Case Doc 903 Filed 02/14/18 Entered 02/14/18 11:39:15 Desc Main Document Page 1 of 12 UNITED STATES BANKRUPTCY COURT DISTRICT OF MAINE

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1 Case Doc 903 Filed 02/14/18 Entered 02/14/18 11:39:15 Desc Main Document Page 1 of _1.docx UNITED STATES BANKRUPTCY COURT DISTRICT OF MAINE ) In re: ) ) THE GETCHELL AGENCY, ) Chapter 11 ) Case No Debtor. ) ) MOTION FOR AUTHORITY TO SELL SUBSTANTIALLY ALL OF THE DEBTOR S ASSETS AND TO ASSUME AND ASSIGN CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES Nathaniel R. Hull, the chapter 11 trustee (the Trustee ) in the above-captioned chapter 11 case of The Getchell Agency (the Debtor ), moves, pursuant to 11 U.S.C. 105(a), 363 and 365, as supplemented by Rules 2002, 6004, 6006, and 9014 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules ) and D. Me. LBR , for authority to sell substantially all of the Debtor s assets to Emile Clavet or his designee (the Stalking Horse ), as more particularly described in that certain Asset Purchase Agreement dated February 12, 2018 (the APA ), a copy of which is attached hereto as Exhibit A. By this motion (the Sale Motion ), the Trustee also seeks authority to assume and assign to the Stalking Horse, or to any successful bidder, certain executory contracts and unexpired leases. The proposed sale shall be free and clear of all liens, claims and encumbrances with all such liens, claims and encumbrances to attach to the proceeds of the proposed sale, except as provided herein. Finally, the Trustee seeks an order pursuant to Bankruptcy Rules 6004(h) and 6006(d) authorizing him to consummate the proposed sale immediately after entry of this Court s order granting this Sale Motion. In support hereof, the Trustee states as follows: I. JURISDICTION, VENUE AND STATUTORY BASIS FOR RELIEF 1. The United States District Court for the District of Maine (the District Court ) has original but not exclusive jurisdiction over this chapter 11 case pursuant to 28 U.S.C. 1334(a) and

2 Case Doc 903 Filed 02/14/18 Entered 02/14/18 11:39:15 Desc Main Document Page 2 of 12 over this Sale Motion pursuant to 28 U.S.C. 1334(b). Pursuant to 28 U.S.C. 157(a) and Rule 83.6 of the District Court s local rules, the District Court has referred this chapter 11 case and this Sale Motion to this Court. 2. This is a core proceeding pursuant to 28 U.S.C. 157(b)(2) and the Court has constitutional authority to enter final judgment in this proceeding. 3. Venue over this chapter 11 case is proper in this district pursuant to 28 U.S.C. 1408, and venue over this proceeding is proper in this district pursuant to 28 U.S.C The relief sought in this Sale Motion is predicated upon 11 U.S.C. 105(a), 363 and 365, Bankruptcy Rules 2002, 6004, 6006, and 9014, and D. Me. LBR II. FACTUAL BACKGROUND REGARDING DEBTOR S OPERATIONS 5. Debtor is a Residential Section 21 Funded Care Agency, licensed by the State of Maine, pursuant to Title 22, Chapter 7801(A) of the Maine Revised Statutes, to house and provide support services for adults living with physical, emotional and cognitive disabilities, in residential care facilities of mobile or modular homes located in Bangor, Maine. 6. At any given time, up to seventy-two (72) consumers reside on Debtor s premises. Some of the consumers are under the care of guardians ad litem, others are wards of the State of Maine whose welfare is monitored by state guardians, and some serve as their own guardians. All clients are protected by a state advocate. 7. As of the time of the Trustee s appointment, Debtor employed one hundred thirtyeight (138) employees. III. PROCEDURAL BACKGROUND 8. On March 25, 2016, the Debtor filed a voluntary petition for relief under Chapter 11 of the Code (the Petition Date ) _1.docx -2-

3 Case Doc 903 Filed 02/14/18 Entered 02/14/18 11:39:15 Desc Main Document Page 3 of On November 21, 2017, the U.S. Trustee filed a motion to appoint a Trustee pursuant to 11 U.S.C. 1112(b)(1). This Court granted the motion for appointment of a trustee on November 28, On November 28, 2017, the U.S. Trustee filed a motion to appoint Nathaniel R. Hull as Chapter 11 trustee. On November 29, 2017, this Court granted that motion appointing Mr. Hull as Chapter 11 trustee. 11. The Trustee has determined that a sale of the assets of the Debtor, on a going concern basis, is in the best interests of the creditors of the Debtor. In order to preserve the going concern value of the Debtor s assets and minimize risk, such sale must occur on an expedited basis. 12. The Trustee has actively marketed the Debtor s assets to entities most likely to have an interest in buying the Debtor s assets, with the aim of maximizing the value of those assets for the benefit of all creditors. 13. After considering the universe of prospective buyers, the Debtor entered into the APA with the Stalking Horse. IV. RELIEF REQUESTED 14. The Trustee hereby requests entry of an order authorizing him to sell the Assets (as defined below) to the Stalking Horse (or other such entity, if any, that submits a higher or better offer for the Assets, hereinafter the Successful Bidder ) free and clear of all liens, claims, encumbrances and interests. Additionally, the Trustee seeks authority to assume and assign certain executory contracts and unexpired leases (collectively, the Assigned Contracts ) to the Stalking Horse or the Successful Bidder. In connection with the sale and assignment, the Trustee requests that this Court enter an order approving the proposed sale, which would (i) authorize and approve the proposed sale pursuant to the terms of the APA, and (ii) approve the assumption and assignment _1.docx -3-

4 Case Doc 903 Filed 02/14/18 Entered 02/14/18 11:39:15 Desc Main Document Page 4 of 12 of the Assigned Contracts (or such other executory contracts and/or unexpired leases as the Stalking Horse or Successful Bidder may identify). IV. BASIS FOR RELIEF A. Summary of Sale 15. The APA contains the material terms of the Stalking Horse s proposed purchase and should be consulted as to all of the terms of the proposed sale. Certain material terms of the Stalking Horse APA can be summarized as follows: 1 a. Purchased Assets: All assets of TGA other than the Excluded Assets (collectively, the Assets ). b. Assigned Contracts and Leases: all executory contracts and all unexpired leases as may be designated by the Stalking Horse (the Assigned Contracts ), subject to the addition or removal of certain executory contracts and unexpired leases by the Stalking Horse, shall be assigned to the Stalking Horse. c. Excluded Assets: (a) all rights of Seller under this Agreement and the agreements and instruments executed and delivered to Seller by Buyer pursuant to this Agreement; (b) all rights and claims, now existing or hereafter arising, to deposits, security deposits, cash, cash equivalents, refunds, rebates, insurance rebates and securities of Debtor, whether held by Seller or by another Person for the benefit of Seller or Debtor; (c) all of the Debtor s books, records, ledgers, files and documents relating to Excluded Assets; (d) Debtor s formal corporate records, including its certificate of incorporation, bylaws, minute books, corporate books, stock transfer records and other records having to do with the corporate organization of Debtor; (e) any tax attributes of Debtor, including, without limitation, any net operating loss carryovers and any right or claim for a tax refund or rebate attributable to any pre-closing period; (f) all personnel records and other records Debtor is required by any Law to retain in its possession; (g) all of Debtor s rights to the attorney-client privilege and any related documentation; and (h) all causes of action under Chapter 5 of the Bankruptcy Code. d. Sale Free and Clear: The transfer of the Assets to the Stalking Horse shall be free and clear of all liens, claims, encumbrances and interests. e. Purchase Price: The purchase price for the Assets is Three Million Four Hundred Thousand Dollars ($3,400,000). At the Closing, in 1 The summary of the terms of the APA set forth herein is intended solely to provide a brief overview of certain material terms thereof. This summary is qualified entirely by reference to the APA, and in the event of any conflict or inconsistency between the provisions of this Motion and the APA, the APA shall control _1.docx

5 Case Doc 903 Filed 02/14/18 Entered 02/14/18 11:39:15 Desc Main Document Page 5 of 12 exchange for the Purchased Assets, Buyer shall: (i) pay or deliver by wire transfer in immediately available funds to Seller, One Million Dollars ($1,000,000), less the Deposit (as defined below), (ii) deliver to Seller a promissory note in the original principal amount of Two Million Four Hundred Thousand Dollars ($2,400,000) (the Promissory Note ) and (iii) pay, or become responsible for payment of Cure Costs in a manner satisfactory to Seller. Payment terms of the Promissory Note shall be as follows: Buyer shall pay $750,000 in 3 installments of $250,000 each on the dates that are 6 months, 12 months, and 18 months after Closing, respectively (and if such date is not a business day, then Buyer shall pay such installment on the first business day after such date); Buyer shall pay the other portion of the original principal amount ($1,650,000) in equal monthly installments of $45, each over 36 consecutive months, commencing on the day that is the first day of the calendar month after the Closing Date (and if such date is not a business day, then Buyer shall pay such installment on the first business day after such date) and continuing with each successive month until such portion of the original principal amount is paid in full; no interest shall accrue provided no event of default occurs; and default interest shall accrue at the rate of 6% per annum. f. Deposit: The Stalking Horse will deliver to counsel to the Trustee, as escrow agent, in cash by wire transfer of immediately available funds the specified amounts, to be held as a deposit (collectively, the Deposit ) as follows: (i) $10,000 no later than 2 business days after the date of execution of this Agreement by both parties, and (ii) $40,000 upon satisfaction or Buyer s waiver of the contingencies described in Sections 7.4, , and 7.10 of the Stalking Horse APA. Buyer s failure to make any such payment on or before the specified date shall constitute a default hereunder. g. Cure Costs: The Stalking Horse shall pay any amounts payable under 11 U.S.C. 365(b)(1)(A), (B), or (C) in order to effectuate the assumption of the Assigned Contracts. h. Break-Up Fee: The Stalking Horse APA requires that, in the event that a higher or better offer or offers is approved by the Bankruptcy Court, the Debtor pay to the Stalking Horse a break-up fee in the amount of $102, (the Break-Up Fee ) and a reimbursement of actual expenses incurred by the Stalking Horse (the Expense Reimbursement ) in an amount not to exceed $50, The Break-Up Fee and Expense Reimbursement shall constitute allowed claims under 503(b)(1) and 507(a)(1) of the Bankruptcy Code _1.docx -5-

6 Case Doc 903 Filed 02/14/18 Entered 02/14/18 11:39:15 Desc Main Document Page 6 of 12 i. Conditions to Closing: includes: entry of orders by this Court approving Bid Procedures, and Sale Motion, and satisfaction of contingencies identified in the Stalking Horse APA. B. Request for Authority to Sell Substantially All of MMA s Assets 16. Section 363(b)(1) of the Bankruptcy Code provides authority for a trustee, after notice and a hearing, [to] use, sell, or lease, other than in the ordinary course of business, property of the estate. 11 U.S.C. 363(b)(1). The authority to sell assets conferred upon a trustee by section 363(b) of the Bankruptcy Code includes a sale of substantially all the assets of an estate. See In re Coastal Cable T.V., Inc., 24 B.R. 609, 611 (1st Cir. B.A.P. 1982) (vacated on other grounds) ( A sale of all or most of a debtor s assets may occur prior to confirmation of a plan. ); In re GSC, Inc., 453 B.R. 132, 155 (Bankr. S.D.N.Y. 2011) ( In addition to a reorganization plan, a section 363(b) sale is an appropriate means of disposing of the debtor s assets.... A debtor may sell substantially all of its assets as a going concern and later submit a plan of liquidation.... ) (quoting In re Chrysler, LLC, 405 B.R. 84, 96 (Bankr. S.D.N.Y. 2009)); In re CadKey, Inc., 317 B.R. 19, 24 (D. Mass. 2004) (affirming order authorizing sale of substantially all of debtor s assets); Otto Preminaer Films. Ltd. v. Qintex Entm t., Inc. (In re Qintex Entm t Inc.), 950 F.2d 1492, 1495 (9th Cir. 1991) ( Section 363 of the Code allows a debtor to sell assets of the estate... including a sale of substantially all the assets of the estate. ); In re Haven Eldercare, LLC, 390 B.R. 762, 770 (Bankr. D. Conn. 2008) (same; collecting cases); see also Fla. Dep t. Revenue v. Piccadilly Cafeterias, Inc., 554 U.S. 33, 37 n.2 (2008) ( [I]n some cases... a debtor sells all or substantially all its assets under 363(b)(1)... before seeking or receiving plan confirmation. ); In re Envisionet Computer Svcs., Inc., 275 B.R. 664, 666, (D. Me. 2002) (noting that bankruptcy court entered an order approving the sale of substantially all of the debtor s assets). 17. The power to approve a sale under section 363(b) is within the sound discretion of the trial court. Coastal Cable T.V., 24 B.R. at 611. [A] chapter 11 debtor may sell all or _1.docx -6-

7 Case Doc 903 Filed 02/14/18 Entered 02/14/18 11:39:15 Desc Main Document Page 7 of 12 substantially all its assets pursuant to section 363(b) prior to confirmation of a chapter 11 plan, when the court finds a good business reason for doing so. In re General Motors Corp., 407 B.R. 463, 491 (Bankr. S.D.N.Y. 2009); see also In re AMR Corp., 490 B.R. 158, 164 (Bankr. S.D.N.Y. 2013); Lionel Corp. v. Comm. of Equity Security Holders (In re Lionel Corp.), 722 F.2d 1063, 1071 (2d Cir. 1983) (rejecting the requirement that only an emergency situation permits the use of section 363(b) and setting forth the sound business purpose test in the context of a sale of substantially all of a debtor s assets under section 363(b)); ASARCO, Inc. v. Elliott Mgmt. (In re ASARCO, LLC), 650 F.3d 593, 601 (5th Cir. 2011); Stephens Indus., Inc. v. McClung, 789 F.2d 386, 390 (6th Cir. 1986). 18. Here, the sound business purpose test is easily met. A sale of the Assets as a going concern will maximize the value of the estate for the benefit of all stakeholders. In contrast, the delay attendant in confirming and selling under a plan involves more risk of loss of value than is warranted in light of the negligible potential benefits. 19. Courts have also required that the sale price be fair and reasonable and that the sale be the result of good faith negotiations with the Stalking Horse. See, e.g., In re Abbotts Dairies of Pa., 788 F.2d 143, (3d Cir. 1986); see also 11 U.S.C. 363(m) ( The reversal or modification on appeal of an authorization under [ 363(b)] of a sale or lease of property does not affect the validity of a sale or lease... to an entity that purchased or leased such property in good faith.... ). 20. As noted above, the Trustee marketed the Assets to numerous potential purchasers. The Trustee was unable to secure an offer that he considered superior to offer made by the Stalking Horse, although such a higher and better offer may occur in connection with the auction. 21. The APA is the product of good faith and arm s length negotiations between the Trustee and the Stalking Horse. Further, the price and the form and structure of the offer proposed _1.docx -7-

8 Case Doc 903 Filed 02/14/18 Entered 02/14/18 11:39:15 Desc Main Document Page 8 of 12 by the Stalking Horse will continue to be tested in the marketplace. The bidding procedures, which the Trustee has requested this Court approve pursuant to the Bid Procedures Motion, are fair to all parties and are designed to permit the Trustee to obtain the best possible price for the Assets. Thus, the Trustee believes that the winning bid or bids that emerge from this process will be the highest and best bid(s) obtainable for the Assets. 22. The Trustee submits that the proposed sale of the Assets to the Stalking Horse is entirely consistent with the guidelines set forth in applicable case law. The Trustee believes that a prompt sale is in the best interests of the Debtor s creditors and their respective estates, and will maximize the amount that the Debtor, its creditors may realize from the sale of the Assets. C. Sale Free and Clear of Liens, Claims and Interests 23. The Trustee requests authorization to sell the Assets free and clear of liens, claims, encumbrances, and other interests subject to the provisions contained herein. Section 363(f) of the Bankruptcy Code provides that: The trustee may sell property under [ 363(b)] free and clear of any interest in such property of an entity other than the estate, only if (1) applicable nonbankruptcy law permits sale of such property free and clear of such interest; (2) such entity consents; (3) such interest is a lien and the price at which such property is to be sold is greater than the aggregate value of all liens on such property; (4) such interest is in bona fide dispute; or (5) such entity could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of such interest. 11 U.S.C. 363(f). Because the language of 363(f) is in the disjunctive, courts can approve a sale if any one of the five conditions is satisfied. BAC Home Loans Servicing LP v. Grassi, 2011 WL at *5 (1st Cir. BAP Nov. 21, 2011) _1.docx -8-

9 Case Doc 903 Filed 02/14/18 Entered 02/14/18 11:39:15 Desc Main Document Page 9 of The Trustee expects that he will satisfy, at a minimum, the second and fifth of the requirements under section 363(f). Without limitation, the Trustee anticipates that he will obtain the consent of those entities holding an interest in the Assets. 25. Alternatively, if any of the secured creditors asserting an interest in the Assets are not willing to consent to the sale of the Assets, the Court is nonetheless empowered to authorize the sale free and clear of any such interest as long as that creditor receives the value of its collateral. See In re Boston Generating, LLC, 440 B.R. 302, 332 (Bankr. S.D.N.Y. 2010); In re Beker Indus. Corp., 63 B.R. 474, 477 (Bankr. S.D.N.Y. 1986); In re Oneida Lake Dev., Inc., 114 B.R. 352, (Bankr. N.D.N.Y. 1990). Those secured creditors could be compelled to accept a money satisfaction of their respective interests pursuant to section 363(f)(5) of the Bankruptcy Code. See, e.g., In re James, 203 B.R. 449, 453 (Bankr. W.D. Mo. 1997); In re Grand Slam U.S.A., Inc., 178 B.R. 460, (E.D. Mich. 1995). Courts considering this issues have held that the cramdown provision under the Bankruptcy Code constitutes a legal or equitable proceeding and permits a sale under section 363(f)(5). See, e.g., Grand Slam, 178 B.R. at 464; In re Levitt & Sons, LLC, 384 B.R. 630, 648 (Bankr. S.D. Fla. 2008); In re Gulf States Steel, Inc. of Ala., 285 B.R. 497, 508 (Bankr. N.D. Ala. 2002); Scherer v. Fed. Nat. Mortg. Ass n (In re Terrace Chalet Apartments, Ltd.), 159 B.R. 821, 829 (N.D. Ill. 1993). 26. Below is a summary of secured claims relating to the Assets: a. All Assets. The State of Maine has a lien on all assets to secure its $350,000 DIP Loan, approved by this Court dated December 11, 2017 [D.E. 839] b. Vehicles. The Assets include approximately forty-eight (48) motor vehicles, as set forth in the Stalking Horse APA. Many of these vehicles are encumbered by liens in favor of Ford Motor Credit, and a small number are by liens in favor of General Motors Credit. Any liens on the vehicles will transfer and attach to the proceeds of sale of _1.docx -9-

10 Case Doc 903 Filed 02/14/18 Entered 02/14/18 11:39:15 Desc Main Document Page 10 of 12 the applicable vehicle to the same extent, validity and priority as the lien on the vehicle. c. 505 Davis Road. The Debtor has been making payments under a contract to purchase real property at 505 Davis Road, Bangor, Maine, for several years. The balance due is approximately $70,000. The Debtor shall pay the balance due to the contract counterparty in exchange for conveyance of a deed to the estate, whereupon the Debtor shall convey the property to the Buyer free and clear of any encumbrances. d. Real Estate Taxes. Real estate taxes shall be dealt with and paid at closing. e. Tax Liens. Any tax liens on the Assets shall attach to the proceeds of the property conveyed to the same extent, validity and priority as such has existed on the Assets. 27. To the extent not paid at closing, all liens against the Assets will attach to the cash proceeds received from the sale of those Assets in the same force, effect and priority as such liens have existed prior to the Petition Date, subject to the rights and defenses, if any, of the Trustee and/or the Debtor or any party-in-interest. D. Assumption and Assignment of Executory Contracts and Unexpired Leases 28. A trustee is authorized to assume an executory contract and unexpired lease provided that, at the time of assumption, the trustee: (1) cures, or provides adequate assurance that the trustee will promptly cure, any default; (2) compensates, or provides adequate assurance that the trustee will promptly compensate, the counterparty for any actual pecuniary loss resulting from any default; and (3) provides adequate assurance of future performance under the executory contract or unexpired lease. See 11 U.S.C. 365(a), (b)(1). A default based upon the filing of the bankruptcy case or the insolvency or financial condition of the debtor need not be cured. See 11 U.S.C. 365(b)(2). 29. In the case of an assumption and assignment, the purchaser or assignee provides the adequate assurance of future performance. See 11 U.S.C. 365(f)(2). The Bankruptcy Code does _1.docx -10-

11 Case Doc 903 Filed 02/14/18 Entered 02/14/18 11:39:15 Desc Main Document Page 11 of 12 not define the term adequate assurance, and courts have found that the term adequate assurance was intended to be given a practical, pragmatic construction. In re DBSI, Inc., 405 B.R. 698, 708 (Bankr. D. Del. 2009). Adequate assurance is something less than an absolute guarantee. Id. 30. In this case, the APA, as well as the Bid Procedures Motion, contemplates that certain unexpired leases and executory contracts will be assumed and assigned to the Stalking Horse or the Successful Bidder. The Trustee, pursuant to this Motion, seeks to assume and assign those executory contracts and unexpired leases designated by the Stalking Horse or Successful Bidder to be assumed. 31. To accomplish this goal in the most fair and expeditious manner, as provided in the Bid Procedures Motion, the Trustee shall provide the counterparties to such agreements with notice and a reasonable opportunity to object to the proposed assumption and assignment of the agreement, to state cure amounts, if any, that they believe are owing, and for a process to resolve any disputes with respect to such cure amounts The Trustee requests that this Court establish a deadline for parties to the Assigned Contracts and Leases to file alleged cure amounts, or to object to the Trustee s proposed assumption and assignment of such agreements, as set forth in the Bid Procedures Motion. To the extent issues arise as to cure amounts and/or any counterparties raise an issue with respect to the adequate assurance requirement, the Trustee requests that the Court address the matter at the hearing on this Sale Motion. 33. Finally, the Trustee requests that he and the Debtor be relieved from any further liability with respect to the Assigned Contracts after assumption and assignment to the Stalking Horse or the Successful Bidder. See 11 U.S.C. 365(k). 2 The Bid Procedures Motion and the Assumption and Assignment Procedures attached thereto describes the procedures by which the Trustee will provide counterparties with notice and an opportunity to object to the proposed assumption and assignment of the Assigned Contracts and Leases and related cure amounts _1.docx

12 Case Doc 903 Filed 02/14/18 Entered 02/14/18 11:39:15 Desc Main Document Page 12 of 12 V. NOTICE 34. The Trustee shall provide notice as follows: (a) the Sale Notice (as defined in the Bid Procedures Motion) on all creditors, and (b) the Sale Notice and the Sale Motion on: a. The United States Trustee; b. The twenty largest non-insider unsecured creditors of the Debtor; c. Local, State and federal taxing authorities; d. Counsel to the Stalking Horse; e. Prospective bidders (or their counsel) that are known to the Trustee and his advisors; f. The Counter-Parties to the executory contracts and unexpired leases on the Contract & Cure Schedule; g. All parties known to the Trustee to have or assert any liens, claims and encumbrances or other interests against the Assets; and h. All parties having filed requests for notices in the Debtor s case. CONCLUSION Based upon the foregoing, the Trustee requests that the Court enter the proposed sale order authorizing the sale of the Assets to the Stalking Horse, subject to higher and better offers in accordance with the provisions of the bid procedures approved by this Court. In addition, the Trustee requests that this Court enter an order waiving the provisions of Bankruptcy Rules 6004(h) and 6006(d). Dated: February 14, 2018 NATHANIEL R. HULL, Chapter 11 Trustee By: Roger A. Clement, Jr. Roger A. Clement, Jr., Esq. Stephen B. Segal, Esq. Verrill Dana LLP One Portland Square Portland, ME Tel: rclement@verrilldana.com ssegal@verrilldana.com bankr@verrilldana.com _1.docx _1-12-

13 A Page 1 of 30 EXHIBIT A ASSET PURCHASE AGREEMENT This Asset Purchase Agreement (together with any agreements and schedules attached hereto, the Agreement ) is entered into on February 12, 2018 by and between Nathaniel R. Hull, the duly-appointed Chapter 11 trustee (the Trustee ) for the bankruptcy estate (the Estate ) of The Getchell Agency, a Maine corporation (the Debtor ) [Case No ; D. Me.] (the Seller ), and Emile Clavet or his designee (the Buyer ). Capitalized terms used herein without separate definition shall have the meanings ascribed to them in Section WHEREAS, the Debtor has commenced a case (the Chapter 11 Case ) under Chapter 11 of the Bankruptcy Code [Case No ; D. Me.] in the United States Bankruptcy Court for the District of Maine (the Bankruptcy Court ); and WHEREAS, Seller is the duly-appointed Chapter 11 trustee for the Chapter 11 Case [Docket Nos. 789 and 802 in the Chapter 11 Case]; and WHEREAS, Seller wishes to sell and assign to Buyer certain assets (the Acquired Assets ) and executory contracts and unexpired leases (the Assumed Contracts, and together with the Acquired Assets, the Purchased Assets ) of the Debtor and its Estate as more particularly described on Schedule 1.1, and Buyer wishes to purchase the Acquired Assets and assume the Assumed Contracts, in the manner and subject to the terms and conditions set forth in this Agreement and pursuant to Sections 363 and 365 of the Bankruptcy Code; NOW, THEREFORE, in consideration of the mutual agreements herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, each intending to be legally bound, do hereby agree as follows: ARTICLE I PURCHASE AND SALE 1.1 Purchase and Sale. On the Closing Date, and upon the terms and conditions set forth herein and subject to the approval of the Bankruptcy Court pursuant to Sections 363 and 365 of the Bankruptcy Code: (a) Seller shall sell, transfer, convey, assign (and, with respect to all Assumed Contracts, assume and assign to Buyer), and deliver to Buyer, all of Debtor s and the Estate s right, title, and interest in and to the Purchased Assets; and (b) Buyer shall (i) purchase and accept from Seller (and, with respect to all Assumed Contracts, assume Seller s obligations thereunder) all of Debtor s and the Estate s right, title, and interest in and to the Purchased Assets, and (ii) pay, or become responsible for payment of Cure Costs in a manner satisfactory to Seller. Buyer may, by giving notice thereof to Seller at least five (5) days before the Closing, (a) elect to add a contract or lease to the Assumed Contracts listed on Schedule 1.1, or (b) request that one or more of the Assumed Contracts listed on Schedule 1.1 be removed. 1.2 Excluded Assets. Notwithstanding Section 1.1, Seller will not be required to sell or transfer to Buyer, and the Purchased Assets shall not include, any assets or rights not listed on Schedule 1.1, including without limitation the assets or any right or interest in or to any of the assets specifically set forth on Schedule 1.2 attached hereto (collectively, the Excluded Assets ). 1.3 Purchase Price Payable at Closing; Allocations; Prorations; Deposit. 1

14 A Page 2 of 30 (a) The total purchase price (the Purchase Price ) for the Purchased Assets is Three Million Four Hundred Thousand Dollars ($3,400,000). At the Closing, in exchange for the Purchased Assets, Buyer shall: (i) pay or deliver by wire transfer in immediately available funds to Seller, One Million Dollars ($1,000,000), less the Deposit (as defined below), (ii) deliver to Seller a promissory note in the original principal amount of Two Million Four Hundred Thousand Dollars ($2,400,000) (the Promissory Note ) and (iii) pay, or become responsible for payment of, Cure Costs in a manner satisfactory to Seller. Payment terms of the Promissory Note shall be as follows: Buyer shall pay to Seller $750,000 in 3 installments of $250,000 each on the dates that are 6 months, 12 months, and 18 months after Closing, respectively (and if such date is not a business day, then Buyer shall pay such installment on the first business day after such date); Buyer shall pay the other portion of the original principal amount ($1,650,000) in equal monthly installments of $45, each over 36 consecutive months, commencing on the day that is the first day of the calendar month after the Closing Date (and if such date is not a business day, then Buyer shall pay such installment on the first business day after such date) and continuing with each successive month until such portion of the original principal amount is paid in full; no interest shall accrue on the Promissory Note provided no event of default occurs; and default interest shall accrue at the rate of 6% per annum upon an uncured event of default as set forth in the Promissory Note. The Promissory Note shall be on a standard commercial lending form of promissory note, reflecting the terms set forth above, and shall be secured by a standard commercial lending form security agreement (and, for any real property, a standard form commercial mortgage and security agreement) from Buyer attaching to the Purchased Assets and all other assets of Buyer s business, junior and subordinate only to a lien securing working capital financing to be obtained from a commercial lender in an amount not to exceed $700,000 and subject to an intercreditor agreement between Seller and such commercial lender (and acknowledged by Buyer) in a form acceptable to Seller and that such commercial lender. The Promissory Note shall be prepayable in part or in whole at any time without penalty, upon written notice to Seller. (b) No later than one (1) day before the Closing Date, the parties shall allocate, as set forth on Schedule 1.1, (i) the Purchase Price and (ii) the value of Buyer s payment of, or agreement to pay, Cure Costs. After the Closing, the parties shall make consistent use of such allocation, fair market value and useful lives for all tax purposes and in all filings, declarations and reports with the IRS in respect thereof, including the reports required to be filed under Section 1060 of the Internal Revenue Code, if any. (c) As of the Closing Date, utility charges, rents and other charges under the Assumed Contracts, real and personal property taxes relating to the Purchased Assets, and other similar obligations to third parties shall be prorated between Seller and Buyer. (d) On the respective dates set forth below, Buyer shall deliver to Seller in cash by wire transfer of immediately available funds the specified amounts, to be held as a deposit (collectively, the Deposit ) as follows: (i) $10,000 no later than 2 business days after the date of execution of this Agreement by both parties, and (ii) $40,000 upon satisfaction or Buyer s waiver of the contingencies described in Sections 7.4, , and Buyer s failure to make any such payment on or before the specified date shall constitute a default hereunder, time being of the essence. The Deposit shall be held by the Trustee in escrow pending disbursal pursuant to this Agreement. The Deposit shall be released to Seller if (a) the 2

15 A Page 3 of 30 Closing takes place, or (b) this Agreement is terminated by Seller in accordance with Section 9.1(b), provided, however, that in all other cases the Deposit shall be released to Buyer. In the event of a dispute regarding the Deposit while it is held in escrow, the parties agree that the Trustee shall have no right to, and be under no obligation to, release the Deposit until it receives an order issued by a court of competent jurisdiction directing it to do so. 1.4 Assumed and Excluded Liabilities. Buyer shall pay, assume the liability to pay, or otherwise satisfy in a manner satisfactory to Seller accrued, and allowable as a priority unsecured claim pursuant to 11 U.S.C. 507(a)(4), prepetition paid time off for employees for whose accrued time off Seller and the Estate are responsible and whom Buyer retains or employs before or within 14 calendar days following Closing (the PTO Liability ). Except for (i) the PTO Liability, and (ii) liabilities assumed by Buyer in connection with the Assumed Contracts, Buyer shall not assume any liabilities whatsoever (including Environmental Liabilities), obligations, taxes or indebtedness of Seller or of the Estate, whether direct or indirect, liquidated or unliquidated, known or unknown, whether accrued, absolute, contingent, matured, unmatured or otherwise (collectively, the Excluded Liabilities ). ARTICLE II CLOSING 2.1 Closing. The closing of the transfer and sale of the Purchased Assets (the Closing ) shall occur at the Portland, Maine offices of Verrill Dana, LLP at 10:00 A.M., local time, on or before April 3, 2018, or on such other date as may be mutually agreed to by Buyer to Seller, or such other place as the parties may agree (such date, the Closing Date ). 2.2 Closing Deliveries of Buyer. Subject to fulfillment or Buyer s waiver of the conditions set forth in Article VII, at the Closing, Buyer shall deliver all of the following to Seller: (a) Immediately available funds constituting the required cash balance of the Purchase Price in the amount and in the manner described in Section 1.3 in accordance with the payment instructions to be provided by Seller to Buyer prior to the Closing (and Seller shall be entitled to retain the Deposit); (b) Executed original of the Promissory Note and the related security agreement, mortgage and security agreements, and intercreditor agreement (if any as of the date of Closing); (c) executed by Buyer; Counterparts of the instruments referred to in Section 2.3 that are to be (d) All other documents, closing statements, affidavits, instruments and writings reasonably required to be delivered by Buyer at or prior to the Closing Date in order to effectuate the intent of this Agreement. 2.3 Closing Deliveries of Seller. Subject to fulfillment or waiver of the conditions set forth in Article VIII, at the Closing, Seller shall deliver all of the following to Buyer: 3

16 A Page 4 of 30 (a) A bill of sale from Seller and the Estate to Buyer, in the form set forth on Exhibit A-1 attached hereto, duly executed by Seller; (b) the statutory form; (c) in real property; Quitclaim Deeds to any real property included in the Acquired Assets, on Any applicable declarations of value with respect to transfers of interests (d) All other documents, closing statements, affidavits, instruments and writings reasonably required to be delivered by Seller at or prior to the Closing Date in order to effectuate the intent of this Agreement; (e) Physical delivery of any of the following in Seller s possession, without any representation or warranty, with respect to any of the Purchased Assets: keys to vehicles, offices, houses, mobile homes, and other premises and properties included in the Purchased Assets, and all computer access codes and passwords for the computer programs or systems included in the Purchased Assets; and (f) An assignment and assumption agreement in the form set forth on Exhibit A-2 hereto, duly executed by Seller, provided, however, that in no event shall Buyer have the right to disapprove the Sale Order or terminate this transaction by reason of Seller s inability to assign any or all of the Assumed Contracts if such failure is due to the Bankruptcy Court s determination that Buyer has failed to provide adequate assurance of future performance to the counter party, it being acknowledged and agreed that the Buyer shall bear sole responsibility for providing such adequate assurance. ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER Seller hereby represents and warrants to Buyer as follows: Debtor. 3.1 Appointment of Seller. Seller is the duly appointed Chapter 11 Trustee for the 3.2 Authority of Seller; Enforceability. (a) Subject to the Sale Order and the Bid Procedures Order becoming Final Orders (in each case, as defined below), Seller has the full legal power and authority to execute, deliver and perform this Agreement and any agreement, document or instrument executed and delivered pursuant to this Agreement or in connection with this Agreement. (b) Subject to the Sale Order and the Bid Procedures Order becoming Final Orders, this Agreement is the legal, valid and binding obligation of Seller and the Estate, enforceable against Seller and the Estate in accordance with its terms. 3.3 Limited Warranty. Except for the representations and warranties expressly contained in Article III of this Agreement, Seller makes no representations or warranties whatsoever, 4

17 A Page 5 of 30 express or implied, with respect to the Purchased Assets. Buyer has conducted and shall conduct its own independent due diligence and shall have no claims or causes of action against Seller or Seller s partners, employees, agents, attorneys, or representatives relating to the inaccuracy of Seller s representations and warranties, or the incompleteness of or failure to disclose any information provided to Buyer or failure to disclose any information to Buyer in connection with this Agreement. Upon the Closing, Buyer will accept the Purchased Assets at the Closing AS-IS, WHERE IS and WITH ALL FAULTS. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER Buyer hereby represents and warrants to Seller as follows: 4.1 Organization of Buyer. Buyer or his designee is, or shall be at Closing, a corporation or limited liability company, duly organized, validly existing and in good standing under the laws of the State of Maine. 4.2 Authority of Buyer; Enforceability. (a) Buyer has the full power and authority to execute, deliver and perform this Agreement and any agreement, document or instrument executed and delivered pursuant to this Agreement or in connection with this Agreement. The execution, delivery and performance of this Agreement and any agreement, document or instrument executed and delivered pursuant to this Agreement or in connection with this Agreement by Buyer have been duly authorized and approved by all necessary organizational actions on the part of Buyer. (b) Subject to the conditions herein and the Sale Order and the Bid Procedures Order becoming Final Orders, this Agreement is the legal, valid and binding agreement of Buyer, enforceable against Buyer in accordance with its terms. 4.3 Buyer s Financial and Technical Capability. Buyer has the financial capability, including all financing, sufficient cash or cash equivalents and/or credit facilities, necessary to consummate the transactions contemplated in this Agreement, including funding of the Deposit and payment of the Purchase Price, and has the technical capability to operate the Acquired Assets after the Closing. ARTICLE V ACTIONS PRIOR TO THE CLOSING DATE 5.1 Investigation by Buyer. Subject to Buyer entering into and abiding by the terms of such confidentiality and non-disclosure agreements as Seller may require (and Buyer expressly acknowledges that some of the relevant materials are confidential medical records that require special protections), Seller shall furnish to Buyer or its authorized representatives reasonable access to the books and records of the Debtor upon reasonable notice during regular business hours and shall provide access to such additional information (excluding information that is or is reasonably likely to be protected by the attorney client privilege or considered attorney work-product or the disclosure of which would in Seller s judgment violate any privacy laws or regulations) concerning the Purchased Assets as shall be reasonably requested to assist Buyer in determining whether the 5

18 A Page 6 of 30 conditions precedent to obligations of Buyer described in Article VII of this Agreement. Buyer will return any records Seller delivers to Buyer that are or are reasonably likely to be attorney-client privileged or considered attorney work product or which Buyer realizes are attorney-client privileged or considered attorney work product. Buyer acknowledges that it is relying on its own review of the Purchased Assets and that Seller is merely the trustee of Debtor s Chapter 11 case and is not making any representations or warranties about the Purchased Assets, including any representation about the accuracy or completeness of any of Debtor s books and records. 5.2 Preserve Accuracy of Representations and Warranties. Each of the parties hereto shall refrain from taking any action that would render any representation or warranty of such party contained in this Agreement inaccurate in any material respect as of the Closing Date. 5.3 Bankruptcy Court Order. (a) Seller shall promptly file with the Bankruptcy Court and serve upon all appropriate creditors and parties-in-interest a motion seeking (i) entry of the Bid Procedures Order and (ii) entry of the Sale Order. (b) Seller shall use commercially reasonable efforts to obtain the Bid Procedures Order no later than 30 days after full execution of this Agreement, and the Sale Order no later than March 30, (c) Each of Seller and Buyer shall promptly make any filings and use commercially reasonable efforts to obtain any and all other approvals and orders necessary or appropriate for the performance of its obligations hereunder, subject to its obligations to comply with any order of the Bankruptcy Court. (d) In the event an appeal is taken, or a stay pending appeal is requested, from either the Bid Procedures Order or the Sale Order, Seller and Buyer shall be entitled to in their sole respective discretion use their respective commercially reasonable efforts to defend any such appeal, provided, however, that neither party shall be required to incur costs or fees in any such undertaking. 5.4 No Inconsistent Actions. Subject to its obligations to comply with any order of the Bankruptcy Court (including, but not limited to, Seller s right and ability to conduct an auction in accordance with the Bid Procedures Order), and the other terms of this Agreement, Seller and Buyer each agrees not to file, consent to be filed or support a plan of reorganization, or file any pleadings, with the Bankruptcy Court that would be inconsistent with the terms of this Agreement. 6

19 A Page 7 of Competing Proposals. Seller may provide information to any person in connection with making a proposal as part of the Section 363 sale process contemplated in this Agreement, or have discussions with such person with respect to such information as it relates to the making of such proposal, provided, however, that Seller shall only be permitted to enter into an agreement for a sale to a person other than Buyer to the extent permitted under the Bid Procedures Order. Seller shall provide Buyer with notice of the receipt of any competing Qualified Offer (to be defined in the Bid Procedures Order or motion seeking the same) within two (2) Business days of receipt of the same. 5.6 Expense Reimbursement and Break-Up Fee. This Agreement is expressly subject to other offers presented to Seller in accordance with the Bid Procedures Order. In the event the Bankruptcy Court determines that an offer for the Purchased Assets submitted pursuant to the Bid Procedures Order is higher or better than the terms set forth in this Agreement and approves any such offer in lieu of this Agreement (an Alternative Offer ), and provided Buyer is not in default hereunder, then Seller shall (i) return the Deposit to the Buyer, (ii) within three (3) business days after the closing on the sale pursuant to the Alternative Offer (an Alternative Transaction ) (a) pay to Buyer, by wire transfer of immediately available funds, a partial break-up fee in the amount of $30,600, and (b) reimburse Buyer, by wire transfer or immediately funds, for its actual reasonable expenses, including legal fees incurred by Buyer in connection with the attempted acquisition of the Purchased Assets and this Agreement and any related proceedings before the Bankruptcy Court in an amount not to exceed $50,000 (the Expense Reimbursement ), (iii) within 6 months after closing on the Alternative Transaction pay to Buyer, by wire transfer of immediately available funds, a further partial breakup fee in the amount of $35,700, and (iv) within 12 months after closing on the Alternative Transaction pay to Buyer, by wire transfer of immediately available funds, the remaining balance of the breakup fee, in the amount of $35,700. The aggregate sum of the three breakup fee payments described above shall be referred to herein as the Break-Up Fee. The Break-Up Fee and the Expense Reimbursement shall constitute allowed administrative priority expenses under sections 503(b)(1) and 507(a)(2) of the Bankruptcy Code. The Break-Up Fee and the Expense Reimbursement shall be Buyer s sole remedy as a result of a sale of the Purchased Assets pursuant to any other offer in accordance with the Bid Procedures Orders. Buyer s entitlement to the Break-Up Fee and the Expense Reimbursement, on the terms set forth herein, is contingent upon Buyer s not being in default hereunder and Seller s receipt of Buyer s written waiver of the conditions set forth in Sections 7.4, 7.8, 7.9, and 7.10 no later than seven (7) calendar days prior to the deadline for competing bids as set forth in the Bid Procedures Order. 5.7 Consents of Third Parties. Each of the parties will use their commercially reasonable efforts to secure, before the Closing Date, any consent, approval or waiver, in form and substance reasonably satisfactory to Buyer, from any party or Governmental Body as required to be obtained to transfer or assign the Purchased Assets to Buyer or to otherwise satisfy the conditions set forth herein, provided, however, that Seller shall have no obligation to expend funds in order to obtain such consent or approval nor shall Seller be required to make any representation about or on behalf of Buyer. 5.8 Other Actions. Without limitation of any other provision of this Agreement or the Bid Procedures Order, as soon as practicable after the execution of this Agreement, the parties shall use their respective commercially reasonable efforts to cooperate with the other to take such 7

20 A Page 8 of 30 other actions as may be necessary to effectuate in a timely manner the Closing after the fulfillment or waiver of the parties respective conditions set forth in Articles VII and VIII. 5.9 Census Count. During the pendency of this Agreement, and provided Buyer is not in default hereunder, Seller shall by the close of business on the Friday of each such week (unless otherwise agreed to by the parties) provide Buyer and his counsel by a thencurrent client census count, without any representation or warranty. Buyer shall maintain such information as confidential. ARTICLE VI ADDITIONAL AGREEMENTS 6.1 Further Cooperation. In addition to any specific requirement set forth herein, each of the parties hereto will cooperate with the other and execute and deliver to the other party hereto such other instruments, documents and information and take such other actions as may be reasonably requested from time to time by the other party hereto, at the sole cost and expense of the requesting party, as necessary to (a) carry out, evidence and confirm the intended purposes of this Agreement and (b) make any declaration, filing or registration with any Governmental Body. 6.2 Assignment of Claims. In the event that Buyer voluntarily elects to pay or otherwise satisfy any of the Excluded Liabilities, Buyer agrees that it will not, by assignment, subrogation or otherwise, succeed to the rights of the Person holding such Excluded Liability, nor assert (nor permit any other Person to assert) any claim against Seller or Seller s bankruptcy estate for any such Excluded Liability. In the event that Buyer becomes obligated or required to pay, by Court order, any such Excluded Liability, and Buyer in fact makes such payment of any such Excluded Liability, then all of Buyer s subrogation rights shall be preserved and reserved, and all of Seller s defenses and rights of offset and recoupment shall be preserved and reserved. ARTICLE VII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER The obligations of Buyer under this Agreement shall be, at the option of Buyer, subject to the satisfaction of the conditions set forth below. These conditions are solely for the benefit of Buyer and may be waived in whole or in part by Buyer at any time in its sole discretion. 7.1 No Misrepresentation or Breach of Agreements and Warranties. There shall have been no material breach by Seller in the performance of any of its agreements herein. Each of the representations and warranties of Seller contained in this Agreement shall be true and correct on the Closing Date as well as on the date of this Agreement. 7.2 No Injunction. No injunction, stay or restraining order shall be in effect prohibiting the consummation of the transactions contemplated in this Agreement. No law, ordinance or regulation shall have been enacted, and no order, judgment, or decree shall have been enacted or rendered by a Governmental Authority or any other person (and not subsequently dismissed, settled, withdrawn or terminated, nor shall any petition, complaint, or action have been filed or be pending that seeks such order, judgment or decree) which would prevent the consummation at the Closing of or restrain or invalidate the transactions contemplated by this Agreement. 8