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Inre

IN THE UNITED STATES BANKRUPTCY COURT


FOR THE DISTRICT OF DELAWARE
Chapter 11
CRDENTIA CORP., et al.,l Case No. 10-__ _
Debtors. (Joint Administration Requested)
APPLICATION UNDER 11 U.S.C. 327(a) and 1107(b), FED.
R. BANKR. P. 2014 & 2016, AND BANKR. D. DEL. L.R. 2014-1 &
2016-1 TO APPROVE THE EMPLOYMENT AND RETENTION OF
GERSTEN SAVAGE, LLP AS ATTORNEYS FOR THE DEBTORS
Crdentia Corp. ("Crdentia Corp.") and its affiliated debtors, ATS Universal, LLC, Baker
Anderson Clnistie, Inc., CRDE Corp., GHS Acquisition Corporation, Health Industry
Professionals, LLC, IDP Holding, Inc., MP Health Corp., New Age Staffmg, Inc. and Nurses
Network, Inc., (collectively with Crdentia Corp., the "Debtors" or "Crdentia"), file this
Application, pursuant to sections 327(a) and 1107(b) of title 11 of the United States Code (as
amended, the "Bankruptcy Code"), Rules 2014 and 2016 of the Federal Rules of Bankruptcy
Procedure (the "Bankruptcy Rules") and Rules 2014-1 and 2016-1 of the Local Rules of
Bankmptcy Practice and Procedure of the United States Banktuptcy Court for the District of
Delaware (the "Local Rules"), to Approve the Employment and Retention of Gersten Savage
LLP ("Gersten Savage" or the "Firm") as attorneys for the Debtors nunc pro tunc to the Petition
Date (as defined below). In support of this Application, the Debtors rely upon and incorporate
by reference (a) the Declaration of Rebecca Irish in Support of the Debtors' Chapter 11 Petitions
1 The Debtors, along witb tbe last four digits of tbeir federal tax identification numbers, are: Crdentia
Corp.(5701), ATS Universal, LLC (3980), Baker Aoderson Orristie, lnc. (3631), CRDE Corp. (2509), GHS
Acquisition Corporation (9736), Healtb Industry Professionals, LLC (4246), HIP Holding, lnc. (3468), MP Healtb
Corp. (4403), New Age Staffing, lnc. (1214) and Nurses Network, lnc. (6291). The Debtors' mailiog address for
purposes oftbese cases is 1964 Howell Branch Road, Ste. 206, Wiater Park, Florida 32792.
and First Day Pleadings (the "Irish Declaration"), filed contemporaneously herewith, and (b) the
Declaration of Paul Rachmuth (the "Rachmuth Declaration"), attached hereto as Exhibit A, and
represent as follows:
I. JURISDICTION AND VENUE
1. This Court has jurisdiction over this matter pursuant to 28 U.S.C. 157 and
1334 and 11 U.S. C. 327(a). This is a core proceeding pursuant to 28 U.S. C. 157. Venue is
proper pursuant to 28 U.S.C. 1408 and 1409.
2. The statutory bases for the relief requested herein are sections 327(a) and 1107(b)
ofthe Bankruptcy Code, Bankruptcy Rules 2014 and 2016, and Local Rules 2014-1 and 2016-1.
fl. BACKGROUND
3. On this date (the "Petition Date"), each of the Debtors filed a voluntary petition
for relief under Chapter II of the Bankruptcy Code. The Debtors continue to manage and
operate their business as debtors in possession pursuant to II 07 and 1108 of the Bankruptcy
Code. The Debtors have filed a motion requesting that the Court jointly administer the Debtors'
bankruptcy estates.
4. An official connnittee of unsecured creditors has not been appointed in these
Chapter 11 cases. Further, no trustee or examiner has been requested or appointed in any of
these Chapter 11 cases.
5. Crdentia is a provider of healthcare staffing services to hospitals and other
healthcare facilities throughout the United States. The Company serves over 1,000 hospital,
government, clinic, nursing home, and home care clients, and facilitates the placement of staff
across the following services groups: Travel Nurses, Per Diem and Block Assignment Nurses,
Physicians (Locum Tenens), Allied Staffing, and Private Duty Home Care.
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6. The Debtors are m a severe liquidity crisis attributable to a host of factors,
including, among others, (a) an industry-wide decline in demand, (b) material deterioration of the
travel nursing market segment, (c) re-entry of formerly retired or part-time healthcare
professionals into institutional full-time positions, which causes a reduction in the need for
personnel from staffing agencies, (d) a decline in markets served by Crdentia due to office
closures, (e) the Debtors' lack of focus on building a sales organization with a disciplined
approach to managing the sales function, (f) mix of types of business that was unfavorable to
appropriate profitability, (g) inability to hire quality local hub managers in a timely manner, (h)
failure to capitalize on new contractual oppmtunities with new clients, (i) failure to reach critical
scale at the operating locations sufficient to fund the corporate overhead, and (j) utilizing debt
and equity funding to acquire entities/operations which did not produce the positive results
expected. As the revenues declined and gross margins contracted, Crdentia's management chose
a path of cost reductions and office closures which provided only a partial solution and limited
relief
7. After considering the available alternatives, the Board of Directors, after
consulting with its advisors, concluded, that negotiating a plan of reorganization with Com Vest
Capital, LLC, Crdentia's secured lender ("Com Vest"), whereby Com Vest receives all of the
equity of the reorganized Crdentia was in the best interests of Crdentia and its creditors, and for
the Debtors to commence the Chapter 11 cases.
8. Additional information regarding the Debtors' business, capital structure, and the
circumstances leading to these chapter 11 filings is described in the Irish Declaration.
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Ill. PROPOSED ATTORNEYS FOR THE DEBTORS
9. The Debtors seek approval of the employment and retention of Gersten Savage as
their attorneys in these bankruptcy cases, effective as of the Petition Date.
10. Section 327(a) of the Bankruptcy Code provides: "the trustee, with the comt's
approval, may employ one or more attorneys ... that do not hold or represent an interest adverse
to the estate, and that are disinterested persons, to represent or assist the trustee in canying out
the trustee's duties under this title." 11 U.S.C. 327(a).
11. Crdentia seeks to retain Gersten Savage for, in addition to others, the following
reasons:
a. Gersten Savage has extensive experience and knowledge in the field of debtors'
and creditors' rights and business reorganizations under Chapter 11 of the
Bankruptcy Code. Gersten Savage has expe1tise, experience, and know ledge
practicing before bankruptcy courts in this and other districts throughout the
count1y. Gersten Savage's appearance before this Court for the matters in these
Chapter 11 cases will be efficient and cost effective for the Debtors' estates.
b. Gersten Savage is a full-service law firm with experience and expe1tise in all
other legal areas that will have an impact on the Debtors' day-to-day operations
and their reorganization under Chapter 11 of the Bankruptcy Code.
12. The Debtors contemplate that Gersten Savage will render specialized legal
services to the Debtors as needed throughout these cases. Generally, the legal services that
Gersten Savage will render may be summarized, in pmt, as follows:
a. Advising the Debtors of their rights, powers and duties as debtors m
possession under the Bankruptcy Code;
b. Performing all legal services for and on behalf of the Debtors that may be
necessary or appropriate in the administration of these bankmptcy cases
and the Debtors' businesses;
c. Advising the Debtors concerning, and assisting in, the negotiation and
documentation of financing agreements and debt restructurings;
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d. Counseling the Debtors in connection with the formulation, negotiation,
and consunnnation of a possible sale of the Debtors' or their assets;
e. Reviewing the nature and validity of agreements relating to the Debtors'
interests in real and personal property and advising the Debtors of their
conesponding rights and obligations;
f Advising the Debtors conceming preference, avoidance, recovery, or other
actions that they may take to collect and to recover property for the benefit
of the estates and their creditors, whether or not arising under Chapter 5 of
the Bankmptcy Code;
g. Preparing on behalf of the Debtors all necessary and appropriate
applications, motions, pleadings, draft orders, notices, schedules, and other
documents and reviewing all financial and other reports to be filed in these
bankruptcy cases;
h. Advising the Debtors conceming, and preparing responses to,
applications, motions, complaints, pleadings, notices, and other papers that
may be filed and served in these bankruptcy cases;
1. Counseling the Debtors in connection with the formulation, negotiation,
and promulgation of a plan of reorganization and related documents or
other liquidation of the estates;
J. Working with and coordinating efforts among other professionals to
attempt to preclude any duplication of effort among those professionals
and to guide their efforts in the overall framework of Debtors'
reorganization or liquidation; and
k. Working with professionals retained by other parties in interest in this
bankmptcy case to attempt to stmcture a consensual plan of
reorganization, liquidation, or other resolution of the bankruptcy cases for
Debtors.
13. The nonexclusive serVIces described above are essential to the Debtors'
successful reorganization.
14. By separate application, the Debtors are seeking to retain and employ the law firm
of Bayard, P.A., Attn: Jamie L. Edmonson, 222 Delaware Avenue, Suite 900, Wilmington, DE
19801 ("Bayard") as Delaware bankmptcy counsel to represent the Debtors in these Chapter 11
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cases. Gersten Savage and Bayard will make every effort to avoid and minimize duplication of
services in these cases.
IV. GERSTEN SAVAGE'S DISINTERESTEDNESS
15. Gersten Savage was engaged by Crdentia on February 3, 2010 to provide advice
concerning financial restructuring, pre-bankruptcy and bankruptcy planning.
16. Gersten Savage has expended significant resources over the past few months
working with Crdentia to prepare for the ftling of these cases. Over the last few months, Gersten
Savage has become intimately familiar with Crdentia's business operations and financial affairs
and many of the legal issues that will likely arise in the context of these Chapter 11 cases. If
Crdentia is forced to retain counsel other than Gersten Savage, the Debtors' estates would incur
additional expenses and delays associated with familiarizing new counsel with the intricacies of
Crdentia's financial affairs and business.
17. To the best of Crdentia's knowledge, information and belief, and except as set
fmih on Schedule A annexed to the Rachmuth Declaration, Gersten Savage has no connection
with Crdentia's creditors, parties in interest or affiliates, or attorneys or accountants for any of
them, the United States Trustee, or any person employed in the Office of the United States
Trustee.
18. To the best of Crdentia's knowledge based upon the Rachmuth Declaration,
Gersten Savage does not represent or hold any interest adverse to the Debtors, their estates,
creditors, equity security holders, or affiliates in the matters upon which Gersten Savage is to be
engaged, and is a "disinterested person" within the meaning of section 101(14) of the
Bankruptcy Code, as modified by section 1107(b) of the Bankruptcy Code, and as required by
section 327(a) of the Bankmptcy Code.
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V. COMPENSATION
19. Subject to Court approval, and in accordance with the applicable provisions of the
Bankruptcy Code, the Bankmptcy Rules, the Local Rules and any applicable orders of this
Court, the Debtors propose to pay Gersten Savage its customary hourly rates in effect from time
to time as set fmth herein, plus reimbursement of actual, necessary expenses incuned by Gersten
Savage on the Debtors' behalf. The following are Gersten Savage's cunently hourly rates for
work of this nature:
Partners
Associates
Paraprofessionals
$525 to $650
$350 to $450
$250
20. Consistent with historical firm practice, the hourly rates set forth above are
subject to adjustments on January 1st of each year (beginning January 1, 2011) to reflect
economic and other conditions (subject to client approval and Comt approval, if necessary).
21. Gersten Savage will comply with the requirements of this Comt, the Bankruptcy
Code, the Bankmptcy Rules and the Local Rules with respect to fee and expense applications of
professionals employed by bankmptcy estates.
22. Prior to the petition date, Gersten Savage received a retainer in the amount of
$100,000 for work to be performed by the Fi:tm. The full amount of the retainer was applied to
prepetition invoices prior to the filing of the bankruptcy cases. Accordingly, Gersten Savage
does not hold a retainer for the postpetition engagement. Any amounts owed in excess of the
retainer payments have been waived. Accordingly, Gersten Savage was not a creditor of the
Debtors when the bankruptcy petitions were filed. Except as set fmth herein, Gersten Savage
has never been counsel for the Debtor, or otherwise received payment for services related
thereto.
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23. No promises have been received by Gersten Savage, nor any partner, counsel, nor
associate thereof, as to compensation in connection with this case other than in accordance with
the provisions of the Bankruptcy Code. Gersten Savage has no agreement with any other entity
to share with such entity any compensation received by Gersten Savage in connection with these
cases.
24. Gersten Savage's compliance with the requirements of sections 327, 329, 330,
and 504 of the Bankruptcy Code, Bankmptcy Rules 2014 and 2016, and the Local Rules 2014-1
and 2016-1 is set forth in detail in the Rachmuth Declaration.
VI. NOTICE
25. No trustee, examiner or creditors' committee has been appointed in these chapter
11 cases. Notice of the Motion has been provided to: (a) the United States Trustee; (b) those
parties listed on the consolidated list of creditors holding the twenty (20) largest unsecured
claims against the Debtors, as identified in their chapter 11 petitions; (c) counsel for ComVest;
and (d) those parties who have requested notice in these cases pursuant to Bankruptcy Rule 2002.
In light of the nature of the relief requested herein, the Debtors submit that no other or further
notice is required.
VII. CONCLUSION
26. No previous request for the relief sought herein has been made to this or any other
Comt.
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WHEREFORE, Crdentia respectflllly requests that the Court (i) approve this Applkation,
(ii} authorh:e Crdentia to employ and retain Gersten Savage as counsel in these Chapter ll cases
as requested in this Application, effective as of the Petition Date, and (iii) grant Crdentia any
other relief that is just and proper.
Dated; March 17, 2010
Crdentia Corp.
(for itself and on behalf of its affiliated
Debtors and Debtors in Poswssion)
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EXHIBIT A
Inre
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
Chapter 11
Case No. 10-
---
CRDENTIA CORP., et al.,2
Debtors. (Joint Administration Requested)
DECLARATION OF PAUL RACHMUTH IN SUPPORT OF APPLICATION UNDER 11
U.S.C. 327(a) and 1107(b), FED. R. BANKR. P. 2014 & 2016, AND BANKR. D. DEL.
L.R. 2014-1 & 2016-1 TO APPROVE THE EMPLOYMENT AND RETENTION OF
GERSTEN SAVAGE, LLP AS ATTORNEYS FOR THE DEBTORS
I, PAUL RACHMUTH, hereby declare as follows under penalty of perjury:
I. BACKGROUND
1. I am an attorney licensed to practice law in the State ofNew York and have been
a member of good standing of the New York Bar since 1996.
2. I am a patiner in the law firm of Gersten Savage, LLP ("Gersten Savage" or the
"Firm"). My office address is 600 Lexington Avenue, New York, New York 10022.
3. Pursuant to 327, 329, 330, and 504 and Bankruptcy Rules 2014(a) and
2016(b), I make this Declaration and Disclosure of Compensation Pursuant to Bankmptcy Rule
2016 and 11 U.S.C. 329 (the "Declmation") in Support of the Application Under Section
327(a) of the Bankmptcy Code to Approve the Employment and Retention of Gersten Savage as
Attomeys for the Debtors (the "Application").
2 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 Industry Professionals, LLC ( 4246), IDP Holding, Inc. (3468), MP Health
Corp. (4403), New Age Staffing, Inc. (1214) and Nurses Network, Inc. (6291). The Debtors' mailing address for
purposes ofthese cases is 1964 Howell Branch Road, Ste. 206, Winter Park, Florida 32792.
IT. GENERALSTATEMENT
4. Neither I nor Gersten Savage represent any interest adverse to any of the above-
referenced debtors ("Crdentia" or the "Debtors"), as required by 11 U.S.C. 327(a), 328(a),
329, and 504. Additionally, we are disinterested persons, as defined by 11 U.S. C. 101(14).
5. Except as set forth on Schedule A annexed hereto, neither I, Gersten Savage, nor
any partner, counsel, or associate thereof, insofar as I have been able to ascertain, have any
connection with Crdentia or their creditors, the United States Trustee, persons employed in the
United States Trustee's office, or any other potential pmiies-in-interest herein, or their respective
attorneys, except as set forth herein. I do not believe any of these relationships creates an
adverse relationship with Crdentia.
6. Gersten Savage has approximately 25 attorneys. Consequently, it is possible that
Gersten Savage has "connections" with another attorney or other professional to be involved in
these cases. Gersten Savage may have refened matters to professionals to be involved in these
cases or been refened matters by such parties.
27. Gersten Savage was engaged by Crdentia on February 3, 2010 to provide advice
concerning financial restructuring, pre-bankruptcy and bankruptcy planning.
28. A copy of Gersten Savage's Retention Agreement (the "Retention Agreement") is
annexed hereto as Exhibit 1. Pmsuant to the Retention Agreement, Gersten Savage has agreed to
cap its fees at $100,000, subject to ce1iain caveats.
7. In the process of Gersten Savage's representation of Crdentia, we have become
familim with Crdentia's business operations and financial affairs and many of the legal issues
that will likely arise in the context of these Chapter 11 cases. If Crdentia is forced to retain
counsel other than Gersten Savage, the Debtors' estates would incm additional expenses and
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delays associated with familiarizing new counsel with the intricacies of Crdentia's financial
affairs and business.
III. SEARCH AND DISCLOSURE PROCEDURES
8. Gersten Savage maintains a conflicts database management system (the
"System"), which is designed to reveal the potential for conflicts of interest and other
connections to existing and former clients. When retained by Crdentia, we utilized the System to
search for potential conflicts of interest and other connections to existing and former clients and
other potential pmiies-in-interest in this case whom Gersten Savage has represented. We
sem-ched for connections to the following: (a) Crdentia; (b) Crdentia's largest creditors;
(c) Crdentia's secured lenders; (d) Crdentia's landlord; (e) Crdentia's utility providers; (f)
Crdentia's litigation counterparties; (g) Crdentia's directors and officers; (h) Crdentia's financial
advisor; (i) the applicable taxing authorities; and (j) the United States Trustee (collectively the
"Potentially Interested Pmties").
9. I have, or one of my pminers has, reviewed the results of this conflict search. The
System holds no information that would suggest that Gersten Savage is now or has ever been
adverse to Crdentia, or that we have ever represented any pmties in interest in matters related to
this case or to Crdentia. All connections between Gersten Savage and the Potentially Interested
Pmiies are set f01ih on Schedule A, annexed hereto. To the best of my knowledge, information
and belief: (i) Gersten Savage does not represent or hold any interest adverse to Crdentia, their
estates, creditors, equity security holders, or affiliates in the matters upon which Gersten Savage
is to be engaged; and (iii) Gersten Savage is a "disinterested person" within the meaning of
section 101(14) of the Bankruptcy Code, as modified by section 1107(b) of the Bankruptcy
Code, and as required by section 327(a) of the Bankruptcy Code.
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10. Additionally, the proposed employment of Gersten Savage is not prohibited by or
improper under Bankruptcy Rule 5002. I am not related, and to the best of my knowledge, no
attorney at the Firm is related, to any United States Bankruptcy Judge or District Court Judge for
the District of Delaware or to the United States Trustee for such district or any employee in the
office thereof
II. The disclosures identified above are based upon all information reasonably
available to Gersten Savage at the time of submission of the Application to the Bankruptcy Court
for approval. Gersten Savage will, to the extent necessary, supplement this Declaration as may
be required by the Bankruptcy Code and Bankruptcy Rules if and when any other relationships
exist or are modified such that further disclosure is required. G e r ~ t e n Savage will implement
appropriate internal procedures to protect the interests of Crdentia in connection with the
representations and relationships set forth above.
IV. COMPENSATION INFORMATION
12. Prior to the petition date, Gersten Savage received a retainer in the amount of
$100,000 for work to be performed by the Firm. The full amount of the retainer was applied to
prepetition invoices prior to the filing of the bankruptcy cases. Accordingly, Gersten Savage
does not hold a retainer for the postpetition engagement. Any amounts owed in excess of the
retainer payments have been waived. Accordingly, Gersten Savage was not a creditor of the
Debtors when the bankruptcy petitions were filed. Gersten Savage was not a creditor of the
Debtors when the bankruptcy petitions were filed. Except as set forth herein, Gersten Savage
has never been counsel for the Debtor, or otherwise received payment for services related
thereto. Pursuant to Local Rule 2016-1, all payments received by Gersten Savage for the year
prior to the Petition Date are set forth in Schedule B, annexed hereto.
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13. Subject to Comt approval, and in accordance with the applicable provisions of the
Bankruptcy Code, the Bankruptcy Rules. The Local Rules and any applicable orders of this
Court, the Debtors propose to pay Gersten Savage its customary hourly rates in effect from time
to time as set forth herein, plus reimbursement of actual, necessary expenses incurred by Gersten
Savage on the Debtors' behalf. The following are Gersten Savage's cunently hourly rates for
work of this natme:
Partners
Associates
Paraprofessionals
$525 to $650
$350 to $450
$250
14. Consistent with historical firm practice, the hourly rates set forth above are
subject to adjustments on January 1st of each year (beginning January 1, 2011) to reflect
economic and other conditions (subject to client approval and Court approval, if necessary).
15. Gersten Savage will comply with the requil:ements of this Comt, the Bankruptcy
Code, the Bankruptcy Rules and the Local Rules with respect to fee and expense applications of
professionals employed by bankruptcy estates.
16. No promises have been received by Gersten Savage, nor any partner, counsel, nor
associate thereof, as to compensation in connection with this case other than in accordance with
the provisions of the Bankruptcy Code.
17. Gersten Savage has no agreement with any other entity to share with such entity
any compensation received by Gersten Savage in connection with these cases.
18. I declare under penalty of petjury under the laws of the United States that the
foregoing statements are true and correct.
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Dated: March 17,2010
New York, New York
Is/ Paul Rachmuth
Paul Rachmuth
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SCHEDULE A to the
DECLARATION OF PAUL RACHMUTH IN SUPPORT OF APPLICATION UNDER 11
U.S.C. 327(a) and 1107(b), FED. R. BANKR. P. 2014 & 2016, AND BANKR. D. DEL.
LR. 2014-1 & 2016-1 TO APPROVE THE EMPLOYMENT AND RETENTION OF
GERSTEN SAVAGE, LLP AS ATTORNEYS FOR THE DEBTORS
Connections to Potentially Interested Parties:
Gersten Savage has, over the past 3 years, represented Com Vest and its affiliate, Commonwealth
Associates LP ("Commonwealth"), in other matters unrelated to Crdentia. Gersten Savage is not
currently representing ComVest or Commonwealth on any matters. Gersten Savage's revenue
fiom matters in which it represented Com Vest and/or Commonwealth has been less than 5% of
Gersten Savage's total annual revenue in each ofthe past 3 years.
Upon review, we have determined that no potential exists for this prior representation to create a
conflict of interest.
SCHEDULE B to the
DECLARATION OF PAUL RACHMUTH IN SUPPORT OF APPLICATION UNDER 11
U.S.C. 327(a) and 1107(b), FED. R. BANKR. P. 2014 & 2016, AND BANKR. D. DEL.
l.R. 2014-1 & 2016-1 TO APPROVE THE EMPLOYMENT AND RETENTION OF
GERSTEN SAVAGE, LLP AS ATTORNEYS FOR THE DEBTORS
Pursuant to Local Rule 2016-1, the following payments were received by Gersten Savage
during the year prior to the Petition Date:
Payment
Date Amount
2/3/10 $50,000
3/9/10 $50,000
TOTAL: $100,000
EXHIBITl
[Gersten Savage Retention Agreement]
GERSTEN SAVAGE LLP
VIA
Crdentia Corporation
5001 LBJ Freeway, Suite 850
Dallas, Texas 75244
Atto: Rebecca Irish, Authorized Person
Re: Retention of Gersten Savage LLP
Dear Rebecca;
February 2, 2010
600 U:XlNGiON AVENUE
NEW YORK NY
T; 212-7529700
F: 212-980-519:2.
INFO@GERSTENSAVAGE.COM
WWW.GERSTENSAVAGE.COM
Thank you for selecting our finn to represent Crdentia Corporation ("Crdentia'') in
connection with it restructoring reorgardzation. The purpose of this letter ('the "Retention
Agreement") is to confirm 'the terms and conditions upon which you have retained us, as set forth
below.
Scope of Services
Crdentia has engaged Gersten Savage LLP (the "Finn") to assist it in a corporate
restructoring, which may include a transfer of the interests in Crdentia and a filing for protection
llllder Chapter II of the Bankruptcy Code (a "Bankruptcy Filing"). Accordingly, as part of the
Finn's representation of Crdentia, we will prepare all documents necessary for a Bankruptcy
Filing.
Assignment of Firm Personnel
Jay Kaplowitz, David Danovitch and I will be the partners primarily responsible for your
matter. We will draw upon the expertise of other partners and associates within the Finn as may
be required in order to fulfill our responsibilities under this engagement. We may also use legal
assistants to handle certain tasks, as appropriate.
Fees. Expenses and Billings
The time speot on this matter will be charged against an initial retainer payment as
provided below. The retainer payment will in 0311 likelihood not represent the arnollllt of the
overall fee which you may incur by virtue of our services.
t "
I
I
GERSTEN SAVAGE LLP
Retention Agreement
February 2, 2010
Page2of5
The amount of our fee will be based on our regular hourly rates, along with any out-of-
pocket disbursements which are incurred on Crdentia's behalf. Crdentia will be billed on the
basis of hourly rates multiplied by the number of hours worked on your matter, subject to a fee
cap as described below. The billing rates for partners in the Firm range from $525.00 per hour to
$650.00 per hour, and billing rates for associates range from $375.00 per hour to $450.00 per
hour. Our paralegals-law clerks billing rate is $225.00 to $350.00 per hour. Kindly note, these
rates are subject to periodic adjustment.
In accordance with Bankruptcy practice, Crdentia will be billed for disbursements and
charges incurred on its behalf that are beyond the Firm's general office-related expenses. These
disbursements and charges are likely to include, but are not limited to, photocopying and
facsimile charges, long distance telephone expenses, hand deliveries, postage, overnight courier
services, and computer research charges from subscription services such as Lexis-Nexis and
PACER.
A statement of fees, disbursements and charges will be sent to Crdentia monthly for any
work performed prior to a Bankruptcy Filing. If you have any questions regarding the billing
format or information contained in any invoice, please contact us so that we can try to answer
them promptly.
If there is a Bankruptcy Filing, the Firm will seek to be retained by the debtor-in-
possession with a fee arrangement substantially similar to the one described here.
Fee Limitation
Notwithstandiog the foregoing, the Firm hereby agrees to limit its total fees with respect
to the engagement described in this Retention Agreement to $100,000.00 (the "Fee Cap"). The
Fee Cap will apply to all fees earned prior to or during a Bankruptcy Filing through
consunwation of a successful plan of reorganization and closing of the bankruptcy case, or
similar event concluding the bankruptcy process.
Specifically excluded from the Fee Cap are (a) expenses actually incurred by the Firm,
including filing fees; (b) fees related to any litigation not contemplated in tbis Retention
Agreement, such as a third party challenges to the validity, priority or perfection of a secured
party's liens in tbe assets of Crdentia or litigation based on actions by Crdentia officers, directors
or employees prior to the Bankruptcy Filing; and (c) the fees and expenses of third parties,
including any finandal advisor, local counsel, or committee counsel retained in counection to the
Bankruptcy Filing.
Initial Retention Pavment
The Firm requests an initial payment of $50,000.00 as an advance for services to be
rendered and expenses to be incurred in connection with tbe Firm's representation of Crdentia.
In addition, the Firm may request other advance payments from time to time in amounts
necessary to maintain an adequate advance payment balance, in consideration of anticipated
GERSTEN SAVAGE LLP
Retention Agreement
February 2, 2010
Page3 oj5
services for the next period. We wlll return to Crdentia any portion of our advance fee that is not
earned upon the conclusion of our engagement.
Some fees, charges and disbursements incurred may remain unpaid as of the date of a
Bankruptcy Filing. Immediately prior to the filing, we will prepare an estimated invoice for fees
and expenses incurred and deduct such amount from the advance. Thereafter, we will perform a
reconciliation with respect to prepetition fees and expenses actually incurred, with any additional
amounts to be charged against the advance or, alternatively, as the case may be, any excess
amounts previously deducted to be returned to and augment the remaining advance. After the
filing of any Chapter 11 case, the remaining advance will be applied against postpetition fees and
expenses in accorda11ce with Federal Rule of Bankruptcy Procedure 2016 or other applicable
laws and rules. Postpetition tees and expenses are to be paid by Crdentia as and when approved
by the Court (subject to the Fee Cap described above) and are not intended to be setoff against
the advance until the conclusion of the case. Under local practice in many jurisdictions,
including Delaware, a debtm' s professionals may submit applications for their fees and expenses
to the Court on a monthly basis, for approval of 80% of their fees and 100% of their expenses.
Upon approval by the Court, these amounts may be paid by the debtor. On a quarterly basis,
professionals may seek approval of the remaining 20% of their fees that had not been paid
Again, upon approval by the Court, these amounts may be paid by the debtor.
Wiring instructions for the aforementioned advance and any additional advances are as
follows:
Questions and Termination
Signature Bank
565 Fifth Avenue
New York, NY 10017
ABA# 026013576
Account# 1500884408
While we anticipate that you will be satisfied with our representation, we encourage you
to irrforrn us if at any time our services do not meet your expectations. If we cannot resolve an
issue stemming from our representation of you, you may end this relationship at anytime by
giving us written notice, subject to your obligation to pay us according to the terms of this
agreement. We, in tum, reserve the right, subject to any limitations imposed by a bankruptcy
court or other court of competent jurisdiction, to withdraw from the representation upon written
notice in the event that you fall to cooperate with us in any way which we may reasonably
request, or to timely pay our statements in full as submitted, or in the event we determine in our
reasonable discretion that it would be improper under rules of professional responsibility or
impractical to continue our relationship.
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GERSTEN SAVAGE LLP
Retention Agreement
February 2, 2010
Page4of5
By agreeing to be bound by the terms of ibis agreement, you hereby consent to our
vohmtary withdrawal and the termination of our engagement as your counsel at any time for
good cause, such as your failure timely to pay our legal fees and the costs and expenses incurred
on your behalf or any other fact or circumstance which would, in our opinion, render our
. continuing representation unlawful, unethical, or inadvisable. Such discharge or withdrawal shall
not affect your obligation promptly to pay us for the fees and costs that you have incurred
through the date of our termination.
Resolution of Disputes -Mediation and Arbitration
Any dispute, controversy or claim arising out of or relatiog to this engagement before a
Bankruptcy Filing, . including any dispute, controversy or claim relatiog to our fees,
disbursements and charges, shall first be submitted to non"binding mediation before a mediator
jointly selected by the parties. Failing resolution through mediation, any such dispute,
controversy or claim shall be finally resolved by confidential arbitration as follows: (1) If and to
the extent that the New York Fee Dispute Resolution Program (Part 137 of 22 NYCRR)
providing for the informal and expeditious resolution of fee disputes between attorneys and
clients is applicable, then the rules and procedures of such Fee Dispute Resolution Program shall
apply; (2) If such Fee Dispute Resolution Program is not applicable to any such dispute,
controversy or claim, then the arbitration shall be conducted in New York City in accordance
with the Commercial Arbitration Rules of the American Arbitration Association, and any award
issued in such arbitration shall be enforceable in any court with jurisdiction. A copy of the New
York Fee.Dispute Resolution Program is available upon request.
Binding Agreement
This letter represents the entire agreement between Crdentia and the Firm concerulng the
terms and conditions of this engagement. By signing below, Crdentia acknowledges that this
letter has been reviewed and its content understood and that Crdentia agrees to be bound by its
terms and conditions. Furthermore, Crdentia acknowledges that the Firm has made no
representations regarding the outcome of the matter for which the Firm has been engaged
hereunder. No change or waiver of any of the provisions of this letter shall be binding on either
Crdentia or on the Firm unless the change or waiver is in writing and signed by botl;l Crdentia
and the Firm.
The use of this letter is to help ensure that there are no misunderstandings regarding the
services the Firm is to perform for you or the basis of compensation.
If the foregoing accurately reflects our agreement and understanding, kindly date and
sign this letter on behalf of Crdentia and return one copy to us in person, by mail, facsirulle or
email and wire transfer an initial retainer payment as described above.
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GERSTEN SAVAGE LLP
Retention Agreement
February 2, 2010
Page 5 ofS
Thank you again for this opportunity to be of service to Crdentia. My colleagues and I
look forward to working with you.
V truly yours,