In re

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE
Chapter 11
CRDENTIA CORP., eta/.,
1
Case No. 10-10926 (BLS)
Debtors. (Jointly Administered)
Re: Docket No. 16
CERTIFICATION OF COUNSEL REGARDING ORDER (A)
AUTHORIZING DEBTORS TO OBTAIN INTERIM POST-
PETITION FINANCING AND GRANT SECURITY INTERESTS
AND SUPERPRIORITY ADMINISTRATIVE EXPENSE STATUS
PURSUANT TO 11 U.S. C. 105 AND 364(c); (B) MODIFYING THE
AUTOMATIC STAY PURSUANT TO 11 U.S.C. 362; (C)
AUTHORIZING DEBTORS TO ENTER INTO AGREEMENTS
WITH COMVEST CAPITAL LLC; AND (D) SCHEDULING A
FINAL HEARING PURSUANT TO BANKRUPTCY RULE 4001
I, Daniel A O'Brien, proposed counsel for the above-captioned debtors and
debtors in possession (the "Debtors"), hereby certify and state as follows:
1. On March 18, 2010, the Debtors filed the Motion for Order (A)
Authorizing Debtors to Obtain Interim Post-Petition Financing and Grant Security
Interests and Superpriority Administrative Expense Status Pursuant to 11 U.S. C. Sections
105 and 364(c); (B) Modifying the Automatic Stay Pursuant to 11 U.S.C. Section 362;
(C) Authorizing Debtors to Enter Into Agreements with Comvest Capital LLC; and (D)
Scheduling a Final Hearing Pursuant to Bankruptcy Rule 4001 (the "DIP Motion").
2. On March 19, 2010, the Court held a "first day" hearing (the "Hearing")
with respect to the Debtors' various requests for relief, including the DIP Motion.
The Debtors, along with the last four digits of their federal tax identification numbers, are:
Crdentia Corp.(5701), ATS Universal, LLC (3980), Baker Anderson Christie, Inc. (3631),
CRDE Corp. (2509), GHS Acquisition Corporation (9736), Health Industty Professionals, LLC
(4246), HIP Holding, Inc. (3468), MP Health Corp. (4403), New Age Staffing, Inc. (1214) and
Nurses Network, Inc. (6291). The Debtors' mailing address for purposes of these cases is 1964
Howell Branch Road, Ste. 206, Winter Park, Florida 32792.
{BAY:01513641vl)
3. Attached hereto as Exhibit A is a revised form of Order approving the DIP
Motion (the "Order") reflecting changes made after discussions with the United States
Trustee. Attached as Exhibit B is a blackline comparison of the Order to the form of
order originally filed with the DIP Motion.
4. The United States Trustee has reviewed the Order and does not object to
its entry.
WHEREFORE, the Debtors respectfully request that the Court enter the Order.
March 19, 2010
Wilmington, Delaware
{BAY,0151364lvl}
BAYARD, P.A.
Is/ Daniel A. 0 'Brien. Esq.
Jamie L. Edmonson (No. 4247)
Daniel A O'Brien (No. 4897)
222 Delaware Avenue, Suite 900
Wilmington, DE 19801
Phone: (302) 655-5000
Fax: (302) 658-6395
-and-
GERSTEN SAVAGE, LLP
Paul Rachmuth
600 Lexington Avenue
New York, New York 10022
Telephone: (212) 752-9700
Facsimile: (212) 980-5192
Proposed Counsel for the Debtors and
Debtors in Possession
EXHIBIT A
{BAY:01513641vl)
In re
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
Chapter 11
CRDENTIA CORP., et al.,
1
Case No. 10-10926 (BLS)
Debtors. (Jointly Administered)
Re: Docket No. 16
ORDER (A) AUTHORIZING DEBTORS TO
OBTAIN INTERIM POST-PETITION FINANCING AND
GRANT SECURITY INTERESTS AND SUPERPRIORITY
ADMINISTRATIVE EXPENSE STATUS PURSUANT TO 11 U.S.C.
105 AND 364(c); (B) MODIFYING THE AUTOMATIC STAY
PURSUANT TO 11 U.S.C. 362; (C) AUTHORIZING DEBTORS
TO ENTER INTO AGREEMENTS WITH COMVEST
CAPITAL LLC; AND (D) SCHEDULING A FINAL
HEARING PURSUANT TO BANKRUPTCY RULE 4001
Upon the motion (the "Motion"), dated March 17, 2010, Crdentia, Inc.
("Crdentia"), CRDE Corp., GHS Acquisition Corporation, Staff Search Acquisition Corp., MP
Health Corp., Prime Staff, LP, Mint Medical Staffing Odessa, LP and ATS Universal, LLC
(each, individually, a "Debtor" and collectively, "Debtors" or "Borrower"), each as a debtor and
debtor-in-possession in the above-captioned chapter 11 cases (collectively, the "Cases"),
pursuant to sections 105, 361, 362, 364(c)(1), 364(c)(2) and 364(c)(3) of title 11 of the United
States Code, 11 U.S. C. 101, et seq. (the "Bankruptcy Code") and Rules 2002, 4001(c), and
9014 of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"), seeking, among
other things:
The Debtors, along with the last four digits of their federal tax identification numbers, are: Crdentia
Corp.(5701), ATS Universal, LLC (3980), Baker Anderson Christie, lnc. (3631), CRDE Corp. (2509), GHS
Acquisition Corporation (9736), Health Industry Professionals, LLC ( 4246), HlP Holding, Inc. (3468), MP Health
Corp. (4403), New Age Staffing, Inc. (1214) and Nurses Network, lnc. (6291) .. The Debtors' mailing address for
purposes of these cases is 1964 Howell Branch Road, Ste. 206, Winter Park, Florida 32792.
{BAY:01512347v2}
(1) authorization for Borrower to obtain post-petition loans, advances and
other financial accommodations on an interim basis for a period through and including the date
of the Final Hearing (as hereinafter defined) from Com Vest Capital LLC ("Lender"), inclusive of
the amount of all pre-petition indebtedness owed by Debtors to Lender, in accordance with the
terms and conditions set forth in the Existing Loan Agreement (as hereinafter defined), as
amended and ratified by the Ratification Agreement (as hereinafter defined), and in accordance
with the Budget (as hereinafter defined) and this Order, secured by security interests in and liens
upon all of the Collateral (as hereinafter defined) pursuant to sections 364(c)(2) and 364(c)(3) of
the Bankruptcy Code;
(2) authorization for Debtors to enter into the Ratification and Amendment
Agreement, dated March 17, 2010 (the "Ratification Agreement", a copy of which is annexed to
the Exhibit Supplement to the Motion (the "Exhibit Supplement") as Exhibit "B" thereto), by
and among Debtors and Lender, which ratifies, extends, adopts and amends the Existing Loan
Agreement and the other existing loan, financing and security agreements by and among
Borrower, and Lender (capitalized terms not otherwise defined in this Order shall have the
respective meanings ascribed thereto in the Existing Loan Agreement, as amended and ratified
by the Ratification Agreement);
(3) modification of the automatic stay to the extent hereinafter set forth;
( 4) granting to Lender a super-priority administrative claim status pursuant to
section 364(c)(1) of the Bankruptcy Code in respect of all Obligations (as defined in the
Ratification Agreement); and
( 5) setting a final hearing on the Motion.
Due and appropriate notice of the Motion, the relief requested therein, and the
Interim Hearing (as defined below) (the "Notice") having been served by the Debtors on (i) the
Lender; (ii) United States Trustee for the District of Delaware (the "U.S. Trustee"); (iii) holders
of the twenty (20) largest unsecured claims against the Debtors' estates (on a consolidated basis)
(the "20 Largest Unsecured Creditors"); (iv) the Internal Revenue Service ("IRS"); (v) the
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Attorney General of the State of Delaware; (vi) a11 landlords, owners, and/or operators of
premises at which any of the Debtors' inventory and/or equipment is located; and (vii) certain
other parties identified in the certificate of service filed with the Court, including, without
limitation, a11 creditors who have filed or recorded pre-petition liens or security interests against
any of the Debtors' assets ( co11ectively, the "Noticed Parties");
The initial hearing on the Motion having been held by this Court on March 19,
2010 (the "Interim Hearing");
Upon the record made by the Debtors at the Interim Hearing, including the
Motion and the filings and pleadings in the Cases, and good and sufficient cause appearing
therefore;
THE COURT HEREBY MAKES THE FOLLOWING FINDINGS OF FACTS
AND CONCLUSIONS OF LAW:
A Petition. On March 17, 2010 (the "Petition Date"), each of the Debtors
filed voluntary petitions (the "Petitions") under chapter 11 of the Bankruptcy Code. A motion
for joint administration of the Debtors' estates is pending. The Debtors continue to operate their
businesses and manage their properties as debtors-in-possession pursuant to sections 1107(a) and
1108 of the Bankruptcy Code.
B. Jurisdiction and Venue. The Court has jurisdiction of this proceeding and
the parties and property affected hereby pursuant to 28 U.S. C. 157(b) and 1334. The Motion
is a "core" proceeding as defined in 28 U.S. C. 157(b)(2)(A), (D), and (M). Venue of the Cases
and the Motion in this Court is proper pursuant to 28 U.S. C. 1408 and 1409.
C. Notice. Under the circumstances, the Notice given by the Debtors of the
Motion, the Interim Hearing and the relief granted under this Order constitutes due and sufficient
notice thereof and complies with Bankruptcy Rule 4001 (c).
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D. Debtors' Acknowledgments and Agreements. Subject to the provisions of
this Interim Order, including paragraph 4.1, the Debtors admit, stipulate, acknowledge and agree
that:
(i) Pre-Petition Financing Agreements. Prior to the commencement
of the Cases, Lender made loans and advances and provided credit accommodations to Borrower
pursuant to (1) Loan and Security Agreement, dated July 3, 2008, by and between Borrower and
Lender, as successor to Capital Tempfunds, a division of Capital Business Credit LLC
("Tempfunds"), the First Amendment dated as of June 22, 2009, between Wells Fargo Bank,
N.A., acting through its Wells Fargo Business Credit and Operating Division ("WFBC"),
successor in interest to Tempfunds, and the Second Amendment to Loan and Security
Agreement, dated July 7, 2009 (as the same has heretofore been amended, supplemented,
modified, extended, renewed, restated and/or replaced at any time prior to the Petition Date, the
"Existing Loan Agreement"), and (2) all other agreements, documents, and instruments executed
and/or delivered with, to, or in favor of Lender, including, without limitation, the security
agreements, notes, guarantees, mortgages, and Uniform Commercial Code ("UCC") financing
statements and all other related agreements, documents, and instruments executed and/or
delivered in connection therewith or related thereto, (collectively, the "Pre-Petition Financing
Agreements"). Copies of the operative Pre-Petition Financing Agreements are annexed to the
Exhibit Supplement as Exhibit "B".
(ii) Term Loan Debt. Prior to the commencement of the Cases,
Borrower obtained term loans from Lender or otherwise incurred obligations pursuant to the
Revolving Credit and Term Loan Agreement dated February 22, 2008, executed by Crdentia in
favor of Lender, in the aggregate principal amount of $16,700,000 (the "Term Loan Agreement"
and together with all other agreements, documents and instruments executed and/or delivered in
connection therewith, or incident to same, the "Term Loan Documents"). Pursuant to the Term
Loan Documents, borrowings are secured by the Pre-Petition Collateral (as hereinafter defined).
4
(iii) Pre-Petition Obligations Amount. As of the Petition Date, the
aggregate amount of all Loans and other Pre-Petition Obligations (as defined in the Ratification
Agreement) owed by the Debtors to Secured Lender under and in connection with the Pre-
Petition Financing Agreements, consisting of Revolving Loans with a principal due in an amount
not less than $5,736,551.72 and the Term Loans with principal due in an amount not less than
$10,693,240.81 plus all interest accruing thereon, and all fees, costs, expenses, and other charges
accrued, accruing, or chargeable with respect thereto totaling $18,995,353.01 (the "Pre-Petition
Obligations", as such term is more fully defined in the Ratification Agreement'), and that the
Pre-Petition Obligations constitute allowed, legal, valid, binding, enforceable and non-avoidable
obligations of the Debtors, and are not subject to any offset, defense, counterclaim, avoidance,
recharacterization or subordination pursuant to the Bankruptcy Code or any other applicable law,
and Debtors do not possess and shall not assert any claim, counterclaim, setoff or defense of any
kind, nature or description which would in any way affect the validity, enforceability and non-
avoidability of any of the Pre-Petition Obligations.
(iv) Pre-Petition Collateral. As of the Petition Date, the Pre-Petition
Obligations were fully secured pursuant to the Pre-Petition Financing Agreements by valid,
perfected, enforceable and non-avoidable first priority security interests and liens granted by the
Debtors to Lender upon all of the Collateral (as defined in the Existing Loan Agreement)
existing as of the Petition Date and all rents, issues, profits, proceeds, and products thereof (the
"Prepetition Collatenil", and collectively, together with any other property of the Debtors'
bankruptcy estates (as defined under section 541 of the Bankruptcy Code, the "Estates") .
Debtors do not possess and will not assert any claim, counterclaim, setoff or defense of any kind,
nature or description, which would in any way affect the validity, enforceability and non-
To the extent that the term "Pre-Petition Obligations" as defined and used in this Interim
Order is in any way inconsistent or conflicts with the way in which such term is defined in the
Ratification Agreement, the definition of such term contained in the Ratification Agreement shall
control and shall be incorporated into this Interim Order.
5
avoidability of any of Lender's liens, claims and/or security interest m the Pre-Petition
Collateral.
6
E. Findings Regarding the Postpetition Financing.
(i) Postpetition Financing. The Debtors have requested from Lender,
and Lender is willing to extend, certain loans, advances and other financial accommodations, as
more particularly described and on the terms and conditions set forth in this Order and the
Financing Agreements (as hereinafter defined);
(ii) Need for Post-Petition Financing. The Debtors do not have
sufficient available sources of working capital to operate their businesses in the ordinary course
of their businesses without the financing requested under the Motion. The Debtors' ability to
maintain business relationships with their vendors, suppliers, and customers, to pay their
employees, and to otherwise fund their operations, is essential to Debtors' continued viability.
The ability of the Debtors to obtain sufficient working capital and liquidity through the proposed
post-petition financing arrangements with Lender as set forth in this Order and the Financing
Agreements is vital to the preservation and maintenance of the going concern values of the
Debtors. Accordingly, the Debtors have an immediate need to obtain the post-petition financing
in order to permit, among other things, the orderly continuation of the operation of their
businesses, to minimize the disruption of their business operations, and to manage and preserve
the assets of their estates in order to maximize the recovery to all estate creditors;
(iii) No Credit Available on More Favorable Terms. The Debtors
believe that it would be futile, under the circumstances, to pursue alternative post-petition
financing in the form of: ( 1) unsecured credit allowable as an administrative expense under
Section 503(b}(1} of the Code; (2) unsecured credit allowable under Sections 364(a) and 364(b)
of the Code; or (3) secured credit pursuant to Section 364(c) of the Code, on more favorable
terms and conditions from sources other than the Secured Lender. Accordingly, the Secured
Lender has agreed to fund the Debtors' continued operations in chapter 11 in exchange for the
reasonable protections proposed, including first-priority liens on all of the Debtors' assets.;
7
(iv) Good Faith Pursuant to Section 364(e). Any credit extended
under the terms of this Interim Order shall be deemed to have been extended in good faith by
Lender as that term is used in section 3 64( e) of the Bankruptcy Code.
( v) Budget. Borrower has prepared and delivered to Lender an initial
thirteen (13) week budget (the "Budget") (a copy of which is annexed to the Exhibit Supplement
as Exhibit "C"). The Budget has been thoroughly reviewed by Borrower and its management
and sets forth, among other things, in each case, commencing with the week ending as of March
19, 2010: (A) projected weekly cash receipts for each week; (B) projected weekly cash
disbursements for each week; and (C) projected weekly loan balances for each week. Lender is
relying upon the Debtors' compliance with the Budget in accordance with Section 5.3 of the
Ratification Agreement in determining to enter into the post-petition financing agreements
provided for herein.
(vi) Good Cause. The relief requested in the Motion is necessary,
essential, and appropriate and is in the best interests of and will benefit the Debtors, their
creditors, and their Estates as its implementation will, among other things, provide the Debtors
with the necessary liquidity (A) to minimize disruption to the Debtors' businesses and on-going
operations, (B) preserve and maximize the value of the Debtors' Estates for the benefit of all the
Debtors' creditors, and (C) avoid immediate and irreparable harm to the Debtors, their creditors,
their businesses, their employees, and their assets.
(vii) Immediate Entry. Sufficient cause exists for immediate entry of
this Order pursuant to Bankruptcy Rules 4001(c)(2). No party appearing in the Cases has filed
or made an objection to the relief sought in the Motion and the entry of this Order, or any
objections that were made (to the extent such objections have not been withdrawn) are hereby
overruled.
Based upon the foregoing, and after due consideration and good cause appearing
therefor;
8
IT IS HEREBY ORDERED, ADJUDGED AND DECREED, that:
Section 1. Authorization and Conditions to Financing.
1.1 Motion Granted. The Motion is granted in accordance with Bankruptcy
Rule 4001(c)(2) to the extent provided in this Order. This Order shall hereinafter be referred to
as the "Interim Order."
1.2 Authorization to Borrow and Use of Loan Proceeds. Borrower is hereby
authorized and empowered to immediately borrow and obtain Loans and to incur indebtedness
and obligations owing to Lender pursuant to the terms and conditions of this Interim Order and
the Existing Loan Agreement, as ratified and amended by the Ratification Agreement (as the
same has heretofore been or may hereafter be amended, modified, supplemented, restated,
extended or replaced, the "Loan Agreement"; as such term is more fully defined in the
Ratification Agreement) and the other Financing Agreements during the period commencing on
the date of this Interim Order through and including the date of the Final Hearing as set forth in
section 6 of this Interim Order (the "Interim Financing Period") in an amount not to exceed
$500,000 in accordance with the Budget. Subject to the terms and conditions contained in this
Interim Order, the Budget and the Financing Agreements, Borrower shall use the proceeds of the
Loans and any other credit accommodations provided to Borrower or pursuant to this Interim
Order and the Loan Agreement for, inter alia, the payment of employee salaries, payroll, taxes,
and other general operating and working capital purposes in the ordinary course of Debtors'
businesses in accordance with the Financing Agreements, including amounts paid for such
purposes which may constitute administrative expense claims under the Bankruptcy Code
directly attributable to the operation of Debtors' businesses, expenditures authorized by final
order of the Court including, without limitation, professionals whose retention has been approved
by the Court under Sections 327, 328, and 330 ofthe Bankruptcy Code (to the extent such Court-
authorized expenditures are in accordance with the Financing Agreements) and the fees of the
U.S. Trustee, the Clerk of this Court.
9
1.3 Financing Agreements.
1.3 .1 Authorization. The Debtors are hereby authorized to enter into,
execute, deliver, perform, and comply with all of the terms, conditions and covenants of the
Loan Agreement, the other Pre-Petition Financing Agreements, as ratified and amended by the
Ratification Agreement, and all other agreements, documents and instruments executed and/or
delivered in connection with or related to the Loan Agreement and the Pre-Petition Financing
Agreements and this Interim Order, pursuant to which, inter alia, the Debtors ratifY, reaffirm,
extend, assume, adopt, amend, and restate the Existing Loan Agreement and the other Pre-
Petition Financing Agreements to which they are a party, and together with the Loan Agreement,
the Pre-Petition Financing Agreements, as ratified and amended by the Ratification Agreement,
and all other agreements, documents and instruments executed and/or delivered in connection
therewith or related thereto, as all of the same have heretofore been or may hereafter be
amended, modified, extended, supplemented, restated or replaced, collectively, the "Financing
Agreements").
1.3 .2 Approval. The Debtors are authorized to perform under the
Financing Agreements (including, without limitation, the Loan Agreement) to implement the
terms and provisions of this Interim Order. All of such terms, conditions, and covenants shall be
sufficient and conclusive evidence of the borrowing arrangements by and among the Borrower
and Lender and of the Debtors' assumption and adoption of all of the terms, conditions, and
covenants of the Loan Agreement and the other Financing Agreements for all purposes,
including, without limitation, to the extent applicable, the payment of all Obligations (as defined
in the Loan Agreement) arising thereunder, including, without limitation, all principal, interest,
commissions, servicing fees, unused line fees, DIP facility fees, early termination fees, and other
10
fees and expenses, including, without limitation, all of Lender's attorneys' fees and legal
expenses, as more fully set forth in the Financing Agreements.
1.3 .3 Amendment. Subject to the terms and conditions of the Loan
Agreement and the other Financing Agreements, Lender and Debtors may amend, modify,
supplement, or waive any provision of the Financing Agreements (an "Amendment") without
further approval or order of the Court so long as (i) such Amendment is not material (for
purposes hereof, a "material" Amendment shall mean any Amendment that operates to add
and/or increase the amount of borrowings or associated fees/costs, increase the rate of interest
other than as currently provided in the Financing Agreements, increase the Maximum Credit (as
defined in the Ratification Agreement), add specific new events of default or enlarge the nature
and extent of default remedies available to Lender following an event of default, or otherwise
modify any terms and conditions in any Financing Agreements in a manner materially less
favorable to the Debtors or parties in interest, (ii) the Debtors provide prior written notice of the
Amendment (the "Amendment Notice") to (x) counsel to any official committee appointed in the
Cases under section 1102 of the Bankruptcy Code (collectively, the "Committee(s)"), or in the
event no such Committee is appointed at the time of such Amendment, the 20 Largest Unsecured
Creditors, and (y) the U.S. Trustee, and file the Amendment Notice with the Court, and (iii) no
objection to the Amendment is filed with the Court within two (2) business days from the later of
the date the Amendment Notice is served or the date the Amendment Notice is filed with the
Court in accordance with this section. Any material Amendment to the Financing Agreements
must be approved by the Court to be effective.
1.4 Payment of Pre-Petition Debt. The Debtors are authorized to pay Lender
on account of the Pre-Petition Obligations in accordance with the Financing Agreements and
sections 1. 5 and 1. 6 ofthis Interim Order.
1.5 Payments and Application of Payments. The Debtors are authorized and
directed to make all payments and transfers of Estate property to Lender as provided, permitted,
and/or required under the Loan Agreement and other Financing Agreements, which payments
11
and transfers, to the extent they are made on account of Post-Petition Obligations, shall not be
avoidable or recoverable from Lender under Sections 547, 548, 550, 553 or any other provision
of the Bankruptcy Code or any other claim, charge, assessment, or other liability, whether by
application of the Bankruptcy Code, other law, or otherwise. Lender shall apply the proceeds of
the Collateral or any other amounts or payments received by Lender in respect of the Obligations
in accordance with the Loan Agreement, the other Financing Agreements and this Interim Order,
including, without limitation, applying all payments, proceeds and other amounts first to the Pre-
Petition Obligations, until such Pre-Petition Obligations are paid in full, and then to the Post-
Petition Obligations. Without limiting the generality of the foregoing, the Debtors are authorized
and directed, without further order of this Court, to pay or reimburse Lender for all reasonable
present and future costs and expenses, including, without limitation, all reasonable professional
fees and legal expenses, paid, or incurred by Lender in connection with the financing
transactions as provided in this Interim Order and the Financing Agreements provided that, with
respect to such professional fees and legal expenses, Lender shall submit copies of the relevant
invoices to counsel for the following entities: the Debtors, the Creditors' Committee and the
United States Trustee. Any disputes between the Lender and the aforementioned parties
regarding the payment of such invoices shall be resolved by this Court.
1.6 Continuation of Pre-Petition Procedures. All pre-petition practices and
procedures for the payment and collection of proceeds of the Collateral, the turnover of cash, and
delivery of property to Lender, and the funding pursuant to the Financing Agreements, including
the blocked account arrangements and any other similar lockbox and blocked depository bank
accounts arrangements may continue subject to further or other order of this Court.
Section 2. Postpetition Lien; Superpriority Administrative Claim Status.
2.1 Post-Petition Lien.
2.1.1 Lien Granting. To secure the prompt payment and performance of
any and all Obligations of Debtors to Lender of whatever kind or nature or description, absolute
or contingent, now existing or hereafter arising, including, without limitation, all Pre-Petition
12
Obligations and all Post-Petition Obligations (as defined in the Ratification Agreement)
(collectively, the "Obligations", as such term is more fully defined in the Ratification Agreement
and is incorporated herein by reference), Lender shall have and is hereby granted, effective as of
the Petition Date, valid and perfected first priority security interests and liens, superior to all
other liens, claims and/or security interests that any creditor of any Debtor's Estate may have
(but subject to the Permitted Encumbrances and certain claims entitled to priority as and to the
extent expressly provided in section 2.1.2 below), in and upon all of the Pre-Petition Collateral
and the Post-Petition Collateral (as each term is defined in the Ratification Agreement). The Pre-
Petition Collateral and the Post-Petition Collateral are collectively referred to herein as the
"Collateral". While Lender intends to seek a lien on and security interest in avoidance actions
under Chapter 5 of the Bankruptcy Code to secure the Loans and other Obligations advanced or
incurred after the Petition Date in the Permanent Financing Order, no such lien or security
interest is being granted by this Interim Order. In accordance with Sections 552(b) and 361 of
the Bankruptcy Code, the value, if any, in any of the Collateral, in excess of the amount of the
Obligations secured by such Collateral after satisfaction of the Post-Petition Obligations of
Debtors to Lender, shall constitute additional security for the repayment of the Pre-Petition
Obligations and adequate protection for the use by Debtors and the diminution in the value of the
Collateral existing on the Petition Date.
2.1.2 Lien Priority. The pre-petition and post-petition liens and security
interests of Lender granted under the Financing Agreements and this Interim Order in the
Collateral shall be and shall continue to be first and senior in priority to all other interests and
liens of every kind, nature and description, whether created consensually, by an order of the
Court, or otherwise, including, without limitation, liens or interests granted in favor of third
parties in conjunction with sections 363, 364, and/or any other sections of the Bankruptcy Code
or other applicable law; provided, however, that Lender's liens and security interests in the
Collateral shall be subject only to (i) the liens expressly permitted under Sections 8.4 and 9.8 of
the Loan Agreement (to the extent such liens are valid, perfected, enforceable and unavoidable);
13
and (ii) the Carve-Out Expenses (as defined herein) solely to the extent provided for in sections
2.3, 2.4 and 2.5 of this Interim Order (collectively, the "Permitted Liens and Claims").
2.1.3 Post-Petition Lien Perfection. This Interim Order shall be
sufficient and conclusive evidence of the priority, perfection, and validity of the Post-Petition
Liens, effective as of the Petition Date, without any further act and without regard to any other
federal, state, or local requirements or law requiring notice, filing, registration, recording, or
possession of the Collateral or other act to validate or perfect such security interest or lien
including without limitation, control agreements with other financial institutions holding a
blocked account, investment property control account or other depository account consisting of
Collateral (a "Perfection Act"). Notwithstanding the foregoing, if Lender shall, in its sole
discretion, elect for any reason to file, record, or otherwise effectuate any Perfection Act, Lender
is authorized to perform such act and the Debtors are authorized to cooperate to the extent
necessary or required by Lender, and in such event, the subject filing or recording office is
authorized to accept, file, and/or record any document in regard to such act in accordance with
applicable law. Lender may choose to file, record, or present a certified copy of this Interim
Order in the same manner as a Perfection Act. Should Lender so choose and attempt to file,
record, or perform a Perfection Act, no defect or failure in connection with such attempt shall in
any way limit, waive, or alter the validity, enforceability, attachment, or perfection of the
Postpetition Lien by virtue of entry of this Interim Order.
2.2 Supeq>riority Administrative Expense. For all Post-Petition Obligations
now existing or hereafter arising pursuant to this Interim Order, the Financing Agreements or
otherwise, Lender is granted an allowed super-priority administrative claim pursuant to section
364(c)(1) of the Bankruptcy Code having priority in right of payment over any and all other
obligations, liabilities and indebtedness of Debtors, now in existence or hereafter incurred by
Debtors and over any and all administrative expenses or priority claims of the kind specified in,
or ordered pursuant to, inter alia, sections 105, 326, 328, 330, 331, 503(b), 507(a), 507(b),
364(c)(1) and/or 1114 of the Bankruptcy Code (the "Super-Priority Claim") provided, however,
14
the Super-Priority Claim shall be subject only to the Permitted Liens and Claims as and to the
extent expressly set forth in this Interim Order.
2.3 Carve-Out Expenses.
2.3 .1 Carve-Out Expenses. Upon the declaration by Lender of
the occurrence of an Event of Default (as defined herein), Lender's liens, claims and security
interests in the Collateral and its Super-Priority Claim shall be subject only to the right of
payment of the following expenses (the "Carve-Out Expenses"):
a. statutory fees payable to the U.S.
Trustee pursuant to 28 U.S. C. section 1930(a)(6);
b. fees payable to the Clerk of this
Court; and
c. subject to the terms and conditions of
this Interim Order, the unpaid and outstanding reasonable fees and
expenses actually incurred on or after the Petition Date, and
approved by a final order of the Court pursuant to sections 326,
328, 330, or 331 of the Bankruptcy Code (collectively, the
"Allowed Professional Fees") by attorneys, accountants, and other
professionals retained by the Debtors under section 327 or 1103(a)
of the Bankruptcy Code, as well as notice, balloting and claims
agents (the "Debtors Professionals"), less the amount of any
retainers, if any, then held by each Debtors Professionals, in a
cumulative, aggregate sum not to exceed $85,000 (the "Debtors
Professional Fee Carve-Out").
d. subject to the terms and conditions of
this Interim Order, the unpaid and outstanding Allowed
Professional Fees by attorneys, accountants and other professionals
retained by any Committee(s) under section 327 or 1103(a) of the
15
Bankruptcy Code (collectively, the "Committee Professionals"),
less the amount of any retainers, if any, then held by each
Committee Professionals, in a cumulative, aggregate sum not to
exceed $25,000 (the "Committee Professional Fee Carve-Out" and
with the Debtors Professional Fee Carveout, the "Professional Fee
Carveout" ).
2.3 .2 Excluded Professional Fees. Notwithstanding anything to
the contrary in this Interim Order, the Professional Fee Carve-Out shall not be used to pay any
Allowed Professional Fees or any other fees and/or expenses incurred by any Professional in
connection with any of the following: (a) an assertion or joinder in (but excluding any
investigation into) any claim, counter-claim, action, proceeding, application, motion, objection,
defense, or other contested matter seeking any order, judgment, determination or similar relief:
(i) challenging the legality, validity, priority, perfection, or enforceability of the Obligations or
Lender's liens on and security interests in the Collateral, (ii) invalidating, setting aside, avoiding,
or subordinating, in whole or in part, the Obligations or Lender's liens on and security interests
in the Collateral, or (iii) preventing, hindering, or delaying Lender's assertion or enforcement of
any lien, claim, right or security interest or realization upon any Collateral, (b) a request .tn...u.s.e
the Cash Collateral (as such term is defined in section 363 of the Bankruptcy Code) other than as
set forth in this Order, without the prior written consent of Lender, (c) a request for authorization
to obtain debtor -in-possession financing or other financial accommodations pursuant to section
364(c) or (d) of the Bankruptcy Code other than from Lender without the prior written consent of
Lender, (d) the commencement or prosecution of any action or proceeding of any claims, causes
of action, or defenses against Lender or any of their respective officers, directors, employees,
agents, attorneys, affiliates, assigns, or successors, including, without limitation, any attempt to
recover or avoid any claim or interest from Lender under Chapter 5 of the Bankruptcy Code, or
(e) any act which has the effect of materially and adversely modifying or compromising the
rights and remedies of Lender, or which is contrary, in a manner that is material and adverse to
16
i
"!
Lender to any term or condition set forth in or acknowledged by the Financing Agreements or
this Interim Order and which results in the occurrence of an Event of Default under the
Financing Agreements and/or this Interim Order. The foregoing shall neither limit nor otherwise
affect the ability of an official committee to use funds allocated to the Professional Fee Carve-
Out for the purpose of investigating (but not prosecuting) the Lender's claim and/or claims and
causes of action against the Lender.
2.4 Carve-Out Reserve. At Lender's sole discretion, Lender may, at any time
and in any increment in accordance with the Loan Agreement, establish an Availability Reserve
against the amount of Loans and other credit accommodations that would otherwise be made
available to the Debtors pursuant to the lending formulae contained in the Loan Agreement in
respect of the Professional Fee Carve-Out and the other Carve-Out Expenses.
2.5. Payment of Carve-Out Expenses. Any payment or reimbursement made
either directly by or on behalf of Lender at any time or by or on behalf of the Debtors on or after
the occurrence of an Event of Default in respect of any Allowed Professional Fees or any other
Carve-Out Expenses shall, in either case, permanently reduce the Debtors or Committees
Professional Fee Carve-Out, as applicable, on a dollar-for-dollar basis. Lender's obligation to
fund or otherwise pay the Professional Fee Carve-Out and the other Carve-Out Expenses shall be
added to and made a part of the Obligations, secured by the Collateral, and entitle Lender to all
of the rights, claims, liens, priorities and protections under this Interim Order, the Financing
Agreements, the Bankruptcy Code, and/or applicable law. Payment of any Carve-Out Expenses,
whether by or on behalf of Lender, shall not be deemed to reduce the Obligations and shall not
be deemed to subordinate any Lender's liens and security interests in the Collateral or their
Super-Priority Claim to any junior pre-petition or post-petition lien, interest, or claim in favor of
any other party. Except as otherwise provided herein with respect to the Professional Fee Carve--
Out and the other Carve-Out Expenses, Lender shall not be responsible for the direct payment or
reimbursement of any fees or disbursements of any Professionals incurred in connection with the
Cases under any chapter of the Bankruptcy Code, and nothing in sections 2.3, 2.4 or 2.5 of this
17
Interim Order shall be construed to obligate Lender in any way, to pay compensation to or to
reimburse expenses of any Professional, or to ensure that the Debtors have sufficient funds to
pay such compensation or reimbursement.
2.6. Section 507(b) Priority. To the extent Lender's liens on and security
interests in the Collateral or any other form of adequate protection of the Lender's interests is
insufficient to pay indefeasibly in full all Obligations, Lender shall also have the priority in
payment afforded by section 507(b) to the extent of any such deficiency.
Section 3. Default; Rights and Remedies; Relief from Stay.
3.1 Events of Default. The occurrence of any of the following events shall
constitute an Event of Default under this Interim Order:
a. Debtors' failure to perform, m any respect, any of the terms,
conditions or covenants or its obligations under this Interim Order; or
b. An "Event of Default" under the Loan Agreement or any of the other
Financing Agreements.
3.2 Rights and Remedies Upon Event of Default. Upon the occurrence of and
during the continuance of an Event of Default, the Debtors shall be bound by all restrictions,
prohibitions, and other terms as provided in this Interim Order, the Loan Agreement, and the
other Financing Agreements, and Lender may elect any and all consequences of such Event of
Default, and Lender shall be entitled to take any act or exercise any right or remedy as provided
in this Interim Order and/or any Financing Agreement, including, without limitation, declaring
all Obligations immediately due and payable, accelerating the Obligations, ceasing to extend
Loans and/or make Letter of Credit Accommodations on behalf of Debtors, and, subject to
paragraph 3.4 below, setting off any Obligations with Collateral or proceeds in Lender's
possession, and enforcing any and all rights with respect to the Collateral. Lender shall have no
obligation to lend or advance any additional funds to or on behalf of the Debtors, or provide any
other financial accommodations to the Debtors immediately upon or after the occurrence of an
18
Event of Default or an act, event, or condition that with the giving of notice or the passage of
time, or both, would constitute an Event of Default.
3.3 Expiration of Commitment. Upon the expiration of the Debtors' authority
to borrow and obtain other credit accommodations from Lender pursuant to the terms of this
Interim Order and the Financing Agreements (except if such authority shall be extended with the
prior written consent of Lender, which consent shall not be implied or construed from any other
action, inaction or acquiescence by Lender), unless an Event of Default set forth in section 3.2
above occurs sooner and the automatic stay has been lifted or modified pursuant to section 3.4 of
this Interim Order, all of the Obligations shall immediately become due and payable and the
Lender shall be automatically and completely relieved from the effect of any stay under section
3 62 of the Bankruptcy Code or any other restriction on the enforcement of its liens upon and
security interests in the Collateral or any other rights granted to Lender pursuant to the terms and
conditions of the Financing Agreements or this Interim Order, and subject to the provisions of
section 3.4, Lender may be authorized to take any and all actions and remedies provided to it in
this Interim Order, the Financing Agreements and/or applicable law to proceed against and
realize upon the Collateral and any other property of the Debtors' Estates.
3.4 Relief from Automatic Stay. The automatic stay provisions of section 362
of the Bankruptcy Code and any other restriction imposed by an order of the Court or by law are
hereby modified and vacated without further notice, application, or order of the Court to the
extent necessary to permit Lender to perform any act authorized or permitted under or by virtue
of this Interim Order or the Financing Agreements, including, without limitation, (a) to
implement the post-petition financing arrangements authorized by this Interim Order and
pursuant to the terms of the Financing Agreements, (b) to take any act to create, validate,
evidence, attach, or perfect any lien, security interest, right or claim in the Collateral, and (c) to
assess, charge, collect, advance, deduct, and receive payments with respect to the Obligations,
including, without limitation, all interests, fees, costs, expenses permitted under the Financing
Agreements, and apply such payments to the Obligations pursuant to the Financing Agreements
19
and this Interim Order. In addition, and without limiting the foregoing, upon the occurrence of
an Event of Default and after providing three (3) business days prior written notice (the
"Enforcement Notice") to counsel for the Debtors, counsel for the Committee (if appointed), the
U.S. Trustee and the Court, unless this Court has entered an order to the contrary, Lender shall
be entitled to take any action and exercise all rights and remedies provided to them by this
Interim Order, the Financing Agreements and/or applicable law as it may deem appropriate in its
sole discretion to, among other things, proceed against and realize upon the Collateral and any
other assets and properties of any Debtors' Estates upon which Lender has been or may hereafter
be granted liens and security interests to obtain the full and indefeasible repayment of all
Obligations.
Section 4. Representations; Covenants; and Waivers.
4.1 Objections to Pre-Petition Obligations. Any action, claim, or defense
(hereinafter, an "Objection") that seeks to object to, challenge, contest, or otherwise invalidate or
reduce, whether by setoff, recoupment, counterclaim, deduction, disgorgement or claim of any
kind (a) the existence, validity, or amount of the Pre-Petition Obligations, (b) the extent, legality,
validity, perfection, or enforceability of Lender's pre-petition liens and security interests in the
Pre-Petition Collateral, or (c) Lender's right to apply post-petition payments against Pre-Petition
Obligations in satisfaction of Lender's liens as provided for in this Interim Order shall be filed
with the Court by any Committee or other party in interest, within forty-five ( 45) calendar days
from the date of appointment of the Committee by the U.S. Trustee, or (y) in the event no
Committee is appointed, within the forty-five (45) days following the Petition Date by any party
in interest with requisite standing, unless such time periods are extended by (x) the consent of the
Lender or (y) further order of this Court on notice to the Debtors and the Lender (the "Objection
Period"). If any such Objection is timely filed arid successfully pursued, nothing in this Interim
Order shall prevent the Court from granting appropriate relief with respect to the Pre-Petition
Obligations and/or Lender's liens on the Pre-Petition Collateral. If no Objection is timely filed
or an Objection is timely filed but denied, (a) the Pre-Petition Obligations shall be deemed
20
allowed in full, shall not be subject to any setoff, recoupment, counterclaim, deduction, or claim
of any kind, and shall not be subject to any further objection or challenge by any party at any
time, and Lender's pre-petition liens on and security interests in the Pre-Petition Collateral shall
be deemed legal, valid, perfected, enforceable, and non-avoidable for all purposes and of first
and senior priority, subject to only the Permitted Liens and Claims, and (b) Lender, its
participants, and each of their respective agents, officers, directors, employees, attorneys,
professionals, successors, and assigns shall be deemed released and discharged from any and all
claims and causes of action related to or arising out of the Pre-Petition Financing Agreements
and shall not be subject to any further objection or challenge by any party at any time.
4.2 Debtors' Waivers. At all times during the Cases and whether or not an
Event of Default has occurred, the Debtors irrevocably waive any rights that they may have to
seek authority (i) to use Cash Collateral of Lender under section 363 of the Bankruptcy Code,
other than as specified herein, (ii) to obtain postpetition loans or other financial accommodations
pursuant to section 364(c) or (d) of the Bankruptcy Code other than from Lender, or as may be
otherwise expressly permitted pursuant to the Loan Agreement, (iii) to challenge the application
of any payments authorized by this Interim Order as pursuant to section 506(b) of the
Bankruptcy Code, or to assert that the value of the Pre-Petition Collateral is less than the Pre-
Petition Obligations, (iv) to propose or support a plan of reorganization that does not provide for
the indefeasible payment in full and satisfaction of all Obligations on the effective date of such
plan, or (v) to seek relief under the Bankruptcy Code, including without limitation, under section
105, to the extent any such relief would in any way restrict or impair the rights and remedies of
Lender as provided in this Interim Order and the Financing Agreements or Lender's exercise of
such rights or remedies; provided, however, Lender may otherwise consent in writing, but no
such consent shall be implied from any other action, inaction, or acquiescence by Lender.
4.3 Section 506(c) Claims. Upon entry of a final order providing for such
relief (if authorized), except for the Carve-Out Expenses, no costs or expenses of administration,
which have or may be incurred in the Cases at any time during the Interim Financing Period shall
21
be charged against Lender, its claims, or the Collateral pursuant to section 506(c) of the
Bankruptcy Code without the prior written consent of Lender, and no such consent shall be
implied from any other action, inaction, or acquiescence by Lender.
4.4 Collateral Rights. Until all of the Obligations shall have been indefeasibly
paid and satisfied in full, (a) no other party shall foreclose or otherwise seek to enforce any
junior lien or claim in any Collateral, (b) subject to the terms and conditions of this Interim
Order, upon and after the occurrence and continuance of an Event of Default, Lender in its
discretion, in connection with a liquidation or other disposition of any of the Collateral may enter
upon, occupy, and use any real property, equipment, leasehold interests, warehouse
arrangements, trademarks, tradenames, copyrights, licenses, patents, or any other assets of the
Debtors, which are owned by or subject to a lien of any party other than the Debtors and which
are used by the Debtors in their businesses, all without interference from the respective lessors,
licensors, or owner of such property for the purpose of conducting liquidation sales of the
Debtors' assets and properties; provided that, Lender will be responsible for the payment of any
fees, rentals, royalties, or other amounts due such lessor, licensor, or owner of such property and
any reasonable costs or expenses incurred by such lessor, licensor, or owner for the period of
time that Lender actually occupies or uses the premises, equipment, or the intellectual property
(but in no event for any accrued and unpaid fees, rentals, or other amounts due for any period
prior to or after the date that any such party actually occupies or uses such assets or properties).
4. 5 Release. Subject to the provisions of this Interim Order, including
paragraph 4.1, in consideration of Lender making post-petition loans, advances and providing
other credit and financial accommodations to the Debtors pursuant to the provisions of the
Financing Agreements and this Interim Order, Debtors, on behalf of themselves and their
successors and assigns, (collectively, the "Releasors"), shall, forever release, discharge and
acquit Lender and its officers, directors, agents, attorneys and predecessors-in-interest
(collectively, the "Releasees") of and from any and all claims, demands, liabilities,
responsibilities, disputes, remedies, causes of action, indebtedness and obligations, of every kind,
22
nature and description, including, without limitation, any so-called "lender liability" claims or
defenses, that Releasors had, have or hereafter can .or may have against Releasees as of the date
hereof, in respect of events that occurred on or prior to the date hereof with respect to the
Debtors, the Pre-Petition Obligations, the Financing Agreements and any Loans, Letter of Credit
Accommodations or other financial accommodations made by Lender to Debtors pursuant to the
Financing Agreements. In addition, upon the indefeasible payment in full of all Obligations
owed to Lender by Debtors and termination of the rights and obligations arising under the
Financing Agreements and this Interim Order (which payment and termination shall be on terms
and conditions acceptable to Lender), Lender shall be released from any and all obligations,
liabilities, actions, duties, responsibilities and causes of action arising or occurring in connection
with or related to the Financing Agreements and/or this Interim Order (including without
limitation any obligation or responsibility (whether direct or indirect, absolute or contingent, due
or not due, primary or secondary, liquidated or unliquidated) to pay or otherwise fund the Carve-
Out Expenses), on terms and conditions acceptable to Lender.
Section 5. Other Rights and Obligations.
5.1 No Modification or Stay of This Interim Order. Notwithstanding (i) any
stay, modification, amendment, supplement, vacating, revocation, or reversal of this Interim
Order, the Financing Agreements, or any term hereunder or thereunder, (ii) the failure to obtain a
Final Order pursuant to Bankruptcy Rule 400l(c)(2), or (iii) the dismissal or conversion of the
Cases (a "Subject Event"), (x) the acts taken by Lender in accordance with this Interim Order,
and (y) the Post-Petition Obligations incurred or arising prior to the Lender's actual receipt of
written notice from Debtors expressly describing the occurrence of such Subject Event shall be
governed in all respects by the original provisions of this Interim Order, and the acts taken by
Lender in accordance with this Interim Order, and the post-petition liens granted to Lender in the
Post-Petition Collateral, and all other rights, remedies, privileges, and benefits in favor of the
Lender pursuant to this Interim Order and the Financing Agreements shall remain valid and in
full force and effect pursuant to section 364(e) of the Bankruptcy Code. For purposes of this
23
Interim Order, the term "appeal", as used in section 364(e) of the Bankruptcy Code, shall be
construed to mean any proceeding for reconsideration, amending, rehearing, or re-evaluating this
Interim Order by this Court or any other tribunal.
5.2 Power to Waive Rights; Duties to Third Parties. Lender shall have the
right to waive any of the rights and remedies provided or acknowledged in this Interim Order in
favor of Lender (the "Lender Rights"), and shall have no obligation or duty to any other party
with respect to the exercise or enforcement, or failure to exercise or enforce any Lender Rights.
Any waiver by Lender of any Lender Rights shall not be or constitute a continuing waiver. A
delay in or failure to exercise or enforce any Lender Right shall neither constitute a waiver of
such Lender Right, subject Lender to any liability to any other party, nor cause or enable any
other party to rely upon or in any way seek to assert as a defense to any obligation owed by the
Debtors to the Lender.
5.3 Disposition of Collateral. Debtors shall not sell, transfer, lease,
encumber or otherwise dispose of any portion of the Collateral without the prior written consent
of Lender (and no such consent shall be implied, from any other action, inaction or acquiescence
by Lender) or an order of this Court, except for sales of Debtors' Inventory in the ordinary
course of its business or as approved by the Bankruptcy Court.
5.4 Inventory. Debtors shall not, without the consent of Lender or an order
of this Court, enter into any agreement to return any inventory to any of its creditors for
application against any pre-petition indebtedness under any applicable provision of section 546
of the Bankruptcy Code, or consent to any creditor taking any setoff against any of its pre-
petition indebtedness based upon any such return pursuant to section 553(b)(l) of the
Bankruptcy Code or otherwise.
5. 5 Reservation of Rights. Except as may be inconsistent with the
provisions of this Interim Order, the terms, conditions and provisions of this Interim Order is in
addition to and without prejudice to the rights of Lender to pursue any and all rights and
remedies under the Bankruptcy Code, the Financing Agreements, or any other applicable
24
agreement or law, including, without limitation, rights to seek adequate protection and/or
additional or different adequate protection, to seek relief from the automatic stay, to seek an
injunction, to oppose any request for use of cash collateral or granting of any interest in the
Collateral or priority in favor of any other party, to object to any sale of assets, and to object to
applications for allowance and/or payment of compensation of Professionals or other parties
seeking compensation or reimbursement from the Estates.
5.6 Binding Effect. This Interim Order shall be binding upon Debtors, all
parties in interest in the Cases, and their respective successors and assigns, including any trustee
or other fiduciary appointed in the Cases or any subsequently converted bankruptcy case( s) of
the Debtors. This Interim Order shall also inure to the benefit of Lender, Debtors, and their
respective successors and assigns. The provisions of this Interim Order and the Financing
Agreements, Post-Petition Obligations, Superpriority Claim and any and all rights, remedies,
privileges, and benefits in favor of Lender provided or acknowledged in this Interim Order, and
any actions taken pursuant thereto, shall be effective immediately upon entry of this Interim
Order pursuant to Bankruptcy Rules 6004(g) and 7062, shall continue in full force and effect,
and shall survive entry of any such other order, including without limitation any order which
may be entered confirming any plan of reorganization, converting one or more of the Cases to
any other chapter under the Bankruptcy Code, or dismissing one or more of the Cases. Any
order dismissing one or more of the Cases under section 1112 or otherwise shall be deemed to
provide (in accordance with sections 105 and 349 of the Bankruptcy Code) that (a) the
Superpriority Claim and Lender's liens in the Collateral shall continue in full force and effect
notwithstanding such dismissal until the Obligations are indefeasibly paid and satisfied in full,
and (b) this Court shall retain jurisdiction, notwithstanding such dismissal, for the purposes of
enforcing the Superpriority Claim and liens in the Collateral.
5.7 Term: Termination. Notwithstanding any prov1s1on of this Interim
Order to the contrary, the term of the financing arrangements among Debtors and Lender
25
authorized by this Interim Order may be terminated pursuant to the terms of the Loan
Agreement.
5.8 Limited Effect. Unless the Interim Order specifically provides
otherwise, in the event of a conflict between the terms and provisions of any of the Financing
Agreements and this Interim Order, the terms and provisions of this Interim Order shall govern,
interpreted as niost consistent with the terms and provisions of the Financing Agreements.
5.9 Objections Overruled. All objections to the Motion on an interim basis,
if any, are hereby overruled.
Section 6. Final Hearing and Response Dates.
6.1 The Final Hearing on the Motion pursuant to Bankruptcy Rule 4001(c)(2)
is scheduled for Apri116, 2010 at 1:30 p.m. before this Court. The Debtors shall promptly mail
copies of this Interim Order to the Noticed Parties, and to any other party that has filed a request
for notices with this Court and to any Creditors' Committee after same has been appointed, or
Creditors' Committee counsel, if same shall have filed a notice.
6.2 Any party in interest objecting to the relief sought at the Final Hearing
shall serve and file objections, which objections shall: (i) be in writing; (ii) conform to the
Bankruptcy Rules and the Local Rules; and (iii) be filed with the Clerk of the United States
Bankruptcy Court for the District of Delaware no later than three (3) business days before the
Final Hearing and served upon the following parties so as to be received not less than three (3)
business days before the Final Hearing: (a) counsel to the Debtors, Gersten Savage, LLP, Attn:
Paul Rachmuth, Esq, 600 Lexington Avenue, New York, New York 10017 and Bayard, P.A.,
Attn: Jamie L. Edmonson, Esq., 222 Delaware Avenue, Suite 900, Wilmington, Delaware 19899
(b) the United States Trustee for the District of Delaware; (c) counsel to the Secured Lender,
Lowenstein Sandler PC, Attn: Thomas A. Pitta, Esq, 65 Livingston Avenue, Roseland, New
Jersey 07068, tpitta@lowenstein.com; and (d) counsel to any statutory committee appointed in
these chapter 11 cases.
26
In the event this Court modifies any of the provisions of this Interim Order or the
Financing Agreements following such further hearing, such modifications shall not affect the
rights and priorities of Lender pursuant to this Interim Order with respect to the Collateral, and
any portion of the Obligations which arises or is incurred or is advanced prior to such
modifications (or otherwise arising prior to such modifications), and this Interim Order shall
remain in full force and effect except as specifically amended or modified at such Final Hearing.
Dated: March , 2010
Wilmington, Delaware
HONORABLE BRENDAN L. SHANNON
UNITED STATES BANKRUPTCY JUDGE
27
EXIDBITB
{BAY:Ol51364lvl}
In re
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
Chapter 11
CRDENTIA CORP., eta!. ,I Case No. 10-10926 (BLS)
Debtors. (Jointly Administered)
Re: Docket No. 16
ORDER (A) AUTHORIZING DEBTORS TO
OBTAIN INTERIM POST-PETITION FINANCING AND
GRANT SECURITY INTERESTS AND SUPERPRIORITY
ADMINISTRATIVE EXPENSE STATUS PURSUANT TO 11 U.S.C.
105 AND 364(c); (B) MODIFYING THE AUTOMATIC STAY
PURSUANT TO 11 U.S.C. 362; (C) AUTHORIZING DEBTORS
TO ENTER INTO AGREEMENTS WITH COMVEST
CAPITAL LLC; AND (D) SCHEDULING A FINAL
HEARING PURSUANT TO BANKRUPTCY RULE 4001
Upon the motion (the "Motion"), dated March 17, 20 I 0, Crdentia, Inc.
("Crdentia"), CRDE Corp., GHS Acquisition Corporation, Staff Search Acquisition Corp., MP
Health Corp., Prime Staff, LP, Mint Medical Staffing Odessa, LP and ATS Universal, LLC
(each, individually, a "Debtor" and collectively, "Debtors" or "Borrower"), each as a debtor and
debtor-in-possession in the above-captioned chapter 11 cases (collectively, the "Cases"),
pursuant to sections 105, 361, 362, 364(c)(1), 364(c)(2) and 364(c)(3) of title 11 of the United
States Code, 11 U.S. C. 101, et seq. (the "Bankruptcy Code") and Rules 2002, 400l(c), and
9014 of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"), seeking, among
other things:
The Debtors, along with the last fonr digits of their federal tax identification nnrnbers, are: Crdentia
Corp.(5701), ATS Universal, LLC (3980), Baker Anderson Christie, Inc. (3631), CRDE Corp. (2509), GHS
Acquisition Corporation (9736), Health Industry Professionals, LLC ( 4246), HIP Holding, Inc. (3468), MP Health
Corp. (4403), New Age Staffing, Inc. (1214) and Nurses Network, Inc. (6291) .. The Debtors' mailing address for
purposes of these cases is 1964 Howell Branch Road, Ste. 206, Winter Park, Florida 32792.
{BAY:Ol512347v2}
(1) authorization for Borrower to obtain post-petition loans, advances and
other financial accommodations on an interim basis for a period through and including the date
of the Final Hearing (as hereinafter defined) from Com Vest Capital LLC ("Lender"), inclusive of
the amount of all pre-petition indebtedness owed by Debtors to Lender, in accordance with the
terms and conditions set forth in the Existing Loan Agreement (as hereinafter defined), as
amended and ratified by the Ratification Agreement (as hereinafter defined), and in accordance
with the Budget (as hereinafter defined) and this Order, secured by security interests in and liens
upon all of the Collateral (as hereinafter defined) pursuant to sections 364(c)(2) and 364(c)(3) of
the Bankruptcy Code;
(2) authorization for Debtors to enter into the Ratification and Amendment
Agreement, dated March 17, 2010 (the "Ratification Agreement", a copy of which is annexed to
the Exhibit Supplement to the Motion (the "Exhibit Supplement") as Exhibit "B" thereto), by
and among Debtors and Lender, which ratifies, extends, adopts and amends the Existing Loan
Agreement and the other existing loan, financing and security agreements by and among
Borrower, and Lender (capitalized terms not otherwise defined in this Order shall have the
respective meanings ascribed thereto in the Existing Loan Agreement, as amended and ratified
by the Ratification Agreement);
(3) modification of the automatic stay to the extent hereinafter set forth;
( 4) granting to Lender a super-priority administrative claim status pursuant to
section 364(c)(1) of the Bankruptcy Code in respect of all Obligations (as defined in the
Ratification Agreement); and
( 5) setting a final hearing on the Motion.
Due and appropriate notice of the Motion, the relief requested therein, and the
Interim Hearing (as defined below) (the "Notice") having been served by the Debtors on (i) the
Lender; (ii) United States Trustee for the District of Delaware (the "U.S. Trustee"); (iii) holders
of the twenty (20) largest unsecured claims against the Debtors' estates (on a consolidated basis)
(the "20 Largest Unsecured Creditors"); (iv) the Internal Revenue Service ("IRS"); (v) the
2
Attorney General of the State of Delaware; (vi) all landlords, owners, and/or operators of
premises at which any of the Debtors' inventory and/or equipment is located; and (vii) certain
other parties identified in the certificate of service filed with the Court, including, without
limitation, all creditors who have filed or recorded pre-petition liens or security interests against
any of the Debtors' assets (collectively, the "Noticed Parties");
The initial hearing on the Motion having been held by this Court on March 19,
2010 (the "Interim Hearing");
Upon the record made by the Debtors at the Interim Hearing, including the
Motion and the filings and pleadings in the Cases, and good and sufficient cause appearing
therefore;
THE COURT HEREBY MAKES THE FOLLOWING FINDINGS OF FACTS
AND CONCLUSIONS OF LAW:
A. Petition. On March 17, 2010 (the "Petition Date"), each of the Debtors
filed voluntary petitions (the "Petitions") under chapter 11 of the Bankruptcy Code. A motion
for joint administration of the Debtors' estates is pending. The Debtors continue to operate their
businesses and manage their properties as debtors-in-possession pursuant to sections 1107(a) and
11 08 of the Bankruptcy Code.
B. Jurisdiction and Venue. The Court has jurisdiction of this proceeding and
the parties and property affected hereby pursuant to 28 U.S. C. 157(b) and 1334. The Motion
is a "core" proceeding as defined in 28 U.S.C. 157(b)(2)(A), (D), and (M). Venue of the Cases
and the Motion in this Court is proper pursuant to 28 U.S. C. 1408 and 1409.
C. Notice. Under the circumstances, the Notice given by the Debtors of the
Motion, the Interim Hearing and the relief granted under this Order constitutes due and sufficient
notice thereof and complies with Bankruptcy Rule 4001 (c).
3
D. Debtors' Acknowledgments and Agreements. +he-Subject to the
provisiOns of this Interim Order including paragraph 4.1 the Debtors admit, stipulate,
acknowledge and agree that:
(i) Pre-Petition Financing Agreements. Prior to the commencement
of the Cases, Lender made loans and advances and provided credit accommodations to Borrower
pursuant to (1) Loan and Security Agreement, dated July 3, 2008, by and between Borrower and
Lender, as successor to Capital Tempfunds, a division of Capital Business Credit LLC
("Tempfunds"), the First Amendment dated as of June 22, 2009, between Wells Fargo Bank,
N.A., acting through its Wells Fargo Business Credit and Operating Division ("WFBC"),
successor in interest to Tempfunds, and the Second Amendment to Loan and Security
Agreement, dated July 7, 2009 (as the same has heretofore been amended, supplemented,
modified, extended, renewed, restated and/or replaced at any time prior to the Petition Date, the
"Existing Loan Agreement"), and (2) all other agreements, documents, and instruments executed
and/or delivered with, to, or in favor of Lender, including, without limitation, the security
agreements, notes, guarantees, mortgages, and Uniform Commercial Code ("UCC") financing
statements and all other related agreements, documents, and instruments executed and/or
delivered in connection therewith or related thereto, (collectively, the "Pre-Petition Financing
Agreements"). Copies of the operative Pre-Petition Financing Agreements are annexed to the
Exhibit Supplement as Exhibit "B".
(ii) Term Loan Debt. Prior to the commencement of the Cases,
Borrower obtained term loans from Lender or otherwise incurred obligations pursuant to the
Revolving Credit and Term Loan Agreement dated February 22, 2008, executed by Crdentia in
favor the aggregate principal amount of $16,700,000 (the "Term Loan Agreement"
and together with all other agreements, documents and instruments executed and/or delivered in
connection therewith, or incident to same the "Term Loan Documents"). Pursuant to the Term
Loan Documents, borrowings are secured by the Pre-Petition Collateral (as hereinafter defined).
4
(iii) Pre-Petition Obligations Amount. As of the Petition Date, the
aggregate amount of all Loans and other Pre-Petition Obligations (as defined in the Ratification
Agreement) owed by the Debtors to Secured Lender under and in connection with the Pre-
Petition Financing Agreements, consisting of Revolving Loans with a principal due in an amount
not less than $5,736,551.72 and the Term Loans with principal due in an amount not less than
$10,693,240.81 plus all interest accruing thereon, and all fees, costs, expenses, and other charges
accrued, accruing, or chargeable with respect thereto totaling $18,995,353.01 (the "Pre-Petition
Obligations", as such term is more fully defined in the Ratification Agreement
1
), and that the
Pre-Petition Obligations constitute allowed, legal, valid, binding, enforceable and non-avoidable
obligations of the Debtors, and are not subject to any offset, defense, counterclaim, avoidance,
recharacterization or subordination pursuant to the Bankruptcy Code or any other applicable law,
and Debtors do not possess and shall not assert any claim, counterclaim, setoff or defense of any
kind, nature or description which would in any way affect the validity, enforceability and non-
avoidability of any ofthe Pre-Petition Obligations.
(iv) Pre-Petition Collateral. As of the Petition Date, the Pre-Petition
Obligations were fully secured pursuant to the Pre-Petition Financing Agreements by valid,
perfected, enforceable and non-avoidable first priority security interests and liens granted by the
Debtors to Lender upon all of the Collateral (as defined in the Existing Loan Agreement)
existing as of the Petition Date and all rents, issues, profits, proceeds, and products thereof (the
"Prepetition Collateral", and collectively, together with any other property of the Debtors'
bankruptcy estates (as defined under section 541 of the Bankruptcy Code, the "Estates") .
Debtors do not possess and will not assert any claim, counterclaim, setoff or defense of any kind,
nature or description, which would in any way affect the validity, enforceability and non-
To the extent that the term "Pre-Petition Obligations" as defined and used in this Interim
Order is in any way inconsistent or conflicts with the way in which such term is defined in the
Ratification Agreement, the definition of such term contained in the Ratification Agreement shall
control and shall be incorporated into this Interim Order.
5
avoidability of any of Lender's liens, claims and/or security interest m the Pre-Petition
Collateral.
6
E. Findings Regarding the Postpetition Financing.
(i) Postpetition Financing. The Debtors have requested from Lender,
and Lender is willing to extend, certain loans, advances and other financial accommodations, as
more particularly described and on the terms and conditions set forth in this Order and the
Financing Agreements (as hereinafter defined);
(ii) Need for Post-Petition Financing. The Debtors do not have
sufficient available sources of working capital to operate their businesses in the ordinary course
of their businesses without the financing requested under the Motion. The Debtors' ability to
maintain business relationships with their vendors, suppliers, and customers, to pay their
employees, and to otherwise fund their operations, is essential to Debtors' continued viability.
The ability of the Debtors to obtain sufficient working capital and liquidity through the proposed
post-petition financing arrangements with Lender as set forth in this Order and the Financing
Agreements is vital to the preservation and maintenance of the going concern values of the
Debtors. Accordingly, the Debtors have an immediate need to obtain the post-petition financing
in order to permit, among other things, the orderly continuation of the operation of their
businesses, to minimize the disruption of their business operations, and to manage and preserve
the assets of their estates in order to maximize the recovery to all estate creditors;
(iii) No Credit Available on More Favorable Terms. The Debtors
believe that it would be futile, under the circumstances, to pursue alternative post-petition
financing in the form of: (1) unsecured credit allowable as an administrative expense under
Section 503(b)(1) of the Code; (2) unsecured credit allowable under Sections 364(a) and 364(b)
of the Code; or (3) secured credit pursuant to Section 364(c) of the Code, on more favorable
terms and conditions from sources other than the Secured Lender. Accordingly, the Secured
Lender has agreed to fund the Debtors' continued operations in chapter 11 in exchange for the
reasonable protections proposed, including first-priority liens on all of the Debtors' assets.;
(iv) Business Judgment and Good Faith Pursuant to Section 364(e).
The terms ef the Fiuaneiug Agreements and this Order are fair, just, and reasenable under the
7
eireumstanees, are ordinary ana appropriate for seeurea finaneing to debtors in possession,
refleet the Debtors' OJ<oreise of their prudent business judgment eonsistent with their fiaueiary
duties, ana are supported by reasonably equivalent value ana fair eonsiaeration. The terms ana
eonaitions of the Finaneing Agreements ana this Order have been negotiated in good faith ana at
arms' length by ana among the Debtors ana Lender, with all parties represented by eounsel. Any
credit extended under the terms of this Interim Order shall be deemed to have been extended in
good faith by Lender as that term is used in section 364(e) of the Bankruptcy Code.
(v) Budget. Borrower has prepared and delivered to Lender an initial
thirteen (13) week budget (the "Budget") (a copy of which is annexed to the Exhibit Supplement
as Exhibit "C"). The Budget has been thoroughly reviewed by Borrower and its management
and sets forth, among other things, in each case, commencing with the week ending as of March
19, 2010: (A) projected weekly cash receipts for each week; (B) projected weekly cash
disbursements for each week; and (C) projected weekly loan balances for each week. Lender is
relying upon the Debtors' compliance with the Budget in accordance with Section 5.3 of the
Ratification Agreement in determining to enter into the post-petition financing agreements
provided for herein.
(vi) Good Cause. The relief requested in the Motion is necessary,
essential, and appropriate and is in the best interests of and will benefit the Debtors, their
creditors, and their Estates as its implementation will, among other things, provide the Debtors
with the necessary liquidity (A) to minimize disruption to the Debtors' businesses and on-going
operations, (B) preserve and maximize the value of the Debtors' Estates for the benefit of all the
Debtors' creditors, and (C) avoid immediate and irreparable harm to the Debtors, their creditors,
their businesses, their employees, and their assets.
(vii) Immediate Entry. Sufficient cause exists for immediate entry of
this Order pursuant to Bankruptcy Rules 4001(c)(2). No party appearing in the Cases has filed
or made an objection to the relief sought in the Motion and the entry of this Order, or any
8
objections that were made (to the extent such objections have not been withdrawn) are hereby
overruled.
Based upon the foregoing, and after due consideration and good cause appearing
therefor;
IT IS HEREBY ORDERED, ADJUDGED AND DECREED, that:
Section 1. Authorization and Conditions to Financing.
1.1 Motion Granted. The Motion is granted in accordance with Bankruptcy
Rule 400l(c)(2) to the extent provided in this Order. This Order shall hereinafter be referred to
as the "Interim Order."
1.2 Authorization to Borrow and Use of Loan Proceeds. Borrower is hereby
authorized and empowered to immediately borrow and obtain Loans and to incur indebtedness
and obligations owing to Lender pursuant to the terms and conditions of this Interim Order and
the Existing Loan Agreement, as ratified and amended by the Ratification Agreement (as the
same has heretofore been or may hereafter be amended, modified, supplemented, restated,
extended or replaced, the "Loan Agreement"; as such term is more fully defined in the
Ratification Agreement) and the other Financing Agreements during the period commencing on
the date of this Interim Order through and including the date of the Final Hearing as set forth in
section 6 of this Interim Order (the "Interim Financing Period") in an amount not to exceed
$500,000 in accordance with the Budget. Subject to the terms and conditions contained in this
Interim Order, the Budget and the Financing Agreements, Borrower shall use the proceeds of the
Loans and any other credit accommodations provided to Borrower or pursuant to this Interim
Order and the Loan Agreement for, inter alia, the payment of employee salaries, payroll, taxes,
and other general operating and working capital purposes in the ordinary course of Debtors'
businesses in accordance with the Financing Agreements, including amounts paid for such
purposes which may constitute administrative expense claims under the Bankruptcy Code
directly attributable to the operation of Debtors' businesses, expenditures authorized by final
9
order of the Court including, without limitation, professionals whose retention has been approved
by the Court under Sections 327, 328, and 330 of the Bankruptcy Code (to the extent such Court-
authorized expenditures are in accordance with the Financing Agreements) and the fees of the
U.S. Trustee, the Clerk of this Court.
1.3 Financing Agreements.
1.3 .I Authorization. The Debtors are hereby authorized and directed to
enter into, execute, deliver, perform, and comply with all of the terms, conditions and covenants
of the Loan Agreement, the other Pre-Petition Financing Agreements, as ratified and amended
by the Ratification Agreement, and all other agreements, documents and instruments executed
and/or delivered in connection with or related to the Loan Agreement and the Pre-Petition
Financing Agreements and this Interim Order, pursuant to which, inter alia, the Debtors ratify,
reaffirm, extend, assume, adopt, amend, and restate the Existing Loan Agreement and the other
Pre-Petition Financing Agreements to which they are a party, and together with the Loan
Agreement, the Pre-Petition Financing Agreements, as ratified and amended by the Ratification
Agreement, and all other agreements, documents and instruments executed and/or delivered in
connection therewith or related thereto, as all of the same have heretofore been or may hereafter
be amended, modified, extended, supplemented, restated or replaced, collectively, the "Financing
Agreements").
1.3.2 Approval. The Debtors are authorized to perform under the
Financing Agreements (including, without limitation, the Loan Agreement) ana eaeh term set
ferth therein are apprevecl te the extent necessary to implement the terms and provisions of this
Interim Order. All of such terms, conditions, and covenants shall be sufficient and conclusive
evidence of the borrowing arrangements by and among the Borrower and Lender and of the
Debtors' assumption and adoption of all of the terms, conditions, and covenants of the Loan
10
Agreement and the other Financing Agreements for all purposes, including, without limitation, to
the extent applicable, the payment of all Obligations (as defined in the Loan Agreement) arising
thereunder, including, without limitation, all principal, interest, commissions, servicing fees,
unused line fees, DIP facility fees, early termination fees, and other fees and expenses, including,
without limitation, all of Lender's attorneys' fees and legal expenses, as more fully set forth in
the Financing Agreements.
1.3 .3 Amendment. Subject to the terms and conditions of the Loan
Agreement and the other Financing Agreements, Lender and Debtors may amend, modify,
supplement, or waive any provision of the Financing Agreements (an "Amendment") without
further approval or order of the Court so long as (i) such Amendment is not material (for
purposes hereof, a "material" Amendment shall mean any Amendment that operates to add
and/or increase the amount of borrowings or associated fees/costs increase the rate of interest
other than as currently provided in the Financing Agreements, increase the Maximum Credit (as
defined in the Ratification Agreement), add specific new events of default or enlarge the nature
and extent of default remedies available to Lender following an event of default, or otherwise
modify any terms and conditions in any Financing Agreements in a manner materially less
favorable to the Debtors (in the good faith judgment of Lender and Delltors)or parties in interest,
(ii) the Debtors provide prior written notice of the Amendment (the "Amendment Notice") toW
counsel to any official committee appointed in the Cases under section 1102 of the Bankruptcy
Code (collectively, the in the event no such Committee is appointed at the
time of such Amendment, the 20 Largest Unsecured Creditors, and (y) the U.S. Trustee, and file
the Amendment Notice with the Court, and (iii) no objection to the Amendment is filed with the
Court within two (2) business days from the later of the date the Amendment Notice is served or
the date the Amendment Notice is filed with the Court in accordance with this section. Any
material Amendment to the Financing Agreements must be approved by the Court to be
effective.
11
1.4 Payment of Pre-Petition Debt. The Debtors are authorized to pay Lender
on account of the Pre-Petition Obligations in accordance with the Financing Agreements and
sections 1. 5 and 1. 6 of this Interim Order.
1. 5 Payments and Application of Payments. The Debtors are authorized and
directed to make all payments and transfers of Estate property to Lender as provided, permitted,
and/or required under the Loan Agreement and other Financing Agreements, which payments
and transfers-. to the extent they are made on account of Post-Petition Obligations shall not be
avoidable or recoverable from Lender under Sections 547, 548, 550, 553 or any other provision
of the Bankruptcy Code or any other claim, charge, assessment, or other liability, whether by
application of the Bankruptcy Code, other law, or otherwise. Lender shall apply the proceeds of
the Collateral or any other amounts or payments received by Lender in respect of the Obligations
in accordance with the Loan Agreement, the other Financing Agreements and this Interim Order,
including, without limitation, applying all payments, proceeds and other amounts first to the Pre-
Petition Obligations, until such Pre-Petition Obligations are indefeasibly paid in full--IHld
eollljlletely satisfied, and then to the Post-Petition Obligations. Without limiting the generality
of the foregoing, the Debtors are authorized and directed, without further order of this Court, to
pay or reimburse Lender for all reasonable present and future costs and expenses, including,
without limitation, all reasonable professional fees and legal expenses, paid, or incurred by
Lender in connection with the financing transactions as provided in this Interim Order and the
Financing Agreements, all of whieh, among other things, shall be and are inelueee as part ofthe
prineipal amount of the Obligations, ana shall be seeuree by the Collateral. provided that with
respect to such professional fees and legal expenses Lender shall submit copies of the relevant
invoices to counsel for the following entities: the Debtors the Creditors' Committee and the
United States Trustee. Any disputes between the Lender and the aforementioned parties
regarding the payment of such invoices shall be resolved by this Court.
1.6 Continuation of Pre-Petition Procedures. All pre-petition practices and
procedures for the payment and collection of proceeds of the Collateral, the turnover of cash, and
12
delivery of property to Lender, and the funding pursuant to the Financing Agreements, including
the blocked account arrangements and any other similar lockbox and blocked depository bank
accounts arrangements, are hereby approved, shall eoHtinue without iHterrnption or ereak in
eoHtinuity after the eommeneemeflt of the Cases, and shall apply to any and all deposit aeeouflts
established in aeeordanee v;ith applieallle Guidelines of the United States Trustee, other loeal
rules and mandates or otherwise. may continue subject to further or other order of this Court.
Section 2. Postpetition Lien; Superpriority Administrative Claim Status.
2.1 Post-Petition Lien.
2.1.1 Lien Granting. To secure the prompt payment and performance of
any and all Obligations of Debtors to Lender of whatever kind or nature or description, absolute
or contingent, now existing or hereafter arising, including, without limitation, all Pre-Petition
Obligations and all Post-Petition Obligations (as defined in the Ratification Agreement)
(collectively, the "Obligations", as such term is more fully defined in the Ratification Agreement
and is incorporated herein by reference), Lender shall have and is hereby granted, effective as of
the Petition Date, valid and perfected first priority security interests and liens, superior to all
other liens, claims and/or security interests that any creditor of any Debtor's Estate may have
(but subject to the Permitted Encumbrances and certain claims entitled to priority as and to the
extent expressly provided in section 2.1.2 below), in and upon all of the Pre-Petition Collateral
and the Post-Petition Collateral (as each term is defined in the Ratification Agreement). The Pre-
Petition Collateral and the Post-Petition Collateral are collectively referred to herein as the
"Collateral". Not'.vithstanding the foregoing or anything to the eofltrary eofltained in the Loan
f.greemeflt, Lender's While Lender intends to seek a lien on and security interest in avoidance
actions under Chapter 5 of the Bankruptcy Code shall-to secure the Loans and other Obligations
advanced or incurred after the Petition Date until--in the entry of a Permanent Financing Order
graming to Lender .JliLSuch a-lien and-or security interest on all Oeligationsis being granted by
this Interim Order. In accordance with Sections 552(b) and 361 of the Bankruptcy Code, the
value, if any, in any of the Collateral, in excess of the amount ofthe Obligations secured by such
13
Collateral after satisfaction of the Post-Petition Obligations of Debtors to Lender, shall constitute
additional security for the repayment of the Pre-Petition Obligations and adequate protection for
the use by Debtors and the diminution in the value of the Collateral existing on the Petition Date.
2.1.2 Lien Priority. The pre-petition and post-petition liens and security
interests of Lender granted under the Financing Agreements and this Interim Order in the
Collateral shall be and shall continue to be first and senior in priority to all other interests and
liens of every kind, nature and description, whether created consensually, by an order of the
Court, or otherwise, including, without limitation, liens or interests granted in favor of third
parties in conjunction with sections 363, 364, and/or any other sections of the Bankruptcy Code
or other applicable law; provided, however, that Lender's liens and security interests in the
Collateral shall be subject only to (i) the liens expressly permitted under Sections 8.4 and 9.8 of
the Loan Agreement (to the extent such liens are valid, perfected, enforceable and unavoidable);
and (ii) the Carve-Out Expenses (as defined herein) solely to the extent provided for in sections
2.3, 2.4 and 2.5 of this Interim Order (collectively, the "Permitted Liens and Claims").
2.1.3 Post-Petition Lien Perfection. This Interim Order shall be
sufficient and conclusive evidence of the priority, perfection, and validity of the Post-Petition
Liens, effective as of the Petition Date, without any further act and without regard to any other
federal, state, or local requirements or law requiring notice, filing, registration, recording, or
possession of the Collateral or other act to validate or perfect such security interest or lien
including without limitation, control agreements with other financial institutions holding a
blocked account, investment property control account or other depository account consisting of
Collateral (a "Perfection Act"). Notwithstanding the foregoing, if Lender shall, in its sole
discretion, elect for any reason to file, record, or otherwise effectuate any Perfection Act, Lender
is authorized to perform such act and the Debtors are authorized and direeted to perform sueh aet
cooperate to the extent necessary or required by Lender, whish aet or aets shall be deemed to
have been aeeoroplished as of the date and time of entry of this Interim Order, notwithstanding
the date and time aetually aeeoroplished, and in such event, the subject filing or recording office
14
is authorized to accept, file, and/or record any document in regard to such act in accordance with
applicable law. Lender may choose to file, record, or present a certified copy of this Interim
Order in the same manner as a Perfection Act, whish shall be tantamount to a Perfestion 1\st,
ana, in sush event, the subj est filing or resorcling offiee is authorized to assept, file, or resorcl
sush sertifiecl sopy of this Interim Order in assorclanse with applieable law. Should Lender so
choose and attempt to file, record, or perform a Perfection Act, no defect or failure in connection
.with such attempt shall in any way limit, waive, or alter the validity, enforceability, attachment,
or perfection of the Postpetition Lien by virtue of entry of this Interim Order.
2.2 Superpriority Administrative Expense. For all Post-Petition Obligations
now existing or hereafter arising pursuant to this Interim Order, the Financing Agreements or
otherwise, Lender is granted an allowed super -priority administrative claim pursuant to section
364(c)(1) of the Bankruptcy Code having priority in right of payment over any and all other
obligations, liabilities and indebtedness of Debtors, now in existence or hereafter incurred by
Debtors and over any and all administrative expenses or priority claims of the kind specified in,
or ordered pursuant to, inter alia, sections 105, 326, 328, 330, 331, 503(b), 508(&), 507(a),
507(b), 364(c)(1), 728 and/or 1114 of the Bankruptcy Code (the "Super-Priority Claim")
provided. however, the Super-Priority Claim shall be subject only to the Permitted Liens and
Claims as and to the extent expressly set forth in this Interim Order.
2.3 Carve-Out Expenses.
2.3.1 Carve-Out Expenses. Upon the declaration by Lender of
the occurrence of an Event of Default (as defined herein), Lender's liens, claims and security
interests in the Collateral and its Super-Priority Claim shall be subject only to the right of
payment of the following expenses (the "Carve-Out Expenses"):
a. statutory fees payable to the U.S.
Trustee pursuant to 28 U.S.C. section 1930(a)(6);
b. fees payable to the Clerk of this
Court; and
15
c. subject to the terms and conditions of
this Interim Order, the unpaid and outstanding reasonable fees and
expenses actually incurred on or after the Petition Date, and
approved by a final order of the Court pursuant to sections 326,
328, 330, or 331 of the Bankruptcy Code (collectively, the
"Allowed Professional Fees") by attorneys, accountants, and other
professionals retained by the Debtors under section 327 or 1103(a)
of the Bankruptcy Code, as well as notice, balloting and claims
agents (the "Debtors Professionals"), less the amount of any
retainers, if any, then held by each Debtors Professionals, in a
cumulative, aggregate sum not to exceed $85,000 (the "Debtors
Professional Fee Carve-Out").
d. subject to the terms and conditions of
this Interim Order, the unpaid and outstanding Allowed
Professional Fees by attorneys, accountants and other professionals
retained by any Committee(s) under section 327 or 1103(a) of the
Bankruptcy Code (collectively, the "Committee Professionals"),
less the amount of any retainers, if any, then held by each
Committee Professionals, in a cumulative, aggregate sum not to
exceed $25,000 (the "Committee Professional Fee Carve-Out" and
with the Debtors Professional Fee Carveout, the "Professional Fee
Carveout" ).
2.3 .2 Excluded Professional Fees. Notwithstanding anything to
the contrary in this Interim Order, the Professional Fee Carve-Out shall not be used to pay any
Allowed Professional Fees or any other fees and/or expenses incurred by any Professional in
connection with any of the following: (a) an assertion or joinder in (but excluding any
investigation into) any claim, counter-claim, action, proceeding, application, motion, objection,
16
defense, or other contested matter seeking any order, judgment, determination or similar relief:
(i) challenging the legality, validity, priority, perfection, or enforceability of the Obligations or
Lender's liens on and security interests in the Collateral, (ii) invalidating, setting aside, avoiding,
or subordinating, in whole or in part, the Obligations or Lender's liens on and security interests
in the Collateral, or (iii) preventing, hindering, or delaying Lender's assertion or enforcement of
any lien, claim, right or security interest or realization upon any Collateral, (b) a request 1ll....ll.se
the Cash Collateral (as such term is defined in section 363 of the Bankruptcy Code) other than as
set forth in this Order, without the prior written consent of Lender, (c) a request for authorization
to obtain debtor-in-possession financing or other financial accommodations pursuant to section
3 64( c) or (d) of the Bankruptcy Code other than from Lender without the prior written consent of
Lender, (d) the commencement or prosecution of any action or proceeding of any claims, causes
of action, or defenses against Lender or any of their respective officers, directors, employees,
agents, attorneys, affiliates, assigns, or successors, including, without limitation, any attempt to
recover or avoid any claim or interest from Lender under Chapter 5 of the Bankruptcy Code, or
. (e) any act which has the effect of materially and adversely modifying or compromising the
rights and remedies of Lender, or which is contrary, in a manner that is material and adverse to
Lender to any term or condition set forth in or acknowledged by the Financing Agreements or
this Interim Order and which results in the occurrence of an Event of Default under the
Financing Agreements and/or this Interim Order. The foregoing shall neither limit nor otherwise
affect the ability of an official committee to use funds allocated to the Professional Fee Carve-
Out for the purnose of investigating (but not prosecuting) the Lender's claim and/or claims and
causes of action against the Lender.
2.4 Carve-Out Reserve. At Lender's sole discretion, Lender may, at any time
and in any increment in accordance with the Loan Agreement, establish an Availability Reserve
against the amount of Loans and other credit accommodations that would otherwise be made
available to the Debtors pursuant to the lending formulae contained in the Loan Agreement in
respect of the Professional Fee Carve-Out and the other Carve-Out Expenses.
17
2.5. Payment of Carve-Out Expenses. Any payment or reimbursement made
either directly by or on behalf of Lender at any time or by or on behalf of the Debtors on or after
the occurrence of an Event of Default in respect of any Allowed Professional Fees or any other
Carve-Out Expenses shall, in either case, permanently reduce the Debtors or Committees
Professional Fee Carve-Out, as applicable, on a dollar-for-dollar basis. Lender's obligation to
fund or otherwise pay the Professional Fee Carve-Out and the other Carve-Out Expenses shall be
added to and made a part of the Obligations, secured by the Collateral, and entitle Lender to all
of the rights, claims, liens, priorities and protections under this Interim Order, the Financing
Agreements, the Bankruptcy Code, and/or applicable law. Payment of any Carve-Out Expenses,
whether by or on behalf of Lender, shall not be deemed to reduce the Obligations and shall not
be deemed to subordinate any Lender's liens and security interests in the Collateral or their
Super-Priority Claim to any junior pre-petition or post-petition lien, interest, or claim in favor of
any other party. Except as otherwise provided herein with respect to the Professional Fee Carve-
Out and the other Carve-Out Expenses, Lender shall not be responsible for the direct payment or
reimbursement of any fees or disbursements of any Professionals incurred in connection with the
Cases under any chapter of the Bankruptcy Code, and nothing in sections 2.3, 2.4 or 2.5 of this
Interim Order shall be construed to obligate Lender in any way, to pay compensation to or to
reimburse expenses of any Professional, or to ensure that the Debtors have sufficient funds to
pay such compensation or reimbursement.
2.6. Section 507(b) Priority. To the extent Lender's liens on and security
interests in the Collateral or any other form of adequate protection of the Lender's interests is
insufficient to pay indefeasibly in full all Obligations, Lender shall also have the priority in
payment afforded by section 507(b) to the extent of any such deficiency.
18
Section 3. Default; Rights and Remedies; Relief from Stay.
3.1 Events of Default. The occurrence of any of the following events shall
constitute an Event of Default under this Interim Order:
a. Debtors' failure to perform, m any respect, any of the terms,
conditions or covenants or its obligations under this Interim Order; or
b. An "Event of Default" under the Loan Agreement or any of the other
Financing Agreements.
3.2 Rights and Remedies Upon Event of Default. Upon the occurrence of and
during the continuance of an Event of Default, the Debtors shall be bound by all restrictions,
prohibitions, and other terms as provided in this Interim Order, the Loan Agreement, and the
other Financing Agreements, and Lender may elect any and all consequences of such Event of
Default, and Lender shall be entitled to take any act or exercise any right or remedy as provided
in this Interim Order and/or any Financing Agreement, including, without limitation, declaring
all Obligations immediately due and payable, accelerating the Obligations, ceasing to extend
Loans and/or make Letter of Credit Accommodations on behalf of Debtors, and, subject to
paragraph 3.4 below, setting off any Obligations with Collateral or proceeds in Lender's
possession, and enforcing any and all rights with respect to the Collateral. Lender shall have no
obligation to lend or advance any additional funds to or on behalf of the Debtors, or provide any
other financial accommodations to the Debtors immediately upon or after the occurrence of an
Event of Default or an act, event, or condition that with the giving of notice or the passage of
time, or both, would constitute an Event of Default.
3.3 Expiration of Commitment. Upon the expiration of the Debtors' authority
to borrow and obtain other credit accommodations from Lender pursuant to the terms of this
Interim Order and the Financing Agreements (except if such authority shall be extended with the
prior written consent of Lender, which consent shall not be implied or construed from any other
action, inaction or acquiescence by Lender), unless an Event of Default set forth in section 3.2
above occurs sooner and the automatic stay has been lifted or modified pursuant to section 3 .4 of
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this Interim Order, all of the Obligations shall immediately become due and payable and the
Lender shall be automatically and completely relieved from the effect of any stay under section
362 of the Bankruptcy Code or any other restriction on the enforcement of its liens upon and
security interests in the Collateral or any other rights granted to Lender pursuant to the terms and
conditions of the Financing Agreements or this Interim Order, and subject to the orovisions of
section 3 .4 Lender shall-may be ana is hereby authorized, in its aiseretien, to take any and all
actions and remedies provided to it in this Interim Order, the Financing Agreements and/or
applicable law, which Lender may deem apprepriate ana to proceed against and realize upon the
Collateral and any other property of the Debtors' Estates.
3.4 Relief from Automatic Stay. The automatic stay provisions of section 362
of the Bankruptcy Code and any other restriction imposed by an order of the Court or by law are
hereby modified and vacated without further notice, application, or order of the Court to the
extent necessary to permit Lender to perform any act authorized or permitted under or by virtue
of this Interim Order or the Financing Agreements, including, without limitation, (a) to
implement the post-petition financing arrangements authorized by this Interim Order and
pursuant to the terms of the Financing Agreements, (b) to take any act to create, validate,
evidence, attach, or perfect any lien, security interest, right or claim in the Collateral, and (c) to
assess, charge, collect, advance, deduct, and receive payments with respect to the Obligations,
including, without limitation, all interests, fees, costs, expenses permitted under the Financing
Agreements, and apply such payments to the Obligations pursuant to the Financing Agreements
and this Interim Order. In addition, and without limiting the foregoing, upon the occurrence of
an Event of Default and after providing three (3) business days prior written notice (the
"Enforcement Notice") to counsel for the Debtors, counsel for the Committee (if appointed), the
U.S. Trustee and the Court, unless this Court has entered an order to the contrary Lender shall
be entitled to take any action and exercise all rights and remedies provided to them by this
Interim Order, the Financing Agreements and/or applicable Jaw as it may deem appropriate in its
sole discretion to, among other things, proceed against and realize upon the Collateral and any
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other assets and properties of any Debtors' Estates upon which Lender has been or may hereafter
be granted liens and security interests to obtain the full and indefeasible repayment of all
Obligations.
Section 4. Representations; Covenants; and Waivers.
4.1 Objections to Pre-Petition Obligations. Any action, claim, or defense
(hereinafter, an "Objection") that seeks to object to, challenge, contest, or otherwise invalidate or
reduce, whether by setoff, recoupment, counterclaim, deduction, disgorgement or claim of any
kind (a) the existence, validity, or amount of the Pre-Petition Obligations, (b) the extent, legality,
validity, perfection, or enforceability of Lender's pre-petition liens and security interests in the
Pre-Petition Collateral, or (c) Lender's right to apply post-petition payments against Pre-Petition
Obligations in satisfaction of Lender's liens as provided for in this Interim Order (provided, tha-t
the only grounds for ehallenging sueh right is that the Pre Petition Obliga-tions were not fully
seeured by the Pre Petition Colla-teral as of the Petition Da-te) shall be filed with the Court 0<)-by
any Committee, and no or other party in interest, within forty-five ( 45) calendar days from the
date of appointment of the Committee by the U.S. Trustee, or (y) in the event no Committee is
appointed, within the forty-five ( 45) days following the Petition Date by any party in interest
with requisite standing within unless such time periods are extended by (x) the consent of the
Lender or (y) further order of this Court on notice to the Debtors and the Lender (the "Objection
Period"). If any such Objection is timely filed and successfully pursued, nothing in this Interim
Order shall prevent the Court from granting appropriate relief with respect to the Pre-Petition
Obligations and/or Lender's liens on the Pre-Petition Collateral. If no Objection is timely filed
or an Objection is timely filed but denied, (a) the Pre-Petition Obligations shall be deemed
allowed in full, shall not be subject to any setoff, recoupment, counterclaim, deduction, or claim
of any kind, and shall not be subject to any further objection or challenge by any party at any
time, and Lender's pre-petition liens on and security interests in the Pre-Petition Collateral shall
be deemed legal, valid, perfected, enforceable, and non-avoidable for all purposes and of first
and senior priority, subject to only the Permitted Liens and Claims, and (b) Lender, its
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participants, and each of their respective agents, officers, directors, employees, attorneys,
professionals, successors, and assigns shall be deemed released and discharged from any and all
claims and causes of action related to or arising out of the Pre-Petition Financing Agreements
and shall not be subject to any further objection or challenge by any party at any time.
4.2 Debtors' Waivers. At all times during the Cases and whether or not an
Event of Default has occurred, the Debtors irrevocably waive any rights that they may have to
seek authority (i) to use Cash Collateral of Lender under section 3 63 of the Bankruptcy Code,
other than as specified herein, (ii) to obtain postpetition loans or other financial accommodations
pursuant to section 364(c) or (d) of the Bankruptcy Code other than from Lender, or as may be
otherwise expressly permitted pursuant to the Loan Agreement, (iii) to challenge the application
of any payments authorized by this Interim Order as pursuant to section 506(b) of the
Bankruptcy Code, or to assert that the value of the Pre-Petition Collateral is less than the Pre-
Petition Obligations, (iv) to propose or support a plan of reorganization that does not provide for
the indefeasible payment in full and satisfaction of all Obligations on the effective date of such
plan, or (v) to seek relief under the Bankruptcy Code, including without limitation, under section
105, to the extent any such relief would in any way restrict or impair the rights and remedies of
Lender as provided in this Interim Order and the Financing Agreements or Lender's exercise of
such rights or remedies; provided, however, Lender may otherwise consent in writing, but no
such consent shall be implied from any other action, inaction, or acquiescence by Lender.
4.3 Section 506(c) Claims. ThEeej'lt Upon entry of a final order moviding for
such relief (if authorized) except for the Carve-Out Expenses, no costs or expenses of
administration, which have or may be incurred in the Cases at any time during the Interim
Financing Period shall be charged against Lender, its claims, or the Collateral pursuant to section
506(c) of the Bankruptcy Code without the prior written consent of Lender, and no such consent
shall be implied from any other action, inaction, or acquiescence by Lender.
4.4 Collateral Rights. Until all of the Obligations shall have been indefeasibly
paid and satisfied in full, (a) no other party shall foreclose or otherwise seek to enforce any
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junior lien or claim in any Collateral, (b) subject to the terms and conditions of this Interim
Order, upon and after the occurrence and continuance of an Event of Default, Lender in its
discretion, in connection with a liquidation or other disposition of any of the Collateral may enter
upon, occupy, and use any real property, equipment, leasehold interests, warehouse
arrangements, trademarks, tradenames, copyrights, licenses, patents, or any other assets of the
Debtors, which are owned by or subject to a lien of any party other than the Debtors and which
are used by the Debtors in their businesses, all without interference from the respective lessors,
licensors, or owner of such property for the purpose of conducting liquidation sales of the
Debtors' assets and properties; provided that, Lender will be responsible for the payment of any
fees, rentals, royalties, or other amounts due such lessor, licensor, or owner of such property and
any reasonable costs or expenses incurred by such lessor, licensor, or owner for the period of
time that Lender actually occupies or uses the premises, equipment, or the intellectual property
(but in no event for any accrued and unpaid fees, rentals, or other amounts due for any period
prior to or after the date that any such party actually occupies or uses such assets or properties).
4.5 Release. IR-Subject to the provisions of this Interim Order including
paragraph 4.1 in consideration of Lender making post-petition loans, advances and providing
other credit and financial accommodations to the Debtors pursuant to the provisions of the
Financing Agreements and this Interim Order, Debtors, on behalf of themselves and their
successors and assigns, (collectively, the "Releasors"), shall, forever release, discharge and
acquit Lender and its officers, directors, agents, attorneys and predecessors-in-interest
(collectively, the "Releasees") of and from any and all claims, demands, liabilities,
responsibilities, disputes, remedies, causes of action, indebtedness and obligations, of every kind,
nature and description, including, without limitation, any so-called "lender liability" claims or
defenses, that Releasors had, have or hereafter can or may have against Releasees as of the date
hereof, in respect of events that occurred on or prior to the date hereof with respect to the
Debtors, the Pre-Petition Obligations, the Financing Agreements and any Loans, Letter of Credit
Accommodations or other financial accommodations made by Lender to Debtors pursuant to the
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Financing Agreements. In addition, upon the indefeasible payment in full of all Obligations
owed to Lender by Debtors and termination of the rights and obligations arising under the
Financing Agreements and this Interim Order (which payment and termination shall be on terms
and conditions acceptable to Lender), Lender shall be released from any and all obligations,
liabilities, actions, duties, responsibilities and causes of action arising or occurring in connection
with or related to the Financing Agreements and/or this Interim Order (including without
limitation any obligation or responsibility (whether direct or indirect, absolute or contingent, due
or not due, primary or secondary, liquidated or unliquidated) to pay or otherwise fund the Carve-
Out Expenses), on terms and conditions acceptable to Lender.
Section 5. Other Rights and Obligations.
5.1 No Modification or Stay of This Interim Order. Notwithstanding (i) any
stay, modification, amendment, supplement, vacating, revocation, or reversal of this Interim
Order, the Financing Agreements, or any term hereunder or thereunder, (ii) the failure to obtain a
Final Order pursuant to Bankruptcy Rule 400l(c)(2), or (iii) the dismissal or conversion of the
Cases (a "Subject Event"), (x) the acts taken by Lender in accordance with this Interim Order,
and (y) the Post-Petition Obligations incurred or arising prior to the Lender's actual receipt of
written notice from Debtors expressly describing the occurrence of such Subject Event shall be
governed in all respects by the original provisions of this Interim Order, and the acts taken by
Lender in accordance with this Interim Order, and the post-petition liens granted to Lender in the
Post-Petition Collateral, and all other rights, remedies, privileges, and benefits in favor of the
Lender pursuant to this Interim Order and the Financing Agreements shall remain valid and in
full force and effect pursuant to section 3 64( e) of the Bankruptcy Code. For purposes of this
Interim Order, the term "appeal", as used in section 364(e) of the Bankruptcy Code, shall be
construed to mean any proceeding for reconsideration, amending, rehearing, or re-evaluating this
Interim Order by this Court or any other tribunal.
5.2 Power to Waive Rights; Duties to Third Parties. Lender shall have the
right to waive any of the terms, remedies provided or acknowledged in this Interim
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Order in respeet favor of Lender (the "Lender Rights"), and shall have no obligation or duty to
any other party with respect to the exercise or enforcement, or failure to exercise or enforce any
Lender Rights. Any waiver by Lender of any Lender Rights shall not be or constitute a
continuing waiver. A delay in or failure to exercise or enforce any Lender Right shall neither
constitute a waiver of such Lender Right, subject Lender to any liability to any other party, nor
cause or enable any other party to rely upon or in any way seek to assert as a defense to any
obligation owed by the Debtors to the Lender.
5.3 Disposition of Collateral. Debtors shall not sell, transfer, lease,
encumber or otherwise dispose of any portion of the Collateral without the prior written consent
of Lender (and no such consent shall be implied, from any other action, inaction or acquiescence
by Lender) aOO-or an order of this Court, except for sales of Debtors' Inventory in the ordinary
course of its business or as approved by the Bankruptcy Court.
5.4 Inventory. Debtors shall not, without the consent of Lender or an order
of this Court, enter into any agreement to return any inventory to any of its creditors for
application against any pre-petition indebtedness under any applicable provision of section 546
of the Bankruptcy Code, or consent to any creditor taking any setoff against any of its pre-
petition indebtedness based upon any such return pursuant to section 553(b)(l) of the
Bankruptcy Code or otherwise.
5. 5 Reservation of Rights. Except as may be inconsistent with the
provisions of this Interim Order, the terms, conditions and provisions of this Interim Order is in
addition to and without prejudice to the rights of Lender to pursue any and all rights and
remedies under the Bankruptcy Code, the Financing Agreements, or any other applicable
agreement or law, including, without limitation, rights to seek adequate protection and/or
additional or different adequate protection, to seek relief from the automatic stay, to seek an
injunction, to oppose any request for use of cash collateral or granting of any interest in the
Collateral or priority in favor of any other party, to object to any sale of assets, and to object to
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applications for allowance and/or payment of compensation of Professionals or other parties
seeking compensation or reimbursement from the Estates.
5.6 Binding Effect. This Interim Order shall be binding upon Debtors, all
parties in interest in the Cases, and their respective successors and assigns, including any trustee
or other fiduciary appointed in the Cases or any subsequently converted bankruptcy case( s) of
the Debtors. This Interim Order shall also inure to the benefit of Lender, Debtors, and their
respective successors and assigns. The provisions of this Interim Order and the Financing
Agreements, Post-Petition Obligations, Superpriority Claim and any and all rights, remedies,
privileges, and benefits in favor of Lender provided or acknowledged in this Interim Order, and
any actions taken pursuant thereto, shall be effective immediately upon entry of this Interim
Order pursuant to Bankruptcy Rules 6004(g) and 7062, shall continue in full force and effect,
and shall survive entry of any such other order, including without limitation any order which
may be entered confirming any plan of reorganization, converting one or more of the Cases to
any other chapter under the Bankruptcy Code, or dismissing one or more of the Cases. Any
order dismissing one or more of the Cases under section 1112 or otherwise shall be deemed to
provide (in accordance with sections 105 and 349 of the Bankruptcy Code) that (a) the
Superpriority Claim and Lender's liens in the Collateral shall continue in full force and effect
notwithstanding such dismissal until the Obligations are indefeasibly paid and satisfied in full,
and (b) this Court shall retain jurisdiction, notwithstanding such dismissal, for the purposes of
enforcing the Superpriority Claim and liens in the Collateral.
5.7 Term; Termination. Notwithstanding any prov1s1on of this Interim
Order to the contrary, the term of the financing arrangements among Debtors and Lender
authorized by this Interim Order may be terminated pursuant to the terms of the Loan
Agreement.
5. 8 Limited Effect. Unless the Interim Order specifically provides
otherwise, in the event of a conflict between the terms and provisions of any of the Financing
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Agreements and this Interim Order, the terms and provisions of this Interim Order shall govern,
interpreted as most consistent with the terms and provisions of the Financing Agreements.
5.9 Objections Overruled. All objections to the Motion on an interim basis
if any are hereby overruled.
Section 6. Final Hearing and Response Dates.
6.1 The Final Hearing on the Motion pursuant to Bankruptcy Rule 4001(c)(2)
is scheduled for April lli, 2010 at .mt :30 p.m. before this Court. The Debtors shall
promptly mail copies of this Interim Order to the Noticed Parties, and to any other party that has
filed a request for notices with this Court and to any Creditors' Committee after same has been
appointed, or Creditors' Committee counsel, if same shall have filed a notice.
6.2 Any party in interest objecting to the relief sought at the Final Hearing
shall serve and file objections, which objections shall: (i) be in writing; (ii) conform to the
Bankruptcy Rules and the Local Rules; and (iii) be filed with the Clerk of the United States
Bankruptcy Court for the District of Delaware no later than three (3) business days before the
Final Hearing and served upon the following parties so as to be received not less than three (3)
business days before the Final Hearing: (a) counsel to the Debtors, Gersten Savage, LLP, Attn:
Paul Rachmuth, Esq, 600 Lexington Avenue, New York, New York 10017 and Bayard, P.A.,
Attn: Jamie L. Edmonson, Esq., 222 Delaware Avenue, Suite 900, Wilmington, Delaware 19899
(b) the United States Trustee for the District of Delaware; (c) counsel to the Secured Lender,
Lowenstein Sandler PC, Attn: Thomas A. Pitta, Esq, 65 Livingston Avenue, Roseland, New
Jersey 07068 tpitta@lowenstein.com; and (d) counsel to any statutory committee appointed in
these chapter 11 cases.
In the event this Court modifies any of the provisions of this Interim Order or the
Financing Agreements following such further hearing, such modifications shall not affect the
rights and priorities of Lender pursuant to this Interim Order with respect to the Collateral, and
any portion of the Obligations which arises or is incurred or is advanced prior to such
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modifications (or otherwise arising prior to such modifications), and this Interim Order shaH
remain in fuil force and effect except as specificaily amended or modified at such Final Hearing.
Dated: March , 2010
Wilmington, Delaware
HONORABLE BRENDAN L. SHANNON
UNITED STATES BANKRUPTCY JUDGE
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