So Ordered. Diane Davis United States Bankruptcy Judge · UNITED STATES BANKRUPTCY COURT NORTHERN...

UNITED STATES BANKRUPTCY COURTNORTHERN DISTRICT OF NEW YORK

In re: Chapter 11Case No. 15-60823

NIRVANA, INC., et al.,~ Main Case

Debtors.Jointly Administered

ORDER PURSUANT TO SECTIONS 105(aj AND 363 OF THEBANKRUPTCY CODE APPROVING SELECTION OFSTALKING HORSE, BREAK-UP FEE AND RELATED

RELIEF IN CONNECTION WITH SALE OF DEBTORS' ASSETS

Debtors Nirvana, Inc., Nirvana Transport, Inc., Nirvana Warehousing, Inc. and

Millers Wood Development Corp. (collectively, the "Debtors"), having moved by motion

dated September 25, 2015 for an Order pursuant to 11 U.S.C. ~§ 105(a) and 363

authorizing and approving their selection of SNG Beverage Group LLC ("SNG") as the

The Debtors in these chapter 11 cases, along with the last four digits of each Debtor's federal taxidentification number, are; Nirvana, Inc. (5474), Nirvana Transport, Inc. (6503), Nirvana Warehousing, Inc.(2646) and Millers Wood Development Corp. (8040).

2579978.5 10/27/2015

Signed this 30 day of October, 2015.

So Ordered.Diane Davis

United States Bankruptcy Judge

____________________________

Case 15-60823-6-dd Doc 279 Filed 11/02/15 Entered 11/02/15 09:38:47 Desc Main Document Page 1 of 10

stalking horse bidder, and approving aBreak-Up Feet, an Expense Reimbursement and

certain related relief in connection with the Debtors' proposed sale of substantially all of

their assets (the "Stalking Horse Motion"); and the Court having entered an Order dated

July 31, 2015 (the "Bid Procedures Order") pursuant to sections 363 and 105 of the

Bankruptcy Code: (A)(1) Setting Deadline and Approving Requirements and Procedures

for Interested Parties to Submit Competing Bids for Substantially All Assets; (2)

Approving Form of Purchase Agreement; (3) Scheduling an Auction; (4) Setting Hearing

Date to Approve Sale of Assets to Successful Bidder; and (5) Approving Procedures

With Respect to the Assumption and Assignment of Certain Executory Contracts and

Unexpired Leases; and (B) Approving Form and Manner of Notice; and through the

Bidding Procedures Order, the Court having, inter alia, approved certain Bidding

Procedures For the Sale of All or Substantially All of the Assets of Nirvana, Inc., Nirvana

Transport, Inc., Nirvana Warehousing, Inc. and Millers Wood Development Corp., which

were attached as Exhibit "A" to the Bid Procedures Order (the "Bid Procedures"); and

NOW, upon the Order dated September 25, 2015 Shortening Time for a hearing

on the Stalking Horse Motion; and upon the Bridge Order dated October 14, 2015

extending the Bid Deadline and Auction Date to October 16, 2015; and upon the Limited

Objection to the Stalking Horse Motion dated October 1, 2015 (the "Comsource

Objection") by Comsource, Inc. ("Comsource"); and upon the Limited Objection to the

Stalking Horse Motion dated October 2, 2015 (the "NBT Objection") by NBT Bank,

National Association ("NBT"); and upon the Limited Objection to the Stalking Horse

Motion dated October 2, 2015 (the "NYBDC Objection") by New York Business

2 Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Stalking

Horse Motion.

2579978.5 10/27/2015


Development Corporation and Statewide Zone Capital Corporation of New York

(collectively "NYBDC"), and upon the United States Trustee's ("UST") Objection to the

Stalking Horse Motion dated October 2, 2015 (the "UST Objection"); and upon the

Limited Objection of Northeast Bank ("NEB") dated October 2, 2015 to the Stalking

Horse Motion (the "NEB Objection" and collectively with the Comsource Objection, the

NBT Objection, the NYBDC Objection, the UST Objection, the "Objections"); and upon

the Debtors' Omnibus Response dated October 8, 2015 to the Objections; and upon the

Affirmation of Harold J. Bordwin dated October 7, 2015 in support of the Stalking Horse

Motion, the Affirmation of Edward R. Wiehl dated October 7, 2015 in support of the

Stalking Horse Motion and the Declaration of Gulshan Chhabra dated October 6, 2015

in support of the Stalking Horse Motion; and upon the record of the hearing held by the

Court on October 14, 2015 in connection with the Stalking Horse Motion (the "Hearin ");

and upon the consensual withdrawal of the Objections upon the record of the Hearing;

and pursuant to the settlement reached among the Debtors, Comsource, NBT, NYBDC,

NEB, the United States Small Business Administration (the "SBA"), the UST and the

Official Committee of Unsecured Creditors (the "Committee") as put on the record of the

Hearing; and upon the Court finding that (i) it has jurisdiction over the matters raised in

the Motion pursuant to 28 U.S.C.§ 1334; (ii) this is a core proceeding pursuant to 28

U.S.C. § 157(b)(2); (iii) the relief requested in the Motion is in the best interest of the

Debtors' estates, their creditors, and other parties in interest; and for good and sufficient

cause shown; and after due deliberation and cause appearing therefor; it is hereby

ORDERED, that the Motion is granted as set forth herein; and it is further

3


ORDERED, that SNG is approved as the stalking horse purchaser for the

Debtors' Assets upon the terms and conditions of this Order and the Asset Purchase

Agreement between the Debtors and SNG dated October 23, 2015 attached hereto as

Exhibit "A" (the "SNG Agreement"); and it is further

ORDERED, that the Debtor is authorized and directed to execute the SNG

Agreement; and it is further

ORDERED, to the extent of any or inconsistency between the terms of this Order

and the SNG Agreement, the terms of this Order shall govern; and it is further

ORDERED, that the purchase price as set forth in the SNG Agreement is Seven

Million Three Hundred Fifty Thousand Dollars ($7,350,000.00) (the "Stalking Norse

Purchase Price"); and it is further

ORDERED, that the gross amount of the Stalking Horse Purchase Price shall be

allocated $6,050,000.00 to NBT and NYBDC (the "Senior Secured Lenders") on

account of their respective secured claims (without prejudice and subject to further

allocation among the Senior Secured Creditors as may be determined by such parties

or the Court if agreement cannot be reached, but without prejudice to the rights of NEB

and the SBA (the SBA and NEB are collectively referred to hereinafter as the "Junior

Secured Lenders") to seek agreement to share in such proceeds or to seek such relief

from the Court if agreement cannot be reached, but with a full reservation of the rights

of NBT and NYBDC to oppose any such relief, other than on jurisdictional grounds) and

$1,300,000.00 to Comsource as a settlement allowing for the Debtors' sale of the

Comsource Equipment; and it is further


ORDERED, that, in the event there is no bid higher than the Stalking Horse

Purchase Price, neither the Senior Secured Lenders nor Comsource shall exercise any

credit bid rights under Bankruptcy Code § 363(k), or rights as a lessor under Bankruptcy

Code § 365; and it is further

ORDERED, that, in the event that a Senior Secured Lender, Junior Secured

Lender or Comsource exercises any rights in the form of a credit bid pursuant to

Bankruptcy Code §§ 363(k), 365 or otherwise, and such Senior Secured Lender, Junior

Secured Lender and/or Comsource are the Successful Bidder(s), such Successful

Bidders) shall pay the approved Break-Up Fee to the Debtors' estates in cash at

closing, and in the case of a joint credit bid, pro-rata in accordance with the amount of

their respective successful credit bids, and the Debtors' estates shall pay such Break-

Up Fee to SNG in cash at closing; and it is further

ORDERED, that from the Stalking Horse Purchase Price, the Senior Secured

Lenders and Comsource shall fund an initial carve-out to the Debtors' estates in the

amount of $75,000.00, funded 82%from the Senior Secured Lenders and 18%from

Comsource, to be used for payment of allowed administrative, priority and unsecured

claims in these cases in their order of priority under the Bankruptcy Code; and it is

further

ORDERED, that from the Stalking Horse Purchase Price and any higher amount

which may be obtained at the Auction (the "Purchase Price"), the Senior Secured

Lenders and Comsource shall share the closing expenses of the Debtors' asset sale,

including the commission and expenses payable to Keen-Summit Capital Partners LAC,


on the following basis: 82%from the Senior Secured Lenders and 18%from

Comsource; and it is further

ORDERED, that the allocation of the closing expenses of the Debtors' asset sale,

including the commission and expenses payable to Keen-Summit Capital Partners LLC

shall be subject to an agreement of all secured creditors that receive proceeds from

such sale, or, if agreement cannot be reached, determination by the Court; and it is

further

ORDERED, that in the event one or more Overbids are made above the Stalking

Horse Purchase Price, the first $175,000.00 from the Initial Overbid (defined below)

shall be allocated as follows: $150,000.00 to the Senior Secured Lenders and

$25,000.00 to the Debtors' estate for the payment of allowed administrative, priority and

unsecured claims in their order of priority under the Bankruptcy Code. Any additional

amount received above $175,000.00, apart from the Break-Up Fee, shall be allocated

82% to the Senior Secured Lenders and 18% to Comsource, up to the full amount of

their respective claims; and it is further

ORDERED, that if the Junior Secured Lenders share in the Stalking Horse

Purchase Price or the Purchase Price, then they shall also be obligated to contribute to

the $75,000.00 carve-out, the $25,000.00 carve-out, and the payment of the

commission and expense reimbursement to Keen-Summit Capital Partners LLC, all as

described above, with the amount of such contribution to be determined either by

agreement of the parties or pursuant to an order of the Court if no agreement is

reached; and it is further

3


ORDERED, that the Break-Up Fee equal to 2.95% of the cash portion of the

Stalking Horse Purchase Price, or $216,825.00, inclusive of any expense

reimbursement, is approved; and it is further

ORDERED, that the Debtors are authorized and directed to pay to SNG the

Break-Up Fee when due in accordance with the terms of the SNG Agreement; and it is

further

ORDERED, that, to the extent a Competing Bid is accepted by the Debtors as

the Successful Bid (as that term is defined in the Bid Procedures), the party who made

the Successful Bid, regardless of whether such Successful Bid is a credit bid, is

authorized and directed to pay the Break-Up Fee directly to SNG on the date of Closing

by wire transfer of immediately available good funds to an account specified by SNG;

provided, however, that the Break-Up Fee shall be deemed a disbursement from the

Debtors' estates for the purpose of calculating the quarterly fee due under 28 U.S.C.

§ 1930(a)(6); and it is further

ORDERED, that in connection with the Debtors' obligation to pay the Break-Up

Fee, Section 10.1 of the SNG Agreement shall survive termination of the SNG

Agreement and until paid, the Break-Up Fee shall constitute a superpriority

administrative expense claim in favor of SNG under 11 U.S.C. § 364(c); and it is further

ORDERED, that the required minimum Initial Overbid at the Auction for the

purchase of the Debtors' Assets as a going concern (including the Comsource

Equipment) shall be $175,000 plus the Break-Up Fee, or $391,825.00, in excess of the

cash portion of the Purchase Price, for a total Initial Overbid of $7,741,825.00; and it is

it~[ii~T-.~'i

7


ORDERED, that minimum Bidding Increments (as that term is defined in the Bid

Procedures) at the Auction for the purchase of the Debtors' Assets as a going concern

(including the Comsource Equipment), after the Initial Overbid, shall be $50,000.00; and

it is further

ORDERED, that for purposes of evaluating any Competing Bid for the purchase

of the Debtors' Assets as a going concern that excludes the Comsource Equipment, the

Competing Bid shall not be contingent upon consummation of any transaction for the

Comsource Equipment and the minimum cash bid payable to the estate shall be

$6,566,825.00 ($6,300,000.00 + $216,825.00 + $50,000.00); and it is further

ORDERED, that, for the purposes of evaluating the Bid Value (as that term is

defined in the Bid Procedures) of a Qualified Overbid (as that term is defined in the Bid

Procedures), including any Qualified Overbid by SNG, the Debtors will, at each round of

bidding, give effect to the Break-Up Fee that may be payable to SNG under the SNG

Agreement and this Order, as well as any additional costs that may be imposed on the

Debtors by such Qualified Overbid; and it is further

ORDERED, that if SNG is not the Successful Bid, SNG may, in its sole

discretion, terminate the SNG Agreement in accordance with the terms thereof, and

under no set of circumstances will SNG be required to be the Backup Bidder (as that

term is defined in the Bid Procedures); and it is further

ORDERED, that except for SNG, no other party submitting an offer or Competing

Bid shall be entitled to any break-up fee or other reimbursement of expenses,

termination fee or other similar fee or payment. Moreover, the tendering of a bid shall


not entitle any party, including SNG, to seek a claim for substantial contribution under

section 506(c) of the Bankruptcy Code, or otherwise; and it is further

ORDERED, that SNG shall have standing to contest the Debtors' selection of the

Successful Bid; and it is further

ORDERED, that SNG shall, within three (3) days from the entry of this Order, pay

to the Debtors' counsel a deposit in the amount of $735,000.00 (the "Deposit"), which

Debtors' counsel shall hold in escrow. If SNG is selected as the Successful Bid, the

Deposit shall be applied to reduce the cash portion of the Purchase Price due from

SNG. If the SNG Agreement is terminated or if SNG is not selected as the Successful

Bid, Debtors' counsel shall refund the Deposit to the SNG within two (2) business days

from the earlier of (i) the date of termination or (ii) the date of the Auction; and it is

further

ORDERED, that the Bid Deadline is extended to 4:00 p.m. on November 6, 2015;

and it is further

ORDERED, that the Auction is adjourned to 10:00 a.m. on November 12, 2015 at

the offices of Bond, Schoeneck &King, PLLC, One Lincoln Center, Syracuse, New

York; and it is further

ORDERED, that the Sale Hearing is adjourned to 10:00 a.m. on November 17,

2015 in Utica, New York; and it is further

ORDERED, that to the extent of any inconsistency between this Order and the

Order Authorizing the Retention and Employment of Keen-Summit Capital Partners,

LLC as the Business Broker to the Debtors dated July 31, 2015 (the "Keen Retention

Order"), the Keen Retention Order shall control; and it is further


ORDERED, that this Order shall be binding upon and inure to the benefit of SNG,

its affiliates, successors and assigns, and the Debtors, and their estates, including any

chapter 7 or chapter 11 trustee or other fiduciary appointed for the estates of the

Debtors, whether in these cases or subsequent bankruptcy cases or upon dismissal of

these cases; and it is further

ORDERED, that, the Amended Bidding Procedures attached hereto as Exhibit

"B" shall supersede and replace the Bid Procedures previously approved by this Court;

provided, however, that if there are any conflicts between the Amended Bidding

Procedures and the terms of this Order, the terms of this Order shall control; and it is

further

ORDERED, that notwithstanding Bankruptcy Rule 6004, this Order shall be

effective and enforceable immediately upon entry and its provisions shall be self-

executing; and it is further

ORDERED, that the Court shall retain jurisdiction over any matter or dispute

arising from or relating to the implementation of this Order.

###

10


Exhibit A

To Stalking Horse Approval Order

[SNG Asset Purchase Agreement]

2580070.3

Case 15-60823-6-dd Doc 279-1 Filed 11/02/15 Entered 11/02/15 09:38:47 Desc Exhibit A - Part 1 Page 1 of 84

ASSET PURCHASE AGREEMENT

dated as of October 23, 2015

by and among

SNG BEVERAGE GROUP LLC, Buyer

and

NIRVANA, INC.,

MILLERS WOOD DEVELOPMENT CORP.,

NIRVANA TRANSPORT, INC.,

and

NIRVANA WAREHOUSING, INC.,

Sellers, Debtors and Debtors in Possession

and, solely for purposes of Section 1.1 hereof,

COMSOURCE, INC.

4644328v15


TABLE OF CONTENTSPage

ARTICLE 1 PURCHASE AND SALE OF T~-IE ACQUIRED ASSETS .............................1

1.1. Transfer of Acquired Assets ................................................................................... l

1.2. Excluded Assets ......................................................................................................4

1.3. Assumption of Liabilities .......................................................................................5

1.4. Excluded Liabilities ...............................................................................................6

1.5. Determination of Acquired Assets .........................................................................8

1.6. Sellers' Actions With Respect to Contracts ...........................................................8

1.7. Cure Payments ........................................................................................................9

1.8. Non-Assignment of Assigned Contracts ................................................................9

ARTICLE 2 CONSIDERATION AND CLOSING ADJUSTMENT ..................................9

2.1. Consideration ..........................................................................................................9

2.1. Closing Adjustment ..............................................................................................10

ARTICLE 3 CLOSING AND DELIVERIES .....................................................................10

3.1. Closing ..................................................................................................................10

3.2. Sellers' Deliverables .............................................................................................10

3.3. Buyer's Deliverables ............................................................................................13

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLER ........................13

4.1. Corporate Organization ........................................................................................13

4.2. Authorization and Validity ...................................................................................14

4.3. No Conflict or Violation .......................................................................................14

4.4. [Intentionally Omitted] ........................................................................................14

4.5. Compliance with Law; Permits ............................................................................14

4.6. Contracts ...............................................................................................................15

4.7. Occupational Safety and Health Matters ..............................................................15

4.8. Applicable Food Laws ..........................................................................................16

4.9. Real Property .......................................................................................................16

4.10. Environmental Matters .........................................................................................17

4.11. Employee Benefits; Employees ............................................................................17

4.12. Insurance ...............................................................................................................18

4.13. Title to Assets; Sufficiency of Assets ...................................................................19

4.14. Intellectual Property .............................................................................................19

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4.15. [Intentionally Omitted] .........................................................................................19

4.16. Inventory ...............................................................................................................19

4.17. Taxes ....................................................................................................................19

4.18. Brokers ................................................................................................................20

4.19 Warranties Are Exclusive ....................................................................................20

ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BUYER .........................20

5.1. Organization .........................................................................................................20

5.2. Authorization and Validity ...................................................................................21

5.3. No Conflict or Violation .......................................................................................21

5.4. Consents, Approvals and Notifications ................................................................21

5.5. Availability of Funds ............................................................................................21

5.6. Brokers .................................................................................................................21

5.7 Warranties Are Exclusive .................................................................21

ARTICLE 6 COVENANTS AND AGREEMENTS ..........................................................21

6.1. Pre-Closing Covenants of Sellers ........................................................21

6.2. Pre-Closing Covenants of Buyer ..........................................................................23

ARTICLE 7 EMPLOYMENT MATTERS .........................................................................23

7.1. Employee and Benefits Matters ............................................................................23

ARTICLE 8 TAX~S ...........................................................................................................23

8.1. Taxes Related to Purchase of Assets ....................................................................24

8.2. Cooperation on Tax Matters .................................................................................24

8.3. Allocation of Purchase Price and Purchase Price Allocation Forms ....................24

8.4. Proration Real Property Taxes ..............................................................................25

8.5. Excluded Liabilities ..............................................................................................25

ARTICLE 9 CONDITIONS PRECEDENT TO PERFORMANCE BY PARTIES...........25

9.1. Conditions Precedent to Performance by Sellers ................................................25

9.2. Conditions Precedent to Performance by Buyer ..................................................26

ARTICLE 10 BANKRUPTCY COURT MATTERS ..........................................................27

10.1. Approval of Break-Up Fee ..................................................................................27

10.2. Competing Transaction ........................................................................................28

10.3. Bankruptcy Court Filings .....................................................................................28

10.4. Notice of Sale .......................................................................................................29

4644328v15


ARTICLE 11 TERMINATION AND EFFECT OF TERMINATION ................................29

1 1.1. Termination ..........................................................................................................29

11.2 [Intentionally Omitted] .........................................................................................30

11.3. Effect of Termination or Breach ...........................................................................30

ARTICLE 12 MISCELLANEOUS ......................................................................................31

12.1. Successors and Assigns .........................................................................................31

12.2. Governing Law; Jurisdiction; Waiver of Jury Trial ..............................................31

12.3. Specific Performance .............................................................................................31

12.4. Survival of Representations and Warranties ..........................................................31

12.5. Payment of Expenses; Cost of Litigation ..............................................................32


12.7. Severability ............................................................................................................32

12.8. Notices ...................................................................................................................32

12.9. Amendments; Waivers ...........................................................................................33

12.10. Public Announcements ..........................................................................................34

12.11. Entire Agreement ...................................................................................................34


12.13. No Third-party Beneficiaries .................................................................................34

12.14. Headings ................................................................................................................34

12.15. Construction ..........................................................................................................34


12.17. Counterparts ..........................................................................................................34

12.18. Time of Essence ....................................................................................................35

ARTICLE 13 DEFINITIONS .................................................................................................35

13.1. Certain Terms Defined ............................................................................................35

EXHIBITS

Exhibit A Bill of SaleExhibit B Assignment and Assumption AgreementExhibit C IP Assignment AgreementExhibit D Assignment of Rea( Estate LeasesExhibit E Real Property Deed

iv

4644328v15


SCHEDULES

Schedule 1.1 (a) Owned Real PropertySchedule l.l(b) Real Estate LeasesSchedule 1.l (c) Assigned ContractsSchedule t .1(d) EquipmentSchedule 1.1(e) InventorySchedule 1.1(fj Seller Intellectual PropertySchedule 1.1(g) PermitsSchedule 1.l (i) Goodwill and Other Intangible AssetsSchedule 1.1(0) Telephone Numbers, Fax Numbers, Email Addresses, Domain NamesSchedule 1.1(s) CamsoL~rce Agreements and EquipmentSchedule 1.2 Excluded AssetsSchedule 1.2(k) Excluded Insurance PoliciesSchedule 1.2(1) Automobile LeasesSchedule 1.6(d) Rejection of Certain ContractsSchedule 3.2(a)(xvii) Required ConsentsSchedule 4.2 Consents and ApprovalsSchedule 4.3 No Conflict or ViolationSchedule 4.5(a) Compliance with LawsSchedule 4.5(b) PermitsSchedule 4.6(a) Material ContractsSchedule 4.6(b) Material ContractsSchedule 4.6(c) Material ContractsSchedule 4.7 Occupational Safety and HealthSchedule 4.8(a) Applicable Food LawsSchedule 4.8(b) Applicable Food LawsSchedule 4.9(a) Owned Real PropertySchedule 4.9(b) Assumed Real Estate LeasesSchedule 4.1 1(a) Employee Benefits PlansSchedule 4.11(b) Employee ListSchedule 4.12 Insurance PoliciesSchedule 4.14 Intellectual PropertySchedule 4.16 InventorySchedule 4.17 TaxesSchedule 7.1(b) Employee and Benefits MattersSchedule 9.2(d) Required Licenses and Permits

Schedule 13 Permitted Liens

v

4644328v15


ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of October 23,2015 (the "Agreement Date"), is made by and among SNG Beverage Group LLC, a Delawarelimited liability company ("Buyer"), Nirvana, Inc., a New York corporation ("Nirvana's, MillersWood Development Corp., a New York corporation ("Millers Wood"), Nirvana Transport, Inc., aNew York corporation ("Transport"),Nirvana Warehousing, Inc., a New York corporation("Warehousing" and together with Nirvana, Millers Wood and Transport, "Debtors" or "Sellers"and each, individually, " "Debtor" or "Seller"), and, solely for purposes of Section 1.1,ComSource, Inc., a New York corporation ("Cornsouce"). Capitalized terms used in thisAgreement are defined or cross-referenced in Article l3.

RF.C'1TAT.~

WHEREAS, to facilitate the sale of assets contemplated herein, on June 3, 2015 (the"Petition Date"), the Debtors filed voluntary petitions initiating cases (the "BankNuptcy Cases"and each a "Bankruptcy Cuse") udder chaptee 1 I of title 11 of the United States Code (11 U.S.C.101 et seq., the ̀ Bankruptcy Code") with the United States Bankruptcy Court for the Northern

District of New York (the ̀ 'Bankruptcy CourP');

WHEREAS, on June 16, 2015, the Debtors filed a motion seeking entry of an order fromthe Bankruptcy Court, pursuant to sections 105, 363 and 365 of the Bankruptcy Code (the "SaleOrder") approving the sale of the Acquired Assets to Buyer pursuant to the terms and conditionsset forth herein.

WHEREAS, Sellers are engaged in the bottling and distribution of natural spring water(the "Business"), located at One Nirvana Plaza, Forestport, New York 13338.

WHEREAS, on the terms and subject to the conditions set forth in this Agreement, Buyerdesires to purchase from Sellers, and Sellers desire to sell to Buyer, the Acquired Assets(including the Assigned Contracts), in a sale authorized by the Bankruptcy Court free and clear ofall liens, claims and encumbrances pursuant to sections 105, 363 and 365 of the BankruptcyCode.

WHEREAS, Buyer also desires to assume, and Sellers desire to assign and transfer toBuyer, the Assumed Liabilities.

NOW, THEREFORE, in consideration of the foregoing and their respectiverepresentations, warranties, covenants and undertakings herein contained, and other good andvaluable consideration, the receipt and sufficiency of which are hereby acknowledged, Sellers andBuyer hereby agree as follows:

ARTICLE 1PURCHASE AND SALE OF THE ACQUIRED ASSETS

1.1. Transfer of Acquired Assets. At the Closing, and upon the terms and conditions setforth herein, each Seller shall sell to Buyer (or Buyer's designee), and Buyer (or Buyer's

a~aa32s~is


designee) shall acquire from each Seller, all of such Seller's right, title and interest in, to andunder the Acquired Assets free and clear of all liens, claims and encumbrances (except forPermitted Liens and Assumed Liabilities) pursuant to sections 105, 363 and 365 of theBankruptcy Code. "Acquired Assets" shall mean solely the following property of Sellers andother property, assets, and items acquired by Buyer (or Buyer's designee) in accordance with theprovisions of Section 1.5, but shall exclude the Excluded Assets:

(a) fee simple title to the Owned Real Property identified as the 5 parcels ofproperty aggregating approximately 1,679.15 acres located in Forestport, Town of Boonville,County of Oneida, State of New York, covering approximately one mile square, bordered on thewest by State Route 12 and on the east by the Black River owned by debtor, Millers Wood andmore particularly described at Schedule 1.1(a) (the "Real Property"), free and clear of all Liens,but subject to any applicable Permitted Liens and Assumed Liabilities;

(b) all of Sellers' rights under any Real Estate Leases listed on Schedule 1.1(b)(the "Real Estate Leases");

(c) all of Sellers' rights and interests under: (i) the sales orders, customerContracts, or other similar Contracts entered into by any Seller with its customers, includingthose listed on Schedule 1.1(c) (the "Customer Contracts"); (ii) the open purchase orders forwhich the goods or services have not been received by Sellers as of the Closing Date (the"Purchase Orders'; (iii) other Contracts entered into by any of the Sellers with any supplier orvendor and listed on Schedule l.l(c) (the "Supplier ContYacts"); (vi) all Equipment leases setforth on Schedule l.l(c) (the "Equipment Leases"); and (v) all other Contracts listed onSchedule 1.1(c) (the "Other Contracts" and, together with the Rea( Estate Leases, the CustomerContracts, the Purchase Orders, the Supplier Contracts and the Equipment Leases that Buyer isassuming, the "Assigned Contracts");

(d) (i) all of Sellers' fixed assets, equipment, spare parts, machinery, trucks,forklifts and other utility vehicles, furniture, fixtures, tools, computers, telephone systems,furniture, leasehold improvements and supplies, and other personal property wherever located orlisted on Schedule 1.1(d) and any related rights thereto (the "Equipment"); and (ii) any rights ofSellers, to the extent transferable, to the warranties and licenses received from manufacturers andsellers of the Egtiiipment (if any);

(e) (i) all of Sellers' raw materials, components and other parrs, work-in-process, finished goods, packaging, supplies, parts and all other inventory whether on hand, onorder, in transit or held by others on a consignment basis or as listed on Schedule 1.1(e) (the"Inventory"); and (ii) any rights of Sellers, to the extent transferable, to the warranties andlicenses received from suppliers with respect to such Inventory (if any);

(~ all intellectual and intangible property owned by any Seller, including allof the following to the extent transferable or assignable: (i) trade names, trademarks, servicemarks, trade dress, logos, Internet domain names, and all registrations of and applications toregister any of the foregoing; (ii) copyright rights in original works of authorship, software andapplications (including databases, source code and object code), and registrations andapplications therefor; (iii) rights of use, display, publication, reproduction, distribution,

2

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performance and rights to create derivative works; (iv) proprietary or confidential know-how,tools, algorithms, technology, patents, patent applications, nonpatented/patentable inventions,processes, methods and trade secrets; (v) all goodwill and all Contracts related to any of theforegoing along with all claims for infringement of or interferences with any of the foregoing andthe right to recover past damages with respect to any of the foregoing; (vi) all rights of any kindwhatsoever of Sellers accruing under any of the foregoing provided by applicable law of anyjurisdiction, by international treaties and conventions and otherwise throughout the world; (vii)any and all royalties, fees, income, payments and other proceeds now or hereafter due or payablewith respect to any and all of the foregoing; (viii) any and all claims and causes of action withrespect to any of the foregoing, whether accruing before, on and/or after the date hereof,including a(l rights to and claims for damages, restitution and injunctive and other legal andequitable relief for past, present and future infringement, dilution, misappropriation, violation,misuse, breach or default, with the right but no obligation to sue for such legal and equitablerelief and to collect, or otherwise recover, any such damages; and (ix) ail intellectual property setforth on Schedule 1.1(f~ (collectively, the "Seller Intellectual Property");

(g) all permits, licenses, approvals, franchises, notices, registrations andauthorizations issued by any Governmental Authority necessary to operate the Business (andpending applications for the foregoing) (collectively, "Permits"), including those Permits listedon Schedule 1.1(x), excluding only such Permits to the extent not legally transferable;

(h) copies of all Business Records;

(i) rights to and goodwill and other intangible assets represented by thewords "Nirvana", "Positively Pure", "Naturally Green", "Not all water is created equal" and anylogos related thereto and associated with the Acquired Assets, including customer and supplierlists and as set forth on Schedule 1.1(i):,

(j) all surety accounts, prepaid expenses, refunds (including all tax andinsurance refunds), security and like deposits and other similar prepaid items relating to anyAcquired Assets or Assumed Liabilities;

(k) all accounts and notes receivable (the "Accounts Receivable");

(1) any and all rights of set-off of Sellers arising out of or relating to eventsprior to the Closing Date (except to the extent relating to the Excluded Liabilities) and anyAvoidance Action with respect to the Acquired Assets;

(m) all of Sellers' insurance policies and claims and rights thereunder relatingto the Business, any Acquired Assets or any Assumed Liabilities, except as provided in Section1.2k•

(n) any and all computer applications, software, owned or licensed, whetherfor general business usage (e.g., accounting, word processing, graphics, spreadsheet analysis,etc.) or specific, unique-to-the-business usage and all computer operating, security orprogramming software, owned or licensed by Sellers;

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(o) all telephone numbers, fax numbers, email addresses and Internet domainna►nes as set forth on Schedule 1.1(0);

(p) all rights, remedies and benefits of Sellers arising under or relating to anyof the Acquired AsseCS or the Assumed Liabilities, ieicluding rights, remzdies and benefits arisingout of express or implied warranties and services agreements from manufacturers or suppliers ofthe Inventory or Equipment (or components thereof , the other Acquired Assets or productspurchased or ordered by Sellers prior to the Closing Date (and in any case, any componentthereof , and all claims and causes of action arising therefrom;

(q) all rights of Sellers under non-disclosure or confidentiality, non-compete,assignment of intellectual property rights (inventions), acknowledgements of work-for-hire ornon-solicitation agreements with employees, consultants, independent contractors and agents ofSellers or with third parties, including non-disclosure or confidentiality, non-compete, or non-solicitation agreements entered into in connection with the Auction or a sale of the Business;

(r) all rights of Sellers in the following Action: Nzrvczna, Inc. v. Nestle WatersNorth America Inc. pending in the U.S. District Court for the Northern District of New York, casenumber 6:14-cv-01181-MAD-ATS, filed on September 26, 2014; and

(s) the equipment subject to the agreements with Comsource described onSchedule 1.1(s) (sL~ch agreements, the "Comsource Agreements", and such equipment, the"Comsoatrce Equipment").

By its signature below, Comsource hereby consents to the inclusion of the Comsource Equipmentamong the Acquired Assets and to the sale of the Comsource Equipment by Sellers to Buyerhereunder, and agrees to execute such further documents and do any and all such further things asmay be reasonably necessary to convey ownership of the Comsource Equipment to Buyer.

1.2. Excluded Assets. Notwithstanding anything to the contrary in this Agreement or anydocument or instrument delivered pursuant hereto, the Acquired Assets do not include any of theproperties and assets of Sellers listed or described in this Section 1.2 (the "Excluded Assets"),none of which shall be conveyed to Buyer (or Buyer's designee):

(a) any asset of Seller that otherwise would constitute an Acquired Asset butfor the fact that such asset has been conveyed, leased or otherwise disposed of prior to or on theClosing Date in Seller's ordinary course of business;

(b) all Cash and Equivalents;

(c) all prepaid expenses, refunds (including all tax and insurance refunds),security and like deposits and other similar prepaid items, in each case relating to any ExcludedAssets or Excluded Liabilities;

(d) all rights to claims or adjustments with respect to Excluded Assets relatingto any proceeding before any Governmental Authority;

(e) the capital stock or other equity interests of any Seller;

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(fj all books, files and records owned by Seller that relate to any of theExcluded Assets and current or former employees and other personnel, including, withoutlimitation, books, files and records that are related to medical history, medical insurance or othermedical ►natters and to workers' compensation and to the evaluation, appraisal or performance ofcurrent or former employees and other personnel of Seller (collectively, the "EmploymentRecords");

(g) the certificates of incorporation, qualifications to conduct business as aforeign corporation, taxpayer and other identification numbers, seals, stock transfer books, blankstock certificates, corporate books and records of internal corporate or limited liability companyproceedings, tax and accounting records, work papers and other records relating to theorganization or maintenance of corporate existence of any Seller and any other records that anySeller is required by Law to retain; provided, however, that copies of the foregoing items shall beprovided by Sellers to Buyer after the Closing Date upon Buyer's request;

(h) all rights in Employee Benefits Plans;

(i) all rights of Sellers under the Transaction Documents;

(j) any Avoidance Actions with respect to the Excluded Assets;

(k) the insurance policies set forth on Schedule 1.2(k) and claims and rightsthereunder;

(1) all automobiles and leases of Sellers or any of their respective employeesor Affiliates or any other Person set forth on Schedule 1.2(1) (the "Automobile Leases"); and

(m) all Contracts of Sellers, other than the Assigned Contracts, including all ofSellers' rights as a lessee (but not, for the avoidance of doubt, any rights of Sellers as owner ofthe Comsource Equipment) under the Comsource Agreements (the "Excluded Contracts").

1.3. Assumption of Liabilities. Subject to the terms and conditions of this Agreementand on the basis of the representations, warranties, covenants and agreements herein contained,at the Closing, Buyer (or Buyer's designee) shall assume, and Suyer (or Buyer's designee) shallhereafter pay, perform and discharge when due, only the following Liabilities of Sellers as listedbelow (collectively, the "Assumed Liabilities")

(a) all Liabilities with respect to accounts payable for trade payables arising inthe ordinary course of operation of the Business in connection with the Acquired Assets after theClosing Date (the "Accounts Pcxyable");

(b) all cure obligations which must be paid to counterparties to the AssignedContracts pursuant to section 365(b)(1) of the Bankruptcy Code;

(c) a(l Liabilities under the Assigned Contracts first arising after the ClosingDate;

4644328v15


(d) all Liabilities of Sellers under the Permits first arising after the ClosingDate;

(e) all Liabilities arising froth the ownership of the Acquired Assets firstarising after the Closing Date; and

(~ all Liabilities, except guaranty liabilities, related to non-officer employeesof Sellers in the Business as of the Closing if such employees are hired by the Buyer.

1.4. Excluded Liabilities. Except as specifically provided in Section 1.3, Buyer shallnot assume or be deemed to assume and shall have nn responsibility or obligation with respectto, any Liabilities of, or Claim against, Sellers, or of any predecessor, stockholder or otherAffiliate of Sellers, of any kind or nature, whether absolute, accrued, contingent or otherwise andwhether due or to become due and whether or not asserted, and whether or not known orunknown or currently existing or hereafter arising, and however arising (the "ExcludedLiabilities"). The Excluded Liabilities shall include:

(a) any Liabilities in respect of or relating to or otherwise arising, whetherbefore, on, or after the Closing Date, out of, or in connection with the Excluded Assets;

(b) any Liabilities related to the Comsource Agreements to the extent notassumed pursuant to the terms of amended or modified agreements between Comsource andBuyer;

(c) any Liabilities related to employees and former employees except asprovided in Section 1.3(f~ and Section 7.1;

(d) any Liabilities of Sellers for professional fees and expenses for any and allof their respective advisors, including advisors retained pursuant to an Order (as defined herein)of the Bankruptcy Court;

(e) other than those Liabilities assumed by Buyer pursuant to Section 1.3(a)hereof, Sellers' administrative expenses in the Bankruptcy Case;

(~ any employment and change in control agreements (or such similaragreements) and any stock option agreements and stock purchase agreements to which any Selleris a party except for any such agreements listed on Schedule 7.1(b);

(g) except as provided in Schedule 7.1(b), any Liabilities associated with anyEmployee Benefits Plans of Sellers that is not expressly acquired or assumed by Buyer;

(h) any and all Liabilities with respect to any environmental, health or safetymatter (including any Liability under any Environmental Law, Occupational Safety and HealthLaw and Applicable Food Laws), relating to, arising out of or in connection with (i) any Seller'soperation of its businesses or its leasing, ownership or operation of real property, or (ii) theownership, operation or condition of the Business or the Acquired Assets, in each case, as existingon or before t11e Closing Date;

4644328v15


(i) any payables and priority or non-priority secured or unsecured Claims notexpressly assumed under this Agreement;

(j) any Liabilities of Sellers in respect of Indebtedness;

(k) any Liabilities of Sellers that any Person seeks to impose upon Buyer byvirtue of any theory of liability based on being a successor, consolidation, alter ego, merecontinuation or substantial continuation, or having been de facto or otherwise merged with theSellers, or "bulk transfer" laws;

(1) any Liabilities with respect to any Lien, action, Claim, suit, arbitration,

inquiry, investigation or other proceeding of any nature (whether criminal, civil, legislative,administrative, regulatory, prosecutorial or otherwise) by or before any arbitrator orGovernmental Authority or similar Person or body (each, an "ActioK") or other contingent

liabilities of any Seller, whether or not disclosed to Buyer, relating to periods and occurrences

ended on or before the Closing Date, including any Actions or other Claims or contingent

liabilities relating to tort, personal injury or products liability;

(m) any Liabilities arising under any Contract that is not an Assigned Contract;

(n) any Liabilities of Sellers arising under or relating to any notice and other

requirements of the Worker Adjustment and Retraining Notification Act of 1988 (the "WARN

Act") related to terminations prior to, on or after the Closing Date;

(o) any obligations to provide and any claims made pursuant to any coverage

under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") and any related

administrative costs;

(p) any Liabilities to any stockholder or other equity holder of any Seller or

any of their respective AfCliates;

(q) any Liabilities of any Seller related to the right to or issuance of any capital

stock or other equity interest of such Seller, including stock options or warrants;

(r) any Liabilities of Sellers resulting from, caused by or arising out of, or that

relate to, directly or indirectly, the conduct of Sellers or ownership, lease or license of any

properties or assets or any properties or assets previously used by Sellers or any predecessor of

Sellers, or other actions or omissions with respect to the period prior to Closing;

(s) any Sellers' Taxes;

(t) any liability to government or regulatory agencies in connection with the

operation of the Business prior to the Closing Date, including under any state bottle deposit law;

(u) any other Liabilities not expressly assumed pursuant to Section 1.3; and

(v) any Liability (including any Liability under any Environmental Law)

arising out of the remedial and reclamation obligations with respect to the Real Property, as

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indicated by the New York State Department of Environmental Conservation ("NYSDEC") in its

limited objection to Debtors' Stalking Horse Approval Motion, filed with the Bankruptcy Court

on October 13, 2015, regarding the site of the former mine known as the "Nirvana Sand Pit" or

the "Nirvana Borrow Pit," as at►thorized by Mined Land Reclamation Permit No. 6-3026-00111/00001, and the approved mined-land use and reclamation plan forming a part of that

permit (the "NYSDEC Objection").

1.5. Determination of Acquired Excluded Assets and Liabilities. On or before the Closing

Date, Seller may, from time to time, with Buyer's consent, which shall not be unreasonably

withheld or delayed, update the Schedules hereto listing Acquired Assets or Excluded Assets and

Assumed and Excluded Liabilities to add or remove a Contract, lease or other asset or liability toor from such Schedules. Any such update shall be treated as if included at the time of execution

of this Agreement.

1.6. Sellers' Actions With Respect to Contracts.

(a) Sellers' Obligation to Maintain Scheduled Contracts Until Closing. From

and after the Agreement Date, Sellers shall not reject or alter (or attempt to alter) the terms of

any executory Contracts or unexpired leases to which any Sel(er is a party (collectively, the

"Schedrtled Contracts") unless otherwise agreed to in writing by Buyer or as provided below in

Section 1.6(c). Sellers shall provide timely and proper written notice of the motion seeking entry

of the Safe Order to all parties to the Scheduled Contracts and take all other actions necessary~to

cause such Scheduled Contracts to be assumed by Sellers and assigned at Closing by each Seller

to Buyer (or Buyer's designee) pursuant to section 365 of the Bankruptcy Code.

(b) Assigned Contracts. At the Closing, each Seller shall, pursuant to the Sale

Order and the Assignment and Assumption Agreement and other transfer and assignment

documents reasonably requested by Buyer, assume and sell and assign to Buyer (or Buyer's

designee) (in either case, the consideration for which is included in the Purchase Price), all

Scheduled Contracts that are Assigned Contracts, which shall be set forth on the Schedules

delivered pursuant to Section 1.1.

(c) Rejection of Excluded Contracts. As soon as practicable after the Closing

Date, Sellers shall reject all Scheduled Contracts that are Excluded Contracts. To the extent that

any executory Contract or unexpired lease relating to the Business is not identified prior to the

Closing Date or is not an Assigned Contract or an Excluded Contract on the Closing Date, upon

discovery of any such executory Contract or unexpired lease by Buyer or Sellers, the discovering

party promptly shall give written notice to the other party, and Buyer shall have seven (7) days to

provide Sellers with written notice that such executory Contract or unexpired lease will be an

Assigned Contract, and Sellers and Buyer shall promptly move to cause such executory Contract

or unexpired lease to be assumed by Buyer (or Buyer's designee) as if such Contract or lease

were an Assigned Contract at the Closing; provided, however, that in the absence of such timely

written notice from Buyer, such executory Contract or unexpired Lease shall be deemed an

Excluded Contract and Sellers may reject such executory Contract or unexpired lease. The

covenants set forth in this Section 1.6(c) shall survive the Closing.

4644328v15


(d) Notwithstanding anything in this Agreement to the contrary, Sellers mayreject the Contracts set forth on Schedule 1.6(d) at any time from and after the Petition Date.

(e) For the avoidance of doubt, any references to the Comsource Agreementsas leases or• to ally of Sellers' rights thereunder as that of a lessee is not intended as an admissionby any party that the Comsource Agreements are in fact leases (as opposed to secured loanagreements or another type of financing agreemetlt} or that any of the Sellers is in fact a lesseethereunder.

1.7. Cure Payments. Not later than five Business Days prior to the Closing Date, Sellershall deliver to Buyer a detailed calculation of the cure obligations which must be paid tocounterparties to the Assigned Contracts pursuant to section 365(b)(1) of the Bankruptcy Code.Upon receiving such calculation, and notwithstanding any provision of this Agreement to thecontrary, Quyer may elect, at any time prior to Closing, to remove any Contract from among theAssigned Contracts (thereby making such contract an Excluded Contract).

1.8. Non-Assignment of Assigned Contracts. Anything contained herein to the contrarynotwithstanding, (a) this Agreement shall not constitute an agreement to assign any AssignedContract if, after giving effect to the provisions of sections 363 and 365 of the Bankruptcy Code,an attempted assignment thereof, without obtaining a Consent, would constitute a breach thereof

and (b) no breach of this Agreement shall have occurred by virtue of such nonassignment. If,after giving effect to the provisions of sections 363 and 365 of the Bankruptcy Code, such

Consent is required but not obtained, Sellers shall cooperate with Buyer, at Buyers' sole expense,in any reasonable arrangement, including Quyer's provision of credit support, designed toprovide for Buyer (or Buyer's designee) the benefits and obligations of or under any suchAssigned Contract, including enforcement for the benefit of Buyer (or Buyer's designee) of any

and all rights of Sellers against a third party thereto arising out of the breach or cancellationthereof by such third party. Any assignment to Buyer (or Buyer's designee) of any Assigned

Contract that shall, after giving effect to the provisions of sections 363 and 365 of the

Bankruptcy Code, require the Consent of any third party for such assignment as aforesaid shall

be made subject to such Consent being obtained. Any Contract that would be an AssignedContract but is not assigned in accordance with the terms of this Section 1.8 shall not be

considered an "Assigned Contract" for purposes hereof unless and until such Contract isassigned to Buyer after the Closing Date upon receipt of the requisite Consents to assignment

and Bankruptcy Court approval.

ARTICLE 2CONSIDERATION AND CLOSING ADJUSTMENT

2.1. Consideration. The aggregate consideration for the sale and transfer of the Acquired

Assets shall be: (a) $7,350,000, less (i) the Cure Amount, if any (ii) the outstanding principalamount of, and any accrued but unpaid interest under, the Buyer Loans, and (iii) any amount due

to Buyer or an Affiliate thereof under the Management Agreement, and subject to (x) anyamounts prorated to Sellers in accordance with Section 8.4 and (y) the Closing Adjustment setforth in Section 2.2 (the resulting amount, the "Cash AmounP'), by wire transfer of immediately

available funds, and (b) assumption of the Assumed Liabilities (collectively, the "Purchase

Price"), which is payable and deliverable at the Closing in accordance with Section 3.3. Buyer

4644328v15


may allocate such consideration among the assets and assumed liabilities as Buyer ►naydetermine.

2.2. Closing Adjustment.

(a) Before the Closing, Buyer and Sellers shall jointly determine the value of theAccounts Receivable and Inventory on hand as of the Closing (the "Closing AmounP').

(b) The "CCosing AtljustrnertP' shall be an amount equal to the Closing Amountminus the Target Amount. If the Closing Adjustment is a positive number, the Cash Amount shallbe increased by the amount of the Closing Adjustment. If the Closing Adjustment is a negativenumber, the Cash Amount shall be decreased by the amount of the Closing Adjustment.

ARTICLE 3CLOSING AND DELIVERIES

3.1. Closing• The consummation of the transactions contemplated hereby (the"Closing") shall take place at the offices of Bond, Schoeneck &King, PLLC, One LincolnCenter, 1 10 West Fayette Street, Syracuse, New York 13202 on the second Business Day afterthe satisfaction or waiver by the appropriate party hereto of all the conditions contained inArticle 9, or on such other date or at such other place and time as may be agreed to in writingby the parties hereto (the "Closing Dute"). The Closing will be deemed to be effective at 11:59p.tn. (Eastern time) on the Closing Date.

3.2. Sellers' Deliverables.

(a) The sale, transfer, assignment and delivery by Sellers of the Acquired Assets toBuyer (or Buyer's designee), as herein provided, shall be effected on the Closing Date. At theClosing, Sellers shall duly execute and deliver the following documents, which shall beconsistent with the terms of this Agreement:

(i) A certified copy of the Sale Order. The Sale Order sha11 contain,among other terms acceptable to Buyer and Sellers, the following provisions:

(1) that the terms anti conditions of the sale ofthe Acquired Assets to Buyer as set forth herein are approved;

(2) that the sale of the Acquired Assets to :Buyer is freeand clear, other than for Assumed Liabilities, of any and ail Liabilities and Liens of any type ornature whatsoever pursuant to section 3630 of the Bankruptcy Code, except for PermittedLiens;

(3) that Sellers hold good and marketable title to theAcquired Assets and have the authority to transfer the Acquired Assets to Buyer;

(4) that the Purchase Price constitLites fair value forthe Acquired Assets;

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(5) that Buyer is acquiring none of the ExcludedAssets;

(6) that Buyer acted in good faith in all respects andthat Buyer and its assignees and designees are entitled to the peotections of section 363(m) ofthe Bankruptcy Code;

(7) that notice of the transactions contemplated hereby

was good and sufficient and was provided timely to all parties in interest in the Bankruptcy Case

who are entitled or required to receive notice pursuant to the Federal Rules of BankruptcyProcedure, the local rules of the Bankruptcy Court, or other applicable law;

(8) that Sellers, are authorized to assume and assign to

Buyer each of the Assigned Contracts; provic~ec~, however, that Buyer shall have soleresponsibility of paying the cure costs required to be paid in accordance with section365(b)(1)(A) of the Bankruptcy Code and Section 1.3 of this Agreement, provided, however,

that cure costs paid by Buyer shall reduce the Cash Amount, in accordance with Section 2.1 of

this Agreement;

(9) that Sellers are authorized and directed toconsummate the transactions contemplated by this Agreement and to comply in all respects with

the terms of this Agreement;

(10) that the sale process conducted by Sellers and/or

their agent was non-collusive, fair and reasonable and was conducted in good faith;

(11) that Buyer and Sellers did not engage in any

conduct which would allow the transactions contemplated by this Agreement to be set aside

pursuant to section 363(n) of the Bankruptcy Code;

(12) that Buyer is not a successor to, or otherwise liable

for, the Liabilities, debts or obligations of Sellers under any theory of law, other than as

specifically set forth in this Agreement with respect to the Assumed Liabilities;

(13) that, pursuant to section 1 OS of the Bankruptcy

Code, any creditors of Sellers are enjoined from taking any actions against Buyer or the

Acquired Assets except in connection with liabilities expressly assumed by Buyer herein;

(14) that Buyer shall not be deemed a successor employer

to Sellers for purposes of any liability arising under the WARN Act, any similar state or local

Law, or any collective bargaining agreement or other labor or employment agreement; and

(15) that the Sale Order is binding upon any successors

to Sellers, including any chapter 7 trustee that may be appointed in the Bankruptcy Case;

(ii) a duly executed bill of sale with respect to the Acquired Assets,substantially in the form attached hereto as Exhibit A (the "Bill of Sule");

4644323v15


(iii) a duly executed assignment and assumption agreement withrespect to the Assumed Liabilities, substantially in the form attached hereto as Exhibit B (the"Assignment and Assumption Agreement");

(iv) a duly executed intellectual property assignment agreement withrespect to the Seller Intellectual Property, substantially in the form attached hereto as Exhibit C(the "IPAssrgnmentAgreement");

(v) a duly executed assignment and conveyance agreement with regardto the Real Estate Leases, substantially in the form attached hereto as Exhibit D (the"Assib n`nent of Assumed Real Estate Leases ");

(vi) (A) a duly executed and acknowledged customary deed inrecordable form in the form attached hereto as exhibit E, (B) a duly executed title affidavit in aform reasonably required by the title company issuing Buyer's title insurance policy for the Real

Property, and (C) such other transfer, recordation and deed intake forms and other statements,

disclosures, documents and certifications reasonably and customarily required to convey real

property in the jurisdiction in which the Real Property is located;

(vii) an officer's certificate, dated as of the Closing Date, executed by aduly authorized officer of Seller certifying that the conditions set forth in Section 9.2(a) and

Section 9.2(b) have been satisfied;

(viii) duly executed certificates from each Seller pursuant to Treasury

Regulations Section 1.1445-2(b) that such Seller is not a foreign person within the meaning of

Code Section 1445;

(ix) duly executed counterparts of any other customary bills of sale,endorsements, Consents, assignments and other good and sufficient instruments of conveyance

and assignment as Sellers and Buyer and their respective counsel shall deem reasonably

necessary or appropriate to vest in Buyer all rights, title and interest in, to and under the

Acquired Assets, Assigned Contracts and Assumed Liabilities, as well as physical possession of

all the Acquired Assets;

(x) a copy of the Business Records;

(xi) A closing settlement statement in form and substance satisfactory to

the parties hereto, regarding certain Closing matters, including any adjustments to the Purchase

Price, executed by Seller;

(xii) Any Consents to assignments from third parties relating to the

Assigned Contracts that require such consents, as shown on Schedule 32(a~xii), as well as any

other Consents to the extent that the failure to obtain any such Consent would cause a Material

Adverse Effect with respect to the Business;

(xiii) Legal, valid and binding UCC-3 termination statements or other

documentation (in form and substance reasonably satisfactory to Seller, Buyer and their respective

12

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counsel), in recordable form, sufficient to release any Lien against the Acquired Assets or toterminate any recordation or filing in respect thereof; and

(xiv) such other documents as Suyer's counsel may reasonably request

that are necessary to evidence or consummate the transactions contemplalecl by ltiis Agreerrletit.

(b) Notwithstanding anything in this Agreement or any Transaction Document

to the contrary, Sellers' obligation to convey to Buyer all rights of Sellers under the Permitslisted on Schedule 1.1(x) shall include providing: (i) if required by Law, notices of intent totransfer such Permit to Buyer in accordance with the government regulations governing suchPermit transfer; (ii) information as required by the government regulations governing such Permittransfer; and (iii) assistance to Buyer in obtaining the transfer of such Permits.

3.3. Buver's Deliverables. At the Closing, Buyer shall make the following payment andBuyer (or Buyer's designee, if applicable) shall duly execute and deliver the following

documents, which shall be consistent with the terms of this Agreement:

(a) pay to Nirvana, for the benefit of Sellers, the Cash Amount, less the

$735,000 deposited with or for the benefit of Sellers prior to the Closing (the "Deposit"), by wire

transfer of immediately available fiends;

(b) a duly executed Assignment and Assumption Agreement;

(c) a duly executed IP Assignment Agreement;

(d) a duly executed Assignment of Assumed Real Estate Leases;

(e) duly executed counterparts of the instruments set forth in Section 3.2, asapplicable;

(~ an officer's certificate, dated as of the Closing Date, executed by a duly

authorized officer of Buyer certifying that the conditions set forth in Section 9.1(a) and Section

9. I (b) have been satisfied; and

(g) such other documents as Sellers' counsel may reasonably request that are

necessary to evidence or consummate the transactions contemplated by this Agreement.

ARTICLE 4REPRESENTATIONS AND WARRANTIES OF SELLER

Sellers jointly and severally hereby represent and warrant to Buyer, as of the Agreement

Date and as of the Closing Date (except with respect to representations and warranties made as

of a particular date, which shall be deemed to be made only as of such date), as follows:

4.1. Corporate Organization. Each Seller is a New York corporation, duly organized,

validly existing and in good standing under the Laws of the State of New York. Subject to any

necessary authority from the Bankruptcy Court, each Seller has all requisite power and authority

13

a6aa3as~~s


and all necessary approvals, permits, licenses and authorizations to own its properties and assetsand to conduct the Business as now conducted.

4.2. Authorization and Validity. Subject to the Bankruptcy Court's entry of the Sale

Order and such other Orders as may be required and the receipt of the Consents set forth on

Schedule 4.2, each Seller has all requisite power and authority to enter into this Agreement and

all other instruments and documents required to be executed and delivered by such Seller

pursuant hereto or to enable such Seller to effect the transactions contemplated hereby(collectively, the "Truns«ction Documents") and to carry out its obligations hereunder and

thereunder. Subject to the entry of the Sale Order, the execution and delivery of this Agreement

and the Transaction Documents and the performance by each Seller of its obligations hereunder

and thereL~nder have been duly authorized by all necessary action by the board of directors of

each Seller, and no other proceedings on the part of any such Seller are necessary to authorize

such execution, delivery and performance. This Agreement and the Transaction Documents

requited to be executed and delivered by each Seller have been duly executed by such Seller and,

subject to the Bankruptcy Court's entry of the Sale Order, constitute its valid and binding

obligation, enforceable against it in accordance with the terms herein and therein.

4.3. No Conflict or Violation. Except as set forth on Schedule 4.3 and subject to the

Bankruptcy Court's entry of the Sale Order, the execution, delivery and performance by Sellers

of this Agreement and each Transaction Document do not and will not (a) violate or conflict with

any provision of the bylaws or certificate of incorporation oi• comparable organizational

documents (collectively, the "Organizational Documents") of Sellers, (b) violate any provision

of law, regulation, rule or other legal requirement of any Governmental Authority ("L~~w") or

any writ, injunction, order, judgment or decree of any court or Governmental Authority

("Order") applicable to any Seller or its property or assets, or (c) violate or result in a breach of

or constitute (with due notice or lapse of time or both) a default under or give rise to a right of

termination, cancellation or acceleration of any obligation or loss of a material benefit under any

Material Contract or Permit.

4.4. [Intentionally Omitted].

4.5. Compliance with Law; Permits.

(a) Except as set forth on Schedule 4.5(a), each Seller, and each of its current

and former officers, directors, partners, agents and employees, has, in all material respects,

complied with and is in material compliance with, and is not in default in any respect with, all

applicable Laws and Orders of any Governmental Authority relating to the operation of the

Business, and no written notices has been received by, and no claims filed against, any Seller

alleging a material violation of any such Laws or Orders.

(b) Schedule 4.5(b) sets forth a true, complete and correct list of all material

Permits relating to the Acquired Assets held by Sellers as of the Agreement Date. To Sellers'

Knowledge, the Permits listed on Schedule 4.5(b) constitute all of the material Permits necessary

for Sellers to lawfully conduct and operate the Business, the Equipment, the Owned Real Property

and the Leased Real Property in the manner currently conducted and operated in all material

respects. Except as set forth on Schedule 4.5(b), all such material Permits are valid and in full

14

4644328v15


force and effect and none of the Sellers is in material default under or in violation of any of theterms and conditions of such Permits. To Seller's Knowledge, no modification, suspension orcancellation of any such Permits is pending (other than pursuant to its terms) or, to Sellers'Knowledge, threatened except as set forth on Schedule 4.5(b).

4.6. Contracts.

(a) Schedule 4.6(a) sets forth a true, complete and correct list of each materialContract, including all Assigned Contracts (the "Material Contracts") to which each Seller is aparty or by which any Seller is bound in connection with the Business or by which the AcquiredAssets may be bound or affected. As of the Agreement Date, each Seller has provided or madeavailable to Buyer true and complete copies of each Material Contract (including all amendmentsthereto) to which it is a party.

(h) As of the Agreement Date, and except as set forth on Schedule 4.6(b), (i)each Seller has performed any obligations required to be performed by it to date t►nder eachMaterial Contract and is not in breach or default thereunder, and, (ii) to the Knowledge o#'Sellers, no other party to any of the Material Contracts is (with or without the lapse of time or thegiving of notice, or both) in material breach or default thereunder, except only for those defaultsthat will be cured in accordance with the Sale Order (or' that need not be cured under the

Bankruptcy Code to permit the assumption and assignment of the Assigned Contracts).

(c) As of the Agreement Date, and except as set forth on Schedule 4.6(c), to

the Knowledge of Sellers, each of the Material Contracts is, and will be at the Closing, valid,

binding and in full force and effect against the Seller party thereto and the other parties thereto.

4.7. Occupational Safety and Health Matters. Except as specifically set forth in

Schedule 4.7:

(a) Sellers are and have been in compliance with, in all material respects, and

are not in violation of or liable under, any applicable Occupational Safety and Health Laws and

no reason exists to Sellers' knowledge whereby Buyer would not be capable of continued

operation of the Btiisiness in compliance with applicable Occupational Safety and Health Lawswithout undue expense or burden after the Closing Date;

(b) None of the Sellers has received any written notice or other communication

from any Governmental Authority or any other Person regarding (i) any failure to comply in any

material respect with any applicable Occupational Safety and Health Law or (ii) any obligation

to undertake or bear any material cost of any Occupational Safety and Health Liabilities,

including, without limitation, any Occupational Safety and Health Liabilities with respect to any

Facility at, to or from which Hazardous Materials have been generated, manufactured, refined,

transferred, used or processed, transported, treated, stored, handled, transferred, disposed of,

recycled or received by any Seller, and, there are no facts or circumstances that can be

reasonably expected to form the basis of (i) or (ii);

(c) There is no reason to believe that any closure of any Facility is required

pursuant to any Occupational Safety and Health Law.

15

a~aa328~~s


4.8. Applicable Food Laws.

(a) Except as set forth on Schedule 4.8(a), Sellers have complied in allmaterial respects with all Applicable Food Laws, and no claim has been filed or, to theKnowledge of Sellers, threatened, against such Sellers alleging a violation of any suchApplicable Food Laws.

(b) Except as set forth on Schedule 4.8(b), there have been no recalls or

withdrawals of products produced or sold by any Seller or other similar federal, state or private

actions with respect to such products and, to the Knowledge of Sellers, no facts or circumstances

exist that could reasonably be expected to result in such actions.

4.9. Real Pro~ert~

(a) There is no Owned Real Property other than the Real Property. With

respect to each parcel of Real Property: (i) the applicable Seller has good and marketable

indefeasible f'ee simple title, free and clear of all Liens, other than Permitted Liens; (ii) all leases,

subleases, licenses, concessions, or other agreements, written or oral, granting to any Person the

right of use or occupancy of any portion of such .Real Property are set forth on Schedule 4.9(a);

and (iii) there are no outstanding options or rights of first refusal to purchase, lease or occupy

such Real Property (other than the right of Buyer pursuant to this Agreement), or any portion

thereof or interest therein.

(b) Schedule 4.9(b) sets forth all Real Estate Leases (or other property interests)

for real and immovable property under which each Seller is a lessee, licensee or occupant, and

Sellers have delivered true, correct, accurate and complete copies of all leases and other

instruments and agreements (together with all amendments, modifications, supplements, and

restatements thereto, if any) thereof to Buyer. Except as set forth on Schedule 4.9(b), such Real

Estate Leases are in frill force and effect and have not been amended, modified, restated or

otherwise supplemented and the Real Estate Leases represent the entire agreement between the

applicable Seller and the applicable landlord with respect to the premises and leasehold estate

under the respective Real Estate Leases. Cxcept as set forth on Schedule 4.9(b), neither Sellers

nor, to the Knowledge of Sellers, any other party to the Real Estate Leases is in material breach or

default of its obligations under any of the Real Estate Leases or other material Contracts

appertaining to the Leased Real Property, and no event has occurred or circumstance exists which

with the delivery of notice, the passage of time or both, would constitute such a material breach or

default, or permit the termination, modification or acceleration of rent or other obligation under

any such Real Estate Lease or other Material Contract. Sellers have not given notice to, or

received written notice from, any landlords, of any defaults in connection with the Real Estate

Leases.

(c) No Seller has received any written, or to the Knowledge of Sellers, oral

notice of condemnation or eminent domain proceedings pending or threatened that affect the

Real Property or Leased Real Property. No Seller has received any written, or to the :Knowledge

of Sellers, oral notice of any zoning, ordinance, building, land use, fire or health code or other

legal violation affecting any such Real Property or Leased Real Property, except where any such

4~aa3zs~~s


violations would not materially interfere with Sellers' use of such Real Property or Leased Real

Property, consistent with the use of such properties prior to the Agreement Date.

(d) There are no encroachments or other facts or conditions affecting any of the

Owned Real Property or Leased Real Property that would be revealed by an accurate survey orinspection thereof, which encroachments, facts or conditions would not materially interfere with

Sellers' use of such Owned Real Property or Leased Real Property, consistent with the use of such

properties prior to the Agreement Date. None of the buildings and structures on such Owned Real

Property and Leased Real Property encroaches upon real property of another Person or upon the

area of any easement affecting the Owned Real Property or Leased Real Property.

(e) No Seller has received any notice of violation of any Real Property Law

and, to the Sellers' Knowledge, there is no basis for the issuance of any such notice or the taking

of any action for such violation. There is no pending or, to the Sellers' Knowledge, anticipated

change in any Real Property Law that will prohibit or materially restrict the ownership, lease, use

or occupancy of any Owned Real Property or any portion thereof in the continued operation of

the Qusiness.

4.10. Environmental Matters. No Seller has received any notice (other than the NYSDEC

Objection) of any violation of any Environmental Law with respect to the Business, the Owned

Real Property or the Leased Real Property and, to the Sellers' Knowledge, except as stated in the

NYSDEC Objection, (a) Each Seller, and each of the Acquired Assets, Owned Real Property and

Leased Real Property, is in compliance with all :Environmental Laws; (b) there is no complaint,

investigation, suit, claim, action or judicial or administrative proceeding relating to or arising

under Environmental Laws that is pending or, to the Knowledge of Sellers, threatened against

any Seller or any real property owned, operated or leased by any Seller, or the Business or any of

the Acquired Assets; (c) none of the Owned Real Property or Leased Real Property has been

listed on the federal Comprehensive Environmental Response, Compensation Liability

Information System (CERCLIS) database or any other similar federal, provincial or state list of

known or suspected contaminated sites; (d) no Hazardous Materials are present, or have been

used, treated, stored, disposed of or Released by any Seller at any location, or by any other

Person at, on or under the Owned Real Property or the Leased Real Property in any manner or

concentration that requires investigation, removal or remediation under Environmental Laws or

would otherwise cause any Seller or any future owner or operator of any Owned Real Property or

Leased Real Property to incur liability under Environmental Laws; and (e) no Seller has received

any notice of or entered into any Order involving uncompleted, outstanding or unresolved

obligations, liabilities or requirements relating to or arising under Environmental Laws. Sellers

have delivered or made available to Buyer complete and accurate copies of all Environmental

Reports, audits, and assessments prepared by or for Sellers that are in Sellers' possession, as well

as all material correspondence with Governmental Authorities or other Persons relating to

Environmental Laws, environmental conditions or environmental compliance matters at any of

the premises at which Sellers operate the Business and concerning the operation of the Business,

including but not limited to the Owned Real Property and the Leased Real Property.

4.1 1. Employee Benefits; Employees.

17

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(a) Set forth on Schedule 4.11(a) is a list of all plans, programs, policies,

agreements and arrangements relating to or providing for employment, compensation, benefits or

perquisites to any current or former employee or independent contractor (or their beneficiaries) of

any Seller that is maintained by or contributed to by such Seller or with respect to which any Seller

has any Liability ("Employee Benefits Planr"). As of the Agreement Date, no Seller nor any

ERISA Affiliate of such Seller has ever maintained, sponsored, or contributed to an Employee

Benefits Plan that is subject to Title IV of ERISA or, in any way, directly or indirectly, has any

liability with respect to such a plan (including, witho~►t limitation, any multiemployer plan withinthe meaning of Section 3(37) of ERISA). As of the Agreement Date, all Employee Benefits Plans

are in documentary, administrative and operational full compliance with applicable Law, including

ERISA and the Code, and the regulations promulgated thereunder, all contributions, premiums and

payments required to be made with respect to any Employee Benefits Plan have been timely made,

and there is no pending or, to the Knowledge of Sellers, threatened, action relating to any

Employee Benefits Plan (other than routine claims for benefits). Each Employee Benefits Plan that

is intended to be qualified under Section 401(a) of the Code has received a favorable determination

letter or opinion letter from the Internal Revenue Service. To the Knowledge of Sellers, no

circumstance exists that could result in revocation of any such favorable determination letter or

opinion letter. Sellers have no expressed or implied commitment, and have not expressed or

implied to any employee or other Person any such commitment, to provide any benefits or

compensation other than required by the terms of the Employee Benefits Plans as in effect as of the

date hereof.

(b) Each Seller is, and at all times has been, in compliance in all material

respects with all applicable Laws respecting employment, employment practices, terms and

conditions of employment and wages and hours, collective bargaining, leaves of absence, health

and safety, and immigration and there are no pending or threatened claims or proceedings against

any Seller with respect to any current or former employee. No union represents any of Sellers'

employees, no Seller is signatory to any collective bargaining agreement and, to the Knowledge of

Sellers, no Seller has experienced any strike, work stoppage, slowdown, lockout, unfair labor

practice complaint, union organizing activity or other material employee or labor dispute, and no

such activity is pending, threatened or anticipated. To the Sellers' Knowledge, as of the Agreement

Date, there is no organizational effort presently being made or threatened by or on behalf of any

labor union with respect to any employees of any Seller. Schedule 4.1 1(b) accurately sets forth,

with respect to each employee of Sellers (including any employee who is on a leave of absence or

on layoff status): (i) the name of such employee and the date as of which such employee was

originally hired; (ii) such employee's title; (iii) such employee's annualized compensation as of the

Agreement Date; and (iv) each Cmployee Benefits Plan in which such employee participates or is

eligible to participate.

4.12. Insurance. Schedule 4.12 sets forth a true, complete and correct description of all

insurance policies owned, held, or maintained by or for the benefit of any Seller or insuring the

property or assets of any Seller, including the type and amount of coverage and the expiration

dates of the policies. Sellers have made available to Buyer all policies of insurance owned,

held, or maintained by or for the benefit of any Seller or insuring the property or assets of any

Seller. Except as set forth nn Schedule 4.12, (a) current premiums and any other obligations

under such insurance policies have been paid and all such policies are valid and enforceable

a~aa32s~~s


and in full force and effect on the Agreement Date and no Seller is in default with respect to itsobligations under any such insurance policies and (b) no Seller has received any notice of, orthreatening, any suspension, revocation, modification or cancellation of any insurance policyor a material increase in any premium in connection therewith or informing any Seller that anycoverage listed on Schedule 4.12 will or may not be available in the fiiture on substantially the

same terms as now in effect. The consummation of the transactions contemplated by thisAgreement and the Transaction Documents will not cause a cancellation or reduction in thecoverage of such insurance policies.

4.13. Title to Assets; Sufficiency of Assets. Sellers have good and marketable title to, or

a valid leasehold interest in or all rights to use each and all of the Acquired Assets. Upon entry

of the Sale Order, Buyer will be vested, to the maximum extent permitted by sections 363 and

365 of the Bankruptcy Code, with good, valid, marketable and undivided title to the Acquired

Assets free and clear of all Liens, other than Permitted Liens.

4.14. Intellectual Pro~ert~ Set fortfl on SchedL~le 4.14 is a complete and accurate list of

all of the Sellers' Intellectual Property. To the Knowledge of Sellers, Sellers own, on an

exclusive basis, all right, title and interest in and to all the Seller Intellectual Property. Except

as set forth on Schedule 4.14: (a) the use of the Seller Intellectual Property by any Seller does

not interfere with, infringe upon, misappropriate or otherwise come into conflict with any

intellectual property rights of any other Person and no Seller has received any demand, claim

or notice from any Person with respect to such intellectual property which challenges the

validity of any such intellectual property; (b) as of the Agreement Date, to the Sellers'

Knowledge, no other Person is infringing upon or misappropriating any Seller Intellectual

Property; (c) no trademark or service mark owned, or, to the Sellers' Knowledge, licensed, by

any Seller is involved in any opposition, cancellation or equivalent proceeding, and to the

Sellers' Knowledge, no such action has been threatened; (d) no patent owned by any Seller is

involved in any interference, reissue, reexamination or equivalent proceeding; (e) as of the

Agreement Date, no Seller has granted a license to any Person to use any Seller Intellectual

Property other than licenses granted in the ordinary course of business or under any agreement

set forth on Schedule 4.14; and (~ no Seller is bound by, and no Seller Intellectual Property is

subject to, any settlement, Order or stipulation that limits or restricts, or would limit or restrict,

in any material respect, the ability of any Seller to use, transfer, license, exploit, assert or

enforce such Seller Intellectual Property.


4.16. Inventory. Except as set forth on Schedule 4.16, the Inventory of Sellers (a)

consists solely of materials and goods useable or saleable in the ordinary course of business

(taking into account the quantity and quality of the Inventory), (b) is not materially defective,

slow moving, obsolete or damaged, and (c) is fit and merchantable for their particular use in all

material respects. Except as set forth on Schedule 4.16, none of the Inventory is subject to any

consignment, bailment, warehousing or similar agreement.

4.17. Taxes. Seller has prepared and filed or caused to be filed all material Tax Returns

and reports relating to the Business and the Acquired Assets required to be filed with any

Governmental Authority prior to the Closing Date. Except as described in Schedule 4.17, Seller

4644328v15


has paid, or withheld and remitted, in full, all Taxes due and owing and all claims, demands,assessments, judgments, costs, and expenses connected therewith. Except as described inSchedule 4.17, Seller is not a party to any action or proceeding, nor to the Knowledge of Seller,is any such action or proceeding contemplated or threatened, for the assessment or collection ofany Taxes relating to the Business or the Acquired Assets, and no deficiency notices or reportshave been received by Seller in respect of any Tax relating to the Business or the AcquiredAssets. Seller has withheld and paid each material Tax required to have been withheld and paidin connection with amounts paid or owing to any employee, independent contractor, creditor,customer, shareholder or other party, and camplied with all information reporting and backupwithholding provisions of applicable Law. Except as described in Schedule 4.17, no extensionsor waivers of statutes of limitations have been given ot• requested with respect to any of Sellers'Taxes. None of Sellers is, or ever has been, a party to, or a promoter of, a "reportabletransaction" within the meaning of Section 6707A(c)(1) of the Code and Treasury RegulationsSection 1.601 1-4(b). No claim has ever been made by any Governmental Authority in ajLzrisdiction where a Seller does not file Tax Returns that such Seller is or may be subject totaxation by that jurisdiction.

4.18. Brokers. Neither Sellers nor any of their respective Affiliates have authorized anyPerson to act as broker, finder, banker, consultant, intermediary or in any other similar capacitywhich would entitle such Person to any investment banking, brokerage, finder's or similar fee inconnection with the negotiation, execution or performance of this Agreement or the transactionscontemplated hereby, except for the fees and expenses of Keen-Summit Capital Partners LLC,which will be solely the obligation of Sellers or their respective Affiliates.

4.19. Warranties Are Exclusive. The parties acknowledge that the representations and

warranties contained in this Article 4 are the only representations or warranties given by theSeller and that all other express or implied warranties are disclaimed. Without limiting theforegoing, Buyer acknowledges that the Acquired Assets are conveyed "as is", "where is" and"with all faults" and that all warranties of merchantability or fitness for a particular purpose are

disclaimed. Without limiting the foregoing, Buyer acknowledges that Seller and its Affiliateshave made no representation or warranty concerning any (a) use to which the acquired assets

may be put; (b) future revenues, costs, expenditures, cash flow, results of operations, financialcondition or prospects that may result from the ownership, use or sale of the acquired assets or

the assumption of the assumed liabilities; or (c) other information or documents made available

to Buyer or its Affiliates.

ARTICLE 5REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to Sellers as follows, as of the Agreement Date and

as of the Closing Date:

5.1. Organization. Buyer is a limited liability company, duly organized, validlyexisting and in good standing under the Laws of the State of Delaware, and has all requisite

power and authority to own its properties and assets and to conduct its business as now

conducted.

20

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5.2. Authorization and Validity. Buyer has all requisite power and authority to enter

into this Agreement and to execute and deliver the Transaction Documents to which it is a party

and to carry out its obligations hereunder and thereunder. The execution and delivery of this

Agreement and the Transaction Documents and the performance by Buyer of its obligations

hereunder and thereunder have been duly authorized by all necessary action by its board of

directors (or similar governing body), and no other proceedings on the part of Buyer are

necessary to authorize such execution, delivery and performance. This Agreement and the

Transaction Documents to which Buyer is a party have been duly executed by Suyer and

constitute its valid and binding obligation, enforceable against it in accordance with the terms

herein and therein.

5.3. No Conflict or Violation. The execution, delivery and performance by Buyer of this

Agreement and the Transaction Documents do not and will not (a) violate or conflict with any

provision of the Organizational Documents of Buyer, or (b) violate any Law ox Order applicable

to Buyer, other than, in the case of clause (b), any such violation or conflict that would not

reasonably be expected to materially delay or impair the ability of Buyer to perform its

obligations under this Agreement and the Transaction Documents to which it is a party or to

consummate the transactions contemplated hereby or thereby.

5.4. Consents Approvals and Notifications. The execution, delivery and performance by

Buyer of this Agreement and the Transaction Documents and the consummation of the

transactions contemplated hereby and thereby do not require the Consent of, or declaration or

filing with, any Governmental Authority or any other Person except for: (a) the Bankruptcy

Court's entry of the Sale Order and (b) such Consents and filings, the failure of which to obtain

or make would not reasonably be expected to materially delay or impair the ability of Buyer to

perform its obligations under this Agreement and the Transaction Documents to which it is a

party or to consummate the transactions contemplated hereby or thereby.

5.5. Availabilit~of Funds. As of the Closing, Buyer will have sufficient funds available

to cons~immate the transactions contemplated by this Agreement and to perform its obligations

hereunder and to provide adequate assurance of future performance by Buyer under this

Agreement and the Assigned Contracts.

5.6. Brokers. Neither Buyer nor any of its Affiliates has authorized any Person to act as

broker, finder, banker, consultant, intermediary or in any other similar capacity that would entitle

such Person to any investment banking, brokerage, finder's or similar fee in connection with the

transactions contemplated by this Agreement, except where any fee or payment due such persons

would be solely the obligation of Buyer or its Affiliates.

5.7. Warranties Are Exclusive. The parties acknowledge that the representations and

warranties contained in this Article 5 are the only representations or warranties given by the

Buyer and that all other express or implied warranties are disclaimed.

ARTICLE 6COVENANTS AND AGREEMENTS

6.1 Pre-Closing Covenants of Seller. Sellers covenant to Buyer that during the period

21

4644328v1~


from the date hereof through and including the Closing Date or the earlier• termination of this

Agreement:

(a) Conduct of Business Before the Closing Date. Unless otherwise agreed by

Seller and Buyer or as required by the Bankruptcy Code or an Order by the Bankruptcy Court,

Seller shall conduct the Business in all material respects in the ordinary course of business and

shall use commercially reasonable efforts to preserve intact the Business and relationships with

third parties. Without in any way limiting the foregoing, Seller shall not, without obtaining the

prior consent of Buyer:

(i) take or agree to commit to take any action that would make any

representation or warranty of Seller inaccurate in any material respect at, or as of any time prior

to, the Closing Date;

(ii) fail to keep in full force and effect and to pay all premiums and

other amounts due under 1ny of Seller's insurance policies;

(iii) make any material change in its general pricing practices or policies

or in its credit or allowance practices or policies, except to the extent reasonably necessary to be

competitive in its industry;

(iv) sell or dispose of any of the Acquired Assets other than sales of

Inventory in the ordinary course of business;

(v) make any material modification to any Assigned Contract; or

(vi) discount Accounts Receivable or Inventory other than in the

ordinary course of business.

(b) Cooperation. Seller shall use commercially reasonable efforts to (i) obtain

the Consents and (ii) take, or cause to be taken, all actions and to do, or cause to be done, all

things necessary or proper, consistent with applicable Law, to consummate and make effective

as soon as possible the transactions contemplated hereby.

(c) Access to Records and Properties. Prior to the Closing, Buyer shall be

entitled, at its expense, to conduct such investigation of the condition (financial or otherwise) of

the Business, assets, properties or operations of Seller as Buyer shall reasonably deem

appropriate and Seller shall provide Buyer with reasonable access to Seller's facilities and

personnel during normal business hours to assist Buyer in conducting such an investigation.

(d) Notice of Certain Events. Seller shall promptly notify Buyer of, and

provide to Buyer any information reasonably requested with respect to, the occurrence of any

event or condition or the existence of any fact that would reasonably be expected to cause a

Material Adverse Effect or to cause any of the conditions to either of the parties' obligations to

consummate the transactions) contemplated by this Agreement not to be fulfilled.

22

4644328v(5


62 Pre-Closing Covenants of Buver. Buyer covenants to Seller that, during the period

from the date hereof through and including the Closing Date or the earlier termination of this

Agreement:

(a) Cooperation. Buyer shall use corntnercially reasonable efforts to take, or

cause to be taken, all action and to do, or cause to be done, all things necessary or proper,

consistent with applicable Law, to consummate and make effective as soon as possible the

transactions contemplated hereby.

(b) Adequate Assurances Re~ardin~ Assigned Contracts and Required Orders.

With respect to each Assigned Contract, Buyer shall provide adequate assurance of the fixture

performance of such Assigned Contract by Buyer. Buyer shall promptly take such actions as

may be reasonably requested by Seller to assist Seller in obtaining the Bankruptcy Court's entry

of the Sale Order and any other Order of the Bankruptcy Court reasonably necessary to

consummate the transactions contemplated by this Agreement.

(c) Notice of Certain Events. Buyer shall promptly notify Seller of, and

provide to Seller any information reasonably regL~ested with respect to, the occurrence of any

event or condition or the existence of any fact that would reasonably be expected to cause a

Material Adverse Effect or to cause any of the conditions to either of the parties' obligations to

consummate the transactio►1s contemplated by this Agreement not to be fulfilled.

ARTICLE 7EMPLOYMENT MATTERS

7.1. Employee and Benefits Matters.

(a) Buyer shall have the right, but not the obligation, to offer employment

immediately after the Closing to each or any employee of any Seller employed in the Business on

terms and conditions as determined by Buyer in its sole discretion. Such employees who accept

such offers of employment and become employees of Buyer shall be collectively referred to as

the ("Transferred Employees").

(b) Without in any way limiting the foregoing, as of the Closing Date, Buyer

may, in its sole and absolute discretion, assume on behalf of the Transferred :Employees the

Employee Benefits Plans or the underlying insurance or administrative contracts set forth on

Schedule 7.1(b), or offer to the Transferred Employees employee benefits plans that are, in the

aggregate, substantially comparable to the Employee Benefits Plans as in effect on the date hereof,

provided that Buyer shall have the right at any time to amend, suspend or terminate any employee

benefit plan that it assumes, adopts or maintains for the ̀ Transferred Employees or any of its other

employees. Sellers shall take all necessary measures to reflect any such assumption by Buyer of

the Employee Benefits Plans.

ARTICLE 8TAXES

23

a6a432s~is


8.1. Taxes Related to Purchase of Acquired Assets. Al( Taxes, including, without

limitation, all state and local Taxes in connection with the transfer of the Acquired Assets, and all

recording and filing fees (collectively, "Transaction Taxes"), that may be imposed by reason of

the sale, transfer, assignment and delivery of the Acquired Assets and that are not exempt Linder

section 1 146(a) of the Bankruptcy Code, shall be borne 50% by Sellers and 50% by Buyer. Buyer

and Seller shall cooperate to determine the amount of Transaction Taxes payable in connection

with the transactions contemplated under this Agreement. Seller shall provide to Buyer at Closing

all requisite exemption certificates. Seller and Buyer shall prepare and file any and all required

Tax Returns for or with respect to such Transaction Taxes with any and all appropriate

Governmental Authority. Seller shall be solely responsible for all other Taxes relating to the Sale

of the Acquired Assets, including, but not limited to, income and franchise taxes.

8.2. Cooperation on Tax Matters.

(a) Buyer and Seller shall furnish or cause to be furnished to each other, as

promptly as practicable, such information and assistance relating to the Acquired Assets and the

Assumed Liabilities as is reasonably necessary for the preparation and filing of any Tax Return,

claim for refund or other required or optional filings relating to Tax mailers, for the preparation

for and proof of facts during any Tax audit, for the preparation for any Tax protest, for the

prosecution or defense of any suit or other proceeding relating to Tax matters and for the answer

to any Governmental Authority relating to Tax matters.

(b) Buyer shall retain possession of all accounting, business, financial and Tax

records and information (i) relating to the Acquired Assets or the Assumed Liabilities that are

in existence on the Closing Date and transferred to Buyer hereunder; and (ii) coming into

existence after the Closing Date that relate to the Acquired Assets or the Assumed :Liabilities

before the Closing Date, for the minimal period from the Closing Date as required by the

Internal Revenue Code. Buyer shall give Seller notice and an opportunity to retain any such

recoc•ds in the event that Buyer determines to destroy or dispose of them after such period. In

addition, from and after the Closing Date, Buyer shall provide access to Seller (after

reasonable notice and during normal business hours and without charge), to the books, records,

documents and other information relating to the Acquired Assets or the Assumed Liabilities as

Seller may reasonably deem necessary to (i) properly prepare for, file, prove, answer,

prosecute and defend any such Tax Return, claim, filing, tax audit, tax protest, suit, proceeding

or answer; or (ii) administer or complete the Bankruptcy Case. Such access shall include,

without limitation, access to any computerized information retrieval systems relating to the

Acquired Assets or the Assumed Liabilities.

8.3. Allocation of Purchase Price. Buyer and Sellers will allocate the Purchase Price

among the Acquired Assets in accordance with a schedule to be reasonably agreed by them prior

to the Closing Date (the "Allocation"). The Allocation will be binding upon Buyer and Sellers

and their respective successors and assigns, and none of the parties to this Agreement will take

any position (whether in returns, audits or otherwise) that is inconsistent with the Allocation.

Buyer and Sellers will report the purchase and sale of the Acquired Assets on all tax returns,

including, without limitation, Form 8594 as provided for in section 1060 of the Code, in

accordance with the Allocation and will cooperate in timely filing with the Internal Revenue

Service their respective Forms 8594. The Allocation agreed to by the Sellers and Buyer shall not

24

4644328v15


be binding upon the Sellers' prepetition secured lenders, and any allocation of the Purchase Priceamong such lenders, including pursuant to any settlement between such lenders and Sellers, shallnot be binding on Sellers or Buyer for purposes of the Allocation provided for in this Section

8.3.

8.4. Proration of Real Property Taxes. All real property Taxes imposed on the AcquiredReal Property for any taxable period commencing on or before the Closing Date and ending after

the Closing Date (a "Straddle Period") shall be prorated between Buyer and Sellers based on the

best information then available, with (a) Sellers being liable for such Taxes attributable to anyportion of a Straddle Period ending on the Closing Date and (b) Buyer being liable for such

Taxes attributable to any portion of a Straddle Period beginning after the Closing Date. The

amount of all such prorations shall be calculated and paid on the Closing Date and the Purchase

Price shall be reduced to reflect the amount allocated to Sellers.

8.5. Excluded Liabilities. For the avoidance of doubt, and except as expressly provided

herein, Excluded Liabilities shall include any Liabilities for (a) any Taxes imposed on any Seller

for any Tax period, (b) any Taxes imposed nn the Business or on, with respect to, or based on,

the Acquired Assets for any Tax period or portion thereof ending on or before the Closing Date,

including any Taxes prorated to the portion of a Straddle Period ending on the Closing Date as

determined under Section 8.4 hereof, (c) any Taxes imposed on the transactions contemplated by

this Agreement (including any transfer Taxes), and (d) any Taxes imposed on Buyer or any of its

Affiliates as a transferee or successor of any Seller (collectively, "SeClers' Tuxes").

ARTICLE 9CONDITIONS PRECEDENT TO PERFORMANCE BY PARTIES

9.1. Conditions Precedent to Performance by Sellers. The obligation of Seller to

consummate the transactions contemplated by this Agreement is subject to the fulfillment, at or

before the Closing, of the following conditions, any one or more of which may be waived by

Seller, in its sole discretion:

(a) Representations and Warranties of Buyer. The representations and

warranties of Buyer made in Article 5 of this Agreement, in each case, shall be true and correct as

of the date hereof and as of the Closing Date as though made by Buyer again as of the Closing

Date, except to the extent (i) such representations and warranties expressly relate to an earlier

date, in which case such representations and warranties shall be true and correct on and as of such

earlier date, and (ii) any inaccuracies in such representations and warranties would not,

individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

(b) Performance of the Obligations of Bum Buyer shall have performed in

all material respects alf obligations required under this Agreement to which it is party which are

to be performed by it on or before the Closing Date (except with respect to the obligation to pay

the Purchase Price in accordance with the terms of this Agreement and any obligations qualified

by materiality, which obligations shall be performed in all respects as required under this

Agreement).

25

4644328vI5


(c) Bankruptcy Court Approval; No Injunction or Stay. The Bankruptcy Court

shall have entered the Sale Order which shall be a Final Order in full force and effect on the

Closing Date. On the Closing Date there shall be no order staying, reversing, modifying, vacating

or amending the Sale Order and there shall be no preliminary or permanent injunction or other

Order of any court or Government Authority declaring this Agreement invalid or unenforceable in

any material respect or otherwise preventing the transactions contemplated herein from being

consummated.

(d) Closing Deliveries. Buyer shall have made the deliveries contemplated

under Section 3.3.

(e) Assigned Contract Cure. Buyer shall, consistent with section

365(b)(1)(A) of the Bankruptcy Code, but subject to its rights otherwise provided under this

Agreement, either pay undisputed cure claims relating to Assigned Contracts on the Closing Date

or provide for a reservation of funds sufficient to pay the alleged amount of any disputed cure

claim relating to an Assigned Contract on the Closing Date.

9.2. Conditions Precedent to the Performance by Buver. The obligations of Buyer to

consummate the transactions contemplated by this Agreement are subject to the fulfillment, at or

before the Closing, of the following conditions, any one or more of which (other than the

conditions contained in Article 4) may be waived by Buyer, in its sole discretion:

(a) Representations and Warranties of Seller. The representations and

warranties of Seller made in Article 4 of this Agreement shall be true and correct as of the date

hereof and as of the Closing Date as though made by Seller again as of the Closing Date, except to

the extent (i) such representations and warranties expressly relate to an earlier date, in which case

such representations and warranties shall be true and correct on and as of such earlier date and (ii)

any inaccuracies in such representations and warranties would not, individually or in the

aggregate, reasonably be expected to result in a Material Adverse Effect.

(b) Performance of the Obligations of Seller. Seller shall have performed in all

material respects al( obligations required under this Agreement to which Seller is party to be

performed by Seller on or before the Closing Date (except with respect to any obligations

qualified by materiality, which obligations shall be performed in all respects as required under this

Agreement).

(c) Bankruptcy Court Approval• No Injunction or Stay. The Bankruptcy Court

shall have entered the Sale Order and Stalking Horse Approval Order in form and substance

acceptable to Buyer which shall be Final Orders and be in full force and effect on the Closing

Date. On the Closing Date there shall be no Order staying, reversing, modifying, vacating or

amending the Sale Order or Stalking Horse Approval Order and there shall be no preliminary or

permanent injunction or other Order of any court or Government Authority declaring this

Agreement invalid or unenforceable in any material respect or otherwise preventing the

transactions contemplated herein from being consummated.

(d) Required Licenses and Permits. Buyer shall have obtained all rights to the

Permits necessary to operate the Business as set forth on Schedule 9.2(d), which are not legally

26

4644328v15


transferable to Buyer by Sellers, and the NY Bottling License (as defined in Schedule 1.1(x)) shall

have been renewed beyond its November 30, 2015 expiration date for the usual and customary

renewal term.

(e) Consents and A royals. Buyer shall have received the Consents set forth

on Schedule 3.2(a) in form and substance reasonably satisfactory to Buyer, provided, however,

Buyer shall not require the Consent of any Governmental Authority or counterparty to an

Assigned Contract if such Consent is not necessary to consummate the transactions contemplated

herein by operation of the Bankruptcy Code including, without limitation, section 3650 thereof.

(~ No Material Adverse Effect. There shall not have occurred any event, fact

or circumstance that has had, or is reasonably likely to have, a Material Adverse Effect.

(g) Closing Deliveries. Seller shall have made the deliveries contemplated

under this Agreement.

(h) Condition of Acquired Assets. Other than (i) the sale of Inventory, (ii) the

collection of Accounts Receivable, and (iii) reasonable wear and tear with respect to Owned

Machinery and Equipment, in each case consistent with Seller's ordinary co«rse of business, the

Acquired Assets shall not have become subject to damage or other casualty resulting in a

reduction in the value of the Acquired Assets in excess of $250,000.

(i) [Intentionally Omitted].

(j) Comsource Equipment. Buyer shall have received (i) a copy of a Final

Order of the Bankruptcy Court permitting Sellers to convey the Comsource Equipment to Buyer

(or an assignee of Buyer pursuant to Section 12.1), free and clear of any Liens, including any

claim by Comsource to ownership of the Comsource Equipment, and (ii) in a form reasonably

satisfactory to Buyer, to be obtained and delivered by Sellers, (A) releases of any Liens by

creditors of Comsource asserted against the Comsource Equipment, and/or (B) a copy of a Final

Order of the Bankruptcy Court permitting Sellers to convey the Comsource Equipment to Buyer

(or an assignee of Buyer pursuant to Section 12.1), free and clear of any Liens asserted against the

Comso~arce Equipment by creditors of Comsource, following a hearing on the issue with proper

notice to such creditors.

(k) Remedial and Reclamation Obli anions. The remedial and reclamation

obligations concerning the Real Property, any other Liability referenced in Section 1.4(v), and any

other obligation with respect to the Acquired Assets under Environmental Law identified by (or

discovered based on information provided by) NYSDEC prior to the Closing shall have been

resolved to the reasonable satisfaction of both Buyer and NYSDEC.

ARTICLE 10BANKRUPTCY COURT MATTERS

10.1. Approval of Break-Up Fee. In consideration for Buyer having expended

considerable time and expense in connection with this Agreement and the negotiation thereof and

the identification and quantification of assets of Sellers, Sellers shall pay to Buyer abreak-up fee in

27

4644328v15


an amount equal to $216,825, which equals 2.95% of the Cash Amount, without regard to the

adjustments set forth in Section 2.1(a) (the "Break-Up Fee"), at the closing of a transaction that is

a Competing Bid (as hereinafter defined). Sellers acknowledge and agree that (i) the approval of

the Break-Up Fee is an integral part of the contemplated transactions, (ii) in the absence of Sellers'

obligations to pay the Break-Up Fee, Buyer woLlld not have entered into this Agreement, (iii) the

entry of Buyer into this Agreement is beneficial to Sellers, (iv) the Break-Up Fee is reasonable in

relation to Buyer's efforts and to the magnitude of the transactions contemplated hereby, and (v)

time is of the essence with respect to entry of the Sale Order and the Stalking Horse Approval

Order (as hereinafter defined).

10.2. Competing Transaction.

(a) This Agreement is subject to approval by the Bankruptcy Court and the

consideration by Sellers of higher or otherwise better competing bids (each a "Co~npetrng Biel").

(b) Following the entry of the Stalking Horse Approval Order by the

Bankruptcy Court and until the Bankruptcy Court's approval of the Sale Order approving this

Agreement, Sellers and their Affiliates are permitted to market and solicit other proposals or offers

by, any Person in connection with any sale or other disposition of ail or any part of the Acquired

Assets. In addition, during such time period, Sellers have the responsibility and obligation to

respond to any inquiries or offers to purchase all or any part of the Acquired Assets and perform

any and all other acts related thereto which are required under the Bankruptcy Code or other

applicable Law, including supplying information relating to the Business and the assets of Sellers

to prospective purchasers.

10.3. Bankruptcy Court Filings.

(a) As promptly as practicable following the execution of this Agreement,

Sellers shall seek the approval from the Bankruptcy Court of a Motion Pursuant To Sections 105(a)

and 363 of the Bankruptcy Code For Order Approving Selection of Stalking Horse, Qreak-Up Fee

and Related Relief In Connection With the Sale of Debtors' Assets ("Stalking Horse Approval

_M~tron") permitting, among other things, the sale of the Acquired Assets to Buyer under the terms

of this Agreement, demonstrating that Buyer is a "good faith" purchaser under Section 363(m) of

the Bankruptcy Code, as well as the entry of an order approving the Stalking ~-Iorse Approval

Motion ("Stalking Horse Approval Order") which shall include customary auction terms and

conditions acceptable to the parties, including, without limitation:

(i) the recognition of Buyer's status as a "stalking horse" bidder;

(ii) approval of the payment of the Bt•eak-Up Fee;

(iii) appropriate over-bid protections set at increments acceptable to the

parties, with the Buyer having the last opportunity to bid after the Sellers' receipt of any additional

bids and before the next round of bidding commences;

(iv) a provision stating that Buyer shall have no obligation to serve as a

"Backup Bidder" if the Buyer is not the successful bidder in the Auction; and

28

4644328v15


(v) a provision stating that any Deposit paid by Buyer shall be returnedto Buyer within two (2) Business Days (y) if this Agreement is terminated or (z) if Buyer is not thesuccessful bidder in the Auction.

(b) Buyer agrees that it will promptly take such actions as are reasonablyrequested by Sellers to assist in obtaining entry of the Sale Order and the Stalking Horse Approval

Order including, without limitation, furnishing affidavits or other documents or information forfiling with the Bankruptcy Court for the purposes, among others, of providing necessary assurances

of performance by Buyer under this Agreement and demonstrating that Buyer is a "good faith"purchaser under Section 363(m) of the Bankruptcy Code. In the event the entry of the Sale Order

or the Stalking Horse Approval Order shall be appealed, each party shall use their respectivecommercially reasonable efforts to defend against such appeal.

(c) Sellec•s shall use their reasonable best efforts to obtain approval of the

Stalking I-Iorse Approval Order and the Sale Order as soon as practicable.

(d) In the event that an appeal is taken, or a stay pending appeal or application

for reconsideration is requested from the Sale Order or the Stalking Horse Approval Order, Sellers

shall promptly notify Buyer of such appeal or stay request and shall provide Buyer within one (1)

Business Day a copy of the relevant notice of appeal or order of stay or application for

reconsideration. Sellers shall also provide Buyer with written notice of any motion or application

filed in connection with any appeal from either of such orders or application for reconsideration.

10.4. Notice of Sale. Notice of the sale of Acquired Assets contemplated in this

Agreement shall be in a form reasonably acceptable to Buyer. Sellers shall take such steps as are

necessary to notify all Persons and parties in interest required to receive notice in accordance with

applicable Law (including, to the extent applicable, Rules 2002, 3016, 3017 and 6004 of the

Federal Rules of Bankruptcy Procedure and any local rules or orders of the Bankruptcy Court) and

any bidding procedures order on all Persons required to receive notice under applicable Law.

ARTICLE 11TERMINATION AND EFFECT OF TERMINATION

11.1. Termination. This Agreement may be terminated prior to the Closing as follows:

(a) by mutual written agreement of Buyer and the Sellers;

(b) by the Buyer or the Sellers, if the Buyer is not the successful bidder in the

Auction (as determined by Buyer immediately after the Auction);

(c) by Buyer or Sellers if the Closing shall not have occurred on or before the

date that is thirty (30) calendar days after the date the Bankruptcy Court enters the Sale Order

approving and authorizing the sale of the Acquired Assets to Buyer (as may be extended by

written agreement of Buyer and Nirvana) (the "Closing Dute Deczclline"); provided, however,

that the terminating party is not in material breach of any of its representations and warranties

contained in this Agreement and has not failed in any material respect to perform any of its

obligations hereunder;

29

4644328x15


(d) by Buyer or Sellers if there shall be in effect an Order as to which noappeal, motion for rehearing or reconsideration or a petition for writ of certiorari is pendingrestraining, enjoining or otherwise prohibiting the consummation of the transactionscontemplated hereby;

(e) by Buyer if there shall have been a breach by any Seller of any of itsrepresentations, warranties, covenants or agreements contained in this Agreement, which breachwould result in the failure to satisfy one or more of the conditions set forth in this Agreement,

and such breach or other event or condition shall be incapable of being cured or, if capable ofbeing cured, shall not have been cured within ten (10) calendar days after written notice thereof

shall have been received by Sellers; provided, that Buyer is not in material breach of thisAgreement as of such date;

(~ by Sellers, if there shall have been a breach by Buyer of any of its

representations, warranties, covenants or agreements contained in this Agreement, which

breach would result in the failure to satisfy one or more of the conditions set forth in thisAgreement, and such breach or other event or condition shall be incapable of being cured or, if

capable of being cured, shall not have been cured within ten (10) calendar days after written

notice thereof shall have been received by Buyer; provided, that no Seller is in material breach

of this Agreement as of such date;

(g) by Buyer on or after the date the Sale Order ceases to be in full force and

effect, or is revoked, rescinded, vacated, materially modified, reversed or stayed, or otherwise

rendered ineffective by a court of competent jurisdiction;

(h) by Buyer if the Bankruptcy Case is dismissed or converted into a case

under chapter 7 of the Bankruptcy Code or a chapter 7 or chapter 1 1 trustee or an examiner with

expanded powers is appointed for any of the Sellers; or

(i) by Buyer if the Break-Up Fee are not approved in the Stalking Horse

Approval Order.

1 1.2. [Intentionally Omitted].

11.3. Effect of Termination or Breach. I~f this Agreement is terminated in accordance

with Section 1 1.1 (a) this Agreement shall become null and void and of no further force and

effect, except (i) for the provisions of this Section 1 1.3, which shall expressly survive any such

termination, (ii) that Buyer shall be refunded the Deposit, if any, that it paid to or for the

benefit of Sellers, (iii) for the provisions of Sections 12.1 — 12.18 hereof, and (iv) that the

termination of this Agreement for any cause shall not relieve any party hereto from any

Liability that at the time of termination had already accrued to any other party hereto or that

thereafter may accrue in respect of any act or omission of such party prior to such termination;

(b) Sellers shall not be entitled to any damages, losses, or payment from Buyer, and Buyer

shall have no further Liability of any kind to Sellers, any of their respective Affiliates, or any

third party on account of this Agreement; and (c) in the case of a termination pursuant to

Section l l .l(b) or ~e~, Sellers shall pay to Buyer the Break-Up Fee at the time provided in

Section 10.1 or at such other time as is permitted by the Bankruptcy Court.

30

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ARTICLE 12MISCELLANEOUS

12.1. Successors and Assigns. Except as otherwise provided in this Agreement, no party

hereto shall assign this Agreement or any rights or obligations hereunder without the prior

written consent of the other party hereto, and any such attempted assignment without such prior

written consent shall be void and of no force and effect; provided, however, Buyer may, without

the prior consent of Sellers, assign all or any portion of this Agreement and Buyer's rights

hereunder to any Affiliate. This Agreement shall inure to the benefit of and shall be binding

upon the successors and permitted assigns of the parties hereto, including any trustee appointed

in the Bankruptcy Case. Any purported assignment in violation of this Agreement shall be null

and void.

12.2. Governing Law• Jurisdiction; Waiver of Jury Trial.

(a) This Agreement shall be construed, performed and enforced in accordance

with, and governed by, the Laws of the state of New York (without giving effect to the principles

of conflicts of Laws thereof , except to the extent that the Laws of such State are superseded by

the Bankruptcy Code.

(b) For so long as Sellers are subject to the jurisdiction of the Bankruptcy

Court, the parties hereto irrevocably elect as the sole judicial forum for the adjudication of any

matters arising under or in connection with the Agreement, and consent to the exclusive

jurisdiction of, the Bankruptcy Court. After Sellers are no longer subject to the jurisdiction of the

:Bankruptcy Court, any legal action or proceeding with respect to this Agreement or the

transactions contemplated hereby may be brought in the courts of the state of New York sitting

in Syracuse, New York or of the United States District Court for the Northern District of New

York, and by execution and delivery of this Agreement, each of the parties hereto consents to the

non-exclusive jurisdiction of those courts. Each of the parties hereto irrevocably waives any

objection, including any objection to the Laying of venue or based on the grounds of forum non

conveniens, which it may now or hereafter have to the bringing of any action or proceeding in

such jurisdiction in respect of this Agreement or the transactions contemplated hereby.

(c) Each party hereto hereby irrevocably and unconditionally waives, to the

fullest extent it may legally and effectively do so, trial by jury in any suit, action or proceeding

arising hereunder.

12.3. Specific Performance. Each party hereto acknowledges and agrees that the other

parties would be damaged irreparably in the event any provision of this Agreement is not

performed in accordance with its specific terms or otherwise breached, so that, in addition to any

other remedy that a party hereto may have under Law or equity, a party may be entitled to

injunctive relief to prevent breaches of the provisions of this Agreement and to enforce

specifically this Agreement and the terms and provisions hereof, without the necessity of posting

any bond or other undertaking in connection therewith.

12.4. Survival of Representations and Warranties. None of the representations or

warranties of Sellers or Buyer set forth in this Agreement or in any certificate delivered in

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4644328vl5


connection with the transactions contemplated by this Agreement shall survive the Closing. The

parties hereto agree that the covenants contained in this Agreement to be performed at or after

the Closing shall surviving the Closing, and each party hereto shall be liable to the other after the

Closing for any breach thereof.

12.5. Payment of Expenses; Cost of Liti ate ion• Whether or not the transactions

contemplated hereby are consummated, Sellers shall be responsible for all of their expenses

incurred or to be incurred in connection with the negotiation and execution of this Agreement

and each other agreement, document and instrument contemplated by this Agreement and the

consummation of the transactions contemplated hereby and thereby. Buyer shall be responsible

for all of its expenses incurred or to be incurred in connection with the negotiation and execution

of this Agreement and each other agreement, document and instrument contemplated by this

Agreement and the consummation of the transactions contemplated hereby and thereby.


12.7. Severability. In the event that any part of this Agreement is declared by any court

or other judicial or administrative body to be null, void or unenforceable, said provision shall

survive to the extent it is not so declared, and all of the other provisions of this Agreement

shall remain in full force and effect only if, after excluding the portion deemed to be

unenforceable, the remaining terms shall provide for the consummation of the transactions

contemplated hereby in substantially the same manner as originally set forth at the later of the

date this Agreement was executed or last amended.

12.8. Notices. All notices, requests, demands and other communications under this

Agreement shall be in writing and shall be deemed to have been duly given: (a) on the date of

service if served personally on the party to whom notice is to be given; (b) on the day of

transmission if sent via facsimile transmission to the facsimile number given below (with hard

copy to follow); (c) on the day of transmission if sent via electronic mail to the electronic mail

address given below (with hard copy to follow); (d) on the day after delivery to a reputable

overnight express courier (charges prepaid); or (e) on the fifth day after mailing, if mailed to the

party to whom notice is to be given, by certified or registered mail, postage prepaid and return

receipt requested:

If to any Seller prior to the Closing, to:

Nirvana, Inc.One Nirvana PlazaForestport, New York 13338Attention: Mozafar Rafizadeh, presidentFacsimile: (315) 942-5013Email: mozafar~nitvanasprin~.com

If to any Seller after the Closing, to:

Mozafar Rafizadeh152 Gibson Hiil RoadChester, New York 10918

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4644323v15


In each case, with a copy to (which shall not constitute notice):

Bond, Schoeneck &King, PLLCOne Lincoln Center100 West Fayette StreetSyracuse, New York 13202-1355AtCn: Stephen A. DonatoFacsimile: (315) 218-8100Email: sdonatonbsl<.comAttn: Camille W. Hill, Esq.Facsimile: (315) 2188100Em~iL• chill~a~bsk.com

Teitelbaum &Baskin, LLC1 Barker AvenueThird FloorWhite Plains, New York 10601Attention: Jay Teitelbaum, Esq.Facsimile: (914) 437-7672Email: iteitelbaum a,tblawll~~.com

If to Buyer prior to the Closing, to:

SNG Beverage Group LLCc/o Gulshan Chhabra111 West Main StreetClinton, New Jersey 08809Email: graichh cr gmail.com

In each case, with a copy to (which shall not constitute notice):

Riker Danzig Scherer .Hyland & Ferretti LLP

Headquarters Plaza, One Speedwell Avenue

P.O. Box 1981Morristown, New Jersey 07962-1981

Attn: Derrick Freijomil, Esq.

Facsimile: 973-451-8622Email: dfrei,~omil a~rikei~.com

Attn: Jason D. Navarino, Esq.Facsimile: 973-451-8668Email:.,inavarino(a~riker.com

Any party may change its address for the purpose of this Section 11.8 by giving the other

party written notice of its new address in the manner set forth above.

12.9. Amendments; Waivers. This Agreement may be amended or modified, and any of

the terms, covenants, representations, warranties or conditions hereof may be waived, only by a

written instrument executed by the parties hereto, or in the case of a waiver, by the party

33

4644328v15


waiving compliance. Any waiver by any party of any condition, or of the breach of any

provision, term, covenant, representation or warranty contained in this Agreement, in any one or

more instances, shall not be deemed to be nor construed as a furthering or continuing waiver of

any such condition, or of the breach of any other provision, term, covenant, representation or

warranty of this Agreement.

12.10. Public Announcements. No party hereto shall make any press release or public

announcement concerning the transactions contemplated by this Agreement without the prior

written approval of the other party hereto, unless a press release or public announcement is

required by Law, Order of the Bankruptcy Court, or by Sellers in conjunction with or in

furtherance of the Bankruptcy Case. If any such announcement or other disclosure is required

by Law or Order of the Bankruptcy Court, the disclosing party shall give the non-disclosing

party prior notice of, and an opportunity to comment on, the proposed disclosure. Buyer shall

not be restricted from making any public announcements or issuing any press releases after the

Closing.

12.11. Entire Agreement. This Agreement and the Transaction Documents contain the

entire understanding among the parties hereto with respect to the transactions contemplated

hereby and supersede and replace all prior and contemporaneous agreements and

understandings, oral or written, with regard to such transactions. All Schedules hereto and any

documents and instruments delivered pursuant to any provision hereof are expressly made a part

of this Agreement as fully as though completely set forth herein.


12.13. No Third-party Beneficiaries. Nothing in this Agreement is intended to confer any

rights or remedies under or by reason of this Agreement on any Persons other than Sellers and

Buyer and their respective successors and permitted assigns. Nothing in this Agreement is

intended to relieve or discharge the obligations or liability of any third Persons to Sellers or

Buyer. No provision of this Agreement shall give any third Persons any right of subrogation or

action over or against Sellers or Buyer.

12.14. Headings. The article and section headings in this Agreement are for reference

purposes only and shall not affect the meaning or interpretation of this Agreement.

12.15. Construction. Unless the context of this Agreement otherwise requires, (a) words

of any gender include the other gender, (b) words using the singular or plural number also

include the plural or singular number, respectively, (c) the terms "hereof," "herein," "hereby,"

and derivative or similar words refer to this entire Agreement as a whole and not to any other

particular article, section or other subdivision, (d) the words "include," "includes" and

"including" shall be deemed to be followed by the phrase "without limitation," (e) "shall,"

"will," or "agrees" are mandatory, and "may' is permissive, and (~ "or" is not exclusive.


12.17. Counterparts. This Agreement may be executed in several counterparts

(including by means of telecopied or PDr signature pages), each of which shall be deemed an

34

4haa3?s~~s


original, but all of which shall constitute the same agreement. This Agreement and any signed

agreement or instrument entered into in connection with this Agreement, and any amendments

hereto or thereto, to the extent signed and delivered by means of a facsimile machine or other

electronic delivery (including PDF), shall be treated in all manner and respects as an original

abreement or instrument and shall be considered to have the same binding legal effect as if it

were the original signed version thereof delivered in person. No party hereto or to any such

agreement or instrument shall raise the use of a facsimile machine or other electronic delivery

(including PDF) to deliver a signature or the fact that any signature or agreement or instrument

was transmitted or communicated through the use of a facsimile machine or other electronic

delivery (including PDF) as a defense to the formation of a contract and each such party forever

waives any such defense.

12.18. Time of Essence. Tine is of the essence of this Agreement.

ARTICLE 13DEFINI'T'IONS

13.1. Certain Terms Defined. In addition to such terms as are previously defined in

this Agreement, the following terms as used in this Agreement shall have the following

meanings:

"Affiliate" means, with respect to any Person, any other Person directly or indirectly

controlling, controlled by or under direct or indirect common control with such first Person where

"control" means the possession, directly or indirectly, of the power to direct or cause the direction

of the management policies of a Person, through the ownership of voting securities, by Contract,

as trustee, executor or otherwise.

"Applic~eble Food L~rws" means all applicable Laws relating to the use, manufacture,

packaging, licensing, labeling, distribution, advertising, marketing or sale of any beverage

products of the Business.

"Aatction" means the auction conducted by Sellers pursuant to the Bidding Procedures

Order.

"Avoidance Action" means any and all Claims and causes of action of Sellers arising

under the Bankruptcy Code or similar federal, state or local laws, including under chapter 5 of the

Bankruptcy Code.

"Bankruptcy Code" means Tit(e 11 of the United States Code, 11 U.S.C. § 101 et seq., as

amended.

"Bankruptcy Court" means the United States Bankruptcy Court for the Northern District

of New York or such other court having jurisdiction over the Bankruptcy Case.

`Bankruptcy Rules" means the Federal Rules of Bankruptcy Procedure.

35

4644328v15


"Business Day" means any day other than Saturday, Sunday and any day that is a legal

holiday or a day on which banking institutions in New York, New York are authorized by Law to

close.

"Business Records" means all books, files and records to the extent they apply to the

Acquired Assets, including customer lists, historical customer files, reports, plans, data,

accounting and tax records, test results, product specifications, drawings, diagrams, training

manuals, engineering data, safety and Environmental Reports and documents, maintenance

schedules, operating and production records, inventory records, business plans, and marketing

and all other studies, documents and records.

`Buyer Louns" means loans, if any, made to Sellers by Buyer or an Affiliate thereof prior

to the Closing.

"Cash and Equivalents" means cash, negotiable instruments, checks, money orders,

marketable securities, short-term instruments and other cash equivalents, fiends in time and

demand deposits or similar accounts and any evidence of indebtedness issued or guaranteed by

the Governmental Authority.

"Cluirn" has the meaning set forth in section 101(5) of the Bankruptcy Code.

"Code" means the Internal Revenue Code of 1986, as amended.

"Consent" means any consent, approval, authorization, qualification, waiver or

notification of a Governmental Authority or third party.

"ContracP' means any written or oral contract, agreement, purchase order, license,

sublicense, lease, sublease, mortgage, instruments, guaranties, commitment, understanding,

undertaking or other similar arrangement, whether express or implied.

"Cure AmounP' means all amounts, costs and expenses required by the Bankruptcy Court

to cLzre all defaults under the Assigned Contracts so that they may be sold and assigned to Buyer

pursuant to sections 363 and 365 of the Bankruptcy Code.

"Environmental Luw.s" means all currently existing and future federal, state, provincial,

municipal, local and foreign statutes, ordinances, rules, Orders, regulations, remediation

standards, and other provisions having the force of law for protection of public health or the

environment, including the federal Comprehensive Environmental Response, Compensation and

Liability Act of 1980,42 U.S.C. ~ 9601 et seq., as amended, the federal Resource Conservation

and Recovery Act, 42 U.S.C. ~ 6901 et seq., as amended, and similar or related state statutes.

"Environmental Reports" means any environmental sampling or report performed

specifically to test compliance with any Environmental Laws, and any and all Phase I or II

environmental assessments, in each case which any Seller has received with respect to the

Business, the Owned Real Property, or the Leased Real Property; provided, Environmental

Reports shall not include any safety, health and environmental audit reports, or internal

investigation reports, prepared under the direction of Seller's legal department and privileged

36

4644328v1~


under the attorney-client privilege, attorney work-product privilege, or state or federal

environmental self-auditing privilege or policy.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

"ERISA Affiliate" means any trade or business (whether or not incorporated) which is

treated as a single employer with any Seller under Section 414(b), (c), (m) or (o) of the Code or

Section 4001 of ERISA.

"Faczlity" means the premises subject to the Real Estate Lease.

"Final Order" means an Order or judgment of the Bankruptcy Court or any other court of

competent jurisdiction entered by the Clerk of the Bankruptcy Court or such other court on the

docket in the Bankruptcy Case or the docket of such other court, which has not been modified,

amended, reversed, vacated or stayed and as to which (i) the time to appeal, petition for certiorari,

or move for a new trial, reargument or rehearing has expired and as to which no appeal, petition

for certiorari or motion for a new trial, reargument or rehearing shall then be pending or (ii) if an

appeal, writ of certiorari, new trial reargument or rehearing thereof has been sought, such Order

or judgment of the Bankruptcy Court or other court of competent jurisdiction shall have been

affirmed by the highest court to which such Order was appealed, or certiorari shall have been

denied, or a new trial, reargument or rehearing shall have been denied or resulted in no

modification of such Order, and the time to take any further appeal, petition for certiorari or move

for a new trial, reargument or rehearing shall have expired, as a result of which such Order shall

have become final in accordance with Kule 8002 of the Bankruptcy Rules; provided, that the

possibility that a motion under Rule 60 of the Federal Rules of Civil Procedure, or any analogous

rule under the Bankruptcy Rules, may be filed relating to such Order, shall not cause such Order

not to be a Final Order.

"GAAP" means United States generally accepted accounting principles in effect from time

to time.

"Govern~nentul Authority" means any agency, division, subdivision, audit group,

procuring office or governmental or regulatory authority in any event or any adjudicatory body

thereof, of the United States, any state or other political subdivision thereof or any foreign

government or any political subdivision thereof.

"Hazardous Materials" means and includes any hazardous or toxic substance or waste or

any contaminant or pollutant regulated under Environmental Laws, including, but not limited to,

"hazardous substances" as currently defined by the Federal Comprehensive Environmental

Response Compensation and Liability Act of 1980, as amended, "hazardous wastes" as currently

defined by the Resource Conservation and Recovery Act, as amended, natural gas, petroleum or it

products or byproducts and crude oil.

"Improvements" means all buildings and all other structures (surface and subsurface),

facilities, parking areas and other improvements located on or affixed to the Owned Real

Property and all fixtures on the Owned Real Property which constitute real property under

applicable Law, including, without limitation, all mechanical, heating, air conditioning,

plumbing, electrical and ventilating systems.

37

4644328v(~


"Indebtedness" with respect to any Person means any obligation of such Person for

borrowed money, and in any event shall include (i) any obligation incurred for all or any part of

the purchase price of property or other assets or for the cost of property or other assetsconstructed or of improvements thereto, other than accounts payable included in current liabilities

and incurred in respect of property purchased in the ordinary course of business, (ii) the face

amount of all letters of credit issued for the account of such Person, (iii) obligations (whether or

not such Person has assumed or become liable for the payment of such obligation) secured by

Liens, (iv) capitalized lease obligations, (v) all guarantees and similar obligations of such Person,

(vi) all accrued interest, fees and charges in respect of any indebtedness, and (vii) all prepayment

premiums and penalties, and any other fees, expenses, indemnities and other amounts payable as

a resL~lt of the prepayment or discharge of any indebtedness.

"Knowledge of Sellers", "Sellers' Knowledge" or any other similar knowledge

qualification means the knowledge of Mansur Rafizadeh and Mozafar Rafizadeh, after due

inquiry (or knowledge one would have after due inquiry), including due inquiry of any other

appropriate employees of Seller; provided, however, that due inquiry shall not require inquiry of

any Person that has not been informed as of the Agreement Date that the Bankruptcy Case will

be filed.

"Leuse~l Real Property" means any land, buildings, structures, improvements, fixtures or

other interest in real property which any Seller has the right to use, or which is used or intended to

be used by any Seller or used or intended to be used in, or otherwise related to, the Business and

leased pursuant to a Real Estate Lease.

"Liability" means any obligation or liability (whether known or unknown, whether

asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether

liquidated or unliquidated, and whether due or to become due and regardless of when asserted),

including any liability for Taxes.

"Lien" means any lien (statutory or otherwise, including, without limitation, as used in the

Bankruptcy Code), hypothecation, encumbrance (including, without limitation, as used in the

Bankruptcy Code), Claim, claim, community property interest, condition, Liability, security

interest, interest (including, without limitation, as used in the Bankruptcy Code), mortgage,

pledge, restriction, charge, instrument, license, preference, priority, security agreement, easement,

covenant, encroachment, right of way, option, right of recovery, Tax (including foreign, federal,

state and local Tax), Order of any Governmental Authority, of any kind or nature, including any

restriction on use, voting, transfer, receipt of income or exercise or any other attribute of

ownership (including (i) any conditional sale or other title retention agreement and any lease

having substantially the same effect as any of the foregoing, (ii) any assignment or deposit

arrangement in the nature of a security device, (iii) any claim based on any theory that Buyer is a

successor, transferee or continuation of Sellers or the Business, and (iv) any leasehold interest,

license or other right, in favor of a Third party or any Seller, to use any portion of the Acquired

Assets), whether secured or unsecured, Choate or inchoate, filed or unfiled, scheduled or

unscheduled, noticed or unnoticed, recorded or unrecorded, contingent or non-contingent,

material or non-material, known or unknown.

38

464432Av15


"Mu~czgement AgreemenP' means the agreement, if any, regarding the management of the

Business between one or more Sellers on the one hand, and the Buyer or an Affiliate thereof on

the other hand.

"Material Adverse Effect" means any change, effect, event, occurrence, development,circumstance or state of facts which (i) has had or would reasonably be expected to have,

individually or in the aggregate, a materially adverse effect on the Business or the financial

condition or results o~f operations of Sellers, (ii) would materially impair the ability of Sellers to

perform their• obligations under this Agreement or (iii) would have a materially adverse effect on,

or prevent or materially delay the consummation of, the transactions contemplated by this

Agreement; provided, that a Material Adverse Effect shall not include (A) general economic or

industry circumstances or events, but only if such circumstances or events do not have a

disproportionate impact on the Business when compared to other industry participants, and (B)

changes, effects, or impacts on Sellers or the Business arising directly out of, based on, or

resulting from (x) the ding by Sellers of the Bankruptcy Case, or (y) the sale process in the

Bankruptcy Case. For the avoidance of doubt, cessation of the operation of the Business for any

reason prior to Closing shall constitute a Material Adverse Effect.

"Occupution«l Safety ur~cl Health Law" means any applicable Law designed to provide

safe and healthful working conditions and to reduce occupational safety and health hazards.

"Occupational Safety ~~nd Health Liabilities" means any cost, damage, expense,

liability, obligation, duty to indemnify, defend or reimburse, or other responsibility consisting of

or relating to: (i) fines, penalties, judgments, awards, settlements, legal or administrative

proceedings, damages, losses, claims, remedial costs and expenses arising under Occupational

Safety and Health Law; (ii) financial responsibility for corrective action, including without

limitation any investigation, or abatement action including blot not limited to engineering or

administrative controls, or the use of required personal protective equipment, required by any

applicable Occupational Safety and I-Iealth Law, or by any final decision, injunction, Order,

judgment, ruling or decree of any applicable Occupational Safety and Health jurisdiction; and

(iii) any other compliance, corrective or remedial measures required under Occupational Safety

and Health Law.

"Owned Real Property" means al( real property owned by any of the Sellers, together

with all Improvements erected thereon, and any and all rights, privileges, easements, licenses,

hereditaments and other appurtenances relating thereon.

"Permitted Liens" means, without waiver of any right to challenge the validity thereof:

(i) all Liens in existence on the Agreement Date set forth on Schedule 13; (ii) Liens for Taxes,

assessments and government or other similar charges that are not yet due and payable or that,

altho~zgh due and payable, are being contested in good faith and for which adequate reserves have

been established in accordance with GAAP, all of which are set forth on Schedule 13; (iii) such

covenants, conditions, restrictions, easements, encroachments or Liens, or any other state of facts,

that do not prohibit or materially interfere with (A) the current operation of any Owned Real

Property and which do not render title to any Owned Real Property unmarketable or (B) the

present occupancy of any Leased Real Property or the use of such Leased Real Property as it has

been used by Sellers in the conduct of the Business prior to the Closing Date; (iv) zoning,

39

4644328v15


building codes and other land use Laws regulating the use or occupancy of the Owned Real

Property or the Leased Real Property or the activities conducted thereon which are imposed by

any Governmental Authority having jurisdiction over Owned Real Property or the Leased Real

Property; and (v) a lessor's interest in, and any mortgage, pledge, security interest, Lien

(statutory or other) or conditional sale agreement on or affecting a lessor's interest in, property

underlying any of the Real Estate Leases.

"Person" means any individual, corporation, partnership, joint venture, association, joint -

stock company, trust, unincorporated organization or Governmental Authority.

"Real Estate Lease" means all right, title and interest of Sellers in all leases, subleases,

licenses, concessions and other agreements (written or oral) and all amendments, modifications,

extensions, renewals, guaranties and other agreements with respect thereto, including the right to

all security deposits and other• amounts and instruments deposited by or on behalf of any Seller

thereunder, pursuant to which a Seller holds a leasehold or subleasehold estate in, or is granted

the right to use or occupy, any Leased Real Property.

"Release" means, with respect to any Hazardous Material, any spilling, leaking, pumping,

pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing or

migrating into or through any surface or ground water, drizlking water supply, soil, surface or

subsurface strata or medium, or the ambient air.

"TurgetAccounts Receivable" means $1,360,907.88.

"Target Amount" means the sum of the Target Accounts Receivable and the Target

Inventory.

"Target Inventory" means the sum of the Total Finished Goods Inventory and Total Raw

Materials Inventory as set forth on Schedule 1.1(e).

"Tax Return" means any report, return, information return, filing or other information,

including any schedules, exhibits or attachments thereto, Treasury Form TD F 90-22.1 and any

amendments to any of the foregoing required to be filed or maintained in connection with the

calculation, determination, assessment or collection of any Taxes (including estimated Taxes).

"Taxes" means all taxes, however denominated, including any interest, penalties or

additions to tax that may become payable in respect thereof, imposed by any Governmental

Authority (domestic or foreign), which taxes shall include all income taxes, payroll and employee

withholding, unemployment insurance, social security (or similar), sales and use, excise,

franchise, gross receipts, occupation, real and personal property, stamp, transfer, workmen's

compensation, customs duties, registration, documentary, stamp, healthcare (whether or not

considered a tax under applicable Law), medical device, escheat or unclaimed property (whether

or not considered a tax under applicable Law) value added, alternative or add-on minimum,

estimated, environmental (including taxes under Section 59A of the Code) and other obligations

of the same or a similar nature (including as a result of a party to this Agreement being a member

of an affiliated, consolidated or combined group with any other corporation at any time prior to

the Closing Date and including any liability for such amounts imposed on another Person as a

40

4644328v15


transferee or successor, pursuant to contract, including a tax sharing, allocation, or

indemnification agreement, or otherwise).

"Treasury Regulations" means the regulations promulgated by the U.S. Department of

the Treasury under the Lode.

"United States" or "U.S." means the United States of America.

(Sdgnatures aYe on the following page.)

4644328v15


1N Vi/l ITIESS WHEREOF, the parties hereto have caused this Agreement to 6e executed

by their respective officers thereunto drily a~~thorized as of the date fi~•st above written.

BUYER: SNG BEVERAGE GROUP LT.,C

~~~~~

By: ~,.

Name: Gu an ChhabraTitle: Managing Member

SELLERS:

NIRVANA, INC.

By:Name:Title:

MILLERS WOOD DEVEL(3PMENT CORP.

By: __Name:Tit(e:

NIRVANA TRANSPORT, INC.

By:Name:Title:

NIRVANA WAREHOUSING, INC.

~Y~ _._.Name:'Title:

[Signature Page t fo Asset Purchase Agreement]

42


. .~

iN WITTIESS WHEREOF, the parties hereto have caused this Agreement to be executedby their respective officers thereunto duly authorized as of the date first above written.

BUYER: SNG BEVERAGE GROUP LLC

Bv:Name: Gutshan ChhabraTitte: Managing Mcmber

SEL~E~2S:

~7lI.

MILLERS WOOD DEVELOPMENT CORP.

By: ̂N~~~:Title:

NIRVAI~tA TRANSPORT. INC.

/!~✓ %~

~~•,

NIRVANA WAREHOUSING, INC.

$y:Name: pTide: i

[Signature Paga to Asset Purchase Agreement]

42


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executedby their respective af~cers thereunto duly authorized as of the date first above written.

BUYER: SNG BEVERAGE GROUP LLC

By:Name: Gulshan ChhabraTitle: Managing Member

SELLERS:

NIRVANA, INC.

By: _Name;Title:

MILLERS WOOD DEVELOPMENT CORP.

By:Name:Title:

NIRVANA TRANSPQRT, INC.

$y: _Name:Title:

NIRVANA WAREHOUSING, XNC.

By: _Name:Title:

[Signature Page to Asset Purchase Agreement]

42


J ~~

~~ , m

_ -, , _ Kevin M. Hanlon

n 7-~ , Chief Executive Officer


Exhibit B

To Stalking Horse Approval Order

[Amended Bidding Procedures]

2580070.3

Case 15-60823-6-dd Doc 279-3 Filed 11/02/15 Entered 11/02/15 09:38:47 Desc Exhibit B Page 1 of 11

UNITED STATES BANKRUPTCY COURTNORTHERN DISTRICT OF NEW YORK

In re:Chapter 11

NIRVANA, INC., Case No. 15-60823Main Case

Debtors. Jointly Administered

AMENDED BIDDING PROCEDURES FOR THC SALE OF ALL OR SUBSTANTIALLYALL OF THE ASSETS OF NIRVANA, INC., NIRVANA TRANSPORT, INC., NIRVANA

WAREHOUSING, INC. AND MILLERS WOOD DEVELOPMENT CORP.

Set forth below are the amended bidding procedures (the "Bidding Procedures") to beemployed with respect to the proposed sale (the "Proposed Sale") of substantially all of theassets (the "Assets'') owned by debtors Nirvana, Inc. ("Nirvana"), Nirvana Transport, Inc.("Transport"), Nirvana Warehousing, Inc. ("Warehousing") and Millers Wood DevelopmentCorp. ("Millers Wood") (collectively, the "Debtors"). The Proposed Sale is subject tocompetitive bidding as set forth herein and approval by the United States Bankruptcy Court for

the Northern District of New York (the "Bankruptcy") pursuant to sections 363 and 365 of

chapter 11 of title 11 of the United States Code (the ̀ Bankruptcy Code"). All capitalized termsshall have the meaning ascribed to them in that certain form Asset Purchase Agreement (the

"SNG Agreement") approved by the Court in connection with the Proposed Sale.

On June 16, 2015, the Debtors filed the Debtors' Motion for Orders Pursuant to Sections10~ And 363 of the Bankruptcy Code and Bankruptcy Rzale 6004: (A) (i) Authorizing the Sale ofSzabstantially All of the Debtors' Assets', Free and Clear of~ All Liens, Claims, Interests andEncumbrances, Subjecl to the Terms of~ the Asset Picrchase Agreement cznd Sz~bject to Higherand/or Better Offers; (ii) Authorizing and Approving the Form of Assel Purchase Agreement;anc~ (iii) AuChorizing the DebtoNs to Consufnmate all Transactions Related to the Proposed Sale;(~3)Approving Bidding Proeedi~Nes and Other Related Relief,• and (C) Authorizing Debtors toAssume Cef•tain ExecutoYy ConCracts and Unezpi~ed Leases and Assign Such Contracts and

Leases ~o PurchaseN Pursuant to 11 U.S.C. ~~ 365(a), (b) cznc~ (c) cznd Bankruptcy Rule6006(e)(1) (Docket No. 74, the "Sale Motion"). On July 31, 2015, the Bankruptcy Court entered

an order approving certain Bidding Procedures.

On September 25, 2015 the Debtors moved for an Order pursuant to 11 U.S.C. §§ 105(a)

and 363 authorizing and approving their selection of SNG Beverage Group LLC ("SNG") as the

~ The Debtors in these chapter 1 1 cases, along with the last four digits of each Debtor's federal tax identification

number, are: Nirvana, Inc. (5474), Nirvana Transport, Inc. (6503), Nirvana Warehousing, Inc. (2646) and Millers

Wood Development Corp. (8040).

2580070.3


stalking horse bidder, and approving; aBreak-tJp Fee, an Expense Reimbursement and certain

related relief in connection with the Debtors' proposed sale of substantially ail of their assets (the

(Docket No. 237, "Stalkin Horse Motion"). On October 14, 2015, the Bankruptcy Court

approved the Stalking Horse Motion, and approved (i) SNG Beverage Group LLC as the stalking

horse bidder for substantially all of the Debtors' Assets (the "Stalking Horse"); (ii) the terms and

form of the SNG Agreement; (iii) the Stalking Horse Purchase Price of $7,350,000.00; (iv) a

Break-Up Fee equal to 2.95% of the Stalking Horse Purchase Price ($216,825.00); (v) the Initial

Overbid amount of $175,000.00; (vi) subsequent Bidding Increments of not less than

$50,000.00; and (vi) other modifications to the Bidding Procedures as set forth herein.

These Bidding Procedures describe, among other things, the assets available for sale, the

form of bids and the manner in which bidders and bids become qualified, the coordination of

diligence efforts among bidders, the conduct of the Auction (as defined herein), the ultimate

selection of the Successful Bidder (as defined herein) and the Court's approval thereof (the

"Bidding Process"). The Bidding Procedures were developed following consultation with the

Debtors' professionals. The Debtors will continue to consult with their professionals, as well aswith the Prepetition Secured Lenders, the Official Committee of Unsecured Creditors appointed

in these chapter 11 cases (the "Committee"), the United States Trustee, their customers, and

contract and lease counter-parties, throughout the Bidding; Process. In the event that the Debtors

and any such constituents disagree as to the interpretation or application of these Bidding

Procedures, the Bankruptcy Court shall have jurisdiction to hear and resolve such dispute.

Assets to be Sold

The Assets to be sold include all or substantially all of the Debtors' real and personal

property assets, including, without limitation: the real property and improvements owned by

Millers Wood, the personal property assets associated with the water bottling business operated

by Nirvana, Transport and Warehousing in Forestport, New York, machinery and equipment,

furnishings, fi;ctures, contracts, accounts receivable, inventory, supplies, intellectual property and

technology, computer hardware and software, permits, authorizations and licenses, claims,

Nirvana's books and records, claims, goodwill and the names "Nirvana", "Nirvana Spring

Water" and all derivations thereof. The foregoing summary description of the Assets is provided

for the convenience of Potential Bidders and is in all regards qualified by and subject to the

terms of the Purchase Agreement.

To the extent that a potential purchaser seeks to purchase any "personally identifiable

information" (as that term is defined in 11 U.S.C. § 101(41)(A)), the potential purchaser must

agree to comply with, and be bound by, the Debtors' privacy policy.

The Debtors shall retain all rights to any Assets that are not subject to a bid accepted by

the Debtors and approved by the Bankruptcy Court at the Sale Hearing (as defined herein).

The sale of the Assets will be conducted on an "As Is, Where Is" basis and without

representations or warranties of any kind, nature, or description by the Debtors, their agents

(including, without limitation, Keen-Summit Capital Partners LLC) or the Debtors' bankruptcy

estates, except to the extent set forth in the SNG Agreement or Purchase Agreement (defined

below), as approved by the Bankruptcy Court. Except as otherwise provided in such approved

SNG Agreement or Purchase Agreement, or in the Bankruptcy Court's order approving the

22580070.3


same, the Assets shall he sold to the Successful Bidder free and clear of all liens, claims, interestsand encumbrances thereon (collectively, the "Liens"), with such Liens to attach solely to the netproceeds of the sale.

Participation Requirements

In order to participate in the Bidding Process, a person (a "Potential Bidder") must be a"Qualified Bidder." SNG, as the approved Stalking Horse, and the Prepetition Secured Lenders,to the extent of their right to credit bid under 11 U.S.C. § 363 and other applicable laws, areQualified Bidders. Among other requirements, to become a Qualified Bidder, a Potential Biddershall:

(a) deliver to the Debtors an executed non-disclosure agreement in form and substanceacceptable to the Debtors;

(b) deliver to the Debtors on or before the Bid Deadline (defined below): (i) a QualifiedBid (defined below) and (ii) current audited financial statements, evidence ofavailability of f nancing and/or such other financial and/or credit-quality disclosuresas may be reasonably requested by the Debtors, all in form and substance sufficientto demonstrate to the reasonable satisfaction of the Debtors that the Potential Bidderhas the financial wherewithal to consummate a transaction pursuant to its QualifiedBid; and

(c) comply with all of the Debtors' requests for additional information which wouldenable the Debtors to evaluate, among other things, the Potential Bidder's ability toconsummate a transaction, the Potential Bidder's legal authority to bid, and/or thePotential Bidder's ability to fulfill its obligations in connection therewith. Failtiireby the Potential Bidder to comply with requests for additional information may be abasis for the Debtors to determine that a bid made by the potential Bidder is not aQualified Bid.

The Debtors, in consultation with their professionals, the Prepetition Secured Lendersand the Committee, shall determine whether a bid qualifies as a "Qualified Bid."

For a purchase of the Debtors' Business as a going concern pursuant to the terms of theSNG Agreement, the bid shall:

(i) be on terms equal to, or better than, the terms of the SNG Agreement;

(ii) Purchase price:

(a) be in the cash amount of not less than $7,741,825.00($7,350,000.00+ $216,825.00 + $175,000.00) for a purchasewhich includes the purchase of the Comsource Equipment; or

(b) be in the cash amount of not less than $6,566,825.00($6,300,000 +$216,825.00 + $50,000.00) for a purchase whichexcludes the purchase of the Comsource Equipment and cannot

2580070.3


he conditioned upon consummation of a transaction with

Comsource for such Equipment;

(iii) be for a purchase price to be paid in cash, cash equivalents or readilymarketable securities acceptable in the discretion of the Debtors or, if such

bid contemplates the assumption of any of the Debtors' existing senior

secured debt, be accompanied by evidence that the counterparty to such

debt has agreed to the terms of such assumption; provided however, that

any bid must provide that in the event any portion of the Debtors' existing

senior secured debt proposed to be assumed is determined by the Court to

be unsecured, the Qualified Bidder shall instead pay to the Debtors, incash or cash equivalents, an amount equal to the present value of such

debt;

(iv) be accompanied by a signed Asset Purchase Agreement (a "Purchase

Agreement"), together with a copy marked to show any changes from theform of the SNG Agreement approved by the Court and attached asexhibit A to the Order approving the Stalking Horse Motion;

(v) be accompanied by a good faith deposit in cash or immediately available

funds (the "Deposit") in an amount equal to 10% of the purchase pricestated by the Qualified Bidder, as more fully described below;

(vi) contain a list of the Debtors' executory contracts and unexpired leaseswith respect to which the Bidder seeks assignment from the Debtors and,

if the bid is conditioned on the assumption and assignment of suchexecutory contracts and/or expired leases, provide evidence of theBidder's ability to provide adequate assurance of firture performance ofsuch contracts or leases;

(vii) provide satisfactory evidence of committed financing or current audited

financial statements or other form of financial and/or credit-qualitydisclosure reasonably sufficient to ascertain such Bidder's ability toconsummate the sale and not be conditioned on obtaining financing or on

the outcome of any due diligence;

(viii) not request or entitle the bidder to any break-up fee, expensereimbursement or similar type of payment;

(ix) fully disclose the identity of each entity that will be bidding for the Assets

or otherwise participating in connection with such bid and the complete

terms of any such participation;

(Y) be accompanied by a letter from the Bidder stating that

(a) the Bidder is prepared to enter into and consummate the proposedtransaction in accordance with the terms of the SNG Agreement afterapproval by the Bankruptcy Court of the Sale Order;

42580070.3


(b) the Bidder will make all necessary federal, state or local filings, pay all

costs and expenses associated with such filings (including the costs

and expenses of the Debtors);

(c) such Bidder's offer is irrevocable until the date that is forty-five (45)

days after the conclusion of the Sale Hearing or the closing, whichever

comes first; and

(d) be delivered to counsel for the Debtors, with a copy to Keen-Summit

Capital Partners LLC, on or before the Bid Deadline.

For a purchase of certain specified assets:

(a) The Debtors have identified the following lots of Assets which may be separately bid

upon:

i. Real Estate (Land and Improvements)ii. Intellectual Propertyiii. Comsource Equipmentiv. Equipment

- the SIPA Bottling Line- Operating Equipment- Yard Equipment- Office Equipment- Maintenance Equipment- All other miscellaneous equipment and tools

v. Raw Materials Inventoryvi. Finished Goods Inventoryvii. Accounts Receivable

(b) The bid shall:

i. specify the Asset lot and the cash purchase price;

ii, not be subject to contingencies

iii. be accompanied by a good faith deposit in cash or immediately

available funds (the "Deposit") in an amount equal to 10% of the

purchase price stated by the Qualified Bidder;

iv. provide satisfactory evidence of committed financing or current

audited financial statements or other form of financial and/or credit-

quality disclosure reasonably sufficient to ascertain such Bidder's

ability to consummate the sale and not be conditioned on obtaining

financing or on the outcome of any due diligence;

v. not request ox entitle the Bidder to any break-up fee, expense

reimbursement or similar type of payment;

52580070.3


vi. fully disclose the identity of each entity that will be bidding for the

Assets or otherwise participating in connection with such bid and thecomplete terms of any such participation;

vii. be irrevocable until the date that is forty-five (45) days after theconclusion of the Sale Nearing with respect to the Assets; and

viii, be delivered to counsel for the Debtors and Keen-Summit CapitalPartners LLC on or before the Bid Deadline.

As promptly as practicable after a Potential Bidder delivers a bid, the Debtors shall determine,

and shall notify the Potential Bidder in writing, whether the Potential Bidder is a Qualified

Bidder. Debtors will ascertain, in the exercise of their reasonable business judgment, whether a

Bid is a Qualified Bid, taking into account, among other things, the completeness of the bid

package, the Bidder's experience, financial capacity to close and reputation in the marketplace.

The Debtors may waive any requirements for Qualified Bidders or Qualified Bids.

Confidentiality: By submitting a bid, each Bidder agrees to maintain as confidential and to not

disclosure to third parties both the tact that the Bidder submitted a bid and the terms and

conditions of such bid.

Ri~l il~a~linP

A Potential Bidder that desires to make a bid shall deliver written and electronic copies of

its bid so that it is actually received not later than 4:00 p.m. (prevailing Lastern Time) on

November 6, 2015 (the "Bid Deadline") by:

(i) counsel to the Debtors, Bond, Schoeneck &King, PLLC, One Lincoln

Center, Syracuse, New York 13202 (Attn: Stephen A. Donato, Esq.,

sdonato a,bsk~com and Camille W. Hill, Esq., chill~bsk.com);

(ii) special counsel to the Debtors, Teitelbaum &Baskin, LLC, 1 Barker

Avenue, Third Floor, White Plains, New York 10601 (Attn: Jay Teitelbaum, Esq.,jteitelbaum(r~,tblawllp.com);

(iii) Keen-Summit Capital Partners LLC, 10 East 53d Street, New York ,New

York (Attn: Harold J. Bordwin, hbordwin c~keen-summit.com, Doug Greenspan,d~reenspan~u),keen-sL~mmit.com, and Chris Mahoney, cnzahone~(a~keen-

summit.com).

This provision does not apply to Prepetition Secured Lenders who may credit bid at the Auction

in such amounts as they deem advisable. The Debtors may extend the Bid Deadline once or

successively, but are not obligated to do so. If the Bid Deadline is extended, the Debtors shall

promptly notify all known Potential Bidders of such extension.

62580070.3


Deposit Requirement

A. Each Bidder shall tender a Deposit with its bid to the law firm of Bond, Schoeneck &

King, PLLC. The Successful Bidder and Backup Bidder will be required to tender

additional Deposits, as set forth below.

B. The Deposit shall be by cashier's check or certified check payable to Bond,

Schoeneck &King, PLLC, as escrow agent for the Debtors (the "Escrow Agent").

The Escrow Agent shall have no liability to any party in connection with its services

with respect to Deposits except for willful misconduct, gross negligence or bad faith.

Escrow Agent, at its discretion, may either immediately deposit Deposits into its

escrow account or may hold Deposits pending the outcome of the Auction.

C. In the event that the Debtors do not consummate a sale of the Assets to a Potential

Bidder, for any reason (other than the Qualified Bidder's failure to consummate a

sale), the Debtors' sole obligation and liability shall be to refund the Deposit to the

Qualified Bidder.

D. No Bid shall be deemed to be "accepted" by the Debtors unless and until the

Bankruptcy Court has entered the Sale Order.

Due Diligence

Upon a Potential Bidder's execution of a confidentiality agreement in form and substance

approved by the Debtors, each Potential Bidder shall be afforded reasonable due diligence access

with respect to the Assets prior to the Bid Deadline (the "Due Diligence Period"}. Neither the

Debtors nor their representatives shall be obligated to furnish any information of any kind

whatsoever relating to the Assets at any time prior to or after the Due Diligence Period. Due

diligence access may include access to the Debtors' online data room, management presentations

as may be scheduled by the Debtors, on-site inspections of the Assets and such other matters

which a Potential Bidder may request and as to which the Debtors may agree. The Debtors will

designate employees or other representatives to coordinate reasonable requests for additional

information and dt~e diligence access from Potential Bidders. The Debtors may, in their

discretion, coordinate diligence efforts such that multiple Potential Bidders have simultaneous

access to due diligence materials and/or simultaneous attendance at management presentations or

site inspections. Potential Bidders are advised to exercise their own discretion before relying on

any information regarding the Assets provided by anyone other than the Debtors or their

representatives.

Each Potential Bidder shall comply with all reasonable requests for additional

information by the Debtors or their advisors regarding such Potential Bidder's financial

wherewithal to consummate and perform obligations in connection with the Sale. Failure by the

Potential Bidder to comply with requests for additional information may be a basis for the

Debtors to determine that a bid made by the Potential Bidder is not a Qualified Bid.

By participating in the Auction, each Qualified Bidder shall be deemed to acknowledge

and represent that it has had an opportunity to inspect and examine the Assets and to conduct any

and all due diligence regarding the Assets prior to submitting its bid, that it has relied solely upon

72580070.3


its own independent review, investigation and/or inspection of any documents in making its bid,

and that it did not rely upon any written or oral statements, representations, promises, warranties

or guaranties whatsoever, whether express, implied, by operation of law or otherwise, regarding

the Assets, or the completeness of any information provided in connection with the Bidding

Process except as expressly stated in the relevant Purchase Agreement submitted with its

Qualified Bid.Auction

If one or more Qualified Bids with respect to some or all of the Assets are received on or

prior to the Bid Deadline, or notice by any Prepetition Secured Lender of intent to credit bid, the

Debtors shall conduct an auction (the "Auction") with respect to the Assets. Only Qualified

Bidders who timely submitted a Qualified Bid, SNG and the Prepetition Secured Lenders will be

eligible to participate in the Auction. Any creditor or party in interest and their counsel is

authorized to attend the Auction regardless of whether they intend to bid at the Auction.

The Auction shall take place on November 12, 2015 at 10:00 a.m. (prevailing Eastern

Time) at the offices of Bond, Schoeneck &King, PLLC, One Lincoln Center, Syracuse, New

York 13202, or at such other time and place as the Debtors may notify all Qualified Bidders, the

Prepetition Secured Lenders and the Committee. The Debtors shall provide copies of all

Qualified Bids to the Prepetition Secured Lenders, the Committee, the Office of the United

States Trustee and all other Qualified Bidders at least one (1) business day prior to the Auction.

At the commencement of the Auction, the Debtors shall announce the Qualified Bid or

Bids that they have determined represents the highest or otherwise best bids for the Assets (the

"Starting Qualified Bid") and the overall consideration value ascribed to such bid (the "Bid

Value"). Each Qualified Bidder present at the Auction will be permitted to increase its bid (or in

the case of a Prepetition Secured Lender, make its initial bid) (such increased Qualified Bid, a

"Qualified Overbid"), provided that such Initial Qualified Overbid must exceed the Stalking

Horse Purchase Price by the amount of the Break-Up Fee plus $175,000.00 ($391,825.00) and

each subsequent minimum bid increment shall be at least Fifty Thousand Dollars ($50,000.00) or

such other bidding increment as the Debtors shall announce at the Auction (the "Biddin

Increment"). During the course of the Auction, the Debtors will inform the participants which

Qualified Overbid reflects the then-highest or otherwise best offer for the Assets and the Bid

Value ascribed thereto. In their discretion, the Debtors may elect not to consider any subsequent

bid received at the Auction unless the Bid Value of such bid exceeds the Bid Value of the

Starting Qualified Bid or then-highest Qualified Overbid by the Bidding Increment.

For the purposes of evaluating the Bid Value of a Qualified Overbid, including any

Qualified Overbid by SNG or any Secured Lender, the Debtors will, at each round of bidding,

give effect to the Break-Up Fee that may be payable to SNG under the SNG Agreement as well

as any additional costs that may be imposed on the Debtors by such Qualified Overbid

The Auction may be adjourned from time to time by the Debtors but it shall not be

concluded until each Qualified Bidder has had an opportunity to submit a Qualif ed Overbid with

knowledge of the Bid Value ascribed to the Starting Qualified Bid or then-highest Qualified

Overbid, as applicable.

82580070.3


Joinder of one or more Prepetition Secured Lenders for purposes of submitting a

Qualified Bid, including by credit bidding, shall be permitted and shall not be deemed to be an

agreement to control the sale price in violation of 11 U.S.C. § 363(n).

Any Prepetition Secured Lender which is a Successful Bidder shall be required to pay its

pro-rata share of the Break-Up Fee in cash at closing.

At the conclusion of the Auction, and after consultation with the Prepetition Secured

Lenders in attendance at the Auction and the Committee, the Debtors will announce the

Qualified Bids) which they deem to represent the highest or otherwise best bids) for the Assets

(such bid or bids being the "Successful Bid(s)" and the Qualified Bidders) submitting such bid,

the "Successful Bidders)") and the next highest or otherwise best bid (the "Backup Bid" and the

party submitting such bid, the "Backup Bidders)"), provided, however, that absent its consent,

SNG shall not be considered as a Backup Bidder. As a condition precedent to the Debtors

declaring any bid the Successful Bids) or the Backup Bid(s), the Successful Bidders) or Backup

Bidder(s), other than a Prepetition Secured Lender, shall provide the Debtors with additional

cash or immediately available funds so that the Deposit paid by the Successful Bidders) or

Backup Bidders) will be increased to an amount equal to ten percent (10%) of the cash portion

of such bidder's Successfiil Bid or Backup Bid. Any Deposits not applied in satisfaction of the

obligations of the Successful Bidders) or Backup Bidders) in connection with their respective

bids shall be returned not later than five (5) business days following the conclusion of the Sale

Hearing (defined below).

The Debtors" determination of what constitutes the Successful Bid and the Backup Bid

will be based upon the exercise of the Debtors' discretion and may take into consideration price,

modifications to the SNG Purchase Agreement, closing risk, risk of delay, financial condition,

experience and such other factors as the Debtors may deem relevant.

The establishment of the Successful Bids) and the Backup Bids) does not release any

Bidder from its obligations and all bids remain open and irrevocable until the earlier to occur of

the closing of the sale, or forty-five (45) days following the conclusion of the Sale Hearing.

The Sale Hearin

A hearing to approve the Proposed Sale (the "Sale Hearing") is presently scheduled to

take place on November 17, 2015 at 10:00 a.m. (prevailing Eastern Time) before the

Honorable Diane Davis, United States Bankruptcy Court for the Northern District of New York,

United States Courthouse, 10 Broad Street, Utica, New York. At the Sale Hearing, the Debtors

will seek entry of an order, among other things, authorizing and approving the sale of the Assets

to the Successful Bidder(s), as determined by the Debtors in consultation with the Prepetition

Secured Lenders and the Committee, and in accordance with the Bidding Procedures, pursuant to

the terms and conditions set forth in the relevant Purchase Agreements) submitted by the

Successful Bidder(s). The Sale Hearing may be adjourned or rescheduled without notice other

than by an announcement of the adjourned date in open court at the Sale Hearing.

92580070.3


The Closing

Following Bankruptcy Court approval of the sale of the Assets to the Successful

Bidder(s), if the Successful Bidders) fails to consummate an approved sale because of a breach

or failure to perform on the part of such Successful Bidder(s), the Backup Bid(s), shall be

deemed to be the Successful Bids) with respect to the Assets and the Debtors shall effectuate the

sale of Assets to the Backup Bidders) without further order of the Bankruptcy Court. The

Debtors shall retain all rights to the Assets that are not subject to a bid accepted by the Debtors

and approved by the Bankruptcy Court. If an Auction is held, the Debtors shall be deemed to

have accepted a Qualified Bid only when (i) such bid is declared the Successful Bid (or the

Backup Bid) at the Auction, (ii) definitive documentation has been executed in respect thereof,

and (iii) the Bankruptcy Court has entered an order approving the sale.

The Closing shall occur in accordance with the terms of the Purchase Agreement and the

Sale Order, WITH RESPECT TO THE CLOSING, TIME OF PERFORMANCE BY THE

SUCCESSFUL BIDDER IS ON THE ESSENCE.

Reservation of Ri hts

The Debtors, in consultation with the Prepetition Secured Lenders and the Committee,

reserve all rights to terminate the Bidding Process at any time if the Debtors determine, in their

business judgment, that the Bidding Process will not maximize the value of the Debtors'

bankruptcy estates. In addition, and after consultation with the Prepetition Secured Lenders and

the Committee, the Debtors reserve all rights not to submit any bid which is not acceptable to the

Debtors for approval to the Bankruptcy Court. The Debtors shall further have the right to amend

the rules set forth herein for the Bidding Process or impose such other terms and conditions for

the Bidding Process which the Debtors determine, in their business judgment are necessary to

fulfill their fiduciary duties, provided that such modifications are not inconsistent with any

Bankruptcy Court order. Without limiting the generality of the foregoing, the Debtors may reject

at any time before entry of an order of the Bankruptcy Court approving a Qualified Bid, any bid

that, in the Debtors' discretion is (i) inadequate or insufficient, (ii) not in conformity with the

requirements of the Bankruptcy Code or the Bidding Procedures, or (iii) contrary to the best

interests of the Debtors, their estates and creditors.

Potential Bidders hereby irrevocably and unconditionally consent to submit to the

exclusive jurisdiction of the Bankruptcy Court for any disputes, lawsuits, claims or other

proceedings related or pertaining to, or resulting or arising from, the Assets, the Auction, the due

diligence information., and/or the alleged acts or omissions of the Debtors or any of their

respective officers, directors, employees, affiliates, agents, advisors or representatives. The

submission of a bid shall constitute an express consent by the Bidder to the exclusive jurisdiction

of the Bankruptcy Court for all such matters. These Bidding Procedures shall be governed by

and construed in accordance with the laws of the State of New York without regard to conflict of

law principles (that might dictate the application of the laws of another jur~isdietion).

102580070.3


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