MEMBERSHIP INTEREST AND ASSET PURCHASE AGREEMENTLLC Membership Agreement |
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MEMBERSHIP INTEREST AND ASSET PURCHASE AGREEMENT
Among VARSITY GROUP INC., CAMPUS OUTFITTERS, LLC, CAMPUS TEXTBOOKS, LLC and THE SELLERS listed on the signature page hereof Dated as of May 26, 2005 _______________________________________________
TABLE OF CONTENTS Page 1. DEFINITIONS 1 1.1 Definitions 1 1.2 Interpretation 10 2. PURCHASE AND SALE; CLOSING. 11 2.1 Purchase and Sale of Campus Outfitters Assets 11 2.2 Purchase and Sale of Textbooks Membership Interests 12 2.3 Purchase Price 13 2.4 Closing Date 16 2.5 Deliveries 16 2.6 Allocation 17 2.7 Expense Reimbursement 17 3. ASSUMPTION OF LIABILITIES. 17 3.1 Assumed Campus Outfitters Liabilities 17 3.2 Excluded Liabilities 17 4. SELLERS' REPRESENTATIONS AND WARRANTIES 18 4.1 Organization and Validity 18 4.2 Governmental Consents 20 4.3 Financial Statements, etc. 20 4.4 Change in Condition Since December 31, 2004 20 4.5 Litigation 22 4.6 Licenses; Compliance With Legal Requirements and Regulations 23 4.7 Title to and Condition of Assets; Sufficiency of Assets 23 4.8 Taxes 23 4.9 Certain Contracts 24 4.10 Intellectual Property 26 4.11 Environmental Matters 26 4.12 Employees 27 4.13 Warranties 27 4.14 Personal and Real Property 27 4.15 Employee Benefits 28 4.16 Purchase Entirely for Own Account 29 4.17 Disclosure of Information 29 4.18 Restricted Securities 29 4.19 Legends 29 4.20 Removal of Legend Upon Transfer 30 4.21 Receipt of Quarterly Statement 30 4.22 Brokers 30 5. REPRESENTATIONS AND WARRANTIES WITH RESPECT TO PURCHASER 30 5.1 Corporate Matters 30 5.2 Financial Condition 31 5.3 Litigation 31 5.4 Brokers 31 5.5 SEC Reports and Financial Statements 31 6. CONDITIONS TO CLOSING 32 6.1 Conditions Precedent to Obligations of Purchaser 32 6.2 Conditions Precedent to Obligations of Sellers 33 7. CERTAIN COVENANTS 34 7.1 Liability for Transfer Taxes 34 7.2 Access to Information 34 7.3 Operation of the Acquired Business Prior to Closing 35 7.4 Consents 37 7.5 No Solicitation 37 7.6 Books and Records 38 7.7 Covenant Not to Compete; Non-Solicitation 38 7.8 Non-Solicitation 39 7.9 Employees 39 8. MUTUAL COVENANTS 41 8.1 Further Assurances 41 8.2 Further Actions Regarding Purchased Assets 41 8.3 Access to Information and Personnel 41 8.4 Taxes 42 8.5 Collection of Accounts Receivable and Payment to Sellers 43 8.6 Assignment of Fidelity Note 43 9. TERMINATION 43 9.1 Termination 43 9.2 Effect of Termination 44 9.3 Closing Deadline 44 10. SURVIVAL; INDEMNIFICATION 44 10.1 Survival 44 10.2 Indemnification by Purchaser 44 10.3 Indemnification by the Sellers 45 10.4 Indemnification Process 45 10.5 Limitation on Indemnification 48 10.6 Tax Treatment 48 11. GENERAL PROVISIONS 48 11.1 Governing Law; Jurisdiction 48 11.2 Notices 49 11.3 Exhibits 50 11.4 Entire Agreement, Binding Effect 50 11.5 Headings 50 11.6 Expenses; Expense Reimbursement 50 11.7 Amendment 50 11.8 Waiver 50 11.9 Time of the Essence 51 11.10 Assignment 51 11.11 Specific Performance 51 11.12 No Third Party Beneficiary 51 11.13 Severability 51 11.14 Counterparts; Signatures 51 11.15 Schedules 51
MEMBERSHIP INTEREST AND ASSET PURCHASE AGREEMENT THIS MEMBERSHIP INTEREST AND ASSET PURCHASE AGREEMENT (this " Agreement ") is dated as of May 26, 2005, among Varsity Group Inc., a Delaware corporate (the " Purchaser "), Campus Outfitters, LLC, a Maryland limited liability company (" Campus Outfitters "), Campus Textbooks, LLC, a Maryland limited liability company (" Campus Textbooks ") and the individuals listed on the signature pages hereto. RECITALS WHEREAS, certain of the individuals listed on the signature pages hereto (the " Campus Textbooks Sellers ") together own beneficially and of record all of the limited liability company membership interests of Campus Textbooks (the " Campus Textbooks Membership Interests "); WHEREAS, certain of the individuals listed on the signature pages hereto (the " Campus Outfitters Sellers ", and, together with the Campus Textbooks Sellers, the " Sellers ") together hold own all of the limited liability company membership interests of Campus Outfitters; WHEREAS, Campus Outfitters owns all of the Campus Outfitters Assets; WHEREAS, the Sellers wish to sell to Purchaser, and Purchaser wishes to purchase from the Sellers the Campus Textbooks Membership Interests upon the terms and subject to the conditions set forth herein; and WHEREAS, the Sellers wish to cause Campus Outfitters sell to Purchaser, and Purchaser wishes to purchase from Campus Outfitters the Campus Outfitters Assets, and in connection therewith Purchaser is willing to assume the Assumed Campus Outfitters Liabilities, all upon the terms and subject to the conditions set forth herein. NOW, THEREFORE, in consideration of the premises and of the mutual promises herein made, and in consideration of the representations, warranties and covenants herein contained, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby agree as follows: . . For purposes of this Agreement, the following definitions shall apply: . shall have the meaning specified in Section 4.3(a)(i) of this Agreement. . shall have the meaning specified in Section 4.3(a)(ii) of this Agreement. . shall have the meaning specified in Section 2.5(a)(iii) of this Agreement. . shall mean the Acquired Campus Outfitters Business and the Acquired Campus Textbooks Business. Acquired Campus Outfitters Assets . shall have the meaning specified in Section 2.1 of this Agreement. Acquired Campus Outfitters Assets Purchase Price Allocation . shall have the meaning specified in Section 2.6 of this Agreement, and shall be as set forth on Schedule 2.6 to this Agreement. Acquired Campus Outfitters Business . shall mean the business of marketing, distributing, servicing and selling school uniforms and related accessories, products and equipment operated by Campus Outfitters , and involving the Acquired Campus Outfitters Assets, prior to the Closing Date. Acquired Campus Textbooks Business . shall mean the business of marketing and distributing, Textbooks or other educational accessories and equipment operated by Campus Textbooks prior to the Closing Date. . shall have the meaning specified in Section 7.5 of this Agreement. Action . shall mean any claim, action, cause of action, litigation or suit (in contract, tort or otherwise), inquiry, proceeding, notice of noncompliance, demand letter, audit or investigation by or before any Governmental Authority, arbitrator or similar Person. . shall mean, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person. . shall mean this Membership Interest and Asset Purchase Agreement. . shall have the meaning specified in Section 2.6 of this Agreement. . shall have the meaning specified in Section 11.10 of this Agreement. Assumed Campus Outfitters Liabilities . shall have the meaning specified in Section 3.1 of the Agreement. . shall have the meaning specified in Section 4.15(a) of this Agreement. . shall have the meaning specified in Section 2.5(a)(iii) of this Agreement. . shall have the meaning specified in Section 2.1(b)(iii) of this Agreement. . shall mean books, records, documents, lists, manuals, plans, files, data and other materials (in any form or medium) relating to the Acquired Business and the Purchased Assets, including, without limitation, advertising materials, drawings, catalogues, price lists, correspondence, mailing lists, lists of customers, distribution lists, price lists, photographs, production data, sales and promotional materials and records, purchasing materials, records and databases, personnel records, quality control records and procedures, blueprints, research and development files and media materials and plates, copies of accounting records, all original property Tax Returns relating to the Purchased Assets; copies of all other Tax Returns of each of Campus Textbooks and Campus Outfitters filed since each of their organization, and copies of current litigation files. Business . shall mean the businesses of Campus Textbooks and, with respect to the Acquired Campus Outfitters Assets, Campus Outfitters as such business is currently conducted and as proposed to be conducted. . means any day, other than (i) a Saturday or Sunday, or (ii) any other day on which commercial banking institutions are permitted or required to be closed in the State of New York. . shall have the meaning specified in Section 7.2 to this Agreement. Campus Outfitters . shall have the meaning specified in the Preamble to this Agreement. Campus Outfitters Retained Assets . shall have the meaning specified in Section 2.1(b) to this Agreement. Campus Outfitters Sellers . shall have the meaning specified in the Recitals to this Agreement. Campus Textbooks . shall have the meaning specified in the Preamble to this Agreement. Campus Textbooks Membership Interests . shall have the meaning specified in the Recitals to this Agreement. Campus Textbooks Membership Interests Allocation . shall have the meaning specified in Section 2.6 of this Agreement, and shall be as set forth on Schedule 2.6 to this Agreement. Campus Textbooks Sellers . shall have the meaning specified in the Recitals to this Agreement. Cash Payment . shall have the meaning specified in Section 2.3(a)(i) of this Agreement. Change of Control . shall mean, with respect to Purchaser the occurrence of a merger, consolidation, share exchange, recapitalization, business combination, tender offer or exchange offer or other similar transaction involving a majority of the outstanding shares of Varsity Common Stock or a sale of all or substantially all of the assets of Purchaser to a third party. . shall have the meaning specified in Section 2.3(c)(iii) of this Agreement. . shall have the meaning specified in Section 2.3(c)(iii) of this Agreement. . shall have the meaning specified in Section 10.4(a) of this Agreement. . shall have the meaning specified in Section 10.4(a) of this Agreement. . shall mean the closing of the transactions contemplated by this Agreement. . shall mean the date specified in Section 2.4 of this Agreement. . shall mean the date specified in Section 9.3 of this Agreement. . shall mean the Internal Revenue Code of 1986, as amended. . shall mean, together, Campus Textbooks and Campus Outfitters. . shall have the meaning set forth in Section 7.7(b) of this Agreement. Confidentiality Agreement . shall mean that certain Confidentiality Agreement, dated as of April 29, 2005, and entered into by and among Varsity Group Inc., Campus Textbooks and Campus Outfitters. . shall mean any consent, approval, authorization, waiver, permit, grant, franchise, concession, agreement, license, exemption or order of, registration, certificate, declaration or filing with, or report or notice to, any Person, including but not limited to any Governmental Authority. . shall mean, with respect to any Person, any and all contracts or agreements, whether oral or written, including, but not limited to, customer contracts, development or developer agreements, work-for-hire agreements, franchise agreements, covenants not to compete, commitments, alliance agreements, purchase and sales orders, arrangements, employment agreements, subcontracting agreements, consulting agreements, leases, licenses, indentures, notes, bonds, deeds (or other evidence of indebtedness) and other agreements or contracts to which or by which such Person is legally bound. . shall have the meaning specified in Sec tion 10.2 of this Agreement. Debt . shall mean all obligations of a Person (i) for borrowed money including capitalized leases, (ii) evidenced by notes, bonds, debentures, letters of credit or similar instruments, (iii) under conditional sale, title retention or similar agreements or arrangements with respect to the deferred purchase price of property, and (iv) in the nature of guarantees of obligations of the type described in clauses (i), (ii) and (iii) above of any other Person. . shall have the meaning specified in Section 10.4(a) of this Agreement. . shall have the meaning set forth in Section 4 of this Agreement. . shall have the meaning set forth in Section 7.9(b) of this Agreement. . shall have the meaning set forth in Section 4.15(a ) of this Agreement. . shall mean the employees of Campus Textbooks and Campus Outfitters. . shall mean all accusations, allegations, notices of violation, liens, claims, demands, suits, or causes of action for any damage, including, without limitation, personal injury or property damage, arising out of or related to Environmental Liabilities or Materials of Environmental Concern or pursuant to applicable Environmental Laws. . shall mean all federal, state, local or foreign laws, regulations, ordinances or codes, without limitation, relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, ground water, land surface or subsurface strata), including, without limitation, Legal Requirements relating to emissions, discharges, releases or threatened releases of Materials of Environmental Concern, or to the generation, manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Materials of Environmental Concern. . shall mean any losses, damages, costs, expenses, liabilities, obligations and claims of any kind arising out of, based on, resulting from or relating to: (a) acts, omissions occurrences and circumstances forming the basis for any violation or alleged violation of Environmental Laws; (b) the presence, release, spill, emission, leaking, injection, deposit, disposal, dispersal, leaching or migration into the ambient air, surface water, ground water, land surface of subsurface strata of any Materials of Environmental Concern; or (c) the presence of any Materials of Environmental Concern at any property currently, or previously, owned or leased by any of the Companies which pose a threat to human health or the environment. . shall have the meaning specified in Section 4.11(a) of this Agreement. . of any Person shall mean (i) shares of capital stock, partnership or limited liability company interests or other equity securities of or interests in such Person, (ii) subscriptions, calls, warrants, options or commitments of any kind or character relating to, or entitling any Person to purchase or otherwise acquire, any such shares of capital stock, partnership or limited liability company interests or other equity securities of or interests in such Person, (iii) securities convertible into or exercisable or exchangeable for shares of capital stock, partnership or limited liability company interests or other equity securities of or interests in such Person, and (iv) stock options, equity equivalents, interests in the ownership or earnings of, or stock appreciation, phantom stock or other similar rights of, or with respect to, such Person. . shall mean the Employee Retirement Income Security Act of 1974, as amended, and the regulations issued thereunder. . shall have the meaning specified in Section 4.15(a) of this Agreement. Excluded Campus Outfitters Liabilities . shall have the meaning specified in Section 3.2 of this Agreement. . shall mean the Securities Exchange Act of 1934, as amended, and the related rules and regulations promulgated thereunder by the SEC. . shall have the meaning specified in Section 2.7 of this Agreement. . shall have the meaning specified in Section 2.3(d) of this Agreement. Financial Statements . shall have the meaning specified in Section 4.3(a)(i) of this Agreement. . shall mean United States generally accepted accounting principles as in effect from time to time. . shall have the meaning specified in Section 4.1(a) of this Agreement. . shall mean any federal, state or local or any foreign government, governmental, regulatory or administrative authority, agency or commission or any court, tribunal or judicial body. . shall have the meaning specified in Section 10.4 of this Agreement. . shall have the meaning specified in Section 10.4 of this Agreement. . shall mean any and all patents, registered and unregistered copyrights, registered and unregistered trademarks and service marks, trade names, all applications or registrations for any of the foregoing, and trade names, brand marks, brand names, trade dress, logos, Internet domain names and trade secrets. . shall mean rights in and to the following: (i) registered and unregistered copyrights and derivative works thereof; (ii) pending and issued patents (including all provisionals, reissues, reexaminations, divisionals, continuations and continuations in-part); (iii) registered and unregistered trademarks (including pending applications); (iv) mask works, trade secrets; (v) design; (vi) moral and author rights; and (vii) all other Intellectual Property of any kind or nature. Inventory . shall mean all inventories of textbooks or uniforms or related equipment for sale in opened or unopened containers. . shall mean the United States Internal Revenue Service. . (and terms of similar import) shall mean the actual knowledge of Eric Kuhn and Jack Benson after reasonable inquiry. . (and terms of similar import) shall mean the actual knowledge of Adam Hanin, Elliott Hanin and Adam Isaacson after reasonable inquiry. . shall have the meaning specified in Section 2.3(e) of this Agreement. . shall mean the Personalty Leases and the Real Property Leases. . shall mean any federal, state, foreign or local statute, ordinance, code, rule or regulation, guidance, or any Governmental Order, or any license, franchise, consent, approval, permit or similar right granted under any of the foregoing. Lien . means any claim, lien, pledge, option, right of first refusal, easement, security interest, deed of trust, mortgage, right-of-way, encroachment, building or use, restrictive covenant or other encumbrance (including an option to purchase, right of first refusal or first offer), whether voluntarily incurred or arising by operation of law, and includes, without limitation, any agreement to give any of the foregoing in the future, and any contingent or conditional sale agreement or other title retention agreement or lease in the nature thereof. Materials of Environmental Concern . shall mean any substance or material that is on the Closing Date prohibited, regulated or defined as hazardous by any Governmental Authority under any Environmental Law including, without limitation, chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum, petroleum derivatives or other hydrocarbons, petroleum products, asbestos, PCBs, VOCs, SVOCs, dangerous substances, designated substances, controlled products or subject waste, all as defined in or pursuant to any Environmental Law. . shall have the meaning specified in Section 6.1(g) of this Agreement. . shall have the meaning specified in Section 7.7(a) of this Agreement. . shall have the meaning specified in Section 7.7(a) of this Agreement. . shall have the meaning specified in Section 2.3(e) of this Agreement. Ordinary Course of Business . shall mean the ordinary course of the business, consistent with past practices, of Campus Textbooks and Campus Outfitters, as the case may be. . shall have the meaning specified in Section 7.7(b) of this Agreement. . shall have the meaning specified in Section 4.15(a) of this Agreement. . shall have the meaning specified in Section 2.3(a)(ii) of this Agreement. . means (i) mechanic's, materialmen's and similar Liens with respect to any amounts not yet due and payable or which are being contested in good faith through appropriate proceedings and for which adequate reserves have been established in accordance with GAAP, (ii) Liens for Taxes not yet due and payable, (iii) Liens securing rental payments under capital lease agreements, (iv) Liens securing lease payments under leases or licenses for Leased Real Property, (v) Liens arising in favor of the United States government as a result of progress payment clauses contained in any Contract, and (vi) in the case of Real Property, (A) any matters, restrictions, covenants, conditions, limitations, rights, rights of way, encumbrances, encroachments, agreements and other matters of fact or record, (B) such state of fact or exceptions that an accurate survey or inspection of the Real Property would show, (C) present or future laws applicable to the Real Property, including the use or improvement thereof, and (D) matters affecting Real Property created by or with the written consent of Purchaser. . shall mean a natural person, corporation, trust, partnership, limited liability company, governmental entity, agency or branch or department thereof, or any other legal entity. Personalty Leases . shall have the meaning specified in Section 4.14(a). . shall have the meaning specified in Section 4.15(a) . . means any taxable year or period that begins after the Closing Date and, with respect to any Straddle Period, the portion of such Straddle Period beginning after the Closing Date. . means any taxable year or period that ends on or before the Closing Date and, with respect to any Straddle Period, the portion of such Straddle Period ending on the Closing Date. . shall have the meaning set forth in Section 8.4(c) of this Agreement. Purchased Assets . shall mean the Acquired Campus Outfitters Assets and all of the limited liability company membership interests of Campus Textbooks. . shall have the meaning set forth in the Preamble to this Agreement. . shall have the meaning specified in Section 10.3 of thi s Agreement. . shall have the meaning specified in Section 5.5 of this Agreement. . shall have the meaning specified in Section 4.14(c) . . shall have the meaning specified in Section 2.3(c)(i) . . means any officer, director, member, shareholder, partner, principal, attorney, agent, employee, banker, accountant, consultant or other representative. . shall have the meaning specified in Section 2.3(e) of this Agreement. . means the Securities and Exchange Commission. . shall mean the Securities Act of 1933, as amended, and the related rules and regulations promulgated thereunder by the SEC. Seller s . shall have the meaning set forth in the Recitals to this Agreement. . shall have the meaning specified in Section 10.2 of this Agreement. . shall have the meaning specified in Section 10.3 of this Agreement. . shall have the meaning specified in Section 2.3(a)(ii) of this Agreement. . means any taxable year or tax period that includes (but does not end on) the Closing Date. . shall mean with respect to any Person, all taxes of any kind, levies or other like assessments, customs, duties, imposts or charges, including without limitation, income, gross receipts, ad valorem, value-added, excise, real or personal property, asset, sales, use, license, payroll, transaction, capital, net worth, franchise (if not based on income), estimated taxes, withholding, employment, social security, workers' compensation, utility, severance, production, unemployment compensation, occupation, premium, windfall profits, transfer and gains taxes or other governmental taxes imposed or payable to the United States, or any state, county, local or foreign government or subdivision or agency thereof, and in each instance such term shall include any interest, penalties or additions to tax attributable to any such Tax, whether disputed or not, for which such Person may be liable (including any such Tax related to any other Person for which such Person is liable pursuant to Treasury Regulation 1.1502-6 or any analogous state or local Tax provision, or as a successor, transferee, by contract or otherwise). . shall mean all returns, declarations, reports, claims for refund and information returns and statements of any Person required to be filed or sent by or with respect to, or in respect of, any Taxes, including any schedule or attachment thereto and any amendment thereof. . shall have the meaning specified in Section 7.5 of this Agreement. . shall have the meaning specified in Section 10.4(a) of this Agreement. . shall have the meaning specified in Section 2.3(a) of this Agreement. . shall have the meaning specified in Section 7.1 of this Agreement. . shall have the meaning specified in Section 7.9 of this Agreement. . shall have the meaning specified in 2.3(c)(ii) of this Agreement. Two Year Anniversary Trading Price . shall have the meaning specified in 2.3(c)(ii) of this Agreement. Varsity Common Stock . shall have the meaning specified in Section 2.3(a)(ii) of this Agreement. Varsity Stock Recipient . shall have the meaning specified in Section 2.3(b) of this Agreement. . shall have the meaning specified in Section 4.15(a) of this Agreement. . In this Agreement, unless the contrary intention appears:
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. Subject to and upon the terms and conditions set forth in this Agreement, the Campus Textbooks Sellers shall at the Closing, in accordance with all applicable Legal Requirements, sell, transfer, assign, convey and deliver to Purchaser the Campus Textbooks Membership Interests free and clear of all Liens. .
. The Closing of the transactions provided for herein shall take place at the offices of Latham & Watkins LLP, 555 11 th Street, NW, Suite 1000, Washington, DC, at 10:00 a.m. (local time) on the date two (2) Business Days after all conditions precedent to Closing set forth in Section 6.1 and Section 6.2 have been satisfied or waived (other than the conditions that, by their terms cannot be satisfied until Closing, but subject to the satisfaction of all such conditions at such time), or at such other time or place upon which the parties may agree (the day on which the Closing takes place being referred to herein as the " Closing Date ") , provided that all conditions to Closing set forth in Section 6.1 and Section 6.2 have been satisfied or waived, and provided further that, assuming that all other conditions to Closing set forth in Section 6.1 and Section 6.2 have been satisfied or waived (subject to Sellers' termination right pursuant to Section 9.1 ), the Closing shall occur on the next Business Day following the day on which Sellers provide Purchaser with a copy of the payoff letter or letters contemplated by Section 2.5(c) .
. At the Closing, subject to the satisfaction or waiver of each of the conditions specified in Section 6 below:
. The Total Purchase Price (including any adjustments pursuant to Section 2.3 ) shall be allocated (as required pursuant to Section 1060 of the Code and the Regulations promulgated thereunder) among the Acquired Campus Outfitters Assets (the " Acquired Campus Outfitters Assets Purchase Price Allocation ") and the Campus Textbooks Membership Interests (the " Campus Textbooks Membership Interests Allocation ") and the Assumed Campus Outfitters Liabilities as set forth in Schedule 2.6 hereto (the " Allocation "), it being understood that the Allocation shall relate solely to allocation required for income tax purposes and shall not be controlling for any other purpose. Purchaser, Sellers and the Companies shall file all Tax Returns (including IRS Form 8594 and any supplemental filings) consistently with the Allocation and neither Purchaser, Sellers, nor the Companies shall take a position on any Tax Return inconsistent with the Allocation without the written consent of the other parties hereto, provided , however , that nothing contained herein shall prevent Purchaser, Sellers or the Companies from settling any proposed deficiency or adjustment by any taxing authority based upon or arising out of the Allocation, and neither Purchaser, Sellers or the Companies shall be required to litigate before any court, any proposed deficiency or adjustment by any taxing authority challenging such Allocation. Notwithstanding anything to the contrary in this Agreement, the provisions of this Section 2.6 shall survive the Closing without limitation . . On the date following the date hereof, Purchaser shall pay to Campus Outfitters a good faith deposit in the amount of $50,000 (the " Expense Reimbursement "). The Expense Reimbursement will be applied to pay for the reasonable expenses of Sellers, Campus Textbook and Campus Outfitters in accordance with Section 11.6 hereof, and will be non-refundable to Purchaser. Except for transaction expenses funded by the Expense Reimbursement, all transaction expenses incurred by Sellers or either of the Companies shall be borne solely by the Sellers. . At Closing, Purchaser hereby assumes and is responsible for, solely and exclusively, those liabilities of Campus Outfitters set forth on Schedule 3.1 (the " Assumed Campus Outfitters Liabilities "). The Assumed Campus Outfitters Liabilities shall not exceed the amount of One Million Eight Hundred Eighty Eight Thousand Three Hundred Dollars ($1,888,300), provided that invoices or bills received by Sellers following the Closing Date for amounts payable for goods provided or services rendered by Sellers or Campus Outfitters in the ordinary course of business prior to the Closing Date shall not be deemed Assumed Campus Outfitters Liabilities to the extent the amount due under such bills or invoices does not exceed $50,000 in the aggregate. . Except as provided in Section 3.1 or Section 7.9 of this Agreement, and regardless of any disclosure of Sellers, Purchaser does not and shall not assume, incur or otherwise become responsible for any liabilities, obligations and commitments of Campus Outfitters, other than the Assumed Campus Outfitters Liabilities, whether actual or contingent, matured or unmatured, liquidated or unliquidated, or known or unknown, whether arising out of the occurrences prior to, at or after the Closing Date, including, without limitation, all liabilities, obligations and commitments (i) (for Taxes of Campus Outfitters including, without limitation, any Taxes arising from the transactions described in this Agreement); (ii) related to product liability claims involving or relating to products marketed or sold by Campus Outfitters prior to Closing; (iii) with the exception of the Assumed Campus Outfitters Liabilities, for any of Campus Outfitters' indebtedness for borrowed money, including, without limitation, inter-company indebtedness; (iv) associated with or relating to any Campus Outfitters Retained Asset; (v) related to or resulting from any and all litigation, proceedings, claims (including indemnification claims) or suits arising out of, relating to or incident to, any action, omission, event or occurrence prior to Closing including all those set forth on Schedule 4.5 hereto; (vi) based on, resulting from or relating to (A) acts, omissions, occurrences and circumstances forming the basis for any violation or alleged violation of any Environmental Law related to Campus Outfitters or any of its Real Property or (B) the presence or Release into the Environment of any Materials of Environmental Concern related to or involving Campus Outfitters or its predecessors or any of its owned or leased Real Property; (vii) relating to claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e; the Civil Rights Act of 1866, 42 U.S.C. 1981; the Age Discrimination in Employment Act, 29 U.S.C. 621 et seq .; the Americans With Disabilities Act, 42 U.S.C. 12101 et seq. ; or any other federal, state, local or foreign statute, executive order, or regulation regarding employment or the termination of employment, or the common law of any state or foreign country relating to torts, employment contracts, and employment terminations; (viii) for any action, claim, suit, demand or litigation for severance pay, bonus, salary, sick leave, holiday pay, vacation pay (including any accrued and unpaid vacation or holiday pay), salary, or any other fringe benefit or compensation that Purchaser has not expressly agreed to assume hereunder, by any employee, independent contractor or consultant or former employee, independent contractor or consultant of Campus Outfitters (other than such obligations accruing for the pay period that includes the Closing, which obligations shall be the responsibility of Purchaser); (ix) relating to any settlements or reduction of any of Campus Outfitters' accounts payable or similar liabilities owed to third parties; (x) resulting from (A) a breach or violation of the terms of any Contract assigned pursuant to Section 2.1(a)(ii) by Campus Outfitters on or prior to the Closing Date, or (B) nonpayment of any accrued expenses, fees or amounts due under such Contracts by Campus Outfitters, which amounts were due prior to the Closing; and (xi) relating to or resulting from any of the Contracts of Campus Outfitters which are Campus Outfitters Retained Assets (collectively, the " Excluded Campus Outfitters Liabilities "). . Each of the Sellers individually and Sellers, on behalf of Campus Textbooks, represents and warrants to the Purchaser as follows: .
. The Campus Textbooks Sellers hold 100% of the limited liability company membership interests of Campus Textbooks. The Campus Outfitters Sellers hold 100% of the limited liability company membership interests of Campus Outfitters. The limited liability company membership interests set forth on Schedule 4.1(d) hereto constitute all of the issued and outstanding Equity Securities of each of Campus Textbooks and Campus Outfitters. . No Consent of any Governmental Authority is required for the execution, delivery or performance of this Agreement or any documents or agreements contemplated hereby by any of the Sellers or the consummation by each of Campus Textbooks and Campus Outfitters of the transactions contemplated by this Agreement.
. Except for matters set forth in Schedule 4.4 , since December 31, 2004:
. Except as set forth in Schedule 4.5 attached hereto, (a) there is no Action pending or, to the Knowledge of Sellers, threatened against either of Campus Textbooks or Campus Outfitters or relating to the Acquired Business or any of the Acquired Assets; (b) there is no Action pending or, to the Knowledge of Sellers, threatened which questions the legality, validity or propriety of the transactions contemplated by this Agreement; (c) there is no unfair labor practice charge against Campus Outfitters related to the Acquired Campus Outfitters Business pending or, to the Knowledge of Sellers, threatened before any Governmental Authority, (d) there is no unfair labor practice charge against Campus Textbooks pending or, to the Knowledge of Sellers, threatened before any Governmental Authority, and (d) no material dispute has arisen between any of either of Campus Textbooks and its top five customers or Campus Outfitters and its top five customers, including any claims for refunds or claims for indemnity. .
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