MOTION FOR ORDER APPROVING BID AND -

Page 1 - MOTION FOR ORDER APPROVING BID AND SALE PROCEDURES ::ODMA\PCDOCS\PORTLAND\900683\6 BALL JANIK LLP

One Main Place 101 Southwest Main Street, Suite 1100 Portland, Oregon 97204-3219 Telephone 503-228-2525

Brad T. Summers, OSB No. 911116 [email protected] David W. Criswell, OSB No. 925930 [email protected] Mathew W. Lauritsen, OSB No. 083949 [email protected] BALL JANIK LLP 101 SW Main Street, Suite 1100 Portland, Oregon 97204-3219 Phone: 503-228-2525 Fax: 503-295-1058

Attorneys for Peter C. McKittrick, Chapter 7 Trustee

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF OREGON

In re

BLUE HERON PAPER COMPANY,

Debtor.

Case No. 09-40921-rld7

TRUSTEE’S MOTION FOR ORDER APPROVING BID AND SALE PROCEDURES, INCLUDING PAYMENT OF BROKER FEES AND BREAK-UP FEES

Peter C. McKittrick, Chapter 7 Trustee in the above-captioned case (the “Trustee”),

hereby moves for an order establishing bid and sale procedures including payment of broker fees

and a break-up fee, with regard to certain real property commonly known as Willamette Falls

Redevelopment Site: 419/427 Main Street (including the former Blue Heron Paper Mill), Oregon

City, Oregon, including any personal property remaining after completion of the NRI Salvage

Operations, and all rights and benefits appurtenant to, or associated with, such real property

(including, but not limited to, all entitlements, permits, approvals, easements, water and mineral

rights) (the “Property”).

Case 09-40921-rld7 Doc 1389 Filed 06/26/13



JURISDICTION

1. This Court has jurisdiction to consider this matter pursuant to 28 U.S.C. §§ 157

and 1334. Venue is proper in this Court pursuant to 28 U.S.C. §§ 1408 and 1409.

2. The relief sought in this motion is based upon sections 105(a), 363 of the

Bankruptcy Code and Bankruptcy Rules 2002, 6004 and 9014.

INTRODUCTION 3. On December 31, 2009, Blue Heron Paper Company (the “Debtor”) commenced a

voluntary case under chapter 11 of the Bankruptcy Code.

4. On March 22, 2011, the Court entered an order directing the United States Trustee

to appoint a chapter 11 Trustee in the Debtor’s case. The United States Trustee appointed

Peter C. McKittrick as the chapter 11 Trustee.

5. The case was converted to a chapter 7 proceeding on April 1, 2011. The United

States Trustee appointed Peter C. McKittrick as the chapter 7 trustee on the same day.

BACKGROUND

6. The Trustee has received a number of inquiries from potential purchasers seeking

to acquire the Property as part of an orderly liquidation of the Debtor’s assets.

7. After due consultation with advisors and interested parties, and after negotiations

and discussions with various potential interested purchasers, the Trustee has entered into a

Purchase and Sale Agreement for the sale of the Property pursuant to section 363 of the

Bankruptcy Code in the form attached hereto as Exhibit 1 (the “PSA”). The prospective

purchaser under the PSA is Eclipse Development Group LLC (“Eclipse”).

8. The PSA is subject to the receipt of higher or better offers received through a

court-approved auction or sale process. If the auction or sale process yields a higher or better

offer than that contained in the PSA, the Trustee will seek authority to effect a sale with the

winning bidder.




RELIEF REQUESTED

9. By this motion, the Trustee seeks entry of an Order Approving Bid and Sale

Procedures in substantially the form attached hereto as Exhibit 2 (the “Bid Procedures Order”)

which:

(a) Authorizes and approves bid procedures in connection with the receipt and

analysis of competing bids, substantially in the form attached as Exhibit 3 ("Bid

Procedures") to the Bid Procedures Order;

(b) Approves the form of the notice of the s ale and the hearing thereon, substantially

in the form attached as Exhibit 4 (the "Sale Notice") to the Bid Procedures Order;

and

(c) Establishes the following dates and deadlines, subject to modification as needed,

relating to competitive bidding and approval of the sale:

i. Bid Deadline: August 21, 2013 at 5:00 p.m. prevailing Pacific time, as the

deadline by which all binding bids must be actually received by the

Trustee pursuant to the Bid Procedures (the "Bid Deadline").1

ii. Objection Deadline: August 21, 2013 at 5:00 p.m. prevailing Pacific time,

as the deadline to object to the sale transaction.

iii. Auction: August 27, 2013 at 10:00 a.m. prevailing Pacific time, as the

date and time the auction, if one is needed (the "Auction"), will be held at

the offices of Ball Janik LLP, 101 SW Main Street, Suite 1100, Portland,

Oregon.

iv. Sale Hearing: Within fourteen days after the Auction, or as soon as

practicable, a hearing to approve the results of the Auction will be held

before the Honorable Randall L. Dunn, United States Bankruptcy Court

1 See Paragraph 9.6 of the PSA.




for the District of Oregon, Courtroom No. 3, 1001 S.W. Fifth Avenue,

Portland, Oregon (the "Sale Hearing").

(d) Approves Eclipse as the stalking horse bidder and its entitlement to a cash break-

up fee in the amount of $250,000.

(e) Approves payment at Closing of a broker commission to Stuart Skaug, Garrett

Carter and Barbara Emmons of CBRE, in the amount of 2% of the final sale price.

10. By this Motion, the Trustee also seeks entry of an order (the “Sale Order”)

substantially in the form agreed upon with the winning bidder, authorizing and approving the

sale of the Property free and clear of all liens, claims, interests and encumbrances.

THE PROPOSED SALE

11. The PSA sets forth the following principal terms2: Purchaser:

Eclipse Development Group LLC

Purchase Price:

$4,100,000, cash at closing

Assets to Be Acquired: Fee simple interest in the Property

Excluded Assets: All personal property subject to NRI Salvage Operations’ rights or claims.

Assumed Liabilities: None

Bid Protections: Approval of Eclipse as stalking horse bidder and a break-up fee of $250,000

12. In addition to the above general sale provisions, the following sale provisions are

disclosed in accordance with applicable local rules and guidelines: Sale to Insider:

Buyer is not an insider as defined under Bankruptcy Code § 101(31).

2 This summary is provided for the convenience of the Court and interested parties. It is not intended to be a complete summary of the PSA. To the extent that there is any conflict between this summary and PSA, the PSA shall govern in all respects.




Sale Free and Clear: The sale will be free and clear of liens and other interests. The parties with such interest and the nature of those interests are set forth below.

Lienholders Affected: State of Oregon, Department of Energy ATTN: Lisa Schwartz, Director 625 Marion St. NE Salem, OR 97301-3737 State of Oregon, Department of Energy c/o Oregon Department of Justice ATTN: Ellen F. Rosenblum, Attorney General 1162 Court Street NE Salem, OR 97301-4096 Oregon Department of Energy c/o Carolyn G. Wade DOJ Civil Enf Civil Recovery 1162 Court St NE Salem OR 97301 Sempra Energy Solutions, LLC c/o Registered Agent Corporation Service Company 285 Liberty St. NE Salem, OR 97301 Sempra Energy Solutions, LLC c/o Noble Americas Gas & Power Corp. ATTN: William Cronin, President Four Stamford Plaza 107 Elm Street Stamford, CT 06902 Noble Americas Gas & Power Corp. c/o Registered Agent Corporation Service Company 285 Liberty St. NE Salem, OR 97301 Noble Americas Gas & Power Corp. Christopher L Parnell Dunn Carney Allen 851 SW 6th Ave Ste 1500 Portland OR 97204 Oregon City Boat Club c/o Gregory Gardner, President 20420 S Patsy Dr. Oregon City, OR 97045 Oregon City Boat Club




c/o Wade P. Bettis, OSB No. 72025 1906 Fourth St. La Grande, OR 97850 Attorney for Oregon City Boat Club Clackamas County Bob Vroman, Tax Assessor Department of Assessment & Taxation 150 Beavercreek Rd. Oregon City, OR 97045 Precautionary Listing Only:3 Wells Fargo Business Credit, Inc. c/o Registered Agent Corporation Service Company 285 Liberty St. NE Salem, OR 97301 Wells Fargo Business Credit, Inc. Martin J. McKinley, President Sixth St. & Marquette Ave. N9312-032 Minneapolis, MN 55479 Wells Fargo Bank, N.A. c/o Registered Agent Corporation Service Company 285 Liberty St. NE Salem, OR 97301 Wells Fargo Bank, N.A. Carrie L. Tolstedt, President 101 N. Phillips Ave. Sioux Falls, SD 57104

Releases and Insider Benefits:

None

Good Faith Deposit: Eclipse deposited $100,000 in an escrow account upon execution of the PSA. The PSA requires Eclipse to deposit another $400,000 within 60 days after execution of the PSA, unless Eclipse terminates the PSA during the 60 days based on due diligence. Other qualified bidders will also be required to submit a good faith deposit equal to $500,000.

3 Wells Fargo’s lien has been satisfied, but appears on record title. Wells Fargo is therefore listed on a precautionary basis.




Credit Bidding: The motion does not seek to limit credit bidding under section 363.

Standard for Approval:

The motion seeks approval of the proposed sale pursuant to the business judgment standard.

Relief from Bankruptcy Rule 6004(h):

The motion requests relief from the 14-day stay provided by Bankruptcy Rule 6004(h).

Solicitation Process: Notice of the proposed sale shall be given to all creditors and parties in interest.

Tax Consequences: The Trustee anticipates no adverse tax consequences upon closing of the proposed transaction.

Proceeds: The Trustee estimates that the proposed sale will result in the following payments at Closing, based on the gross sale price of $4,100,000:

TOTAL: $4,100,000 Clackamas County Property

Tax: $(350,000)

Federal AMT/Oregon Taxes: $(100,000) Broker Fee (2%): $(82,000) Misc. Closing Costs: $(35,000) ODOE Lien: $(1,000,000)4

Noble/SEMPRA Lien: $(800,400) Net Proceeds to Estate: $(2,553,000)5

AUCTION AND BID PROCEDURES

13. The proposed Bid Procedures are intended to permit a fair and efficient,

competitive sale consistent with an orderly liquidation of the Debtor’s property, and to promptly

identify any alternative bid that is higher or otherwise better than the bid set forth in the PSA.

The Bid Procedures establish, among other things:

• The deadlines and requirements for becoming a potential bidder, submitting

competing bids and the method and criteria by which such competing bids are 4 The Trustee and ODOE have agreed to cap ODOE’s secured claim at $1,000,000 to facilitate the proposed sale. The Trustee has reserved the right to challenge the amount of ODEO’s secured claim, and ODOE has reserved the right to seek payment of its secured claim from the proceeds up to $1,000,000. 5 The Trustee and lien holder Noble/SEMPRA have agree to split net proceeds 70%-30% pursuant to a separate settlement agreement.




to become entitled to be qualified bids sufficient to trigger an Auction,

including the minimum consideration that must be provided and the terms and

conditions that must be satisfied by any Bidder (other than Eclipse) to be

entitled to be a potential bidder and a qualified bidder.

• Various other matters relating to the sale process generally.

14. The Bid Procedures recognize the Trustee’s fiduciary obligations to maximize

sale value and, as such, do not impair the Trustee’s ability to consider all qualified bid proposals,

and preserve the Trustee’s right to modify the Bid Procedures as necessary or appropriate to

maximize value for the bankruptcy estate.

15. The Bid Procedures contain the following provisions that are required to be

highlighted pursuant to local rules and guidelines:

(a) Provisions Governing Qualification of Bidders. The provisions governing an

entity's right to become a qualified bidder are set forth in Paragraph D of the Bid

Procedures.

(b) Provisions Governing Qualified Bids. The provisions governing Qualified Bids

are set forth in paragraphs D of the Bid Procedures. Such provisions include,

among other things, submission of the bid by a deadline to be set by the Court,

accompanied by a $500,000 good faith deposit, with such bid not being subject to

any financing contingency, due diligence contingency, or any contingency

relating to internal approvals or consents. Eclipse is deemed to have satisfied all

of the bidding conditions.

(c) Provisions Providing Bid Protections to "Stalking Horse" Bidder. Paragraph A of

the Bid Procedures sets forth the "stalking horse" bidder protections. The PSA

does not include any limitations on the Trustee’s ability to solicit higher or better

bids. It does provide for the provision of a break-up fee for expenses in the




amount of $250,000, which shall be paid in the event that the Property is sold to a

party other than Eclipse.

(d) Bidding Increments. Paragraph G(4) of the Bid Procedures states that an initial

competing bid must exceed the purchase price in the proposed sale by at least

$300,000. A competing bid may not provide for the competing bidder to receive a

break-up fee, topping fee, expense reimbursement, or other similar fee or

arrangement. At auction, each subsequent bid shall be in increments of no less

than Fifty Thousand Dollars ($50,000).

(e) Due Diligence Period. Interested parties shall have until the Bid Deadline to

conduct due diligence. Paragraph C of the Bid Procedures sets forth the

requirements for obtaining due diligence access.

(f) Provisions Governing the Auction. Paragraph G of the Bid Procedures sets forth

the date, time and place at which the Auction (if any) will be conducted and the

method for providing notice to parties of any changes thereto.

BASIS FOR SALE FREE AND CLEAR OF LIENS

16. Section 363(b)(1) of the Bankruptcy Code provides that a trustee, “after notice

and a hearing, may use, sell, or lease, other than in the ordinary course of business, property of

the estate." This provision generally allows a trustee (subject to Court approval) to sell property

of the estate outside the ordinary course of business where the proposed sale is a sound exercise

of the trustee’s business judgment and the sale is proposed in good faith and for fair value.

Committee of Equity Security Holders v. Lionel Corporation (In re Lionel Corp.), 722 F.2d 1063,

1070 (2d Cir. 1983); In re Ernst Home Center, Inc., 209 B.R. 974, 980 (Bankr. W.D. Wash.

1997). When a trustee articulates a reasonable basis for its business decisions, "courts will

generally not entertain objections to the [trustee’s] conduct." Comm. of Asbestos-Related

Litigants v. Johns-Manville Corp. (In re Johns-Manville Corp.), 60 B.R. 612, 616 (Bankr.

S.D.N.Y. 1986).




17. The PSA was negotiated at arms length in good faith, and the Trustee believes its

terms are fair and reasonable under the circumstances. Eclipse is not an “insider” of the Debtor

and neither the Debtor nor its management has a financial interest in the transaction

contemplated by the PSA.

18. The Trustee seeks authority to sell the Property free and clear of all liens, claims

and encumbrances which may be asserted against the assets, with any such liens, claims and

encumbrances attaching to the proceeds of the sale.

19. Eclipse (and potential bidders in the Auction process) will only buy the Property

if it is sold "free and clear" of liens and interests.

20. Holders of liens and interests in the Property will be adequately protected because

they will be paid from the sale proceeds or their interests will attach to the proceeds of the sale,

or they will have voluntarily consented to the sale.

BASIS FOR APPROVAL OF BREAK-UP FEE

21. The Trustee has also requested approval of the break-up fee set forth in the PSA,

consisting of $250,000. The break up fee would be payable to Eclipse in the event that another

bidder prevails at the Auction and an alternate sale is ultimately approved by this Court.

22. In evaluating breakup and similar fees, courts have applied three basic standards:

(a) the business judgment test; (b) the best interests of creditors test; and (c) the "actual and

necessary" or administrative expense test. It appears that the Ninth Circuit has not adopted (nor

rejected) any of the foregoing tests. No matter which test it chooses to apply, however, it would

be appropriate for the Court to approve the Break-Up Fee.

23. Although Courts may apply different analytical standards, they generally reach the

same conclusion: breakup fees are appropriate when they encourage bidding and are in the best

interest of the estate. See, e.g., In re Integrated Resources, Inc., 147 B.R. 650 (S.D.N.Y. 1992),

app. dismissed on jurisdictional grounds, 3 F.3d 49 (2d Cir. 1993) (applying the business

judgment standard to approve breakup fee that helped attract and retain a potentially successful




bid and attract other bidders); In re America West Airlines, Inc., 166 B.R. 908, 912 (Bankr. D.

Ariz. 1994) (applying the best interest of creditors tests and focusing on "whether the transaction

will further the diverse interests of the debtor, creditors and equity holders alike"); In re O’Brien

Environmental Energy, Inc., 181 F.3d 527, 535 (3d Cir. 1999) (applying the "actual and

necessary" test and stating that the estate benefits if the breakup fee induced "a bid that otherwise

would not have been made * * *"); In re 995 Fifth Avenue Associates, L.P., 96 B.R. 24, 28

(Bankr. S.D.N.Y. 1989) (bidding incentives may be "legitimately necessary to convince a white

knight to enter the bidding by providing some form of compensation for the risks it is

undertaking").

24. Here, the break-up fee is designed to compensate Eclipse for the time and expense

of negotiation and due diligence in connection with its proposed purchase. The amount of the

break-up fee, $250,000, constitutes the parties’ reasonable estimate of actual out of pocket

expenses.

25. Due diligence with regard to the Property is of above average complexity for a

transaction this size. Considerations of particular note with regard to any buyer of the Property

include (1) the complexity and sheer size of the industrial site (approximately 23 acres with over

50 structures), (2) the Property’s location along the Willamette River and its proximity to

Willamette Falls (3) the long history of industrial use of the site dating back to the 1800s and the

related potential for environmental issues, (4) the status of the planning and entitlement process,

(5) preservation issues for some of the structures on the site with historical significance, and (6)

the substantial cost of demolishing the remaining structures on the site to make way for

redevelopment.

26. $250,000 consists of about 6% of the proposed sale price, which is in line with

break-up fees approved in other cases. See, e.g., Consumer News & Business Channel

Partnership v. Financial News Network, Inc. (In re Financial News Network, Inc.), 980 F.2d 165,

167 (2d Cir. 1992) (noting without discussion $8.2 million breakup fee on $149.3 million




transaction (5.5% of consideration offered)); see also LTV Aerospace & Defense Co. v.

Thomson-CSF, S.A. (In re Chateugay Corp.), 1998 B.R. 848, 861 (S.D.N.Y. 1996) (enforcing

$20 million "reverse breakup fee" payable to debtor on $450 million offer (4.4% of

consideration)).

NON-APPLICABILITY OF RULE 6004 STAY

27. In addition to the other sale-related relief sought herein, the Trustee requests that

the Court specifically find inapplicable any stays that might otherwise inhibit the Trustee’s

ability to close the proposed transaction for the sale of the Property immediately after the Court

enters an order approving the transaction, including, without limitation, those arising under

Bankruptcy Rules 6004 or 6006.

NOTICE

28. This motion has been served on (a) the Office of the United States Trustee; (b) the

Debtor and its counsel; (c) counsel for the Debtor’s known secured creditors; and (d) all parties

requesting special notice. The Sale Notice will be served on all creditors and parties in interest.

This motion has been served on (1) Wells Fargo Business Credit, Inc., (2) the State of Oregon,

acting through the Department of Energy, (3) Wells Fargo Bank, N.A., (4) Sempra Energy

Solutions, LLC, and (5) the Oregon City Boat Club in compliance with the notice and service

requirements of FRCP 4, FRBP 7004(b)(6), and 11 U.S.C. § 363. The Trustee submits that no

other or further notice is required.

WHEREFORE, the Trustee respectfully requests that the Court enter the Order

Approving Bid and Sale Procedures attached hereto as Exhibit 2.

DATED June 26, 2013 BALL JANIK LLP

By: /s/ David W. Criswell David W. Criswell, OSB No. 925930 [email protected] 101 SW Main Street, Suite 1100 Portland, OR 97204



PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (the "Agreement") is made andentered into as of ,~v4u- 2 ~ , 2013 (the "Effective Date") by and between EclipseDevelopment Group, LLC, a California limited liability company ("Buyer"), and Peter C.McKittrick, Trustee for the Estate of Blue Heron Paper Company, Inc., Bankruptcy Case No.09-40921-r1d7 ("Seller").

Recitals'

A. Seller is the court appointed Chapter 7 Bankruptcy Trustee for the Estate ofBlue Heron Paper Company, Inc., Bankruptcy Case No. 09-40921-r1d7 (the "Bankruptcy")before the U.S. Bankruptcy Court for the Oregon District (the "Court"), and in that capacity Seller isselling the fee simple interest in certain land located in Clackamas County, Oregon, and described onthe attached Exhibit A, including any and all buildings and structures, and any personal property,fixtures, equipment and electrical, plumbing, fire sprinkler, lighting, heating, ventilating and airconditioning systems, if any, and other similar systems remaining at such real property upon thecompletion of the NRI Salvage Operations (as defined in Section 6.4.4) and all rights and benefitsappurtenant to, or associated with, such real property (including, but not limited to, all entitlements,permits, approvals, easements, water and mineral rights) existing as of the Closing Date (as definedin Section 5.1) (collectively, the "Pro e ").

B. Subject to Court Approval (as defined in Section 4.1.2), Seller desires to sellthe Property to Buyer, and Buyer desires to purchase the Property from Seller, for the price and onthe other terms and conditions set forth in this Agreement.

A~xeements:

In consideration of the foregoing, the mutual covenants of the parties set forth in thisAgreement, and other good and valuable consideration, the receipt and adequacy of which are herebyacknowledged, the parties, intending to be legally bound, agree as follows:

1. Purchase and Sale. Subject to Court Approval, Seller agrees to sell the Property toBuyer, and Buyer agrees to purchase the Property from Seller, for the price and on the terms andconditions set forth in this Agreement. Buyer acknowledges that the Property does not includeintangible rights or other interests of Seller which are not appurtenant to the Property (except to theextent included in the definition of "Property" set forth in Recital A above), including, withoutlimitation, any of Seller's accounts, contracts, insurance policies, choses in action or other intangiblerights or claims.

2. Purchase Price; Earnest Money.

2.1 Purchase Price. The purchase price for the Property ("Purchase Price") shallbe the sum of Four Million One Hundred Thousand and 00/100 Dollars ($4,100,000.00).

2.2 Payment. Buyer shall pay the entire Purchase Price to Seller in immediatelyavailable funds at the Closing (as defined in Section 5.1).

2.3 Earnest Money. Within three (3) business days after the Effective Date,

DOC SOC/ 1625030v5/012794-0027(902751 v.2)

Exhibit 1 Page 1 of 15


Buyer shall open an escrow with Lawyers Title Insurance Company (the "Escrow Agent") and shalldeposit One Hundred Thousand and 00/100 Dollars ($100,000.00), which amount, along with anyinterest earned thereon, shall constitute initial earnest money with respect to this transaction (the"Initial Earnest Monev"). Unless Buyer gives written notice to Seller of Buyer's approval of allaspects of the Property or Buyer's waiver of the due diligence conditions on or before the DueDiligence Deadline (as defined in Section 4.1.1), this Agreement shall terminate and the InitialEarnest Money shall be promptly returned to Buyer. (If Buyer fails to give such written notice toSeller on or before the Due Diligence Deadline, Buyer shall be deemed to have terminated thisAgreement and the Initial Earnest Money shall be promptly returned to Buyer.) If Buyer gives Sellerwritten notice to Seller of Buyer's approval of all aspects of the Property or waiver of the duediligence conditions on or before the Due Diligence Deadline, Buyer shall deposit an additional FourHundred Thousand and 00/100 Dollars ($400,000.00) with Seller on the first business day followingthe Due Diligence Deadline, and the combined sum of Five Hundred Thousand and 00/100 Dollars($500,000.00) of Buyer's two deposits, and any interest earned thereon, shall constitute the fullearnest money with respect to this transaction (the "Earnest Monet/"). The Earnest Money shall becredited against the Purchase Price at the Closing. The Earnest Money shall be refunded to Buyeronly (i) upon a ternunation of this Agreement following the failure of any of the remainingconditions set forth herein to Buyer's obligation to consummate this transaction, or (ii) upon Seller'sfailure to convey the Property to Buyer as provided herein, other than as a result of Buyer's defaulthereunder. In the event Buyer fails to consummate its purchase of the Property in accordance withthis Agreement notwithstanding the satisfaction or waiver of all conditions to Buyer's obligation todo so, the Earnest Money shall be retained by Seller as liquidated damages and shall constituteSeller's sole remedy against Buyer on account of such failure to consummate this transaction. Sellerand Buyer acknowledge and agree that the damages that would be incurred by Seller on account ofsuch a failure to close by Buyer would be difficult to ascertain with reasonable certainty and that theamount of the Earnest Money constitutes a reasonable approximation of such damages and not apenalty.

Pre-Closing Matters.

3.1 Access to Property. From time to time prior to the Closing or the earlierternunation of this Agreement, Buyer and its representatives shall have the right, after reasonablenotice to Seller and at reasonable times, to enter upon the Property for the purpose of conducting anyinvestigation or test reasonably related to Buyer's purchase or prospective use of the Property;provided that all such activities shall be conducted at no out-of-pocket expense to Seller. Buyer shall(i) indemnify, defend, and hold harmless Seller from and against any claim, loss, liability, or expense(including reasonable attorneys' fees) arising from or related to Buyer's activities pursuant to thisSection 3.1, provided, however, Buyer shall have no obligation to indemnify, defend or hold Sellerharmless from Buyer's mere discovery ofpre-existing defects, environmental contamination of anyother matters in, on or under the Property, and (ii) if Buyer does not acquire the Property pursuant tothis Agreement, fully compensate Seller for any physical damage to, or any lien or encumbranceimposed on, the Property and attributable to Buyer's activities pursuant to this Section 3.1, provided,however, Buyer shall have no obligation to indemnify, defend or hold Seller hannless from Buyer'smere discovery ofpre-existing defects, environmental contamination of any other matters in, on orunder the Property. Prior to conducting any Phase I Environmental Site Assessments (ESA), Buyershall provide Seller with the proposed scope of work for Seller's review. Seller shall have three (3)business days to review and provide comments on the scope. Buyer shall incorporate any reasonablecomments into the scope of the Phase I ESA. Buyer shall have no right to conduct anyenvironmental testing or sampling, including a Phase II ESA without Seller's prior written approval,

2DOC SOC/ 1625 03 Ov5/012794-0027(905152 t/.2)



which shall not be unreasonably withheld, conditioned or delayed.

3.2 Access to Records. From time to time prior to the Closing or the earlierternunation of this Agreement, Buyer and its representatives shall have the right to inspect all books,records, maps, contracts, aerial photographs, deeds, agreements, abstracts, and other materials relatedto the Property and within Seller's possession or control. Any such inspection shall take place duringnormal business hours at the offices) of Seller at which such materials are located upon not less thantwo (2) business days' notice to Seller, and shall be undertaken without expense to Seller. Inaddition, within fourteen (14) days after the Effective Date, Seller will deliver the documentsdescribed on the attached Exhibit B to Buyer. Seller and its agents shall have no responsibility orliability for the completeness or accuracy of the documents listed on Exhibit B or any otherinformation given by Seller to Buyer regarding the condition or operation of the Property(collectively, the "Seller Information"). Seller is making no representation with respect to the SellerInformation, Buyer assumes and accepts the entire responsibility for interpreting and assessing theSeller Information, and Buyer will rely solely on Buyer's own judgment in making Buyer's decisionto purchase the Property.

3.3 Title Matters. Within five (5) days of the Effective Date, Seller shall cause tobe delivered to Buyer a current preliminary title report for the Property from the Escrow Agent datedwithin thirty (30) days of the Effective Date (the "Title Report") along with copies of (or electroniclinks to) the documents described in the Title Report and an ALTA survey of the Property(collectively, the "Title Documents"). The "Pernutted Exceptions" shall consist of all matters ofpublic record, except for any monetary liens and encumbrances( which will be paid or removed bySeller at Closing), approved by Buyer in accordance with this Agreement. Buyer may, at its sole costand expense, obtain a new or updated ALTA survey if it so desires.

4. Conditions to Closing.

4.1 Buyer's Conditions. Buyer's obligation to close this transaction shall besubject to and contingent upon the satisfaction (or waiver by Buyer in its sole discretion) of each ofthe following conditions:

4.1.1 Due Dili enc~e Approval. Buyer's obligation to purchase the Propertyshall be contingent upon Buyer's review and approval of all aspects of the Property in Buyer's soleand absolute discretion (including, without limitation, the Property's physical and environmentalcondition, zoning, code compliance and feasibility) within sixty (60) days following the EffectiveDate of this Agreement (the "Due Diligence Deadline").

4.1.2 Court Approval. The issuance of an Order in the Bankruptcy Caseapproving the terms and conditions of sale of the Property pursuant to the terms of this Agreement(the "Court Approval").

4.1.3 Performance of Obli ate ions. Each of the obligations and covenants ofSeller to be performed prior to or on the Closing Date pursuant to this Agreement shall have beenperformed in all material respects.

4.1.4 Title Policv. The Escrow Agent shall have committed to issue thetitle insurance policy contemplated by Section 5.5.

DOC SOC/ 1625030v5/O l 2794-0027(905152 v.2)



4.1.5 No Material Adverse Change in Property. There shall not haveoccurred any material adverse change in the physical condition of the Property from the DueDiligence Deadline.

4.2 Seller's Conditions. Seller's obligation to close this transaction shall besubject to and contingent upon the satisfaction (or waiver by Seller in its sole discretion) of each ofthe following conditions:

4.2.1 Court Approval. Satisfaction of the Court Approval conditions.

4.2.2 Secured Creditor Approval. At the sole cost of Seller, it shall haveobtained the approval in a form reasonably acceptable to Seller of the existing secured creditor of thePurchase Price set forth in this Agreement, provided, however, that Seller may only terminate thisAgreement due to the condition in this Section 4.2.2 if it gives written notice to Buyer of suchtermination no later than ten (10) business days after the Effective Date, unless the secured creditorapproval is obtained through a settlement which requires the approval of the Court, in which caseSeller shall seek Court approval of the settlement within twenty (20) business days after the EffectiveDate and Seller or Buyer may terminate this Agreement due to the condition in this Section 4.2.2 ifthe Court fails to approve the settlement within such twenty (20) business day period.

4.2.3 Accuracy of Representations. Each of Buyer's representations andwarranties set forth in this Agreement shall be true and correct in all material respects as of theClosing Date.

4.2.4 Performance of Obli ate ions. Each of the obligations and covenants ofBuyer to be performed prior to or on the Closing Date pursuant to this Agreement shall have beenperformed in all material respects.

5. Closing.

5.1 Time and Place of Closing. This transaction shall be closed in escrow (the"Closing") at the office of Lawyers Title Insurance Company in Portland, Oregon ("Escrow Agent"),or at such other location as the parties may mutually agree. The Closing shall take place on a datemutually acceptable to the parties within the closing time frames set forth in the Court Approval, butin any event (i) not earlier than fifteen (15) days following the expiration (or waiver by Buyer) of theDue Diligence Period, and (ii) not later than ninety (90) days after the Effective Date, provided,however, if Seller has not obtained Court Approval despite its diligent efforts, Buyer shall have theright to extend the Closing by up to four (4) periods of thirty (30) calendar days each (until CourtApproval is obtained) by delivery of written notice to Seller at least one (1) business day prior to theoriginal scheduled Closing Date or any extended Closing Date. The date on which the Closingoccurs is referred to herein as the "Closing Date."

5.2 Events of Closing. At the Closing, the following shall occur:

5.2.1 Buyer shall pay the Purchase Price (subject to credit for the EarnestMoney and adjustments to reflect prorations and closing costs), to Seller by delivery of immediatelyavailable funds to Escrow Agent.

5.2.2 Seller shall execute, acknowledge, and deliver to Buyer a Trustee's

4DOC SOG 1625030v5/012794-0027(905152 v.2)



Deed, with same legal effect as a statutory Bargain and Sale Deed, (the "Deed"), conveying theProperty to Buyer.

5.2.3 Seller shall execute and deliver to Buyer a general assignmentconveying to Buyer all of the intangible rights of Seller included in the Property, including, but notlimited to, rights to any permits, approvals, entitlements and water rights.

5.2.4 The parties shall take such other actions as maybe reasonablynecessary to complete the Closing in accordance with this Agreement.

5.3 Prorations; Supplemental Taxes or Assessments. Property taxes andgovernmental assessments on the Property shall be prorated between Seller and Buyer as of theClosing Date. In the event any supplemental taxes or assessments are billed after the Closing Datefor periods prior thereto, such supplemental taxes and assessments shall be paid promptly by Seller.Any tax refunds received by Buyer which are allocable to the period prior to the Closing Date shallbe paid by Buyer to Seller.

5.4 Closing Costs. The costs associated with the Closing shall be allocated asfollows:

5.4.1 Seller shall pay (i) one-half of the escrow fee of Escrow Agent, (ii)the premium for the standard portion of the ALTA coverage title insurance policy contemplated bySection 5.5, (iii) all recording fees with respect to the Deed, and (iv) all documentary transfer andother taxes in connection with the transfer of the Property from Seller to Buyer.

5.4.2 Buyer shall pay (i) one-half of the escrow fee of Escrow Agent, (ii)the cost of the title insurance policy contemplated by Section 5.5 in excess of the cost of standardowner's coverage, and any endorsements to the policy required by Buyer or its lender, and (iii) allcosts of updating the existing ALTA survey provided by Seller.

5.4.3 All other closing costs shall be apportioned between the parties aslegally required, or in accordance with customary practices in Clackamas County, Oregon.

5.4.4 Except as expressly provided in this Agreement, each party shall bearall costs and expenses incurred by such party in connection with this transaction.

5.5 Title Insurance Policy. The Escrow Agent shall deliver to Buyer an ALTAextended coverage owner's policy of title insurance with respect to the Property, with a coverageamount equal to the Purchase Price, subject only to the Permitted Exceptions, the standard exceptionsto such policies, and any liens or encumbrances suffered or created by Buyer.

5.6 Possession. Buyer shall be entitled to possession of the Property upon theClosing, subject to any occupancy rights of NRI Global, Inc. ("NRI") as provided in that certainAsset Purchase Agreement (Blue Heron Paper Company) dated September 19, 2011 by and betweenSeller and NRI, as amended by that certain First Amendment to Asset Purchase Agreement dated asof June 22, 2012 by and between Seller and NRI (the "NRI A~xeement").

6. Representations and Warranties.

6.1 Seller's Representations and Warranties. Seller represents and warrants to

5DOC SOC/ 1625 03 Ov5/012794-0027(905152 v.2)



Buyer as follows:

6.1.1 Subject to receiving Court Approval, Seller has full power andauthority to execute, deliver, and perform its obligations under this Agreement and all instrumentsrequired to be delivered by Seller hereunder.

6.1.2 Neither Seller's execution and delivery of this Agreement, nor itsperformance of its obligations hereunder, will violate any court order, including, without limitation,the Bankruptcy Case.

6.2 Bu. erg's Representations and Warranties. Buyer represents and warrants toSeller as follows:

6.2.1 Buyer has full power and authority to execute, deliver, and performBuyer's obligations under this Agreement and all instruments required to be delivered hereunder. Allrequisite authorizing action has been taken by Buyer in connection with the execution and delivery ofthe Agreement and the consummation of the transaction.

6.2.2 Buyer acknowledges that this Agreement is subject to Court Approvaland all of the terms and conditions of such Court Approval, including, without limitation, the termsof any overbid and closing requirements and procedures in connection with the sale of the Property.

6.2.3 Buyer is a disinterested party in the Bankruptcy Case (as such term isdefined by the United States Bankruptcy Code), and except as otherwise disclosed to Seller inwriting, Buyer has no business, family or financial relationship with any parties with an interest inthe bankruptcy case, including, without limitation, creditors, professionals and their affiliates.

6.3 Renewal of Representations and Warranties. All representations andwarranties contained in this Section 6 shall be deemed made as of the Effective Date and renewed asof the Closing Date.

6.4 No Other Representations and Warranties; Condition of PropertX.

6.4.1 Each party hereby acknowledges and agrees that no representations orwarranties have been made with respect to the Property or this transaction other than those expresslyset forth in this Section 6, elsewhere in this Agreement, or in the Deed. Buyer acknowledges that, asof the Due Diligence Deadline, it will have investigated the Property to its satisfaction and agreesthat, subject to the representations and warranties of Seller set forth in Section 6.1, elsewhere in thisAgreement, and in the Deed, BUYER WILL BE TAKING THE PROPERTY IN ITS "AS IS"CONDITION WITH NO WARRANTY, EXPRESS OR IMI'LIED, AND WITH ALL FAULTS,including latent defects, if any, and defects and conditions, if any, that cannot be observed by casualinspection. Without limiting the generality of the foregoing provisions of this Section 6.4, Buyeracknowledges and agrees that, except as expressly set forth in Section 6.1, neither Seller nor anyoneacting by, for or through Seller has made any representations or warranties including, but not limitedto those with respect to, and Buyer hereby releases Seller and anyone acting by, for or through Seller,from any loss, liability or claim including, but not limited to those arising from, (i) the fitness of theProperty for any particular purpose, (ii) the condition of the Property, or the existence or condition ofany building, structures, or other improvements thereon, (iii) any applicable building, zoning, or firelaws or regulations or compliance therewith or the existence or compliance with any required permits

6DOCSOG 1625030v5/O l 2794-0027(905152 v.2)



of any governmental authority, (iv) Buyer's ability to obtain any type of development or buildingpermits at any time, (v) the availability or existence of any water, sewer, or other utilities or utilitydistricts, (vi) the inadequacy or non-existence of any access rights to or from the Property, (vii) thepresence in, on, or under the Property or any improvements thereon, or any adjacent property, ofhazardous substances or contamination of any kind, and (viii) the acreage or square footage of theProperty. Buyer expressly waives any statutory right or cause of action based on any of the abovematters, including, without limitation, any statutory obligation of disclosure with respect to suchmatters.

6.4.2 Buyer acknowledges that the provisions of this Section 6.4 were anegotiated part of this Agreement and serve as an essential component of the consideration for thisAgreement. Without limiting the generality of the foregoing, the parties specifically acknowledgethat, as of the Due Diligence Deadline, Buyer shall have had an opportunity to inspect the Propertywith regard to environmental concerns and the Purchase Price has been negotiated to eliminate allclaims relating to environmental matters. Consequently, this provision bars all claims brought by theBuyer against Seller concerning the condition of the Property pursuant to the Federal ComprehensiveEnvironmental Response, Compensation and Liability Act of 1980 ("CERCLA"), as amended, theFederal Resource Conservation and Recovery Act ("RCRA"), as amended, and any applicable,similar federal andlor state legislation. Notwithstanding the parties' intent that this provision bar allsuch claims against Seller, should a court of competent jurisdiction deem otherwise, the presence ofthis provision shall serve as the overwhelming, primary factor in any equitable apportionment ofliability or damages under CERCLA, RCRA, and other such legislation.

6.4.3 Buyer hereby waives, releases, acquits and forever discharges Seller,its employees or agents or any other person acting on behalf of Seller, of and from any and all claims,actions, causes of action, demands, rights, damages, costs, expenses, or compensation whatsoever,direct or indirect, known ar unknown, foreseen or unforeseen, which Buyer now has or which mayarise in the future on account of or in any way growing out of or in connection with any physicalcharacteristics or existing condition of the Property, including, without limitation, subsurfaceconditions and solid and hazardous wastes, and hazardous substances, on, under, or related to theProperty, and any laws rules or regulations applicable thereto.

6.4.4 Buyer acknowledges and agrees that (a) Seller has sold to NRI all ofthe personal property, fixtures, and equipment located upon the Property, including, withoutlimitation all of the salvageable scrap and wiring, and leaving upon the Property generally barephysical structures, (b) NRI is currently removing such personal property, fixtures, equipment andsalvageable scrap and wiring under the terms of the NRI Agreement (the "NRI Salva e~Operations"),(c) the physical structures upon the Property maybe altered or damaged in connection with the NRISalvage Operations, and as such may not be in substantially the same condition at Closing as theyexisted on the Effective Date, and (d) any change in the condition of the physical structures on theProperty prior to Closing is not a condition to Buyer's obligation to close the purchase of theProperty, and does not entitle Buyer to any abatement or credit against the Purchase Price.

7. Default; Remedies.

Agreement.7.1 Time of Essence. Time is of the essence of the parties' obligations under this

7.2 Limitation of Buver Remedies and Damages. Buyer acknowledges that

7DOCSOG 1625030v5/012794-0027(905152 v.2)



Seller is acting solely through the authority of the Court pursuant to the Bankruptcy Case, andBuyer therefore agrees that Buyer's sole and absolute remedy for any breach of this Agreementby Seller shall be to terminate this Agreement and obtain a refund of the Earnest Moneydeposited by Buyer plus (pursuant to Section 9.2) Two Hundred Fifty Thousand Dollars($250,000.00) as reimbursement for its due diligence costs and expenses. Under nocircumstance shall Seller or anyone acting by, for or through Seller be liable to Buyer orBuyer's heirs, successors or assigns, for any other direct, indirect, consequential, incidental,punitive or exemplary damages, or damages of any other kind arising out of or related to thisAgreement or the Property. Buyer further acknowledges and agrees that Seller would not bewilling to enter into this Agreement without Buyer's agreement to the foregoing limitation ofremedies and damages.

Miscellaneous Provisions.

8.1 Survival. All provisions of this Agreement that contemplate performance orcontinuation after the Closing Date (including, without limitation, indemnity obligations) shallsurvive the Closing and be fully enforceable thereafter.

8.2 Bindin~ect. The provisions of this Agreement shall be binding upon andinure to the benefit of the parties and, subject to the restrictions on assignment set forth herein, theirrespective successors and assigns.

8.3 Assignment. Buyer shall not assign any of its rights or obligations under thisAgreement without the prior written consent of Seller. Notwithstanding the foregoing prohibition,Buyer shall have the right to assign and transfer its rights, duties and obligations under thisAgreement to an entity in which Buyer and/or its principal, Douglas B. Gray, or any entity controlledby Douglas B. Gray, is a shareholder, partner or member. No assignment of this Agreement shallrelease Buyer from its obligations under this Agreement.

8.4 Notices. All notices under this Agreement shall be in writing. Notices may be(i) delivered personally, (ii) transmitted by facsimile, (iii) delivered by a recognized nationalovernight delivery service, or (iv) mailed by certified United States mail, postage prepaid and returnreceipt requested. Notices to any party shall be directed to the address set forth below, or to suchother or additional address as any party may specify by notice to the other party. Any noticedelivered in accordance with this paragraph shall be deemed given when actually received or, ifearlier, (a) in the case of any notice transmitted by facsimile, on the date on which the transmission isconfirmed, (b) in the case of any notice delivered by a recognized national overnight delivery service,on the next business day after delivery to the service or, if different, on the day designated fordelivery, or (c) in the case of any notice mailed by certified U.S. mail, two business days afterdeposit therein.

If to Seller: c/o Peter McKittrick, Trustee515 NW Saltzman Rd., PMB #917Portland, OR 97229Fax No.: (503) 961-8180

DOC SOC/ 1625030x5/012794-0027(905152 v.2)



With copy to: Ball Janik LLPAttn: Brad T. Summers101 SW Main Street, Suite 1100Portland, OR 97204Fax No.: (503) 295-1058

If to Buyer: Eclipse Development Group, LLCAttn: Douglas B. Gray17802 Sky Park Circle, Suite 200Irvine, CA 92614Fax. No.: (949) 251-9979

With copy to: Stradling Yocca Carlson & RauthAttn: Bruce C. Stuart, Esq.660 Newport Center Drive, Suite 1600Newport Beach, CA 92660Fax No.: (949) 725-4100

8.5 Waiver. Any party's failure to exercise any right or remedy under thisAgreement, delay in exercising any such right or remedy, or partial exercise of any such right orremedy, shall not constitute a waiver of that or any other right or remedy hereunder. A waiver of anybreach of any provision of this Agreement shall not constitute a waiver of any succeeding breach ofsuch provision or a waiver of such provision itself. No waiver of any provision of this Agreementshall be binding on a party unless it is set forth in writing and signed by such party.

8.6 Amendment. This Agreement may not be modified or amended except by thewritten agreement of the parties.

8.7 Attorneys' Fees. If a suit, action, or other proceeding of any naturewhatsoever (including any proceeding under the U.S. Bankruptcy Code) is instituted in connectionwith this Agreement or any instrument or agreement delivered by either party at Closing, or tointerpret or enforce any rights or remedies hereunder or thereunder, the prevailing party shall beentitled to recover its attorneys' fees and all other fees, costs, and expenses actually incurred andreasonably necessary in connection therewith, as deternuned by the court at trial or on any appeal orreview, in addition to all other amounts provided by law.

8.8 Severability. If any provision of this Agreement is held invalid, illegal, orunenforceable, then (i) such provision shall be enforceable to the fullest extent permitted byapplicable law, and (ii) the validity and enforceability of the other provisions of this Agreement shallnot be affected and all such provisions shall remain in full force and effect.

8.9 Inte agr tion. This Agreement contains the entire agreement and understandingof the parties with respect to the subject matter hereof and supersedes all prior and contemporaneousagreements with respect thereto. The parties acknowledge and agree that there are no agreements orrepresentations relating to the subject matter of this Agreement, either written or oral, express orimplied, that are not set forth in this Agreement.

8.10 Governing Law. This Agreement shall be governed by and construed inaccordance with the internal laws of the State of Oregon and any applicable provisions of the United

9DOCSOG 1625030x5/012794-0027(905152 v.2)



States Bankruptcy Code, without regard to the principles of conflicts of law that would provide forapplication of another law.

8.11 Jurisdiction.

8.11.1 Prior to the closing of the Bankruptcy Case, except as otherwiseexpressly provided in this Agreement, the parties agree that any suit, action or proceeding seeking toenforce any provision of, or based on any matter arising out of or in connection with, this Agreementshall be brought exclusively in the Bankruptcy Court, and each of the parties hereby irrevocably (a)consents to the jurisdiction of the Bankruptcy Court (and of the appropriate appellate courtstherefrom) in any such suit, action or proceeding, and (b) waives, to the fullest extent permitted bylaw, any objection that it may now or hereafter have to the laying of the venue of any such suit,action or proceeding in the Bankruptcy Court or that any such suit, action or proceeding which isbrought in the Bankruptcy Court has been brought in an inconvenient forum.

8.11.2 Upon the closing of the Bankruptcy Case, except as otherwiseexpressly provided in this Agreement, the parties agree that any suit, action or proceeding seeking toenforce any provision of, or based on any matter arising out of or in connection with, this Agreementmaybe brought in any court having subject matter jurisdiction over such suit, action or proceeding,and that any cause of action arising out of this Agreement shall be deemed to have arisen from atransaction of business in the State of Oregon, and each of the parties hereby irrevocably (a) consentsto the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit,action or proceeding, and (b) waives, to the fullest extent permitted by law, any objection that it maynow or hereafter have to the laying of the venue of any such suit, action or proceeding in any suchcourt or that any such suit, action or proceeding which is brought in any such court has been broughtin an inconvenient forum.

8.12 Conshuction and Interpretation. The headings or titles of the sections of thisAgreement are intended for ease of reference only and shall have no effect whatsoever on theconstruction or interpretation of any provision of this Agreement; references herein to sections are tosections of this Agreement unless otherwise specified. Meanings of defined terms used in thisAgreement are equally applicable to singular and plural forms of the defined terms. As used herein,(i) the term "party" refers to a party to this Agreement, unless otherwise specified, (ii) the terms"hereof," "herein," "hereunder," and similar terms refer to this Agreement as a whole and not to anyparticular provision of this Agreement, (iii) the term "this transaction" refers to the transactions)contemplated by this Agreement, and (iv) the term "including" is not limiting and means "includingwithout limitation." In the event any period of time specified in this Agreement ends on a day otherthan a business day, such period shall be extended to the next following business day. All provisionsof this Agreement have been negotiated at arm's length and this Agreement shall not be construed foror against any party by reason of the authorship or alleged authorship of any provision hereof.

8.13 Execution. This Agreement maybe executed in any number of counterparts,all of which together shall constitute one and the same agreement. Each party may rely upon thesignature of each other party on this Agreement that is transmitted by facsimile as constituting a dulyauthorized, irrevocable, actual, current delivery of this Ageement with the original ink signature ofthe transmitting party.

8.14 Incorporation of Recitals, Exhibits, and Schedules. The Recitals to thisAgreement and any Exhibits or Schedules attached to this Agreement are incorporated herein by this

10DOC SOG 1625030v5/012794-0027(905152 v.2)



reference.

8.15 Further Assurances. Each party agrees to execute and deliver such additionaldocuments and instruments as may reasonably be required to effect this transaction fully, so long asthe terms thereof are consistent with the terms of this Agreement.

8.16 Commissions. Seller warrants and represents to Buyer that no broker orfinder has been engaged by it in connection with the transaction contemplated by this Agreementother than Stuart Skaug, Garrett Carter and Barbara Emmons of CBRE whose commission shall bepaid for by Seller pursuant to a separate written agreement. Buyer warrants and represents to Sellerthat no broker or finder has been engaged by it in connection with the transaction contemplated bythis Agreement other than Preston Fetrow of CBRE whose commission shall be paid for by Buyerpursuant to a separate written agreement. In the event any other claims for brokers' or finders' fees orcommissions are made in connection with the negotiation, execution, or consummation of thisAgreement, then Buyer shall indemnify, hold harmless, and defend Seller from and against suchclaims if they are based upon any statement, representation or agreement made by Buyer, and Sellershall indemnify, hold harmless, and defend Buyer if such claims shall be based on any statement,representation or agreement made by Seller.

8.17 Oregon Statutory Disclaimer. THE PROPERTY DESCRIBED IN THISINSTRUMENT MAY NOT BE WITHIN A FIRE PROTECTION DISTRICT PROTECTINGSTRUCTURES. THE PROPERTY IS SUBJECT TO LAND USE LAWS AND REGULATIONSTHAT, IN FARM OR FOREST ZONES, MAY NOT AUTHORIZE CONSTRUCTION OR SITINGOF A RESIDENCE AND THAT LIMIT LAWSUITS AGAINST FARMING OR FORESTPRACTICES, AS DEFINED IN ORS 30.930, IN ALL ZONES. BEFORE SIGNING ORACCEPTING THIS INSTRUMENT, THE PERSON TRANSFERRING FEE TITLE SHOULDINQUIRE ABOUT THE PERSON'S RIGHTS, IF ANY, UNDER ORS 195.300, 195.301 AND195.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, ANDSECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 TO 7,CHAPTER 8, OREGON LAWS 2010. BEFORE SIGNING OR ACCEPTING THISINSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULDCHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TOVERIFY THAT THE UNIT OF LAND BEING TRANSFERRED IS A LAWFULLYESTABLISHED LOT OR PARCEL, AS DEFINED IN ORS 92.010 OR 215.010, TO VERIFY THEAPPROVED USES OF THE LOT OR PARCEL, TO VERIFY THE EXISTENCE OF FIREPROTECTION FOR STRUCTURES AND TO INQUIRE ABOUT THE RIGHTS OFNEIGHBORING PROPERTY OWNERS, IF ANY, iJNDER ORS 195.300, 195.301 AND 195.305TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 TO 7, CHAPTER 8,OREGON LAWS 2010.

8.18 Confidentiality. From the Effective Date of this Agreement and until theinformation must be disclosed in connection with the Court Approval, each party agrees that, unlessit has the consent of the other party, it will: (i) keep the Purchase Price confidential; (ii) will notdisclose to anyone (except as allowed below), including the media, the Purchase Price. However,each party may disclose the Purchase Price as follows: (i) on a need-to-know basis, to its respective:lawyers, investors, managerial employees and consultants to be involved in the transactioncontemplated by this Agreement; and (ii) if required to do so by court order or otherwise by law; andin such circumstances, Buyer will promptly give Seller written notice of the pending disclosure, so

11DOC SOC/ 1625030v5/012794-0027(905 ] 52 v.2)



that Seller may challenge the requirement of disclosure. Notwithstanding the foregoing, Seller maydisclose negotiations to and as required by the Court, or to creditors in the Bankruptcy Case.

9. Agreement Subject to Terms of Court Approval. Notwithstanding any otherprovision of this Agreement to the contrary, this Agreement is expressly made subject in allrespects to the terms of sale set forth in the Court Approval (which are incorporated herein byreference), including, without limitation, the terms of the overbid and closing procedures setforth in the Court Approval and as generally described below. In the event any provision ofthis Agreement is in conflict with the terms and conditions of bidding and sale set forth in theCourt Approval, then the terms and conditions of the Court Approval shall be controlling.

9.1 Upon the parties' mutual execution of this Agreement, Seller will file amotion with the Court to approve bid procedures, to set an overbid and objection deadline, toschedule an auction if any qualified overbids are received, to schedule a hearing to approve the sale,and to approve abreak-up fee to the Buyer, all subject to the terms of this Agreement.

9.2 The amount of the break-up fee will be Two Hundred Fifty Thousand and00/100 Dollars ($250,000.00). The break-up fee will be paid to the Buyer if the Court approves, andSeller consummates, a sale of the Property to a party other than the Buyer. Court approval of thebreak-up fee will require the Buyer's agreement to share with qualified competing bidders any duediligence materials or reports generated for the Buyer by third parties at Buyer's expense (butexcluding any architectural and/or engineering materials prepared by or on behalf of Buyer), but willnot require the Buyer to disclose any reports or analyses generated internally by the Buyer.

9.3 The bid procedures will require any potential competing bidder to execute aconfidentiality agreement and demonstrate its financial capacity to close the proposed transaction, asreasonably determined by Seller, as a condition to obtaining due diligence access.

9.4 The bid procedures will require the submission of any competing bid by adeadline (discussed below), accompanied by a deposit in the amount of Five Hundred ThousandDollars ($500,000.00) in the form of a wire transfer or cashier's check and a copy of the bid markedto show all differences between the provisions in such bid and the provisions of this Agreement. Toqualify, a competing bid must provide for a purchase price exceeding the Buyer's purchase price byat least Three Hundred Thousand and 00/100 Dollars ($300,000.00). A competing bid may notprovide for the competing bidder to receive abreak-up fee, topping fee, expense reimbursement orother similar fee or arrangement. A competing bid may not be subject to any financing contingency,due diligence contingency, or any contingency relating to internal approvals or consents.

9.5 If no qualified competing bids are received by the bid deadline, the Buyerwill be deemed the successful purchaser and Seller will immediately pursue entry of a Court orderauthorizing the sale of the Property to the Buyer. If one or more qualified competing bids("4ualified Competing Bids") are received by the bid deadline, Seller will conduct an auction on adate to be scheduled by the Court.

9.6 Seller will request the Court to set a deadline for any competing bids andobjections to the sale approximately sixty (60) days after the Effective Date. The auction, if anyQualified Competing Bids are received, will be scheduled to occur within seven (7) days after thedeadline for competing bids. Buyer may bid for the Property at the auction. The bidding at theauction shall commence at the amount of the highest Qualified Competing Bid. Each subsequent bid

12DOC SOG 1625030x5/012794-0027(905152 v.2)



shall be in increments of no less than Fifty Thousand Dollars ($50,000.00). The Court hearing toapprove the sale will be scheduled at the Court's convenience, but Seller will request a hearing assoon as reasonably possible after the date scheduled for the auction.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Datefirst set forth above.

Seller:Pet r . McKittrick, stee for the Estateof Blue Heron Paper Company, Inc.,Bankruptcy Case No. 09-40921-r1d7

Buyer: ECLIPSE DEVELOPMENT GROUP, LLC,a California limited liability company

By:NamTitle

13DOCSOG 1625030x5/012794-0027(905152 v.2)



EXHIBIT A

Leal Description of Property

A-1DOCSOG 1625030x5/012794-0027



ExxrsiT B

Seller Information

B-1DOCSOG 1625030x5/012794-0027



Page 1 - ORDER APPROVING BID AND SALE PROCEDURES INCLUDING BREAK-UP FEE

::ODMA\PCDOCS\PORTLAND\900849\3 BALL JANIK LLP One Main Place 101 Southwest Main Street, Suite 1100 Portland, Oregon 97204-3219 Telephone 503-228-2525

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF OREGON

In re


Debtor.


ORDER APPROVING BID AND SALE PROCEDURES

This matter came before the Court on the Trustee’s Motion for Order Approving Bid and

Sale Procedures including Break-Up Fee (the “Motion”) filed by Peter C. McKittrick, Chapter 7

Trustee in the above-captioned case (the “Trustee”) on June 26, 2013, concerning the sale under

11 U.S.C. § 363 of certain real property commonly known as Willamette Falls Redevelopment

Site: 419/427 Main Street (including the former Blue Heron Paper Mill), Oregon City, Oregon,

including any personal property remaining after completion of the NRI Salvage Operations, and

all rights and benefits appurtenant to, or associated with, such real property (including, but not

limited to, all entitlements, permits, approvals, easements, water and mineral rights) (the

“Property”). The Court having held an initial hearing on the Motion on July 12, 2013, and

having considered the submissions and arguments of counsel and the files and records herein,

and being now fully advised of the premises,

THE COURT FINDS as follows:





A. This Court has jurisdiction to consider and decide this matter pursuant to 28

U.S.C. §§ 157 and 1334. Venue is proper in this Court pursuant to 28 U.S.C. §§ 1408 and 1409.

B. The notice provided regarding the Motion constitutes sufficient and adequate

notice to all parties, expressly including adequate service upon (1) Wells Fargo Business Credit,

Inc., (2) the State of Oregon, acting through the Department of Energy, (3) Wells Fargo Bank,

N.A., (4) Sempra Energy Solutions, LLC, and (5) the Oregon City Boat Club for the purposes of

the proposed sale free and clear of their interests under 11 U.S.C. § 363. No other or further

notice in connection with the entry of this Order is or shall be required.

C. The bid procedures (attached as Exhibit B to this Order) were proposed by the

Trustee in good faith with the goal of maximizing the value of the Property for the benefit of all

creditors of the estate and other parties-in-interest. The Trustee has articulated good and

sufficient reasons for approving the bid procedures, which are reasonable and appropriate under

the circumstances and designed to maximize the recovery on, and realizable value of, the

Property.

D. The Trustee’s proposed sale notice (attached as Exhibit C to this Order) is

appropriate and reasonably calculated to provide all interested parties with timely and proper

notice of this Order, the sale, and the auction (if any).

E. The proposed break-up fee, payable to Eclipse Development Group LLC

(“Eclipse”) in the amount of $250,000 in the event of a sale to a third party, is approved, and is

necessary and appropriate to compensate Eclipse for (1) making the initial offer that serves as the

floor for further bidding, and (2) negotiating and entering into the PSA (defined below).

F. The bid procedures (including the break-up fee) are fair and reasonable. The bid

procedures represent an exercise of the Trustee’s sound business judgment, will facilitate an

orderly sale process, and are in the best interests of the Debtor’s estate.

G. On or about June 21, 2013, the Trustee entered into a Purchase and Sale

Agreement for the sale of the Property to Eclipse (the “PSA”).





H. Entry of this Order is in the best interests of the Debtor, the Debtor’s estate, its

creditors, and other parties-in-interest.

Now, therefore,

IT IS HEREBY ORDERED as follows:

1. The Motion is granted as set forth below.

2. The bid procedures attached hereto as Exhibit B are approved and shall be used in

connection with the proposed sale of the Property.

3. All responses or objections to the relief sought in the Motion that have not been

withdrawn, waived or settled are hereby overruled.

4. Any objections to the proposed sale shall be in writing and filed with this Court

no later than August 21, 2013 at 5:00 p.m. Pacific Time. Any party filing such an objection must

attend the sale hearing and advocate its objection at such hearing. Any objection not filed,

served, and/or advocated in accordance with this paragraph may be deemed waived and may be

forever barred.

5. The auction for the Property, if necessary, will be held on August 27, 2013, at

10:00 a.m. Pacific Time, at the offices of Ball Janik LLP, 101 SW Main Street, Suite 1100,

Portland, Oregon.

6. The sale hearing will be conducted within fourteen (14) days after the Auction, or

as soon as otherwise practicable, before the Honorable Randall L. Dunn, United States

Bankruptcy Court for the District of Oregon, Courtroom No. 3, 1001 S.W. Fifth Avenue,

Portland, Oregon, to consider the entry of an order providing and approving, inter alia, the

following: (a) the sale of the Property to Eclipse or any alternative successful bidder free and

clear of all liens, claims, interests, obligations, and encumbrances in accordance with 11 U.S.C. §

363(f); and (b) that the PSA or any alternative successful bidder’s sale agreement was entered

into in good faith, without collusion, and from arms' length bargaining positions. The Trustee

shall be deemed to have accepted a bid and the successful bidder determined only when the bid





for the Property has been approved by the Court at the sale hearing.

7. The break-up fee of $250,000 is approved. The Trustee is authorized to pay the

break-up fee to Eclipse in accordance with the terms set forth in the PSA. The break-up fee shall

be treated as an administrative expense claim payable solely from and secured by a first priority

lien on the sale proceeds and any sale deposit under section 364(d) of the Bankruptcy Code. As

applicable, the break-up fee shall be paid to Eclipse at the closing of such sale or disposition of

the sale deposit prior to the payment of the proceeds of such sale to any third party asserting a

lien on the Property, and shall be free and clear of any such lien.

8. The Trustee is authorized to pay the proposed broker fee of 2% at Closing as set

forth in the Motion, to Stuart Skaug, Garrett Carter and Barbara Emmons of CBRE.

9. The sale notice, substantially in the form attached hereto as Exhibit C, is hereby

approved.

10. The failure of any third party to file and serve an objection as ordered and directed

herein shall be deemed the consent of such party to the sale and transfer of the Property to

Eclipse or any alternative successful bidder.

11. Pursuant to the Guidelines Regarding Motions for Sale of All or Substantially All

Assets and Sale Procedures Motions adopted by the Bankruptcy Court on March 8, 2010 (LBF

363), the Trustee is hereby excused from the requirement of using Local Bankruptcy Form 760.5

[Notice of Intent to Sell Real or Personal Property, Compensate Real Estate Broker, and/or Pay

and Secured Creditor's Fees and Costs; Motion for Authority to Sell Property Free and Clear of

Liens; and Notice of Hearing].

12. As provided by Bankruptcy Rule 6004(h), this Order shall not be stayed for 14

days after the entry thereof, and shall be effective and enforceable immediately upon its entry on

the docket.

13. Unless otherwise specified, all time periods set forth in this Order shall be

calculated in accordance with Bankruptcy Rule 9006(a).





# # #

Presented By: BALL JANIK LLP By: /s/ David W. Criswell David W. Criswell, OSB No. 925930

[email protected] 101 SW Main Street, Suite 1100 Portland, OR 97204




Preliminary Title Report 1st Revision Order No.: 32F0002231

Exhibit "A"

Lot 1, Block 74, OREGON CITY, in the City of Oregon City, County of Clackamas and State ofOregon.

Preliminary Title ReportoRRQ 6/200sPage 3



lauritsen.m

Typewritten Text

LEGAL DESCRIPTION OF OFFICE SITE:

Preliminary Title Report 2nd Revision Order No.: 32F0002230

Exhibit "A"

PARCEL XIII:

A parcel located in the West one-half of Section 31, Township 2 South and Range 2 East of theWillamette Meridian, in the County of Clackamas and State of Oregon, being fully described asfollows:

Commencing at the Southwest corner of said Section 31; thence North 32030'13" East3001.82 feet to a David Evans and Associates, Inc., 3-U4-inch brass disk stamped "STA BWILL-DAM" set in the roadway on top of Portland General Electric Company's dam on the rightbank of the Willamette River; thence North 17010'45" East329.77 feet to a David Evans andAssociates, Inc. 3-Ll4-inch brass disk stamped "GPS STA A WILL-DAM" set in the roadway ontop of said dam; thence North 19o10'38" East 362.42 feet to a brass screw in lead set by Davisand Pike in PS 21487 on file at the Clackamas County Surveyor's Office and the point ofbeginning, said point being on the boundary of Parcel 16, Document No. 87-40048, ClackamasCounty Deed Records; thence using said PS 2L487 as the basis of bearing and distances,South 53029'30" East 123.28 feet to the Southwest corner of Block 1, Plat of OREGON CITY;thence North 36030'30" East 34.55 feet along the West boundary of said block to the Westerlymost corner of Parcel 17 in said Document No. 87-40048; thence leaving said Westerlyboundary and following the Southerly boundary of said Parcel 17, South 21o14'21" East165.54 feet; thence South 53029'30' East 70.00 feet to the Westerly right-of-way of MainStreet extended; thence leaving said Parcel 17 boundary and following said Westerly right-of-way extended, South 36"30'30' West 148.31 feet to the boundary of the parcel described inDocument No. 89-42199; thence leaving said Westerly right-of-way extended and followingthe boundary of said Document No. 89-42199, North 48003'00" West 15.20 feet; thence North41057'00' East 40.00 feet; thence North 48003'00" West 86.00 feet; thence South 41057'00"West 90.00 feet; thence South 48003'00" East 105.96 feet to the Westerly right-of-way ofMain Street extended; thence following said Westerly right-of-way extended, North 36030'30"East 45.88 feet; thence leaving said Document No. 89-42199 boundary, South 53029'30" Eastalong the boundary of Parcel 91, Volume209, Page 1, a distance of 796.37 feet to a pointwhich is 15.00 feet Westerly when measured at right angles to the centerline of the main tractof the Oregon and California Railroad Company (now Southern Pacific Railroad); thenceNortherly parallel with said centerline and 15.00 feet Westerly L79.OO feet to the Northerlyboundary of the Mill Reserve; thence South 54o35' East along said Mill Reserve Boundary to apoint which is Westerly 10.00 feet from said centerline; thence leaving the boundary of said PS

21487 as a basis of bearings and distances, Southerly parallel with said centerline and 10.00feet Westerly when measured at right angles to the Northerly boundary of the ArchibaldMcKinlay Donation Land Claim No. 60; thence Westerly following said claim line to a pointwhich is 20.00 feet Westerly when measured at right angles to said centerline; thence leavingsaid claim line and said Parcel 91 boundary, Southerly and parallel and 20.00 feet Westerlywhen measured at right angles to said centerline, to the Northerly boundary of Block 21, Platof CANEMAH; thence following the Northerly boundary of said Block 21, Westerly to the Westboundary of said Donation Land Claim No. 60; thence Northerly along the Westerly boundaryof said claim to the Northwest corner of said claim; thence Easterly following the Northboundary of said claim to the Ordinary Low Water Line on the right bank of the WillametteRiver; thence Northerly following the Ordinary Low Water Line of the right bank of theWillamette River to a line intersecting said Ordinary Low Water Line running South 00008'53"West from a point which is South 16010'59" West 235.99 feet from said "GPS STA B"; thenceNorth OOo08'53" East 144.80 feet to a point on the boundary of the property to be retained byPortland General Electric Company which is South 16o10'59" West 235.99 feet from said "GPS

STA B"; thence North 04052'47" West 176.01 feet to a point on said Portland General ElectricPreliminary Title ReportoRRQ 6/2005Page 3



lauritsen.m

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LEGAL DESCRIPTION OF MILL SITE:

lauritsen.m

Sticky Note

Accepted set by lauritsen.m

Preliminary Title Report 2nd Revision Order No.: 32F00O223O

Boundary; thence North 19054'18" West 276 feet to the Ordinary Low Water Line on the rightbank of the Willamette River; thence following said Ordinary Low Water Line Northeasterly tothe intersection of the South boundary of said Parcel 16, Document No. 87-4OO4B; thenceSouth 53029'30'East per said Davis and Pike Survey to the point of beginning.

FURTHER EXCEPTING THEREFROM the following described property:

Commencing at said David Evans and Associates, Inc. 3-1/4-inch brass disk stamped "GPSSTA B WILL-DAM"; thence North LTotO'4S" East 329.77 feet to said David Evans andAssociates,Inc.3-L/4-inch brass disk stamped "GPS STA A WILL-DAM"; thence South62012'51" East292.15 feet to a 1-inch brass cap stamped "DEA INC.", set in a concrete walland the point of beginning; thence North 52047'03" West277.9B feet; thence South l7oLO'45"West 550.00 feet; thence South 38007'51" West 60.00 feet; thence North 04052'47" West776.0L feet; thence South 72049'15" East 30.00 feet; thence North 77otO'45" East 534.40feet; thence South 52o47'O3" East 363.42 feet; thence South 37072'57" West 65.00 feet to thepoint of beginning.

FURTHER EXCEPTING THEREFROM that portion of Government Lot 11, also known asABERNATHY ISLAND lying in Section 31, Township 2 South, Range 2 East of the WillametteMeridian.

PARCEL XIV:

Lot B, Block 3, OREGON CITY, in the City of Oregon City, County of Clackamas and State ofOregon.

TOGETHER WITH that portion of vacated Water Street inuring thereto by reason of vacatingOrdinance No. 1918, recorded January tO, 1979, as Recorder's Fee No.79-001179.

PARCEL XV:

All that property in the Oregon City Donation Land Claim, bounded as follows:

The Northwesterly line of Water Street, the Southwesterly line of Fourth Street and extendedNorthwesterly, the Northeasterly line of Fifth Street extended Northwesterly and the low waterline of the Easterly right bank of the Willamette River.

PARCEL XVI:

Part of Lot7, Block 3, OREGON CITY, in the City of Oregon City, County of Clackamas andState of Oregon, described as follows:

Beginning at the most Northerly corner of Lot 7, Block 3, OREGON CITY; thence Southwesterlyalong the Northwesterly line of said Lot 7, a distance of 34,90 feet; thence at right angles tothe last named course, Southeasterly 72.70 feet; thence at right angles to the last namedcourse Northeasterly,34.9O feet; thence Northwesterly 72.70 feet to the place of beginning.

PARCEL XVII:

Part of Lot7, Block 3, OREGON CITY, in the City of Oregon City, County of Clackamas andState of Oregon, more particularly described as follows:

Beginning at the most Westerly corner of said lot on Water Street; thence Southeasterly alongthe Southerly line of said lot, 72.70 feet; thence Northeasterly, parallel to Water Street, 34.80





PARCEL XXI:

Lots 5 and 6, Block 3, OREGON CITY, in the City of Oregon City, County of Clackamas andState of Oregon.

TOGETHER WITH that portion of vacated water Street described in Vacation Ordinance No.1531, recorded June 25, 1963, in Book 623, Page 688, Deed Records.

ALSO TOGETHER WITH that portion of vacated alley running East and West through Block 3,which inures thereto by reason of Vacation Ordinance No. 1918, recorded January 10, 1979, asRecorder's Fee No. 79-OOL779.

PARCEL XXII:

Part of Lots 3 and 4, Block 3, OREGON CITY, in the City of Oregon City, County of Clackamasand State of Oregon, more particularly described as follows:

Commencing at a point in the Northwesterly line of Main Street, which is 33 feet Northeasterlyfrom the most Southerly corner of Lot 4, Block 3, OREGON CITY; thence Northeasterly alongthe Northwesterly line of Main Street, a distance of 4t feet to the most Southerly corner ofthat tract of land conveyed to T.L. Charman and E.E. Charman, by Deed recorded February 23,1883, in Book "V", Page 197, Deed Records; thence Northwesterly parallel to the Northeasterlyline of Fourth Street, a distance of 105 feet to the Northwesterly line of Lot 3 of said Block 3;thence Southwesterly along the Northwesterly lines of Lots 3 and 4, a distance of 17 feet to apoint which is 57 feet Northeasterly from the most Westerly corner of Lot 4 of said Block 3;thence Southeasterly parallel to the Northeasterly line of Fourth Street, a distance of 55 feet;thence Southwesterly parallel to the Northwesterly line of Main Street, a distance of 24 feet;thence Southeasterly parallel to the Northeasterly line of Fourth Avenue, a distance of 50 feetto the place of beginning.

ALSO that portion of vacated Main Street which inures thereto, by reason of VacationOrdinance No. 1531, recorded June 25, 1963, in Book 623, Page 688.

PARCEL XXIII:

Part of Lot 4, Block 3, OREGON CITY, in the City of Oregon City, County of Clackamas andState of Oregon, more particularly described as follows:

Beginning at the most Southerly corner of said Lot 4; thence Northeasterly along theNorthwesterly line of Main Street, a distance of 33 feet; thence Northwesterly parallel to theNortheasterly line of Fourth Street, a distance of 50 feet; thence Northeasterly and parallel tothe Northwesterly line of Main Street, a distance of 24 feet; thence Northwesterly and parallelwith the Northeasterly line of Fourth Street, a distance of 55 feet to the Northwesterly line ofLot 4; thence Southwesterly along said Northwesterly line of Lot 4, a distance of 57 feet to themost Westerly corner of Lot 4; thence Southeasterly along the Northeasterly line of FourthStreet, a distance of 105 feet to the place of beginning.

TOGETHER WITH that portion of vacated Main Street which inures thereto, by reason ofVacation Ordinance No. 1531, recorded June 25, 1953, in Book 623, Page 688.

PARCEL XXIV:

The following described portions of Main Street and Fourth Street, as vacated by Ordinance

Preliminary Title ReportoRRQ 6/2005Page 6




No. 1458, recorded May 26, 1959 in Book 555, Page 839, OREGON CITY, in the City of OregonCity, County of Clackamas and State of Oregon, to wit:

Beginning at the most Southerly corner of said Block 1, said plat; thence Northeasterly alongthe Northwesterly line of Main Street to the Northeasterly corner of Block 2; thenceNorthwesterly along the Northeasterly boundary of Block 2 to the most Northerly corner of saidBlock 2; thence Northeasterly along the Northeasterly extension of the Northwesterly line ofBlock 2 to the most Westerly corner of Block 3; thence Southeasterly along the Southwesterlyboundary of Block 3 and the Southeasterly extension thereof to the Southeasterly line of MainStreet, said plat; thence Southwesterly along the Southeasterly line of Main Street to theintersection of said Southeasterly line with the Southeasterly extension of the Southwesterlyline of said Block; thence Northwesterly to the place of beginning, all within the corporatelimits of said city.

TOGETHER WITH that portion of vacated Water Street inuring thereto by reason of VacationOrder No. 1531, recorded June 25, 1963, in Book 623, Page 688.

PARCEL XXV:

A tract of land in OREGON CITY, in the City of Oregon City, County of Clackamas and State ofOregon, described as follows:

Commencing at the most Westerly corner of Block 2, OREGON CITY; thence Northwesterly ona Northwesterly extension of the Southwesterly line of Block 2, to the low water mark of theWillamette River; thence Northerly along the low water mark of the river to a point ofintersection with the Northwesterly extension of the Northeasterly line of Block 2; thenceSoutheasterly along said Northwesterly extension of the Northeasterly line of Block 2, to themost Northerly corner of Block 2; thence Southwesterly along the Northwesterly line of Block2, to the place of beginning.

TOGETHER WITH that portion of vacated Third Street and Water Street which inures thereto byVacation Ordinance No. 82, recorded November 23, 1955.

TOGETHER WITH those portions of vacated Water Street which inures thereto by reason ofVacation Ordinance No. 1391, recorded February 6, 1953, in Book 465, Page249.

PARCEL XXVI:

All of Block 2, OREGON CITY, in the City of Oregon City, County of Clackamas and State ofOregon.

TOGETHER WITH all of the vacated alley in Block 2, which inures thereto by reason of VacationOrdinance No. 740, recorded November 23, L955, in Book 504, Page 223.

ALSO TOGETHER WITH any portions of vacated Water Street which inures thereto by reason ofVacation Ordinance No. 82, recorded November 23, 1955 and Vacation Ordinance No. 1391,recorded February 6, 1953, in Book 465, Page 249.

PARCEL XXVII:

That portion of vacated Third Street lying Westerly of the Northwest line of Main Street in theplat of OREGON CITY, disclosed by Ordinance No. 1420, in the City of Oregon City, County ofClackamas and State of Oregon.




Preliminary Title Report 2nd Revision Order No.: 32F00O2230

PARCEL XXVIII:

Lots 1, 2,3,6,7 and B, and the North one-half of Lots 4 and 5, Block 1, OREGON CITY, in theCity of Oregon City, County of Clackamas and State of Oregon.

TOGETHER WITH that portion of a vacated alley which inured thereto by Ordinance No. 96,recorded November 23, 1955 in Book 5O4, Page 22L.

ALSO TOGETHER WITH that portion of vacated Water Street which inures thereto by reason ofOrdinance No. 82, recorded November 23, !955, in Book 504, Page 2L9.

PARCEL XXIX:

A part of the Oregon City Claim, in the City of Oregon City, County of Clackamas and State ofOregon, described as follows:

Beginning at a point 300 feet West of the intersection of the South line of Third Street inOregon City with the center line of Main Street; thence Southerly on the West line of WaterStreet, 286.40 feet to the North line of Second Street extended Westerly; thence Westerly onsaid North line to the low water mark of the Willamette River; thence downstream with themeanders thereof to the South line of Third Street; thence Easterly on said South line to theplace of beginning.

TOGETHER WITH those portions of vacated 3rd Street and Water Street which inured theretoby reason of vacation by Ordinance No. 82, recorded November 23, 1955, in Book 504, Page279.

PARCEL XXX:

A portion of Lots 4 and 5, Block 1, OREGON CIW, and a portion of the Oregon City Claim, inSection 31, Township 2 South, Range 2 East of the Willamette Meridian, in the City of OregonCity, County of Clackamas and State of Oregon, described as follows:

Beginning at a point on the Northwesterly line of vacated Main Street 99 feet Southwesterlyfrom the Southeast corner of the vacated alley in said Block 1; thence Southwesterly along theNorthwesterly line of vacated Main Street and its Southwesterly extension 93 feet; thenceNorthwesterly at right angles to Main Street 70 feet; thence Northwesterly in a straight lineL67.75 feet, more or less, to the most Westerly corner of the North one-half of Lot 5, Block 1,OREGON CIW; thence Southeasterly along the Southwesterly line of the North halves of Lots 4and 5, Block 1, OREGON CITY, 210 feet to the place of beginning.

PARCEL XXXI:

A parcel of land located in Section 31, Township 2 South, Range 2 East of the WillametteMeridian, in the County of Clackamas and State of Oregon, described as follows:

Beginning at the most Southerly corner of Parcel II in that certain tract described in Deed fromOregon City Manufacturing Company, a corporation, to Publishers' Paper Co., a corporation,dated September 27,1954, recorded September 29, L954, in Book 486, Page 614, DeedRecords; thence South 36030'30' West along the Southwesterly extension of the Northwestline of Main Street, a distance of 148.31 feet to the true place of beginning of that tract beingherein described; thence North 48003'00" West, a distance of 15.20 feet; thence North41057'00' East, a distance of 40.00 feet; thence North 48003'00" West, a distance of 86.00feet; thence South 41057'00" West, a distance of 90.00 feet; thence South 48003'00" East, a





distance of 86.00 feet; thence South 48o03'OO" East, a distance of 19.95 feet to said extendedNorthwest line of Main Street; thence along said extended Northwest line North 36030'30'East, a distance of 45,88 feet; thence continuing along said extended Northwest line North36030'30' East, a distance of 4.35 feet to the true place of beginning.

EXCEPT that portion of the property described in the boundary line agreement recorded asDocument No. 89-042199 between Smurfit Newsprint Corporation and Portland GeneralElectric Company which falls within the boundary of the following described property:

Commencing at the Southwest corner of said Section 31; thence North 32030'13" East3001.82 feet to a David Evans and Associates, Inc, 3-1l4-inch brass disk stamped "GpS STA BWILL-DAM" set in the roadway on top of Portland General Electric Company's dam on the rightbank of the Willamette River; thence North l7o7}'45" East 329.77 feet to a David Evans andAssociates, Inc. 3-t/4-inch brass disk stamped "GPS STA A WILL-DAM"; thence South62o72'5t" East292.15 feet to a 1-inch brass cap stamped "DEA INC.", set in a concrete walland the point of beginning; thence North 52o47'O3" West277.98 feet; thence South tTot}'4'"West 550.00 feet; thence South 38007'51' West 60.00 feet; thence North 04052'47" West176.01 feet; thence South 72049'75" East 30.00 feet; thence North 17o10'45" East 534.40feet; thence South 52047'03" East 363.42 feet; thence South 37012'57" West 65.00 feet to thepoint of beginning.

PARCEL XXXII:

A tract of land situate in Section 31, Township 2 South, Range 2 East of the WillametteMeridian, in the County of Clackamas and State of Oregon, being a part of which is known asMILL RESERVE, and more particularly described as follows, to-wit:

Beginning at a point in Oregon City, in said county and state, where the Northerly boundaryline of MILL RESERVE, in said town, intersects the Easterly line of Main Street extendedSoutherly; thence Southerly along said Easterly line of Main Street extended 175 feet; thenceNorth 53"38-L/2'West, a distance of 64.0 feet; thence North parallel with the Easterly line ofthe tract of land herein described, 773.76 feet to the said Northerly boundary line of MILLRESERVE; thence Southeasterly along said boundary line 64 feet, more or less, to the place ofbeg i nni ng.

PARCEL XXXIII:

A tract of land in Section 3, Township 2 South, Range 2 East of the Willamette Meridian, beinga part of what is known as MILL RESERVE, more particularly described as follows:

Commencing at a point in the East line of Main Street in said Oregon City at the Northwestcorner of a parcel of land known and designated as the MILL RESERVE, (shown on taxassessor's maps as "North line of MILL RESERVE") the same being also the corner of a lot ofland owned by the heirs of Daniel Harvey, deceased, and running thence in a straight linealong the said East line of said Main Street, Southerly L75 feet to the true point of beginningof the tract to be described; thence at right angles with the East line of Main Street Easterly toa point within 15 feet West of the center of the Portland Railway Company's Tract; thenceNortherly on a line parallel with the center of said railroad tract and 15 feet distant therefrom,125 feet, more or less, to a point 50 feet from said lands belonging, or formerly belonging tothe heirs of said Daniel Harvey, deceased, and within 50 feet of the Northern boundary of saidMILL RESERVE; thence Westerly at right angles with said Main Street to a point in the East lineof Main Street; thence South along the East line of Main Street to the true place of beginning.The same being a parcel of land 125 feet front on Main Street and extending back to within 15feet of the center of said railroad tract.





EXCEPTTHEREFROM any portion described as Parcel XIV in Document recorded April 25, L949,in Book 418, Page 408.

PARCEL XXXIV:

A tract of land in Section 31, Township 2 South, Range 1 East of the Willamette Meridian, inthe City of Oregon City, County of Clackamas and State of Oregon, more particularly describedas follows:

Beginning at a point of intersection of the Southerly line of Block 29, in OREGON CITY, in theCity of Oregon City, County of Clackamas and State of Oregon, and a line parallel with theEasterly line of Main Street, and 78.3 feet Easterly thereof and running thence Southerly,parallel with the Easterly line of Main Street72.5 feet to the Southerly side of the foundationof the former filter building; thence Westerly along the Southerly line of the foundation of saidfilter building, 18.3 feet to a point; thence Southerly on a line parallel with the Easterly line ofMain Street, 10 feet; thence Easterly on a line parallel with the Southerly line of said Block 29to the Southeast corner of said tract belonging to the city (recorded December 3, 1901, inBook 78, Page 390); thence Northeasterly along the Easterly line of said tract to theintersection of the Southerly line of said Block 29; thence Westerly on the Southerly line ofBlock 29 to the place of beginning.

PARCEL XXXV:

A tract of land being in Section 31, Township 2 South, Range 2 East of the WillametteMeridian, in the City of Oregon City, County of Clackamas and State of Oregon, and being aportion of Lot 5, PLAT OF OREGON CITY, and known as a portion of the MILL RESERVE.

Beginning at a point 47 .5 feet Northerly from the most Westerly corner of Lot 5, Block 28,OREGON CITY, in the City of Oregon City, County of Clackamas and State of Oregon, on theEasterly line of Main Street; thence Southerly on the Easterly line of Main Street, 150 feet;thence Easterly at right angles, 60 feet; thence Northerly at right angles, 31 feet; thenceEasterly at right angles 18.3 feet; thence Northerly at right angles 119 feet; thence Westerlyat right angles 78.3 feet to the place of beginning.

PARCEL XXXVI:

All of Block 29, OREGON CIry, in the City of Oregon City, County of Clackamas and State ofOregon.

TOGETHER WITH vacated alley running Easterly and Westerly through said block, lyingWesterly of the Westerly line of Southern Pacific Railroad right of way (formerly Oregon andCalifornia Railroad right of way), by Ordinance No. 440, recorded November23, 1955, in Book504, Page 222.

TOGETHER WITH that portion of vacated Third Street which inured thereto by reason ofVacation Ordinance No. 978, recorded November 23, 1955, in Book 5O4, Page 226.

EXCEPTING THEREFROM a portion of Lot 5, described as follows:

Beginning at the most Westerly corner of said Lot 5; thence Northerly along Main Street47.5feet; thence Easterly at right angles 78.3 feet; thence Southerly at right angles 47.5 feet;thence Westerly at right angles 78.3 feet to the place of beginning.




Preliminary Title Report 2nd Revision Order No.: 32F000223O

AND ALSO EXCEPTING THEREFROM that portion of Lots 1 and 2 described as follows:

Beginning at a point in the Northerly line of Block 29 of the original Town of OREGON CITv,Oregon, distant 202.21feet Easterly along said Northerly line from its intersection with thecenter line of Main Street; thence Easterly on said Northerly line 15.79 feet to a point on theOregon and California Railroad Company's Westerly right of way line; thence Southerly alongsaid right of way line 138.62 feet, more or less, to its intersection with the Southerly line ofLot 2, Block 29; thence Westerly along said Southerly line 15.79 feet, more or less, to a pointdistant Easterly along said lot line 191.86 feet from the center line of Main Street, which pointis distant 22,5 feet Westerly at right angles from the center line of Oregon and CaliforniaRailroad Company's main tract, as now constructed; thence Easterly parallel to said center lineand 22.5 feet distant Westerly therefrom, L38.62 feet to the point of beginning.

PARCEL XXXVII:

All of Block 28, OREGON CITY, in the City of Oregon City, County of Clackamas and State ofOregon.

TOGETHER WITH the vacated alley running Easterly and Westerly through said block lyingWesterly of the Southern Pacific Railroad Company right of way (formerly Oregon andCalifornia Railroad Company right of way) by Ordinance No. 776, recorded November 23,1955, in Book 5O4, Page 224.

TOGETHER WITH that portion of vacated Fourth Street inuring thereto by reason of VacationOrdinance No.797, recorded November 23, 1955 in Book 504, Page 225, and that portion ofThird Street which inured thereto by Vacation Ordinance No. 978, recorded November 23,1955, in Book 504, Page 226.

EXCEPT the Easterly B feet of Lots 1 and 2, conveyed to the Oregon and California RailroadCompany by Deed from H.L.L. Clark, recorded May 6, t9O7, in Book 99, Page 196, DeedRecords, Deed from Alonso L. Richardson, recorded May 6, 1906, in Book 99, Page 197, DeedRecords, and Deed from W.L. Block, recorded November 7,1906, in Book 97, Page 218, DeedRecords.

AND EXCEPT that part of Lots 3 and 4, claimed by the Southern Pacific Railroad Company,(formerly the Oregon and California Railroad Company) by Deeds from Daniel F. Leahy andwife, recorded May 3, t876, in Book "M", Page 98, Deed Records, and recorded July 20, 1891,in Book 44, Page 66, Deed Records.

AND EXCEPT that part of Lots 1, 2 and 3, conveyed by Hawley Pulp and Paper Company to theOregon and California Railroad Company by Deed recorded May 9, 1976, in Book 142, Page620, Deed Records.

PARCEL XXXVIII:

All of Lots 3, 4, 5 and 6, Block 27, OREGON CITY, in the City of Oregon City, County ofClackamas and State of Oregon.

TOGETHER WITH that a portion of vacated Fourth Street inuring thereto by reason of VacationOrdinance No.797, recorded November 23, L955, in Book 504, Page 225, and vacated MainStreet inuring thereto by reason of Vacation Ordinance No. 1531, recorded June 25, 1963, inBook 623, Page 5BB.

EXCEPT that part of Lots 3 and 4 conveyed to the Oregon and California Railroad Company by





Deed recorded May 3, L876, in Book "M", Page 98 and in Deed recorded May 9, 1916, in Book142, Page 623, Deed Records, and described as follows:

Beginning at a point in the Southerly line of Block 27, which is 229.26 feet distant Easterly onsaid Southerly line from its intersection with the center line of Main Street; thence Northerlyparallel to the center line of the Oregon California Railroad Company's main tract (as it existedin 1916) and 26 feet distant Westerly therefrom 130.8 feet to a point in the Northerly line ofLot 3 in said Block 27; thence Easterly on said Northerly line 2.3 feet to the Northeast cornerof Lot 3 in said block; thence Southerly on the Easterly line of Block 27, a distance of t39.4feet to the Southeasterly corner of Block 27; thence Westerly on the Southerly line of Block27, a distance of L2.74 feet to the place of beginning.

PARCEL XXXIX:

Beginning at the most Westerly corner of Block 29, OREGON CITY, in the City of Oregon City,County of Clackamas and State of Oregon; thence Southerly along an extension of theSoutheasterly boundary of Main Street, now vacated, to the Northerly line of the Mill Reserve;thence Northwesterly along said Mill Reserve line 64 feet, more or less, to a point on theSouthwesterly extension of the Northwesterly boundary of Main Street, now vacated; thenceEasterly along said extension of Main Street to the most Southerly corner of Block 1, OREGONCITY; thence Southeasterly along the Southerly terminus of Main Street, now vacated, 64 feetto the point of beginning.

PARCEL XL:

That portion of vacated Water Street, as described in Vacation Ordinance No. 1918, recordedJanuary L0, 1979, as Recorder's Fee No. 79-001L79, lying Southwesterly of the Northwesterlyextension of the Southwest line of Lot B, Block 3, OREGON CITY, in the City of Oregon City,County of Clackamas and State of Oregon.




Page 1 - BID PROCEDURES FOR SALE OF DEBTOR’S REAL PROPERTY FREE AND CLEAR OF LIENS

::ODMA\PCDOCS\PORTLAND\900847\2

BALL JANIK LLP One Main Place 101 Southwest Main Street, Suite 1100 Portland, Oregon 97204-3219 Telephone 503-228-2525





In re


Debtor.


BID PROCEDURES FOR SALE OF DEBTOR’S REAL PROPERTY FREE AND CLEAR OF LIENS

These Bid Procedures have been approved by order of the United States Bankruptcy Court for the District of Oregon (the "Court") in connection with the above captioned bankruptcy case of Blue Heron Paper Company ("Debtor") (the "Bid Procedures Order"). These Bid Procedures set forth the process by which Peter C. McKittrick, Chapter 7 Trustee in the above-captioned case (the “Trustee”), is authorized to conduct the sale (the "Sale") by auction (the "Auction") of certain real property commonly known as Willamette Falls Redevelopment Site: 419/427 Main Street (including the former Blue Heron Paper Mill), Oregon City, Oregon, including any personal property remaining after completion of the NRI Salvage Operations, and all rights and benefits appurtenant to, or associated with, such real property (including, but not limited to, all entitlements, permits, approvals, easements, water and mineral rights) (the “Property”). These Bid Procedures also set forth the terms by which prospective bidders may qualify for and participate in the Auction, thereby competing to make the highest or otherwise best offer for the Property.






A. Stalking Horse Bidder On June 21, 2013, the Trustee and Eclipse Development Group, LLC ("Eclipse") entered into a Purchase and Sale Agreement (the "PSA") for the acquisition of the Property. Among other things, Eclipse agreed that it would pay a purchase price in an amount equal to $4,100,000 (the "Purchase Price") for the Property, subject to overbids and the entry of an order of the Court (the “Sale Order”) approving the Sale of the Property free and clear of all liens. The Trustee agreed to pay to Eclipse a break-up fee of Eclipse’s reasonable out-of-pocket expenses up to $250,000 (the “Break-Up Fee”) in the event that the Court approves, and the Trustee consummates, the acquisition of the Property by any person other than Eclipse. A copy of the PSA may be obtained by contacting counsel for the Trustee, Mathew W. Lauritsen. B. Participation Requirements To participate in the bidding process and to obtain access to due diligence materials, a person (other than Eclipse) interested in purchasing the Property (a "Potential Bidder") must deliver (unless previously delivered) to both the Trustee and counsel for the Trustee the following (the “Preliminary Bid Documents”):

(a) An executed confidentiality agreement in form and substance acceptable to the Trustee and the Trustee’s counsel;

(b) Preliminary written proof by the Potential Bidder of its financial capacity to close

the proposed transaction, including, but not limited to, its ability to satisfy the standards to provide adequate assurance of future performance of any contracts and leases to be assumed and assigned under section 365 of the Bankruptcy Code, which may include current unaudited or verified financial statements of, or verified financial commitments (i.e., banking or capital references) obtained by, the Potential Bidder (or, if the Potential Bidder is an entity formed for the purpose of acquiring the property to be sold, the party that will bear liability for a breach), the adequacy of which must be deemed satisfactory to the Trustee in the Trustee’s business judgment.

As soon as practicable, and in any event within two business days after a Potential Bidder delivers the Preliminary Bid Documents, the Trustee shall determine and notify the Potential Bidder whether such Potential Bidder has submitted acceptable Preliminary Bid Documents. The Trustee will work with Potential Bidders during the two business-day period (as it may be extended by the Trustee) to attempt to correct or cure any deficiencies in any Preliminary Bid Documents. Only those Potential Bidders whose Preliminary Bid Documents have been deemed acceptable at the end of such two business-day period, as it may be extended by the Trustee (each "Acceptable Bidder") may conduct a due diligence review with respect to the Property or submit bids to acquire the Property. Eclipse is deemed an Acceptable Bidder.






C. Obtaining Due Diligence Access After receipt of an executed confidentiality agreement and notification of Acceptable Bidder status, the Trustee will provide each Acceptable Bidder reasonable due diligence information, as requested, including access to any electronic data room, as soon as reasonably practicable after such request.

D. Bid Requirements Any Acceptable Bidder that is interested in being a participant in the Auction and acquiring the Property (each a "Bidder") must submit a "Bid" as provided herein prior to 5:00 p.m. Pacific time on August 21, 2013 (the "Bid Deadline"). Any such Bid must:

(1) Identify the bidder, i.e., including any party for whom it may be bidding with or on behalf of and whether the bidder is a party to any agreement limiting the bidders at the Auction and any relation of such parties to the Debtor or the Trustee.

(2) Contain (a) a signed definitive asset purchase agreement in substantially the form of the

PSA (a “Competing Purchase Agreement”) and (b) a comparison of such Competing Purchase Agreement to the PSA, showing all the differences between the two. A Competing Purchase Agreement must: (i) be in form and substance satisfactory to the Trustee; (ii) clearly designate the intent to acquire the Property in its entirety; (iii) provide for a purchase price with respect to the Property in an amount that is at least equal to the Purchase Price, plus $300,000 ($4,400,000) (the "Initial Overbid Amount"); (iv) provide that the Bidder will forfeit the Sale Deposit (defined below), as liquidated damages if such purchaser defaults under the Competing Purchase Agreement; (v) not be subject to any (a) financing contingency; (b) contingency relating to the completion of unperformed due diligence; (c) contingency relating to the approval of the Bidder's board of directors or other internal approvals or consents; or (d) any conditions precedent to the Bidder's obligation to purchase the Property, other than Court approval of the Sale and performance of the Trustee’s obligations under the agreement; and (vi) not provide for the payment to the Bidder of any break-up fee, topping fee, expense reimbursement or other similar fee or arrangement.

(3) Include a deposit in the amount of $500,000 (the "Sale Deposit") in the form of either a

wire transfer to an account specified by the Trustee or a certified check. The Sale Deposit shall be held in escrow by the Trustee in a segregated account pending the closing of the Sale. The full amount of the Sale Deposit shall be forfeited as liquidated damages if such Bidder is the Successful Purchaser (defined below) and fails to close the transaction because of a breach or failure to perform on the part of the Successful Purchaser.

(4) To the extent not previously provided to the Trustee, be accompanied by evidence

satisfactory to the Trustee in the Trustee’s business judgment that the Bidder: is willing, authorized, capable and qualified financially, legally and otherwise, of performing all






obligations under its proposed Competing Purchase Agreement in the event it submits the Successful Bid (as hereinafter defined) at the Auction, including its ability to provide adequate assurances under the Bankruptcy Code.

(5) Be submitted to counsel for the Trustee so as to be received not later than the Bid

Deadline. Any Bid that meets all of the foregoing requirements, as determined by the Trustee in his good faith discretion, shall be considered a "Qualified Bid." Counsel for the Trustee shall, as soon as practicable, send a copy of each Qualified Bid received, if any, to the following parties: (i) Eclipse; (ii) counsel to the secured creditors, and (iii) counsel to each Bidder submitting a Qualified Bid (or if a Bidder does not have counsel, to the Bidder).

E. Evaluation of Qualified Bids Prior to the Auction, the Trustee shall evaluate the Qualified Bids and identify the Qualified Bid that is, in Trustee's business judgment, the highest or otherwise best bid (the "Starting Bid"). No later than 2:00 p.m. Pacific time on August 23, 2013, the Trustee shall notify Eclipse and all parties who have submitted Qualified Bids as to whether there will be an Auction, and if so, which Qualified Bid is the Starting Bid. F. No Qualified Bids If no Qualified Bids are received by the Bid Deadline, then the Auction will not occur and Eclipse will be deemed the Successful Purchaser. Subject to the terms of the PSA, the Trustee will immediately pursue entry of a Sale Order by the Court approving the PSA and authorizing the Sale of the Property to Eclipse. G. Auction In the event the Trustee determines that one or more Bids are Qualified Bids, then the Trustee will conduct the Auction on August 27. 2013, at 10 a.m. Pacific Time (the "Auction") with respect to the sale of the Property at the offices of Ball Janik LLP, 101 SW Main Street, Suite 1100, Portland, Oregon, or at such other location as may be designated by the Trustee. The Auction will be conducted in accordance with the following procedures (the "Auction Procedures"):

(1) The Qualified Bidders, including Eclipse, shall appear in person or through duly-authorized representatives at the Auction.

(2) Only Qualified Bidders, including Eclipse, shall be entitled to bid at the Auction. (3) Bidding at the Auction shall begin at the Starting Bid.






(4) Subsequent bids at the Auction, including any bids by Eclipse, shall be made in minimum increments of $50,000 or as otherwise agreed by the Bidders or as set by the Trustee.

(5) For purposes of determining Eclipse's bid amounts, Eclipse shall receive a credit

equal to the Break-Up Fee in each round of bidding. (6) All bidding will be open and transparent to all persons permitted to attend the

Auction. (7) The bidding may be transcribed by a certified court reporter to ensure an accurate

recording of the bidding at the Auction. (8) Each Qualified Bidder will be required to confirm on the record at the Auction

that it has not colluded with any other person with respect to the bidding or the Sale.

(9) The Auction shall be governed by such other procedures as may be announced by

the Trustee or his counsel from time to time at the Auction; provided that any such other procedures shall not be inconsistent with the Bid Procedures Order or any other order in the Debtor’s bankruptcy case.

H. Acceptance of the Successful Bid Upon the conclusion of the Auction (if the Auction is conducted), the Trustee, in the exercise of the Trustee’s reasonable, good-faith business judgment, shall identify the highest or otherwise best bid (the "Successful Bid"). The Qualified Bidder having submitted the Successful Bid will be deemed the "Successful Purchaser." The Successful Purchaser and the Trustee shall, as soon as commercially reasonable and practicable, complete and sign all agreements, contracts, instruments or other documents evidencing and containing the terms upon which the Successful Bid was made. The Trustee will present the results of the Auction to the Court at the Sale Hearing, at which certain findings will be sought from the Court regarding the Auction, including, among other things, that (1) the Auction was conducted, and the Successful Purchaser was selected, in accordance with these Bid Procedures, (2) the Auction was fair in substance and procedure, (3) the Successful Bid was a Qualified Bid, and (4) consummation of the Sale contemplated by the Successful Bid is in the best interests of the bankruptcy estate. If an Auction is held, the Trustee shall be deemed to have accepted a Qualified Bid only when (1) such bid is declared the Successful Bid at the Auction or by the Court, and (2) definitive documentation has been executed in respect thereof. Such acceptance is conditioned on approval by the Court of the Successful Bid and the entry of an Order approving such Successful Bid.






I. Bankruptcy Court Approval of Sale A hearing to consider approval of the Sale to the Successful Purchaser (or to approve the PSA if no Auction is held) (the "Sale Hearing") and seek entry of a Sale Order will take place within fourteen (14) days of the Auction, or at such other time as is announced at the Auction by the Trustee. The Sale Hearing will be held before the Honorable Randall L. Dunn, United States Bankruptcy Court for the District of Oregon, Courtroom No. 3, 1001 S.W. Fifth Avenue, Portland, Oregon. The Trustee and the Successful Purchaser, once the Successful Purchaser has been determined, shall each use their commercially reasonable efforts, and shall cooperate, assist and consult with each other, to secure the entry of a Sale Order in a form reasonably acceptable to the Trustee and the Successful Purchaser. The Sale Hearing may be continued to a later date by the Trustee by sending notice to all prospective bidders prior to, or making an announcement at, the Sale Hearing. No further notice of any such continuance will be required to be provided to any party. J. Designation of Back-Up Bidder Upon the conclusion of the Auction and the selection of the Successful Purchaser, the Trustee shall select the person submitting the next highest or otherwise best bid (the "Back-Up Bidder"). The bid of the Back-Up Bidder shall remain open until the second business day following the closing of the Sale to the Successful Purchaser. If for any reason the Successful Purchaser is unable or unwilling to consummate an approved Sale because of breach or failure to perform on the part of the Successful Purchaser, (1) it will forfeit its Sale Deposit to the Trustee as liquidated damages in lieu of any other damages with respect to such breach, and (2) the Back-Up Bidder shall be deemed to be the Successful Purchaser. The purchase price shall be the amount of such Back-Up Bidder's last bid, and the Trustee shall be authorized to effectuate the Sale to the Back-Up Bidder without further order of the Bankruptcy Court. K. Break-Up Fee At the closing of the Sale to the Successful Purchaser, if the Successful Purchaser is not Eclipse, the Trustee shall cause the closing agent to pay the Break-Up Fee to Eclipse by wire transfer in immediately available funds to an account designated by Eclipse. L. Return of Sale Deposit The Sale Deposit of the Successful Purchaser shall, upon consummation of the Sale, be credited to the purchase price paid by the Successful Purchaser. If the Successful Purchaser fails to consummate the Sale, then the full amount of the Sale Deposit shall be forfeited to, and be retained irrevocably by, the Trustee. The Sale Deposit of any unsuccessful Qualified Bidder will be returned to such unsuccessful Qualified Bidder within two business days after (1) the conclusion of the Auction (if the Bidder does not submit the Successful Bid and is not designated the Back-Up Bidder) or (2) consummation of the Sale (if the Bidder is designated the Back-Up Bidder).






M. Reservation of Rights to Modify Bid Procedures The Trustee reserves the right to modify these Bid Procedures in any manner that will best promote the goals of the bidding process and may impose, at or prior to the Auction, additional customary terms and conditions on the Sale, including, without limitation, extending the deadlines set forth in these Bid Procedures, adjourning the Auction at the Auction, and/or adjourning the Sale Hearing in open court without further notice.






Page 1 - NOTICE OF MOTION TO APPROVE 363 SALE OF DEBTOR’S REAL PROPERTY AND APPROVING BID AND SALE PROCEDURES






In re


Debtor.


NOTICE OF MOTION TO APPROVE SALE OF DEBTOR’S REAL PROPERTY

PLEASE TAKE NOTICE that Peter C. McKittrick, Chapter 7 Trustee in the above-captioned case (the “Trustee”), has moved to approve the sale of certain real property commonly known as Willamette Falls Redevelopment Site: 419/427 Main Street (including the former Blue Heron Paper Mill), Oregon City, Oregon, including any personal property remaining after completion of the NRI Salvage Operations, and all rights and benefits appurtenant to, or associated with, such real property (including, but not limited to, all entitlements, permits, approvals, easements, water and mineral rights) (the “Property”) to Eclipse Development Group LLC (“Eclipse”), if there are no higher and better offers from qualified bidders. The sale to Eclipse is for the sum of $4,100,000 and would be pursuant to a Purchase and Sale Agreement (“PSA”) entered into between the Trustee and Eclipse. A copy of the PSA may be obtained by contacting the Trustee’s counsel.

PLEASE TAKE FURTHER NOTICE that the Trustee proposes to obtain an order providing and authorizing, inter alia, the following: (1) that the sale is free and clear of all liens, claims, interests, obligation, and encumbrances; and (2) that the PSA or any alternative successful bidder’s sale agreement was entered into in good faith, without collusion, and from arms' length bargaining positions.





PLEASE TAKE FURTHER NOTICE that the Court has entered an order authorizing the Trustee to hold an auction to sell the Property if an overbid is received. The auction, if one occurs, is scheduled for August 27, 2013 at 10 a.m. Pacific time at the offices of Ball Janik LLP, 101 SW Main Street, Suite 1100, Portland, Oregon. PLEASE TAKE FURTHER NOTICE that the Court entered an order approving bid procedures in connection with the sale and the auction. A copy of the Bid Procedures can be obtained from Trustee’s counsel. PLEASE TAKE FURTHER NOTICE that competing bidders are required to submit competing bids in the minimum amount of $4,400,000 and otherwise qualify as bidders in accordance with the approved bid procedures prior to August 21, 2013, at 5:00 p.m. Pacific time. PLEASE TAKE FURTHER NOTICE that, within 14 days after the Auction, or as soon as otherwise practicable, a hearing approving the sale will take place at the United States Bankruptcy Court for the District of Oregon, Courtroom 3, 1001 SW Fifth Avenue, Portland, Oregon. PLEASE TAKE FURTHER NOTICE that if you wish to object to the sale of the Property, you must, on or before August 21, 2013, file a written objection to the sale with the Clerk of the Court, United States Bankruptcy Court for the District of Oregon, 1001 SW Fifth Avenue, Seventh Floor, Portland, Oregon 97204. Copies of any of the pleadings or documents referenced herein may be obtained by contacting the Trustee’s counsel, Mathew W. Lauritsen (E-mail: [email protected]; telephone: 503-228-2525).






Exhibit A Page 1 of 10

LEGAL DESCRIPTION OF OFFICE SITE:



Exhibit A Page 2 of 10

LEGAL DESCRIPTION OF MILL SITE:



Exhibit A Page 3 of 10Exhibit 2

Page 27 of 43



Page 28 of 43



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Page 31 of 43



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Page 34 of 43




BALL JANIK LLPOne Main Place 101 Southwest Main Street, Suite 1100 Portland, Oregon 97204-3219 Telephone 503-228-2525

Brad T. Summers, OSB No. [email protected] W. Criswell, OSB No. 925930 [email protected] W. Lauritsen, OSB No. [email protected] JANIK LLP101 SW Main Street, Suite 1100 Portland, Oregon 97204-3219 Phone: 503-228-2525 Fax: 503-295-1058




In re


Debtor.



These Bid Procedures have been approved by order of the United States Bankruptcy Court for the District of Oregon (the "Court") in connection with the above captioned bankruptcy case of Blue Heron Paper Company ("Debtor") (the "Bid Procedures Order").

These Bid Procedures set forth the process by which Peter C. McKittrick, Chapter 7 Trustee in the above-captioned case (the “Trustee”), is authorized to conduct the sale (the "Sale") by auction (the "Auction") of certain real property commonly known as Willamette Falls Redevelopment Site: 419/427 Main Street (including the former Blue Heron Paper Mill), Oregon City, Oregon, including any personal property remaining after completion of the NRI Salvage Operations, and all rights and benefits appurtenant to, or associated with, such real property (including, but not limited to, all entitlements, permits, approvals, easements, water and mineral rights) (the “Property”). These Bid Procedures also set forth the terms by which prospective bidders may qualify for and participate in the Auction, thereby competing to make the highest or otherwise best offer for the Property.

Exhibit B Page 1 of 7






A. Stalking Horse Bidder

On June 21, 2013, the Trustee and Eclipse Development Group, LLC ("Eclipse") entered into a Purchase and Sale Agreement (the "PSA") for the acquisition of the Property. Among other things, Eclipse agreed that it would pay a purchase price in an amount equal to $4,100,000 (the "Purchase Price") for the Property, subject to overbids and the entry of an order of the Court (the “Sale Order”) approving the Sale of the Property free and clear of all liens. The Trustee agreed to pay to Eclipse a break-up fee of Eclipse’s reasonable out-of-pocket expenses up to $250,000 (the “Break-Up Fee”) in the event that the Court approves, and the Trustee consummates, the acquisition of the Property by any person other than Eclipse. A copy of the PSA may be obtained by contacting counsel for the Trustee, Mathew W. Lauritsen.

B. Participation Requirements

To participate in the bidding process and to obtain access to due diligence materials, a person (other than Eclipse) interested in purchasing the Property (a "Potential Bidder") must deliver (unless previously delivered) to both the Trustee and counsel for the Trustee the following (the “Preliminary Bid Documents”):


(b) Preliminary written proof by the Potential Bidder of its financial capacity to close the proposed transaction, including, but not limited to, its ability to satisfy the standards to provide adequate assurance of future performance of any contracts and leases to be assumed and assigned under section 365 of the Bankruptcy Code, which may include current unaudited or verified financial statements of, or verified financial commitments (i.e., banking or capital references) obtained by, the Potential Bidder (or, if the Potential Bidder is an entity formed for the purpose of acquiring the property to be sold, the party that will bear liability for a breach), the adequacy of which must be deemed satisfactory to the Trustee in the Trustee’s business judgment.








C. Obtaining Due Diligence Access

After receipt of an executed confidentiality agreement and notification of Acceptable Bidder status, the Trustee will provide each Acceptable Bidder reasonable due diligence information, as requested, including access to any electronic data room, as soon as reasonably practicable after such request.

D. Bid Requirements

Any Acceptable Bidder that is interested in being a participant in the Auction and acquiring the Property (each a "Bidder") must submit a "Bid" as provided herein prior to 5:00 p.m. Pacific time on August 21, 2013 (the "Bid Deadline"). Any such Bid must:


(2) Contain (a) a signed definitive asset purchase agreement in substantially the form of the PSA (a “Competing Purchase Agreement”) and (b) a comparison of such Competing Purchase Agreement to the PSA, showing all the differences between the two. A Competing Purchase Agreement must: (i) be in form and substance satisfactory to the Trustee; (ii) clearly designate the intent to acquire the Property in its entirety; (iii) provide for a purchase price with respect to the Property in an amount that is at least equal to the Purchase Price, plus $300,000 ($4,400,000) (the "Initial Overbid Amount"); (iv) provide that the Bidder will forfeit the Sale Deposit (defined below), as liquidated damages if such purchaser defaults under the Competing Purchase Agreement; (v) not be subject to any (a) financing contingency; (b) contingency relating to the completion of unperformed due diligence; (c) contingency relating to the approval of the Bidder's board of directors or other internal approvals or consents; or (d) any conditions precedent to the Bidder's obligation to purchase the Property, other than Court approval of the Sale and performance of the Trustee’s obligations under the agreement; and (vi) not provide for the payment to the Bidder of any break-up fee, topping fee, expense reimbursement or other similar fee or arrangement.

(3) Include a deposit in the amount of $500,000 (the "Sale Deposit") in the form of either a wire transfer to an account specified by the Trustee or a certified check. The Sale Deposit shall be held in escrow by the Trustee in a segregated account pending the closing of the Sale. The full amount of the Sale Deposit shall be forfeited as liquidated damages if such Bidder is the Successful Purchaser (defined below) and fails to close the transaction because of a breach or failure to perform on the part of the Successful Purchaser.

(4) To the extent not previously provided to the Trustee, be accompanied by evidence satisfactory to the Trustee in the Trustee’s business judgment that the Bidder: is willing, authorized, capable and qualified financially, legally and otherwise, of performing all








(5) Be submitted to counsel for the Trustee so as to be received not later than the Bid Deadline. Any Bid that meets all of the foregoing requirements, as determined by the Trustee in his good faith discretion, shall be considered a "Qualified Bid." Counsel for the Trustee shall, as soon as practicable, send a copy of each Qualified Bid received, if any, to the following parties: (i) Eclipse; (ii) counsel to the secured creditors, and (iii) counsel to each Bidder submitting a Qualified Bid (or if a Bidder does not have counsel, to the Bidder).

E. Evaluation of Qualified Bids

Prior to the Auction, the Trustee shall evaluate the Qualified Bids and identify the Qualified Bid that is, in Trustee's business judgment, the highest or otherwise best bid (the "Starting Bid"). No later than 2:00 p.m. Pacific time on August 23, 2013, the Trustee shall notify Eclipse and all parties who have submitted Qualified Bids as to whether there will be an Auction, and if so, which Qualified Bid is the Starting Bid.

F. No Qualified Bids

If no Qualified Bids are received by the Bid Deadline, then the Auction will not occur and Eclipse will be deemed the Successful Purchaser. Subject to the terms of the PSA, the Trustee will immediately pursue entry of a Sale Order by the Court approving the PSA and authorizing the Sale of the Property to Eclipse.

G. Auction

In the event the Trustee determines that one or more Bids are Qualified Bids, then the Trustee will conduct the Auction on August 27. 2013, at 10 a.m. Pacific Time (the"Auction") with respect to the sale of the Property at the offices of Ball Janik LLP, 101 SW Main Street, Suite 1100, Portland, Oregon, or at such other location as may be designated by the Trustee.

The Auction will be conducted in accordance with the following procedures (the "Auction Procedures"):


(2) Only Qualified Bidders, including Eclipse, shall be entitled to bid at the Auction.

(3) Bidding at the Auction shall begin at the Starting Bid.








(5) For purposes of determining Eclipse's bid amounts, Eclipse shall receive a credit equal to the Break-Up Fee in each round of bidding.

(6) All bidding will be open and transparent to all persons permitted to attend the Auction.

(7) The bidding may be transcribed by a certified court reporter to ensure an accurate recording of the bidding at the Auction.

(8) Each Qualified Bidder will be required to confirm on the record at the Auction that it has not colluded with any other person with respect to the bidding or the Sale.

(9) The Auction shall be governed by such other procedures as may be announced by the Trustee or his counsel from time to time at the Auction; provided that any such other procedures shall not be inconsistent with the Bid Procedures Order or any other order in the Debtor’s bankruptcy case.

H. Acceptance of the Successful Bid

Upon the conclusion of the Auction (if the Auction is conducted), the Trustee, in the exercise of the Trustee’s reasonable, good-faith business judgment, shall identify the highest or otherwise best bid (the "Successful Bid"). The Qualified Bidder having submitted the Successful Bid will be deemed the "Successful Purchaser." The Successful Purchaser and the Trustee shall, as soon as commercially reasonable and practicable, complete and sign all agreements, contracts, instruments or other documents evidencing and containing the terms upon which the Successful Bid was made. The Trustee will present the results of the Auction to the Court at the Sale Hearing, at which certain findings will be sought from the Court regarding the Auction, including, among other things, that (1) the Auction was conducted, and the Successful Purchaser was selected, in accordance with these Bid Procedures, (2) the Auction was fair in substance and procedure, (3) the Successful Bid was a Qualified Bid, and (4) consummation of the Sale contemplated by the Successful Bid is in the best interests of the bankruptcy estate.

If an Auction is held, the Trustee shall be deemed to have accepted a Qualified Bid only when (1) such bid is declared the Successful Bid at the Auction or by the Court, and (2) definitive documentation has been executed in respect thereof. Such acceptance is conditioned on approval by the Court of the Successful Bid and the entry of an Order approving such Successful Bid.







I. Bankruptcy Court Approval of Sale

A hearing to consider approval of the Sale to the Successful Purchaser (or to approve the PSA if no Auction is held) (the "Sale Hearing") and seek entry of a Sale Order will take place within fourteen (14) days of the Auction, or at such other time as is announced at the Auction by the Trustee. The Sale Hearing will be held before the Honorable Randall L. Dunn, United States Bankruptcy Court for the District of Oregon, Courtroom No. 3, 1001 S.W. Fifth Avenue, Portland, Oregon. The Trustee and the Successful Purchaser, once the Successful Purchaser has been determined, shall each use their commercially reasonable efforts, and shall cooperate, assist and consult with each other, to secure the entry of a Sale Order in a form reasonably acceptable to the Trustee and the Successful Purchaser.

The Sale Hearing may be continued to a later date by the Trustee by sending notice to all prospective bidders prior to, or making an announcement at, the Sale Hearing. No further notice of any such continuance will be required to be provided to any party.

J. Designation of Back-Up Bidder

Upon the conclusion of the Auction and the selection of the Successful Purchaser, the Trustee shall select the person submitting the next highest or otherwise best bid (the "Back-Up Bidder"). The bid of the Back-Up Bidder shall remain open until the second business day following the closing of the Sale to the Successful Purchaser. If for any reason the Successful Purchaser is unable or unwilling to consummate an approved Sale because of breach or failure to perform on the part of the Successful Purchaser, (1) it will forfeit its Sale Deposit to the Trustee as liquidated damages in lieu of any other damages with respect to such breach, and (2) the Back-Up Bidder shall be deemed to be the Successful Purchaser. The purchase price shall be the amount of such Back-Up Bidder's last bid, and the Trustee shall be authorized to effectuate the Sale to the Back-Up Bidder without further order of the Bankruptcy Court.

K. Break-Up Fee

At the closing of the Sale to the Successful Purchaser, if the Successful Purchaser is not Eclipse, the Trustee shall cause the closing agent to pay the Break-Up Fee to Eclipse by wire transfer in immediately available funds to an account designated by Eclipse.

L. Return of Sale Deposit

The Sale Deposit of the Successful Purchaser shall, upon consummation of the Sale, be credited to the purchase price paid by the Successful Purchaser. If the Successful Purchaser fails to consummate the Sale, then the full amount of the Sale Deposit shall be forfeited to, and be retained irrevocably by, the Trustee. The Sale Deposit of any unsuccessful Qualified Bidder will be returned to such unsuccessful Qualified Bidder within two business days after (1) the conclusion of the Auction (if the Bidder does not submit the Successful Bid and is not designated the Back-Up Bidder) or (2) consummation of the Sale (if the Bidder is designated the Back-Up Bidder).







M. Reservation of Rights to Modify Bid Procedures

The Trustee reserves the right to modify these Bid Procedures in any manner that will best promote the goals of the bidding process and may impose, at or prior to the Auction, additional customary terms and conditions on the Sale, including, without limitation, extending the deadlines set forth in these Bid Procedures, adjourning the Auction at the Auction, and/or adjourning the Sale Hearing in open court without further notice.


By: /s/ David W. Criswell David W. Criswell, OSB No. 925930 [email protected] SW Main Street, Suite 1100 Portland, OR 97204







Brad T. Summers, OSB No. [email protected] W. Criswell, OSB No. 925930 [email protected] W. Lauritsen, OSB No. [email protected] JANIK LLP101 SW Main Street, Suite 1100 Portland, Oregon 97204-3219 Phone: 503-228-2525 Fax: 503-295-1058




In re


Debtor.





Exhibit C Page 1 of 2





PLEASE TAKE FURTHER NOTICE that the Court has entered an order authorizing the Trustee to hold an auction to sell the Property if an overbid is received. The auction, if one occurs, is scheduled for August 27, 2013 at 10 a.m. Pacific time at the offices of Ball Janik LLP, 101 SW Main Street, Suite 1100, Portland, Oregon.

PLEASE TAKE FURTHER NOTICE that the Court entered an order approving bid procedures in connection with the sale and the auction. A copy of the Bid Procedures can be obtained from Trustee’s counsel.

PLEASE TAKE FURTHER NOTICE that competing bidders are required to submit competing bids in the minimum amount of $4,400,000 and otherwise qualify as bidders in accordance with the approved bid procedures prior to August 21, 2013, at 5:00 p.m. Pacific time.

PLEASE TAKE FURTHER NOTICE that, within 14 days after the Auction, or as soon as otherwise practicable, a hearing approving the sale will take place at the United States Bankruptcy Court for the District of Oregon, Courtroom 3, 1001 SW Fifth Avenue, Portland, Oregon.

PLEASE TAKE FURTHER NOTICE that if you wish to object to the sale of the Property, you must, on or before August 21, 2013, file a written objection to the sale with the Clerk of the Court, United States Bankruptcy Court for the District of Oregon, 1001 SW Fifth Avenue, Seventh Floor, Portland, Oregon 97204.

Copies of any of the pleadings or documents referenced herein may be obtained by contacting the Trustee’s counsel, Mathew W. Lauritsen (E-mail: [email protected]; telephone: 503-228-2525).


By: /s/ David W. Criswell David W. Criswell, OSB No. 925930 [email protected] SW Main Street, Suite 1100 Portland, OR 97204


Exhibit C Page 2 of 2










In re


Debtor.



These Bid Procedures have been approved by order of the United States Bankruptcy Court for the District of Oregon (the "Court") in connection with the above captioned bankruptcy case of Blue Heron Paper Company ("Debtor") (the "Bid Procedures Order"). These Bid Procedures set forth the process by which Peter C. McKittrick, Chapter 7 Trustee in the above-captioned case (the “Trustee”), is authorized to conduct the sale (the "Sale") by auction (the "Auction") of certain real property commonly known as Willamette Falls Redevelopment Site: 419/427 Main Street (including the former Blue Heron Paper Mill), Oregon City, Oregon, including any personal property remaining after completion of the NRI Salvage Operations, and all rights and benefits appurtenant to, or associated with, such real property (including, but not limited to, all entitlements, permits, approvals, easements, water and mineral rights) (the “Property”). These Bid Procedures also set forth the terms by which prospective bidders may qualify for and participate in the Auction, thereby competing to make the highest or otherwise best offer for the Property.






A. Stalking Horse Bidder On June 21, 2013, the Trustee and Eclipse Development Group, LLC ("Eclipse") entered into a Purchase and Sale Agreement (the "PSA") for the acquisition of the Property. Among other things, Eclipse agreed that it would pay a purchase price in an amount equal to $4,100,000 (the "Purchase Price") for the Property, subject to overbids and the entry of an order of the Court (the “Sale Order”) approving the Sale of the Property free and clear of all liens. The Trustee agreed to pay to Eclipse a break-up fee of Eclipse’s reasonable out-of-pocket expenses up to $250,000 (the “Break-Up Fee”) in the event that the Court approves, and the Trustee consummates, the acquisition of the Property by any person other than Eclipse. A copy of the PSA may be obtained by contacting counsel for the Trustee, Mathew W. Lauritsen. B. Participation Requirements To participate in the bidding process and to obtain access to due diligence materials, a person (other than Eclipse) interested in purchasing the Property (a "Potential Bidder") must deliver (unless previously delivered) to both the Trustee and counsel for the Trustee the following (the “Preliminary Bid Documents”):


(b) Preliminary written proof by the Potential Bidder of its financial capacity to close

the proposed transaction, including, but not limited to, its ability to satisfy the standards to provide adequate assurance of future performance of any contracts and leases to be assumed and assigned under section 365 of the Bankruptcy Code, which may include current unaudited or verified financial statements of, or verified financial commitments (i.e., banking or capital references) obtained by, the Potential Bidder (or, if the Potential Bidder is an entity formed for the purpose of acquiring the property to be sold, the party that will bear liability for a breach), the adequacy of which must be deemed satisfactory to the Trustee in the Trustee’s business judgment.







C. Obtaining Due Diligence Access After receipt of an executed confidentiality agreement and notification of Acceptable Bidder status, the Trustee will provide each Acceptable Bidder reasonable due diligence information, as requested, including access to any electronic data room, as soon as reasonably practicable after such request.

D. Bid Requirements Any Acceptable Bidder that is interested in being a participant in the Auction and acquiring the Property (each a "Bidder") must submit a "Bid" as provided herein prior to 5:00 p.m. Pacific time on August 21, 2013 (the "Bid Deadline"). Any such Bid must:


(2) Contain (a) a signed definitive asset purchase agreement in substantially the form of the

PSA (a “Competing Purchase Agreement”) and (b) a comparison of such Competing Purchase Agreement to the PSA, showing all the differences between the two. A Competing Purchase Agreement must: (i) be in form and substance satisfactory to the Trustee; (ii) clearly designate the intent to acquire the Property in its entirety; (iii) provide for a purchase price with respect to the Property in an amount that is at least equal to the Purchase Price, plus $300,000 ($4,400,000) (the "Initial Overbid Amount"); (iv) provide that the Bidder will forfeit the Sale Deposit (defined below), as liquidated damages if such purchaser defaults under the Competing Purchase Agreement; (v) not be subject to any (a) financing contingency; (b) contingency relating to the completion of unperformed due diligence; (c) contingency relating to the approval of the Bidder's board of directors or other internal approvals or consents; or (d) any conditions precedent to the Bidder's obligation to purchase the Property, other than Court approval of the Sale and performance of the Trustee’s obligations under the agreement; and (vi) not provide for the payment to the Bidder of any break-up fee, topping fee, expense reimbursement or other similar fee or arrangement.

(3) Include a deposit in the amount of $500,000 (the "Sale Deposit") in the form of either a

wire transfer to an account specified by the Trustee or a certified check. The Sale Deposit shall be held in escrow by the Trustee in a segregated account pending the closing of the Sale. The full amount of the Sale Deposit shall be forfeited as liquidated damages if such Bidder is the Successful Purchaser (defined below) and fails to close the transaction because of a breach or failure to perform on the part of the Successful Purchaser.

(4) To the extent not previously provided to the Trustee, be accompanied by evidence

satisfactory to the Trustee in the Trustee’s business judgment that the Bidder: is willing, authorized, capable and qualified financially, legally and otherwise, of performing all







(5) Be submitted to counsel for the Trustee so as to be received not later than the Bid

Deadline. Any Bid that meets all of the foregoing requirements, as determined by the Trustee in his good faith discretion, shall be considered a "Qualified Bid." Counsel for the Trustee shall, as soon as practicable, send a copy of each Qualified Bid received, if any, to the following parties: (i) Eclipse; (ii) counsel to the secured creditors, and (iii) counsel to each Bidder submitting a Qualified Bid (or if a Bidder does not have counsel, to the Bidder).

E. Evaluation of Qualified Bids Prior to the Auction, the Trustee shall evaluate the Qualified Bids and identify the Qualified Bid that is, in Trustee's business judgment, the highest or otherwise best bid (the "Starting Bid"). No later than 2:00 p.m. Pacific time on August 23, 2013, the Trustee shall notify Eclipse and all parties who have submitted Qualified Bids as to whether there will be an Auction, and if so, which Qualified Bid is the Starting Bid. F. No Qualified Bids If no Qualified Bids are received by the Bid Deadline, then the Auction will not occur and Eclipse will be deemed the Successful Purchaser. Subject to the terms of the PSA, the Trustee will immediately pursue entry of a Sale Order by the Court approving the PSA and authorizing the Sale of the Property to Eclipse. G. Auction In the event the Trustee determines that one or more Bids are Qualified Bids, then the Trustee will conduct the Auction on August 27. 2013, at 10 a.m. Pacific Time (the "Auction") with respect to the sale of the Property at the offices of Ball Janik LLP, 101 SW Main Street, Suite 1100, Portland, Oregon, or at such other location as may be designated by the Trustee. The Auction will be conducted in accordance with the following procedures (the "Auction Procedures"):


(2) Only Qualified Bidders, including Eclipse, shall be entitled to bid at the Auction. (3) Bidding at the Auction shall begin at the Starting Bid.







(5) For purposes of determining Eclipse's bid amounts, Eclipse shall receive a credit

equal to the Break-Up Fee in each round of bidding. (6) All bidding will be open and transparent to all persons permitted to attend the

Auction. (7) The bidding may be transcribed by a certified court reporter to ensure an accurate

recording of the bidding at the Auction. (8) Each Qualified Bidder will be required to confirm on the record at the Auction

that it has not colluded with any other person with respect to the bidding or the Sale.

(9) The Auction shall be governed by such other procedures as may be announced by

the Trustee or his counsel from time to time at the Auction; provided that any such other procedures shall not be inconsistent with the Bid Procedures Order or any other order in the Debtor’s bankruptcy case.

H. Acceptance of the Successful Bid Upon the conclusion of the Auction (if the Auction is conducted), the Trustee, in the exercise of the Trustee’s reasonable, good-faith business judgment, shall identify the highest or otherwise best bid (the "Successful Bid"). The Qualified Bidder having submitted the Successful Bid will be deemed the "Successful Purchaser." The Successful Purchaser and the Trustee shall, as soon as commercially reasonable and practicable, complete and sign all agreements, contracts, instruments or other documents evidencing and containing the terms upon which the Successful Bid was made. The Trustee will present the results of the Auction to the Court at the Sale Hearing, at which certain findings will be sought from the Court regarding the Auction, including, among other things, that (1) the Auction was conducted, and the Successful Purchaser was selected, in accordance with these Bid Procedures, (2) the Auction was fair in substance and procedure, (3) the Successful Bid was a Qualified Bid, and (4) consummation of the Sale contemplated by the Successful Bid is in the best interests of the bankruptcy estate. If an Auction is held, the Trustee shall be deemed to have accepted a Qualified Bid only when (1) such bid is declared the Successful Bid at the Auction or by the Court, and (2) definitive documentation has been executed in respect thereof. Such acceptance is conditioned on approval by the Court of the Successful Bid and the entry of an Order approving such Successful Bid.






I. Bankruptcy Court Approval of Sale A hearing to consider approval of the Sale to the Successful Purchaser (or to approve the PSA if no Auction is held) (the "Sale Hearing") and seek entry of a Sale Order will take place within fourteen (14) days of the Auction, or at such other time as is announced at the Auction by the Trustee. The Sale Hearing will be held before the Honorable Randall L. Dunn, United States Bankruptcy Court for the District of Oregon, Courtroom No. 3, 1001 S.W. Fifth Avenue, Portland, Oregon. The Trustee and the Successful Purchaser, once the Successful Purchaser has been determined, shall each use their commercially reasonable efforts, and shall cooperate, assist and consult with each other, to secure the entry of a Sale Order in a form reasonably acceptable to the Trustee and the Successful Purchaser. The Sale Hearing may be continued to a later date by the Trustee by sending notice to all prospective bidders prior to, or making an announcement at, the Sale Hearing. No further notice of any such continuance will be required to be provided to any party. J. Designation of Back-Up Bidder Upon the conclusion of the Auction and the selection of the Successful Purchaser, the Trustee shall select the person submitting the next highest or otherwise best bid (the "Back-Up Bidder"). The bid of the Back-Up Bidder shall remain open until the second business day following the closing of the Sale to the Successful Purchaser. If for any reason the Successful Purchaser is unable or unwilling to consummate an approved Sale because of breach or failure to perform on the part of the Successful Purchaser, (1) it will forfeit its Sale Deposit to the Trustee as liquidated damages in lieu of any other damages with respect to such breach, and (2) the Back-Up Bidder shall be deemed to be the Successful Purchaser. The purchase price shall be the amount of such Back-Up Bidder's last bid, and the Trustee shall be authorized to effectuate the Sale to the Back-Up Bidder without further order of the Bankruptcy Court. K. Break-Up Fee At the closing of the Sale to the Successful Purchaser, if the Successful Purchaser is not Eclipse, the Trustee shall cause the closing agent to pay the Break-Up Fee to Eclipse by wire transfer in immediately available funds to an account designated by Eclipse. L. Return of Sale Deposit The Sale Deposit of the Successful Purchaser shall, upon consummation of the Sale, be credited to the purchase price paid by the Successful Purchaser. If the Successful Purchaser fails to consummate the Sale, then the full amount of the Sale Deposit shall be forfeited to, and be retained irrevocably by, the Trustee. The Sale Deposit of any unsuccessful Qualified Bidder will be returned to such unsuccessful Qualified Bidder within two business days after (1) the conclusion of the Auction (if the Bidder does not submit the Successful Bid and is not designated the Back-Up Bidder) or (2) consummation of the Sale (if the Bidder is designated the Back-Up Bidder).






M. Reservation of Rights to Modify Bid Procedures The Trustee reserves the right to modify these Bid Procedures in any manner that will best promote the goals of the bidding process and may impose, at or prior to the Auction, additional customary terms and conditions on the Sale, including, without limitation, extending the deadlines set forth in these Bid Procedures, adjourning the Auction at the Auction, and/or adjourning the Sale Hearing in open court without further notice.












In re


Debtor.









PLEASE TAKE FURTHER NOTICE that the Court has entered an order authorizing the Trustee to hold an auction to sell the Property if an overbid is received. The auction, if one occurs, is scheduled for August 27, 2013 at 10 a.m. Pacific time at the offices of Ball Janik LLP, 101 SW Main Street, Suite 1100, Portland, Oregon. PLEASE TAKE FURTHER NOTICE that the Court entered an order approving bid procedures in connection with the sale and the auction. A copy of the Bid Procedures can be obtained from Trustee’s counsel. PLEASE TAKE FURTHER NOTICE that competing bidders are required to submit competing bids in the minimum amount of $4,400,000 and otherwise qualify as bidders in accordance with the approved bid procedures prior to August 21, 2013, at 5:00 p.m. Pacific time. PLEASE TAKE FURTHER NOTICE that, within 14 days after the Auction, or as soon as otherwise practicable, a hearing approving the sale will take place at the United States Bankruptcy Court for the District of Oregon, Courtroom 3, 1001 SW Fifth Avenue, Portland, Oregon. PLEASE TAKE FURTHER NOTICE that if you wish to object to the sale of the Property, you must, on or before August 21, 2013, file a written objection to the sale with the Clerk of the Court, United States Bankruptcy Court for the District of Oregon, 1001 SW Fifth Avenue, Seventh Floor, Portland, Oregon 97204. Copies of any of the pleadings or documents referenced herein may be obtained by contacting the Trustee’s counsel, Mathew W. Lauritsen (E-mail: [email protected]; telephone: 503-228-2525).






Page 1 - CERTIFICATE OF SERVICE ::ODMA\PCDOCS\PORTLAND\900683\6 BALL JANIK LLP


CERTIFICATE OF SERVICE

Pursuant to LBR 7005-1, I certify that on the date below, I caused notice of the filing of this TRUSTEE’S MOTION FOR ORDER APPROVING BID AND SALE PROCEDURES, INCLUDING PAYMENT OF BROKER FEES AND BREAK-UP FEES to be served on the United States Trustee, Official Committee of Unsecured Creditors, and the other interested parties requesting notice through the Court’s CM/ECF system, as well as by first class U.S. mail on the following parties in interest requesting notice by mail: Hollis Adams Predictive Maintenance Tech. LLC POB 424 Newberg, OR 97132

Dan Alexander 17721 S Deininger Rd Oregon City, OR 97045

American Machine & Gear Inc Patrick Portwood 2770 NW Industrial St Portland, OR 97210

Hope J. Antonacci 5427 SE Cornish Ct Milwaukie, OR 97267

Ashland, Inc. c/o Terry Nicholson 5200 Blazer Parkway Dublin, OH 43017

BRIAN W. BISIGNANI 17 North 2nd St, 12th Floor Harrisburg, PA 17101

BNSF Railway Company Attn: Quincy Chumley 3001 Lou Menk Dr Ft Worth, TX 76131

Lonnie Edward Bain 47225 SE Clausen Rd Estacada, OR 97023

Colleen Barth 7671 S Drake Rd Mt Angel, OR 97362

Jeff Becker 2617 Jolie Pointe Rd West Linn, OR 97068

Lance S. Bell 13430 NE Sandy Blvd #K-2 Portland, OR 97230

Terry Bourbonnais 19804 SW Boones Ferry Rd Tualatin, OR 97062

Jerry F Carlos 29729 S Molalla Ave Molalla, OR 97038

Christie T Chulos 15806 S Holcomb Blvd Oregon City, OR 97045

Clearwater Environ. Services Inc 28395 SW Boberg Rd Wilsonville, OR 97070

Coastal Fibre, Inc c/o Troy Wilson, President POB 99 Lyons, OR 97358

Wayne S. De Vore 18889 Highland Dr Oregon City, OR 97045

Charlotte Demitrakikes Demitrakikes Trucking, Inc POB 381 Canby, OR 97013

Michael Demitrakikes Demitrakikes Trucking, Inc POB 381 Canby, OR 97013

Demitrakikes Trucking, Inc. c/o Denise Thornton P.O. Box 381 Canby, OR 97013

Donald K Dowell 355 Chicago Ave Gladstone, OR 97027

Everett J Drury 13918 SE Estella Ave Milwaukie, OR 97267

Jeff Garvison 17186 Holly Ln Oregon City, OR 97045

GREGORY A HARTMAN 210 SW Morrison St #500 Portland, OR 97204

Robert M. Herr 13306 Abigail Ct Oregon City, OR 97045

Steven L. Irvin 3556 Sunset Dr Hubbard, OR 97032

Gregg D. Johnson 23001 NE 209th Ave Battle Ground, WA 98604-4910

MARY ANN KILGORE 1400 Douglas St MC 1580 Omaha, NE 68179

John W. LaFarge 16170 S Henrici Rd Oregon City, OR 97045

Randy Dennis Larson POB 206 Scotts Mills, OR 97375

Randy Lee Larson POB 206 Scotts Mills, OR 97375

J Skay Lessley 8409 167th Ave NE Redmond, WA 98052

Jennifer Skay Lessley 8409 167th Ave NE Redmond, WA 98052

Mark Lowrie 12787 Hiefield Ct Oregon City, OR 97045

Brad S Mallonee 1338 W 4th Ave Kennewick, WA 99336

RAND L McCLELLAN 65 E State St #2100 Columbus, OH 43215

Metro 600 NE Grand Ave Portland, OR 97232-2736

Metro Waste Paper Recovery, Inc. c/o Ken Rasmussen 12345 104 Ave. Surrey, BC V3V3H2

James E. Miller 3220 Ermine St SE Albany, OR 97322

Ron Milton 1850 West 24th Ave Eugene, OR 97405-1638

Joseph E. Moffitt 1180 Columbia Ave Gladstone, OR 97027

Jared Motta 31127 Willamette Way W Wilsonville, OR 97070

DAVID C NEU 925 4th Ave #2900 Seattle, WA 98104-1158

Nationwide Magazine Recycling, Inc. c/o Roy Threlkeld 2300 Apollo Circle Carrollton, TX 75006

Pacific Fibre Products c/o Don Lightfoot PO Box 278 Longview, WA 98632

Portland Valve & Fitting Co POB 15196 Portland, OR 97293

GLENN M REISMAN Two Corporate Dr #234 Shelton, CT 06484-0861

Marilyn K Roberts 32012 S Hwy 213 Molalla, OR 97038

Mellott G Ronald 971 Josephine St Oregon City, OR 97045

Larry Rotrock POB 1033 Estacada, OR 97023

GARVEY SCHUBERT 900 SW Fifth Ave #2600 Portland, OR 97204

Guy Leo Salveta 700 N Road 32 #229 Pasco, WA 99301-4661

Steve Schiefelbein 1450 Rosemont Rd West Linn, OR 97068

Michael Schwenker 9111 NE 145th Ave Vancouver, WA 98682

Peter R Shaw 1124 S Fir St Canby, OR 97013

Anthony Smith 3228 SW Beaverton-Hillsdale Hwy #15 Portland, OR 97239-1193

Dwayne Soltesz 8518 SE 72nd Ave Portland, OR 97206-8707

Jon Stewart 317 5th Ave SE #A Albany, OR 97321

Streimer Sheet Metal Works, Inc 740 North Knott St Portland, OR 97227-2099

James E Thorne 1012 Leonard St Oregon City, OR 97045

US Dept of Labor EBSA 300 Fifth Ave #1110 Seattle, WA 98104

JOHN M VOLKMAN 851 SW 6th Ave #1200 Portland, OR 97204

Weyerhaeuser c/o Linda Fornero CH2E30 P.O. Box 9777 Federal Way, WA 98063

Stacey Dinnell 30482 S Marian St Molalla, OR 97038


Page 2 - CERTIFICATE OF SERVICE ::ODMA\PCDOCS\PORTLAND\900683\6 BALL JANIK LLP


DATED: June 26, 2013 /s/ Stuart Wylen

Stuart Wylen, Legal Secretary


CERTIFICATE OF SERVICE re PARTIES TO BE SERVED IN COMPLIANCE WITH FRCP 4 and 11 USC 363:

In addition to the parties set forth above, the following parties have been served in compliance with FRCP 4 and FRBP 7004(b)(6), with regard to the service requirements of 11 U.S.C. § 363: State of Oregon, Department of Energy ATTN: Lisa Schwartz, Director 625 Marion St. NE Salem, OR 97301-3737

State of Oregon, Department of Energy c/o Oregon Department of Justice ATTN: Ellen F. Rosenblum, Attorney General 1162 Court Street NE Salem, OR 97301-4096

Oregon Department of Energy c/o Carolyn G. Wade DOJ Civil Enf Civil Recovery 1162 Court St NE Salem OR 97301

Sempra Energy Solutions, LLC c/o Registered Agent Corporation Service Company 285 Liberty St. NE Salem, OR 97301

Sempra Energy Solutions, LLC c/o Noble Americas Gas & Power Corp.ATTN: William Cronin, President Four Stamford Plaza 107 Elm Street Stamford, CT 06902

Noble Americas Gas & Power Corp. c/o Registered Agent Corporation Service Company 285 Liberty St. NE Salem, OR 97301

Noble Americas Gas & Power Corp. Christopher L Parnell Dunn Carney Allen 851 SW 6th Ave Ste 1500 Portland OR 97204

Oregon City Boat Club c/o Gregory Gardner, President 20420 S Patsy Dr. Oregon City, OR 97045

Oregon City Boat Club c/o Wade P. Bettis, OSB No. 72025 1906 Fourth St. La Grande, OR 97850 Attorney for Oregon City Boat Club

Clackamas County Bob Vroman, Tax Assessor Department of Assessment & Taxation 150 Beavercreek Rd. Oregon City, OR 97045

Wells Fargo Business Credit, Inc. c/o Registered Agent Corporation Service Company 285 Liberty St. NE Salem, OR 97301

Wells Fargo Business Credit, Inc. Martin J. McKinley, President Sixth St. & Marquette Ave. N9312-032 Minneapolis, MN 55479

Wells Fargo Bank, N.A. c/o Registered Agent Corporation Service Company 285 Liberty St. NE Salem, OR 97301

Wells Fargo Bank, N.A. Carrie L. Tolstedt, President 101 N. Phillips Ave. Sioux Falls, SD 57104
