MEMBERSHIP INTEREST PURCHASE AGREEMENT

Exhibit 2.4

MEMBERSHIP INTEREST PURCHASE AGREEMENT

BY AND AMONG

SCHOOLONE.COM, LLC

VARSITY GROUP INC.,

AND

CAMPUS OUTFITTERS GROUP, LLC,

Dated as of February 27, 2008

TABLE OF CONTENTS

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MEMBERSHIP INTEREST PURCHASE AGREEMENT

THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (this “ Agreement ”) is dated as of February 27, 2008, by and among Schoolone.com, LLC, an Ohio limited liability company doing business as Fit Technology (“ Purchaser ”),Varsity Group Inc., a Delaware corporation (“ Varsity ”), and Campus Outfitters Group, LLC, a Delaware limited liability company (“ Campus Outfitters ”).

RECITALS

WHEREAS, Varsity owns beneficially and of record all of the Campus Outfitters Membership Interests; and

WHEREAS, Varsity desires to sell to Purchaser, and Purchaser desires to purchase from Varsity, the Campus Outfitters Membership Interests 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:

1.1 Definitions . For purposes of this Agreement, the following definitions shall apply:

Acquired Business shall mean the business of marketing, distributing, servicing and selling school uniforms and related apparel products, as conducted by Campus Outfitters and its Subsidiaries on the Closing Date, except as otherwise provided in Section 6.5 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.

Affiliate 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.

Agreement shall mean this Membership Interest Purchase Agreement.

Benefit Arrangement shall have the meaning specified in Section 3.15(a) of this Agreement.

Books and Records shall mean books, records, documents, lists, manuals, plans, files, data and other materials directly and exclusively relating to the Acquired Business,

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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, media materials and plates and copies of accounting records.

Business Day 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.

Campus Outfitters shall have the meaning specified in the Preamble to this Agreement.

Campus Outfitters Membership Interests shall mean all of the Equity Securities in Campus Outfitters.

Closing shall mean the closing of the transactions contemplated by this Agreement.

Closing Date shall mean the date specified in Section 2.3 of this Agreement.

Code shall mean the U.S. Internal Revenue Code of 1986, as amended.

Consent shall mean any material 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.

Contract 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.

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, or (iv) in the nature of guarantees of obligations of the type described in clauses (i), (ii) and (iii) above of any other Person.

Disclosure Schedule shall mean, collectively the Schedules attached hereto prepared and delivered by Varsity and/or Campus Outfitters.

Employee Plan shall have the meaning set forth in Section 3.15(a) of this Agreement.

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Employees shall mean the employees of Campus Outfitters and its Subsidiaries.

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.

Equity Securities 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.

ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended, and the regulations issued thereunder.

ERISA Affiliate shall have the meaning specified in Section 3.15(a) of this Agreement.

GAAP shall mean United States generally accepted accounting principles as in effect from time to time.

Governing Documents shall have the meaning specified in Section 3.1(a) of this Agreement.

Governmental Authority shall mean any United States federal, state or local governmental, regulatory or administrative authority, agency or commission or any United States court, tribunal or judicial body.

Intellectual Property shall mean any and all of the following property of the Acquired Business (i) inventions (whether or not patented or patentable), (ii) patents and patent applications (including all provisional applications, reissues, reexaminations, divisionals, continuations and continuations in part, (iii) copyrighted works and other works of authorship, (iv) trademarks and service marks, trade names and all applications for registrations of any of the foregoing, (v) trade secrets (including, without limitation, business plans, financial information, technical information, analyses, data and other information which derives economic value from being generally known), (vi) software applications and code (other than third party shrinkwrap licenses), (vii) customer lists, (viii) Internet websites and all underlying applications and code, and (ix) Internet domain names.

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Intellectual Property Rights shall mean all right, title and interest in and to the Intellectual Property including, without limitation, the following: (i) copyrights; (ii) pending and issued patents and patent applications (including all provisionals, reissues, reexaminations, divisionals, continuations and continuations in-part); (iii) trademark rights (including pending applications); (iv) copyrights; (v) trade secret rights, and (vi) all other proprietary rights of any kind or nature.

Inventory shall mean all inventories of uniforms or related property for sale by Campus Outfitters.

IRS shall mean the United States Internal Revenue Service.

Knowledge of Purchaser (and terms of similar import) shall mean the actual knowledge of Micki Tubbs.

Knowledge of Varsity (and terms of similar import) shall mean the actual knowledge of Jim Craig, John Griffin or Charlotte McFarland.

Leases shall mean the Personal Property Leases and the Real Property Leases.

Legal Requirement 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.

Material Adverse Change or “Material Adverse Effect ” or similar phrase shall mean, with respect to any Person, any event or circumstance that has or would reasonably be expected to have a material adverse effect on the business, results of operations, assets, liabilities, or condition (financial or otherwise) of such Person; provided, however, that none of the following shall be deemed, either alone or in combination, to constitute, and no change, event, circumstance, development, occurrence or effect arising from or attributable or relating to any of the following shall be taken into account in determining whether there has been a Material Adverse Effect: (i) the execution, delivery, public announcement or pendency of this Agreement or any of the transactions contemplated herein or any actions taken in compliance herewith, including the impact thereof on the relationships of Campus Outfitters with customers, suppliers, distributors, consultants, employees or independent contractors; (ii) any change in GAAP or applicable Laws (or interpretation hereof) after the date of this Agreement; (iii) any acts of God, calamities, acts of war or terrorism, or national or international political or social conditions; or (iv) any matter identified in the Disclosure Schedule.

Materials of Environmental Concern shall mean any substance or material that is on the Closing Date prohibited as hazardous by any Governmental Authority under any

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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.

Ordinary Course of Business shall mean the ordinary course of the business, consistent with past practices of Campus Outfitters and its Subsidiaries over the last 12 months.

Pension Plan shall have the meaning specified in Section 3.15(a) of this Agreement.

Permitted Liens 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.

Person shall mean a natural person, corporation, trust, partnership, limited liability company, governmental entity, agency or branch or department thereof, or any other legal entity.

Personal Property Leases shall have the meaning specified in Section 3.14(a).

Plans shall have the meaning specified in Section 3.15(a) .

Post-Closing Tax Period 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.

Pre-Closing Tax Period 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.

Property Taxes shall have the meaning set forth in Section 7.3(c) of this Agreement.

Purchaser shall have the meaning set forth in the Preamble to this Agreement.

Purchase Price shall have the meaning specified in Section 2.2 of this Agreement.

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Real Property Leases shall have the meaning specified in Section 3.14(c) .

Representative means any officer, director, member, shareholder, partner, principal, attorney, agent, employee, banker, accountant, consultant or other representative.

Straddle Period means any taxable year or tax period that includes (but does not end on) the Closing Date.

Subsidiary means, with respect to any Person (the “Owner”), any other Person of which securities or other interests having the power to elect a majority of the governing body, or otherwise having the power to direct the business and policies of that other Person are held by Owner or one or more of its Subsidiaries; when used without reference to a particular Person, “Subsidiary” means a Subsidiary of Campus Outfitters.

Taxes 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 or local 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).

Tax Returns 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.

Transfer Taxes shall have the meaning specified in Section 6.1 of this Agreement.

Welfare Plan shall have the meaning specified in Section 3.15(a) of this Agreement.

1.2 Interpretation . In this Agreement, unless the contrary intention appears:

(a) a reference to a Section, Schedule or Exhibit is a reference to a Section of, or Schedule or Exhibit to, this Agreement and references to this Agreement include any recital in, or Exhibit or Schedule to, this Agreement;

(b) any agreement referred to herein shall mean such agreement as amended, supplemented and modified as of the Closing Date to the extent permitted by the applicable provisions thereof, and shall include all exhibits, schedules, and other documents or agreements attached thereto;

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(c) the singular includes the plural and vice versa;

(d) whenever the words “include,” “includes” or “including” are used in this Agreement, they are deemed to be followed by the words “without limitation;”

(e) any reference herein to “dollars,” “$” or similar terms shall be to United States dollars; and

(f) each of Purchaser and Varsity and their respective counsel have reviewed and revised (or requested revisions of) this Agreement and have participated in the preparation of this Agreement, and therefore any usual rules of construction requiring that ambiguities are to be resolved against a particular party shall not be applicable in the construction and interpretation of this Agreement and any schedules and exhibits hereto.

2.1 Purchase and Sale of Campus Outfitters Membership Interests . Subject to and upon the terms and conditions set forth in this Agreement, Varsity hereby sells, transfers, assigns, conveys and delivers to Purchaser the Campus Outfitters Membership Interests free and clear of all Liens (other than any restrictions to transfer under any applicable Federal or state securities Legal Requirements).

2.2 Purchase Price . On the terms and subject to the conditions set forth in this Agreement, the aggregate amount of the purchase price to be paid to Varsity at Closing (the “ Purchase Price ”) for the Campus Outfitters Membership Interests shall be equal to $700,000 payable by Purchaser in the form of a written acknowledgement by Purchaser that it has irrevocably released Varsity from its obligation to make accounts payable remittances to Purchaser in the amount of the Purchase Price (i.e., $700,000).

2.3 Closing Date . 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 hereof (the “ Closing Date ”).

2.4 Deliveries . At the Closing:

(a) Deliveries by Varsity . Varsity shall deliver to Purchaser (i) evidence of the transfer of Campus Outfitters Membership Interests (which interests are uncertificated) in form and substance satisfactory to Purchaser, (ii) a Bill of Sale and Assignment and Assumption Agreement in the form attached hereto as Exhibit A effecting the transfer or assignment of all of the assets used exclusively in the Acquired Business from Varsity to Campus Outfitters and (iii) duly signed resignations, effective as of the Closing, of the individuals listed on Schedule 2.4 from their officer and director positions with Campus Outfitters and/or the Subsidiaries.

(b) Deliveries by Purchaser . Purchaser shall deliver a written acknowledgment in accordance with Section 2.1 as to the payment of the Purchase Price in form and substance satisfactory to Varsity.

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(c) Other Deliveries . The Closing certificates and other documents and agreements required to be delivered pursuant to this Agreement with respect to the Closing will be exchanged, including but not limited to evidence of release of the Lien in favor of Follett Corporation.

Varsity represents and warrants to the Purchaser as follows, except as otherwise set forth in the Disclosure Schedule:

3.1 Organization and Validity Organization and Qualification; Power .

(a) Campus Outfitters and its Subsidiary (i) are limited liability companies duly organized and validly existing under the laws of the state of Delaware and the state of Maryland, respectively; and (ii) are duly qualified and in good standing in all jurisdictions in which they are doing business as required by the laws of that particular jurisdiction and have all necessary limited liability company power and authority to engage in the business in which they are presently engaged and to own, lease and operate their assets and to carry on their business as it is now being conducted, except where the failure to be so qualified or in good standing, or to have such power or authority, could not individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. Varsity has delivered or made available to Purchaser true, correct and complete copies of the articles of organization and operating agreement (collectively, the “ Governing Documents ”) of Campus Outfitters and each of its Subsidiaries, and none of these Governing Documents have been modified, amended or rescinded and all are in full force and effect as of the date hereof.

(b) Authorization; Validity . Each of Varsity, Campus Outfitters and Campus Outfitters’ Subsidiaries has all requisite corporate or limited liability company power and authority to enter into this Agreement and the other agreements, documents and instruments to be executed and delivered by Varsity and Campus Outfitters pursuant hereto and to carry out its or their obligations hereunder and thereunder. The execution and delivery by Varsity and Campus Outfitters of this Agreement and the other agreements, documents and instruments to be executed by Varsity and Campus Outfitters pursuant hereto and the consummation of the transactions contemplated hereby have been duly authorized by Varsity as the sole member of Campus Outfitters. This Agreement and the related agreements, documents and instruments referred to herein to which Varsity or Campus Outfitters is a party have been duly executed and delivered by such parties and constitute the valid and legally binding obligations of such parties, enforceable against each of them in accordance with their respective terms.

(c) No Conflict; Compliance; Binding Effect . Except as set forth in Schedule 3.1(c), the execution and delivery of this Agreement and the related agreements, documents and instruments referred to herein, the sale and transfer of the Campus Outfitters Membership Interests, and the consummation of the transactions contemplated hereby do not, and will not, in any material respect, conflict with, contravene, result in a violation or breach of or default under (with or without the giving of notice or the lapse of time or both), give rise to a right or claim of termination, amendment, modification, vesting, acceleration or cancellation of

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any right or obligation or loss of any material benefit under, or result in the creation of any Lien upon any of the assets of Campus Outfitters or any of its Subsidiaries or the Campus Outfitters Membership Interests under (i) any Legal Requirement, order, writ, injunction, judgment, arbitration award or decree or other restriction to which Varsity, Campus Outfitters or any Subsidiary are subject or bound, (ii) Governing Documents of Campus Outfitters or its Subsidiaries or (iii) any Contract to which Varsity or Campus Outfitters or any of its Subsidiaries is a party.

(d) Ownership of Membership Interests . Varsity holds 100% of the limited liability company membership interests of Campus Outfitters, free and clear of any Liens (other than any restrictions to transfer under any applicable Federal or state securities Legal Requirements). There are no Equity Securities of Campus Outfitters other than the limited liability company membership interests of Campus Outfitters issued to Varsity.

(e) Capitalization . All Equity Securities of the Subsidiaries are owned of record and beneficially by Campus Outfitters. No Subsidiary has any Equity Securities other than its limited liability company interests issued to Campus Outfitters. The Campus Outfitters Membership Interests and the outstanding Equity Securities of the Subsidiaries (i) have been duly authorized and validly issued and are fully paid and non-assessable, and (ii) were issued in compliance with all applicable Legal Requirements. Schedule 3.1(e) identifies all Subsidiaries of Campus Outfitters.

3.2 Governmental Consents . No material Consent of any Governmental Authority is required for the execution, delivery or performance of this Agreement or any documents or agreements contemplated hereby by Varsity or the consummation by Varsity or Campus Outfitters of the transactions contemplated by this Agreement.

3.3 Financial Statements; Liabilities .

(a) Attached hereto as Schedule 3.3(a) is the unaudited consolidated balance sheet of Campus Outfitters and its Subsidiaries as of December 31, 2007 and a statement of the accounts receivables and accounts payables as of the Closing Date, which balance sheet and statement fairly reflect in all material respects the assets, liabilities and accounts receivables and accounts payables, as applicable, of Campus Outfitters and its Subsidiaries, consistent with the books and records of Varsity as used to prepare its financial statements and other information filed with the U.S. Securities and Exchange Commission.

(b) Campus Outfitters Liabilities . To the Knowledge of Varsity, neither Campus Outfitters nor its Subsidiaries has any liabilities, other than the (i) liabilities reflected or reserved against on the balance sheet referred to in Section 3.3(a) or specifically referred to in the notes thereto, (ii) liabilities incurred since December 31, 2007 in the ordinary course of business, (iii) liabilities under the Contracts, and (iv) liabilities or matters referenced in the Disclosure Schedules.

3.4 Change in Condition Since December 31, 2007 . Except for matters set forth in Schedule 3.4 , since December 31, 2007, neither Campus Outfitters nor any of its Subsidiaries has:

(a) Entered into any Contract other than this Agreement relating to (A) the sale of any Equity Securities of Campus Outfitters, (B) the purchase of assets constituting a business, or (C) any merger, consolidation, reorganization or other business combination;

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(b) Settled or agreed to settle any material Action;

(c) Incurred any Debt greater than $100,000 in the aggregate (including any capital lease) other than liability for payment of goods and services incurred in the Ordinary Course of Business;

(d) Outside the Ordinary Course of Business: (i) increased (or committed to increase) the compensation payable to or the benefits afforded any employee, or (ii) increased (or committed to increase) the rate of benefits payable under, amended the terms of, or entered into any new, bonus, incentive, pension, insurance, severance, deferred compensation, retirement profit sharing or other employee benefit plan or compensation or commission arrangement covering any director, independent contractor, or employee of Campus Outfitters or its Subsidiaries, other than as required by any applicable Legal Requirement or Company Plan;

(e) Entered into any new or amended any (or committed to entering into or amending any) employment, severance, retention, or change in control protection agreement for any employee, director or independent contractor of Campus Outfitters or its Subsidiaries (other than customary offer letters for employment at will that do not provide severance benefits, change in control or severance agreement, consultation agreement or other compensation agreement or independent contractor agreements (other than in the Ordinary Course of Business that are terminable within ninety (90) days without liability to Campus Outfitters);

(f) Made any loan to, or entered into any other transaction with any of its directors or officers or entered into any collective bargaining agreement;

(g) Added to or modified in any material respect any of the Company Plans other than (i) contributions made in accordance with the normal practices of Campus Outfitters, or (ii) the extension of coverage to other personnel who became eligible after December 31, 2007;

(h) Sold, assigned or transferred any assets having a value in excess of $100,000 other than in the Ordinary Course of Business;

(i) Cancelled, entered into, terminated or materially amended any material Contract to which Campus Outfitters or any of its Subsidiaries is a party outside the Ordinary Course of Business;

(j) Made a capital expenditure or incurred a liability therefor, involving payments in excess of $25,000;

(k) Failed to operate its business in the Ordinary Course of Business in any material respect;

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(l) Changed accounting methods or practices, other than such changes required by law or GAAP;

(m) Experienced damage, destruction or loss with respect to any property or assets of Campus Outfitters or any of its Subsidiaries having a value in excess of $100,000 (net of insurance proceeds expected) in the aggregate;

(n) Executed, terminated or materially amended any lease for real or personal property involving annual payments in excess of $50,000;

(o) Entered into any agreement, whether or not in writing, to do any of the foregoing; or

(p) Had a Material Adverse Change.

3.5 Litigation . (a) There is no Action pending or, to the Knowledge of Varsity, threatened against Campus Outfitters or any of its Subsidiaries or relating to the Acquired Business; and (b) there is no Action pending or, to the Knowledge of Varsity, threatened which questions the legality, validity or propriety of the transactions contemplated by this Agreement.

3.6 Licenses; Compliance With Legal Requirements and Regulations .

(a) Governmental Licenses; Notices . Campus Outfitters and each of its Subsidiaries has all Consents of any Governmental Authority necessary to conduct its business as conducted on the date hereof, and such Consents are in full force and effect, except where the failure of Campus Outfitters to have obtained such Consents or the failure of such Consents to be in full force and effect would not be reasonably expected to have a Material Adverse Effect. Campus Outfitters and each of its Subsidiaries is in compliance in all material respects with all such Consents of any Governmental Authority and has received no written notice regarding any violation, termination or suspension of any such Consents.

(b) Compliance With Legal Requirements and Regulations . Campus Outfitters and each of its Subsidiaries is in compliance in all material respects with all applicable Legal Requirements relating to the operation of the Acquired Business, except where the failure of Campus Outfitters or its Subsidiaries to be in compliance would not be reasonably expected to have a Material Adverse Effect. No event has occurred and no circumstance exists that (with or without the passage of time or the giving of notice) may result in a violation of, conflict with or failure of Campus Outfitters or any of its Subsidiaries to comply with any Legal Requirements, except where the violation, conflict or failure of Campus Outfitters or its Subsidiaries would not be reasonably expected to have a Material Adverse Effect.

3.7 Title to and Condition of Assets; Sufficiency of Assets .

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(a) Title to and Sufficiency of Assets . Campus Outfitters and each of its Subsidiaries owns or has a valid leasehold interest or other right to use all property (real or personal, tangible or intangible) necessary to operate its business in the same manner as currently conducted, in all material respects, it being understood that Campus Outfitters does not own the registered trademark “Campus Outfitters.”

(b) Condition of Assets . The material machinery, equipment and other tangible property necessary to operate the business of Campus Outfitters and each of its Subsidiaries as currently conducted are, taken as a whole, in good working condition in all material respects (normal wear and tear excluded).

3.8 Taxes .

(a) Each of Varsity, Campus Outfitters and the Subsidiaries (i) has timely filed with the appropriate Governmental Authority all Tax Returns required to be filed by it as of the date of this Agreement for all periods ended on or prior to the Closing Date insofar as such Tax Returns relate to the Acquired Business, and (ii) has timely paid all Taxes showing as due and payable thereon. All such Tax Returns filed by Campus Outfitters and the Subsidiaries are correct and complete in all material respects.

(b) Neither Varsity, Campus Outfitters nor any of the Subsidiaries has received any written notice from a taxing authority in a jurisdiction where it does not file Tax Returns that it is subject to taxation by that jurisdiction.

(c) There are no liens for Taxes (other than (i) for current Taxes not yet due and payable or (ii) which are being contested in good faith by appropriate proceedings) on any assets of Campus Outfitters or any of its Subsidiaries or any of the Campus Outfitters Membership Interests.

(d) Except as set forth on Schedule 3.8(d), there is no claim, action, audit or other proceeding now pending or, to the Knowledge of Varsity, threatened relating to Taxes with respect to the Acquired Business, and no extension or waiver of a statute of limitations relating to Taxes with respect to the Acquired Business is in effect.

3.9 Certain Contracts . Set forth on Schedule 3.9 is a true and complete list of all of the following Contracts of Campus Outfitters and each of its Subsidiaries:

(a) All collective bargaining agreements and all written employment, severance, independent contractor, and consulting agreements, other than (i) customary offer letters for employment at will that do not provide severance benefits beyond customary policies in the Ordinary Course of Business of Campus Outfitters, and (ii) consulting agreements and agreements with independent contractors that are terminable within ninety (90) days without liability to Campus Outfitters;

(b) All Contracts of Campus Outfitters and/or its Subsidiaries to sell or otherwise dispose of any assets having a fair market value in excess of $50,000 except in the Ordinary Course of Business;

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(c) All Contracts between Campus Outfitters or any of its Subsidiaries and any of their respective Affiliates;

(d) All Contracts (including partnership and joint venture agreements) under which (i) Campus Outfitters or any of its Subsidiaries has any liability or obligation for Debt or constituting or giving rise to a guarantee of any liability or obligation of any Person (other than Campus Outfitters), or (ii) any Person has any liability or obligation constituting or giving rise to a guarantee of any liability or obligation of Campus Outfitters or any of its Subsidiaries;

(e) All joint ventures, limited liability company or partnership agreements, or other agreements (however named) involving a sharing of profits, losses, costs or liabilities by Campus Outfitters or any of its Subsidiaries with any other Person, except for uniform supply arrangements with schools involving a revenue sharing arrangement in the Ordinary Course of Business (the “School Contracts”); and

(f) Any agreement relating to the sale or disposition of material assets by Campus Outfitters or any of its Subsidiaries.

Varsity has made available to the Purchaser true and correct copies of the School Contracts and has delivered or made available to Purchaser true and correct copies of the Contracts required to be disclosed on Schedule 3.9 . No material breach or material default in performance by Campus Outfitters or any of its Subsidiaries under any of the Contracts listed on Schedule 3.9 has occurred and is continuing. To the Knowledge of Varsity, no material breach or material default by any other Person under any of the Contracts listed on Schedule 3.9 has occurred and is continuing.

3.10 Intellectual Property .

(a) Except as set forth in Schedule 3.10(a) , all Intellectual Property owned by Campus Outfitters is either owned by Campus Outfitters free and clear of all Liens or validly licensed for use by Campus Outfitters, and all Intellectual Property used in connection with the conduct of the Acquired Business as presently conducted is either owned by Campus Outfitters free and clear of all Liens or validly licensed for use by Campus Outfitters.

(b) Schedule 3.10(b) sets forth a complete and correct list of all Intellectual Property and Intellectual Property Rights owned or licensed by Campus Outfitters that are material to the Acquired Business.

3.11 Environmental Matters .

(a) Campus Outfitters and each of its Subsidiaries is in compliance in all material respects with all Environmental Laws for the operation of the Acquired Business, as now conducted.

(b) There is no Action pending or, to the Knowledge of Varsity, threatened against Campus Outfitters or any of its Subsidiaries in respect of (i) noncompliance

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by Campus Outfitters or any of its Subsidiaries with any Environmental Laws, (ii) the Release or threatened Release into the environment of any Hazardous Substance by Campus Outfitters or any of its Subsidiaries, or (iii) the handling, storage, use, transportation or disposal of any Hazardous Substance by Campus Outfitters or any of its Subsidiaries.

3.12 Employees .

(a) Set forth on Schedule 3.12(a) is a list of each employee of Campus Outfitters and/or its Subsidiaries as of the date of this Agreement, along with the present salary of such person, accrued vacation and sick days, and service credited for purposes of vesting and eligibility to participate in any Benefit Arrangement.

(b) Campus Outfitters and each of its Subsidiaries has paid or properly accrued all wages and compensation due to any of its employees, consultants or independent contractors, including any wages, salaries, commissions, bonuses, other direct compensation, vacation and sick days.

(c) Campus Outfitters and each of its Subsidiaries is in compliance in all material respects with all applicable Legal Requirements res