Exhibit 10.2

 

THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR QUALIFIED UNDER ANY STATE SECURITIES LAWS.  THIS PROMISSORY NOTE
HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY, AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.  NO SUCH SALE OR DISTRIBUTION
MAY BE EFFECTED UNLESS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO, OR AN EXEMPTION FROM SUCH REGISTRATION STATEMENT REQUIREMENTS.

 

SECURED PROMISSORY NOTE

 

Principal Amount: $1,500,000.00

 

San Francisco, California

Interest Rate: 5.00% per annum

 

November 18, 2005

 

FOR VALUE RECEIVED, the undersigned, Crdentia Corp., a Delaware corporation
(“Crdentia”), Baker Anderson Christie, Inc., a California corporation, Nurses
Network, Inc., a California corporation, New Age Staffing, Inc., a Delaware
corporation, PSR Nurses, Ltd., a Texas limited partnership, PSR Nurse
Recruiting, Inc., a Texas corporation, PSR Nurses Holdings Corp., a Texas
corporation, CRDE Corp., a Delaware corporation, Arizona Home Health
Care/Private Duty, Inc., an Arizona corporation, Care Pros Staffing, Inc, a
Texas corporation, HIP Holding, Inc., a Delaware corporation, Health Industry
Professionals, L.L.C., a Michigan limited liability company, Travmed USA, Inc.,
a North Carolina corporation, Prime Staff, LP, a Texas limited partnership, Mint
Medical Staffing Odessa, LP, a Texas limited partnership and GHS Acquisition
Corporation, a Delaware corporation (each individually and referred to
collectively as “Issuer”), jointly and severally promise to pay to MedCap
Partners L.P., or any assignees of the Note (“Holder”), by wire transfer to such
account as Holder may from time to time designate in writing, the principal
amount of One Million Five Hundred Thousand Dollars ($1,500,000.00) (the
“Principal Amount”) payable at such times as specified in paragraph 1 below. 
Issuer also promises to pay interest on the unpaid principal amount from the
date of this Note until this Note is paid in full, at the rate of five percent
(5.00%) per annum, at such times as specified in this Agreement.  This Note is
executed and delivered pursuant to, and in recognition of, a loan of $1,500,000
made by Holder to Issuer on the date hereof.

 

1. Principal Payment.  The Principal Amount shall be payable to Holder on the
earlier of (i) two business days (as defined below) following the date of
Crdentia’s receipt of written demand by Holder requesting such payment or
(ii) the date on which Crdentia completes a private offering or offerings of its
equity securities (whether such offering or offerings consist of one or more
transactions) in an amount of not less than $5.0 million (the “Maturity Date”). 
All payments shall be made in immediately available funds in lawful currency of
the United States of America, without offset, deduction or counterclaim of any
kind.  A “business day” shall mean any day except Saturday, Sunday or any day
that is a legal holiday in the State of California.  Holder may make written
demand by facsimile, email or other usual means of communication between Holder
and Crdentia.

 

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2.  Interest.  Prior to the Maturity Date or the occurrence of an Event of
Default (as defined in paragraph 3 below), the unpaid Principal Amount
periodically outstanding under this Note shall bear simple interest at the rate
of five percent (5.00%) per annum, calculated on the basis of a 365-day year,
based on the actual number of days elapsed (including the first day, but
excluding the last day).  All accrued and unpaid interest on this Note shall be
due and payable on the Maturity Date.  After the Maturity Date or upon the
occurrence and during the continuation of any Event of Default, any unpaid
Principal Amount or accrued interest shall bear interest at the rate of ten
percent (10%) per annum until paid in full.

 

3.  Events of Default.  The occurrence of any of the following events shall
constitute an event of default under this Note: (a) Issuer’s failure to pay the
Principal Amount when due and payable; (b) any Issuer making an assignment for
the benefit of its creditors; (c) any Issuer filing (or consenting to the filing
of) any petition or complaint pursuant to federal or state bankruptcy or
insolvency laws, seeking the appointment of a receiver or trustee for any of its
assets, seeking the adjudication of such Issuer as bankrupt or insolvent,
seeking an “order for relief” under such statutes, or seeking a reorganization
of or a plan of arrangement for Issuer; or (d) any default or breach by any
Issuer of or under any agreement for borrowed money, including loan agreements,
or breach under any capital equipment lease agreement, by which such Issuer is
bound or obligated following the expiration of any applicable grace period. 
Upon the occurrence of an Event of Default, the entire Principal Amount then
outstanding, together with accrued and unpaid interest, shall become immediately
due and payable.

 

4.  Security Agreement.  This Note is executed and delivered together with a
Security Agreement (the “Security Agreement”), entered into as of the date
hereof, between Holder and Issuer (Issuer therein referred to as “Grantor”) by
which Grantor has granted Holder a security interest in the right, title, and
interest in and to all of Grantor’s Collateral (as defined in the Security
Agreement), subject to the liens and encumbrances on the Collateral existing as
of the date hereof.

 

5.  Subordination.  The indebtedness evidenced by this Note is expressly junior
and subordinate in right of payment to the prior payment in full of all of
Issuer’s indebtedness under (i) that certain Second Amended and Restated Loan
and Security Agreement – Revolving Loans, dated as of May 16, 2005, by and among
Crdentia and its subsidiaries, on the one hand, and Bridge Healthcare Finance,
LLC, on the other hand (as the same may be amended or modified from time to
time, the “Revolving Loan Agreement”), and (ii) that certain Amended and
Restated Loan and Security Agreement – Term Loan, dated as of May 16, 2005, by
and among Crdentia and its subsidiaries, on the one hand, and Bridge Opportunity
Finance, LLC, on the other hand (as the same may be amended or modified from
time to time, the “Term Loan Agreement” and, together with the Revolving Loan
Agreement, the “Loan Agreement”).  Notwithstanding anything herein to the
contrary, no payment of principal or interest shall be made on this Note if
there exists any default, or the existence of any event which, with the giving
of notice, would constitute a default, in the payment of any indebtedness under
the Loan Agreement, as determined by the terms of the Loan Agreement.  Holder
agrees to execute all subordination documents reasonably required by Bridge
Healthcare Finance, LLC and/or Bridge Opportunity Finance, LLC.

 

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6.  Prepayment.  This Note may be prepaid, at the option of Issuer, in whole or
in part, at any time or from time to time, without penalty or premium; provided,
however, that any prepayment shall be applied first to the Principal Amount then
outstanding until paid in full and then to accrued and unpaid interest as of the
date of such prepayment.  In the event that Issuer sells any of the Collateral
(as defined in the Security Agreement), the net proceeds from such sale shall be
applied as set forth in the Security Agreement and, to the extent any proceeds
are required to be applied to the payment of the Principal Amount and interest
hereunder, in accordance with the preceding sentence.

 

7.  Maximum Rate of Interest.  In no event shall any interest rate provided for
hereunder exceed the maximum rate legally chargeable by Holder under applicable
law.  If at any time such laws would render usurious any amount due under this
Note, then it is the express intention of Holder and Issuer that Issuer not be
required to pay interest on this Note at a rate in excess of the maximum lawful
rate, that the provisions of this paragraph 7 shall control over all other
provisions of this Note which may be in apparent conflict, that such excess
amount shall be immediately credited to the principal balance owing under this
Note (or, if this Note has been fully repaid, refunded by Holder to Issuer), and
the provisions hereof shall be immediately reformed and the amounts thereafter
decreased, so as to comply with the then applicable usury law, but so as to
permit the recovery of the fullest amount otherwise due under this Note.  Any
credit or refund shall not cure or waive any default by Issuer under this Note. 
For the purposes of this paragraph 7, the term “applicable law” means the laws
of the State of California, as such laws now exist or may be changed or amended
or come into effect in the future.

 

8.  Holder Representations.

 

(a)                                  This Note is being acquired for Holder’s
own account, not as a nominee or agent, and not with a view to the resale or
distribution of any part hereof in violation of the Securities Act of 1933, as
amended (the “1933 Act”), and Holder has no present intention of selling,
granting any participation in, or otherwise distributing this Note in violation
of the 1933 Act.

 

(b)                                 Holder acknowledges that it can bear the
economic risk of complete loss of its investment in this Note and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment in this Note.  Holder
acknowledges that there are substantial risks incident to the ownership of this
Note, and such investment is speculative and involves a high degree of risk of
loss by Holder of Holder’s entire investment in the Issuer

 

(c)                                  Holder has had an opportunity to receive
all information related to Issuer requested and to ask questions of and receive
answers from Issuer regarding Issuer and its business.  Holder has reviewed the
reports and other documents filed by Issuer with the Securities and Exchange
Commission.

 

(d)                                 Holder acknowledges and understands that
this Note is a “restricted security” under the 1933 Act.

 

(e)                                  Holder is an “accredited investor” as
defined by Rule 501 or

 

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Regulation D promulgated under the 1933 Act.

 

9.  No Waiver.  No extension of time for payment of any amount owing hereunder
shall affect the liability of Issuer or any person or entity, now or at any time
hereafter, liable for payment of the indebtedness evidenced hereby.  No delay by
Holder in exercising any power or right hereunder shall operate as a waiver of
any power or right hereunder.

 

10.  Attorneys’ Fees.  If any action or proceeding is brought by Holder to
enforce payment of this Note, then the prevailing party shall be entitled to
recover its reasonable costs and expenses (including without limitation
attorneys’ fees, experts fees, etc.) associated therewith.  In addition, upon
the payment in full of the Principal Amount, Issuer agrees to pay to Holder the
reasonable legal fees, not to exceed $15,000, incurred by MedCap Partners L.P.
in connection with the review and preparation of this Note and the Security
Agreement and any related filings to protect Holder’s security interests.

 

11.  Waiver of Presentment, etc.  Each Issuer, for itself and its respective
successors and assigns, hereby expressly waive presentment, demand, protest,
notice of protest, dishonor, notice of dishonor and any other notice of any type
or nature.  No waiver or modification of the terms of this Note shall be valid
unless in writing and signed by the holder hereof.

 

12.  Severability.  If any provision of this Note is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Note shall remain in full force and effect.  Any provision of this Note
held invalid or unenforceable only in part or degree shall remain in full force
and effect to the extent not held invalid or unenforceable.

 

13.  Time of Essence.  Time is of the essence with regard to all dates set forth
in this Note.

 

14.  Assignment and Transfer.  No Issuer may assign or otherwise transfer its
rights or obligations under this Note without the prior written consent of
Holder.  Any purported assignment or transfer in contravention of this paragraph
14 shall be null and void.  Subject to the foregoing, this Note shall be binding
upon the successors and assigns of Issuer, and shall inure to the benefit of and
be enforceable by the successors and assigns of Holder.  Holder agrees that it
shall not transfer this Note (a) in violation of the 1933 Act or any state
securities laws and (b) unless pursuant to an effective registration statement
or an exemption from such registration statement requirements.

 

15.  Governing Law.  This Note shall be construed in accordance with and
governed by the laws of the State of California, without regard to conflict of
laws principles.

 

[signature pages follow]

 

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IN WITNESS WHEREOF, the undersigned have executed this Note as of the date first
written above.

 

 

CRDENTIA CORP.

 

 

 

 

 

By:

/s/ James D. Durham

 

 

 

 

Name:

 

 

 

 

 

Title: Chief Executive Officer

 

 

BAKER ANDERSON CHRISTIE, INC.

 

 

 

 

 

By:

/s/ James D. Durham

 

 

 

 

Name:

 

 

 

 

 

Title: Chief Executive Officer

 

 

 

NURSES NETWORK, INC.

 

 

 

 

 

By:

/s/ James D. Durham

 

 

 

 

Name:

 

 

 

 

 

Title: Chief Executive Officer

 

 

 

NEW AGE STAFFING, INC.

 

 

 

 

 

By:

/s/ James D. Durham

 

 

 

 

Name:

 

 

 

 

 

Title: Chief Executive Officer

 

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PSR NURSES, LTD.

 

 

 

By:

PSR Nurse Recruiting, Inc.

 

 

 

 

Its:  General Partner

 

 

 

By:

/s/ James D. Durham

 

 

 

 

Name:

 

 

 

 

 

Title: Chief Executive Officer

 

 

 

PSR NURSE RECRUITING, INC.

 

 

 

By:

/s/ James D. Durham

 

 

 

 

Name:

 

 

 

 

 

Title: Chief Executive Officer

 

 

 

PSR NURSES HOLDINGS CORP.

 

 

 

By:

/s/ James D. Durham

 

 

 

 

Name:

 

 

 

 

 

Title: Chief Executive Officer

 

 

 

CRDE CORP.

 

 

 

By:

/s/ James D. Durham

 

 

 

 

Name:

 

 

 

 

 

Title: Chief Executive Officer

 

 

 

ARIZONA HOME HEALTH
CARE/PRIVATE DUTY, INC.

 

 

 

By:

/s/ James D. Durham

 

 

 

 

Name:

 

 

 

 

 

Title: Chief Executive Officer

 

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CARE PROS STAFFING, INC.

 

 

 

By:

/s/ James D. Durham

 

 

 

 

Name:

 

 

 

 

 

Title: Chief Executive Officer

 

 

 

HIP HOLDING, INC.

 

 

 

By:

/s/ James D. Durham

 

 

 

 

Name:

 

 

 

 

 

Title: Chief Executive Officer

 

 

 

HEALTH INDUSTRY
PROFESSIONALS, L.L.C.

 

 

 

By: HIP Holding, Inc.

 

 

 

Its:  Managing Member

 

 

 

By:

/s/ James D. Durham

 

 

 

 

Name:

 

 

 

 

 

Title: Chief Executive Officer

 

 

TRAVMED USA, INC.

 

 

 

By:

/s/ James D. Durham

 

 

 

 

Name:

 

 

 

 

 

Title: Chief Executive Officer

 

 

PRIME STAFF, LP

 

 

 

By: CRDE Corp.

Its:  General Partner

 

 

 

By:

/s/ James D. Durham

 

 

 

 

Name:

 

 

 

 

 

Title: Chief Executive Officer

 

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MINT MEDICAL STAFFING
ODESSA, LP

 

 

 

By: CRDE Corp.

Its:  General Partner

 

 

 

By:

/s/ James D. Durham

 

 

 

 

Name:

 

 

 

 

 

Title: Chief Executive Officer

 

 

GHS ACQUISITION CORPORATION

 

 

 

By:

/s/ James D. Durham

 

 

 

 

Name:

 

 

 

 

 

Title: Chief Executive Officer

 

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Acknowledged and Agreed to:

 

MEDCAP PARTNERS L.P.

 

By:

MedCap Management & Research LLC

 

Its:

General Partner

 

 

 

 

 

 

 

By:

/s/ C. Fred Toney

 

 

 

Name:   C. Fred Toney

 

 

Title: Managing Member

 

 

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