Exhibit 10.4

 

$2,500,000

 

February 22, 2008

 

TERM NOTE

(Tranche B)

 

FOR VALUE RECEIVED, the undersigned, CRDENTIA CORP., a Delaware corporation (the
“Maker”), hereby promises to pay to ComVest Capital, LLC, a Delaware limited
liability company (“ComVest), or registered assigns (hereinafter, collectively
with ComVest, the “Payee”), the sum of Two Million Five Hundred Thousand
($2,500,000) Dollars (the “Principal”), with interest thereon, on the terms and
conditions set forth herein and in the Revolving Credit and Term Loan Agreement
of even date herewith by and between the Maker and ComVest (the “Loan
Agreement”).  Terms defined in the Loan Agreement and not otherwise defined
herein shall have the meanings assigned thereto in the Loan Agreement.

 

Payments of principal of, interest on and any other amounts with respect to this
Term Note (this “Note”) are to be made in lawful money of the United States of
America.

 

                1.             Payments.

 

(a)      Interest.  This Note shall bear interest (“Interest”) on Principal
amounts outstanding from time to time from the date hereof at the rate of twelve
and one-half (12.5%) percent per annum; provided, however, that during the
continuance of any Event of Default under the Loan Agreement, the interest rate
hereunder shall be seventeen and one-half (17.5%) percent per annum.  All
Interest shall be computed on the daily unpaid Principal balance of this Note
based on a three hundred sixty (360) day year, and shall be payable monthly in
arrears on the first day of each calendar month commencing March 1, 2008, and
upon the maturity hereof.

 

(b)      Principal.  The outstanding Principal of this Note shall be due and
payable in full on February 28, 2011.

 

(c)      Non-Business Day.  If any scheduled payment date as aforesaid is not a
business day in the State of Texas or the State of Florida, then the payment to
be made on such scheduled payment date shall be due and payable on the next
succeeding business day, with additional interest on any Principal amount so
delayed for the period of such delay.

 

                2.             Prepayment.

 

(a)      Optional Prepayment of Principal.  All or any portion of the unpaid
Principal balance of this Note, together with all accrued and unpaid Interest on
the Principal amount being prepaid, may at the Maker’s option be prepaid in
whole or in part, at any time or from time to time, upon ten (10) days’ prior
written notice to the Payee.  Any option prepayment of Principal hereunder paid
on or prior to the second (2nd ) anniversary of the date hereof shall require
the simultaneous payment of a prepayment premium in an amount equal to two (2%)
percent of the Principal amount being prepaid; any optional prepayment made
after the second (2nd) anniversary of the date hereof may be made without
premium or penalty.

 

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(b)      Mandatory Prepayments of Principal.  The entire Principal balance of
this Note, and all accrued and unpaid Interest hereunder, (i) shall be required
to be prepaid upon the consummation of any Sale, and (ii) may be required to be
prepaid upon the occurrence of any Event of Default.  In addition, all or a
portion of the Principal of this Note shall be required to be prepaid as and to
the extent provided in Section 2.02(b) of the Loan Agreement.

 

(c)      Application of Payments.  Any and all prepayments hereunder shall be
applied first to any prepayment premium required under Section 2(a) above, then
to unpaid accrued Interest on the Principal amount being prepaid, and then to
Principal.

 

3.     Events of Default.  The occurrence or existence of an Event of Default
under the Loan Agreement shall constitute a default under this Note and shall
entitle the Payee to accelerate the entire indebtedness hereunder and take such
other action as may be provided for in the Loan Agreement and/or in any and all
other instruments evidencing and/or securing the indebtedness under this Note,
or as may be provided under the law.

 

4.      Assignment.  This Note shall be binding upon and shall inure to the
benefit of the respective successors and permitted assigns of the parties
hereto, provided that the Maker may not assign any of its rights or obligations
hereunder without the prior written consent of the Payee.

 

5.      Waiver and Amendment.  No waiver of a right in any instance shall
constitute a continuing waiver of successive rights, and any one waiver shall
govern only the particular matters waived.  Neither any provision of this Note
nor any performance hereunder may be amended or waived except pursuant to an
agreement in writing signed by the party against whom enforcement thereof is
sought.  Except as otherwise expressly provided in this Note, the Maker hereby
waives diligence, demand, presentment for payment, protest, dishonor,
nonpayment, default, notice of any and all of the foregoing, and any other
notice or action otherwise required to be given or taken under the law in
connection with the delivery, acceptance, performance, default, enforcement or
collection of this Note, and expressly agrees that this Note, or any payment
hereunder, may be extended, modified or subordinated (by forbearance or
otherwise) from time to time, without in any way affecting the liability of the
Maker.  The Maker further waives the benefit of any exemption under the
homestead exemption laws, if any, or any other exemption, appraisal or
insolvency laws, and consents that the Payee may release or surrender, exchange
or substitute any personal property or other collateral security now held or
which may hereafter be held as security for the payment of this Note.

 

6.      Governing Law.  This Note shall be construed in accordance with and
governed by the laws of the State of New York, except to the extent superseded
by Federal enactments.

 

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7.      Consent to Jurisdiction; Waiver of Jury Trial.  The Maker hereby
consents to the jurisdiction of all courts of the State of New York and the
United States District Court for the Southern District of New York, as well as
to the jurisdiction of all courts from which an appeal may be taken from such
courts, for the purpose of any suit, action or other proceeding arising out of
or with respect to this Note.  The Maker hereby waives the right to interpose
any counterclaims (other than compulsory counterclaims) in any action brought by
the Payee hereunder, provided that this waiver shall not preclude the Maker from
pursuing any such claims by means of separate proceedings.  THE MAKER HEREBY
EXPRESSLY WAIVES ANY AND ALL OBJECTIONS WHICH IT MAY HAVE AS TO VENUE IN ANY OF
SUCH COURTS, AND ALSO WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY SUCH SUIT,
ACTION OR PROCEEDING.  The Payee may file a copy of this Note as evidence of the
foregoing waiver of right to jury trial.

 

8.      Usury Savings Clause.  All agreements between the Maker and the Payee
are hereby expressly limited to provide that in no contingency or event
whatsoever, whether by reason of acceleration of maturity of the indebtedness
evidenced hereby or otherwise, shall the amount paid or agreed to be paid to the
Payee for the use, forbearance or detention of the indebtedness evidenced hereby
exceed the maximum amount which the Payee is permitted to receive under
applicable law.  If, from any circumstances whatsoever, fulfillment of any
provision hereof or of the Loan Agreement or any Loan Document thereunder, at
the time performance of such provision shall be due, shall involve transcending
the limit of validity prescribed by law, then, ipso facto, the obligation to be
fulfilled shall automatically be reduced to the limit of such validity, and if
from any circumstance the Payee shall ever receive as interest an amount which
would exceed the highest lawful rate, such amount which would be excessive
interest shall be applied to the reduction of the principal balance of any of
the Maker’s Obligations (as such term is defined in the Loan Agreement) to the
Payee, and not to the payment of interest hereunder.  To the extent permitted by
applicable law, all sums paid or agreed to be paid for the use, forbearance or
detention of the indebtedness evidenced by this Note shall be amortized,
prorated, allocated and spread throughout the full term of such indebtedness
until payment in full, to the end that the rate or amount of interest on account
of such indebtedness does not exceed any applicable usury ceiling.  As used
herein, the term “applicable law” shall mean the law in effect as of the date
hereof, provided, however, that in the event there is a change in the law which
results in a higher permissible rate of interest, then this Note shall be
governed by such new law as of its effective date.  This provision shall control
every other provision of all agreements between the Maker and the Payee.

 

9.      Collection Costs.  In the event that the Payee shall place this Note in
the hands of an attorney for collection during the continuance of any Event of
Default, the Maker shall further be liable to the Payee for all costs and
expenses (including reasonable attorneys’ fees) which may be incurred by the
Payee in enforcing this Note, all of which costs and expenses shall be
obligations under and part of this Note; and the Payee may take judgment for all
such amounts in addition to all other sums due hereunder.

 

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IN WITNESS WHEREOF, the Maker has executed this Note on the date first above
written.

 

CRDENTIA CORP.

 

By:

/s/ John B. Kaiser

 

Name:  John B. Kaiser

 

Title:  Chief Executive Officer

 

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