Adak Fisheries Sale Order

Cabot Christianson, Esq. CHRISTIANSON & SPRAKER 911 W. 8th Avenue, Suite 201 Anchorage, Alaska 99501 (907) 258-6016 Attorneys for Debtor IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ALASKA In Re:

) ) ADAK FISHERIES, LLC, ) an Alaska limited liability company, ) Case No. 09-00623 DMD ) Debtor. ) Chapter 11 ________________________________________________)

CHRISTIANSON & SPRAKER 911 WEST 8TH AVENUE, #201 C ANCHORAGE, ALASKA 99501 (907) 258-6016 C Fax (907) 258-2026

ORDER GRANTING DEBTOR’S APPLICATION TO SELL ADAK PLANT FREE AND CLEAR OF LIENS At Docket No. 104, Debtor Adak Fisheries, LLC, (Debtor) applied to this Court for authority to sell to Adak Seafood, LLC, (Buyer), a Delaware limited liability company, the Debtor’s plant facility at Adak, Alaska, and associated equipment and assets, for $488,000 cash to the bankruptcy estate plus assumption of approximately $6.7 million of debt owed to Independence Bank (the “Bank”), on the terms and conditions set forth in the Asset Purchase Agreement (APA) attached hereto as Exhibit A, as modified as set forth in the application. A hearing on the Debtor’s application was held November 9 and 10, 2009, and was noticed as set forth in the affidavits of service on file. Good cause appearing, IT IS HEREBY ORDERED that

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1. The sale to Buyer is approved on the terms set forth in Exhibit A hereto, subject to the provisions of this order. 2. The vessel Eskimo Princess, currently titled in T&S Fisheries LLC, are included in the assets being sold. 3. The Debtor hereby withdraws its motion to reject that certain lease, and associated agreements, with Aleut Enterprise, Inc. (hereafter, Aleut Lease), with prejudice, which said motion is dated September 17, 2009 (Docket No. 34). 4. The Debtor hereby transfers, conveys and/or assigns to Buyer any and all of the Debtor’s interest in the Aleut Lease to Buyer, subject to that certain pending adversary proceeding, including without limitation any and all claims, causes of action and/or defenses set forth or advanced therein, which said adversary proceeding is now

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commonly known and identified as Independence Bank v. Adak Fisheries, LLC, et al., Adversary Proceeding No. 09-90031. This transfer is not an assumption and assignment of the lease and associated agreements under Section 365. 5. At Closing, the Buyer shall remit to Aleut Enterprise, LLC., the total sum of $250,000.00. $138,108.16 of such sum represents the minimum annual rent due Aleut Enterprise, LLC under the Aleut Lease for the 2009 calendar year. The balance of this sum, i.e. $111,891.84, represents payment for property damage. This $250,000 satisfies in full the Aleut motion to compel payment of administrative rent at Docket No. 141. 6. In further consideration of the foregoing, at Closing the Buyer shall escrow the total amount of $150,000, which said amount represents six (6) months of the PAGE 2:

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minimum annual rent due Aleut Enterprise, Inc. under the Aleut Lease for the 2010 calendar year. 7. In further consideration of the foregoing, Buyer shall defend and indemnify the bankruptcy estate from any claim by Aleut Enterprise, LLC on account of post-petition obligations arising under the Aleut Lease. 8. None of the foregoing payments to Aleut Enterprise, LLC, or other provisions of this Order concerning the rights and liabilities of Aleut Enterprise, LLC, with respect to the Aleut Lease shall be a deemed a waiver of any claim, right, defense or position taken or asserted by Aleut Enterprise, LLC against any party, nor deemed an adjudication of any substantive or procedural or other right, claim or liability of Aleut Enterprise, LLC with respect to the Aleut Lease.

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9. The sale does not include cash deposits, except such cash as may be held at Closing in accounts controlled by Independence Bank. 10. The sale price is $488,000 cash to the Debtor at Closing, plus assumption of the entire obligation (approximately $6.7 million) owed by Debtor to Independence Bank at Closing. 11.

Separate and apart from the foregoing sale price, Buyer shall pay

$13,000 to the City of Adak in full satisfaction of all sales tax obligation associated with the sale. 12. The sale is free and clear of the claims, liens and and interests of all entities other than Independence Bank who received notice of the Debtor’s application, and other than creditors who hold security interests, perfected pursuant to AS 28.10.371 PAGE 3:

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et seq in titled motor vehicles. The entities whose claims and liens do not attach to the assets and property sold include, include but are not limited to: Internal Revenue Service,1 State of Alaska,2 City of Adak,3 or Pentech Leasing, The claims, liens and interests of those entities (but not of Independence Bank) shall attach to the proceeds to the same extent and in the same order of priority as exist in the underlying property sold to the Buyer. The transactions contemplated by the APA will not subject Buyer to any liability with respect to the operation of Debtor’s business except as stated therein or herein. 13. After the closing, Independence Bank shall have no claim or lien against the Debtor, or be entitled to any other relief against the Debtor, save for such declaratory relief as may be ordered in Adversary No. 09-90031

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14. The automatic stay is hereby lifted with respect to the Aleut Lease. This lifting of the automatic stay shall be without prejudice to the claims asserted in Adversary 09-00031. 15. The security interests of Independence Bank against the Debtor’s assets and property sold to Buyer shall continue, after closing, in those assets and property pursuant to nonbankruptcy law.

1

Tax liens in the amount $3,102.20 recorded June 23, 2009; $9,466.47 recorded July 6, 2009; and $21,642.97 recorded August 24, 2009. 2

Tax liens in the amount $6,864.52 recorded July 27, 2009, and $11,650.00 recorded April 14, 2009. 3

Tax lien in the amount $546,191.50 recorded April 23, 2009.

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16. Debtor has demonstrated sound business purpose and justification, and compelling circumstances, for the proposed sale pursuant to 11 U.S.C. Section 363(b) prior to, and outside, a plan of reorganization, in that (a) any sale of the plant must close in time for the Buyer to prepare for the upcoming fishing season which commences January, 2010, and there is insufficient time for the plant to be sold through a confirmed plan of reorganization; (b) the only other offer or expression of interest in the plant is by Trident Seafoods Corporation, which has expressed an interest in purchasing certain of Debtor’s assets, and after adjustment for differences between Buyer’s offer and Trident’s expression of interest, Buyer’s offer is millions of dollars higher; and (c) absent a sale to the Buyer on the terms set forth herein, the assets will likely decline speedily in value, and there is no prospect that the plant could be sold on terms more favorable to the

CHRISTIANSON & SPRAKER 911 WEST 8TH AVENUE, #201 C ANCHORAGE, ALASKA 99501 (907) 258-6016 C Fax (907) 258-2026

bankruptcy estate. 17. Debtor may sell its property and assets to Buyer on the terms set forth herein, because (a) applicable nonbankruptcy law permits sale of such property and assets free and clear of the claims and interests set forth herein; (b) any entity who has received notice of the Debtor’s application and who has not filed an objection to the application is deemed to have consented; or (c) either such claims and interests are a lien and the price at which such property is to be sold is greater than the aggregate value of all liens on the property, or such claim and interest is in bona fide dispute. 18. Buyer is a good faith purchaser within the meaning of 11 U.S.C. Section 363(m) and, as such, is entitled to all the protections afforded thereby. Buyer will be acting in good faith within the meaning of Section 363(m) in closing the sale at PAGE 5:

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Exhibit A to Order Authorizing Sale 1 of 15

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