from the 10,000,000  shares of preferred stock,  $0.0001 par value per
share  (the  "Preferred  Stock"),  of the  Corporation  authorized  to be issued
pursuant to the  Certificate of  Incorporation,  a series of the Preferred Stock
having the following terms and designations:

            Section 1. Designation and Amount.  The shares of such series having
a par value of $0.0001  per share  shall be  designated  as "Series A  Preferred
Stock" (the  "Series A Preferred  Stock") and the number of shares  constituting
such series shall be 100,000.  The relative rights,  preferences and limitations
of the Series A Preferred  Stock shall be in all respects  identical,  share for
share,  to the Common Stock of the  Corporation,  except as  otherwise  provided
herein.

            Section  2.  Dividends.  Except  in the case of  distributions  in a
liquidation,  dissolution  or winding up of the  affairs of the  Corporation  as
provided for in Section 5 below, the holders of each share of Series A Preferred
Stock shall be entitled to receive  dividends,  out of assets legally available,
at the rate of $10.00  per share  per annum  payable  solely in shares of Common
Stock (in an amount equal to $10.00  divided by the Fair Market  Value  (defined
below) of the Common Stock).  Dividends of the Series A Preferred Stock shall be
fully  cumulative  and  shall  accrue,  without  interest,  from the date of the
original  issuance  of the  Series A  Preferred  Stock,  and  shall  be  payable
quarterly,  when and as declared by the Board of Directors on March 31, June 30,
September 30 and December 31 of each year,  commencing March 31, 2002, except if
such date is not a business day then such dividend shall be payable on the first
immediately  succeeding  business day (as used herein,  the term  "business day"
shall  mean  any  day  except  a  Saturday,  Sunday  or  day  on  which  banking
institutions are legally authorized to close in the City of New York). Each such
dividend  shall be paid to the holders of record of shares of Series A Preferred
Stock as they  appear on the stock  register of the  Corporation  on such record
date, not exceeding 30 days preceding the payment thereof,  as shall be fixed by
the Board of Directors of the  Corporation.  Dividends on account of arrears for

                                       1





any  past  dividend  periods  may be  declared  and  paid at any  time,  without
reference to any regular  dividend  payment  date,  to holders of record on such
date, not exceeding 45 days preceding the payment date thereof,  as may be fixed
by the Board of  Directors of the  Corporation.  For purposes of this Section 2,
"Fair  Market  Value" on any day shall mean (a) if the Common Stock is listed or
admitted for trading on a national securities exchange,  the reported last sales
price or, if no such  reported  sale  occurs on such  day,  the  average  of the
closing bid and asked prices on such day, in each case on the principal national
securities  exchange on which the Common Stock is listed or admitted to trading,
(b) if the Common  Stock is not listed or  admitted  to trading on any  national
securities  exchange,  the average of the  closing  bid and asked  prices in the
over-the-counter  market on such day as  reported  by  NASDAQ or any  comparable
system or, if not so reported, as reported by any New York Stock Exchange member
firm selected by the  Corporation  for such purpose or (c) if no such quotations
are  available  on such day, the fair market value of a share of Common Stock on
such  day  as  determined  in  good  faith  by the  Board  of  Directors  of the
Corporation.

            Section  3.  Voting  Rights.  Except as  otherwise  provided  by the
General  Corporation Law of the State of Delaware,  the Series A Preferred Stock
and the Common Stock of the Corporation shall vote as one class, with the holder
of each  share of Series A  Preferred  Stock  entitled  to one vote per share of
Series A Preferred Stock.

            Section 4. Reacquired  Shares.  Any shares of the Series A Preferred
Stock  redeemed or  purchased or otherwise  acquired by the  Corporation  in any
manner whatsoever shall be retired and cancelled  promptly after the acquisition
thereof.  All such shares shall upon their  cancellation  become  authorized but
unissued  shares  of  Preferred  Stock,  unless  otherwise  provided  for in the
Corporation's Certificate of Incorporation, and may be reissued as part of a new
series of Preferred  Stock to be created by  resolution  or  resolutions  of the
Board of Directors,  subject to the conditions or  restrictions  on issuance set
forth herein.

            Section 5.     Liquidation, Dissolution or Winding Up.
                           --------------------------------------

            (a)  Upon  the  liquidation,   dissolution  or  winding  up  of  the
Corporation,  no distribution  shall be made (i) to the holders of stock ranking
junior (either as to dividends or upon  liquidation,  dissolution or winding up)
to the Series A Preferred Stock unless,  prior thereto,  the holders of Series A
Preferred  Stock shall have  received a  liquidation  preference  of $100.00 per
share  (the  "Liquidation  Amount"),  plus an amount  equal to unpaid  dividends
thereon,  if any,  to the date of such  payment or (ii) to the  holders of stock
ranking on a parity (either as to dividends or upon liquidation,  dissolution or
winding up) with the Series A Preferred Stock, except distributions made ratably
on the Series A Preferred Stock and all other such parity stock in proportion to
the total  amounts to which the holders of all such shares are  entitled to upon
such  liquidation,  dissolution or winding up. For purposes of this Certificate,
each of (1) the sale,  conveyance,  exchange or transfer of all or substantially
all of the property and assets of the Corporation,  or (2) the  consolidation or
merger  of the  Corporation  with or into any  other  corporation,  in which the
stockholders  of the  Corporation  immediately  prior to such event do not own a
majority of the outstanding shares of the surviving  corporation or (3) the sale
of securities  pursuant to a  registration  statement  filed by the  Corporation
under the  Securities  Act of 1933, as amended,  in connection  with the initial
firm commitment  underwritten  offering of its securities to the general public,
shall  be  deemed  to  be a  liquidation,  dissolution  or  winding  up  of  the
Corporation.

                                       2





            (b) In the event of a liquidation,  dissolution or winding up of the
Corporation  within the meaning of subsection (a) above, then in connection with
each such  event the  Corporation  shall  send to the  holders  of the  Series A
Preferred Stock at least twenty days' prior written notice of the date when such
event shall take place.

            (c) For purposes of this  Certificate  the term "junior stock" shall
mean the Common Stock and any other class or series of shares of the Corporation
hereafter  authorized  over which  Series A Preferred  Stock has  preference  or
priority in the payment of  dividends  or in the  distribution  of assets on any
liquidation, dissolution or winding up of the Corporation.

            (d)  Upon  any  liquidation,   dissolution  or  winding  up  of  the
Corporation,  and after full payment as provided for in Section 5(a) above,  the
holders  of Series A  Preferred  Stock  shall  not be  entitled  to any  further
participation in any distribution of assets by the Corporation.

             Section 6.  Reservation of Cash.  Prior to the  consummation of any
liquidation, dissolution or winding up as described in Section 5(a) hereof, each
corporation,  including this  Corporation,  which may be required to deliver any
cash to the holders of shares of the Series A Preferred  Stock shall assume,  by
written  instrument  delivered to each transfer  agent of the Series A Preferred
Stock,  the obligation to deliver to such holder such cash which,  in accordance
with the  provisions  of Section 5, such  holder may be  entitled  and each such
corporation shall have furnished to each such transfer agent or person acting in
a similar  capacity,  including the Corporation,  an opinion of counsel for such
corporation,  stating that such assumption agreement is legal, valid and binding
upon such corporation.

            Section 7. Waiver.  Any right or privilege of the Series A Preferred
Stock may be waived  (either  generally or in a  particular  instance and either
retroactively  or  prospectively)  by and  only by the  written  consent  of the
holders of a majority of the Series A Preferred  Stock then  outstanding and any
such waiver shall be binding upon each holder of Series A Preferred Stock.

            Section 8.    Notices of Corporate Action. In the event of:

            (a) any taking by the  Corporation of a record of the holders of its
Common Stock for the purpose of determining the holders thereof who are entitled
to  receive  any  dividend  or other  distribution,  or any right or  warrant to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right;

             (b)    any    capital    reorganization,     reclassification    or
recapitalization  of the Corporation,  any consolidation or merger involving the
Corporation  and any other person (other than a  consolidation  or merger with a
wholly-owned subsidiary of the Corporation, provided that the Corporation is the
surviving  or the  continuing  corporation  and no change  occurs in the  Common
Stock),  or any  transfer  of  all or  substantially  all of the  assets  of the
Corporation to any other person; or

            (c) any voluntary or involuntary dissolution, liquidation or winding
up of the Corporation;

then,  and in each such case, the  Corporation  shall cause to be mailed to each
transfer agent for the shares of the Series A Preferred Stock and to the holders
of record of the outstanding shares of the Series A Preferred Stock, at least 20
days (or 10 days in case of any event  specified  in clause (a) above)  prior to

                                       3





the applicable record or effective date hereinafter  specified, a notice stating
(i) the date or  expected  date on which any such  record is to be taken for the
purpose of such  dividend,  distribution  or right or, (ii) the date or expected
date to  which  any  such  reorganization,  reclassification,  recapitalization,
consolidation,  merger, transfer,  dissolution,  liquidation or winding up is to
take  place  and the  time,  if any such  time is to be  fixed,  as of which the
holders of record of Series A  Preferred  Stock  shall be  entitled  to exchange
their shares of Series A Preferred  Stock for the  securities or other  property
deliverable  upon  such  reorganization,   reclassification,   recapitalization,
consolidation, merger, transfer, dissolution, liquidation or winding up, if any.
The  failure  to give any  notice  required  by this  Section  8, or any  defect
therein,  shall not affect the legality or validity of any such action requiring
such notice.

            IN WITNESS  WHEREOF,  the Corporation has caused this Certificate to
be duly executed on its behalf, as of this ___ day of February, 2002.

                                            SPORTING MAGIC, INC.

                                            By:
                                                --------------------------------
                                                    Name:
                                                    Title:
-----END PRIVACY-ENHANCED MESSAGE-----