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

ii

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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 domainnanes 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 atthorized 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 "Trunsction 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 tnder 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

4644328v15


(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 t

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

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