Case 8:10-bk-16743-TA

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RON BENDER (SBN 143364) JACQUELINE L. RODRIGUEZ (SBN 198838) TODD M. ARNOLD (SBN 221868) JOHN-PATRICK M. FRITZ (SBN 245240) LEVENE, NEALE, BENDER, RANKIN & BRILL L.L.P. 10250 Constellation Boulevard, Suite 1700 Los Angeles, California 90067 Telephone: (310) 229-1234; Facsimile: (310) 229-1244 Email: rb@lnbrb.com; jlr@lnbrb.com; tma@lnbrb.com; jpf@lnbrb.com

FILED & ENTERED JUN 25 2010

CLERK U.S. BANKRUPTCY COURT Central District of California BY ngo DEPUTY CLERK

Attorneys for Chapter 11 Debtors and Debtors in Possession UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA (SANTA ANA DIVISION) In re: WESTCLIFF MEDICAL LABORATORIES, INC., Debtor. _______________________________ BIOLABS, INC., Debtor. _______________________________ Affects Both Debtors Affects WESTCLIFF MEDICAL LABORATORIES, INC. only Affects BIOLABS, INC. only Lead Case No. 8:10-bk-16743-TA Jointly Administered with Case No. 8:10-bk-16746-TA Chapter 11 Cases ORDER PURSUANT TO 11 U.S.C. 105 AND 363 AUTHORIZING ON A FINAL BASIS FOR A THIRD INTERIM PERIOD FROM JUNE 24, 2010, TO AND THROUGH JULY 31, 2010, THE DEBTORS TO (A) EMPLOY AND RETAIN FTI CONSULTING, INC. TO PROVIDE CHIEF RESTRUCTURING OFFICER AND TEMPORARY EMPLOYEES, AND (B) TO DESIGNATE MATTHEW PAKKALA AS CHIEF RESTRUCTURING OFFICER Court Scheduled Hearing: Date: June 23, 2010 Time: 10:00 a.m. Place: Courtroom 5B 411 West Fourth Street Santa Ana, CA 92701

Case 8:10-bk-16743-TA

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Upon

consideration

of

the

Debtors

seeking

authorization, pursuant to sections 11 U.S.C. 105 and 363 of chapter 11 of title 11 of the United States Code sections 101 et seq. (the Bankruptcy Code) authorizing the Debtors to (A)

employ and retain FTI Consulting, Inc. (FTI) to provide a Chief Restructuring designate Officer and temporary (Pakkala) employees as the and (B) to

Matthew

Pakkala

Debtors

Chief

Restructuring Officer, nunc pro tunc to May 19, 2010; and upon consideration of the Declaration of Robert E. Whalen (the Whalen Declaration), the Declaration of Matthew Pakkala (the Pakkala Declaration), the FTI Engagement Contract (attached as Exhibit A to the Application) and the filed with and in support based of on the the

Application,

Court

being

satisfied,

representations made in the Application, the Pakkala Declaration, and the Whalen Declaration, that FTI does not represent or hold any interest adverse to the Debtors or the Debtors estates with respect to the matters upon which it is to be engaged and is sufficiently disinterested as that term is defined under

101(14) of the Bankruptcy Code, as modified by 1107(b) of the Bankruptcy Code, and that the Debtors continued employment of FTI and Pakkala is necessary and in the best interests of the Debtors, the Debtors estates, their creditors, and all parties in interest and such continued employment is supported by the Official Committee of Unsecured Creditors (the Committee); and it appearing that due notice of the Application has been provided and no other or further notice need be provided; and the Court
1

Unless otherwise defined herein, each capitalized term shall have the meaning ascribed to such term in the Application.

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having heard the evidence and statements of counsel regarding the Application and having determined that the legal and factual

bases set forth in the Application, the Pakkala Declaration, and the Whalen Declaration establish just cause for the relief

granted herein; it is hereby ORDERED that the Application is GRANTED to the extent provided herein; and it is further ORDERED that, pursuant to Bankruptcy Code 363, the Debtors are authorized to continue to retain and employ FTI and Pakkala on a final basis for an interim period through July 31 , 2010, on the terms and conditions set forth in the Application, the Engagement Contract, and the Pakkala Declaration, subject to the following amendments to such terms: a. In the event the Debtors seek to have FTI personnel assume additional executive officer positions that are different than the positions disclosed in the

Application, or to materially change the terms of the engagement by modifying the functions of the executive officer personnel, a shall be filed. b. No principal, employee, or independent contractor of FTI and its affiliates shall serve as a director of the Debtors during the pendency of the Chapter 11 Cases. c. For Temporary Employees providing services at an hourly rate, FTI shall file with the U.S. Trustee and the Committee, reports of compensation earned and expenses incurred contain on a quarterly charts basis. which Such reports the shall motion to modify the retention

summary

describe

services

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provided,

identify

the

compensation

earned

by

each

Temporary Employee and itemize the expenses incurred. Time records shall (i) be time appended entries to the reports, the

(ii) contain

detailed

describing

task(s) performed, and (iii) be organized by project category. Where personnel are providing services at an

hourly rate, the time entries shall identify the time spent completing each task in 1/10/hour increments and the corresponding charge (time multiplied by hourly

rate) for each task.

Where FTI personnel are serving

as executive officers of the Debtors providing services at a flat monthly rate, time entries are not

required.

All compensation shall be subject to review

by the Court in the event an objection is filed by the United States Trustee or the Committee. The Debtors are permitted to indemnify those persons serving as executive officers on the same terms as

provided to the Debtors other officers and directors under the corporate bylaws and applicable state law, along with insurance coverage under the Debtors D&O policies. There shall be no indemnification of FTI or its

affiliates. For a period of three years after the conclusion of the engagement, neither FTI nor any of its affiliates shall make any investments in the Debtors or Reorganized

Debtors.

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g.

FTI shall disclose any and all facts that may have a bearing on whether the firm, its affiliates, and/or any individuals working on the engagement hold or represent any interest adverse to the Debtors, their creditors, or other parties-in-interest. identified in this The obligation is to a

disclose

subparagraph

continuing obligation. and it is further ORDERED that the Debtors are authorized to continue to

designate Pakkala as the Chief Restructuring Officer on a final basis for an interim period to and through July 31 , 2010; and it is further ORDERED that the terms and conditions of FTIs retainer set forth in the Engagement Contract are hereby approved on a final basis for an interim period to and through July 31, 2010.

Without further order of this Court, FTI shall be authorized, but not required, in its sole discretion, to (i) hold its retainer and apply it to FTIs final bill for postpetition fees and

expenses incurred during these cases, with any excess then to be refunded to the Debtors estates, or (ii) to apply the retainer to fees and expenses incurred by FTI as FTIs engagement in these cases proceeds; and it is further ORDERED that subject to the foregoing, the Debtors are

authorized to pay FTI in such amounts and at such times as are provided in the Engagement Contract on a final basis for an

interim period as accrued through July 31, 2010 without further order of this Court; and it is further

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ORDERED

that

the

terms

of

any

continued

employment

of

Pakkala or compensation paid to FTI for any period from and after August 1, 2010 order shall be the into subject by and of a further written the

stipulated

entered

between

Pakkala,

Committee and the Debtors or a further order of the Court if no such stipulated order can be agreed upon; and it is further ORDERED that this Court shall retain jurisdiction over any issues arising from the implementation or interpretation of this Order.

DATED: June 25, 2010

United States Bankruptcy Judge

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MATTHEW PAKKALA LEVENE, NEALE, BENDER, RANKIN & BRILL L.L.P. BUCHALTER NEMER, A PROFESSIONAL CORPORATION Dated: June 21, 2010

AGREED:

###

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In re: WESTCLIFF MEDICAL LABORATORIES, INC., Debtor(s). BIOLABS, INC., Debtor. CHAPTER 11 Case No. 8:10-bk-16743-TA Jointly Administered with Case No. 8:10-bk-16746-TA

PROOF OF SERVICE OF DOCUMENT

I am over the age of 18 and not a party to this bankruptcy case or adversary proceeding. My business address is: 10250 Constellation Boulevard, Suite 1700, Los Angeles, California 90067

A true and correct copy of the foregoing document described as ORDER PURSUANT TO 11 U.S.C. 105 AND 363 AUTHORIZING ON A FINAL BASIS FOR A THIRD INTERIM PERIOD FROM JUNE 24, 2010, TO AND THROUGH JULY 31, 2010, THE DEBTORS TO (A) EMPLOY AND RETAIN FTI CONSULTING, INC. TO PROVIDE CHIEF RESTRUCTURING OFFICER AND TEMPORARY EMPLOYEES, AND (B) TO DESIGNATE MATTHEW PAKKALA AS CHIEF RESTRUCTURING OFFICER will be served or was served (a) on the judge in chambers in the form and manner required by LBR 5005-2(d); and (b) in the manner indicated below: I. TO BE SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (NEF) Pursuant to controlling General Order(s) and Local Bankruptcy Rule(s) (LBR), the foregoing document will be served by the court via NEF and hyperlink to the document. On ___________, 2010, I checked the CM/ECF docket for this bankruptcy case or adversary proceeding and determined that the following person(s) are on the Electronic Mail Notice List to receive NEF transmission at the email address(es) indicated below: Service information continued on attached page II. SERVED BY U.S. MAIL OR OVERNIGHT MAIL(indicate method for each person or entity served): On ________, 2010, I served the following person(s) and/or entity(ies) at the last known address(es) in this bankruptcy case or adversary proceeding by placing a true and correct copy thereof in a sealed envelope in the United States Mail, first class, postage prepaid, and/or with an overnight mail service addressed as follows. Listing the judge here constitutes a declaration that mailing to the judge will be completed no later than 24 hours after the document is filed. Service information continued on attached page III. SERVED BY PERSONAL DELIVERY, FACSIMILE TRANSMISSION OR EMAIL (indicate method for each person or entity served): Pursuant to F.R.Civ.P. 5 and/or controlling LBR, on June 21, 2010, I served the following person(s) and/or entity(ies) by personal delivery, or (for those who consented in writing to such service method), by facsimile transmission and/or email as follows. Listing the judge here constitutes a declaration that personal delivery on the judge will be completed no later than 24 hours after the document is filed. Via Attorney Service Hon. Theodor Albert United States Bankruptcy Court 411 West Fourth Street Santa Ana, CA 92701 Service by E-Mail: Office of the U.S. Trustee Frank.Cadigan@usdoj.gov; nancy.goldenberg@usdoj.gov; Terry.Biers@usdoj.gov Debtors mapakkala@gmail.com Counsel for Committee bseigel@buchalter.com; jgarfinkle@buchalter.com

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Service information continued on attached page

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I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. June 21, 2010 Date
January 2009

Lourdes Cruz Type Name

/s/ Lourdes Cruz Signature

This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.

F 9013-3.1

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In re: WESTCLIFF MEDICAL LABORATORIES, INC., Debtor(s). BIOLABS, INC., Debtor. CHAPTER 11 Case No. 8:10-bk-16743-TA Jointly Administered with Case No. 8:10-bk-16746-TA

NOTE TO USERS OF THIS FORM:

1) Attach this form to the last page of a proposed Order or Judgment. Do not file as a separate document. 2) The title of the judgment or order and all service information must be filled in by the party lodging the order. 3) Category I. below: The United States trustee and case trustee (if any) will always be in this category. 4) Category II. below: List ONLY addresses for debtor (and attorney), movant (or attorney) and person/entity (or attorney) who filed an opposition to the requested relief. DO NOT list an address if person/entity is listed in category I.

NOTICE OF ENTERED ORDER AND SERVICE LIST

Notice is given by the court that a judgment or order entitled ORDER PURSUANT TO 11 U.S.C. 105 AND 363 AUTHORIZING ON A FINAL BASIS FOR A THIRD INTERIM PERIOD FROM JUNE 24, 2010, TO AND THROUGH JULY 31, 2010, THE DEBTORS TO (A) EMPLOY AND RETAIN FTI CONSULTING, INC. TO PROVIDE CHIEF RESTRUCTURING OFFICER AND TEMPORARY EMPLOYEES, AND (B) TO DESIGNATE MATTHEW PAKKALA AS CHIEF RESTRUCTURING OFFICER was entered on the date indicated as Entered on the first page of this judgment or order and will be served in the manner indicated below: I. SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (NEF) Pursuant to controlling General Order(s) and Local Bankruptcy Rule(s), the foregoing document was served on the following person(s) by the court via NEF and hyperlink to the judgment or order. As of June 21, 2010, the following person(s) are currently on the Electronic Mail Notice List for this bankruptcy case or adversary proceeding to receive NEF transmission at the email address(es) indicated below. Todd M Arnold tma@lnbrb.com Richard L Barnett rick@barnettrubin.com, rlbsec@barnettrubin.com Ron Bender rb@lnbrb.com Jennifer Witherell Crastz jcrastz@hemar-rousso.com Carol J Fogleman mfrost@bwslaw.com John-patrick M Fritz jpf@lnbrb.com Jeffrey K Garfinkle bkgroup@buchalter.com, jgarfinkle@buchalter.com Nancy S Goldenberg nancy.goldenberg@usdoj.gov Michael J Heyman michael.heyman@klgates.com Mark D Houle mark.houle@pillsburylaw.com Andy Kong Kong.Andy@ArentFox.com Rodger M Landau rlandau@lgbfirm.com, kmoss@lgbfirm.com Michael B Lubic michael.lubic@klgates.com Aram Ordubegian ordubegian.aram@arentfox.com Justin E Rawlins jrawlins@winston.com, docketla@winston.com Jacqueline L Rodriguez jlr@lnbrb.com Benjamin Seigel bseigel@buchalter.com, IFS_filing@buchalter.com United States Trustee (SA) ustpregion16.sa.ecf@usdoj.gov Sharon Z Weiss sharon.weiss@hro.com Service information continued on attached page

10

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II. SERVED BY THE COURT VIA U.S. MAIL: A copy of this notice and a true copy of this judgment or order was sent by United States Mail, first class, postage prepaid, to the following person(s) and/or entity(ies) at the address(es) indicated below:

Debtor Westcliff Medical Laboratories, Inc. 1821 E. Dyer Road, #100 Santa Ana, CA 92705-0000 Service information continued on attached page III. TO BE SERVED BY THE LODGING PARTY: Within 72 hours after receipt of a copy of this judgment or order which bears an Entered stamp, the party lodging the judgment or order will serve a complete copy bearing an Entered stamp by U.S. Mail, overnight mail, facsimile transmission or email and file a proof of service of the entered order on the following person(s) and/or entity(ies) at the address(es), facsimile transmission number(s) and/or email address(es) indicated below: Service information continued on attached page
This form is mandatory. It has been approved for use by the United States Bankruptcy Court for t he Central District of California.

January 2009

F 9021-1.1

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