**Exhibit10.91**

****

**MASTER REVOLVING NOTE Variable Rate-Maturity Date-Obligatory Advances (Business and Commercial LoansOnly)**
| **AMOUNT**    | **NOTE  DATE**   | **MATURITY  DATE** | **TAX  IDENTIFICATION #** |
|---------------|------------------|--------------------|---------------------------|
| $2,400,000.00 | January 19, 2007 | January 31, 2008   | 76-0585701                |

 

On the Maturity Date, asstated above, for value received, the undersigned promise(s) to pay to theorder of Comerica Bank (“Bank”), at any office of the Bank in the State ofCalifornia, $2,400,000.00 Dollars (U.S.) (or that portion of it advanced by theBank and not repaid as later provided) with interest until maturity, whether byacceleration or otherwise, or an Event of Default, as later defined, at a perannum rate equal to the Bank’s base rate from time to time in effect minusone-half of one (1/2%) percent per annum and after that at a rate equal to therate of interest otherwise prevailing under this Note plus 3% per annum (but inno event in excess of the maximum rate permitted by law). The Bank’s “base rate”is that annual rate of interest so designated by the Bank and which is changedby the Bank from time to time. Interest rate changes will be effective forinterest computation purposes as and when the Bank’s base rate changes.Interest shall be calculated on the basis of a 360-day year for the actualnumber of days the principal is outstanding. Accrued interest on this Noteshall be payable on the first day of each month commencing February 1, 2007,until the Maturity Date when all amounts outstanding under this Note shall bedue and payable in full, If any payment of principal or interest under thisNote shall be payable on a day other than a day on which the Bank is open forbusiness, this payment shall be extended to the next succeeding business dayand interest shall be payable at the rate specified in this Note during thisextension. A late payment charge equal to 5% of each late payment may becharged on any payment not received by the Bank within 10 calendar days afterthe payment due date, but acceptance of payment of this charge shall not waiveany Default under this Note.

The amount available to beborrowed hereunder shall be reduced to:

(a)                     $2,275,000.00as of March 31, 2007;

(b)                    $2,175,000.00as of June 30, 2007;

(c)                     $2,075,000.00as of September 30, 2007; and

(d)                    $1,975,000.00as of December 31, 2007.

To the extent that, as of thedate for any of the aforementioned reductions, the principal amount outstandinghereunder exceeds the amount available as so reduced, the undersigned shall, onor before the date for such reduction, repay the principal balance outstandinghereunder by an amount not less than such excess.

The principal amount payableunder this Note shall be the sum of all advances made by the Bank to or at therequest of the undersigned, less principal payments actually received in cashby the Bank. The books and records of the Bank shall be the best evidence ofthe principal amount and the unpaid interest amount owing at any time underthis Note and shall be conclusive absent manifest error. No interest shallaccrue under this Note until the date of the first advance made by the Bank;after that interest on all advances shall accrue and be computed on theprincipal balance outstanding from time to time under this Note until the sameis paid in full.

This Note and any otherindebtedness and liabilities of any kind of the undersigned (or any of them) tothe Bank, and any and all modifications, renewals or extensions of it, whetherjoint or several, contingent or absolute, now existing or later arising, andhowever evidenced (collectively “Indebtedness”) are secured by and the Bank isgranted a security interest in all items deposited in any account of any of theundersigned with the Bank and by all proceeds of these items (cash orotherwise), all account balances of any of the undersigned from time to timewith the Bank, by all property of any of the undersigned from time to time inthe possession of the Bank and by any other collateral, rights and propertiesdescribed in each and every deed of trust, mortgage, security agreement,pledge, assignment and other security or collateral agreement which has been,or will at any time(s) later be, executed by any (or all) of the undersigned toor for the benefit of the Bank (collectively “Collateral”). Notwithstanding theabove, (i) to the extent that any portion of the Indebtedness is a consumerloan, that portion shall not be secured by any deed of trust or mortgage on orother security interest in any of the undersigned’s principal dwelling or anyof the undersigned’s real property which is not a purchase money securityinterest as to that portion, unless expressly provided to the contrary inanother place, or (ii) if the undersigned (or any of them) has(have) given orgive(s) Bank a deed of trust or mortgage covering real property, that deed oftrust or mortgage shall not secure this Note or any other indebtedness of theundersigned (or any of them), unless expressly provided to the contrary inanother place.

If the undersigned (or any ofthem) or any guarantor under a guaranty of all or part of the Indebtedness (“guarantor”)(i) fail(s) to pay any of the Indebtedness when due, by maturity, accelerationor otherwise, or fail(s) to pay any Indebtedness owing on a demand basis upondemand; or (ii) fail(s) to comply with any of the terms or provisions of anyagreement between the undersigned (or any of them) or any such guarantor andthe Bank; or (iii) become(s) insolvent or the subject of a voluntary orinvoluntary proceeding in bankruptcy, or a reorganization, arrangement orcreditor composition proceeding, (if a business entity) cease(s) doing businessas a going concern, (if a natural person) die(s) or become(s) incompetent, (ifa partnership) dissolve(s) or any general partner of it dies, becomesincompetent or becomes the subject of a bankruptcy proceeding or (if acorporation of a limited liability company) is the subject of a dissolution,merger or consolidation; or (a) if any warranty or representation made by anyof the undersigned or any guarantor in connection with this Note or any of theIndebtedness shall be discovered to be untrue or incomplete; or (b) if there isany termination, notice of termination, or breach of any guaranty, pledge,collateral assignment or subordination agreement relating to all or any part ofthe Indebtedness; or (c) if there is any failure by any of the undersigned orany guarantor to pay when due any of its indebtedness (other than to the Bank)or in the observance or performance of any term, covenant or condition in anydocument evidencing, securing or relating to such indebtedness; or (d) if theBank deems itself insecure believing that the prospect of payment of this Noteor any of the Indebtedness is impaired or shall fear deterioration, removal orwaste of any of the Collateral; or (e) if there is filed or issued a levy or writof attachment

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or garnishment or other like judicial process upon theundersigned (or any of them) or any guarantor or any of the Collateral,including without limit, any accounts of the undersigned (or any of them) orany guarantor with the Bank, then the Bank, upon the occurrence of any of theseevents (each a “Default”), may at its option and without prior notice to theundersigned (or any of them), declare any or all of the Indebtedness to beimmediately due and payable (notwithstanding any provisions contained in theevidence of it to the contrary), cease advancing money or extending credit toor for the benefit of the undersigned under this Note or any other agreementbetween the undersigned and Bank, terminate this Note as to any futureliability or obligation of Bank, but without affecting Bank’s rights andsecurity interests in any Collateral and the indebtedness of the undersigned toBank, sell or liquidate all or any portion of the Collateral, set off againstthe Indebtedness any amounts owing by the Bank to the undersigned (or any ofthem), charge interest at the default rate provided in the document evidencingthe relevant Indebtedness and exercise any one or more of the rights andremedies granted to the Bank by any agreement with the undersigned (or any ofthem) or given to it under applicable law. In addition, if this Note is securedby a deed of trust or mortgage covering real property, then the trustor ormortgagor shall not mortgage or pledge the mortgaged premises as security forany other indebtedness or obligations. This Note, together with all otherindebtedness secured by said deed of trust or mortgage, shall become due andpayable immediately, without notice, at the option of the Bank, (a) if saidtrustor or mortgagor shall mortgage or pledge the mortgaged premises for anyother indebtedness or obligations or shall convey, assign or transfer themortgaged premises by deed, installment sale contract instrument, or (b) if thetitle to the mortgaged premises shall become vested in any other person orparty in any manner whatsoever, or (c) if there is any disposition (through oneor more transactions) of legal or beneficial title to a controlling interest ofsaid trustor or mortgagor. All payments under this Note shall be in immediatelyavailable United States funds, without setoff or counterclaim.

If this Note is signed by two or more parties (whetherby all as makers or by one or more as an accommodation party or otherwise), theobligations and undertakings under this Note shall be that of all and any twoor more jointly and also of each severally. This Note shall bind theundersigned, and the undersigned’s respective heirs, personal representatives,successors and assigns.

The undersigned waive(s) presentment, demand, protest,notice of dishonor, notice of demand or intent to demand, notice ofacceleration or intent to accelerate, and all other notices and agree(s) thatno extension or indulgence to the undersigned (or any of them) or release,substitution or nonenforcement of any security, or release or substitution ofany of the undersigned, any guarantor or any other party, whether with orwithout notice, shall affect the obligations of any of the undersigned. Theundersigned waive(s) all defenses or right to discharge available under Section3-605 of the California Uniform Commercial Code and waive(s) all othersuretyship defenses or right to discharge. The undersigned agree(s) that theBank has the right to sell, assign, or grant participations, or any interest,in any or all of the Indebtedness, and that, in connection with this right, butwithout limiting its ability to make other disclosures to the full extentallowable, the Bank may disclose all documents and information which the Banknow or later has relating to the undersigned or the Indebtedness. Theundersigned agree(s) that the Bank may provide information relating to the Noteor to the undersigned to the Bank’s parent, affiliates, subsidiaries andservice providers.

The undersigned agree(s) to reimburse the holder orowner of this Note for any and all costs and expenses (including without limit,court costs, legal expenses and reasonable attorney fees, whether inside oroutside counsel is used, whether or not suit is instituted and, if suit isinstituted, whether at the trial court level, appellate level, in a bankruptcy,probate or administrative proceeding or otherwise) incurred in collecting orattempting to collect this Note or incurred in any other matter or proceedingrelating to this Note.

The undersigned acknowledge(s) and agree(s) that thereare no contrary agreements, oral or written, establishing a term of this Noteand agree(s) that the terms and conditions of this Note may not be amended,waived or modified except in a writing signed by an officer of the Bank expresslystating that the writing constitutes an amendment, waiver or modification ofthe terms of this Note. As used in this Note, the word “undersigned” means,individually and collectively, each maker, accommodation party, indorser andother party signing this Note in a similar capacity. If any provision of thisNote is unenforceable in whole or part for any reason, the remaining provisionsshall continue to be effective. **THIS NOTE ISMADE IN THE STATE OF CALIFORNIA AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCEWITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTOF LAWS PRINCIPLES.**

**THE UNDERSIGNED AND THE BANKACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THATIT MAY BE WAIVED UNDER CERTAIN CIRCUMSTANCES. TO THE EXTENT PERMITTED BY LAW,EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITHCOUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUALBENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDINGTHE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS NOTE OR THEINDEBTEDNESS.**

CRDENTIA CORP.
| By:    | /s/ James D.  Durham |   |
|--------|----------------------|--------|
|   | SIGNATURE OF         |
|   |                 |
| Its:   | CEO                  |   |
|   | TITLE                |

 
| 5001 LBJ Fwy, Suite 850 | Dallas | Texas | United States | 75244-6157 |
|-------------------------|--------|-------|---------------|------------|
| Street Address          | City   | State | Country       | Zip Code   |

 
| For Bank Use Only           |   |                               |   | CCAR #                          |
|-----------------------------|--------|------------------------------------|--------|---------------------------------|
|                        |   |                               |   |                            |
| Loan Officer  Initials  NLC |   | Loan Group Name  Peninsula Banking |   | Obligor(s) Name  Crdentia Corp. |   |   |
|                        |   |                               |   |                            |   |   |
| Loan Officer  I.D. No.      |   | Loan Group No.  95745              |   | Obligor #  1868284110           |   | Note # |   | Amount  $2,400,000.00 |

 

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| **** | ** ** | **Corporate Resolutions and Incumbency  Certification**Authority to Procure Loans |
|------|------------|-----------------------------------------------------------------------------------|

 

I certify that I am the dulyelected and qualified Secretary of Crdentia Corp. (“Corporation”) and thekeeper of the records of the Corporation; that the following is a true andcorrect copy of resolutions duly adopted by the Board of Directors of theCorporation in accordance with its bylaws and applicable statutes on or as ofJanuary 19, 2007.

**Copy ofResolutions:**

**Be itResolved, That:**

1.                          Anyone of the Chairman, CEO or CFO of the Corporation are/is authorized, for, onbehalf of, and in the name of the Corporation to:

(a)                    Negotiateand procure loans, letters of credit and other credit or financialaccommodations from Comerica Bank (the “Bank”) up to an amount not exceeding $ N/A(if left blank, then unlimited);

(b)                   Discountwith the Bank commercial or other business paper belonging to the Corporationmade or drawn by or upon third parties, without limit as to amount;

(c)                    Purchase,sell, exchange, assign, endorse for transfer and/or deliver certificates and/orinstruments representing stocks, bonds, evidences of indebtedness or othersecurities owned by the Corporation, whether or not registered in the name ofthe Corporation;

(d)                   Givesecurity for any liabilities of the Corporation to the Bank by grant, securityinterest, assignment, lien, deed of trust or mortgage upon any real or personalproperty, tangible or intangible of the Corporation; and

(e)                    Executeand deliver in form and content as may be required by the Bank any and allnotes, evidences of indebtedness, applications for letters of credit,guaranties, subordination agreements, loan and security agreements, financingstatements, assignments, liens, deeds of trust, mortgages, trust receipts andother agreements, instruments or documents to carry out the purposes of theseResolutions, any or all of which may relate to all or to substantially all ofthe Corporation’s property and assets.

2.                          SaidBank be and it is authorized and directed to pay the proceeds of any such loansor discounts as directed by the persons so authorized to sign, whether sopayable to the order of any of said persons in their individual capacities ornot, and whether such proceeds are deposited to the individual credit of any ofsaid persons or not;

3.                          Anyand all agreements, instruments and documents previously executed and acts andthings previously done to carry out the purposes of these Resolutions areratified, confirmed and approved as the act or acts of the Corporation.

4.                          TheseResolutions shall continue in force, and the Bank may consider the holders ofsaid offices and their signatures to be and continue to be as set forth in acertified copy of these Resolutions delivered to the Bank, until notice to thecontrary in writing is duly served on the Bank (such notice to have no effecton any action previously taken by the Bank in reliance on these Resolutions).

5.                          Anyperson, corporation or other legal entity dealing with the Bank may rely upon acertificate signed by an officer of the Bank to the effect that theseResolutions and any agreement, instrument or document executed pursuant to themare still in full force and effect and binding upon the Corporation.

6.                          TheBank may consider the holders of the offices of the Corporation and theirsignatures, respectively, to be and continue to be as set forth in theCertificate of the Secretary of the Corporation until notice to the contrary inwriting is duly served on the Bank.

I further certify that the above Resolutions are infull force and effect as of the date of this Certificate; that theseResolutions and any borrowings or financial accommodations under theseResolutions have been properly noted in the corporate books and records, andhave not been rescinded, annulled, revoked or modified; that neither theforegoing Resolutions nor any actions to be taken pursuant to them are or willbe in contravention of any provision of the articles of incorporation or bylawsof the Corporation or of any agreement, indenture or other instrument to whichthe Corporation is a party or by which it is bound; and that neither thearticles of incorporation nor bylaws of the Corporation nor any agreement,indenture or other instrument to which the Corporation is a party or by whichit is bound require the vote or consent of shareholders of the Corporation toauthorize any act, matter or thing described in the foregoing Resolutions.

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I further certify that thefollowing named persons have been duly elected to the offices set oppositetheir respective names, that they continue to hold these offices at the presenttime, and that the signatures which appear below are the genuine, originalsignatures of each respectively:

**(PLEASE SUPPLY GENUINESIGNATURES OF AUTHORIZED SIGNERS BELOW)**
|  NAME (Type or Print) | ** ** | **TITLE**         | ** ** | **SIGNATURE**         |
|----------------------------|------------|-------------------|------------|-----------------------|
|                       |       |              |       |                  |
| James D. Durham            |       | Chairman and CEO  |       | /s/ James D. Durham   |
|                       |       |              |       |                  |
|  James J. TerBeest    |       | CFO and Secretary |       | /s/ James J. TerBeest |

 

**In WitnessWhereof,** I haveaffixed my name as Secretary on 1/19/07.
|        |   | /s/ James J. TerBeest |
|--------|--------|-----------------------|
|   |   |                  |   | SECRETARY |

 

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**CERTIFICATION OF BYLAWS**

Theundersigned Secretary of **CRDENTIA CORP.,**aDelaware corporation (“Company”), hereby certifies to **COMERICA BANK,**a Michigan bankingcorporation (“Bank”), that the Bylaws of the Company attached as Exhibit A: (i)are a true, complete and accurate copy of such documents; (ii) remain in fullforce and effect; (iii) have not been amended, repealed or rescinded in anyrespect; and (iv) may continue to be relied upon by Bank until and unlesswritten notice to the contrary is delivered to Bank.

Executedas of the 19th day ofJanuary, 2007.
|        | **CRDENTIA CORP.** |
|--------|--------------------|
|   | ** **         |
|   | ** **         |
|   | By:                | /s/ James J. TerBeest |   |
|   | Name:              | JAMES J. TERBEEST |   |
|   | Its:               | Secretary |
|        |                    |  |  |  |

 

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**EXHIBIT A**

***See Attached Bylaws***

2

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|  | ** ** | **Automatic Loan Payment  Authorization** |
|--|------------|-------------------------------------------|

Date: January 19, 2007
| Obligor Name (Typed or  Printed): | CRDENTIA CORP.         |                         |
|-----------------------------------|------------------------|------------------------------|
|                              |                   |                         |   |   |   |   |   |   |   |
| Obligor Number:                   |                   | Lender’s Cost Center #: |   |   |
|                              |                   |                         |   |   |   |   |   |   |
| Address:                          | 5001 LBJ FWY Suite 850 | Dallas                       |   | Texas |   | 75244-6156 |   |
|                              | STREET ADDRESS         |                         | CITY |   | STATE |   | ZIP CODE |   |
|                                   |                        |                              |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

The undersigned herebyauthorizes **COMERICA BANK**(“Bank”)to charge the account designated below for the payments due on the loan(s) asdesignated below and all renewals, extensions, modifications and/orsubstitutions thereof. This authorization will remain in effect unless theundersigned requests a modification that is agreed to by the Bank in writing.The undersigned remains fully responsible for all amounts outstanding to Bankif the designated account is insufficient for repayment.

x                    AutomaticPayment Authorization for **all**payments **on all current and futureborrowings**, as and when such payments come due (which paymentsinclude, without limitation, principal, interest, fees, costs, and expenses).

o                      AutomaticPayment Authorization for **all**payments**on only the specific borrowing identifiedbelow**, as and when such payments come due (which paymentsinclude, without limitation, principal, interest, fees, costs, and expenses).

Specific Obligation Number:

o                      AutomaticPayment Authorization for **less than all**payments **on only the specific borrowingidentified below**, as and when such payments come due.

Specific Obligation Number:

o                      Principaland Interest payments only

o                      Principalpayments only

o                      Interestpayments only

o                      SPECIALINSTRUCTIONS/IRREGULAR PAYMENT INSTRUCTIONS

 

 

 

**Payment Due****Date**:****Yourloan payments will be charged to your account as indicated above on the datessuch payments become due (or on date thereafter when there are available funds)unless that day is a Saturday, Sunday, or Bank holiday in which case suchpayments will be charged on the following business day, with interest to accrueduring this extension as provided under the loan documents.

Account to be Charged:

o        Checking                  ComericaAccount No.

o        Savings                     ComericaAccount No.

(Charges to account are withdrawals pursuant toaccount resolution)
| CRDENTIA CORP. |                |                  |   |   |
|----------------|---------------------|-----------------------|--------|--------|
|           |                |                  |   |   |
|           |                |                  |   |   |
| By:            | /s/ James D. Durham |                  |   | Its:   | CEO |   |
| SIGNATURE OF   |                | TITLE (if applicable) |
|                |                     |                       |        |        |  |  |  |  |

 

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**USPATRIOT ACT NOTIFICATION**

**IMPORTANT INFORMATION ABOUTPROCEDURESFOR OPENING A NEW ACCOUNT.**

To help the governmentfight the funding of terrorism and money laundering activities, Federal lawrequires all financial institutions to obtain, verify, and record informationthat identifies each person or entity that opens an account, including anydeposit account, treasury management account, loan, other extension of credit,or other financial services product. What this means for Borrower: WhenBorrower opens an account, if Borrower is an individual, Bank will ask forBorrower’s name, taxpayer identification number, residential address, date ofbirth, and other information that will allow Bank to identify Borrower, and, ifBorrower is not an individual, Bank will ask for Borrower’s name, taxpayeridentification number, business address, and other information that will allowBank to identify Borrower. Bank may also ask, if Borrower is an individual, tosee Borrower’s driver’s license or other identifying documents, and, ifBorrower is not an individual, to see Borrower’s legal organizational documentsor other identifying documents.
| RECEIPT ACKNOWLEDGED: |                |   |
|-----------------------|---------------------|--------|
|                  |                |   |
| CRDENTIA CORP.        |                |   |
|                  |                |   |
|                  |                |   |
| By:                   | /s/ James D. Durham |   |
|                  |                |   |
| Its:                  | CEO                 |   |
|                  |                |   |
| Date:                 | January 19, 2007    |   |
|                       |                     |        |  |  |  |  |

 

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| **** | ** ** | **Borrower’s Telephone and Facsimile Authorization** |
|------|------------|-----------------------------------------------------------|

 
| Obligor Number:  |   | Date: January 19, 2007 |
|------------------|--------|------------------------|
|             |   |                   |
| Assignment Unit: |   | Obligation Number:     |

Theundersigned confirms certain borrowing arrangements pursuant to and subject tothe terms of the $2,400,000 Master Revolving Note, and all renewals,extensions, modifications, and/or substitutions thereof (the “Note”) datedJanuary 19, 2007, executed and delivered by the undersigned to Comerica Bank (“Bank”).

Untilnotice to the contrary to the undersigned, Bank has agreed that advances underthe Note may be requested from time to time at the discretion of theundersigned by telephone or facsimile transmission. Immediately upon receiptfrom time to time of such telephone request or facsimile transmission from theundersigned, Bank is authorized to lend and credit such sums of money asrequested to any of the following accounts or any other account with Bankdesignated by the undersigned (together with the Security Code) (suchaccount(s) referred to as “Designated Account(s)”)

 

 

Bankmay rely on receipt of the Security Code as proof that the caller or sender isauthorized to make the request for advance, repayment, change of Security Codeon Comerica’s Flexline System, or change of Designated Account(s) on behalf ofthe undersigned.

Theundersigned acknowledges that borrowings under the Note may be repaid from timeto time at the election of the undersigned, but subject to the terms of theNote and any related agreement with Bank, upon receipt of instructions to do sosent from the undersigned to Bank by telephone or facsimile transmission(together with the Security Code and the Designated Account(s)). Repayment maybe effected (in whole or in part) by debiting any account designated above (ordesignated in compliance with the above paragraph) in accordance with theundersigned’s instructions (together with the Security Code). The undersignedshall remain fully responsible for any amounts outstanding under the Note ifthe undersigned’s accounts with Bank are insufficient for the repayment of theNote. All requests for payments are to be against collected funds.

Theundersigned acknowledges that if Bank makes an advance or effects a repaymentbased on a request made by telephone or facsimile transmission, it shall be forthe convenience of the undersigned and all risks involved in the use of thisprocedure shall be borne by the undersigned, and the undersigned expresslyagrees to indemnify and hold Bank harmless therefor. Without limitation of theforegoing, the undersigned acknowledges that Bank shall have no duty to confirmthe authority of anyone requesting an advance or repayment by telephone orfacsimile transmission, and further that Bank has advised the undersigned to protectand safeguard the Security Code to prevent its unauthorized use. Theundersigned assumes any losses or damages whatsoever which may occur or ariseout of its failure to protect and safeguard the Security Code or out of itsunauthorized use.

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| Borrower(s): |   | CRDENTIA CORP.                                    |
|--------------|--------|---------------------------------------------------|
|         |   |                                              |
| Address:     |   | 5001 LBJ FWY Suite 850   Dallas, Texas 75244-6156 |

 
| CRDENTIA CORP. |                |         |   |   |   |   |   |   |
|----------------|---------------------|--------------|--------|--------|--------|--------|--------|--------|
|           |                |         |   |   |   |   |   |   |
|           |                |         |   |   |   |   |   |   |
| By:            | /s/ James D. Durham |         |   |   |   |   |   |
|           |                | Signature Of |   |   |   |   |   |   |
|           |                |         |   |   |   |   |   |
| Its:           | CEO                 |         |   |   |   |   |   |
|           |                | Title        |   |   |   |   |   |   |
|                |                     |              |        |        |        |        |        |        |  |  |  |  |  |  |  |  |

ComericaFlexline customers will enter their Security Code directly into Comerica’sFlexline system. For customers desiring to utilize a Security Code outside ofthe Flexline system, please enter your Security Code below.

Security Code: 

2

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****

Comerica Bank

January 19, 2007

Crdentia Corp.5001 LBJ FWY Suite 850Dallas, Texas 75244-6156

This LetterAgreement is entered into by and between Comerica Bank (“Bank”) and theundersigned party as of this 19 day of January, 2007.

The undersignedand Bank agree that the following Reference Provision shall be made a part ofany agreement, instrument, or document made or entered into by the undersignedwith or in favor of Bank (collectively, the “Agreement”) and is herebyincorporated into any such Agreement by this reference.

Reference Provision.

a.    In the event that the JuryTrial Waiver provision contained in the Agreement is not enforceable, theparties elect to proceed under this Reference Provision.

b.    With the exception of theitems specified in clause (c), below, any controversy, dispute or claim (each,a “Claim”) between the parties arising out of or relating to the Agreement willbe resolved by a reference proceeding in California in accordance with theprovisions of Section 638 *et seq.*ofthe California Code of Civil Procedure (“CCP”), or their successor sections,which shall constitute the exclusive remedy for the resolution of any Claim,including whether the Claim is subject to the reference proceeding. Except asotherwise provided in the Agreement, venue for the reference proceeding will bein the state or federal court in the county or district where venue isotherwise appropriate under applicable law (the “Court”).

c.    The matters that shall not besubject to a reference are the following: (i) non-judicial foreclosure of anysecurity interests in real or personal property, (ii) exercise of self-helpremedies (including, without limitation, set-off), (iii) appointment of areceiver and (iv) temporary, provisional or ancillary remedies (including,without limitation, writs of attachment, writs of possession, temporaryrestraining orders or preliminary injunctions). This Agreement does not limitthe right of any party to exercise or oppose any of the rights and remediesdescribed in clauses (i) and (ii) or to seek or oppose from a court ofcompetent jurisdiction any of the items described in clauses (iii) and (iv).The exercise of, or opposition to, any of those items does not waive the rightof any party to a reference pursuant to this Agreement.

d.    The referee shall be a retiredjudge or justice selected by mutual written agreement of the parties. If theparties do not agree within ten (10) days of a written request to do so by anyparty, then, upon request of any party, the referee shall be selected by thePresiding Judge of the Court (or his or her representative). A request forappointment of a referee may be heard on an *ex**parte*or expedited basis, and theparties agree that irreparable harm would result if *ex parte*relief is not granted. Pursuant to CCP § 170.6,each party shall have one peremptory challenge to the referee selected by thePresiding Judge of the Court (or his or her representative).

e.    The parties agree that time isof the essence in conducting the reference proceedings. Accordingly, thereferee shall be requested, subject to change in the time periods specifiedherein for good cause shown, to (a) set the matter for a status andtrial-setting conference within fifteen (15) days after the date of selectionof the referee, (b) if practicable, try all issues of law or fact within onehundred twenty (120) days after the date of the conference and (c) report astatement of decision within twenty (20) days after the matter has beensubmitted for decision.

f.     The referee will have powerto expand or limit the amount and duration of discovery. The referee may set orextend discovery deadlines or cutoffs for good cause, including a party’sfailure to provide requested discovery for any reason whatsoever. Unlessotherwise ordered, no party shall be entitled to “priority” in conductingdiscovery, depositions may be taken by either party upon seven (7) days writtennotice, and all other discovery shall be responded to within fifteen (15) daysafter service. All disputes relating to

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discovery which cannot be resolved by the partiesshall be submitted to the referee whose decision shall be final and binding.

g.    Except as expressly set forthin this Agreement, the referee shall determine the manner in which thereference proceeding is conducted including the time and place of hearings, theorder of presentation of evidence, and all other questions that arise withrespect to the course of the reference proceeding. All proceedings and hearingsconducted before the referee, except for trial, shall be conducted without acourt reporter, except that when any party so requests, a court reporter willbe used at any hearing conducted before the referee, and the referee will beprovided a courtesy copy of the transcript. The party making such a requestshall have the obligation to arrange for and pay the court reporter. Subject tothe referee’s power to award costs to the prevailing party, the parties willequally share the cost of the referee and the court reporter at trial.

h.    The referee shall be requiredto determine all issues in accordance with existing case law and the statutorylaws of the State of California. The rules of evidence applicable toproceedings at law in the State of California will be applicable to thereference proceeding. The referee shall be empowered to enter equitable as wellas legal relief, enter equitable orders that will be binding on the parties andrule on any motion which would be authorized in a trial, including withoutlimitation motions for summary judgment or summary adjudication. The refereeshall issue a decision at the close of the reference proceeding which disposesof all claims of the parties that are the subject of the reference. Pursuant toCCP § 644, such decision shall be entered by the Court as a judgment or an orderin the same manner as if the action had been tried by the Court and any suchdecision will be final, binding and conclusive. The parties reserve the rightto appeal from the final judgment or order or from any appealable decision ororder entered by the referee. The parties reserve the right to findings offact, conclusions of laws, a written statement of decision, and the right tomove for a new trial or a different judgment, which new trial, if granted, isalso to be a reference proceeding under this provision.

i.     If the enabling legislationwhich provides for appointment of a referee is repealed (and no successorstatute is enacted), any dispute between the parties that would otherwise bedetermined by reference procedure will be resolved and determined byarbitration. The arbitration will be conducted by a retired judge or Justice,in accordance with the California Arbitration Act §1280 through §1294.2 of theCCP as amended from time to time. The limitations with respect to discovery setforth above shall apply to any such arbitration proceeding.

j.     THEPARTIES RECOGNIZE AND AGREE THAT ALL DISPUTES RESOLVED UNDER THIS REFERENCEPROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY. AFTER CONSULTING (ORHAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR OWN CHOICE, EACHPARTY KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES,AGREES THAT THIS REFERENCE PROVISION WILL APPLY TO ANY CONTROVERSY, DISPUTE ORCLAIM BETWEEN OR AMONG THEM WHICH ARISES OUT OF OR IS RELATED TO THE AGREEMENT.
| **COMERICA BANK** |               |   | ** ** | **CRDENTIA CORP.** |   |                |   |   |
|-------------------|--------------------|--------|------------|--------------------|--------|---------------------|--------|--------|
| ** **        |               |   | ** ** | ** **         |   |                |   |   |
| ** **        |               |   | ** ** | ** **         |   |                |   |   |
| By:               | /s/ Nina L. Cortez |   |       |               | By:    | /s/ James D. Durham |   |
|              |               |   |       |               |   |                |
| Title:            | VICE PRESIDENT     |   |       |               | Title: | CEO                 |
|                   |                    |        |            |                    |        |                     |        |        |  |  |  |  |  |  |  |  |  |

 

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**SECURITYAGREEMENT - PLEDGE**

THIS SECURITYAGREEMENT PLEDGE (this “Agreement”), dated as of January 19, 2007, isentered into by and between JAMES DURHAM, an individual (the “Pledgor”), andCOMERICA BANK, a Michigan banking corporation (the “Secured Party”).

RECITALS:

WHEREAS, CRDENTIACORP., a Delaware corporation (“Borrower”) has executed and delivered toSecured Party a certain $2,400,000 Revolving Credit Note dated as of the datehereof (as the same may be from time to time hereafter amended or supplementedand together with all other agreements, instruments and documents executed byand between Secured Party and Pledgor in connection therewith, the “LoanDocuments”), pursuant to which Secured Party has extended and may hereafterextend certain financial accommodations to Borrower;

WHEREAS, Pledgorhas agreed to secure Borrower’s obligations under the Loan Documents pursuantto the terms and provisions of this Agreement;

NOW, THEREFORE, inconsideration of the recitals and for other good and valuable consideration,receipt of which is hereby acknowledged, Pledgor hereby agrees with SecuredParty as follows:

SECTION 1.  Pledge.

(a)        Unless otherwise definedherein, each term used in this Agreement which is defined in the CaliforniaUniform Commercial Code, as amended from time to time, (the “Code”)shall have the meaning set forth herein.

(b)       Pledgor hereby pledges andgrants to Secured Party a first priority lien on and security interest in eachand all of the following items of collateral (hereinafter collectively referredto as the “Collateral”):

(i)        All of Pledgor’s right,title and interest, including the right to receive all payments of principaland interest, in and to that certain $600,000.00 certificate of deposit,#385107235454 with Bank, together with any and all additions, renewals,replacements, rollovers, reinvestments or substitutions thereof or therefor(the “Certificates”); and

(ii)       All proceeds of theCertificates, including all rights, benefits, principal payments, interestpayments, dividends, distributions, premiums, profits, documents, accounts,instruments, general intangibles, deposit accounts, money and whatever othertangible and intangible property is received by the Pledgor upon theliquidation, sale or other disposition of the Certificates, or the proceedsthereof.

(c)       This Agreements secures,and the Collateral is security for, the prompt and complete payment of any andall debts, liabilities, obligations (including the obligations of Borrowerunder the Loan Documents), covenants and duties owing by Borrower to Secured

**Security Agreement (James Durham)**

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Party of any kind anddescription, whether direct or indirect, absolute or contingent, due or tobecome due, now existing or hereafter arising under this Agreement or the LoanDocuments, and further including all costs, fees, and expenses which Pledgorand/or Borrower is required to pay or reimburse by this Agreement or the LoanDocuments by law or otherwise (collectively, the “Obligations”).

(d)       Pledgor further agrees toexecute and deliver to Secured Party, or to such other party as Secured Partyshall direct, in form and substance as Secured Party shall reasonably request,all security agreements, control agreements, assignments, financing statements,instructions, instruments, notices, and other documents or agreements and totake all further action, at the expense of Pledgor, from time to timereasonably requested by Secured Party in order to maintain a first priorityperfected security interest in the Collateral in favor of Secured Party or toenable Secured Party to exercise and enforce its rights and remedies hereunderwith respect to the Collateral, or to effect a transfer of the Collateral orany part thereof. Pledgor shall take all steps necessary to ensure that allcertificates (including certificated securities) or instruments representing orevidencing the Collateral, if any, shall be delivered to and held by SecuredParty pursuant hereto and shall be in suitable form for transfer or assignmentin blank, all in form and substance satisfactory to Secured Party.

SECTION 2.  Payments on the Certificates.

(a)       Prior to the occurrence ofan Event of Default hereunder, Pledgor shall be entitled to receive payments ofinterest, dividends, or other income made on the Certificates.

(b)       If, after the occurrenceand continuance of an Event of Default hereunder, Pledgor shall become entitledto receive any principal, interest or premium payment in respect of theCertificates, then Pledgor shall be deemed to have accepted the same as SecuredParty’s agent, shall hold such payments in trust on behalf of Secured Party,and shall immediately deliver all such payments to Secured Party. All sums ofmoney which are received by Secured Party in respect of the Certificatespursuant to this provision shall be deemed collections under Section 9608 ofthe Code and shall be credited against the Obligations.

SECTION 3.  Release of Collateral.

(a)       At such time as all of theObligations under the Loan Documents have been fully and finally satisfied, andSecured Party’s obligation to provide extensions of credit thereunder haveterminated, and Borrower is no longer obligated to Secured Party under the LoanDocuments, this Agreement (and the liens granted hereunder) shall automaticallyterminate.

SECTION 4.  Representations,****Warranties, and Covenants of Pledgor.

Pledgorrepresents, warrants, and covenants to Secured Party that:

(a)       The Collateral is owned byPledgor and is not subject to any restrictions on transfer or pledge;

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(b)       Pledgor has full power,authority, and legal right to pledge all of its right, title, and interest inand to the Collateral pursuant to this Agreement;

(c)       This Agreement has beenduly authorized, executed, and delivered by Pledgor and constitutes a legal,valid, and binding obligation of Pledgor enforceable in accordance with itsterms except as such enforceability may be limited by bankruptcy, insolvency,reorganization, moratorium or similar laws affecting creditors’ rightsgenerally and by general principles of equity (regardless of whether suchenforceability is considered in a proceeding in equity or at law);

(d)       No consent of any otherparty (including, without limitation, other creditors of Pledgor) and noconsent, license, permit, approval, or authorization of, exemption by, notice orreport to, or registration, filing, or declaration with, any governmentalauthority, domestic or foreign, is required to be obtained by Pledgor inconnection with the execution, delivery, or performance of this Agreement;

(e)       The execution, delivery,and performance by Pledgor of this Agreement requires no action by or inrespect of, or filing with, any governmental body, agency, or official, anddoes not violate or contravene, or constitute a default under, any law orregulation applicable to Pledgor or of any material agreement, judgment,injunction, order, decree, or other instrument binding upon Pledgor, or resultin the creation or imposition of any lien on any assets of Pledgor except ascontemplated by this Agreement;

(f)        The pledge and assignmentof the Collateral pursuant to this Agreement creates a valid first priorityLien on and a first priority perfected security interest in the Collateral, notsubject to any prior lien or encumbrance in favor of any third party. Pledgorcovenants that the Collateral is now and at all times shall remain free of allliens and encumbrances, other than to Secured Party. Pledgor covenants andagrees that it will defend Secured Party’s right, title and security interestin and to the Collateral against the claims and demands of all persons;

(g)       Secured Party shall havecontrol over the Collateral within the meaning of Section 9104 of the Code, andPledgor shall have no right to withdraw any of the Collateral, and Pledgorshall not liquidate, cause or permit to be liquidated, or effect, or cause orpermit to be effected, any other disposition of the Collateral, in whole or inpart;

(h)       Pledgor hereby grants toSecured Party an irrevocable power of attorney, with full power of substitutioncoupled with an interest, to, so long as any of the Obligations (other thaninchoate obligations to indemnify Secured Party) hereunder and under the LoanDocuments shall remain outstanding, execute and endorse, as applicable, onbehalf of Pledgor, such financing statements, continuation financingstatements, security agreements, reports, notices, and all other documents,instruments and agreements and perform any other acts (including pressing anyclaim) in order to: (i) perfect and maintain perfected security interest in theCollateral; (ii) fully consummate all of the transactions contemplated underthis Agreement and the Loan Documents; and (iii) effect and exercise the rightsand remedies of Secured Party with respect to the Collateral as set forth inthis Agreement.

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SECTION 5.  No Disposition.

Except inaccordance with the terms of the Loan Documents, without the prior writtenconsent of Secured Party, Pledgor agrees that it will not sell, assign,transfer, exchange, or otherwise dispose of, or grant any option with respectto, the Collateral, nor will it create, incur, or permit to exist anyassessment, pledge, lien, mortgage, hypothecation, security interest, charge,option, or any other encumbrance with respect to any of the Collateral, anyinterest therein, or any proceeds thereof.

SECTION 6.  Obligations of PledgorUnconditional.

Pledgor’s duty toperform and observe the agreements and covenants on its part contained hereinshall be absolute and unconditional.

SECTION 7.  Events of Default. Theoccurrence and continuance of any Event of Default under the Loan Documentsshall be an “Event of Default” hereunder.

SECTION 8.  Remedies Upon Default.

(a)       If an Event of Defaultshould occur and continue, Secured Party shall have all of the rights andremedies of a secured party under the Code, under this Agreement, and underapplicable law, and available in equity. In addition, Secured Party shall havethe right, to the full extent permitted by law, and Pledgor shall take suchaction necessary or appropriate to give effect to such right and to giveconsents, ratifications, and waivers thereto, to take any other action withrespect to the Collateral as if Secured Party were the absolute and sole ownerthereof including, without limitation, the right to liquidate and/or convert tocash all or any part of the Collateral (including Certificates of Deposit) andto, at Bank’s option, apply cash proceeds thereof to Obligations then owingand/or to hold the proceeds thereof as continuing security for Obligationswhether such Obligations are then due.

(b)       If an Event of Defaultshould occur and continue, Secured Party shall have the right to exercise anyand all rights and remedies provided by this Agreement (including applicationof any cash Collateral, to the repayment of Borrower’s obligations owing toSecured Party hereunder and under the Loan Documents), to sell the Collateral,or any part thereof, at public or private sale or on any securities exchange,for cash, upon credit, or for future delivery, and at such price or prices asSecured Party may deem commercially reasonable. Secured Party may purchase anyor all of the Collateral so sold at any public sale (or, with respect to anyportion of the Collateral which is of a type customarily sold in a recognizedmarket or is of a type which is the subject of widely distributed standardprice quotations, at any private sale) and thereafter hold the same free fromany right or claim of whatsoever kind. Secured Party is authorized, at any suchsale, if it deems it advisable to do so, to restrict the prospective bidders orpurchasers of any of the Collateral to persons who will represent and agreethat they are purchasing for their own account for investment, and not with aview to the distribution or sale of any of the Collateral. To the extent thatany portion of the Collateral is not of a type customarily sold on a recognizedmarket, Secured Party shall give Pledgor at least ten (10) days written noticeof its intention to make any such public or private sale of that portion of theCollateral.

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(c)       Pledgor hereby agrees thatany disposition of Collateral by way of a private placement or other methodwhich in the reasonable opinion of counsel for Secured Party is required oradvisable under federal and state securities laws shall be deemed to becommercially reasonable. Pledgor also agrees that, except for duties set forthin the Code, Secured Party has no duty to sell or otherwise dispose of theCollateral, either before or after an Event of Default, whether upon therequest of Pledgor or otherwise.

(d)       Pledgor agrees to pay toSecured Party, promptly on demand following any Event of Default, suchreasonable amount of costs, fees and expenses (all of which shall constituteobligations) incurred by Secured Party in connection with the exercise of itsrights under this Section 8, including reasonable attorneys’ fees,disbursements, and legal expenses, whether or not suit is brought.

(e)       Secured Party’s remediesunder this Agreement are cumulative and in addition to all other remedies whichit may possess, at law, in equity, under any other agreement, or otherwise.

SECTION 9.  No Waiver.

No failure on thepart of Secured Party to exercise, and no delay in exercising, any right,power, or remedy hereunder shall operate as a waiver thereof, nor shall anysingle or partial exercise of any such right, power, or remedy by Secured Partypreclude any other or further exercise thereof or the exercise of any otherright, power, or remedy.

SECTION 10.  Miscellaneous.

(a)       Unless the context of thisAgreement clearly requires otherwise, references to the plural include thesingular and to the singular include the plural, references to any genderinclude any other gender, the part includes the whole, the term “including” isnot limiting, and the term “or” has, except where otherwise indicated, theinclusive meaning represented by the phrase “and/or.” The words “hereof,” “herein,”“hereby,” “hereunder,” and similar terms in this Agreement refer to thisAgreement as a whole and not to any particular provision of this Agreement.Article, section, subsection, clause, exhibit and schedule references are tothis Agreement, unless otherwise specified. Initially capitalized termscontained in this Agreement and not separately defined herein shall have themeanings ascribed thereto in the LCRA.

(b)       Any provision of thisAgreement which is prohibited or unenforceable in any jurisdiction shall, as tosuch jurisdiction, be ineffective to the extent of such prohibition orunenforceability without invalidating the remaining provisions hereof or affectingthe validity or enforceability of such provision in any other jurisdiction.

(c)       This Agreement sets forththe entire understanding between Pledgor and Secured Party regarding thesubject matter of this Agreement, and all prior agreements or understandings,if any, regarding the subject matter hereof are merged herein. This Agreementmay not be amended, changed, modified, altered, or terminated except by meansof a writing signed by the parties hereto.

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(d)       The subject headings andthe sections and subsections of this Agreement are included for purposes ofconvenience only and shall not affect the construction or interpretation of anyof its provisions.

(e)       This Agreement may besigned in counterparts, each of which shall be an original, with the same effectas if the signatures thereto and hereto were upon the same instrument.

SECTION 11.  CHOICE OF LAW AND VENUE;JURY TRIAL WAIVER.

(a)       **THE VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION, INTERPRETATION, ANDENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALLMATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNEDBY, AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OFCALIFORNIA, WITHOUT REGARD FOR PRINCIPLES OF CONFLICTS OF LAWS.**

(b)       **THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTIONWITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERALCOURTS LOCATED IN THE STATE OF CALIFORNIA, PROVIDED, HOWEVER,THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAYBE BROUGHT, AT SECURED PARTY’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERESECURED PARTY ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHERPROPERTY MAY BE FOUND. THE PLEDGOR AND THE SECURED PARTY WAIVE, TO THE EXTENTPERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINEOF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANYPROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION.**

(c)       **THE UNDERSIGNED ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS ACONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED UNDER CERTAIN CIRCUMSTANCES. TOTHE EXTENT PERMITTED BY LAW, EACH PARTY, AFTER CONSULTING (OR HAVING HAD THEOPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS, HIS OR HER CHOICE, KNOWINGLY ANDVOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, WAIVES ANY RIGHT TOTRIAL BY JURY IN THE EVENT OF LITIGATION ARISING OUT OF OR RELATED TO THISAGREEMENT OR ANY OTHER DOCUMENT, INSTRUMENT OR AGREEMENT BETWEEN THEUNDERSIGNED PARTIES.**

SECTION 12.  JUDICIAL REFERENCE PROVISION.

(a)       In the event the Jury TrialWaiver set forth above in Section 11(c) above is not enforceable, the partieselect to proceed under this Judicial Reference Provision.

(b)       With the exception of theitems specified in clause (c), below, any controversy, dispute or claim (each,a “Claim”) between the parties arising out of or relating to

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this Agreement or anyother document, instrument or agreement between the undersigned parties(collectively in this Section, the “Comerica Documents”), will be resolved by areference proceeding in California in accordance with the provisions ofSections 638 et seq. of the California Code of Civil Procedure (“CCP”), ortheir successor sections, which shall constitute the exclusive remedy for theresolution of any Claim, including whether the Claim is subject to thereference proceeding. Except as otherwise provided in the Comerica Documents,venue for the reference proceeding will be in the state or federal court in thecounty or district where the real property involved in the action, if any, islocated or in the state or federal court in the county or district where venueis otherwise appropriate under applicable law (the “Court”).

(c)       The matters that shall notbe subject to a reference are the following: (i) nonjudicial foreclosure of anysecurity interests in real or personal property, (ii) exercise of self-helpremedies (including, without limitation, set-off), (iii) appointment of areceiver and (iv) temporary, provisional or ancillary remedies (including,without limitation, writs of attachment, writs of possession, temporaryrestraining orders or preliminary injunctions). This reference provision doesnot limit the right of any party to exercise or oppose any of the rights andremedies described in clauses (i) and (ii) or to seek or oppose from a court ofcompetent jurisdiction any of the items described in clauses (iii) and (iv).The exercise of, or opposition to, any of those items does not waive the rightof any party to a reference pursuant to this reference provision as providedherein.

(d)       The referee shall be aretired judge or justice selected by mutual written agreement of the parties.If the parties do not agree within ten (10) days of a written request to do soby any party, then, upon request of any party, the referee shall be selected bythe Presiding Judge of the Court (or his or her representative). A request forappointment of a referee may be heard on an ex parte or expedited basis, andthe parties agree that irreparable harm would result if ex parte relief is notgranted. Pursuant to CCP § 170.6, each party shall have one peremptorychallenge to the referee selected by the Presiding Judge of the Court (or hisor her representative).

(e)       The parties agree that timeis of the essence in conducting the reference proceedings. Accordingly, thereferee shall be requested, subject to change in the time periods specifiedherein for good cause shown, to (i) set the matter for a status andtrial-setting conference within fifteen (15) days after the date of selectionof the referee, (ii) if practicable, try all issues of law or fact within onehundred twenty (120) days after the date of the conference and (iii) report astatement of decision within twenty (20) days after the matter has been submittedfor decision.

(f)        The referee will havepower to expand or limit the amount and duration of discovery. The referee mayset or extend discovery deadlines or cutoffs for good cause, including a party’sfailure to provide requested discovery for any reason whatsoever. Unlessotherwise ordered based upon good cause shown, no party shall be entitled to “priority”in conducting discovery, depositions may be taken by either party upon seven(7) days written notice, and all other discovery shall be responded to withinfifteen (15) days after service. All disputes relating to discovery whichcannot be resolved by the parties shall be submitted to the referee whosedecision shall be final and binding.

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(g)       Except as expressly setforth herein, the referee shall determine the manner in which the referenceproceeding is conducted including the time and place of hearings, the order ofpresentation of evidence, and all other questions that arise with respect tothe course of the reference proceeding. All proceedings and hearings conductedbefore the referee, except for trial, shall be conducted without a courtreporter, except that when any party so requests, a court reporter will be usedat any hearing conducted before the referee, and the referee will be provided acourtesy copy of the transcript. The party making such a request shall have theobligation to arrange for and pay the court reporter. Subject to the referee’spower to award costs to the prevailing party, the parties will equally sharethe cost of the referee and the court reporter at trial.

(h)       The referee shall berequired to determine all issues in accordance with existing case law and thestatutory laws of the State of California. The rules of evidence applicable toproceedings at law in the State of California will be applicable to thereference proceeding. The referee shall be empowered to enter equitable as wellas legal relief, enter equitable orders that will be binding on the parties andrule on any motion which would be authorized in a court proceeding, includingwithout limitation motions for summary judgment or summary adjudication. Thereferee shall issue a decision at the close of the reference proceeding whichdisposes of all claims of the parties that are the subject of the reference.Pursuant to CCP § 644, such decision shall be entered by the Court as ajudgment or an order in the same manner as if the action had been tried by theCourt and any such decision will be final, binding and conclusive. The partiesreserve the right to appeal from the final judgment or order or from anyappealable decision or order entered by the referee. The parties reserve theright to findings of fact, conclusions of laws, a written statement ofdecision, and the right to move for a new trial or a different judgment, whichnew trial, if granted, is also to be a reference proceeding under thisprovision.

(i)        If the enablinglegislation which provides for appointment of a referee is repealed (and nosuccessor statute is enacted), any dispute between the parties that wouldotherwise be determined by reference procedure will be resolved and determinedby arbitration. The arbitration will be conducted by a retired judge orjustice, in accordance with the California Arbitration Act §1280 through§1294.2 of the CCP as amended from time to time. The limitations with respectto discovery set forth above shall apply to any such arbitration proceeding.

(j)        THE PARTIES RECOGNIZE ANDAGREE THAT ALL CONTROVERSIES, DISPUTES AND CLAIMS RESOLVED UNDER THIS REFERENCEPROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY. AFTER CONSULTING (ORHAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS, HIS OR HER OWNCHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALLPARTIES, AGREES THAT THIS REFERENCE PROVISION WILL APPLY TO ANY CONTROVERSY,DISPUTE OR CLAIM BETWEEN OR AMONG THEM ARISING OUT OF OR IN ANY WAY RELATED TO,THIS AGREEMENT OR THE OTHER COMERICA DOCUMENTS.

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IN WITNESSWHEREOF, the parties hereto have caused this Agreement to be duly executed asof the date first above written.
|        |   |   |   | “PLEDGOR”          |               |   |
|--------|--------|--------|--------|------------------------------|--------------------|--------|
|   |   |   |   |                         |               |   |
|   |   |   |   |                         |               |   |
|   |   |   |   | /s/ James Durham             |
|   |   |   |   | James Durham, an  individual |
|   |   |   |   |                         |               |   |
|   |   |   |   |                         |               |   |
|   |   |   |   | “SECURED PARTY”    |               |   |
|   |   |   |   |                         |               |   |
|   |   |   |   | COMERICA BANK                |               |   |
|   |   |   |   |                         |               |   |
|   |   |   |   |                         |               |   |
|   |   |   |   | By                           | /s/ Nina L. Cortez |
|   |   |   |   | Name:                        | NINA L. CORTEZ     |
|   |   |   |   | Title:                       | VICE PRESIDENT     |
|        |        |        |        |                              |                    |        |  |  |  |

 

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**SECURITYAGREEMENT - PLEDGE**

THIS SECURITYAGREEMENT PLEDGE (this “Agreement”), dated as of January       ,2007, is entered into by and between C. FRED TONEY, an individual (the “Pledgor”),and COMERICA BANK, a Michigan banking corporation (the “Secured Party”).

**RECITALS:**

WHEREAS, CRDENTIA CORP., a Delaware corporation (“Borrower”) hasexecuted and delivered to Secured Party a certain $2,400,000 Revolving CreditNote dated as of the date hereof (as the same may be from time to timehereafter amended or supplemented and together with all other agreements,instruments and documents executed by and between Secured Party and Pledgor inconnection therewith, the “Loan Documents”), pursuant to which SecuredParty has extended and may hereafter extend certain financial accommodations toBorrower;

WHEREAS, Pledgor has agreed to secure Borrower’s obligations under theLoan Documents pursuant to the terms and provisions of this Agreement;

NOW, THEREFORE, in consideration of the recitals and for other good andvaluable consideration, receipt of which is hereby acknowledged, Pledgor herebyagrees with Secured Party as follows:

SECTION 1.  Pledge.

(a)       Unless otherwise definedherein, each term used in this Agreement which is defined in the CaliforniaUniform Commercial Code, as amended from time to time, (the “Code”)shall have the meaning set forth herein.

(b)       Pledgor hereby pledgesand grants to Secured Party a first priority lien on and security interest ineach and all of the following items of collateral (hereinafter collectivelyreferred to as the “Collateral”):

(i)        All of Pledgor’s right,title and interest, including the right to receive all payments of principaland interest, in and to that certain $1,125,000.00 certificate of deposit,#385107235462 with Bank, together with any and all additions, renewals,replacements, rollovers, reinvestments or substitutions thereof or therefor(the “Certificates”); and

(ii)       All proceeds of theCertificates, including all rights, benefits, principal payments, interestpayments, dividends, distributions, premiums, profits, documents, accounts,instruments, general intangibles, deposit accounts, money and whatever othertangible and intangible property is received by the Pledgor upon theliquidation, sale or other disposition of the Certificates, or the proceedsthereof.

(c)       This Agreements secures,and the Collateral is security for, the prompt and complete payment of any andall debts, liabilities, obligations (including the obligations of Borrowerunder the Loan Documents), covenants and duties owing by Borrower to Secured

Security Agreement (C. Fred Toney)

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Party of any kind anddescription, whether direct or indirect, absolute or contingent, due or tobecome due, now existing or hereafter arising under this Agreement or the LoanDocuments, and further including all costs, fees, and expenses which Pledgorand/or Borrower is required to pay or reimburse by this Agreement or the LoanDocuments by law or otherwise (collectively, the “Obligations”).

(d)       Pledgor further agrees toexecute and deliver to Secured Party, or to such other party as Secured Partyshall direct, in form and substance as Secured Party shall reasonably request,all security agreements, control agreements, assignments, financing statements,instructions, instruments, notices, and other documents or agreements and totake all further action, at the expense of Pledgor, from time to timereasonably requested by Secured Party in order to maintain a first priorityperfected security interest in the Collateral in favor of Secured Party or toenable Secured Party to exercise and enforce its rights and remedies hereunderwith respect to the Collateral, or to effect a transfer of the Collateral orany part thereof. Pledgor shall take all steps necessary to ensure that allcertificates (including certificated securities) or instruments representing orevidencing the Collateral, if any, shall be delivered to and held by SecuredParty pursuant hereto and shall be in suitable form for transfer or assignmentin blank, all in form and substance satisfactory to Secured Party.

SECTION 2.  Payments on theCertificates.

(a)       Prior to the occurrenceof an Event of Default hereunder, Pledgor shall be entitled to receive paymentsof interest, dividends, or other income made on the Certificates.

(b)       If, after the occurrenceand continuance of an Event of Default hereunder, Pledgor shall become entitledto receive any principal, interest or premium payment in respect of theCertificates, then Pledgor shall be deemed to have accepted the same as SecuredParty’s agent, shall hold such payments in trust on behalf of Secured Party,and shall immediately deliver all such payments to Secured Party. All sums ofmoney which are received by Secured Party in respect of the Certificatespursuant to this provision shall be deemed collections under Section 9608 ofthe Code and shall be credited against the Obligations.

SECTION 3.  Release ofCollateral.

(a)       At such time as all ofthe Obligations under the Loan Documents have been fully and finally satisfied,and Secured Party’s obligation to provide extensions of credit thereunder haveterminated, and Borrower is no longer obligated to Secured Party under the LoanDocuments, this Agreement (and the liens granted hereunder) shall automaticallyterminate.

SECTION 4.  Representations, Warranties, and Covenantsof Pledgor.

Pledgorrepresents, warrants, and covenants to Secured Party that:

(a)       The Collateral is ownedby Pledgor and is not subject to any restrictions on transfer or pledge;

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(b)       Pledgor has full power,authority, and legal right to pledge all of its right, title, and interest inand to the Collateral pursuant to this Agreement;

(c)       This Agreement has beenduly authorized, executed, and delivered by Pledgor and constitutes a legal,valid, and binding obligation of Pledgor enforceable in accordance with itsterms except as such enforceability may be limited by bankruptcy, insolvency,reorganization, moratorium or similar laws affecting creditors’ rightsgenerally and by general principles of equity (regardless of whether suchenforceability is considered in a proceeding in equity or at law);

(d)       No consent of any otherparty (including, without limitation, other creditors of Pledgor) and noconsent, license, permit, approval, or authorization of, exemption by, noticeor report to, or registration, filing, or declaration with, any governmentalauthority, domestic or foreign, is required to be obtained by Pledgor inconnection with the execution, delivery, or performance of this Agreement;

(e)       The execution, delivery,and performance by Pledgor of this Agreement requires no action by or inrespect of, or filing with, any governmental body, agency, or official, anddoes not violate or contravene, or constitute a default under, any law orregulation applicable to Pledgor or of any material agreement, judgment,injunction, order, decree, or other instrument binding upon Pledgor, or resultin the creation or imposition of any lien on any assets of Pledgor except ascontemplated by this Agreement;

(f)        The pledge and assignmentof the Collateral pursuant to this Agreement creates a valid first priorityLien on and a first priority perfected security interest in the Collateral, notsubject to any prior lien or encumbrance in favor of any third party. Pledgorcovenants that the Collateral is now and at all times shall remain free of allliens and encumbrances, other than to Secured Party. Pledgor covenants andagrees that it will defend Secured Party’s right, title and security interestin and to the Collateral against the claims and demands of all persons;

(g)       Secured Party shall havecontrol over the Collateral within the meaning of Section 9104 of the Code, andPledgor shall have no right to withdraw any of the Collateral, and Pledgorshall not liquidate, cause or permit to be liquidated, or effect, or cause orpermit to be effected, any other disposition of the Collateral, in whole or inpart;

(h)       Pledgor hereby grants toSecured Party an irrevocable power of attorney, with full power of substitutioncoupled with an interest, to, so long as any of the Obligations (other thaninchoate obligations to indemnify Secured Party) hereunder and under the LoanDocuments shall remain outstanding, execute and endorse, as applicable, onbehalf of Pledgor, such financing statements, continuation financingstatements, security agreements, reports, notices, and all other documents,instruments and agreements and perform any other acts (including pressing anyclaim) in order to: (i) perfect and maintain perfected security interest in theCollateral; (ii) fully consummate all of the transactions contemplated underthis Agreement and the Loan Documents; and (iii) effect and exercise the rightsand remedies of Secured Party with respect to the Collateral as set forth inthis Agreement.

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SECTION5.  No Disposition.

Except inaccordance with the terms of the Loan Documents, without the prior writtenconsent of Secured Party, Pledgor agrees that it will not sell, assign,transfer, exchange, or otherwise dispose of, or grant any option with respectto, the Collateral, nor will it create, incur, or permit to exist anyassessment, pledge, lien, mortgage, hypothecation, security interest, charge,option, or any other encumbrance with respect to any of the Collateral, anyinterest therein, or any proceeds thereof.

SECTION 6.  Obligations of Pledgor Unconditional.

Pledgor’s duty to performand observe the agreements and covenants on its part contained herein shall beabsolute and unconditional.

SECTION 7.  Events of Default. The occurrence andcontinuance of any Event of Default under the Loan Documents shall be an “Eventof Default” hereunder.

SECTION 8.  RemediesUpon Default.

(a)       If an Event of Default should occur andcontinue, Secured Party shall have all of the rights and remedies of a securedparty under the Code, under this Agreement, and under applicable law, andavailable in equity. In addition, Secured Party shall have the right, to thefull extent permitted by law, and Pledgor shall take such action necessary orappropriate to give effect to such right and to give consents, ratifications,and waivers thereto, to take any other action with respect to the Collateral asif Secured Party were the absolute and sole owner thereof including, withoutlimitation, the right to liquidate and/or convert to cash all or any part ofthe Collateral (including Certificates of Deposit) and to, at Bank’s option,apply cash proceeds thereof to Obligations then owing and/or to hold theproceeds thereof as continuing security for Obligations whether suchObligations are then due.

(b)       If an Event of Default should occur andcontinue, Secured Party shall have the right to exercise any and all rights andremedies provided by this Agreement (including application of any cashCollateral, to the repayment of Borrower’s obligations owing to Secured Partyhereunder and under the Loan Documents), to sell the Collateral, or any partthereof, at public or private sale or on any securities exchange, for cash,upon credit, or for future delivery, and at such price or prices as Secured Partymay deem commercially reasonable. Secured Party may purchase any or all of theCollateral so sold at any public sale (or, with respect to any portion of theCollateral which is of a type customarily sold in a recognized market or is ofa type which is the subject of widely distributed standard price quotations, atany private sale) and thereafter hold the same free from any right or claim ofwhatsoever kind. Secured Party is authorized, at any such sale, if it deems itadvisable to do so, to restrict the prospective bidders or purchasers of any ofthe Collateral to persons who will represent and agree that they are purchasingfor their own account for investment, and not with a view to the distributionor sale of any of the Collateral. To the extent that any portion of theCollateral is not of a type customarily sold on a recognized market, SecuredParty shall give Pledgor at least ten (10) days written notice of its intentionto make any such public or private sale of that portion of the Collateral.

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(c)       Pledgor herebyagrees that any disposition of Collateral by way of a private placement orother method which in the reasonable opinion of counsel for Secured Party isrequired or advisable under federal and state securities laws shall be deemedto be commercially reasonable. Pledgor also agrees that, except for duties setforth in the Code, Secured Party has no duty to sell or otherwise dispose ofthe Collateral, either before or after an Event of Default, whether upon the request of Pledgor or otherwise.

(d)       Pledgor agrees topay to Secured Party, promptly on demand following any Event of Default, suchreasonable amount of costs, fees and expenses (all of which shall constituteobligations) incurred by Secured Party in connection with the exercise of itsrights under this Section 8, including reasonable attorneys’ fees,disbursements, and legal expenses, whether or not suit is brought.

(e)       Secured Party’sremedies under this Agreement are cumulative and in addition to all otherremedies which it may possess, at law, in equity, under any other agreement, orotherwise.

SECTION 9.  No Waiver.

No failure on the part of Secured Party to exercise, and no delay inexercising, any right, power, or remedy hereunder shall operate as a waiverthereof, nor shall any single or partial exercise of any such right, power, orremedy by Secured Party preclude any other or further exercise thereof or theexercise of any other right, power, or remedy.

SECTION 10.  Miscellaneous.

(a)       Unless the context ofthis Agreement clearly requires otherwise, references to the plural include thesingular and to the singular include the plural, references to any genderinclude any other gender, the part includes the whole, the term “including” isnot limiting, and the term “or” has, except where otherwise indicated, theinclusive meaning represented by the phrase “and/or.” The words “hereof,” “herein,”“hereby,” “hereunder,” and similar terms in this Agreement refer to thisAgreement as a whole and not to any particular provision of this Agreement.Article, section, subsection, clause, exhibit and schedule references are tothis Agreement, unless otherwise specified. Initially capitalized termscontained in this Agreement and not separately defined herein shall have themeanings ascribed thereto in the LCRA.

(b)       Any provision of thisAgreement which is prohibited or unenforceable in any jurisdiction shall, as tosuch jurisdiction, be ineffective to the extent of such prohibition orunenforceability without invalidating the remaining provisions hereof oraffecting the validity or enforceability of such provision in any otherjurisdiction.

(c)       This Agreement sets forththe entire understanding between Pledgor and Secured Party regarding thesubject matter of this Agreement, and all prior agreements or understandings,if any, regarding the subject matter hereof are merged herein. This Agreementmay not be amended, changed, modified, altered, or terminated except by meansof a writing signed by the parties hereto.

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(d)       The subjectheadings and the sections and subsections of this Agreement are included forpurposes of convenience only and shall not affect the construction orinterpretation of any of itsprovisions.

(e)       This Agreement maybe signed in counterparts, each of which shall be an original, with the sameeffect as if the signaturesthereto and hereto were upon the same instrument.

SECTION 11.  CHOICE OF LAW ANDVENUE; JURY TRIAL WAIVER.

(a)       **THE****VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION, INTERPRETATION, ANDENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALLMATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNEDBY, AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OFCALIFORNIA,****WITHOUT REGARD FOR PRINCIPLES OF CONFLICTS OF LAWS.**

(b)       **THE****PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITHTHIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERALCOURTS LOCATED IN THE STATE OF CALIFORNIA, PROVIDED, HOWEVER,THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAYBE BROUGHT, AT SECURED PARTY’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERESECURED PARTY ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHERPROPERTY MAY BE FOUND. THE PLEDGOR AND THE SECURED PARTY WAIVE, TO THE EXTENTPERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINEOF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANYPROCEEDING IS BROUGHT****IN ACCORDANCE WITH THIS SECTION.**

(c)       **THE****UNDERSIGNED ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS ACONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED UNDER CERTAIN CIRCUMSTANCES. TOTHE EXTENT PERMITTED BY LAW, EACH PARTY, AFTER CONSULTING (OR HAVING HAD THEOPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS, HIS OR HER CHOICE, KNOWINGLY ANDVOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, WAIVES ANY RIGHT TOTRIAL BY JURY IN THE EVENT OF LITIGATION ARISING OUT OF OR RELATED TO THISAGREEMENT OR ANY OTHER DOCUMENT, INSTRUMENT OR AGREEMENT BETWEEN THEUNDERSIGNED****PARTIES.**

SECTION 12.  JUDICIAL REFERENCEPROVISION.

(a)       In the event the JuryTrial Waiver set forth above in Section 11 (c) above is not enforceable, theparties elect to proceed under this Judicial Reference Provision.

(b)       With the exception of theitems specified in clause (c), below, any controversy, dispute or claim (each,a “Claim”) between the parties arising out of or relating to

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this Agreement or anyother document, instrument or agreement between the undersigned parties(collectively in this Section, the “Comerica Documents”), will be resolved by areference proceeding in California in accordance with the provisions ofSections 638 et seq. of the California Code of Civil Procedure (“CCP”), ortheir successor sections, which shall constitute the exclusive remedy for the resolutionof any Claim, including whether the Claim is subject to the referenceproceeding. Except as otherwise provided in the Comerica Documents, venue forthe reference proceeding will be in the state or federal court in the county ordistrict where the real property involved in the action, if any, is located orin the state or federal court in the county or district where venue isotherwise appropriate under applicable law (the “Court”).

(c)       The matters that shallnot be subject to a reference are the following: (i) nonjudicial foreclosure ofany security interests in real or personal property, (ii) exercise of self-helpremedies (including, without limitation, set-off), (iii) appointment of areceiver and (iv) temporary, provisional or ancillary remedies (including,without limitation, writs of attachment, writs of possession, temporaryrestraining orders or preliminary injunctions). This reference provision doesnot limit the right of any party to exercise or oppose any of the rights andremedies described in clauses (i) and (ii) or to seek or oppose from a court ofcompetent jurisdiction any of the items described in clauses (iii) and (iv).The exercise of, or opposition to, any of those items does not waive the rightof any party to a reference pursuant to this reference provision as providedherein.

(d)       The referee shall be aretired judge or justice selected by mutual written agreement of the parties.If the parties do not agree within ten (10) days of a written request to do soby any party, then, upon request of any party, the referee shall be selected bythe Presiding Judge of the Court (or his or her representative). A request forappointment of a referee may be heard on an ex parte or expedited basis, andthe parties agree that irreparable harm would result if ex parte relief is notgranted. Pursuant to CCP § 170.6, each party shall have one peremptorychallenge to the referee selected by the Presiding Judge of the Court (or hisor her representative).

(e)       The parties agree thattime is of the essence in conducting the reference proceedings. Accordingly,the referee shall be requested, subject to change in the time periods specifiedherein for good cause shown, to (i) set the matter for a status andtrial-setting conference within fifteen (15) days after the date of selectionof the referee, (ii) if practicable, try all issues of law or fact within onehundred twenty (120) days after the date of the conference and (iii) report astatement of decision within twenty (20) days after the matter has beensubmitted for decision.

(f)        The referee will havepower to expand or limit the amount and duration of discovery. The referee mayset or extend discovery deadlines or cutoffs for good cause, including a party’sfailure to provide requested discovery for any reason whatsoever. Unlessotherwise ordered based upon good cause shown, no party shall be entitled to “priority”in conducting discovery, depositions may be taken by either party upon seven(7) days written notice, and all other discovery shall be responded to withinfifteen (15) days after service. All disputes relating to discovery whichcannot be resolved by the parties shall be submitted to the referee whosedecision shall be final and binding.

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(g)       Except as expressly setforth herein, the referee shall determine the manner in which the referenceproceeding is conducted including the time and place of hearings, the order ofpresentation of evidence, and all other questions that arise with respect tothe course of the reference proceeding. All proceedings and hearings conductedbefore the referee, except for trial, shall be conducted without a courtreporter, except that when any party so requests, a court reporter will be usedat any hearing conducted before the referee, and the referee will be provided acourtesy copy of the transcript. The party making such a request shall have theobligation to arrange for and pay the court reporter. Subject to the referee’spower to award costs to the prevailing party, the parties will equally sharethe cost of the referee and the court reporter at trial.

(h)       The referee shall berequired to determine all issues in accordance with existing case law and thestatutory laws of the State of California. The rules of evidence applicable toproceedings at law in the State of California will be applicable to thereference proceeding. The referee shall be empowered to enter equitable as wellas legal relief, enter equitable orders that will be binding on the parties andrule on any motion which would be authorized in a court proceeding, includingwithout limitation motions for summary judgment or summary adjudication. Thereferee shall issue a decision at the close of the reference proceeding whichdisposes of all claims of the parties that are the subject of the reference. Pursuantto CCP § 644, such decision shall be entered by the Court as a judgment or anorder in the same manner as if the action had been tried by the Court and anysuch decision will be final, binding and conclusive. The parties reserve theright to appeal from the final judgment or order or from any appealabledecision or order entered by the referee. The parties reserve the right tofindings of fact, conclusions of laws, a written statement of decision, and theright to move for a new trial or a different judgment, which new trial, ifgranted, is also to be a reference proceeding under this provision.

(i)        If the enablinglegislation which provides for appointment of a referee is repealed (and nosuccessor statute is enacted), any dispute between the parties that wouldotherwise be determined by reference procedure will be resolved and determinedby arbitration. The arbitration will be conducted by a retired judge orjustice, in accordance with the California Arbitration Act §1280 through§1294.2 of the CCP as amended from time to time. The limitations with respectto discovery set forth above shall apply to any such arbitration proceeding.

(j)        THE PARTIES RECOGNIZEAND AGREE THAT ALL CONTROVERSIES, DISPUTES AND CLAIMS RESOLVED UNDER THISREFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY. AFTERCONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS, HISOR HER OWN CHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUALBENEFIT OF ALL PARTIES, AGREES THAT THIS REFERENCE PROVISION WILL APPLY TO ANYCONTROVERSY, DISPUTE OR CLAIM BETWEEN OR AMONG THEM ARISING OUT OF OR IN ANYWAY RELATED TO, THIS AGREEMENT OR THE OTHER COMERICA DOCUMENTS.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to beduly executed as of the date first above written.
|        |   |   |   | “PLEDGOR”           |               |   |
|--------|--------|--------|--------|-------------------------------|--------------------|--------|
|   |   |   |   |                          |               |   |
|   |   |   |   |                          |               |   |
|   |   |   |   | /s/ C. Fred  Toney            |
|   |   |   |   | C. Fred Toney,  an individual |
|   |   |   |   |                          |
|   |   |   |   |                          |
|   |   |   |   | “SECURED PARTY”     |               |   |
|   |   |   |   |                          |               |   |
|   |   |   |   | COMERICA BANK                 |               |   |
|   |   |   |   |                          |               |   |
|   |   |   |   |                          |               |   |
|   |   |   |   | By                            | /s/ Nina L. Cortez |
|   |   |   |   | Name:                         | NINA L. CORTEZ     |
|   |   |   |   | Title:                        | VICE PRESIDENT     |
|        |        |        |        |                               |                    |        |  |  |  |

 

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**SECURITYAGREEMENT - PLEDGE**

THIS SECURITYAGREEMENT PLEDGE (this “Agreement”), dated as of January   , 2007, is entered into by and between MEDCAP PARTNERS L.P.,a Delaware limited partnership (the “Pledgor”), and COMERICA BANK, aMichigan banking corporation (the “Secured Party”).

RECITALS:

WHEREAS, CRDENTIACORP., a Delaware corporation (“Borrower”) has executed and delivered toSecured Party a certain $2,400,000 Revolving Credit Note entered into as of thedate hereof (as the same may be from time to time hereafter amended orsupplemented and together with all other agreements, instruments and documentsexecuted by and between Secured Party and Borrower in connection therewith, the“Borrower Documents”), pursuant to which Secured Party has extended andmay hereafter extend certain financial accommodations to Borrower;

WHEREAS, Pledgorhas executed and delivered to Secured Party a certain Guaranty entered into asof the date hereof (as the same may be from time to time hereafter amended orsupplemented and together with all other agreements, instruments and documentsexecuted by and between Secured Party and Pledgor in connection therewith, the “PledgorDocuments”, and together with the Borrower Documents, the “LoanDocuments”),

WHEREAS, Pledgorhas agreed to secure its and the Borrower’s obligations under the LoanDocuments pursuant to the terms and provisions of this Agreement;

NOW, THEREFORE, inconsideration of the recitals and for other good and valuable consideration,receipt of which is hereby acknowledged, Pledgor hereby agrees with SecuredParty as follows:

SECTION 1.  Pledge.

(a)       Unless otherwise defined herein, eachterm used in this Agreement which is defined in the California UniformCommercial Code, as amended from time to time, (the “Code”) shall havethe meaning set forth herein.

(b)       Pledgor hereby pledges and grants toSecured Party a first priority lien on and security interest in each and all ofthe following items of collateral (hereinafter collectively referred to as the “Collateral”):

(i)        All of Pledgor’s right, title andinterest, including the right to receive all payments of principal andinterest, in and to that certain $250,000.00 certificate of deposit,#385107235470 with Bank, together with any and all additions, renewals,replacements, rollovers, reinvestments or substitutions thereof or therefor(the “Certificates”): and

Security Agreement (Medcap Partners L.P.)

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(ii)       All proceeds of the Certificates,including all rights, benefits, principal payments, interest payments,dividends, distributions, premiums, profits, documents, accounts, instruments,general intangibles, deposit accounts, money and whatever other tangible andintangible property is received by the Pledgor upon the liquidation, sale orother disposition of the Certificates, or the proceeds thereof.

(c)       This Agreements secures, and theCollateral is security for, the prompt and complete payment of any and alldebts, liabilities, obligations (including the obligations of Pledgor and/orBorrower under the Loan Documents), covenants and duties owing by Pledgorand/or Borrower to Secured Party of any kind and description, whether direct orindirect, absolute or contingent, due or to become due, now existing orhereafter arising under this Agreement or the Loan Documents, and furtherincluding all costs, fees, and expenses which Pledgor and/or Borrower isrequired to pay or reimburse by this Agreement or the Loan Documents by law orotherwise (collectively, the “Obligations”).

(d)       Pledgor further agrees to execute anddeliver to Secured Party, or to such other party as Secured Party shall direct,in form and substance as Secured Party shall reasonably request, all securityagreements, control agreements, assignments, financing statements,instructions, instruments, notices, and other documents or agreements and totake all further action, at the expense of Pledgor, from time to timereasonably requested by Secured Party in order to maintain a first priorityperfected security interest in the Collateral in favor of Secured Party or toenable Secured Party to exercise and enforce its rights and remedies hereunderwith respect to the Collateral, or to effect a transfer of the Collateral orany part thereof. Pledgor shall take all steps necessary to ensure that allcertificates (including certificated securities) or instruments representing orevidencing the Collateral, if any, shall be delivered to and held by SecuredParty pursuant hereto and shall be in suitable form for transfer or assignmentin blank, all in form and substance satisfactory to Secured Party.

SECTION 2.  Payments on the Certificates.

(a)       Prior to the occurrence of an Event ofDefault hereunder, Pledgor shall be entitled to receive payments of interest,dividends, or other income made on the Certificates.

(b)       If, after the occurrence and continuanceof an Event of Default hereunder, Pledgor shall become entitled to receive anyprincipal, interest or premium payment in respect of the Certificates, thenPledgor shall be deemed to have accepted the same as Secured Party’s agent,shall hold such payments in trust on behalf of Secured Party, and shallimmediately deliver all such payments to Secured Party. All sums of money whichare received by Secured Party in respect of the Certificates pursuant to thisprovision shall be deemed collections under Section 9608 of the Code and shallbe credited against the Obligations.

SECTION 3.  Release of Collateral.

(a)       At such time as all of the Obligationsunder the Loan Documents have been fully and finally satisfied, and SecuredParty’s obligation to provide extensions of credit thereunder have terminated,and Pledgor and Borrower are no longer obligated to Secured Party

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under the Loan Documents, this Agreement (and theliens granted hereunder) shall automatically terminate.

SECTION 4.  Representations, Warranties, and Covenantsof Pledgor.

Pledgorrepresents, warrants, and covenants to Secured Party that:

(a)       The Collateral is owned by Pledgor and isnot subject to any restrictions on transfer or pledge;

(b)       Pledgor has full power, authority, andlegal right to pledge all of its right, title, and interest in and to theCollateral pursuant to this Agreement;

(c)       This Agreement has been duly authorized,executed, and delivered by Pledgor and constitutes a legal, valid, and bindingobligation of Pledgor enforceable in accordance with its terms except as suchenforceability may be limited by bankruptcy, insolvency, reorganization,moratorium or similar laws affecting creditors’ rights generally and by generalprinciples of equity (regardless of whether such enforceability is consideredin a proceeding in equity or at law);

(d)       No consent of any other party (including,without limitation, other creditors of Pledgor) and no consent, license,permit, approval, or authorization of, exemption by, notice or report to, orregistration, filing, or declaration with, any governmental authority, domesticor foreign, is required to be obtained by Pledgor in connection with theexecution, delivery, or performance of this Agreement;

(e)       The execution, delivery, and performanceby Pledgor of this Agreement requires no action by or in respect of, or filingwith, any governmental body, agency, or official, and does not violate orcontravene, or constitute a default under, any law or regulation applicable toPledgor or of any material agreement, judgment, injunction, order, decree, orother instrument binding upon Pledgor, or result in the creation or impositionof any lien on any assets of Pledgor except as contemplated by this Agreement;

(f)        The pledge and assignment of theCollateral pursuant to this Agreement creates a valid first priority Lien onand a first priority perfected security interest in the Collateral, not subjectto any prior lien or encumbrance in favor of any third party. Pledgor covenantsthat the Collateral is now and at all times shall remain free of all liens andencumbrances, other than to Secured Party. Pledgor covenants and agrees that itwill defend Secured Party’s right, title and security interest in and to theCollateral against the claims and demands of all persons;

(g)       Secured Party shall have control over theCollateral within the meaning of Section 9104 of the Code, and Pledgor shallhave no right to withdraw any of the Collateral, and Pledgor shall notliquidate, cause or permit to be liquidated, or effect, or cause or permit tobe effected, any other disposition of the Collateral, in whole or in part;

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(h)       Pledgor hereby grants to Secured Party anirrevocable power of attorney, with full power of substitution coupled with aninterest, to, so long as any of the Obligations (other than inchoateobligations to indemnify Secured Party) hereunder and under the Loan Documentsshall remain outstanding, execute and endorse, as applicable, on behalf ofPledgor, such financing statements, continuation financing statements, securityagreements, reports, notices, and all other documents, instruments andagreements and perform any other acts (including pressing any claim) in orderto: (i) perfect and maintain perfected security interest in the Collateral;(ii) fully consummate all of the transactions contemplated under this Agreementand the Loan Documents; and (iii) effect and exercise the rights and remediesof Secured Party with respect to the Collateral as set forth in this Agreement.

SECTION 5.  No Disposition.

Except inaccordance with the terms of the Loan Documents, without the prior writtenconsent of Secured Party, Pledgor agrees that it will not sell, assign,transfer, exchange, or otherwise dispose of, or grant any option with respectto, the Collateral, nor will it create, incur, or permit to exist anyassessment, pledge, lien, mortgage, hypothecation, security interest, charge,option, or any other encumbrance with respect to any of the Collateral, anyinterest therein, or any proceeds thereof.

SECTION 6.  Obligations of Pledgor Unconditional.

Pledgor’s duty toperform and observe the agreements and covenants on its part contained hereinshall be absolute and unconditional.

SECTION 7.  Events of Default. The occurrence andcontinuance of any Event of Default under the Loan Documents shall be an “Eventof Default” hereunder.

SECTION 8.  Remedies Upon Default.

(a)       If an Event of Default should occur andcontinue, Secured Party shall have all of the rights and remedies of a securedparty under the Code, under this Agreement, and under applicable law, andavailable in equity. In addition, Secured Party shall have the right, to thefull extent permitted by law, and Pledgor shall take such action necessary orappropriate to give effect to such right and to give consents, ratifications,and waivers thereto, to take any other action with respect to the Collateral asif Secured Party were the absolute and sole owner thereof including, withoutlimitation, the right to liquidate and/or convert to cash all or any part ofthe Collateral (including Certificates of Deposit) and to, at Bank’s option,apply cash proceeds thereof to Obligations then owing and/or to hold theproceeds thereof as continuing security for Obligations whether suchObligations are then due.

(b)       If an Event of Default should occur andcontinue, Secured Party shall have the right to exercise any and all rights andremedies provided by this Agreement (including application of any cashCollateral, to the repayment of Pledgor’s or Borrower’s obligations owing toSecured Party hereunder and under the Loan Documents), to sell the Collateral,or any part thereof, at public or private sale or on any securities exchange,for cash, upon credit, or for future delivery, and at such price or prices as SecuredParty may deem commercially reasonable.

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Secured Party maypurchase any or all of the Collateral so sold at any public sale (or, withrespect to any portion of the Collateral which is of a type customarily sold ina recognized market or is of a type which is the subject of widely distributedstandard price quotations, at any private sale) and thereafter hold the samefree from any right or claim of whatsoever kind. Secured Party is authorized,at any such sale, if it deems it advisable to do so, to restrict theprospective bidders or purchasers of any of the Collateral to persons who willrepresent and agree that they are purchasing for their own account forinvestment, and not with a view to the distribution or sale of any of theCollateral. To the extent that any portion of the Collateral is not of a typecustomarily sold on a recognized market, Secured Party shall give Pledgor atleast ten (10) days written notice of its intention to make any such public orprivate sale of that portion of the Collateral.

(c)       Pledgor hereby agrees that anydisposition of Collateral by way of a private placement or other method whichin the reasonable opinion of counsel for Secured Party is required or advisableunder federal and state securities laws shall be deemed to be commerciallyreasonable. Pledgor also agrees that, except for duties set forth in the Code,Secured Party has no duty to sell or otherwise dispose of the Collateral,either before or after an Event of Default, whether upon the request of Pledgoror otherwise.

(d)       Pledgor agrees to pay to Secured Party,promptly on demand following any Event of Default, such reasonable amount ofcosts, fees and expenses (all of which shall constitute obligations) incurredby Secured Party in connection with the exercise of its rights under thisSection 8, including reasonable attorneys’ fees, disbursements, and legalexpenses, whether or not suit is brought.

(e)       Secured Party’s remedies under thisAgreement are cumulative and in addition to all other remedies which it maypossess, at law, in equity, under any other agreement, or otherwise.

SECTION 9.  No Waiver.

No failure on thepart of Secured Party to exercise, and no delay in exercising, any right,power, or remedy hereunder shall operate as a waiver thereof, nor shall anysingle or partial exercise of any such right, power, or remedy by Secured Partypreclude any other or further exercise thereof or the exercise of any otherright, power, or remedy.

SECTION 10.  Miscellaneous.

(a) Unless thecontext of this Agreement clearly requires otherwise, references to the pluralinclude the singular and to the singular include the plural, references to anygender include any other gender, the part includes the whole, the term “including”is not limiting, and the term “or” has, except where otherwise indicated, theinclusive meaning represented by the phrase “and/or.” The words “hereof,” “herein,”“hereby,” “hereunder,” and similar terms in this Agreement refer to thisAgreement as a whole and not to any particular provision of this Agreement.Article, section, subsection, clause, exhibit and schedule references are tothis Agreement, unless otherwise specified. Initially capitalized termscontained in this

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Agreement and not separately defined herein shall havethe meanings ascribed thereto in the LCRA.

(b)       Any provision of this Agreement which isprohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,be ineffective to the extent of such prohibition or unenforceability withoutinvalidating the remaining provisions hereof or affecting the validity orenforceability of such provision in any other jurisdiction.

(c)       This Agreement sets forth the entireunderstanding between Pledgor and Secured Party regarding the subject matter ofthis Agreement, and all prior agreements or understandings, if any, regardingthe subject matter hereof are merged herein. This Agreement may not be amended,changed, modified, altered, or terminated except by means of a writing signedby the parties hereto.

(d)       The subject headings and the sections andsubsections of this Agreement are included for purposes of convenience only andshall not affect the construction or interpretation of any of its provisions.

(e)       This Agreement may be signed incounterparts, each of which shall be an original, with the same effect as ifthe signatures thereto and hereto were upon the same instrument.

SECTION 11.  CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

(a)       **THEVALIDITY OF THIS AGREEMENT, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENTHEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERSARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, ANDCONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA,WITHOUT REGARD FOR PRINCIPLES OF CONFLICTS OF LAWS.**

(b)       **THEPARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THISAGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTSLOCATED IN THE STATE OF CALIFORNIA, PROVIDED, HOWEVER, THAT ANYSUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BEBROUGHT, AT SECURED PARTY’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERESECURED PARTY ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHERPROPERTY MAY BE FOUND. THE PLEDGOR AND THE SECURED PARTY WAIVE, TO THE EXTENTPERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINEOF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANYPROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION.**

(c)**       THEUNDERSIGNED ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONALONE, BUT THAT IT MAY BE WAIVED**

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**UNDERCERTAIN CIRCUMSTANCES. TO THE EXTENT PERMITTED BY LAW, EACH PARTY, AFTERCONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS, HISOR HER CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALLPARTIES, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION ARISINGOUT OF OR RELATED TO THIS AGREEMENT OR ANY OTHER DOCUMENT, INSTRUMENT ORAGREEMENT BETWEEN THE UNDERSIGNED PARTIES.**

SECTION 12.  JUDICIAL REFERENCE PROVISION.

(a)       In the event the Jury Trial Waiver setforth above in Section 11(c) above is not enforceable, the parties elect toproceed under this Judicial Reference Provision.

(b)       With the exception of the items specifiedin clause (c), below, any controversy, dispute or claim (each, a “Claim”)between the parties arising out of or relating to this Agreement or any otherdocument, instrument or agreement between the undersigned parties (collectivelyin this Section, the “Comerica Documents”), will be resolved by a referenceproceeding in California in accordance with the provisions of Sections 638 etseq. of the California Code of Civil Procedure (“CCP”), or their successorsections, which shall constitute the exclusive remedy for the resolution of anyClaim, including whether the Claim is subject to the reference proceeding.Except as otherwise provided in the Comerica Documents, venue for the referenceproceeding will be in the state or federal court in the county or districtwhere the real property involved in the action, if any, is located or in thestate or federal court in the county or district where venue is otherwiseappropriate under applicable law (the “Court”).

(c)       The matters that shall not be subject toa reference are the following: (i) nonjudicial foreclosure of any securityinterests in real or personal property, (ii) exercise of self-help remedies(including, without limitation, set-off), (iii) appointment of a receiver and(iv) temporary, provisional or ancillary remedies (including, withoutlimitation, writs of attachment, writs of possession, temporary restrainingorders or preliminary injunctions). This reference provision does not limit theright of any party to exercise or oppose any of the rights and remediesdescribed in clauses (i) and (ii) or to seek or oppose from a court ofcompetent jurisdiction any of the items described in clauses (iii) and (iv).The exercise of, or opposition to, any of those items does not waive the rightof any party to a reference pursuant to this reference provision as providedherein.

(d)       The referee shall be a retired judge orjustice selected by mutual written agreement of the parties. If the parties donot agree within ten (10) days of a written request to do so by any party,then, upon request of any party, the referee shall be selected by the PresidingJudge of the Court (or his or her representative). A request for appointment ofa referee may be heard on an ex parte or expedited basis, and the parties agreethat irreparable harm would result if ex parte relief is not granted. Pursuantto CCP § 170.6, each party shall have one peremptory challenge to the refereeselected by the Presiding Judge of the Court (or his or her representative).

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(e)       The parties agree that time is of theessence in conducting the reference proceedings. Accordingly, the referee shallbe requested, subject to change in the time periods specified herein for goodcause shown, to (i) set the matter for a status and trial-setting conferencewithin fifteen (15) days after the date of selection of the referee, (ii) ifpracticable, try all issues of law or fact within one hundred twenty (120) daysafter the date of the conference and (iii) report a statement of decisionwithin twenty (20) days after the matter has been submitted for decision.

(f)        The referee will have power to expand orlimit the amount and duration of discovery. The referee may set or extenddiscovery deadlines or cutoffs for good cause, including a party’s failure toprovide requested discovery for any reason whatsoever. Unless otherwise orderedbased upon good cause shown, no party shall be entitled to “priority” inconducting discovery, depositions may be taken by either party upon seven (7)days written notice, and all other discovery shall be responded to withinfifteen (15) days after service. All disputes relating to discovery whichcannot be resolved by the parties shall be submitted to the referee whosedecision shall be final and binding.

(g)       Except as expressly set forth herein, thereferee shall determine the manner in which the reference proceeding isconducted including the time and place of hearings, the order of presentationof evidence, and all other questions that arise with respect to the course ofthe reference proceeding. All proceedings and hearings conducted before thereferee, except for trial, shall be conducted without a court reporter, exceptthat when any party so requests, a court reporter will be used at any hearingconducted before the referee, and the referee will be provided a courtesy copyof the transcript. The party making such a request shall have the obligation toarrange for and pay the court reporter. Subject to the referee’s power to awardcosts to the prevailing party, the parties will equally share the cost of thereferee and the court reporter at trial.

(h)       The referee shall be required todetermine all issues in accordance with existing case law and the statutorylaws of the State of California. The rules of evidence applicable toproceedings at law in the State of California will be applicable to thereference proceeding. The referee shall be empowered to enter equitable as wellas legal relief, enter equitable orders that will be binding on the parties andrule on any motion which would be authorized in a court proceeding, includingwithout limitation motions for summary judgment or summary adjudication. Thereferee shall issue a decision at the close of the reference proceeding whichdisposes of all claims of the parties that are the subject of the reference.Pursuant to CCP § 644, such decision shall be entered by the Court as ajudgment or an order in the same manner as if the action had been tried by theCourt and any such decision will be final, binding and conclusive. The partiesreserve the right to appeal from the final judgment or order or from anyappealable decision or order entered by the referee. The parties reserve theright to findings of fact, conclusions of laws, a written statement ofdecision, and the right to move for a new trial or a different judgment, whichnew trial, if granted, is also to be a reference proceeding under thisprovision.

(i)        If the enabling legislation whichprovides for appointment of a referee is repealed (and no successor statute isenacted), any dispute between the parties that would

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otherwise be determinedby reference procedure will be resolved and determined by arbitration. Thearbitration will be conducted by a retired judge or justice, in accordance withthe California Arbitration Act §1280 through §1294.2 of the CCP as amended fromtime to time. The limitations with respect to discovery set forth above shallapply to any such arbitration proceeding.

(j)        THE PARTIES RECOGNIZE AND AGREE THAT ALLCONTROVERSIES, DISPUTES AND CLAIMS RESOLVED UNDER THIS REFERENCE PROVISION WILLBE DECIDED BY A REFEREE AND NOT BY A JURY. AFTER CONSULTING (OR HAVING HAD THEOPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS, HIS OR HER OWN CHOICE, EACH PARTYKNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, AGREESTHAT THIS REFERENCE PROVISION WILL APPLY TO ANY CONTROVERSY, DISPUTE OR CLAIMBETWEEN OR AMONG THEM ARISING OUT OF OR IN ANY WAY RELATED TO, THIS AGREEMENTOR THE OTHER COMERJCA DOCUMENTS.

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IN WITNESS WHEREOF, the parties hereto have causedthis Agreement to be duly executed as of the date first above written.
|        |   | “PLEDGOR”       |                    |   |
|--------|--------|---------------------------|-------------------------|--------|
|   |   |                      |                    |   |
|   |   | MEDCAP PARTNERS L.P.      |                    |   |
|   |   |                      |                    |   |
|   |   |                      |                    |   |
|   |   | By                        | /s/ C. Fred Toney       |
|   |   | Name:                     | C. Fred Toney           |
|   |   | Title:                    | Managing Member of G.P. |
|   |   |                      |                    |   |
|   |   |                      |                    |   |
|   |   | “SECURED PARTY” |                    |   |
|   |   |                      |                    |   |
|   |   | COMERICA BANK             |                    |   |
|   |   |                      |                    |   |
|   |   |                      |                    |   |
|   |   | By                        | /s/ Nina L. Cortez      |
|   |   | Name:                     | NINA L. CORTEZ          |
|   |   | Title:                    | VICE PRESIDENT          |
|        |        |                           |                         |        |  |  |  |  |

 

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| **** | ** ** | **Guaranty** |
|------|------------|--------------|

 

The undersigned, forvalue received, unconditionally and absolutely guarantee(s) to Comerica Bank (“Bank”),and to the Bank’s successors and assigns, payment when due, whether by statedmaturity, demand, acceleration or otherwise, of all existing and futureindebtedness to the Bank of **CRDENTIA CORP.,**a Delaware corporation (“Borrower”) or any successor in interest, includingwithout limit any debtor-in-possession or trustee in bankruptcy which succeedsto the interest of this party or person (jointly and severally the “Borrower”),however this indebtedness has been or may be incurred or evidenced, whetherabsolute or contingent direct or indirect, voluntary or involuntary, liquidatedor unliquidated, joint or several, and whether or not known to the undersignedat the time of this Guaranty or at the time any future indebtedness is incurred(the “Indebtedness”).

The Indebtednessguaranteed includes without limit: (a) any and all direct indebtedness of theBorrower to the Bank, including indebtedness evidenced by any and allpromissory notes; (b) any and all obligations or liabilities of the Borrower tothe Bank arising under any guaranty where the Borrower has guaranteed thepayment of indebtedness owing to the Bank from a third party; (c) any and allobligations or liabilities of the Borrower to the Bank arising fromapplications or agreements for the issuance of letters of credit; (d) any andall obligations or liabilities of the Borrower to the Bank arising out of anyother agreement by the Borrower including without limit any agreement toindemnify the Bank for environmental liability or to clean up hazardous waste;(e) any and all indebtedness, obligations or liabilities for which the Borrowerwould otherwise be liable to the Bank were it not for the invalidity,irregularity or unenforceability of them by reason of any bankruptcy,insolvency or other law or order of any kind, or for any other reason,including without limit liability for interest and attorneys’ fees on, or inconnection with, any of the Indebtedness from and after the filing by oragainst the Borrower of a bankruptcy petition whether an involuntary orvoluntary bankruptcy case, including, without limitation, all attorneys’ feesand costs incurred in connection with motions for relief from stay, cashcollateral motions, nondischargeability motions, preference liability motions,fraudulent conveyance liability motions, fraudulent transfer liability motionsand all other motions brought by Borrower, Guarantor, Bank or third parties inany way relating to Bank’s rights with respect to such Borrower, Guarantor, orthird party and/or affecting any collateral securing any obligation owed toBank by Borrower, Guarantor, or any third party, probate proceedings, on appealor otherwise; (f) any and all amendments, modifications, renewals and/orextensions of any of the above, including without limit amendments,modifications, renewals and/or extensions which are evidenced by new oradditional instruments, documents or agreements; and (g) all costs ofcollecting Indebtedness, including without limit reasonable attorneys’ fees andcosts.

The undersigned waive(s)notice of acceptance of this Guaranty and presentment, demand, protest, noticeof protest, dishonor, notice of dishonor, notice of default, notice of intentto accelerate or demand payment of any Indebtedness, and diligence incollecting any Indebtedness, and agree(s) that the Bank may modify the terms ofany Indebtedness, compromise, extend, increase, accelerate, renew or forbear toenforce payment of any or all Indebtedness, or permit the Borrower to incuradditional Indebtedness, all without notice to the undersigned and withoutaffecting in any manner the unconditional obligation of the undersigned underthis Guaranty. The undersigned further waive(s) any and all other notices towhich the undersigned might otherwise be entitled. The undersignedacknowledge(s) and agree(s) that the liabilities created by this Guaranty aredirect and are not conditioned upon pursuit by the Bank of any remedy the Bankmay have against the Borrower or any other person or any security. Noinvalidity, irregularity or unenforceability of any part or all of theIndebtedness or any documents evidencing the same, by reason of any bankruptcy,insolvency or other law or order of any kind or for any other reason, and nodefense or setoff available at any time to the Borrower, shall impair, affector be a defense or setoff to the obligations of the undersigned under thisGuaranty.

The undersigneddeliver(s) this Guaranty based solely on the undersigned’s independentinvestigation of the financial condition of the Borrower and is (are) notrelying on any information furnished by the Bank. The undersigned assume(s)full responsibility for obtaining any further information concerning theBorrower’s financial condition, the status of the Indebtedness or any othermatter which the undersigned may deem necessary or appropriate from time totime. The undersigned waive(s) any duty on the part of the Bank, and agree(s)that it is not relying upon nor expecting the Bank to disclose to theundersigned any fact now or later known by the Bank, whether relating to theoperations or condition of the Borrower, the existence, liabilities orfinancial condition of any co-guarantor of the Indebtedness, the occurrence ofany default with respect to the Indebtedness, or otherwise, notwithstanding anyeffect these facts may have upon the undersigned’s risk under this Guaranty orthe undersigned’s rights against the Borrower. The undersigned knowinglyaccept(s) the full range of risk encompassed in this Guaranty, which riskincludes without limit the possibility that the

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Borrower may incurIndebtedness to the Bank after the financial condition of the Borrower, or itsability to pay its debts as they mature, has deteriorated.

The undersignedrepresent(s) and warrant(s) that: (a) the Bank has made no representation tothe undersigned as to the creditworthiness of the Borrower; and (b) theundersigned has (have) established adequate means of obtaining from theBorrower on a continuing basis financial and other information pertaining tothe Borrower’s financial condition. The undersigned agree(s) to keep adequatelyinformed of any facts, events or circumstances which might in any way affectthe risks of the undersigned under this Guaranty.

The undersigned grant(s)to the Bank a security interest in and the right of setoff as to any and allproperty of the undersigned now or later in the possession of the Bank. Theundersigned subordinate(s) any claim of any nature that the undersigned now orlater has (have) against the Borrower to and in favor of all Indebtedness andagree(s) not to accept payment or satisfaction of any claim that theundersigned now or later may have against the Borrower without the priorwritten consent of the Bank. Should any payment, distribution, security, orproceeds, be received by the undersigned upon or with respect to any claim thatthe undersigned now or may later have against the Borrower, the undersignedshall immediately deliver the same to the Bank in the form received (except forendorsement or assignment by the undersigned where required by the Bank) forapplication on the Indebtedness, whether matured or unmatured, and untildelivered the same shall be held in trust by the undersigned as the property ofthe Bank. The undersigned further assign(s) to the Bank as collateral for theobligations of the undersigned under this Guaranty all claims of any naturethat the undersigned now or later has (have) against the Borrower (other thanany claim under a deed of trust or mortgage covering real property) with fullright on the part of the Bank, in its own name or in the name of theundersigned, to collect and enforce these claims.

The undersigned agree(s)that no security now or later held by the Bank for the payment of anyIndebtedness, whether from the Borrower, any guarantor, or otherwise, andwhether in the nature of a security interest, pledge, lien, assignment, setoff,suretyship, guaranty, indemnity, insurance or otherwise, shall affect in anymanner the unconditional obligation of the undersigned under this Guaranty, andthe Bank, in its sole discretion, without notice to the undersigned, mayrelease, exchange, enforce and otherwise deal with any security withoutaffecting in any manner the unconditional obligation of the undersigned underthis Guaranty. The undersigned acknowledges(s) and agree(s) that the Bank hasno obligation to acquire or perfect any lien on or security interest in anyasset(s), whether realty or personalty, to secure payment of the Indebtedness,and the undersigned is (are) not relying upon any asset(s) in which the Bankhas or may have a lien or security interest for payment of the Indebtedness.

The undersignedacknowledge(s) that the effectiveness of this Guaranty is not conditioned onany or all of the Indebtedness being guaranteed by anyone else.

Until the Indebtedness isirrevocably paid in full, the undersigned waive(s) any and all rights to besubrogated to the position of the Bank or to have the benefit of any lien,security interest or other guaranty now or later held by the Bank for theIndebtedness or to enforce any remedy which the Bank now or later has againstthe Borrower or any other person. Until the Indebtednes is irrevocably paid infull, the undersigned shall have no right of reimbursement, indemnity,contribution or other right of recourse to or with respect to the Borrower orany other person. The undersigned agree(s) to indemnify and hold harmless theBank from and against any and all claims, actions, damages, costs and expenses,including without limit reasonable attorneys’ fees, incurred by the Bank inconnection with the undersigned’s exercise of any right of subrogation,contribution, indemnification or recourse with respect to this Guaranty. TheBank has no duty to enforce or protect any rights which the undersigned mayhave against the Borrower or any other person and the undersigned assume(s)full responsibility for enforcing and protecting these rights.

Notwithstanding anyprovision of the preceding paragraph or anything else in this Guaranty to thecontrary, if any of the undersigned is or becomes “an “insider” or “affiliate”(as defined in Section 101 of the Federal Bankruptcy Code, as it may beamended) with respect to the Borrower, then that undersigned irrevocably andabsolutely waives any and all rights of subrogation, contribution,indemnification, recourse, reimbursement and any similar rights against theBorrower (or any other guarantor) with respect to this Guaranty, whether suchrights arise under an express or implied contract or by operation of law. It isthe intention of the parties that the undersigned shall not be (or be deemed tobe) a “creditor” (as defined in Section 101 of the Federal Bankruptcy Code, asit may be amended) of the Borrower (or any other guarantor) by reason of theexistence of this Guaranty in the event that the Borrower becomes a debtor inany proceeding under the

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Federal Bankruptcy Code.This waiver is given to induce the Bank to enter into certain written contractswith the Borrower included in the Indebtedness. The undersigned warrant(s) andagree(s) that none of Bank’s rights, remedies or interests shall be directly orindirectly impaired because of any of the undersigned’s status as an “insider”or “affiliate” of the Borrower, and undersigned shall take any action, andshall execute any document, which the Bank may request in order to effectuatethis warranty to the Bank.

If any Indebtedness isguaranteed by two or more guarantors, the obligation of the undersigned shallbe several and also joint, each with all and also each with any one or more ofthe others, and may be enforced at the option of the Bank against eachseverally, any two or more jointly, or some severally and some jointly. TheBank, in its sole discretion, may release any one or more of the guarantors forany consideration which it deems adequate, and may fail or elect not to prove aclaim against the estate of any bankrupt, insolvent, incompetent or deceasedguarantor; and after that, without notice to any other guarantor, the Bank mayextend or renew any or all Indebtedness and may permit the Borrower to incuradditional Indebtedness, without affecting in any manner the unconditionalobligation of the remaining guarantor(s). This action by the Bank shall not,however, be deemed to affect any right to contribution which may exist amongthe guarantors.

Any of the undersignedmay terminate their obligation under this Guaranty as to future Indebtedness(except as provided below) by (and only by) delivering written notice oftermination to an officer of the Bank and receiving from an officer of the Bankwritten acknowledgement of delivery; provided, the termination shall not beeffective until the opening of business on the fifth (5th) day followingwritten acknowledgement of delivery. Any termination shall not affect in anyway the unconditional obligations of the remaining guarantor(s), whether or notthe termination is known to the remaining guarantor(s). Any termination shallnot affect in any way the unconditional obligations of the terminatingguarantor(s) as to any Indebtedness existing at the effective date oftermination or any Indebtedness created after that pursuant to any commitmentor agreement of the Bank or any Borrower loan with the Bank existing at theeffective date of termination (whether advances or readvances by the Bank areoptional or obligatory), or any modifications, extensions or renewals of any ofthis Indebtedness, whether in whole or in part, and as to all of thisIndebtedness and modifications, extensions or renewals of it, this Guarantyshall continue effective until the same shall have been fully paid. The Bankhas no duty to give notice of termination by any guarantor(s) to any remainingguarantor(s). The undersigned shall indemnify the Bank against all claims,damages, costs and expenses, including without limit reasonable attorneys’ feesand costs, incurred by the Bank in connection with any suit, claim or actionagainst the Bank arising out of any modification or termination of a Borrowerloan or any refusal by the Bank to extend additional credit in connection withthe termination of this Guaranty.

Notwithstanding any priorrevocation, termination, surrender or discharge of this Guaranty (or of anylien, pledge or security interest securing this Guaranty) in whole or part, theeffectiveness of this Guaranty, and of all liens, pledges and securityinterests securing this Guaranty, shall automatically continue or bereinstated, as the case may be, in the event that (a) any payment received orcredit given by the Bank in respect of the Indebtedness is returned, disgorgedor rescinded as a preference, impermissible setoff, fraudulent conveyance,diversion of trust funds, or otherwise under any applicable state or federallaw, including, without limitation, laws pertaining to bankruptcy orinsolvency, in which case this Guaranty, and all liens, pledges and securityinterests securing this Guaranty, shall be enforceable against the undersignedas if the returned, disgorged or rescinded payment or credit had not beenreceived or given by the Bank, and whether or not the Bank relied upon thispayment or credit or changed its position as a consequence of it; or (b) anyliability is imposed, or sought to be imposed, against the Bank relating to theenvironmental condition of, or the presence of hazardous or toxic substanceson, in or about, any property given as collateral to the Bank by the Borrower,whether this condition is known or unknown, now exists or subsequently arises(excluding only conditions which arise after any acquisition by the Bank of anysuch property, by foreclosure, in lieu of foreclosure or otherwise, to theextent due to the wrongful act or omission of the Bank), in which case thisGuaranty, and all liens, pledges and security interests securing this Guaranty,shall be enforceable against the undersigned to the extent of all liability,costs and expenses (including without limit reasonable attorneys’ fees andcosts) incurred by the Bank as the direct or indirect result of anyenvironmental condition or hazardous or toxic substances. In the event ofcontinuation or reinstatement of this Guaranty and the liens, pledges andsecurity interests securing it, the undersigned agree(s) upon demand by theBank to execute and deliver to the Bank those documents which the Bankdetermines are appropriate to further evidence (in the public records orotherwise) this continuation or reinstatement, although the failure of theundersigned to do so shall not affect in any way the reinstatement orcontinuation. If the undersigned do(es) not execute and deliver to the Bankupon demand such documents, the Bank and each Bank officer is irrevocablyappointed (which appointment is coupled with an interest) the true and lawfulattorney of the undersigned (with full power of substitution) to execute anddeliver such documents in the

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name and on behalf of theundersigned. For purposes of this Guaranty, “environmental condition” includes,without limitation, conditions existing with respect to the surface or groundwater, drinking water supply, land surface or subsurface and the air; and “hazardousor toxic substances” shall include any and all substances now or subsequentlydetermined by any federal, state or local authority to be hazardous or toxic,or otherwise regulated by any of these authorities.

Although the intent ofthe undersigned and the Bank is that California law shall apply to thisGuaranty, regardless of whether California law applies, the undersigned furtheragree(s) as follows: With respect to the limitation, if any, stated in theAdditional Provisions below on the amount of principal guaranteed under thisGuaranty, the undersigned agree(s) that (a) this limitation shall not be alimitation on the amount of Borrower’s Indebtedness to the Bank; (b) anypayments by the undersigned shall not reduce the maximum liability of theundersigned under this Guaranty unless written notice to that effect isactually received by the Bank at or prior to the time of the payment; and (c)the liability of the undersigned to the Bank shall at all times be deemed to bethe aggregate liability of the undersigned under this Guaranty and any otherguaranties previously or subsequently given to the Bank by the undersigned andnot expressly revoked, modified or invalidated in writing.

The undersigned waive(s)any right to require the Bank to: (a) proceed against any person, includingwithout limit the Borrower; (b) proceed against or exhaust any security heldfrom the Borrower or any other person; (c) pursue any other remedy in the Bank’spower; or (d) make any presentments or demands for performance, or give anynotices of nonperformance, protests, notices of protest, or notices of dishonorin connection with any obligations or evidences of Indebtedness held by theBank as security, in connection with any other obligations or evidences ofindebtedness which constitute in whole or in part Indebtedness, or inconnection with the creation of new or additional Indebtedness.

The undersignedauthorize(s) the Bank, either before or after termination of this Guaranty,without notice to or demand on the undersigned and without affecting theundersigned’s liability under this Guaranty, from time to time to: (a) applyany security and direct the order or manner of sale of it, including withoutlimit, a nonjudicial sale permitted by the terms of the controlling securityagreement, mortgage or deed of trust, as the Bank in its discretion maydetermine; (b) release or substitute any one or more of the endorsers or anyother guarantors of the Indebtedness; and (c) apply payments received by theBank from the Borrower to any indebtedness of the Borrower to the Bank, in suchorder as the Bank shall determine in its sole discretion, whether or not thisindebtedness is covered by this Guaranty, and the undersigned waive(s) anyprovision of law regarding application of payments which specifies otherwise.The Bank may without notice assign this Guaranty in whole or in part. Upon theBank’s request, the undersigned agree(s) to provide to the Bank copies of theundersigned’s financial statements.

The undersigned waive(s)any defense based upon or arising by reason of (a) any disability or otherdefense of the Borrower or any other person; (b) the cessation or limitationfrom any cause whatsoever, other than final and irrevocable payment in full, ofthe Indebtedness; (c) any lack of authority of any officer, director, partner,agent or any other person acting or purporting to act on behalf of the Borrowerwhich is a corporation, partnership or other type of entity, or any defect inthe formation of the Borrower; (d) the application by the Borrower of theproceeds of any Indebtedness for purposes other than the purposes representedby the Borrower to the Bank or intended or understood by the Bank or theundersigned; (e) any act or omission by the Bank which directly or indirectlyresults in or aids the discharge of the Borrower or any Indebtedness byoperation of law or otherwise; or (f) any modification of the Indebtedness, inany form whatsoever including without limit any modification made aftereffective termination, and including without limit, the renewal, extension,acceleration or other change in time for payment of the Indebtedness, or otherchange in the terms of any Indebtedness, including without limit increase ordecrease of the interest rate. The undersigned understands that, absent thiswaiver, Bank’s election of remedies, including but not limited to its decisionto proceed to nonjudicial foreclosure on any real property securing theIndebtedness, could preclude Bank from obtaining a deficiency judgment againstBorrower and the undersigned pursuant to California Code of Civil Proceduresections 580a, 580b, 580d or 726 and could also destroy any subrogation rightswhich the undersigned has against Borrower. The undersigned further understandsthat, absent this waiver, California law, including without limitation,California Code of Civil Procedure sections 580a, 580b, 580d or 726, couldafford the undersigned one or more affirmative defenses to any actionmaintained by Bank against the undersigned on this Guaranty.

The undersigned waivesany and all rights and provisions of California Code of Civil Proceduresections 580a, 580b, 580d and 726, including, but not limited to any provisionthereof that: (i) may limit the time period for Bank to commence a

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lawsuit against Borroweror the undersigned to collect any Indebtedness owing by Borrower or theundersigned to Bank; (ii) may entitle Borrower or the undersigned to a judicialor nonjudicial determination of any deficiency owed by Borrower or theundersigned to Bank, or to otherwise limit Bank’s right to collect a deficiencybased on the fair market value of such real property security; (iii) may limitBank’s right to collect a deficiency judgment after a sale of any real propertysecuring the Indebtedness; (iv) may require Bank to take only one action tocollect the Indebtedness or that may otherwise limit the remedies available toBank to collect the Indebtedness.

The undersignedwaives all rights and defenses arising out of an election of remedies by Bankeven though that election of remedies, such as a nonjudicial foreclosure withrespect to security for a guaranteed obligation, has destroyed the undersigned’srights of subrogation and reimbursement against Borrower by the operation ofSection 580d of the Code of Civil Procedure or otherwise.

Without limiting thegenerality of any other waiver or other provision set forth in this Guaranty,each undersigned Guarantor waives all rights and defenses that any suchundersigned Guarantor may have because the Indebtedness is secured by realproperty. This means, among other things:

(1)       Bank may collect from any undersigned Guarantorwithout first foreclosing on any real or personal property collateral pledgedby any Borrower to secure the Indebtedness.

(2)       If Bank forecloses on any real propertycollateral pledged by any Borrower to secure the Indebtedness:

(a)       the amount of the Indebtedness may bereduced only by the price for which that collateral is sold at the foreclosuresale, even if the collateral is worth more than the sale price.

(b)       Bank may collect from any undersignedGuarantor even if Bank, by foreclosing on the real property pledged ascollateral, has destroyed any right that the undersigned Guarantor may have tocollect from Borrower.

This is an unconditionaland irrevocable waiver of any rights and defenses each undersigned Guarantormay have because the Indebtedness is secured by Real Property. These rights anddefenses include, but are not limited to, any rights or defenses based uponSection 580a, 580b, 580d, or 726 of the California Code of Civil Procedure.

WITHOUT LIMITING THEGENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION SET FORTH IN THIS GUARANTY,EACH UNDERSIGNED GUARANTOR HEREBY WAIVES, TO THE MAXIMUM EXTENT SUCH WAIVER ISPERMITTED BY LAW, ANY AND ALL BENEFITS, DEFENSES TO PAYMENT OR PERFORMANCE, ORANY RIGHT TO PARTIAL OR COMPLETE EXONERATION ARISING DIRECTLY OR INDIRECTLYUNDER ANY ONE OR MORE OF CALIFORNIA CIVIL CODE SECTIONS 2799, 2808, 2809, 2810,2815, 2819, 2820, 2821, 2822, 2838, 2839, 2845, 2847, 2848, 2849, AND 2850.

The undersignedacknowledges and agrees that this is a knowing and informed waiver of theundersigned’s rights as discussed above and that Bank is relying on this waiverin extending credit to Borrower.

The undersignedacknowledge(s) that the Bank has the right to sell, assign, transfer,negotiate, or grant participations in all or any part of the Indebtedness andany related obligations, including without limit this Guaranty. In connectionwith that right, the Bank may disclose any documents and information which theBank now or later acquires relating to the undersigned and this Guaranty,whether furnished by the Borrower, the undersigned or otherwise. Theundersigned further agree(s) that the Bank may disclose these documents andinformation to the Borrower. The undersigned agree(s) that the Bank may provideinformation relating to this Guaranty or to the undersigned to the Bank’sparent, affiliates, subsidiaries and service providers.

The total obligationunder this Guaranty shall be UNLIMITED unless specifically limited in theAdditional Provisions of this Guaranty, and this obligation (whether unlimitedor limited to the extent indicated in the Additional Provisions) shall include,IN ADDITION TO any limited amount of principal guaranteed, any and all intereston all Indebtedness and any and all costs and expenses of any kind, includingwithout limit reasonable attorneys’ fees and costs, incurred by the Bank at anytime(s) for any reason in enforcing any of the duties and obligations of theundersigned under this Guaranty or

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otherwise incurred by theBank in any way connected with this Guaranty, the Indebtedness or any otherguaranty of the Indebtedness (including without limit reasonable attorneys’fees and other expenses incurred in any suit involving the conduct of the Bank,the Borrower or the undersigned). All of these costs and expenses shall bepayable immediately by the undersigned when incurred by the Bank, withoutdemand, and until paid shall bear interest at the highest per annum rateapplicable to any of the Indebtedness, but not in excess of the maximum ratepermitted by law. Any reference in this Guaranty to attorneys’ fees shall bedeemed a reference to fees, charges, costs and expenses of both in-house andoutside counsel and paralegals, whether or not a suit or action is instituted,and to court costs if a suit or action is instituted, and whether attorneys’fees or court costs are incurred at the trial court level, on appeal, in abankruptcy, administrative or probate proceeding or otherwise. Any reference inthe Additional Provisions or elsewhere (a) to this Guaranty being secured bycertain collateral shall NOT be deemed to limit the total obligation of theundersigned under this Guaranty or (b) to this Guaranty being limited in anyrespect shall NOT be deemed to limit the total obligation of the undersignedunder any prior or subsequent guaranty given by the undersigned to the Bank.

The undersignedunconditionally and irrevocably waive(s) each and every defense and setoff ofany nature which, under principles of guaranty or otherwise, would operate toimpair or diminish in any way the obligation of the undersigned under thisGuaranty, and acknowledge(s) that each such waiver is by this referenceincorporated into each security agreement, collateral assignment, pledge and/orother document from the undersigned now or later securing this Guaranty and/orthe Indebtedness, and acknowledge(s) that as of the date of this Guaranty nosuch defense or setoff exists. The undersigned acknowledge(s) that theeffectiveness of this Guaranty is subject to no conditions of any kind.

This Guaranty shallremain effective with respect to successive transactions which shall eithercontinue the Indebtedness, increase or decrease it, or from time to time createnew Indebtedness after all or any prior Indebtedness has been satisfied, until thisGuaranty is terminated in the manner and to the extent provided above.

The undersignedwarrant(s) and agree(s) that each of the waivers set forth above are made withthe undersigned’s full knowledge of their significance and consequences, andthat under the circumstances, the waivers are reasonable and not contrary topublic policy or law If any of these waivers are determined to be contrary toany applicable law or public policy, these waivers shall be effective only tothe extent permitted by law.

This Guaranty constitutesthe entire agreement of the undersigned and the Bank with respect to thesubject matter of this Guaranty. No waiver, consent, modification or change ofthe terms of this Guaranty shall bind any of the undersigned or the Bank unlessin writing and signed by the waiving party or an authorized officer of thewaiving party, and then this waiver, consent, modification or change shall beeffective only in the specific instance and for the specific purpose given.This Guaranty shall inure to the benefit of the Bank and its successors andassigns. This Guaranty shall be binding on the undersigned and the undersigned’sheirs, legal representatives, successors and assigns including, without limit,any debtor in possession or trustee in bankruptcy for any of the undersigned.The undersigned has (have) knowingly and voluntarily entered into this Guarantyin good faith for the purpose of inducing the Bank to extend credit or makeother financial accommodations to the Borrower, and the undersigned acknowledge(s)that the terms of this Guaranty are reasonable. If any provision of thisGuaranty is unenforceable in whole or in part for any reason, the remainingprovisions shall continue to be effective. **THISGUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THESTATE OF CALIFORNIA.**

Additional Provisions (ifany): (a) The undersigned hereby covenants and agrees to deliver to Bank notlater than 30 days after end of each fiscal quarter, internally preparedfinancial statements of the undersigned, prepared in accordance with GAAP andcertified as true and correct by an authorized officer of the undersigned; and

(b) **THE TOTAL OBLIGATION UNDER THIS GUARANTY SHALL NOTEXCEED THE PRINCIPAL AMOUNT OF FOUR HUNDRED THOUSAND DOLLARS ($400,000), PLUSALL INTEREST ON THAT AMOUNT AND ALL COSTS INCURRED BY THE BANK IN COLLECTIONEFFORTS AGAINST THE BORROWER AND/OR THE UNDERSIGNED INCLUDING, WITHOUT LIMIT,REASONABLE ATTORNEY FEES.**

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THE UNDERSIGNEDAND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE,BUT THAT IT MAY BE WAIVED UNDER CERTAIN CIRCUMSTANCES. TO THE EXTENT PERMITTEDBY LAW, EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT)WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUALBENEFIT WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDINGTHE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS GUARANTY ORTHE INDEBTEDNESS.

IN WITNESS WHEREOF, the undersigned has (have) signedthis Guaranty on January 24, 2007.
| WITNESSES:                  |   | GUARANTOR:  MEDCAP PARTNERS L.P.                                               |
|-----------------------------|--------|--------------------------------------------------------------------------------|
| Janna Gunter                |   | By:                                                                            | MEDCAP MANAGEMENT & RESEARCH LLC,  as General Partner |
| Print  Name:                |   |                                                                           |   |
|                        |   | By:                                                                            | /s/ C. Fred Toney |
|                        |   |                                                                           | SIGNATURE OF |
|                        |   | Its:                                                                           | Managing Member of the G.P. |
|                        |   |                                                                           |   |
|                        |   |                                                                           |
| BORROWER(S): CRDENTIA CORP. |   | GUARANTOR’S ADDRESS  500 Third Street  Suite 535  San Francisco, CA 94107 |
|                             |        |                                                                                |  |  |

 

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**CERTIFICATEOF ACKNOWLEDGMENT**

STATE OF CALIFORNIA

COUNTY OF SAN FRANCISCO

On 1/24/07 beforeme, Janna L. Gunter personally appeared C. Fred Toney personally known to me(or proved to me on the basis of satisfactory evidence) to be the person(s)whose name(s) is/are subscribed to within instrument and acknowledged to methat he/she/they executed the same in his/her/their authorized capacity(ies),and that by his/her/their signature(s) on the instrument the person(s), or theentity upon behalf of which the person(s) acted, executed the instrument.

WITNESS my hand andofficial seal.
| (SEAL) |   | /s/ Janna L. Gunter              |
|--------|--------|----------------------------------|
|   |   | (Notary Public’s Signature) |
|   |   |                             |
|   |   | Janna L. Gunter                  |
|   |   | (Type or Print Name)             |

 

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| **** | ** ** | **Resolutions and Incumbency  Certification** |
|------|------------|-----------------------------------------------|

 

I certify that I am theduly elected and qualified Secretary of Medcap Management & Research LLC (“Corporation”)and the keeper of the records of the Corporation; that the Corporation is thegeneral partner of Medcap Partners L.P., a Delaware limited partnership; thatthe following is a true and correct copy of resolutions duly adopted by theofficers/members/managers of the Corporation in accordance with its operatingagreement and applicable statutes on or as of January 19, 2007.

**Copy of Resolutions:**

**Whereas,**the Corporation is general partner and managing member ofMedcap Partners L.P., a limited partnership (the “Partnership”);

**Whereas,**this Partnership is financially interested in the affairs ofCrdentia Corp. (“Borrower”); and

**Whereas,**there has been presented to the Partnership and Corporationcertain documents and instruments including but not limited to a Guaranty (“Agreement”)of indebtedness of Borrower to be executed and delivered by the Partnership toComerica Bank (“Bank”), as yet unexecuted, in favor of Bank, pertaining to theexisting and/or future indebtedness of the Borrower to the Bank; and

**Whereas,**in order to induce the Bank to extend credit or otherfinancial accommodations to the Borrower, the Partnership and Corporation deemsit advisable, desirable, and in the best interests of this Partnership that thePartnership enter into the Agreement;

**Be ItResolved,** That:

1.         Anyone of the following officers of the Corporation, acting in the Corporation’scapacity as managing member of the Partnership:
| Name:         |   | Title:                  |   | Signature         |
|---------------|--------|-------------------------|--------|-------------------|
| C. Fred Toney |   | Managing Member of G.P. |   | /s/ C. Fred Toney |
|          |   |                    |   |              |
|          |   |                    |   |              |

 

is/are authorized toenter into the Agreement; and to execute in such form as may be required by theBank all such other documents and/or instruments as shall be required by Bankin connection with the Agreement and that none of the same shall be validunless so signed or endorsed.

2.         This authorization shall be effective (and Bank shall beentitled to rely fully on it) notwithstanding any contrary terms contained inany limited partnership agreement now or hereafter adopted by the Partnership,and shall remain in full force and effect until the Partnership officiallynotifies the Bank to the contrary in writing (such notice to have no effect onany action previously taken by Bank in reliance on this authorization).

3.         Any and all agreements, instruments and documents previouslyexecuted and acts and things previously done to carry out the purposes of thisAuthorization are ratified, confirmed and approved as the act or acts of thePartnership.

4.         If other persons become partners in the Partnership or ifthe Partnership should become incorporated, the Partnership shall notify theBank promptly in writing of any such changes. This limited partnershipAuthorization is not a consent by the Bank to the adding of partners or to theincorporation of the limited partnership.

5.         Each of the partners of the Partnership have, to the extentrequired pursuant to the terms of the partnership’s limited partnershipagreement, consented to the foregoing and to the execution and delivery of theAgreement.
|   |   |   | /s/ C. Fred Toney                                                       |
|--------|--------|--------|-------------------------------------------------------------------------|
|   |   |   | Secretary, Medcap  Management & Research LLC  & Managing Member |

 

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**CERTIFICATIONOF LIMITED PARTNERSHIP AGREEMENT**

The undersigned Secretaryof **MEDCAP PARTNERS L.P.,**aDelaware limited partnership (“Company”), hereby certifies to **COMERICA BANK,**a Michigan bankingcorporation (“Bank”), that the Limited Partnership Agreement of the Companyattached as Exhibit A: (i) is a true, complete and accurate copy of suchdocuments; (ii) remains in full force and effect; (iii) has not been amended,repealed or rescinded in any respect; and (iv) may continue to be relied uponby Bank until and unless written notice to the contrary is delivered to Bank.

Executed as of the 19 dayof January, 2007.
|        |   | **MEDCAP PARTNERS L.P.** |
|--------|--------|--------------------------|
|   |   | ** **               |
|   |   | ** **               |
|   |   | By:                 | /s/ C. Fred Toney |
|   |   | Name:                    | C. Fred Toney |
|   |   | Its:                     | Secretary  Managing Member of G.P. |
|        |        |                          |  |  |

 

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**EXHIBITA**

***See AttachedLimited Partnership Agreement***

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**CLOSINGAGREEMENT**

This ClosingAgreement dated January 19, 2007, is made among COMERICA BANK (“Bank”),CRDENTIA CORP. (“Borrower”) and MEDCAP PARTNERS L.P. (“Guarantor”) with respectto the $2,400,000 revolving loan (the “Loan”) to be made by Bank to Borrowerpursuant to the $2,400,000 Master Revolving Note dated as of even date herewith(“Note”) payment of which is to be guaranteed by Guarantor pursuant to aGuaranty dated as of even date herewith (“Guaranty”).

1.         Terms. Capitalized terms used herein withoutdefinition have the meanings given them in the Note.

2.         Unsatisfied Closing Conditions. Each of the following(“Unsatisfied Closing Conditions”) is a condition to the Bank’s obligation tomake the Loan:

(a) the Bank’s receipt ofa Certificate of Good Standing from the Texas Secretary of State.

3.         Closing. The Bank will make, the Borrower willborrow, and the Guarantor will guarantee payment of the Loan as of January      ,2007 (“Closing Date”).

4.         Achievement of Unsatisfied Closing Conditions. If theUnsatisfied Closing Conditions are not achieved on or before thirty (30) daysafter the Closing Date, such failure shall be and constitute a “Default” under the Note and the Bankmay deem the Loan to be in default effective as of such day, or any Business Daythereafter. The Bank may declare the Loan due and payable immediately and maycommence the exercise of any and all rights and remedies under the Note orrelated agreements.
| COMERICA BANK |               | CRDENTIA CORP. |
|---------------|--------------------|----------------|
|          |               |           |
| By:      | /s/ Nina L. Cortez |           | By:  | /s/ James D. Durham |
| Its:          | Vice President     |           | Its: | CEO |

 
|   |   | MEDCAP PARTNERS L.P.  By: MEDCAP MANAGEMENT & RESEARCH  LLC, as General Partner |
|--------|--------|-------------------------------------------------------------------------------------|
|   |   |                                                                                |
|   |   |                                                                                | By:  | /s/ Fred Toney |
|   |   |                                                                                | Its: | Managing Member of G.P. |

 

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