EX-10.61 FINAL ORDER AUTHORIZING SECURED FINANCING






Exhibit 10.61




UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE




	 	 	 	 	 	 	 
	In Re:

	 	 	)	 	 	Chapter 11
	 

	 	 	)	 	 	 
	PROXYMED TRANSACTION

	 	 	)	 	 	Case No. 08-11551 (BLS)
	SERVICES, INC., et al.,1

	 	 	)	 	 	 
	 

	 	 	)	 	 	(Jointly Administered)
	Debtors.

	 	 	)	 	 	 
	 

	 	 	 	 	 	Ref. Docket No. 11






FINAL ORDER (I) AUTHORIZING (A) SECURED

POST-PETITION FINANCING PURSUANT TO 11 U.S.C. §§ 105,

361, 362, AND 364(c) AND (d); (B) GRANTING SECURITY INTERESTS,

SUPERPRIORITY CLAIMS AND ADEQUATE PROTECTION; AND (C) USE

OF CASH COLLATERAL AND (II) SCHEDULING A FINAL HEARING PURSUANT

TO BANKRUPTCY RULE 4001(C)


     Upon
the motion (the “Motion”) dated July 23, 2008 of debtors and debtors-in-possession,
ProxyMed Transaction Services, Inc. f/k/a MedUnite, Inc.
(“PTS”), ProxyMed, Inc. d/b/a MedAvant
Healthcare Solutions (“ProxyMed”), and ProxyMed Lab Services, LLC f/k/a Key Communications Service,
Inc. (“ProxyMed Lab”), (PTS, ProxyMed and ProxyMed Lab,
referred to collectively as the “Debtors”),
(a) requesting entry of an order authorizing the Debtors pursuant to Sections 363(c), 364(c) and
364(d) of Title 11 of the United States Code, 11 U.S.C. §§ 101, et seq. (as amended, the
“Bankruptcy Code”) and Rules 2002, 4001(c) and (d) and 9014 of the Federal Rules of Bankruptcy
Procedure (the “Bankruptcy Rules”) and applicable Local




 




			
	1	 	The Debtors in these proceedings are: ProxyMed Transaction Services, Inc. f/k/a MedUnite, Inc.
(Tax ID No. XX-XXX5613); ProxyMed, Inc. d/b/a MedAvant Healthcare Solutions (Tax ID No.
XX-XXX2059); and ProxyMed Lab Services LLC f/k/a Key Communications Service, Inc. (Tax ID No.
XX-XXX2059), each with a principal address of 1854 Shackleford Court, Suite 200, Norcross, GA 30093
and a mailing address of 1901 E. Alton Avenue, Suite 100, Santa Ana, CA 92705.




 









 







Rules,
inter alia, (i) to obtain post-petition financing (the “Post-Petition Financing”)
pursuant to the terms of the DIP Loan Documents (as defined below) from its pre-petition senior
secured
lender Laurus Master Fund Ltd., which together herewith shall include any and all affiliates,
successors, agents or assignees to whom Laurus or its affiliates, successors, agents or assignees
has assigned or may assign certain or all of its rights, including
Valens U.S. SPV I, LLC
(hereinafter, unless otherwise specified, collectively referred to,
as applicable, “Laurus”), and
in Laurus’ (or its designees’ or assignees’) capacity as the Post-Petition Financing lender,
sometimes referred to, individually or collectively, as the “DIP Lender”), (ii) to grant DIP
Lender, pursuant to Bankruptcy Code §§ 364(c) and 364(d), first priority and junior security
interests in all of the Debtors’ currently owned and after-acquired property to secure the Debtors’
obligations under the Post-Petition Financing; and (iii) to grant DIP Lender and Laurus priority in
payment with respect to the obligations incurred in connection with the Post-Petition Financing
over any and all administrative expenses of the kinds specified in Bankruptcy Code §§ 503(b) and
507(b), other than as described below; (b) seeking this Court’s authorization to use Laurus’ cash
collateral within the meaning of Bankruptcy Code § 363(a) (the “Cash Collateral”), pursuant to
Bankruptcy Code § 363(c) and to provide adequate protection, pursuant to Bankruptcy Code §§ 361,
363(e) and 364(d); (c) seeking a preliminary hearing (the
“Preliminary Hearing”) on the
Motion to consider entry of an interim order pursuant to Bankruptcy
Rule 4001 (the “Order”)
authorizing the Debtors to borrow under the Post-Petition Financing the amounts set forth in and
limited by the Approved Budget (as defined below), upon the terms and conditions set forth in this
Order pending the Final Hearing referred to below; and (d) requesting that a final hearing (the
“Final Hearing”) be scheduled by this Court to
consider entry of a final order (the “Final Order”)
authorizing on a final basis, inter alia, the Post-Petition Financing and


2









 






use of the Cash Collateral; and the Interim Hearing having occurred and the Court having
entered an Interim Order Authorizing Secured Post-Petition Financing and other Relief (the
“Interim Order”) on July 24, 2008; and due and sufficient notice of the Motion under the
circumstances having been given; and the Preliminary Hearing on the Motion having been held
before this Court on August 14, 2008; and upon the entire record made at the Preliminary Hearing
and Final Hearing; and this Court having found good and sufficient cause appearing therefor;




     IT IS HEREBY FOUND:



     A. Unless otherwise indicated herein, all capitalized terms used but not defined
herein shall have the meanings given in the Pre-Petition Loan Documents, (as hereafter
defined).



     B. On
July 23, 2008 (the “Petition Date”), the Debtors filed voluntary petitions for
relief with this Court under Chapter 11 of the Bankruptcy Code
(the “Chapter 11 Cases”). The
Debtors are continuing in possession of their property, and operating and managing their
businesses, as debtors-in-possession pursuant to §§ 1107 and 1108 of the Bankruptcy Code. On
July 30, 2008, the Office of the United States Trustee formed an Official Committee of
Unsecured Creditors (“Committee”)



     C. This Court has jurisdiction over the Chapter 11 Cases and the Motion pursuant to
28 U.S.C. §§ 157(b) and 1334. Consideration of the Motion constitutes a core proceeding as
defined in 28 U.S.C. § 157(b)(2).



     D. Laurus, the Debtors, and certain affiliates of Debtors, are parties to, or have an
interest in, one or more of the following documents (collectively the “Pre-Petition Loan
Documents”): (1) Security and Purchase Agreement dated as of December 6, 2005 (the
“Security Agreement”); (2) Member Pledge Agreement dated as of December 6, 2005; (3) Stock



3









 







Pledge Agreement dated as of December 6, 2005; (4) Joinder Agreement executed as of October 6,
2006; (5) Intellectual Property Security Agreement dated as of December 6, 2005; (6) Secured
Revolving Note dated December 6, 2005; (7) Secured Term Note dated December 6, 2005; (8) Deposit
Account Control Agreement dated as of December 8, 2005; (9) Termination Agreement dated December 8,
2005; (10) Subordination Agreement dated as of October 9, 2006; (11) Letter Agreement dated October
10, 2006; (12) Reaffirmation and Ratification Agreement, dated June 21, 2007; (13) Consent, dated
as of August 7, 2007; (14) Amendment to Exhibit A of Deposit Account Control Agreement dated
January 17, 2008; (15) Release of Security Interest dated January 24, 2008; (16) Consent and
Release Letter dated January 28, 2008; and all other related documents, (each as amended,
supplemented or otherwise modified prior to the commencement of these Chapter 11 Cases, and all
collateral and ancillary documents executed in connection therewith).



     E. As identified above, the Pre-Petition Loan Documents include: (i) that certain
Secured Revolving Note dated December 6, 2005, in the initial aggregate amount of
$15,000,000.00 (the “Secured Revolving Note”), and (ii) that certain Secured Term Note dated
December 6, 2005, in the principal amount of $5,000,000.00, the (“Secured Term Note”).



     F. Pursuant to the Pre-Petition Loan Documents, all obligations of the Debtors to
Laurus of any kind or nature under the Pre-Petition Loan Documents are secured by a first
priority blanket security interest (the “Pre-Petition
Liens”) in substantially all of the
Debtors’
assets including, without limitation, equipment, inventory, goods, fixtures, general
liabilities,
accounts, accounts receivable, deposit accounts (including without limitation bank accounts
and
all funds on deposit therein), the Debtors’ rights in escrow accounts and to receive proceeds
from
previous sale transactions, instruments, chattel paper, general intangibles, tax refunds,
contracts,



4









 







letter of credit rights, intellectual property, commercial tort claims, if any, stock, documents
of title, tangible and intangible personal and investment property, money, cash and all cash
equivalents, and all cash held as cash collateral, books and records, all supporting obligations,
and the proceeds and products of all of the foregoing as more particularly included and described
in the Pre-Petition Loan Documents (the “Pre-Petition Collateral”).



     G. Without prejudice to the rights of the Committee (as defined herein) that may be
appointed (but subject to the limitations described in ordering paragraph 23 below), the Debtors
admit that the Debtors were truly and justly indebted to Laurus under the Pre-Petition Loan
Documents, without defense, counterclaim or offset of any kind, and that as of July 22, 2008 such
liability to Laurus was, including interest, in the aggregate amount of approximately (but not less
than) $5,321,965.17 with respect to the Pre-Petition Loan Documents (plus attorneys’ fees, costs,
expenses, and fees, including default fees, unpaid thereon) (the “Pre-Petition
Indebtedness”). As of the Petition Date, the Debtors, on behalf of their estates, but subject
only to the Committee’s investigative and Challenge Rights under Paragraph 25 of this Order, in
consideration of the Post-Petition Financing to be made available under the terms of this Order,
waive and release any and all causes of action and claims against Laurus and its respective
affiliates agents, representatives, assigns and successors. The provisions of this paragraph G
constitute a stipulation by the Debtors and shall become a finding by the Court, subject to the
provisions of ordering paragraph 23 of this Order.



     H. Without prejudice to the rights of the Committee (but subject to the limitations
described in ordering paragraph 23 below), the Debtors further admit that, by reason of the
Pre-Petition Loan Documents, (i) the Pre-Petition Indebtedness is secured by valid, properly
perfected, enforceable and non-avoidable liens and security interests granted by the Debtors to



5









 




Laurus upon and in all of the Pre-Petition Collateral, and (ii) the liens held by Laurus securing
the Pre-Petition Indebtedness are senior to all other security interests in the Pre-Petition
Collateral subject only to any Permitted Liens (as defined in paragraph 8(a) below). The provisions
of this paragraph H constitute a stipulation by the Debtors and shall become a finding of the
Court, subject to the provisions of ordering paragraph 23 of this Order.




     I. Given the Debtors’ current financial condition, the Debtors are unable to operate
by using only Cash Collateral and arc unable to provide Laurus with adequate protection for the use
of Cash Collateral. Moreover, the Debtors are unable to obtain unsecured credit allowable under
Bankruptcy Code § 503(b)(l) as an administrative expense. Financing on a post-petition basis is not
otherwise available without the Debtors granting, pursuant to Bankruptcy Code § 364(c)(l), claims
having priority over any and all administrative expenses of the kinds specified in §§ 503(b) and
507(b) of the Bankruptcy Code and securing such indebtedness and obligations with the security
interests in and the liens upon the property described below pursuant to §§ 364(c) and 364(d) of
the Bankruptcy Code.



     J. Notice of the relief requested herein has been given to (i) the Office of the
United States Trustee, (ii) the creditors holding the 20 largest unsecured claims against each of
the Debtors; (iii) the Committee; and (iv) known holders of pre-petition liens against the Debtors’
property.



     K. Based on the record presented to this Court by the Debtors, it appears that the
Post-Petition Financing and use of Cash Collateral have been negotiated in good faith and at
arm’s-length among the Debtors and Laurus and any credit extended and loans made and to be made to
the Debtors by Laurus and DIP Lenders pursuant to this Order shall be deemed to have been extended,
issued or made, as the case may be, in good faith as required by, and within the



6









 




meaning of, Section 364(e) of the Bankruptcy Code and Laurus and the DIP Lender shall have all of
the protections thereunder.




     L. Based on the record before this Court, it appears that the terms of this Order,
including, without limitation, the terms of the Post-Petition Financing and use of Cash
Collateral, are fair and reasonable, reflect the Debtors’ exercise of prudent business judgment
consistent with their fiduciary duties, and are supported by reasonably equivalent value and fair
consideration.



     M. The Debtors have requested immediate entry of this Order. The permission granted
herein to use Cash Collateral and obtain the Post-Petition Financing and obtain funds thereunder is
necessary to avoid immediate and irreparable harm to the Debtors. This Court concludes that entry
of this Order is in the best interests of the Debtors’ estates and creditors as its implementation
will, among other things, allow for the flow of supplies and services to the Debtors necessary to
sustain the Debtors’ business operations and enhance the Debtors’ prospects for a successful
completion of the Chapter 11 Cases.



     N. Based upon the foregoing findings and conclusions, and upon the record made before this
Court at the Preliminary Hearing, and the undersigned consents of the Debtors and Laurus, and
good and sufficient cause appearing therefor,



     IT IS HEREBY ORDERED DETERMINED AND DECREED that:



     1. Motion Granted. The Motion is granted on a final basis, on the
terms and conditions set forth in this Order.



     2. Authorization. The Debtors are expressly authorized and
empowered to (i) obtain the Post-Petition Financing, use the Cash Collateral, and perform
their
obligations strictly pursuant to the provisions of this Order; (ii) perform their obligations
under




7












 




the Pre-Petition Loan Documents as such documents are, or may be, amended and modified pursuant to
the terms of this Order; and (iii) enter into such other agreements, instruments and documents as
may be necessary or required to evidence the obligations to DIP Lender and Laurus to consummate the
terms and provisions of the Motion and this Order and to evidence perfection of the liens and
security interests to be given to DIP Lender and Laurus (the Pre-Petition Loan Documents as
modified by this Order shall hereinafter be referred to as the
“DIP Loan Documents”). DIP Lender’s
advances of the Post-Petition Financing shall be pursuant to the same terms as the Pre-Petition
Loan Documents, as modified by this Order, without the need for further execution or documentation,
and all advances and borrowings shall be in accordance with the Secured Revolving Note and the
other Pre-Petition Loan Documents. The borrowing(s) made under the credit facility maintained under
the DIP Loan Documents (the “DIP Facility”) and all other indebtedness and obligations incurred on
or after the Petition Date with respect to loans, advances and any other indebtedness or
obligations, contingent or absolute, pursuant to this Order and the DIP Loan Documents which may
now or from time to time hereafter be owing by the Debtors to DIP Lender (including principal,
accrued and unpaid interest, and fees costs and expenses including, without limitation, reasonable
attorneys’ fees and expenses) are referred to herein as the “DIP Indebtedness,” and, together with
the Pre-Petition Indebtedness, as the “Indebtedness.” The Debtors and Laurus may enter into
nonmaterial amendments of or modifications to the DIP Loan Documents and without the need of
further notice and hearing or order of this Court.




     3. Borrowing: Use Cash Collateral. Subject to the Approved Budgets
(as defined in paragraph 17 below) and solely in compliance therewith and subject further to the
terms and conditions of this Order and the DIP Loan Documents, (a) Laurus hereby consents to



8









 




the Debtors’ limited use of Cash Collateral, and (b) DIP Lender will provide the DIP
Facility, on a revolving basis, in accordance with the terms of the DIP Loan Documents, provided,
however, that the Debtors may be permitted an overadvance, as applicable, under the DIP Loan
Documents in the amounts set forth in the Approved Budgets.




     4. Application of Proceeds.



          (a) Proceeds or payments received by Laurus and/or DIP Lender with
respect to the Pre-Petition Collateral and DIP Facility Collateral shall be applied as
follows:
(x) first, to the Pre-Petition Indebtedness consisting of accrued and accruing interest, fees,
costs and expenses; (y) next, to the Pre-Petition Indebtedness consisting of principal; and (z)
last, to the outstanding balance of the DIP Facility, including all accrued and accruing interest,
fees, costs and expenses, then principal.




          (b) The automatic stay under Section 362(a) of the Bankruptcy Code
shall be, and it hereby is, modified to the extent necessary to permit Laurus to retrieve,
collect
and apply payments and proceeds in respect of the Pre-Petition Collateral and the DIP Facility
Collateral (defined in paragraph 7 below) in accordance with the terms and provisions of this
Order and the DIP Loan Documents.




     5. Interest, Fees, Costs and Expenses. The Pre-Petition Indebtedness
shall bear interest at the applicable rates set forth in the DIP Loan Documents and the Pre-Petition Loan Documents. The DIP Indebtedness shall bear interest at the same rates as in the
Pre-Petition Loan Documents. DIP Lender and Laurus shall be entitled to recover all of their
reasonable attorneys’ fees and other professional fees as well as all costs and expenses
incurred
in connection with the Indebtedness and this proceeding. In consideration for providing the
DIP
Facility, DIP Lender shall be paid all fees specified in the DIP Loan Documents in accordance



9









 




with the terms therein for such payment. In addition, for agreeing to provide the DIP
Facility, DIP Lender shall be entitled to a payment (“Facility Payment”) in the amount of $200,000
which shall be included in the DIP Indebtedness and fully earned and non-refundable upon entry of
this Oder.




     6. Termination of the DIP Facility and Use of Cash Collateral. DIP
Lender’s agreement to provide the DIP Facility in accordance with the DIP Loan Documents and
Laurus’ consent to the use of the Cash Collateral shall immediately and automatically terminate
(except as DIP Lender and/or Laurus may otherwise agree in writing in their sole discretion), and
all Indebtedness shall be immediately due and payable in cash upon the earliest to occur of any of
the following (each, a “Termination Date”):




	 	(i)	 	One Business Day following the Final Hearing Date (as defined
below) if a Final Order (as defined below) has not been entered by
August 19, 2008;
	 
	 	(ii)	 	the date of final indefeasible payment
and satisfaction in full in cash of the Indebtedness;
	 
	 	(iii)	 	the effective date of any confirmed plan of
reorganization in the Chapter 11 Cases;
	 
	 	(iv)	 	the consummation of the sale or
other disposition of all or substantially all of the assets of
the Debtors;
	 
	 	(v)	 	the occurrence of any breach by the Debtors of this Order
(including, but not limited to, the Debtors’ failure to adhere to
the Approved Budgets as set forth in ordering paragraph 17 of this
Order or violation of any of the covenants provided for in ordering
paragraph 19 of this Order) or the Final Order, or under any of the
DIP Loan Documents;
	 
	 	(vi)	 	the dismissal of any of the Chapter 11
Cases or the conversion of any of the Chapter 11 Cases into a case
under Chapter 7 of the Bankruptcy Code;
	 
	 	(vii)	 	upon and following the entry of an order authorizing the
appointment in any of the Debtors’ Chapter 11 Cases of a trustee or
an examiner with enlarged powers (beyond those set forth in §




10









 






	 	 	 	1106(a)(3) and (4) of the Bankruptcy Code), relating to the
operation of the business of the Debtors without the prior written
consent of DIP Lender (which consent may be withheld, or, if given
revoked, by DIP Lender in its sole discretion), or if any Debtor
applies for, consents to, or acquiesces in, any such appointment
without the prior written consent of DIP Lender (which consent may
be withheld in its sole discretion);
	 
	 	(viii)	 	this Order or the Final Order is stayed, reversed, vacated, amended
or otherwise modified in any respect without the prior written consent
of DIP Lender (which consent may be withheld in its sole discretion);
	 
	 	(ix)	 	the Court enters an order granting a party
relief from the automatic stay with respect to any portion of the
Pre-Petition Collateral or the DIP Facility Collateral provided that
the value of the relevant collateral is more than $50,000.
	 
	 	(x)	 	this or any other Court enters an order
or judgment in any of the Chapter 11 Cases modifying, limiting,
subordinating or avoiding the priority of the Indebtedness, or the
perfection, priority or validity of Laurus’ or DIP Lender’s
Pre-Petition or DIP Facility Liens or imposing, surcharging or
assessing against Laurus, DIP Lender or their claims or any
Pre-Petition Collateral, DIP Facility Collateral or any fees, costs or
expenses, whether pursuant to § 506(c) of the Bankruptcy Code or
otherwise; or
	 
	 	(xi)	 	if the Court has not entered an order
establishing procedures relating to the conducting of an auction in
connection with the Asset Sale which procedures are acceptable to
Laurus and DIP Lender and permit Laurus and DIP Lender to credit bid
the Pre-Petition Indebtedness and the DIP Indebtedness, without
condition (the “Asset Sale Procedures”) by August 8, 2008;
	 
	 	(xii)	 	if the Court has not entered an order
approving the Asset Sale in a form reasonably acceptable to Laurus and
DIP Lender (the “Sale Order”) by September 9, 2008;
	 
	 	(xiii)	 	if an Asset Sale sufficient to pay Laurus and DIP Lender in full
has not closed by September 19,2008;
	 
	 	(xiv)	 	if the Debtors do not fully cooperate in the disclosure of information reasonably requested by Laurus or any consultant
retained by Laurus.





     7. Liens to Secure the DIP Indebtedness. As security for the DIP
Indebtedness, DIP Lender is hereby granted the following security and liens (the “DIP
Facility



11









 





Liens”) in all currently owned or hereafter acquired property and assets of the Debtors of
any kind or nature, whether real or personal, tangible or intangible, wherever located, now owned
or hereafter acquired or arising and all proceeds, products, rents and profits thereof, including,
without limitation, all cash, goods, accounts receivable, inventory, cash in advance deposits, the
Debtors’ rights in escrow accounts and to receive any remaining proceeds from previous sale
transactions, general intangibles, goodwill, investment property (including, without limitation,
ownership interests in corporations, partnerships, and limited liability companies), deposit
accounts, real estate, intellectual property, machinery, leasehold interests, equipment, vehicles,
trademarks, trade names, licenses, the Pre-Petition Collateral, causes of action, tax refund
claims, commercial tort claims and insurance proceeds, and the proceeds, products, rents and
profits of all of the foregoing (all of the foregoing, the “DIP Facility Collateral”), subject only
to, in the event of the termination of the DIP Facility and the payment of the Carve-Out (as
defined in paragraph 15):




          (a) Pursuant to Section 364(c)(2) of the Bankruptcy Code, a perfected
first priority senior security interest in and lien upon all property noted above of the
Debtors,
whether existing on the Petition Date or thereafter acquired, that, as of the Petition Date,
is not
subject to valid, perfected and non-avoidable liens;




          (b) Pursuant to Section 364(c)(3) of the Bankruptcy Code, a perfected
security interest in and lien upon all property noted above of the Debtors, whether existing
on the
Petition Date or thereafter acquired, that is subject to valid, perfected and unavoidable
liens in
existence as of the Petition Date or to valid and unavoidable liens in existence immediately
prior
to the Petition Date that are perfected subsequent to the Petition Date as permitted by
Section




12









 








546(b) of the Bankruptcy Code (“546(b) Liens”), immediately junior in priority to such
valid, perfected and unavoidable liens;




          (c) Pursuant to Section 364(d)(1) of the Bankruptcy Code, a perfected
first priority senior priming lien (the “Priming Liens”) on all of the DIP Facility
Collateral,
including the Pre-Petition Collateral, which shall be senior to all other security interests
and liens
in property of the Debtors’ estates except only Permitted Liens (as defined in paragraph 8(a)
below); and




          (d) In addition, except to the extent otherwise expressly set forth in
this Order, or in a written instrument, agreement or other document executed by DIP Lender and
subject to paragraph 23 of this Order, neither the Pre-Petition Liens nor the DIP Facility
Liens
shall be subject to subordination to any other liens, security interests or claims under
Section 510
of the Bankruptcy Code, or otherwise. Any security interest or lien upon the Pre-Petition
Collateral or the DIP Facility Collateral which is avoided or otherwise preserved for the
benefit
of the Debtors’ estates under Section 551 or any other provision of the Bankruptcy Code shall
be
subordinate to the Pre-Petition Liens, the DIP Facility Liens and the Senior Adequate
Protection
Liens (defined in paragraph 8(a) below).




     8. Adequate Protection Liens. As adequate protection of Laurus’
interests in the Pre-Petition Collateral, including use of the Cash Collateral, pursuant to §§ 361,
363 and 552(b) of the Bankruptcy Code, Laurus is hereby granted valid, binding, enforceable and
perfected additional and replacement liens (the “Adequate Protection Liens”) in all
property of the Debtors’ estates (excluding only actions for preferences, fraudulent conveyances
and other avoidance claims and recoveries under Chapter 5 of the Bankruptcy Code, hereinafter
referred to as “Avoidance Actions”), including the DIP Facility Collateral, to the extent of any
decrease in



13









 




the value of Laurus’ interests in the Pre-Petition Collateral occurring subsequent to the
Petition Date, with such decrease in value to include decreases resulting from the Debtors’ use (if
any) of Cash Collateral, the depreciation, use, sale, loss, decline in value or market price of the
Pre-Petition Collateral, or otherwise. The Adequate Protection Liens shall enjoy the same validity
and extent as the liens Laurus held on the Petition Date. The Adequate Protection Liens are (a)
subject only to (i) existing liens and encumbrances that were senior to those of Laurus as of the
Filing Date under applicable non-bankruptcy law, and which are valid, binding, enforceable,
perfected and non-avoidable liens existing in the Pre-Petition Collateral as of the Petition Date
(the “Permitted Liens”), other than the Pre-Petition Liens; (ii) the Carve-Out (as defined in
paragraph 15); and (iii) the DIP Facility Liens. Notwithstanding anything to the contrary herein,
Lauras’ Adequate Protection Liens and Liens to secure the DIP Indebtedness referenced in Paragraph
7 shall extend to Avoidance Actions, and the proceeds thereof solely as to claims involving
avoidable transfers of Laurus’ Pre-Petition Collateral or Post-Petition Collateral, provided,
however, that Laurus’ Adequate Protection Liens and the Liens to secure the DIP Indebtedness shall
not extend to cash transfers under Section 547 of the Bankruptcy Code.




     9. Section 507(b) Priority Administrative Claims. If, notwithstanding
the provision of the Adequate Protection Liens, such Adequate Protection liens do not provide
adequate protection of Laurus’ interests in the Pre-Petition Collateral, Laurus shall (i) have a
claim allowed under §§ 507(a)(2) and 507(b) of the Bankruptcy Code (the “507(b) Claim”), and,
except with respect to being subordinated to the Carve-Out, such 507(b) Claim shall be entitled to
priority over every other claim allowable under such § 507(a)(2); and (ii) notwithstanding anything
herein to the contrary, be entitled to seek further adequate protection of its interests and such
further relief as is consistent therewith.



14









 





     10. Superpriority Claims. Subject to the Carve-Out described in
ordering paragraph 15 below, all of the DIP Indebtedness shall have the highest administrative
priority under § 364(c)(1) of the Bankruptcy Code, and shall have priority over all other
costs
and expenses of administration of any kind, including those specified in, or ordered pursuant
to,
§§ 105, 326, 330, 331, 503(b), 507(a), 507(b) or 726 or any other provision of the Bankruptcy
Code or otherwise (whether incurred in the Chapter 11 Case or any successor case), and shall
at
all times be senior to the rights of the Debtors, any successor trustee or estate
representative in
the Chapter 11 Cases or any successor case (the “Superpriority Claims”) provided, however,
that
the Superpriority Claims shall extend to the proceeds of the Avoidance Actions solely as to
claims involving Avoidable Transfers of Laurus’ Pre-Petition or Post-Petition Collateral,
other
than cash transfers under Section 547 of the Bankruptcy Code. Nothing in this Order or the
Approved Budgets (as defined in paragraph 17 below) shall constitute the consent by DIP Lender
or Laurus to the imposition of any costs or expense of administration or other charge, fees,
liens,
assessment or claim (including, without limitation, any amounts set forth in the Approved
Budgets) against DIP Lender or Laurus, their claims or collateral (including the Pre-Petition
Collateral and the DIP Facility Collateral) under § 506(c) of the Bankruptcy Code or
otherwise,
all of which rights have been waived as to all parties including the Committee pursuant to the
terms of this Order.



     11. Perfection of DIP Facility Liens and Adequate Protection Liens.
The DIP Facility Liens and the Adequate Protection Liens shall be, and they hereby are, deemed
duly perfected and recorded under all applicable federal or state or other laws as of the date
hereof, and no notice, filing, mortgage recordation, possession, further order, landlord or
warehousemen lien waivers or other third party consents or other act, shall be required to
effect



15









 




such perfection; provided, however, that notwithstanding the provisions of § 362
of the Bankruptcy Code, (i) DIP Lender may, at its sole option, file or record or cause the Debtors
to obtain any such landlord or warehousemen lien waivers or other third party consents or execute,
file or record, at the Debtors’ expense, any such UCC financing statements, notices of liens and
security interests, mortgages and other similar documents as DIP Lender may require, and (ii) DIP
Lender may require the Debtors to deliver to DIP Lender any chattel paper, instruments or
securities evidencing or constituting any DIP Facility Collateral, and the Debtors are directed to
cooperate and comply therewith. If DIP Lender, in its sole discretion, shall elect for any reason
to cause to be obtained any landlord or warehouse lien waivers or other third party consents or
cause to be filed or recorded any such notices, financing statements, mortgages or other documents
with respect to such security interests and liens, or if DIP Lender, in accordance with the DIP
Loan Documents or this Order, elects to take possession of any DIP Facility Collateral, all such
landlord or warehouse lien waivers or other third party consents, financing statements or similar
documents or taking possession shall be deemed to have been filed or recorded or taken in these
Chapter 11 Cases as of the commencement of these Chapter 11 Cases but with the priorities as set
forth herein, DIP Lender and Laurus may (in their sole discretion), but shall not be required to,
file a certified copy of this Order in any filing or recording office in any county or other
jurisdiction in which the Debtors have real or personal property and such filing or recording shall
be accepted and shall constitute further evidence of (a) DIP Lender’s interest in the DIP Facility
Collateral and (b) Laurus’ interest in the Pre-Petition Collateral.




     12. Waiver by Debtors of Liens and Other Matters. The Debtors and
their estates (and any party in interest acting on behalf of the Debtors) hereby irrevocably waive,
and are barred from asserting or exercising any right (a) without Laurus’ or DIP Lender’s prior



16









 




written consent (which may be withheld in their sole discretion) or (b) without prior indefeasible
payment and satisfaction in full of the Indebtedness: (i) to grant or impose, or request
that the Court grant or impose, under § 364 of the Bankruptcy Code or otherwise, liens on or
security interests in any DIP Facility Collateral, which are pari passu with or senior to
the DIP Facility Liens or the Adequate Protection Liens and Senior Adequate Protection Liens; (ii)
to return goods pursuant to § 546(h) of the Bankruptcy Code to any creditor of the Debtors or to
consent to any creditor taking any setoff against any of such creditor’s pre-petition indebtedness
based upon any such return pursuant to § 553(b)(1) of the Bankruptcy Code or otherwise; (iii) to
seek a surcharge of the DIP Facility Collateral or the Pre-Petition Collateral under § 506(c) of
the Bankruptcy Code (which waiver shall be effective upon entry of the Final Order); (iv) to seek
non-consensual use of Cash Collateral under § 363 of the Bankruptcy Code; (v) to modify or affect
any of the rights of Laurus or the DIP Lender under this Order or any DIP Loan Documents by any
order entered in any of the Chapter 11 Cases or any successor cases; or (vi) propose a plan of
reorganization or liquidation without the written consent of the DIP Lender and Laurus.




     13. Sale Out of the Ordinary Course of Business. Subject to the
requirement that the Indebtedness be paid in full in Laurus’ discretion, the Debtors may not
propose a sale of any of their assets outside the ordinary course of business unless (a) all net
proceeds realized from such sale, less any accrued, allowable and payable portion of the Carve-Out
as contained in this Order, are transferred to Laurus and DIP Lender, as their respective interests
appear, for immediate application in reduction of the Indebtedness in the manner set forth in this
Order, until such time as the Indebtedness shall have been satisfied in full. Such sale proceeds
shall not be permitted to be used by the Debtors under any circumstances except as



17









 




otherwise provided by this Order, and any sale application or procedure involving all or any
portion of the Debtors’ assets shall expressly provide that Laurus and DIP Lender may
exercise
their rights to credit bid their indebtedness under § 363(k) of the Bankruptcy Code.




     14. Modification of Automatic Stay; Other Remedies.



          (a) Except as set forth in subparagraph (b) of this paragraph, which
governs any action of Laurus and DIP Lender to foreclose on their liens on any Pre-Petition
Collateral or DIP Facility Collateral or to exercise any other default-related remedies (other than
those specifically referenced in the next sentence), the automatic stay pursuant to § 362 of the
Bankruptcy Code is hereby vacated as to Laurus and DIP Lender to permit each of them to perform in
accordance with, and exercise, enjoy and enforce their respective rights, benefits, privileges and
remedies pursuant to this Order and the DIP Loan Documents without further application or motion
to, or order from, the Court, and regardless of any change in circumstances (whether or not
foreseeable), and neither Section 105 of the Bankruptcy Code nor any other provision of the
Bankruptcy Code, or any other law, shall be utilized to prohibit Laurus or DIP Lender from the
exercise, enjoyment and enforcement of any of such rights, benefits, privileges and remedies.
Laurus and DIP Lender are hereby granted leave to receive and apply payments to the Indebtedness
from collections on and proceeds of the Pre-Petition Collateral and the DIP Facility Collateral in
the manner specified in this Order and the DIP Loan Documents. In addition, Laurus and DIP Lender
are, as their interests may appear, hereby granted leave to, among other things, to (a) file or
record any financing statements, mortgages or other instruments or other documents to evidence the
Senior Adequate Protection Liens or the DIP Facility Liens or the Subordinated Adequate Protection
Liens, (b) to charge and collect any interest, fees, costs, and expenses and other amounts accruing
at any time under the DIP Loan Documents or this




18









 







Order as provided therein, (c) to give the Debtors any notice provided for in any of the DIP
Loan Documents or this Order, and (d) upon the occurrence of the Termination Date, and without
application or motion to, or order from the Court or any other court, (i) terminate the DIP
Facility and the DIP Loan Documents, (ii) declare all Indebtedness immediately due and payable, and
(iii) revoke the Debtors’ right, if any, under this Order and/or the other DIP Loan Documents to use
Cash Collateral.




          (b) Upon the occurrence of a Termination Date, Laurus or DIP Lender
may file a motion to terminate the automatic stay which shall be served by hand delivery, facsimile
or overnight mail on counsel to the Debtors, the Committee and the Office of the United States
Trustee, and the Court shall conduct a hearing on an expedited or emergency basis, but not more
than three days, to consider terminating the automatic stay under § 362 of the Bankruptcy Code in
favor of Laurus or DIP Lender for the purpose of allowing the DIP Lender or Laurus to exercise all
of their rights and remedies under the Pre-Petition Loan Documents, the DIP Loan Documents, this
Order and applicable law, including foreclosing or otherwise enforcing their liens on any or all of
the Pre-Petition Collateral and the DIP Facility Collateral. The only issue that may be raised by
any party or addressed at such hearing is whether the Termination Date has occurred. Subject to the
right of parties-in-interest to contest whether a Termination Date has occurred, the Debtors shall
cooperate with Laurus and DIP Lender in connection with any enforcement action by such parties by,
among other things, (i) providing access to its premises to representatives of Laurus and DIP
Lender, (ii) providing Laurus and DIP Lender or their designees access to the Debtors’ books and
records, (iii) performing all other obligations set forth in the Pre-Petition Loan Documents, this
Order and/or the other DIP Loan Documents, and (iv) taking reasonable steps to safeguard and
protect the Pre-Petition Collateral,




19









 







and the DIP Facility Collateral until Laurus or DIP Lender can make adequate provision to
protect and safeguard the Pre-Petition Collateral and the DIP Facility Collateral, and the Debtors
shall not otherwise interfere or encourage others to interfere with enforcement of the rights of
Laurus or DIP Lender.




     15. Carve-Out.



          (a) Subject to the remaining provisions of this paragraph, the
Adequate Protection Liens, the DIP Facility Liens, the Superpriority Claims and the 507(b) Claim
shall be subject to (a) the payment of any unpaid fees payable pursuant to 28 U.S.C. § 1930
(including, without limitation, fees under 28 U.S.C. § 1930(a)(6)), (b) the fees due to the
Clerk of the Court (c) the actual fees and expenses incurred by professionals, for the period prior
to the occurrence of a Termination Date, retained by an order of the Court entered
pursuant to
Sections 327 or 1103(b) of the Bankruptcy Code, provided they are within the amounts set forth
in the Approved Budgets and are subsequently allowed by the Bankruptcy Court under
Sections 330 and 331 of the Bankruptcy Code (the “Pre-Termination Date Carve-Out”), (d) the
payment, following the occurrence of any Termination Date which is not waived by DIP
Lender,
of allowed professional fees and disbursements incurred after such Termination Date by all
Professionals retained in this proceeding, pursuant to Sections 327, 328 or 1103(a) of the
Bankruptcy Code, in an aggregate amount not to exceed $250,000 to the extent such amounts are
allowed by the Court and not otherwise payable from any unused amounts for payments to
Professionals set forth in the Approved Budgets (the “Post-Termination Date Carve-Out”), and (e)
any Expense Reimbursement (but not any Break-up Fee), not to exceed $100,000, due and owing to MHC
Acquisition Corp. (“MHC”) pursuant to the terms of that certain Asset Purchase Agreement between
MHC and the Debtors dated July 22, 2008 (the “Agreement”), which





20












 





Expense Reimbursement shall be paid to MHC by the Debtors as and when due under the Agreement. Upon
the occurrence of a Termination Date that is not waived by DIP Lender, DIP Lender shall fund the
remaining portion of the Pre-Termination Date Carve-Out, if any, within seven (7) days after being
provided with a notice setting forth the amount of accrued and unpaid fees and costs allowable
under the Approved Budget and this Order, together with supporting documentation for such amounts.
DIP Lender shall be under no obligation to fund the
Post-Termination Date Carve-Out until it is
determined that there will be insufficient assets in the estate for this purpose. In the event
sufficient funds will not otherwise be available, DIP Lender shall fund the Post-Termination Date
Carve-Out upon being provided with notification of the unavailability of estate assets for such
funding. Subject to the foregoing, the rights of the professionals to the Pre-Termination Date
Carve-Out, the Post-Termination Date Carve-Out, or such lessor amounts as may be allowed by the
Bankruptcy Court, shall be senior to the rights of DIP Lender to such funds. Any Curve-Outs funded
by Laurus or DIP Lender shall be deemed advances under the DIP Facility.




          (b) Notwithstanding anything to the contrary in this Order or the DIP
Loan Documents, no proceeds of any Collateral of Laurus (including any pre-petition retainer funded
by Laurus) pursuant to the Pre-Petition Loan Documents nor any Pre-Petition Collateral or DIP
Facility Collateral (or proceeds thereof) nor any portion of the Carve-Out may be used to pay any
claims for services rendered by any of the Debtors’ professionals, any other entity, or the
Committee’s professionals, if any, in connection with the assertion of or joinder in any claim,
counterclaim, action, proceeding, application, motion, objection, defense or other contested
matter, the purpose of which is to seek or the result of which would be to obtain any order,
judgment, determination, declaration or similar relief (x) invalidating, setting aside, avoiding or




21









 







subordinating, in whole or in part, the Indebtedness or the liens and security interests of Laurus
and DIP Lender in the Pre-Petition Collateral or in the DTP Facility Collateral; or (y) preventing,
hindering or otherwise delaying, whether directly or indirectly, the exercise by Laurus or DIP
Lender of any of their rights and remedies under the Pre-Petition Loan Documents, this Order and/or
the DIP Loan Documents or Laurus’ or DTP Lender’s enforcement or realization upon any of the liens
on or security interests in any Pre-Petition Collateral or DIP Facility Collateral; provided,
however, that the foregoing limitations shall not apply to claims (i) to contest whether a
Termination Date has occurred and (ii) for services rendered by the professionals retained by the
Committee, if any, within the time provided in paragraph 25 of this Order in connection with the
Committee’s investigation of (but not the assertion of) any Challenge Rights as defined in
Paragraph 25 of this Order. Laurus and DIP Lender shall retain their rights as a party in interest
to object to any fee applications or other claims of any entity including, but not limited to,
professionals retained by the Debtors and Committee.




          (c) So long as no Termination Date has occurred, the Debtors are
authorized to use the proceeds of the DIP Facility and the Cash Collateral in accordance with and
limited to the amounts in the Approved Budget to pay such compensation and expense reimbursements
of professional persons retained by the Debtors (the “Debtor Professionals”), the Committee
(“Committee Professionals”), and reasonable expenses of Committee members, as may be awarded by the
Court pursuant to Section 328, 330 or 331 of the Bankruptcy Code (the “Professional Expenses”). The
Debtor Professionals and the Committee Professionals, if any, shall be permitted to submit to the
Debtors, with copies to counsel for the DIP Lender, periodic statements (but no more frequently
than on a monthly basis) for services rendered and reimbursable expenses incurred by them and the
expenses for Committee members (the




22









 







“Conditional Professional Expenses”). Nothing in this subparagraph shall prejudice or
impair the rights of either the Debtor’s Professionals or the Committee’s Professionals to request
an award of compensation in excess of the amounts set forth in the Approved Budget (the
“Unbudgeted Professional Expenses”) or the rights of the DIP Lender or Laurus to object to
the amount or reasonableness of the Conditional Professional Expenses, the Professional Expenses or
the Unbudgeted Professional Expenses. In no event, however, shall Laurus or DIP Lender be
responsible for the payment of Unbudgeted Professional Expenses or any amounts in excess of the
Carve-Out.




     16. Cash Collection Procedures. From and after the date of the entry
of this Order all collections and proceeds of any DIP Facility Collateral or services provided by
the Debtors and all other cash or cash equivalents which shall at any time come into the possession
or control of the Debtors, or to which the Debtors shall become entitled at any time shall be
deposited in the same bank accounts into which the collections and proceeds of the Pre-Petition
Collateral were deposited under the Pre-Petition Loan Documents (or in such other accounts as are
designated by Laurus from time to time), and such collections and proceeds upon such deposit shall
become the sole and exclusive property of Laurus or DIP Lender and shall be applied against the
Indebtedness as provided in this Order and the DIP Loan Documents. In the event the Debtors intend
to open any new bank accounts that would affect the right and ability of Laurus to receive any
proceeds as contemplated by this Order, the Debtors shall first obtain a “lock box agreement” or
other written confirmation to the satisfaction of Laurus and the DIP Lender from the relevant
banking institution recognizing the rights of Laurus and the DIP Lender as provided for in this
Order. All cash and cash equivalents of the Debtors currently in any account of the Debtors or
otherwise in the possession or control of the Debtors constitute



23









 




proceeds of the Pre-Petition Collateral and shall be immediately remitted to Lauras for application
against the Indebtedness. All financial institutions in which any lockboxes, blocked accounts or
other accounts of the Debtors are located are hereby authorized and directed to comply with any
request of Laurus to turnover to Laurus all funds therein without offset or deduction of any kind.




     17. Budget; Use of Cash Collateral and DIP Facility Proceeds.



          (a) Attached as Exhibit A hereto and incorporated herein by reference
is a budget (which has been approved by DIP Lender) setting forth by line item all projected
cash
receipts, billings and cash disbursements for the time period from the weeks ending July 25,
2008 through September 12, 2008 (the “Initial Approved Budget”). The Initial Approved
Budget may be modified or supplemented from time to time by additional budgets (covering any
time period covered by a prior budget or covering additional time periods) to which Laurus and
DIP Lender agree in their sole discretion (each such additional budget, a
“Supplemental
Approved Budget”), so long as such modification or supplement does not alter the amount of the
Professional Fee Expenses set forth on any Approved Budget without the consent of the Debtor
Professionals and Committee Professionals. The aggregate of all items approved by DIP Lender
and Laurus in the Initial Approved Budget and any and all Supplemental Approved Budgets
(acceptable to Laurus and DIP Lender in their sole discretion) shall constitute an
“Approved
Budget.”




          (b) Debtors may use Cash Collateral and the proceeds of the DIP
Facility exclusively to pay for the expenses incurred by Debtors as provided for in the
Approved
Budget. Debtors represent and warrant that (a) the expenditures set forth in the Approved
Budget constitute all of Debtors projected expenses during the period of the Approved Budget,





24









 








and (b) the Cash Collateral and the sums to be advanced by DIP Lender pursuant to the DIP
Facility are sufficient to pay all of the expenses set forth in the Approved Budget. Notwithstanding
the amount of Professional Fees reflected on the item entitled “Creditors’ Professionals” on the
Approved Budget annexed to this Order, which item relates to the fees and expenses of the
Committee’s Professionals, the aggregate amount during the budget period for this item shall be
increased from $150,000 to $250,000. Debtors’ cash receipts shall not be less than as set forth in
the Approved Budget and Debtors’ expenses shall not exceed those set forth in the Approved Budget,
in all cases subject to the Approved Sales Variance, the Approved Cash Receipts Variance, and the
Approved Disbursements Variance (all as defined below, and collectively, the “Approved Variances”).
Notwithstanding the foregoing, DIP Lender shall have no obligation to provide the DIP Facility if
the Debtors exceed the disbursement amounts overadvance limits provided in the Approved Budgets. As
used herein, the Approved Variances include, and are defined and calculated as follows:





	 	(i)	 	“Approved Billing Variance”
means a negative variance of less than 8%, between Debtors’ actual
billings and Debtors’ projected billings measured as of the end of the
weeks ending August 8, 2008 and September 12, 2008 covered by the
Approved Budget;
	 
	 	(ii)	 	“Approved Cash Receipts Variance”
means a negative variance of less than 10%, between Debtors’ actual
cash receipts and Debtors’ projected cash receipts measured commencing
as of the end of the second week covered by the Approved Budget and
each week thereafter for both (i) the two-week period concluding with
the week during which the variance is being calculated, and (ii)
cumulatively from the commencement of the Chapter 11 Cases concluding
with the week during which the variance is being calculated;
	 
	 	(iii)	 	“Approved Disbursements Variance”
means a positive variance of (A) less than 71/2%, between Debtors’
actual disbursements and Debtors’ projected disbursements, on a line
item basis, and (B) less than 71/2% of the Debtors’ actual
disbursements and Debtors’ projected disbursements, on a cumulative
basis, each measured commencing as of the end of the second week
covered by the




25









 






	 	 	 	Approved Budget and each week thereafter for both (i) the two-week
period concluding with the week during which the variance is being
calculated, and (ii) cumulatively from the commencement of the
Chapter 11 Cases concluding with the week during which the variance
is being calculated.





     18. Financial Reporting. In addition to all of the financial reports the
Debtors are required to provide to Laurus pursuant to the Pre-Petition Loan Documents, which
financial reports the Debtors shall continue to provide to Laurus timely in accordance with the
Pre-Petition Loan Documents, the Debtors shall also provide the following reports to DIP Lender and
Laurus, with copies to the Committee: (i) no later than 5:00 p.m. (Eastern Time) each business day,
a weekly borrowing base certificate in the same format as which were submitted prior to the
Petition Date, along with a log of each of the daily disbursements and collections; (ii) no later
than 5:00 p.m. (Eastern time) each Wednesday, a comparison of the items in the Budget for the
preceding week to the Debtors’ actual performance that includes a narrative summary of any material
variances from the Budget for the preceding week; (iii) no later than 5:00 p.m. (Eastern time) each
Monday, a detailed report from the Debtors’ investment bankers that summarizes the status of the
Debtors’ efforts to sell substantially all of its assets as a going concern, which report shall
include (w) a tracking chart reflecting what communications, if any, the Investment Banker had with
interested parties during the prior week; (x) copies of expressions of interest or letters of
intent received by the Debtors from third parties; (y) a summary of the due diligence activities
conducted by interested parties in the preceding week; and (z) a time table for execution of
definitive agreements with potential parties and the filing of pleadings with the Court seeking
approval of the sale; and (ii) no later than the 10th day of each month, beginning August 10, 2008,
the Debtors’ financial statements (including detail by operating division and consolidated balance
sheets, income statements and cash flow statements)



26









 




for the immediately preceding month in the same format as the Debtors have been providing to Laurus
prior to the Petition Date.




     19. Covenants. The Debtors shall timely comply with all of the
covenants set forth in the Pre-Petition Loan Documents, this Order and the DIP Loan
Documents, other than the financial covenants which are superseded by the Approved Budgets
and any covenants relating to the Debtors’ insolvency or the commencement of the Chapter 11
cases.



     20. Application of Proceeds. Neither the Debtors nor any other party
shall have the right to direct or seek an order directing the manner of application of any
payments to DIP Lender or Laurus or any other receipts by DIP Lender or Laurus of proceeds of
any of the Pre-Petition Collateral or DIP Facility Collateral other than in the manner set
forth in
this Order and the Pre-Petition Loan Documents and the DIP Loan Documents.



     21. DIP Lender and Laurus Reservation of Rights. DIP Lender and
Laurus do not waive, and expressly reserve, any and all claims, defenses, rights and remedies
they have pursuant to any or all of the Pre-Petition Loan Documents, the DIP Loan Documents,
the Bankruptcy Code (including but not limited to Section 1110 thereof) and/or other
applicable
law against the Debtors and any officer, director, employee, agent or other representative of
the
Debtors. In addition, the rights and obligations of the Debtors and the rights, claims, liens,
security interests and priorities of DIP Lender and Laurus arising under this Order are in
addition
to, and are not intended as a waiver or substitution for, the rights, obligations, claims,
liens,
security interests and priorities granted by the Debtors, in its pre-petition capacity, under
the Pre-
Petition Loan Documents.



27









 





     22. Order Binding on Successors. The provisions of this Order shall
be binding upon and inure to the benefit of DIP Lender, Laurus, and the Debtors and their
respective successors and assigns (including any trustee or other estate representative
appointed
as a representative of the Debtors’ estate or of any estate in any successor cases). No third
parties are intended to be or shall be deemed to be third party beneficiaries of this Order or
the
DIP Loan Documents.



     23. Releases and Validation of Pre-Petition Indebtedness and Pre-Petition Liens: Allowance of Pre-Petition Indebtedness as Fully Secured Claim. The
release,
discharge, waivers and agreements set forth in this ordering paragraph will be deemed
effective
upon the entry of a Final Order (as defined below) incorporating this paragraph, subject only
to
the rights of the Committee, if any, or any party in interest with requisite standing as set
forth in
paragraph 25 below. Subject to the rights of the Committee, if any, or any party in interest
with
requisite standing acting on behalf of the estate pursuant to paragraph 25, below, the Debtors
and
their estates, hereby: (a) release and discharge Laurus together with all of their affiliates,
agents,
attorneys, officers, directors and employees from any and all claims and causes of action
arising
out of, based upon or related to, in whole or in part, any of the Pre-Petition Loan Documents,
any
aspect of the pre-petition relationship between Laurus and the Debtors, or any other acts or
omissions by Laurus in connection with any of the Pre-Petition Loan Documents, or Laurus’ pre-petition relationship with the Debtors; (b) waive any and all claims, defenses (including,
without
limitation, offsets and counterclaims of any nature or kind) as to the validity, perfection,
priority,
enforceability, subordination and avoidability (under §§510, 544, 545, 547, 548, 550, 551, 552
or 553 of the Bankruptcy Code or otherwise) of the Pre-Petition Indebtedness and the security
interests in and liens on the Pre-Petition Collateral in favor of Laurus; and (c) agree,
without



28









 




further Court order and without the need for the filing of any proof of claim, to the allowance of
the pre-petition claims of Laurus pursuant to §§ 502 and 506 of the Bankruptcy Code on account of
the Pre-Petition Indebtedness, as fully secured claims.




     24. No Liability to Third Parties. DTP Lender and Laurus shall not (i)
have liability to any third party nor shall it be deemed to be in control of the operations of
the
Debtors or to be acting as a “controlling person”, “responsible person” or “owner or operator”
with respect to the operation or management of the Debtors (as such terms, or any similar
terms,
are used in the Internal Revenue Code, the Unites States Comprehensive, Environmental
Response, Compensation and Liability Act as amended, or any similar Federal or state statute),
or owe any fiduciary duty to the Debtors, its creditors or its estate, and (ii) DIP Lender and
Laurus’ relationship with the Debtors shall not constitute nor be deemed to constitute a joint
venture or partnership with the Debtors.



     25. Objections by Parties in Interest. Except as set forth below in this
paragraph 25, all of the provisions of this Order shall be final and binding on the Debtors
(including, without limitation, their successors and assigns), the Debtors’ shareholders, and
all
creditors and other parties in interest, including any Chapter 11 or Chapter 7 trustee
hereinafter
appointed. Notwithstanding anything to the contrary herein, the Committee shall have until
October 15, 2008 (“Objection Period”), unless extended by written consent of Laurus and DIP
Lender, to file, on behalf of the Debtors’ estates, and to serve upon counsel for Laurus,
objections or complaints respecting (a) the claims, causes of actions and defenses released by
the
Debtors pursuant to ordering paragraph 23 above or (b) the validity, extent, priority,
avoidability,
or enforceability of the Pre-Petition Indebtedness, the Pre-Petition
Liens in the Pre-Petition Collateral including, without limitation, to seek
recharacterization, disgorgement (other than with



29









 




respect to the financing extended hereunder), reconciliation or to subordinate any liens or claims
of Laurus under Section 510 of the Bankruptcy Code or otherwise (the “Challenge Rights”). In the
event that no objections or complaints are filed with this Court by the Committee and served upon
counsel for Laurus within the time period set forth above, the provisions of this Order including,
without limitation, paragraph 23 and the Debtors’ Stipulations in this Order shall become final and
binding for all purposes and upon all parties. For purposes of this paragraph 25, a Chapter 7
trustee, as well as the Committee, shall be deemed a party-in-interest with requisite standing to
assert the Challenge Rights in the manner set forth herein provided that the Objection Period has
not expired, in which case such Challenge Rights shall terminate.




     26. Effect of Modification of Order. The Debtors shall not, without
DIP Lender or Laurus’ prior written consent (which shall be given or refused in their sole
discretion), seek to modify, vacate or amend this Order or any DIP Loan Documents. If any of the
provisions of this Order are hereafter modified, vacated or stayed by subsequent order of this or
any other Court, such stay, modification or vacatur shall not affect the validity of any
obligation outstanding immediately prior to the effective time of such stay, modification or
vacation, or the validity and enforceability of any lien, priority, right, privilege or benefit
authorized hereby with respect to any such obligations. Notwithstanding any such stay, modification
or vacatur, any obligation outstanding immediately prior to the effective time of such
modification, stay or vacatur shall be governed in all respects by the original provisions of this
Order, and Laurus shall be entitled to all the rights, privileges and benefits, including, without
limitation, the security interests and priorities granted herein, with respect to all such
obligations.



30









 





     27. Safe Harbor. The Court has considered and determined the matters
addressed herein pursuant to its powers under the Bankruptcy Code, including the power to
authorize the Debtors to obtain credit on the terms and conditions upon which the Debtors
Laurus and DIP Lender have agreed. Thus, each of such terms and conditions constitutes a part
of the authorization under § 364 of the Bankruptcy Code, and is, therefore, subject to the
protections contained in § 364(e) of the Bankruptcy Code.



     28. Subsequent Hearing; Procedure for Objections and Entry of Final
Order. The Motion is set for a final hearing (“Final Hearing”) before this Court at
9:00 a.m. on
August 19, 2008 (such date or such later date to which the Final Hearing is adjourned or
continued with Laurus’ consent, the “Final Hearing Date”), at which time any party in interest
may present any timely filed objections to the entry of a final order, in form and substance
reasonably acceptable to Laurus in its sole discretion (the “Final Order”). The Debtors shall
promptly serve a copy of this Order, by regular mail upon (i) the United States Trustee; (ii)
all
affected state and federal taxing authorities; (iii) the creditors holding the 20 largest
unsecured
claims against each of the Debtors, or the Committee, if appointed; and (iv) any other party
which theretofore has filed in the Chapter 11 Cases a request for special notice with this
Court
and served such request upon Debtors’ counsel. Any objections to this Order and the entry of a
Final Order on the Motion shall be in writing and shall be filed with the Court and served so
that
they not later than five (5) business days before the date scheduled for the Final Hearing and
served so that they are received on or before 4:00 p.m. (Eastern Time) of such date by (i)
Foley & Lardner, LLP, 90 Park Avenue, New York, New York 10016, counsel for the Debtors, Attention: Michael
P. Richman, and Young Conaway Stargatt & Taylor, LLP, 1000 West Street, 17th Floor,
Wilmington, Delaware 19801, Attention: Michael R. Nestor, Esq.; (ii) Stuart



31









 




Komrower, Esq. and Gerald H. Gline, Esq., Cole, Schotz, Meisel, Forman & Leonard, P.A., Court Plaza
North, 25 Main Street, Post Office Box 800, Hackensack, New Jersey 07602-0800 and J. Kate Stickles,
Esq., Cole, Schotz, Meisel, Forman & Leonard, P.A., 1000 N. West Street,
Wilmington, Delaware 19801, counsel for Laurus and DIP Lender; (iii) Otterbourg, Steindler,
Houston & Rosen, PC, 230 Park Avenue, 29th Floor, New York, NY 10169, Attn: David M.
Posner, Esq. and Jenette Barrow-Bosshart, Esq.; and (iv) the United States Trustee. Any objections
by creditors or other parties in interest to any of the provisions of this Order shall be deemed
waived unless filed and served in accordance with this paragraph.




     29. Objections Overruled or Withdrawn. All objections to the entry of
this Order have been withdrawn or are herby overruled.



     30. Controlling Effect of Order. To the extent any provisions in this
Order conflict with any provisions of the Motion, any Pre-Petition Loan Document, any DIP
Loan Document the provisions of this Order shall control.



     31. Order Effective. This Order shall be effective as of the date of
signature by the Court.



32









 





     32. Non Waiver. No omission or delay by Laurus or the DIP Lender
in exercising any right or powers under this Order, the Pre-Petition Loan Documents or DIP Loan
Documents, or any related agreement, will impair such right or power or be construed to be a
waiver of any default or breach or an acquiescence therein, and any single or partial exercise of
any such right or power will not preclude other or further exercise thereof or the exercise of any
other right, and no waiver will be valid unless in writing and signed by Laurus or the DIP Lender,
or their counsel, and then only to the extent specified.



DATED: August 18, 2008




	 	 	 	 	 
	 

	 	/s/ Brendan L. Shannon
 

United States Bankruptcy Judge
	 	 







33