EXHIBIT 10.35


 


AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT – TERM LOAN


 


DATED AS OF MAY 16, 2005


 


BETWEEN


 


BRIDGE OPPORTUNITY FINANCE, LLC


 


AS LENDER,


 


AND


 


CRDENTIA CORP. (“CRDENTIA”)

BAKER ANDERSON CHRISTIE, INC.(“BAKER”)

NURSES NETWORK, INC.(“NURSES NETWORK”)

NEW AGE STAFFING, INC. (“NEW AGE”)

PSR NURSES, LTD. (“PSR LTD.”)

PSR NURSE RECRUITING, INC. (“PSR RECRUITING”)

PSR NURSES HOLDINGS CORP. (“PSR HOLDING”)

CRDE CORP. (“CRDE”)

ARIZONA HOME HEALTH CARE/PRIVATE DUTY, INC. (“AHHC”)

CARE PROS STAFFING, INC. (“CARE PROS”)

HIP HOLDING, INC. (“HIP”)

HEALTH INDUSTRY PROFESSIONALS, L.L.C. (“HIP LLC”)

TRAVMED USA, INC. (“TRAVMED”)

PRIME STAFF, LP (“PRIME STAFF”)

MINT MEDICAL STAFFING ODESSA, LP (“MMSO”)

GHS ACQUISITION CORPORATION (“GHS”)


 


AS BORROWER


 





















 


TABLE OF
CONTENTS


 


	
  1.

  	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Defined
  Terms

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Accounting
  Terms

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Terms
  Defined in UCC

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Other Definitional Provisions; Construction

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  References to Agreements, Enactments, Etc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  LOANS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Term Loan

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Permitted
  Acquisitions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Repayments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Notes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  WARRANTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  INTEREST, FEES AND CHARGES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Interest
  Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Fees
  and Charges

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Maximum
  Interest

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  COLLATERAL

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Grant of Security Interest to Lender

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Other
  Security

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Possessory
  Collateral

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Electronic
  Chattel Paper

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  Letter-of-Credit
  Rights

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  Third-Party
  Collateral

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (g)

  	
  Deposit
  Account

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (h)

  	
  Insurance
  Proceeds

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  PRESERVATION OF COLLATERAL AND PERFECTION OF SECURITY INTERESTS
  THEREIN

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  POSSESSION OF COLLATERAL AND RELATED MATTERS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  COLLECTIONS

  	
   

  



 


i





















 


	
  9.

  	
  COLLATERAL, AVAILABILITY AND FINANCIAL REPORTS AND SCHEDULES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Borrowing
  Base Reports

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Monthly
  Reports

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Financial
  Statements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Annual
  Projections

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  Explanation of Budgets and Projections

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  Invoices and Billing Statements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (g)

  	
  Obligor Financial Statements and Tax Returns

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (h)

  	
  Other
  Information

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  Post-Closing
  Review

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (j)

  	
  Public
  Reporting

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  TERMINATION; AUTOMATIC RENEWAL; EARLY TERMINATION FEE

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Financial Statements and Other Information

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Locations; Certain Collateral

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Loans
  by Borrower

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  [Left
  Blank]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  Liens

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  Organization, Authority and No Conflict

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (g)

  	
  Litigation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (h)

  	
  Compliance with Laws and Maintenance of Permits

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  Affiliate
  Transactions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (j)

  	
  Names
  and Trade Names

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (k)

  	
  Equipment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (l)

  	
  Enforceability

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (m)

  	
  Solvency

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (n)

  	
  Indebtedness

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (o)

  	
  Margin Security and Use of Proceeds

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (p)

  	
  Parent, Subsidiaries and Affiliates

  	
   

  



 


ii





















 


	
   

  	
  (q)

  	
  No
  Defaults

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (r)

  	
  Employee
  Matters

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (s)

  	
  Intellectual
  Property

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (t)

  	
  Environmental
  Matters

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (u)

  	
  ERISA
  Matters

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (v)

  	
  Reimbursement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (w)

  	
  Compliance with Healthcare Regulations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (x)

  	
  Immigration
  Matters

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (y)

  	
  Licenses,
  Permits, etc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (z)

  	
  Collective
  Enterprise

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (aa)

  	
  Acquisition

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (bb)

  	
  Certain Financial Information

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  AFFIRMATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Maintenance
  of Records

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Compliance with Laws and Maintenance of
  Permits

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Inspection and Audits

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  Insurance

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  Collateral

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (g)

  	
  Use of Proceeds

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (h)

  	
  Taxes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  Intellectual Property

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (j)

  	
  Staffing Contracts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (k)

  	
  Billing and Collection System Access

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  NEGATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Indebtedness

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Liens

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Mergers, Sales, Acquisitions, Subsidiaries
  and Other Transactions Outside the Ordinary Course of Business

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Dividends and Distributions

  	
   

  



 


iii





















 


	
   

  	
  (e)

  	
  Investments; Loans

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  Fundamental Changes, Line of Business

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (g)

  	
  Equipment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (h)

  	
  Affiliate Transactions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  Settling of Accounts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (j)

  	
  Restricted Payments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (k)

  	
  Restricted Locations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (l)

  	
  Payments to Travmed

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  FINANCIAL COVENANTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Tangible Net Worth

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Senior Debt Service Coverage Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Minimum EBITDA

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Term Loan Debt Leverage Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  Capital Expenditure Limitations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  Operating Lease Obligations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  DEFAULT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Payment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Breach of This Agreement, the Other
  Agreements and the Revolving Loan Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Breach of Subordination Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Breaches of Other Obligations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  Breach of Representations and Warranties

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  Loss of Collateral

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (g)

  	
  Levy, Seizure or Attachment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (h)

  	
  Bankruptcy or Similar Proceedings

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  Appointment of Receiver

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (j)

  	
  Judgment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (k)

  	
  Default or Revocation of Guaranty

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (l)

  	
  Change of Ownership/Management

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (m)

  	
  Material Adverse Change

  	
   

  



 


iv





















 


	
   

  	
  (n)

  	
  Governmental Authorizations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (o)

  	
  Failure to Maintain Third-Party Payroll Tax
  Service Provider

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (p)

  	
  [Intentionally Deleted]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (q)

  	
  Breach of Certain Obligations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  REMEDIES UPON AN EVENT OF DEFAULT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
  CONDITIONS PRECEDENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
  JOINT AND SEVERAL LIABILITY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
  RELEASES; INDEMNITIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  20.

  	
  NOTICE

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  21.

  	
  CHOICE OF GOVERNING LAW; CONSTRUCTION;
  FORUM SELECTION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  22.

  	
  MODIFICATION AND BENEFIT OF AGREEMENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  23.

  	
  HEADINGS OF SUBDIVISIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  24.

  	
  POWER OF ATTORNEY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  25.

  	
  CONFIDENTIALITY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  26.

  	
  BROKERAGE FEES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  27.

  	
  PUBLICITY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  28.

  	
  LIMITATION OF ACTIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  29.

  	
  LIABILITY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  30.

  	
  COUNTERPARTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  31.

  	
  ELECTRONIC SUBMISSIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  32.

  	
  WAIVER OF JURY TRIAL; OTHER WAIVERS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  33.

  	
  AMENDMENT AND RESTATEMENT

  	
   

  



 


v





















 


	
  ANNEX 1 - DEFINITIONS

  	
   

  
	
   

  	
   

  
	
  EXHIBIT A –
  COMPLIANCE CERTIFICATE

  	
   

  
	
   

  	
   

  
	
  EXHIBIT B – CLOSING CHECKLIST

  	
   

  
	
   

  	
   

  
	
  EXHIBIT C – INFORMATION CERTIFICATE

  	
   

  
	
   

  	
   

  
	
  EXHIBIT D – FORM OF SUBORDINATION
  AGREEMENT

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 1 –
  PERMITTED LIENS

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 11(b) –
  BUSINESS AND COLLATERAL LOCATIONS

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 11(b) - CERTAIN
  COLLATERAL

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 11(g) – LITIGATION

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 11(i) –
  AFFILIATE TRANSACTIONS

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 11(j)
  – NAMES & TRADE NAMES

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 11(n)
  – INDEBTEDNESS

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 11(p)
  – PARENT, SUBSIDIARIES AND AFFILIATES

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 11(q) – DEFAULTS

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 11(t) – ENVIRONMENTAL MATTERS

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 11(v) – GOVERNMENT REIMBURSEMENT PROGRAM MATTERS

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 11(y) – LICENSES AND PERMITS

  	
   

  



 





















 


AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT – TERM LOAN


 


THIS AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT – TERM LOAN (as amended, modified or supplemented
from time to time, this “Agreement”)
made this 16th day of May, 2005 by and between BRIDGE OPPORTUNITY FINANCE, LLC
(“Lender”), Crdentia Corp., a
Delaware corporation (“Crdentia”), Baker Anderson Christie, Inc., a
California corporation (“Baker”), Nurses Network, Inc., a California
corporation (“Nurses Network”), New Age Staffing, Inc., a Delaware
corporation (“New Age”), PSR Nurses, Ltd., a Texas limited partnership (“PSR
Ltd.”), PSR Nurse Recruiting, Inc., a Texas corporation (“PSR Recruiting”),
PSR Nurses Holdings Corp., a Texas corporation (“PSR Holding”), CRDE Corp., a
Delaware corporation (“CRDE”), Arizona Home Health Care/Private Duty, Inc.,
an Arizona corporation (“AHHC”), Care Pros Staffing, Inc., a Texas
corporation (“Care Pros”), HIP Holding, Inc., a Delaware corporation (“HIP”),
Health Industry Professionals, L.L.C., a Michigan limited liability company (“HIP
LLC”), Travmed USA, Inc., a North Carolina corporation (“Travmed”), GHS
Acquisition Corporation, a Delaware corporation (“GHS”), Prime Staff, LP, a
Texas limited partnership (“Prime Staff”), and Mint Medical Staffing Odessa,
LP, a Texas limited partnership (“MMSO”; and together with Crdentia, Baker,
Nurses Network, New Age, PSR Ltd., PSR Recruiting, PSR Holding, CRDE, AHHC,
Care Pros, HIP, HIP LLC, Travmed, GHS and Prime Staff, each referred to
individually and collectively, as “Borrower”),
each, having its principal place of business at 14114 Dallas Parkway, Suite 600,
Dallas, Texas 75254.


 


W I T N E S S
E T H:


 


WHEREAS, Borrower may,
from time to time, request certain Term Loans from Lender in connection with
certain Permitted Acquisitions, and the parties wish to provide for the terms
and conditions upon which such Term Loans or other financial accommodations, if
made by Lender, shall be made, which Term Loans shall be secured by a second
priority security interest in all assets of Borrower (except for all of the
equity interests of each direct and indirect Subsidiary of Crdentia, which has
been pledged to Lender as a first priority security interest pursuant to the
terms of the Pledge Agreement);


 


WHEREAS, Crdentia, Baker,
Nurses Network, New Age, PSR Ltd., PSR Recruiting, PSR Holding, CRDE, AHHC and
Care Pros (the “Original Borrowers”) entered into that certain Loan and
Security Agreement – Term Loan, dated as of August 31, 2004 (the “Original
Loan Agreement”);


 


WHEREAS, the Original
Borrowers entered into that certain Loan and Security Agreement – Revolving
Loans, dated as of June 16, 2004 (as amended, restated, supplemented or
otherwise modified from time to time, the “Revolving Loan Agreement”) with
Bridge Healthcare Finance, LLC, secured by a first priority security interest
in all assets of Borrower (except for all of the equity interests of each
direct and indirect Subsidiary of Crdentia, which has been pledged to Lender
pursuant to the terms of the Pledge Agreement);


 


WHEREAS, Crdentia formed CRDE,
a wholly owned Subsidiary of Crdentia, to facilitate certain Permitted
Acquisitions. Crdentia formed AHHC Acquisition Corporation 


 


1





















 


(“AHHC Acquisition”)
and CPS Acquisition Corporation (“CPS Acquisition”), each a wholly owned
Subsidiary of CRDE, for purposes of acquiring AHHC and Care Pros.  Pursuant to that certain Agreement and Plan
of Reorganization dated as of August 31, 2004 by and among Crdentia, CRDE,
AHHC Acquisition, AHHC, and the former shareholders of AHHC, AHHC Acquisition
merged with and into AHHC with AHHC being the surviving entity.  Pursuant to that certain Agreement and Plan
of Reorganization dated as of August 31, 2004, by and among Crdentia,
CRDE, CPS Acquisition, Care Pros and the former shareholders of Care Pros, Care
Pros merged with and into CPS Acquisition with CPS Acquisition being the
surviving entity and immediately upon such merger changed its name to “Care
Pros Staffing, Inc.”;


 


WHEREAS, after the
Original Loan Agreement was originally executed, the Original Borrowers agreed
to amend the Original Loan Agreement pursuant to the terms of that certain
First Amendment to Loan and Security Agreement – Term Loans dated as of November 30,
2004 (the “First Term Loan Amendment”);


 


WHEREAS, Crdentia formed
HIP Acquisition Corporation, a wholly owned Subsidiary of CRDE, to acquire HIP
and HIP LLC through merger.  HIP LLC is a
wholly owned Subsidiary of HIP.  Pursuant
to that certain Agreement and Plan of Reorganization (“HIP Merger Agreement”)
dated as of March 29, 2005 by and among Crdentia, HIP Acquisition
Corporation, HIP, and certain shareholders of HIP, HIP merged with and into HIP
Acquisition Corporation with HIP Acquisition Corporation being the surviving
entity and immediately upon such merger HIP Acquisition Corporation changed its
name to “HIP Holding, Inc.” (the “HIP Acquisition”).  Immediately after the HIP Acquisition,
Crdentia contributed all of its equity interests in HIP to CRDE.  As a result of the HIP Acquisition and contribution
of equity interests by Crdentia, HIP LLC is a wholly owned subsidiary of HIP
and HIP is wholly owned subsidiary of CRDE;


 


WHEREAS, Crdentia formed
Travmed Acquisition Corporation, a wholly owned Subsidiary of CRDE, to acquire
Travmed through merger.  Pursuant to that
Agreement and Plan of Reorganization (“Travmed Merger Agreement”) dated dated
as of March 29, 2005 by and among Crdentia, CRDE, Travmed Acquisition
Corporation, Travmed and certain shareholders of Travmed, Travmed Acquisition
Corporation merged with and into Travmed, with Travmed being the surviving
entity (the “Travmed Acquisition”).  As a
result of the Travmed Acquisition, Travmed is wholly owned subsidiary of CRDE;


 


WHEREAS, as a result of
the HIP Acquisition and Travmed Acquisition, Original Borrowers, HIP, HIP LLC,
Travmed and Lender agreed to further amend the Original Loan Agreement pursuant
to the terms of that certain Amendment No. 2, Joinder and Consent to Loan
and Security Agreement-Term Loans, dated March 29, 2005 (the “Second Term
Loan Amendment”), to provide for, among other things, the addition of HIP, HIP
LLC and Travmed as additional Borrowers to the Original Loan Agreement;


 


WHEREAS, as a result of
the HIP Acquisition and Travmed Acquisition, Original Borrowers, HIP, HIP LLC,
Travmed and Lender agreed to amend the Original Loan Agreement pursuant to the
terms of that certain Amendment No. 2, Joinder and Consent to Loan and
Security Agreement – Term Loans, dated March 29, 2005, to provide for,
among other things, the addition of HIP, HIP LLC and Travmed as additional
Borrowers to the Loan Agreement;


 


2





















 


WHEREAS, Crdentia formed
GHS, a wholly owned Subsidiary of CRDE, to acquire all of the equity interests
of Prime Staff and MMSO.  Pursuant to
that certain Equity Purchase Agreement (the “Prime Staff Purchase Agreement”)
dated as of May 5, 2005, by and among Crdentia, CRDE, GHS, Prime Staff, Inc.,
a Delaware corporation (“Prime, Inc.”), Prime Staff GP, LLC, a Delaware
limited liability company (“PSGP”), Prime Caid Management, Inc., a Texas
corporation (“Prime Caid”), Mint Medical, LLC, a Delaware limited liability
company (“MM”),  Mint Medical GP, LLC, a
Delaware limited liability company (“MMGP”; and together with Prime, Inc.,
PSGP and MM, each a “Seller” and collectively, the “Prime Staff Sellers”),
Mint Management, Inc., a Texas corporation (“MMI”), and Tony M.
Brown, the Prime Staff Sellers sold to GHS and CRDE, and GHS and CRDE purchased
all of the equity interests in each of Prime Staff and MMSO (collectively, the “Prime
Staff Acquisition”).  As a result of the
Prime Staff Purchase Agreement and the Prime Staff Acquisition, CRDE owns all
of the general partnership interests of both Prime Staff and MMSO and GHS owns
all of the limited partnership interests of both Prime Staff and MMSO;


 


WHEREAS, as a result of
the Prime Staff Purchase Agreement and the Prime Staff Acquisition, Borrower
and Lender agreed to further amend the Original Loan Agreement pursuant to the
terms of that certain Amendment No. 3, Joinder and Consent to Loan and
Security Agreement – Term Loans, dated May 5, 2005 (the “Third Term Loan
Amendment”), to provide for, among other things, the addition of GHS, Prime
Staff and MMSO as additional Borrowers to the Original Loan Agreement; and


 


WHEREAS, the Borrowers
and Lender desire to amend and restate the Original Loan Agreement, as amended
by the First Term Loan Amendment, the Second Term Loan Amendment and the Third
Term Loan Amendment, upon the terms and conditions set forth in this Agreement.


 


NOW, THEREFORE, in
consideration of any Term Loan hereafter made to Borrower by Lender, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by Borrower, the parties agree that the Original Loan
Agreement, as amended by the First Term Loan Amendment, the Second Term Loan
Amendment and the Third Term Loan Amendment, is hereby amended and restated to
read in full as follows:


 


1.                                       DEFINITIONS.


 


(a)                                  Defined Terms.  For the purposes of this Agreement, the
following capitalized words and phrases shall have the meanings set forth in Annex I
attached hereto and made a part hereof.


 


(b)                                 Accounting Terms.  Any accounting terms used in this Agreement
which are not specifically defined herein shall have the meanings customarily
given them in accordance with GAAP. 
Calculations and determinations of financial and accounting terms used
and not otherwise specifically defined hereunder and the preparation of
financial statements to be furnished to the Lender pursuant hereto shall be
made and prepared, both as to classification of items and as to amount, in
accordance with GAAP as used in the preparation of the financial statements of
the Borrower on the Original Closing Date. 
If any changes in accounting principles or practices from those used in
the preparation of the financial statements are hereafter 


 


3





















 


occasioned
by the promulgation of rules, regulations, pronouncements and opinions by or
required by the Financial Accounting Standards Board or the American Institute
of Certified Public Accountants (or any successor thereto or agencies with
similar functions), which results in a material change in the method of
accounting in the financial statements required to be furnished to the Lender
hereunder or in the calculation of financial covenants, standards or terms
contained in this Agreement, the parties hereto agree to enter into good faith
negotiations to amend such provisions so as equitably to reflect such changes
to the end that the criteria for evaluating the financial condition and
performance of the Borrower will be the same after such changes as they were
before such changes; and, if the parties fail to agree on the amendment of such
provisions, the Borrower will furnish financial statements in accordance with
such changes but shall provide calculations for all financial covenants,
perform all financial covenants and otherwise observe all financial standards
and terms in accordance with applicable accounting principles and practices in
effect immediately prior to such changes.


 


(c)                                  Terms Defined in UCC.  The terms “Account”,
“Account Debtor”, “Certificated Security”, “Chattel Paper”, “Commercial Tort Claim”, “Deposit
Account”, “Document”, “Electronic Chattel Paper”, “Equipment”, “Financial Asset”, “Fixture”,
“General Intangible”, “Goods”, “Health-Care-Insurance
Receivables”, “Instrument”,
“Inventory”, “Investment Property”, “Letter-of-Credit Right”, “Payment Intangible”, “Proceeds”, “Security”, “Securities
Account”, “Security Entitlement”,
“Software”, “Supporting Obligation”, “Tangible Chattel Paper” and “Uncertificated Security” shall have the
respective meanings assigned to such terms in the UCC.  All other capitalized words and phrases used
herein and not otherwise specifically defined shall have the respective
meanings assigned to such terms in the UCC, to the extent the same are used or
defined therein.


 


(d)                                 Other Definitional Provisions; Construction.  Whenever the context so requires, the neuter
gender includes the masculine and feminine, the single number includes the
plural, and vice versa, and in particular the word “Borrower” shall be so
construed.  The words “hereof”, “herein”
and “hereunder” and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and references to Article, Section, Subsection, Annex, Schedule, Exhibit and
like references are references to this Agreement unless otherwise
specified.  The word “including” shall
mean “including, without limitation”.  An
Event of Default shall “continue” or be “continuing” until such Event of
Default has been waived in accordance with Section 32(e) hereof.  References in this Agreement to any party
shall include such party’s successors and permitted assigns.  References to any “Section” shall be a
reference to such Section of this Agreement unless otherwise stated.  To the extent any of the provisions of the
Other Agreements are inconsistent with the terms of this Agreement, the
provisions of this Agreement shall govern. 
This Agreement and the Other Agreements are the result of negotiations
among and have been reviewed by counsel to the Lender, Borrower and any other
parties thereto, are product of all parties and, accordingly, they shall not be
construed against the Lender.


 


(e)                                  References
to Agreements, Enactments, Etc. 
Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications thereto,
but only to the extent such amendments, restatements, supplements and other
modifications are not prohibited by the terms of this Agreement or any Other
Agreement, and 


 


4





















 


(ii) references
to any statute or regulation shall be construed as including all statutory and
regulatory provisions amending, replacing, supplementing or interpreting such
statute or regulation.


 


2.                                       LOANS.


 


(a)                                  Term
Loan.  Subject to the terms and
conditions of this Agreement and the Other Agreements, Lender shall make one or
more term loans to Borrower (individually and collectively, the “Term Loan”) provided that (i) each
Term Loan be for a minimum amount of Five Hundred Thousand Dollars ($500,000),
and (ii) the aggregate principal amount of all Term Loans may not exceed
$10,000,000 in the aggregate outstanding at any time.


 


(b)                                 Permitted
Acquisitions.  In connection with any
Acquisition approved in writing by Lender in its sole discretion, any Term Loan
in connection therewith shall be made subject to the satisfaction of the
following conditions precedent thereto (each, a “Permitted Acquisition”): 
(A) the Borrower shall have: (x) a coverage ratio of EBITDA to
Debt Service of at least 1.5 to 1.0, (y) a ratio of Senior Debt to EBITDA
of not more than 4.0 to 1.0, and (z) a ratio of Term Loan Debt to EBITDA
of not more than 2.5 to 1.0; (B) Borrowers
are in compliance, and shall be on the date of the consummation of such
proposed Acquisition, with all financial covenants set forth in Section 14
hereof; (C) pro forma financial projections, prepared by the Borrower in
good faith for the period from the date of the consummation of such proposed
Acquisition to the date which is one year thereafter, shall reflect that the
Borrowers shall be in compliance with all financial covenants set forth in Section 14
hereof; (D) Excess Availability of the Borrowers shall be an amount
mutually agreed upon between Lender and Borrower but in no event less than
$250,000 after giving effect to the proposed Acquisition; (E) the Target
entity to be acquired in such Acquisition shall become a new Borrower hereunder
in accordance with the provisions and requirements of Section 13(c)(ii) hereof;
(F) any Indebtedness to be issued by any Borrower in respect of such
Acquisition (other than Indebtedness under the Revolving Loan Agreement) shall
be Subordinated Debt subject to Subordination Agreements in form and substance
satisfactory to Lender including, without limitation, payment blockage rights
and indefinite standstill on remedies; (G) Lender shall have reviewed and
found satisfactory all Acquisition Documents in respect thereof prior to
Borrower entering into any such Acquisition Documents; (H) no Default or
Event of Default exists as of the proposed date of the Acquisition or would
result after giving effect thereto; (I) Crdentia shall deliver to Lender a
certificate of an officer of Crdentia certifying compliance with the foregoing,
(J) Borrower shall deliver to Lender any other due diligence reasonably
requested by the Lender in connection with an Acquisition or Target, including,
without limitation collateral, cash-flow, and operational audits, and
background checks on Target’s management, in each case to the reasonable
satisfaction to the Lender; and (K) Borrower shall establish and maintain a
separate Lockbox with a Lockbox Bank for receivables from Account Debtors of
CRDE in accordance with the requirements of the Term Loan Agreement and this
Agreement, and Borrower shall execute with such Lockbox Bank a lockbox
agreement, blocked account agreement, and such other agreements related to the
lockbox arrangements, in each case in form and substance acceptable to the
Lender.


 


5





















 


(c)                                  Repayments.


 


(i)                                     The
principal outstanding balance of the Term Loan shall be repaid at the end of
the Term.  If any such payment due date
is not a Business Day, then such payment may be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the amount of interest and fees due hereunder.


 


(ii)                                  Mandatory
Prepayments of the Term Loan.


 


(1)                                  Sales
of Assets.  Upon receipt of the
proceeds of the sale or other disposition of any Equipment or real property of
Borrower which is subject to a mortgage in favor of Lender, or if any of the
Equipment or real property subject to such mortgage is damaged, destroyed or
taken by condemnation in whole or in part, the proceeds thereof, in any case,
in excess of $15,000 individually, or in excess of $50,000 in the aggregate, in
any Fiscal Year shall be paid by Borrower to Lender as a mandatory prepayment
of the Term Loan, such payment to be applied against the remaining installments
of principal in the inverse order of their maturities until repaid in full, and
then against the other Obligations, as determined by Lender, in its sole
discretion.


 


(2)                                  Excess
Cash Flow.  Five (5) days after
receipt by Lender of Borrower’s internally prepared quarterly financial
statements pursuant to Section 9(c)(ii) hereof, commencing with the
calendar quarter ended September 30, 2005, Borrower shall make a mandatory
prepayment of the Term Loan in an amount equal to fifty percent (50%) of Borrower’s
“Excess Cash Flow” (as described below) for the calendar quarter just ended,
such prepayment to be applied against the remaining installments of principal
in the inverse order of their maturities, such mandatory prepayments to
continue until the date on which the Term Loan shall be repaid in full.  In addition, within ten (10) days after
receipt of Borrower’s Fiscal Year-end audited financial statements for each
Fiscal Year of Borrower, or required by Section 9(c)(iii) hereof,
commencing with Borrower’s fiscal year ending December 31, 2005, Borrower
shall make a mandatory prepayment of the Term Loan in any amount necessary to
satisfy any discrepancy between the actual Excess Cash Flow payments received
on a quarterly basis for such Fiscal Year, and the amount required herein as
calculated pursuant to the audited financial statements for such Fiscal
Year.  For purposes hereof, “Excess Cash
Flow” shall mean for each of Borrower’s Fiscal Years, Borrower’s EBITDA for
such period, minus Borrower’s cash taxes paid during such period, minus
actual principal and interest payments made with respect to Borrowed Money
during such period, minus Borrower’s legal, consulting and accounting
expenses in connection with Permitted Acquisitions, if any, for such period (but
only to the extent permitted by Lender and only to the extent not previously
deducted from net income in the calculation of EBITDA), minus all
unfinanced Capital Expenditures by Borrower during such period.


 


(d)                                 Notes.  The Term Loan shall, in Lender’s sole
discretion, be evidenced by one or more promissory notes in form and substance
satisfactory to Lender.  However, if such



 


6





















 


Term
Loans are not so evidenced, such Term Loans may be evidenced solely by entries
upon the books and records maintained by Lender.


 


3.                                       WARRANTS.


 


As additional
consideration for Lender entering into this Agreement and making the credit
facilities available to Borrower as contemplated hereby, Crdentia agrees to
issue to Lender warrants to purchase shares of common stock of Crdentia equal
to, in the aggregate, twelve percent (12%) of the common stock of Crdentia in
accordance with the provisions of Section 12 to the Warrant Agreement, as
follows:


 


(a)                                  Concurrently
with the execution of this Agreement and the making by Lender of an initial
Term Loan to Borrower in the aggregate principal amount of $2,697,801.75,
Crdentia will enter into the Warrant Agreement and, pursuant thereto, will
issue Lender a Warrant Certificate evidencing Lender’s right to purchase three
and 24/100 percent (3.24%) of the common stock of Crdentia, at an exercise
price per warrant of an amount provided in the Warrant Agreement.


 


(b)                                 Concurrently
with the funding by Lender of each additional Term Loan to Borrower, with the
aggregate principal amount of such additional Term Loans not to exceed
$7,500,000, Crdentia will issue to Lender one or more additional Warrant
Certificates representing the right to purchase up to an additional eight and
76/100 percent (8.76%) of the common stock of Crdentia in accordance with the
provisions of Section 12 to the Warrant Agreement.  The Warrant Certificate percentage of each
additional Warrant Certificate shall be determined on a pro rata basis relative
to the amount of each such additional Term Loan.  The exercise price for each additional
Warrant Certificate shall be determined as provided in the Warrant Agreement.


 


4.                                       INTEREST, FEES AND CHARGES.


 


(a)                                  Interest
Rate.


 


The Term Loan shall bear
interest at the rate of fifteen and one-quarter percent (15.25%) per annum, all
such interest to be payable on the first Business Day of each month in
arrears.  Upon the occurrence of an Event
of Default and during the continuance thereof, the Term Loan shall bear
interest at the rate of four percent (4%) per annum in excess of the interest
rate otherwise payable thereon, which interest shall be payable on demand.  All interest shall be calculated on the basis
of a 360-day year.


 


(b)                                 Fees
and Charges.


 


(i)                                     Closing
Fee:  Borrower shall pay to Lender a
closing fee of one and one-half percent (1.5%) of the principal amount of each
Term Loan funded hereunder, which fees shall be fully earned and payable on the
date of disbursement of such Term Loan hereunder.


 


(ii)                                  Collateral
Monitoring Fee:  On the first
Business Day of each calendar month following the Original Closing Date,
Borrower shall pay Lender a 


 


7





















 


collateral
monitoring fee of Three Thousand and No/100 Dollars ($3,000) with respect to
the Term Loan (pro rated for the first month, if it is a partial month), which
fee shall be deemed earned at the beginning of each month; provided however,
that Borrower agrees and acknowledges that such collateral monitoring fee shall
be increased, on a pro rata basis, in the event that, at any time or from time
to time, the aggregate amount of principal outstanding in respect of the Term
Loan exceeds $2,500,000, which increase shall be in the amount of $1,000 per
month for each increment or partial increment of $500,000 of Term Loan
principal in excess of $2,500,000, which collateral monitoring fee hereunder
shall not exceed, in any event, an aggregate of $5,000 per month.


 


(iii)                               Costs
and Expenses: Borrower shall reimburse Lender for all reasonable costs and
expenses, including, without limitation, legal expenses and reasonable
attorneys’ fees (whether for internal or outside counsel), incurred by Lender
in connection with the (i) documentation and consummation of this
transaction and any other transactions between Borrower and Lender, including,
without limitation, Uniform Commercial Code and other public record searches
and filings, overnight courier or other express or messenger delivery,
appraisal costs and surveys; (ii) collection, protection or enforcement of
any rights in or to the Collateral; (iii) collection of any Obligations;
and (iv) administration and enforcement of any of Lender’s rights under
this Agreement or any Other Agreement. 
Borrower shall also pay all normal service charges with respect to all
accounts maintained by Borrower with Lender and any additional services
requested by Borrower from Lender.  All
such costs, expenses and charges shall, if owed to Lender, be reimbursed by
Lender and, in such event or in the event such costs and expenses are owed to
Lender, shall constitute Obligations hereunder, shall be payable by Borrower to
Lender on demand and, until paid, shall bear interest at the highest rate then
applicable to Term Loans hereunder.


 


(iv)                              Capital
Adequacy Charge.  If Lender shall have
determined that the adoption of any law, rule or regulation regarding
capital adequacy, or any change therein or in the interpretation or application
thereof, or compliance by Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any central bank
or governmental authority enacted after the Original Closing Date, does or
shall have the effect of reducing the rate of return on such party’s capital as
a consequence of its obligations hereunder to a level below that which Lender
could have achieved but for such adoption, change or compliance (taking into
consideration Lender’s policies with respect to capital adequacy) by a material
amount, then, from time to time after submission by Lender to Borrower of a
written demand therefor (“Capital Adequacy
Demand”) together with the certificate described below, Borrower
shall pay to Lender such additional amount or amounts (“Capital Adequacy Charge”) as will
compensate Lender for such reduction, such Capital Adequacy Demand to be made
with reasonable promptness following such determination.  A certificate of Lender claiming entitlement
to payment as set forth above shall be deemed presumptively correct in the
absence of manifest error.  Such
certificate shall set forth the nature of the occurrence giving rise to such
reduction, the amount of the Capital Adequacy Charge to be paid to Lender, and
the method by which such amount was determined. 
In determining such amount, Lender may use any reasonable averaging and
attribution method, applied on a non-discriminatory basis.


 


8





















 


(c)                                  Maximum
Interest.  It is the intent of the
parties that the rate of interest and other charges to Borrower under this
Agreement and the Other Agreements shall be lawful; therefore, if for any
reason the interest or other charges payable under this Agreement are found by
a court of competent jurisdiction, in a final determination, to exceed the
limit which Lender may lawfully charge Borrower, then the obligation to pay
interest and other charges shall automatically be reduced to such limit and, if
any amount in excess of such limit shall have been paid, then such amount shall
be refunded to Borrower.


 


5.                                       COLLATERAL.


 


(a)                                  Grant
of Security Interest to Lender.  As
security for the payment of all Term Loans now or in the future made by Lender
to Borrower hereunder and for the payment or other satisfaction of all other
Obligations, Borrower hereby assigns to Lender and grants to Lender a
continuing security interest (subject only to Liens of BHF and other Permitted
Liens) in the following property of Borrower, whether now or hereafter owned,
existing, acquired or arising and wherever now or hereafter located:  (i) all Accounts and all Goods whose
sale, lease or other disposition by Borrower has given rise to Accounts and
have been returned to, or repossessed or stopped in transit by, Borrower; (ii) all
Chattel Paper, Instruments, Documents and General Intangibles (including,
without limitation, all Intellectual Property, licenses, software, franchises,
tax refund claims, claims against carriers and shippers, guarantee claims,
contract rights, Payment Intangibles, security interests, security deposits and
rights to indemnification); (iii) all Inventory; (iv) all Goods
(other than Inventory), including, without limitation, Equipment, vehicles and
Fixtures; (v) all Investment Property; (vi) all Deposit Accounts,
bank accounts, deposits and cash; (vii) all Letter-of-Credit Rights; (viii) Commercial
Tort Claims listed on Schedule 11(b) hereto from time to time;
(ix) any other property of Borrower now or hereafter in the possession,
custody or control of Lender or any agent or any parent, affiliate or
subsidiary of Lender or any participant with Lender in the Term Loans, for any
purpose (whether for safekeeping, deposit, collection, custody, pledge,
transmission or otherwise); and (x) all additions and accessions to,
substitutions for, and replacements, products and Proceeds of the foregoing
property, including, without limitation, proceeds of all insurance policies
insuring the foregoing property, and all of Borrower’s books and records
relating to any of the foregoing and to Borrower’s business.  The
foregoing notwithstanding, the Collateral shall not be deemed to
include any right, title, interest, claim or demand of Borrower in and to
any agreement, document, license or instrument which relates to the foregoing
Collateral to the extent such agreement, document, license or instrument is not
assignable or capable of being encumbered as a matter of law or under the terms
of the agreement, document or instrument applicable thereto or such grant would
result in a breach of the terms of such agreement, document, license, or
instrument (but, in each case, solely to the extent that any such restriction
shall be enforceable under applicable law) without the consent of the
applicable party thereto, and, in each case, only to the extent that any such
term would not be rendered ineffective pursuant to Section 9-406, 9-407, 9-408
or 9-409 of the Uniform Commercial Code of any relevant jurisdiction.


 


(b)                                 Other
Security.  Lender, in its sole
discretion, without waiving or releasing any obligation, liability or duty of
Borrower under this Agreement or the Other Agreements or any Event of Default,
may at any time or times hereafter, but shall not be obligated to, pay, acquire
or accept an assignment of any Lien asserted by any Person in, upon or against
the 


 


9





















 


Collateral,
provided, that Lender may take such actions with respect to Permitted Liens
only after the occurrence and during the continuance of an Event of
Default.  All sums paid by Lender in
respect thereof and all costs, fees and expenses including, without limitation,
reasonable attorney fees, all court costs and all other charges relating
thereto incurred by Lender shall constitute Obligations payable by Borrower to
Lender on demand and, until paid, shall bear interest at the highest rate then
applicable to Term Loans hereunder.


 


(c)                                  Possessory
Collateral.  Immediately upon
Borrower’s receipt of any portion of the Collateral evidenced by an agreement,
Instrument or Document, including, without limitation, any Tangible Chattel
Paper and any Investment Property consisting of Certificated Securities,
Borrower shall deliver the original thereof (i) to BHF, to hold pursuant
to the terms of the Revolving Loan Agreement (other than equity interests of
any Borrower pledged by Crdentia to Lender under the Pledge Agreement, which
shall be delivered to Lender pursuant to the terms of the Pledge Agreement), or
(ii) to the extent the Revolving Loan Agreement has been terminated, to
Lender together with an appropriate endorsement or other specific evidence of
assignment thereof to Lender (in form and substance acceptable to Lender).  If an endorsement or assignment of any such
items shall not be made for any reason, Lender is hereby irrevocably
authorized, as Borrower’s attorney and agent-in-fact, to endorse or assign the
same on Borrower’s behalf.


 


(d)                                 Electronic
Chattel Paper.  To the extent that
Borrower obtains or maintains any Electronic Chattel Paper, Borrower shall (i) comply
with Section 5(e) of the Revolving Loan Agreement, or (ii) to
the extent the Revolving Loan Agreement has been terminated, create, store and
assign the record or records comprising the Electronic Chattel Paper in such a
manner that (i) a single authoritative copy of the record or records
exists which is unique, identifiable and, except as otherwise provided in clauses
(iv), (v) and (vi) below, unalterable, (ii) the authoritative
copy identifies Lender as the assignee of the record or records, (iii) the
authoritative copy is communicated to and maintained by the Lender or its
designated custodian, (iv) copies or revisions that add or change an
identified assignee of the authoritative copy can only be made with the
participation of Lender, (v) each copy of the authoritative copy and any
copy of a copy is readily identifiable as a copy that is not the authoritative
copy and (vi) any revision of the authoritative copy is readily
identifiable as an authorized or unauthorized revision.


 


(e)                                  Letter-of-Credit
Rights.  If Borrower at any time is a
beneficiary under a letter of credit now or hereafter issued in favor of Borrower,
at the request and option of Lender, Borrower shall (i) comply with Section 5(e) of
the Revolving Loan Agreement, or (ii) to the extent the Revolving Loan
Agreement has been terminated, pursuant to an agreement in form and substance
satisfactory to Lender, either (i) arrange for the issuer and any
confirmer of such letter of credit to consent to an assignment to Lender of the
proceeds of any drawing under the letter of credit, or (ii) arrange for
Lender to become the transferee beneficiary of the letter of credit, with
Lender agreeing, in each case, that the proceeds of any drawing under the
letter to credit are to be applied as provided in this Agreement.


 


(f)                                    Third-Party
Collateral.  If Borrower shall at any
time hold or acquire an interest in Collateral in the possession of a third
party (other than Certificated Securities and Goods covered by a Document),
Borrower shall (subject to the rights of BHF therein) promptly 


 


10





















 


obtain
an acknowledgment from the third party that it is holding such Collateral for
the benefit of BHF and the Lender.


 


(g)                                 Deposit Account.  Borrower shall upon the request of Lender
deliver to Lender (subject to the rights of BHF therein), with respect to each
Deposit Account maintained by Borrower now or hereafter (other than with
Lender) and that is permitted hereby, upon obtaining an interest in such
Deposit Account, a deposit account control agreement in form and substance
satisfactory to BHF and the Lender, executed by the financial institution at
which such account is maintained, and shall take such other actions as BHF and
the Lender may jointly request to ensure that Lender’s security interest in
such account is perfected by control as such term is used in UCC Section 9-104.


 


(h)                                 Insurance Proceeds. The net
proceeds of any casualty insurance insuring the Collateral, after deducting all
costs and expenses (including attorneys’ fees) of collection, shall be applied,
at Lender’s option (subject to the rights of BHF and the use of such proceeds
to first repay all Revolving Loan Obligations), either toward replacing or
restoring the Collateral, in a manner and on terms satisfactory to Lender, or,
at Lender’s discretion after the occurrence and during the continuance of an
Event of Default, towards payment of the Obligations.  Any proceeds applied to the payment of
Obligations shall be applied in such manner as Lender may elect.  In no event shall such application relieve
Borrower from payment in full of all installments of principal and interest
which thereafter become due in the order of maturity thereof.


 


6.                                       PRESERVATION
OF COLLATERAL AND PERFECTION OF SECURITY INTERESTS THEREIN.


 


Subject to the rights of
BHF therein, Borrower shall, at Lender’s request, at any time and from time to
time, authenticate, execute and deliver to Lender such financing statements,
documents and other agreements and instruments (and pay the cost of filing or
recording the same in all public offices deemed necessary or desirable by
Lender) and do such other acts and things or cause third parties to do such
other acts and things as Lender may deem necessary or desirable in its sole
discretion in order to establish and maintain a valid, attached and perfected
security interest in the Collateral in favor of Lender (free and clear of all
other Liens, except the Liens in favor of BHF and other Permitted Liens) to
secure payment of the Obligations, and in order to facilitate the collection of
the Collateral.  Subject to the rights of
BHF in the Collateral, Borrower irrevocably hereby makes, constitutes and
appoints Lender (and all Persons designated by Lender for that purpose) as
Borrower’s true and lawful attorney and agent-in-fact to execute and file such
financing statements, documents and other agreements and instruments and do
such other acts and things as may be necessary to preserve and perfect Lender’s
security interest in the Collateral. 
Borrower further agrees that a carbon, photographic, photostatic or
other reproduction of this Agreement or of a financing statement shall be
sufficient as a financing statement. 
Borrower further ratifies and confirms the prior filing by Lender of any
and all financing statements which identify the Borrower as debtor, Lender as
secured party and any or all Collateral as collateral.  Notwithstanding the foregoing, if at any time
BHF issues to the Borrower an instruction with respect to the Collateral or BHF’s
rights thereunder, Borrower may, and the Lender hereby authorizes and instructs
the Borrower to, follow such instruction of BHF, notwithstanding any conflict
that may exist with respect to the Lender’s rights in such Collateral, 


 


11





















 


the Borrower’s
obligations hereunder or the Lender’s instructions with respect thereto, and the
Borrower’s actions in response to such instructions of BHF shall not constitute
a Default or Event of Default hereunder, so long as such compliance with BHF’s
instructions do not constitute a Default or Event of Default under the
Revolving Loan Agreement.


 


7.                                       POSSESSION
OF COLLATERAL AND RELATED MATTERS.


 


Until otherwise notified
by Lender following the occurrence of an Event of Default, Borrower shall have
the right, except as otherwise provided in this Agreement, in the ordinary
course of Borrower’s business, to (a) sell, lease or furnish under
contracts of service any of Borrower’s assets in the ordinary course of
business; (b) use and consume any raw materials, work in process or other
materials normally held by Borrower for such purpose; (c) dispose of
obsolete or unuseful Equipment or other property or assets so long as all of
the proceeds thereof are used for the replacement or substitution of such
Equipment or other property or assets, or, if not so replaced or substituted
within ninety (90) days, paid to Lender for application to the Obligations
(except for such proceeds which are required to be delivered to the holder of a
Permitted Lien which is prior in right of payment); provided, however, that a
sale in the ordinary course of business shall not include any transfer or sale
in satisfaction, partial or complete, of a debt owed by Borrower, other than a
debt secured by a Permitted Lien; (d) transfer assets to any other
Borrower or Subsidiary which is a Borrower; (e) lease or sublease
property; (f) sell or dispose of assets for its fair market value in an
amount not to exceed $50,000 in the aggregate in any fiscal year; and (g) sell
or dispose of other assets with a book value of less than $50,000 in any fiscal
year.


 


8.                                       COLLECTIONS.


 


(a)                                  Upon
request of Lender and consent of BHF, and consistent with the terms of Section 8
of the Revolving Loan Agreement, Borrower shall establish and maintain a
separate lockbox (the “Lockbox”)
with a United States depository institution designated from time to time by
Lender (the “Lockbox Bank”),
subject to the provisions of this Agreement for receivables from Account
Debtors of CRDE.  Borrower shall execute
with the Lockbox Bank a lockbox agreement for the CRDE Account Debtor
Collection Lockbox Account in form and substance acceptable to Lender, and such
other agreements related to such lockbox agreement as Lender may require.  Borrower shall ensure that all collections of
Accounts on which Account Debtors of CRDE are obligated are paid directly into
the Lockbox for deposit into the CRDE Account Debtor Collection Lockbox
Account, and that all funds deposited into the CRDE Account Debtor Collection
Lockbox Account are immediately transferred into the Concentration Account
described in Section 8 of the Revolving Loan Agreement.


 


(b)                                 Intentionally
Deleted.


 


(c)                                  Notwithstanding
anything in any lockbox agreement to the contrary, Borrower agrees that it
shall be liable for any fees and charges in effect from time to time and
charged by the Lockbox Bank in connection with the Lockboxes and Lockbox
Accounts, and that Lender shall have no liability therefor.  Borrower further acknowledges and agrees
that, to the extent such fees and charges are not paid by Borrower directly but
are satisfied using collections in the Lockbox Accounts, such fees and charges
shall be deemed to be Revolving 


 


12





















 


Loans
made by Lender under the Revolving Loan Agreement.  Borrower agrees to indemnify and hold Lender
harmless from any and all liabilities, claims, losses and demands whatsoever,
including reasonable attorneys’ fees and expenses, arising from or relating to
actions of Lender or the Lockbox Bank pursuant to this Section 8 or any
lockbox agreement, other than if such liability, claim, loss or demand arises
due to the gross negligence or willful misconduct of Lender or the Lockbox
Bank, as determined by a court of competent jurisdiction.


 


(d)                                 Subject to all applicable law and all rights
of BHF, Lender may, at any time and from time to time after the occurrence and
during the continuance of an Event of Default, whether before or after
notification to any Account Debtor and whether before or after the maturity of
any of the Obligations, (i) enforce collection of any of Borrower’s
Accounts or other amounts owed to Borrower by suit or otherwise; (ii) exercise
all of Borrower’s rights and remedies with respect to proceedings brought to
collect any Accounts or other amounts owed to Borrower; (iii) surrender,
release or exchange all or any part of any Accounts or other amounts owed to
Borrower, or compromise or extend or renew for any period (whether or not
longer than the original period) any Indebtedness thereunder; (iv) sell
or assign any Account of Borrower or other amount owed to Borrower upon such
terms, for such amount and at such time or times as Lender deems advisable; (v) prepare,
file and sign Borrower’s name on any proof of claim in bankruptcy or other
similar document against any Account Debtor or other Person obligated to
Borrower; and (vi) do all other acts and things which are necessary, in
Lender’s sole discretion, to fulfill Borrower’s obligations under this
Agreement and the Other Agreements and to allow Lender to collect the Accounts
or other amounts owed to Borrower. 
Subject to the rights of BHF, addition to any other provision hereof,
Lender may at any time, after the occurrence and during the continuance of an
Event of Default, at Borrower’s expense, notify Account Debtors to make payment
directly to Lender of any amounts due or to become due thereunder (and once
such notice has been given to an Account Debtor, Borrower shall not give any
contrary instructions to such Account Debtor during the continuance of an Event
of Default without Lender’s prior written consent).


 


(e)                                  On a monthly basis, Lender shall deliver to
Borrower an account statement showing all Loans, charges and payments which
shall be deemed final, binding and conclusive upon Borrower unless Borrower
notifies Lender in writing, specifying any error therein, within thirty (30)
days of the date such account statement is sent to Borrower, and any such
notice shall only constitute an objection to the items specifically identified.


 


9.                                       COLLATERAL,
AVAILABILITY AND FINANCIAL REPORTS AND SCHEDULES.


 


(a)                                  Borrowing
Base Reports.  To the extent
requested by Lender from time to time Borrower shall deliver to Lender the
Borrowing Base Certificate delivered to BHF in respect of the Revolving
Obligations.


 


(b)                                 Monthly
Reports.  After the Revolving Loan
Agreement has been terminated, Borrower shall deliver to Lender, in addition to
any other reports, as soon as practicable and in any event within fifteen
(15) days after the end of each month, (A) a detailed trial balance of
Borrower’s Accounts aged by Account Debtor or payor per date of invoice, in
form and substance reasonably satisfactory to Lender, including, without
limitation, the names 


 


13





















 


and
addresses of all Account Debtors of Borrower, and (B) a summary and detail
of accounts payable (such Accounts and accounts payable divided into such time
intervals as Lender may require in its sole discretion), including a listing of
any held checks.  Prior to the
termination of the Revolving Loan Agreement, Borrower shall deliver to Lender
any monthly report delivered to BHF in respect of the Revolving Obligations as
requested from time to time by Lender.


 


(c)                                  Financial
Statements.  Borrower shall deliver
to Lender the following financial information, all of which shall be prepared
in accordance with GAAP consistently applied (except where such calculations
otherwise require), and shall be accompanied by a certificate in the form of Exhibit A
hereto, which compliance certificate shall include a calculation of all
financial covenants contained in this Agreement, including the financial tests
set forth in Section 13(j)(iii):  (i) no
later than fifteen (15) days after each calendar month, copies of internally
prepared financial statements, including, without limitation, balance sheets
and statements of income, retained earnings and cash flow of (A) CRDE and (B) the
Borrowers, in each case certified by the Chief Financial Officer of Borrower; (ii) no
later than forty-five (45) days after the end of each of the first three
quarters of Borrower’s Fiscal Year, copies of internally prepared financial
statements, including, without limitation, balance sheets, statements of
income, retained earnings, cash flows and reconciliation of surplus for
Borrower on a consolidated basis, certified by the Chief Financial Officer of
Borrower; and (iii) no later than ninety (90) days after the end of each
of Borrower’s Fiscal Years, audited annual financial statements of Borrower on
a consolidated basis, with an unqualified opinion as to the audited financial
statements by independent certified public accountants selected by Borrower and
reasonably satisfactory to Lender.  The
report of such accounts shall be accompanied by copies of any management
letters sent to the Borrower by such accountants.


 


(d)                                 Annual
Projections.  As soon as practicable
and in any event not less than thirty (30) days prior to the beginning of each
Fiscal Year, Borrower shall deliver to Lender projected balance sheets,
statements of income and cash flow for Borrower on a consolidated basis, for
each of the twelve (12) months during such Fiscal Year, which shall include the
assumptions used therein, together with appropriate supporting details as
reasonably requested by Lender.


 


(e)                                  Explanation
of Budgets and Projections.  In
conjunction with the delivery of the annual presentation of projections or
budgets referred to in Subsection 9(d) above, Borrower shall
deliver a letter signed by the President or a Vice President of Borrower and by
the Treasurer or Chief Financial Officer of Borrower, describing, comparing and
analyzing, in detail, all changes and developments between the anticipated
financial results included in such projections or budgets and the historical
financial statements of Borrower.


 


(f)                                    Invoices and Billing Statements.  After the Revolving Loan Agreement has been
terminated, promptly following request therefor by Lender, Borrower shall
provide copies of sales journals, cash receipt journals, and deposit slips,
copies of service invoices, customer statements and credit memoranda issued,
remittance advices and reports, evidence of billing and copies of shipping and
delivery documents, each as applicable to Borrower.


 


(g)                                 Obligor Financial Statements and Tax Returns.  Borrower shall cause each Obligor to deliver
to Lender such Obligor’s annual financial statement (in form acceptable to 


 


14





















 


Lender)
and a copy of such Obligor’s federal income tax return with respect to the
corresponding year, in each case on the date when such tax return is due or, if
earlier, on the date when available.


 


(h)                                 Other
Information.  Promptly following
request therefor by Lender, such other business or financial data, reports,
appraisals and projections as Lender may reasonably request.  This may include, without limitation, a
monthly certificate from the President and Chief Financial Officer of Borrower
showing Borrower’s compliance with each of the financial covenants set forth in
this Agreement, and stating whether any Event of Default has occurred or event
that, with giving of notice or the passage of time, or both, would constitute
an Event of Default, and if so, the steps being taken to prevent or cure such
Event of Default.


 


(i)                                     Post-Closing Review.  Within thirty (30) days after any Permitted
Acquisition, Lender shall conduct (or a firm, consultant, advisor or other
third party hired by the Lender), at Borrower’s cost, a post-closing audit and
review, which post-closing review shall include (whether conducted after the
Original Closing Date or after a Permitted Acquisition), without limitation, (i) a
review of the books, records and accounting systems of Borrower, (ii) a
review and final verification of all add-backs used in determining the final
pro forma financial statements of Borrower, and (iii) a review of
healthcare regulatory compliance matters (“Post-Closing
Review”).


 


(j)                                     Public
Reporting.  Promptly upon the filing
thereof, each Borrower shall deliver to Lender copies of all registration
statements and annual, quarterly, monthly or other regular reports which such
Borrower or any of its Subsidiaries files with the Securities and Exchange
Commission, as well as promptly providing to Lender copies of any reports and
proxy statements delivered to its shareholders.


 


10.                                 TERMINATION;
AUTOMATIC RENEWAL; EARLY TERMINATION FEE.


 


(a)                                  This
Agreement shall be in effect from the Original Closing Date until June 16,
2007 (the “Term”), unless
earlier terminated in accordance with the provisions of this Agreement;
provided that all Obligations shall be due and payable upon the termination,
whether by acceleration or maturity, of the Revolving Loan Agreement with BHF,
unless otherwise provided herein.


 


(b)                                 If
this Agreement expires, then (i) Lender shall not make any additional Term
Loans on or after the date identified as the date on which the Obligations are
to be repaid; and (ii) this Agreement shall terminate on the date
thereafter that the Obligations are paid in full.  At such time as Borrower has repaid all of
the Obligations and this Agreement has terminated, Borrower shall deliver to
Lender an indemnification of Lender, in form and substance satisfactory to
Lender, for checks which Lender has credited to Borrower’s account, but which
subsequently are dishonored for any reason or for automatic clearinghouse or
wire transfers not yet posted to Borrower’s account.


 


(c)                                  Borrower
may terminate this Agreement at any time but only upon sixty (60) days prior
written notice and prepayment of all Obligations.  In the event that the Term Loan (other than
as a result of a mandatory prepayment pursuant to subsection 2(c))
or 


 


15





















 


Revolving
Loans (except in respect of the circumstances described in Section 10(e) of
the Revolving Loan Agreement) are prepaid by Borrower for any reason prior to the
expiration of the Term, the entire principal balance, together with all accrued
and unpaid interest on any Term Loans then outstanding, shall be immediately
due and payable on the effective date of such termination, together with the
Make Whole Amount and all other Obligations of Borrower.


 


(d)                                 Any
prepayment of the Term Loan (other than a mandatory prepayment made pursuant to
the prepayment provisions described in Section 2(c) hereof) shall
also be accompanied by a prepayment fee, equal to the Make Whole Amount.  The following definitions shall apply:


 


(i)                                     “Make
Whole Amount” means the positive difference, if any, between (x) the
Remaining Payment Amount immediately prior to any prepayment of that portion of
the Term Loan which is being prepaid and (y) the principal balance of the
Term Loan being prepaid as of the date of any such prepayment; and


 


(ii)                                  “Remaining
Payment Amount” means the sum of (x) amount of each future and unpaid
scheduled payment of principal and interest on the Term Loan, that would be due
on or after the date of a prepayment of the Term Loan if no payment of the Term
Loan were made prior to the end of the Term, plus (y) the amount of
all Term Loan related fees which would have been earned by Lender from the date
of prepayment through the end of the Term if no payment of the Term Loan were
made prior to the end of the Term.


 


Lender shall provide
Borrower with a written calculation of the Make Whole Amount due from Borrower
hereunder, which calculation shall be presumptively correct absent manifest
error.


 


(e)                                  Borrower
may prepay all of the Term Loan Obligations, without payment of a prepayment
fee, upon written notice to Lender within sixty (60) days after the end of the
first year of the Term, if Lender does not fund any new Term Loan (beyond the
initial Term Loan funding) during the first twelve (12) months of the Term
hereof, provided that no Default or Event of Default then exists.


 


(f)                                    Notwithstanding
anything in this Agreement to the contrary, if the funding obligations of BHF
under the Revolving Loan Agreement terminates for any reason (whether by
voluntary termination by Borrowers, by reason of the occurrence of an Event of
Default or otherwise) prior to the expiration of the Term of this Agreement,
the entire principal balance, together with accrued and unpaid interest on any
Obligations under this Agreement and all Revolving Loan Obligations then
outstanding, including, without limitation, a prepayment fee equal to (i) the
Make Whole Amount due under this Agreement, and (ii) the Make Whole Amount
due under the Revolving Loan Agreement, shall be immediately due and payable on
the effective date of such termination. 
Notwithstanding the foregoing, in the event that Borrower prepays the
Revolving Loan Obligations under the Revolving Loan Agreement solely as a
result of the circumstances described in Section 10(e) of the
Revolving Loan Agreement, the prepayment of the Obligations under this
Agreement shall be prepaid without payment of any prepayment fee, and Borrower
shall not have to pay (I) a prepayment fee equal to the Make 


 


16





















 


Whole
Amount under this Agreement, nor (II) a prepayment fee equal to the Make Whole
Amount under the Revolving Loan Agreement.


 


11.                                 REPRESENTATIONS
AND WARRANTIES.


 


Borrower hereby
represents and warrants to Lender, which representations and warranties
(whether appearing in this Section 11 or elsewhere) shall be true
at the time of the Original Closing Date, shall remain true until the repayment
in full and satisfaction of all the Obligations and termination of this
Agreement, and shall be remade by Borrower at the time each Term Loan is made
pursuant to this Agreement, provided, that representations and warranties made
as of a particular date shall be true and correct as of such date.


 


(a)                                  Financial
Statements and Other Information. 
The financial statements and other information delivered or to be
delivered by Crdentia to Lender on the Original Closing Date fairly present in
all material respects the financial condition of Borrowers, and there has been
no material adverse change in the financial condition, the operations or any
other status of Borrowers, taken as a whole, since the date of the financial
statements delivered to Lender most recently prior to the date of this
Agreement.  All written information now
or heretofore furnished by Borrower to Lender is true and correct in all
material respects as of the date with respect to which such information was
furnished, other than budgets and projections, which represent Borrowers’ good
faith estimate of the matters contained therein.


 


(b)                                 Locations;
Certain Collateral.  The office where
Borrower keeps its books, records and accounts (or copies thereof) concerning
the Collateral, Borrower’s principal place of business and all of Borrower’s
other places of business, locations of Collateral and post office boxes and
locations of bank accounts are as set forth in Schedule 11(b) and
at other locations within the continental United States of which Lender has
been advised by Borrower in accordance with Subsection 12(b)(i).  The Collateral, including, without
limitation, the Equipment (except any part thereof which Borrower shall have
advised Lender in writing consists of Collateral normally used in more than one
state) is kept, or, in the case of vehicles, based, only at the addresses set
forth on Schedule 11(b), and at other locations within the
continental United States of which Lender has been advised by Borrower in
writing in accordance with Subsection 12(b)(i) hereof.  Schedule 11(b) hereto
contains a complete listing of all of the following assets of Borrower as of May 5,
2005: (a) Intellectual Property which is subject to registration statutes
and licenses of Intellectual Property to which Borrower is a party (whether as
licensor or licensee), (b) Instruments (other than Instruments deposited
for collection in the ordinary course of business), (c) Deposit Accounts, (d) Investment
Property, (e) Letter-of-Credit Rights, (f) Chattel Paper, (g) Documents,
(h) Commercial Tort Claims, (i) Collateral which is subject to
certificate of title statutes, and (j) tangible Collateral located with
any bailee, warehousemen or other third parties.


 


(c)                                  Loans
by Borrower.  Borrower has not made
any loans or advances to any Affiliate or other Person except for advances
authorized hereunder to employees, officers and directors of Borrower for
travel and other expenses arising in the ordinary course of Borrower’s
business.


 


(d)                                 [Left
Blank].


 


17





















 


(e)                                  Liens.  Borrower is the lawful owner of all
Collateral now purportedly owned or hereafter purportedly acquired by Borrower,
free from all Liens, other than the Liens in favor of BHF and other Permitted
Liens.


 


(f)                                    Organization,
Authority and No Conflict.  Borrower
is a corporation or limited partnership, duly organized, validly existing and
in good standing in the State of its organization, its state organizational
identification number is as set forth on the Information Certificate and
Borrower is duly qualified and in good standing in all states where the nature
and extent of the business transacted by it or the ownership of its assets
makes such qualification necessary or, if Borrower is not so qualified,
Borrower may cure any such failure without losing any of its rights, incurring
any Liens or material penalties, or otherwise affecting Lender’s rights.  Borrower has the right and power and is duly
authorized and empowered to enter into, execute and deliver this Agreement and
the Other Agreements and perform its obligations hereunder and thereunder.  Borrower’s execution, delivery and
performance of this Agreement and the Other Agreements do not conflict with the
provisions of the organizational documents of Borrower, any statute,
regulation, ordinance or rule of law, or any agreement, contract or other
document which may now or hereafter be binding on Borrower, except for
conflicts with agreements, contracts or other documents which would not have a
Material Adverse Effect on Borrower, and Borrower’s execution, delivery and
performance of this Agreement and the Other Agreements shall not result in the
imposition of any Lien upon any of Borrower’s property (other than Permitted
Liens) under any existing indenture, mortgage, deed of trust, loan or credit
agreement or other agreement or instrument by which Borrower or any of its
property may be bound or affected.


 


(g)                                 Litigation.  Except as disclosed to Lender on Schedule 11(g) hereto,
as of May 5, 2005, there are no actions or proceedings which are pending
or, to the best of Borrower’s knowledge, threatened in writing against
Borrower, which are, reasonably likely to have a Material Adverse Effect on
Borrower.


 


(h)                                 Compliance
with Laws and Maintenance of Permits. 
Borrower has obtained all governmental consents, franchises,
certificates, licenses, authorizations, approvals and permits, the lack of
which would have a Material Adverse Effect on Borrower.  Borrower is in compliance in all material
respects with all applicable federal, state, local and foreign statutes,
orders, regulations, rules and ordinances (including, without limitation,
Environmental Laws and statutes, orders, regulations, rules and ordinances
relating to taxes, employer and employee contributions and similar items,
securities, ERISA or employee health and safety) the failure to comply with
which would have a Material Adverse Effect on Borrower.


 


(i)                                     Affiliate
Transactions.  Except as set forth on
Schedule 11(i) hereto or as permitted pursuant to Subsection 11(c) and
Subsection 13(h) hereof, Borrower is not conducting,
permitting or suffering to be conducted, transactions with any Affiliate other
than transactions with Affiliates for the purchase or sale of Inventory or
services in the ordinary course of business pursuant to terms that are no less
favorable to Borrower than the terms upon which such transactions would have
been made had they been made to or with a Person that is not an Affiliate.


 


18





















 


(j)                                     Names
and Trade Names.  Borrower’s name,
for the past five years, has always been as set forth on the first page of
this Agreement and Borrower uses no trade names, assumed names, fictitious
names or division names in the operation of its business, except as set forth
on Schedule 11(j) hereto.


 


(k)                                  Equipment.  Except for Liens in favor of BHF and other
Permitted Liens, Borrower has good and indefeasible and merchantable title to
and ownership of all Equipment.  No
Equipment is a Fixture to real estate unless such real estate is owned by Borrower
and is subject to a mortgage in favor of Lender (subject to the rights of BHF)
or, if such real estate is leased, is subject to a landlord’s agreement in
favor of (subject to the rights of BHF) Lender on terms acceptable to Lender,
or an accession to other personal property unless such personal property is
subject to a second priority Lien in favor of Lender (subject to the rights of
BHF).


 


(l)                                     Enforceability.  This Agreement and the Other Agreements to
which Borrower is a party are the legal, valid and binding obligations of
Borrower and are enforceable against Borrower in accordance with their
respective terms.


 


(m)                               Solvency.  Borrowers on a consolidated basis are, after
giving effect to the transactions contemplated hereby, solvent, able to pay
their debts as they become due, have capital sufficient to carry on their
business, now own property having a value both at fair valuation and at present
fair saleable value greater than the amount required to pay their debts, and
will not be rendered insolvent by the execution and delivery of this Agreement
or any of the Other Agreements or by completion of the transactions
contemplated hereunder or thereunder.


 


(n)                                 Indebtedness.  Except as set forth on Schedule 11(n)
hereto, Borrower is not obligated (directly or indirectly) for any Indebtedness
other than the Loans and Indebtedness to BHF, and Schedule 11(n)
hereto describes all Indebtedness of the Borrower existing as of May 5,
2005, including, without limitation, any Indebtedness permitted under Section 13(a).


 


(o)                                 Margin
Security and Use of Proceeds. 
Borrower does not own any margin securities, and none of the proceeds of
the Term Loans hereunder shall be used for the purpose of purchasing or
carrying any margin securities or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase any margin securities or
for any other purpose not permitted by Regulation U of the Board of
Governors of the Federal Reserve System as in effect from time to time.


 


(p)                                 Parent,
Subsidiaries and Affiliates.  Except
as set forth on Schedule 11(p) hereto or as otherwise permitted
hereunder, including under Section 13(c) hereof, Borrower has no
Parents, Subsidiaries or other Affiliates, nor is Borrower engaged in any joint
venture or partnership with any other Person.


 


(q)                                 No
Defaults.  Except as set forth on Schedule 11(q)
hereto, Borrower is not in default under any material contract, lease or
commitment to which it is a party or by which it is bound, nor does Borrower
know of any dispute regarding any contract, lease or commitment which would
have, in either case, a Material Adverse Effect on Borrower.


 


(r)                                    Employee
Matters.  As of the Closing Date,
there are no controversies pending or threatened between Borrower and any of
its employees, agents or independent 


 


19





















 


contractors,
other than employee grievances arising in the ordinary course of business which
would not, in the aggregate, have a Material Adverse Effect on Borrower, and
Borrower is in compliance with all federal and state laws respecting employment
and employment terms, conditions and practices except for such noncompliance
which would not have a Material Adverse Effect on Borrower.


 


(s)                                  Intellectual
Property.  Borrower possesses adequate
licenses, patents, patent applications, copyrights, service marks, trademarks,
trademark applications, tradestyles and trade names to continue to conduct its
business as heretofore conducted by it except to the extent that the failure to
possess such items would not have a Material Adverse Effect on Borrower.


 


(t)                                    Environmental
Matters.  Except as set forth on Schedule 11(t)
hereto, Borrower has not generated, used, stored, treated, transported,
manufactured, handled, produced or disposed of any Hazardous Materials, on or
off its premises (whether or not owned by it) in any manner which at any time
violates in any material respect any Environmental Law, or any license, permit,
certificate, approval or similar authorization thereunder, and the operations
of the Borrower comply in all material respects with all Environmental Laws and
all licenses, permits, certificates, approvals and similar authorizations
thereunder.  There has been no
investigation, proceeding, complaint, order, directive, claim, citation or
notice by any governmental authority or any other Person, nor is any pending
or, to the best of the Borrower’s knowledge, threatened with respect to any
non-compliance with or violation of the requirements of any Environmental Law
by the Borrower or the release, spill or discharge, threatened or actual, of
any Hazardous Materials or the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Materials or any other environmental, health or safety matter which would have
a Material Adverse Effect on Borrower or its business, operations or assets or
any properties at which the Borrower has transported, stored or disposed of any
Hazardous Materials.  Borrower has no
material liability (contingent or otherwise) in connection with a release,
spill or discharge, threatened or actual, of any Hazardous Materials or the
generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials.


 


(u)                                 ERISA
Matters.  Borrower has paid and
discharged all obligations and liabilities arising under ERISA of a character
which, if unpaid or unperformed, might result in the imposition of a Lien
against any of its properties or assets.


 


(v)                                 Reimbursement.  Borrower has provided to Lender copies of all
service contracts with Account Debtors, to the extent required by the
Lender.  Borrower is in compliance in all
material respects with such contracts and is entitled to reimbursement under
such contracts.


 


(w)                               Compliance with Healthcare Regulations.


 


(i)                                     Borrower
is not subject to compliance with any Healthcare Regulations, including without
limitation, the Federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b), the
False Claims Act (31 U.S.C. §§ 3729 et seq.), the Health Insurance
Portability and Accountability Act of 1996 (Pub. L. No. 104-191, 110 Stat.
1936 (1996)) and the federal physician self-referral laws (42 U.S.C. § 1395nn);


 


20





















 


(ii)                                  Borrower
has obtained all necessary licenses and accreditations to operate its business
as now conducted, and currently is in compliance with all statutory and
regulatory requirements applicable to it, the failure of which would have a
Material Adverse Effect upon Borrower; and


 


(iii)                               All
persons providing professional health care services for or on behalf of
Borrower (either as an employee or independent contractor) are appropriately
licensed in every jurisdiction in which they hold themselves out as
professional health care providers.


 


(x)                                   Immigration Matters. 
Borrower has complied with applicable United States immigration law
requirements, including without limitation the Illegal Immigration Reform and
Immigrant Responsibility Act of 1996 (Pub. L. No. 104-193), as such laws
apply to Borrower’s recruitment of international temporary professional health
care service providers.


 


(y)                                 Licenses, Permits, etc.  Borrower has all necessary federal, state and
local licenses, permits, registrations, certifications and other approvals
required in order to conduct any healthcare activity in which it is currently
engaged; the failure of Borrower to have such licenses, permits, registrations,
certifications and other approvals would have a Material Adverse Effect on the
Borrower and any Person that provides any healthcare services for or on behalf
of Borrower (either as an employee or independent contractor) holds the
required federal, state and local licenses that are necessary to legally
perform such services and are not suspended or limited in any way; and, except
as set forth on Schedule 11(y) hereto, Borrower is in good standing with
the respective governmental, quasi-governmental and other third party payors
and regulatory agencies that are involved in such healthcare activities.


 


(z)                                   Collective
Enterprise.  Borrowers are engaged in
the businesses of providing staffing in the healthcare industry as of the
Closing Date, as well as in certain other businesses.  These operations require financing on a basis
such that the credit supplied can be made available from time to time to
Borrowers, as required for the continued successful operation of Borrowers
taken as a whole.  Borrowers have
requested the Lender make credit available hereunder primarily for the purposes
of Subsection 12(g) and generally for the purposes of
financing the operations of Borrowers. 
Each Borrower expects to derive benefit (and the Board of Directors of
each Borrower has determined that such Borrower may reasonably be expected to
derive benefit), directly or indirectly, from a portion of the credit extended
by Lender hereunder, both in its separate capacity and as a member of the group
of companies, since the successful operation and condition of each Borrower is
dependent on the continued successful performance of the functions of the group
as a whole.  Each Borrower acknowledges
that, but for the agreement of each of the other Borrowers to execute and
deliver this Agreement, Lender would not have made available the credit
facilities established hereby on the terms set forth herein.


 


(aa)                            Acquisition.  Each Acquisition has been
consummated pursuant to the terms of the applicable Acquisition Documents and
in compliance with all applicable laws. 
Borrower has provided to Lender complete copies of the Acquisition
Documents, including all schedules, exhibits and disclosure letters referred to
therein or delivered pursuant thereto, if any, and all amendments thereto,
waivers relating thereto and other side letters or agreements 


 


21





















 


affecting the term thereof.  None of such agreements and documents has
been amended or supplemented, nor have any of the provisions thereof been
waived by the parties thereto, except pursuant to a written agreement or
agreement which has heretofore been delivered to the Lender.


 


(bb)                          Certain Financial Information.  The
following have been delivered to Lender as of the Original Closing Date:  (i) internally prepared financial
statements of Borrower for the most recent month end and (ii) projections
in form and detail satisfactory to Lender giving effect to each Permitted
Acquisition.


 


12.                                 AFFIRMATIVE
COVENANTS.


 


Until payment and
satisfaction in full of all Obligations and termination of this Agreement,
unless Borrower obtains Lender’s prior written consent waiving or modifying any
of Borrower’s covenants hereunder in any specific instance, Borrower covenants
and agrees as follows:


 


(a)                                  Maintenance
of Records.  Borrower shall at all
times keep accurate and complete books, records and accounts with respect to
all of Borrower’s business activities, in accordance with sound accounting
practices and GAAP consistently applied, and shall keep such books, records and
accounts, and any copies thereof, only at the addresses indicated for such
purpose on Schedule 11(b) or such other location that is
notified to Lender in writing.


 


(b)                                 Notices.  Borrower shall:


 


(i)                                     Locations.  Promptly (but in no event less than ten (10) days
prior to the occurrence thereof) notify Lender of the proposed opening of any
new place of business or new location of Collateral, the closing of any
existing place of business or location of Collateral, any change of the
location of Borrower’s books, records and accounts (or copies thereof), the
opening or closing of any post office box, the opening or closing of any bank
account or, if any of the Collateral consists of Goods of a type normally used
in more than one state, the use of any such Goods in any state other than a
state in which Borrower has previously advised Lender that such Goods will be
used.


 


(ii)                                  Litigation
and Proceedings.  Promptly upon
becoming aware thereof (but in no event later than three (3) days after so
becoming aware), notify Lender of (i) any actions or proceedings that are
greater than $50,000, individually or in the aggregate, which are pending or
threatened against Borrower and (ii) any Commercial Tort Claims of
Borrower which may arise which involve an amount in controversy in excess of
Fifty Thousand and No/100 Dollars ($50,000.00), which notice shall constitute
Borrower’s authorization to amend Schedule 11(b) to add such
Commercial Tort Claim


 


(iii)                               Names
and Trade Names.  Notify Lender
within ten (10) days of the change of its name or the use of any trade
name, assumed name, fictitious name or division name not previously disclosed
to Lender in writing.


 


(iv)                              ERISA
Matters.  Promptly notify Lender of
(x) the occurrence of any “reportable event” (as defined in ERISA) which
might result in the termination by the Pension Benefit Guaranty Corporation
(the “PBGC”) of any employee benefit
plan 


 


22





















 


(“Plan”) covering any officers or employees
of the Borrower, any benefits of which are, or are required to be, guaranteed
by the PBGC, (y) receipt of any notice from the PBGC of its intention to
seek termination of any Plan or appointment of a trustee therefor or
(z) its intention to terminate or withdraw from any Plan.


 


(v)                                 Environmental
Matters.  Immediately notify Lender
upon becoming aware of any investigation, proceeding, complaint, order,
directive, claim, citation or notice with respect to any noncompliance with or
violation of the requirements of any Environmental Law by Borrower or the
generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials or any other environmental,
health or safety matter which affects Borrower or its business operations or
assets or any properties at which Borrower has transported, stored or disposed
of any Hazardous Materials unless the foregoing could not reasonably be
expected to have a Material Adverse Effect on Borrower.


 


(vi)                              Default;
Material Adverse Change.  Promptly
advise Lender of any material adverse change in the business, property, assets,
prospects, operations or condition, financial or otherwise, of Borrower, the
occurrence of any Default or Event of Default hereunder or the occurrence of
any event which, if uncured, will become an Event of Default after notice or
lapse of time (or both).


 


(vii)                           Subordinated
Debt.  Promptly advise Lender of any
default or any event which, with the giving of notice or lapse of time, or
both, would constitute a default, under any subordination agreement relative to
Subordinated Debt, or any agreement, instrument or document evidencing or
relating to any Subordinated Debt, and a certificate of a authorized officer of
Borrower specifying the nature thereof and Borrower’s proposed response
thereto, in reasonable detail; provided that Borrower shall immediately
advise Lender of a Travmed Subordinated Debt Default.


 


All of the foregoing notices shall be provided by Borrower to Lender in
writing.


 


(c)                                  Compliance
with Laws and Maintenance of Permits. 
Borrower shall maintain all governmental consents, franchises,
certificates, licenses, authorizations, approvals and permits, the lack of
which would have a Material Adverse Effect on Borrower, and Borrower shall
remain in compliance with all applicable federal, state, local and foreign
statutes, orders, regulations, rules and ordinances (including, without
limitation, Environmental Laws and statutes, orders, regulations, rules and
ordinances relating to taxes, employer and employee contributions and similar
items, securities, ERISA or employee health and safety) the failure with which
to comply would have a Material Adverse Effect on Borrower.  Following any determination by Lender that
there is noncompliance, or any condition which requires any action by or on
behalf of Borrower in order to avoid noncompliance, with any Environmental Law,
at Borrower’s expense, cause an independent environmental engineer acceptable
to Lender to conduct such tests of the relevant site(s) as are appropriate and
prepare and deliver a report setting forth the results of such tests, a
proposed plan for remediation and an estimate of the costs thereof.


 


23





















 


(d)                                 Inspection
and Audits.  Upon five (5) Business
Days prior written notice so long as no Default or Event of Default exists,
Borrower shall permit Lender, or any Persons designated by it, to call at
Borrower’s places of business at any reasonable times during normal business
hours and, without hindrance or delay, to inspect the Collateral and to
inspect, audit, check and make extracts from Borrower’s books, records,
journals, orders, receipts and any correspondence and other data relating to
Borrower’s business, the Collateral or any transactions between the parties
hereto, and shall have the right to make such verification concerning Borrower’s
business as Lender may consider reasonable under the circumstances.  Borrower shall furnish to Lender such
information relevant to Lender’s rights under this Agreement and the Other
Agreements as Lender shall at any time and from time to time request.  Lender, through its officers, employees or
agents, shall have the right, at any time and from time to time, in Lender’s
name, to verify the validity, amount or any other matter relating to any of
Borrower’s Accounts, by mail, telephone, telecopy, electronic mail or
otherwise, provided that, prior to the occurrence of an Event of Default,
Lender shall conduct such verification in the name of a nominee of Lender or in
Borrower’s name.  Borrower authorizes
Lender to discuss the affairs, finances and business of Borrower with any
officers, employees or directors of Borrower or with its Parent or any
Affiliate or the officers, employees or directors of its Parent or any
Affiliate, and to discuss the financial condition of Borrower with Borrower’s
independent public accountants, which shall be attended by a representative of
Borrower.  Any such discussions shall be
without liability to Lender or to Borrower’s independent public
accountants.  Borrower shall pay to
Lender all customary fees (currently Eight Hundred Fifty and No/100 Dollars
($850.00) per person, per day) and all reasonable costs and out-of-pocket
expenses incurred by Lender in the exercise of its rights hereunder, and all of
such fees, costs and expenses shall constitute Obligations hereunder, shall be
payable on demand and, until paid, shall bear interest at the highest rate then
applicable to Term Loans hereunder; provided, however, that so
long as no Event of Default has occurred, Borrower shall not pay for more than
four (4) audits in any Fiscal Year, except for any audits of a Target in
connection with a proposed Acquisition.


 


(e)                                  Insurance.  Borrower shall:


 


(i)                                     Keep
the Collateral properly housed and insured for the full insurable value thereof
against loss or damage by fire, theft, explosion, sprinklers, collision (in the
case of motor vehicles) and such other risks as are customarily insured against
by Persons engaged in businesses similar to that of Borrower, with such
companies, in such amounts, with such deductibles and under policies in such
form as shall be reasonably satisfactory to BHF and Lender).  Certificates of insurance or, if requested by
Lender, original (or certified) copies of such policies of insurance have been
or shall be, within ninety (90) days after the Original Closing Date, delivered
to Lender, together with evidence of payment of all premiums therefor, and
shall contain an endorsement, in form and substance acceptable to Lender,
showing loss under such insurance policies payable to BHF and Lender, as their
interests appear.  Such endorsement, or
an independent instrument furnished to Lender, shall provide that the insurance
company shall give Lender at least thirty (30) days’ written notice before any
such policy of insurance is altered or canceled (ten (10) days for
non-payment of premiums) and that no act, whether willful or negligent, or
default of Borrower or any other Person shall affect the right of Lender to
recover under such policy of insurance in case of loss or damage.  In addition, Borrower shall cause to be
executed and delivered to 


 


24





















 


BHF and the
Lender, as their interests may appear, an assignment of proceeds of its
business interruption insurance policies. 
Borrower hereby directs all insurers under all policies of insurance to
pay all proceeds payable thereunder directly to BHF and the Lender, as their
interests may appear.  Subject to the
rights of BHF in and to the Collateral and insurance proceeds, Borrower
irrevocably makes, constitutes and appoints Lender (and all officers, employees
or agents designated by Lender) as Borrower’s true and lawful attorney (and agent-in-fact)
for the purpose of making, settling and adjusting claims under such policies of
insurance, endorsing the name of Borrower on any check, draft, instrument or
other item of payment for the proceeds of such policies of insurance and making
all determinations and decisions with respect to such policies of insurance,
provided however, that if no Event of Default shall have occurred and is
continuing, Borrower may make, settle and adjust claims involving less than
$100,000.00 in the aggregate without Lender’s consent.


 


(ii)                                  Maintain,
at its expense, such public liability and third-party property damage insurance
as is customary for Persons engaged in businesses similar to that of Borrower
with such companies and in such amounts with such deductibles and under
policies in such form as shall be reasonably satisfactory to Lender and
certificates of insurance or, if requested by Lender, original (or certified)
copies of such policies have been or shall be, within ninety (90) days after
the Original Closing Date, delivered to Lender, together with evidence of
payment of all premiums therefor; each such policy shall contain an endorsement
showing Lender as additional insured thereunder and providing that the
insurance company shall give Lender at least thirty (30) days’ written notice
before any such policy shall be altered or canceled.


 


If Borrower at any time or times hereafter shall fail to obtain or
maintain any of the policies of insurance required above or to pay any premium
relating thereto, then Lender, without waiving or releasing any obligation or
default by Borrower hereunder, may (but shall be under no obligation to) obtain
and maintain such policies of insurance and pay such premiums and take such
other actions with respect thereto as Lender deems advisable.  Such insurance, if obtained by Lender, may,
but need not, protect Borrower’s interests or pay any claim made by or against
Borrower with respect to the Collateral. 
Such insurance may be more expensive than the cost of insurance Borrower
may be able to obtain on its own and may be cancelled only upon Borrower
providing evidence that it has obtained the insurance as required above.  All sums disbursed by Lender in connection
with any such actions, including, without limitation, court costs, expenses,
other charges relating thereto and reasonable attorneys’ fees, shall constitute
Term Loans hereunder, shall be payable on demand by Borrower to Lender and,
until paid, shall bear interest at the highest rate then applicable to Term
Loans hereunder.


 


(f)                                    Collateral.  Borrower shall keep the Collateral in good
condition, repair and order and shall make all necessary repairs to the
Equipment and replacements thereof so that the operating efficiency and the
value thereof shall at all times be preserved and maintained in all material
respects.  Borrower shall permit Lender
to examine any of the Collateral at any time during normal business hours (so
long as no Default or Event of Default exists) and wherever the Collateral may
be located and, Borrower shall, promptly upon request therefor by Lender,
deliver to Lender any and all evidence of ownership of any of the
Collateral.  Borrower shall, at the
request of Lender, indicate on its records concerning the Collateral a notation,
in form 


 


25





















 


satisfactory
to Lender, of the security interest of BHF and the Lender hereunder.  If, prior to the termination of this
Agreement, Borrower shall obtain rights to any new Collateral of the type
described in the last sentence of Subsection 11(b), Borrower shall
notify Lender in writing (with reasonable detail) of such changes at least once
every thirty (30) days.  Borrower hereby
authorizes Lender to unilaterally modify this Agreement by amending Schedule 11(b) to
include any such Collateral. 
Notwithstanding the foregoing, Borrower hereby agrees that Lender’s
security interest shall extend to all such Collateral, regardless of whether
Lender actually amends Schedule 11(b).


 


(g)                                 Use
of Proceeds.  All monies and other
property obtained by Borrower from Lender pursuant to this Agreement shall be
used solely for (i) payment of a portion of the purchase price for certain
Permitted Acquisitions plus transaction fees and expenses related thereto, and (ii) business
purposes of Borrower.


 


(h)                                 Taxes.  Borrower and any other Obligor shall file all
required tax returns and pay all of its taxes when due, subject to any
extensions granted by the applicable taxing authority, including, without
limitation, taxes imposed by federal, state or municipal agencies, and shall
cause any Liens for taxes to be promptly released; provided, that Obligor shall
have the right to contest the payment of such taxes in good faith by
appropriate proceedings so long as (i) the amount so contested is shown on
Obligor’s financial statements; and (ii) the contesting of any such
payment does not impair the enforceability, validity or priority of the Lender’s
Liens.  If Obligor fails to pay any such
taxes and in the absence of any such contest by Obligor, Lender may (but shall
be under no obligation to) advance and pay any sums required to pay any such
taxes and/or to secure the release of any Lien therefor, and any sums so
advanced by Lender shall constitute Term Loans hereunder, shall be payable by
Obligor to Lender on demand and, until paid, shall bear interest at the highest
rate then applicable to Term Loans hereunder.


 


(i)                                     Intellectual
Property.  Borrower shall maintain
adequate licenses, patents, patent applications, copyrights, service marks,
trademarks, trademark applications, tradestyles and trade names to continue its
business as heretofore conducted by it or as hereafter conducted by it unless
the failure to maintain any of the foregoing could not reasonably be expected
to have a Material Adverse Effect on Borrower.


 


(j)                                     Staffing
Contracts.  Borrower shall promptly
provide true and complete copies to Lender of all material staffing or similar
contracts and, to the extent requested by Lender, deliver to Lender a
collateral assignment agreement with respect to such contracts.


 


(k)                                  Billing
and Collection System Access.  After
the Original Closing Date and, if feasible based on Borrower’s accounting
system, Borrower shall provide electronic access to Lender to its billing and
collection system, on a read-only basis, for purposes of permitting Lender to
inspect and verify billing and collections transactions and related data in
connection with the Collateral, from time to time.


 


26





















 


13.                                 NEGATIVE
COVENANTS.


 


Until payment and
satisfaction in full of all Obligations and termination of this Agreement,
unless Borrower obtains Lender’s prior written consent waiving or modifying any
of Borrower’s covenants hereunder in any specific instance, Borrower agrees as
follows:


 


(a)                                  Indebtedness.  Borrower shall not create, incur, assume or
become obligated (directly or indirectly), for any Indebtedness for Borrowed
Money other than the Term Loans and the Revolving Loans, except that Borrower
may (i) maintain its present Indebtedness listed on Schedule 11(n)
hereto; and (ii) incur purchase money Indebtedness or Capital Lease
Obligations in connection with Capital Expenditures permitted pursuant to Section 14
hereof.  Borrower shall not incur any
Subordinated Debt without the prior written consent of Lender (which shall
include an indefinite standstill of remedies and payment blockage rights during
any Event of Default), nor during the existence of an Event of Default, make
any payment of any part or all of any Subordinated Debt or take any other
action or omit to take any other action in respect of any Subordinated Debt,
except in accordance with any subordination agreement relative thereto or the
subordination provisions thereof or hereof, or grant any Liens on any of its
assets to secure such Subordinated Debt, or amend or modify any agreement,
instrument or document evidencing or relating to any Subordinated Debt after
Lender consents thereto.


 


(b)                                 Liens.  Borrower shall not grant or permit to exist
(voluntarily or involuntarily) any Lien on any of its assets, other than
Permitted Liens.


 


(c)                                  Mergers,
Sales, Acquisitions, Subsidiaries and Other Transactions Outside the Ordinary
Course of Business.


 


(i)                                     Borrower
shall not, without the prior written consent of Lender:  (A) enter into any merger or
consolidation; provided that (i) any Borrower (other than CRDE,
AHHC, Care Pros, HIP, HIP LLC, Travmed, Prime Staff and MMSO) may merge with
and into Crdentia so long as Crdentia is the surviving entity, and (ii) any
Borrower (other than CRDE, AHHC, Care Pros, HIP, HIP LLC, Travmed, Prime Staff,
MMSO and Crdentia) may merge with another Borrower (other than CRDE, AHHC, Care
Pros, HIP, HIP LLC, Travmed, Prime Staff, MMSO and Crdentia), (B) change
the state of Borrower’s organization or enter into any transaction which has
the effect of changing Borrower’s state of organization, except in connection
with a merger permitted in clause (A) above; (C) sell, lease or
otherwise dispose of any of its assets other than in the ordinary course of
business or as permitted under Section 7; (D) purchase the stock,
other equity interests or all or a material portion of the assets of any Person
or division of such Person; or (E) enter into any other transaction
outside the ordinary course of Borrower’s business, including, without
limitation, any purchase, redemption or retirement of any shares of any class
of its stock or any other equity interest, and any issuance of any shares of,
or warrants or other rights to receive or purchase any shares of, any class of
its stock or any other equity interest, subject to clause (iii) below.


 


(ii)                                  Borrower
shall not form any new Subsidiaries or enter into any joint ventures or
partnerships with any other Person, without the prior written consent of Lender
unless (A) Crdentia (or such other Borrower) pledges all of the equity
interests of 


 


27





















 


such new
Subsidiary to Lender, and (B) such entity enters into a joinder agreement
or similar agreement in which such entity becomes a party to this Agreement,
jointly and severally liable for the Obligations and pledges to Lender all of
its assets as Collateral hereunder.


 


(iii)                               Notwithstanding
the provisions of Section 13(c)(i)(A) above, Crdentia may enter into
certain Permitted Acquisitions with the prior written consent of Lender in its
sole discretion.


 


(d)                                 Dividends
and Distributions.  No Borrower shall
declare or pay any dividend or other distribution (whether in cash or in kind)
on any class of its stock (if Borrower is a corporation) or on account of any
equity interest in Borrower (if Borrower is a partnership, limited liability
company or other type of entity) to any Person; provided,  that (i) any
Borrower may pay a dividend or other distribution (whether in cash or in kind)
on any class of its stock (if Borrower is a corporation) or on account of any
equity interest in Borrower (if Borrower is a partnership, limited liability
company or other type of entity) to Crdentia to pay professional fees,
franchise taxes and other ordinary course of business operating expenses
incurred by Crdentia solely in its capacity as parent corporation of Borrower, (ii) any
Borrower may pay a dividend or other distribution (whether in cash or in kind)
on any class of its stock (if Borrower is a corporation) or on account of any
equity interest in Borrower (if Borrower is a partnership, limited liability
company or other type of entity) to another Borrower, and (iii) Crdentia
may pay customary stock dividends to holders of its Series A Preferred
Stock, Series B Preferred Stock, Series B-1 Preferred Stock and Series C
Preferred Stock.


 


(e)                                  Investments;
Loans.  Borrower shall not purchase
or otherwise acquire, or contract to purchase or otherwise acquire, the
obligations or stock of any Person, other than investments in the stock of a
Borrower, investments in connection with Permitted Acquisitions under Sections
2(b) and 13(c)(iii), direct obligations of the United States or
of any State of the United States or political subdivision thereof, obligations
insured by the Federal Deposit Insurance Corporation and obligations
unconditionally guaranteed by the United States or of any State of the United
States or political subdivision thereof; nor shall Borrower lend or otherwise
advance funds to any Person except for advances made to employees, officers and
directors for travel and other expenses and extensions of credit to customers
arising in the ordinary course of business.


 


(f)                                    Fundamental
Changes, Line of Business.  Borrower
shall not enter into a new line of business materially different from Borrower’s
current business.  Borrower further
agrees that no Borrower shall amend its organizational documents or change its
Fiscal Year if such actions (i) would have a Material Adverse Effect on
the Borrower; (ii) would affect the obligations of Borrower to Lender; or (iii) would
affect the interpretation of any of the terms of this Agreement or the Other
Agreements unless Lender has provided written consent after receiving not less
than thirty (30) days’ prior written notice of such actions


 


(g)                                 Equipment.  Borrower shall not (i) permit any
Equipment to become a Fixture to real property unless such real property is
owned by Borrower and is subject to a mortgage in favor of Lender or, if such
real estate is leased, is subject to a landlord’s agreement in favor of Lender
on terms acceptable to Lender, or (ii) permit any Equipment to become an 


 


28





















 


accession
to any other personal property unless such personal property is subject to a first
priority Lien in favor of Lender.


 


(h)                                 Affiliate
Transactions.  Except as set forth on
Schedule 11(i) hereto or as permitted pursuant to Subsection 11(c) hereof,
Borrower shall not conduct, permit or suffer to be conducted, transactions with
Affiliates other than (i) investments by Affiliates in a Borrower; (ii) the
provision of employment, management and consulting services approved by
Borrower’s compensation committee; and (iii) other transactions for the
purchase or sale of Inventory or services in the ordinary course of business
pursuant to terms that are no less favorable to Borrower than the terms upon
which such transactions would have been made had they been made to or with a
Person that is not an Affiliate.


 


(i)                                     Settling
of Accounts.  Borrower will not make
without concurrent written notice provided to Lender, any agreement with any
Account Debtor for any extension of the time for payment of the Account, any
compromise or settlement for less than the full amount thereof, any release of
any Account Debtor from liability therefore, or any deduction therefrom except
a discount or allowance for prompt or early payment allowed by Borrower in the
ordinary course of its business consistent with its historical practices and as
disclosed to Lender in writing; provided, that following the occurrence
and during the continuance of a Default an Event of Default, Borrower shall not
settle or adjust any Account without the consent of Lender.


 


(j)                                     Restricted Payments.  Until
the termination of this Agreement, Borrower shall not make any direct or
indirect payment or prepayment, in cash, in kind, or otherwise, with respect to
the following Indebtedness, except as provided in clauses (i), (ii) and (iii) below:


 


(i)                                     Seller
Notes.  Scheduled payments of
principal and interest under any Seller Note or other instrument of
Subordinated Debt may be paid if, and only to the extent that, at the time of
any such payment no Event of Default then exists or would result from the
making of such payment.


 


(ii)                                  Management/Advisory
Fees.  Scheduled payments in respect
of any management fees, advisory fees or similar fees payable by any Borrower
to any other Borrower may be paid if, and only to the extent that, at the time
of any such payment no Event of Default described in this Agreement then exists
or would result from the making of such payment.


 


(iii)                               Subordinated
Debt.  Scheduled payments in respect
of Subordinated Debt may be made only if either:  (a) the Borrower has Excess Availability
of $500,000, or (b) the Borrower is in compliance with its financial
covenants both before and after the Subordinated Debt payment.


 


(k)                                  Restricted Locations.  Borrower shall not move any of its books or
records or any of its other assets of any kind to its offices located at (i) 3000
S. 31st St. #301, Temple, Arizona 76502 or (ii) 5151 E.
Broadway #1530, Tucson, Arizona 85711.


 


(l)                                     Payments
to Travmed.  Immediately upon the
occurrence of a Travmed Subordinated Debt Default, (i) Borrower shall not,
and shall not permit any Subsidiary or Affiliate to, directly or indirectly,
make any payment (including the payment of any proceeds of 


 


29





















 


a Loan
or the payment of proceeds of any Collateral) to Travmed, and (ii) BHF
shall have no further obligation to make any Loans against the accounts
receivable of Travmed and all accounts receivable of Travmed shall be
immediately removed from the Revolving Borrowing Base Amount.


 


14.                                 FINANCIAL
COVENANTS.


 


Borrower shall maintain
and keep in full force and effect each of the financial covenants set forth
below:


 


(a)                                  Tangible Net Worth.  Borrower’s Tangible Net Worth, on a
consolidated basis, shall not at any time be less than the Minimum Tangible Net
Worth; “Minimum Tangible Net Worth”
being defined for purposes of this Subsection as (i) ($5,000,000) at
all times through June 30,2005, and (ii) thereafter, from the last
day of each fiscal quarter of the Borrowers through the day prior to the last
day of each immediately succeeding fiscal quarter of the Borrowers, the Minimum
Tangible Net Worth during the immediately preceding period plus seventy-five percent (75%) of the Borrowers’
consolidated net income (but without reduction for any net loss) for the Fiscal
Year ending on the first day of such period as reflected on the Borrowers’
audited year end financial statement; and “Tangible Net Worth” being defined
for purposes of this Subsection as the Borrowers’ shareholders’ equity
(including retained earnings) less the book value of all intangible
assets of the Borrowers as determined solely by Lender on a consistent basis plus
the amount of any Subordinated Debt of the Borrowers, all as determined on a
consolidated basis under GAAP applied on a basis consistent with the financial
statement dated March 31, 2005 except as set forth herein;


 


(b)                                 Senior
Debt Service Coverage Ratio.  As of
the last day of each applicable period, the ratio of the Borrower’s Operating
Cash Flow to Borrower’s Senior Debt Service for each period set forth below
(which ratio shall be tested as of the last day of each such period) must be at
least the following:


 


	
  Time Frame

  	
   

  	
  Date Tested

  	
   

  	
  Senior Debt Service

  Coverage Ratio

  	
   

  	
  Based on

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly

  	
   

  	
  6/30/05

  	
   

  	
  0.5 to 1.00

  	
   

  	
  Trailing 3 months

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly

  	
   

  	
  9/30/05

  	
   

  	
  1.00 to 1.00

  	
   

  	
  Trailing 6 months

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly

  	
   

  	
  12/31/05

  	
   

  	
  1.15 to 1.00

  	
   

  	
  Trailing 9 months

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly

  	
   

  	
  3/31/06

  	
   

  	
  1.5 to 1.00

  	
   

  	
  Trailing 12 months

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly

  	
   

  	
  6/30/06 and each fiscal quarter thereafter

  	
   

  	
  1.5 to 1.00

  	
   

  	
  Trailing 12 months

  



 


30





















 


(c)                                  Minimum
EBITDA.  Borrower shall not permit
EBITDA of Borrower to be less than the amount set forth below for the
corresponding period set forth below:


 


	
  Time Frame

  	
   

  	
  Date Tested

  	
   

  	
  Minimum EBITDA

  	
   

  	
  Based on

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly

  	
   

  	
  6/30/05

  	
   

  	
  $

  	
  100,000

  	
   

  	
  Trailing 3 months

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly

  	
   

  	
  9/30/05

  	
   

  	
  $

  	
  300,000

  	
   

  	
  Trailing 6 months

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly

  	
   

  	
  12/31/05

  	
   

  	
  $

  	
  600,000

  	
   

  	
  Trailing 9 months

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly

  	
   

  	
  3/31/06

  	
   

  	
  $

  	
  1,000,000

  	
   

  	
  Trailing 12 months

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly

  	
   

  	
  6/30/06 and each fiscal quarter thereafter

  	
   

  	
  $

  	
  1,000,000

  	
   

  	
  Trailing 12 months

  



 


(d)                                 Term
Loan Debt Leverage Ratio.  Borrower
shall not permit the ratio of Term Loan Debt to EBITDA to be more than the
following for each period set forth below: 


 


	
  Time Frame

  	
   

  	
  Date
  Tested

  	
   

  	
  Coverage

  	
   

  	
  Based
  on:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly

  	
   

  	
  3/31/06

  	
   

  	
  2.70 to 1

  	
   

  	
  Trailing 12 Months

  
	
  Quarterly

  	
   

  	
  6/30/06 and each fiscal quarter thereafter

  	
   

  	
  2.50 to 1

  	
   

  	
  Trailing 12 Months

  



 


(e)                                  Capital
Expenditure Limitations.  Borrowers
shall not make any Capital Expenditures if, after giving effect to such Capital
Expenditure, the aggregate cost of all such fixed assets purchased or otherwise
acquired would exceed $500,000 during any Fiscal Year.


 


(f)                                    Operating
Lease Obligations.  Borrower shall
not incur operating lease obligations requiring payments in excess of $700,000
in the aggregate during any Fiscal Year of Borrower.


 


15.                                 DEFAULT.


 


The occurrence of any one
or more of the following events shall constitute an “Event of Default” by
Borrower hereunder:


 


(a)                                  Payment.  The failure of any Obligor to pay when due,
declared due, or demanded by Lender, any of the Obligations or the Revolving
Loan Obligations.


 


(b)                                 Breach
of This Agreement, the Other Agreements and the Revolving Loan Agreement.  The failure of any Obligor to perform, keep
or observe any of the covenants, conditions, promises, agreements or
obligations of such Obligor under this Agreement or any of the Other Agreements
or the Revolving Loan Agreement; provided that (i) any such failure by
Borrower under Subsections 12(b)(i), (iv), (v) and 12(i) of
this Agreement (or the Revolving 


 


31





















 


Loan
Agreement) shall not constitute an Event of Default hereunder until the
fifteenth (15th) day following the occurrence thereof, and (ii) any such
failure by Borrower under Subsections 12(b)(ii) and (v) of
this Agreement (or Subsections 12(b)(iii) and 12(b)(vi) of
the Revolving Loan Agreement) shall not constitute an Event of Default
hereunder until the fifth (5th) day following the occurrence thereof (including
any grace periods thereto).


 


(c)                                  Breach of Subordination Agreement  The failure of any Person to perform, keep or
observe any of the covenants, conditions, promises, agreements or obligations
of such Person under any Subordination Agreement.


 


(d)                                 Breaches
of Other Obligations.  The failure of
Obligor to pay when due or within any applicable grace period any obligation of
Obligor in excess of $100,000 (other than its Obligations under this Agreement)
for the payment of Indebtedness, other than Subordinated Debt that is not paid
when due to the operation of the requirements of subordination hereunder, or
the becoming due and payable, or declaration to be due any payable, of such
obligation before the expressed maturity of the obligation, or the occurrence of
an event that, with the giving of notice or lapse of time, or both, would cause
any such obligation to become, or allow any such obligation to be declared to
be, due and payable;


 


(e)                                  Breach
of Representations and Warranties. 
The making or furnishing by any Obligor to Lender of any representation,
warranty, certificate, schedule, report or other communication within or in
connection with this Agreement or the Other Agreements, or in connection with
any other agreement between such Obligor and Lender which is untrue or
misleading in any material respect as of the date made.


 


(f)                                    Loss
of Collateral.  The loss, theft,
damage or destruction of any of the Collateral in an amount in excess of
$100,000 in excess of insurance in the aggregate for all such events during any
year of the Term as determined by Lender in its reasonable discretion
determined in good faith, or (except as permitted hereby) sale, lease or
furnishing under a contract of service of, any of the Collateral.


 


(g)                                 Levy,
Seizure or Attachment.  The making or
any attempt by any Person to make any levy, seizure or attachment upon any of
the Collateral with a value in excess of $100,000.


 


(h)                                 Bankruptcy
or Similar Proceedings.  The
commencement of any proceedings in bankruptcy by or against any Obligor or for
the liquidation or reorganization of any Obligor, or alleging that such Obligor
is insolvent or unable to pay its debts as they mature, or for the readjustment
or arrangement of any Obligor’s debts, whether under the United States
Bankruptcy Code or under any other law, whether state or federal, now or
hereafter existing, for the relief of debtors, or the commencement of any
analogous statutory or non-statutory proceedings involving any Obligor;
provided, however, that if such commencement of proceedings against such
Obligor is involuntary, such action shall not constitute an Event of Default
unless such proceedings are not dismissed within forty-five (45) days after the
commencement of such proceedings, though
Lender shall have no obligation to make Term Loans to Borrower during such
forty-five (45) day period or, if earlier, until such proceedings are
dismissed.


 


32





















 


(i)                                     Appointment
of Receiver.  The appointment of a
receiver or trustee for any Obligor, for any of the Collateral or for any
substantial part of any Obligor’s assets or the institution of any proceedings
for the dissolution, or the full or partial liquidation, or the merger or
consolidation, of any Obligor which is a corporation, limited liability company
or a partnership; provided, however, that, if such appointment or commencement
of proceedings against such Obligor is involuntary, such action shall not
constitute an Event of Default unless such appointment is not revoked or such
proceedings are not dismissed within forty-five (45) days after the
commencement of such proceedings, though
Lender shall have no obligation to make Term Loans to Borrower during such
forty-five (45) day period or, if earlier, until such proceedings are
dismissed.


 


(j)                                     Judgment.  The entry of any judgments or orders
aggregating in excess of confirmed insurance coverage in an amount of $100,000
or more against any Obligor which remain unsatisfied or undischarged and in
effect for thirty (30) days after such entry without a stay of enforcement or
execution.


 


(k)                                  Default
or Revocation of Guaranty; Subordination Agreement. 
The occurrence of an event of default under, or the revocation or
termination of, any agreement, instrument or document executed and delivered by
any Person to Lender pursuant to which such Person has guaranteed to Lender the
payment of all or any of the Obligations, has granted Lender a Lien upon some
or all of such Person’s real and/or personal property to secure the payment of
all or any of the Obligations or has subordinated indebtedness in whole or in
part to the Obligations.


 


(l)                                     Change
of Ownership/Management.  If any of
the following events occurs: (i) Jim Durham shall cease to be (x) the
owner of 1,000,000 shares of the issued and outstanding capital stock of
Crdentia, and (y) the Chief Executive Officer of Crdentia at any time, (ii) Pam
Atherton shall cease to be the President of the Borrower at any time, and (iii) Fred
Toney shall cease to be a director of the Borrower at any time, unless Borrower
has received Lender’s written consent for a replacement of Jim Durham, Pam
Atherton, or Fred Toney, as applicable, within 30 days of such notification
(such consent not to be unreasonably withheld).


 


(m)                               Material
Adverse Change.  Any material adverse
change in the Collateral, business, property, assets, prospects, operations or
condition, financial or otherwise of any Obligor, as determined by Lender in
its sole judgment or the occurrence of any event which, in Lender’s sole
judgment, could have a Material Adverse Effect.


 


(n)                                 Governmental Authorizations.  A Government Authority shall have revoked any
Governmental Authorization of Borrower that results in the cessation of
business.


 


(o)                                 Failure
to Maintain Third-Party Payroll Tax Service Provider.  The failure to maintain a contractual
relationship with a payroll tax service provider, acceptable to Lender, at any
time.


 


(p)                                 [Intentionally
Deleted]


 


(q)                                 Breach
of Certain Obligations. 
Notwithstanding anything in Section 15(d) to the contrary, the
occurrence of a Travmed Subordinated Debt Default.


 


33





















 


16.                                 REMEDIES
UPON AN EVENT OF DEFAULT.


 


(a)                                  Upon the occurrence and during the
continuance of an Event of Default described in Subsection 15(g) hereof,
all of the Obligations shall immediately and automatically become due and
payable, without notice of any kind. 
Upon the occurrence of any other Default or Event of Default, all
Obligations may, at the option of Lender, and without demand, notice or legal
process of any kind, be declared, and immediately shall become, due and
payable.


 


(b)                                 Upon the occurrence and during the
continuance of a Default or an Event of Default, Lender may exercise from time
to time any rights and remedies available to it under the Uniform Commercial
Code and any other applicable law in addition to, and not in lieu of, any
rights and remedies expressly granted in this Agreement or in any of the Other
Agreements and all of Lender’s rights and remedies shall be cumulative and
non-exclusive to the extent permitted by law.  In particular, but not by way of limitation
of the foregoing, subject to the rights of BHF, Lender may, without notice,
demand or legal process of any kind, take possession of any or all of the
Collateral (in addition to Collateral of which it already has possession),
wherever it may be found, and for that purpose may pursue the same wherever it
may be found and, may enter onto any of Borrower’s premises where any of the
Collateral may be, and search for, take possession of, remove, keep and store
any of the Collateral until the same shall be sold or otherwise disposed of,
and Lender shall have the right to store the same at any of Borrower’s premises
without cost to Lender.  At Lender’s
request, but subject to the rights of BHF, Borrower shall, at Borrower’s
expense, assemble the Collateral and make it available to Lender at one or more
places to be designated by Lender and reasonably convenient to Lender and
Borrower.  Borrower recognizes that if
Borrower fails to perform, observe or discharge any of its Obligations under
this Agreement or the Other Agreements, no remedy at law will provide adequate
relief to Lender, and agrees that Lender shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages.  Any notification of
intended disposition of any of the Collateral required by law will be deemed to
be a reasonable authenticated notification of disposition if given at least ten
(10) days prior to such disposition and such notice shall (i) describe
Lender and Borrower, (ii) describe the Collateral that is the subject of
the intended disposition, (iii) state the method of the intended
disposition, (iv) state that Borrower is entitled to an accounting of the
Obligations and state the charge, if any, for an accounting and (v) state
the time and place of any public disposition or the time after which any
private sale is to be made.  Lender may
disclaim any warranties that might arise in connection with the sale, lease or
other disposition of the Collateral and has no obligation to provide any
warranties at such time.  Subject to the
rights of BHF, any Proceeds of any disposition by Lender of any of the
Collateral may be applied by Lender to the payment of expenses in connection
with the Collateral, including, without limitation, legal expenses and
reasonable attorneys’ fees, and any balance of such Proceeds may be applied by
Lender toward the payment of such of the Obligations, and in such order of
application as Lender may from time to time elect.


 


34





















 


17.                                 CONDITIONS
PRECEDENT.


 


The obligation of Lender
to enter into and perform this Agreement and to continue to make any Term Loan
is subject to the satisfaction or waiver on or before the date hereof, of the
following conditions precedent:


 


(a)                                  Lender shall have received four (4) originals
of each of the agreements, opinions, reports, approvals, consents, certificates
and other documents set forth on the closing document list attached hereto as Exhibit B
(the “Closing Document List”), or any supplement thereto pertaining to a
Permitted Acquisition in each case in form and substance satisfactory to Lender
(other than Notes, of which Lender shall receive one (1) original) executed
by Borrower and other required Persons, as applicable;


 


(b)                                 Lender shall have received such financial
statements, reports, certifications, and other operational information required
to be delivered under this Agreement, in form and substance reasonably
acceptable to Lender;


 


(c)                                  All of the obligations of Borrower to any
prior lender (other than Subordinated Debt and BHF) as in effect immediately
prior to the Closing Date will be performed and paid in full from the proceeds
of the initial advances under the initial Loans on the Closing Date and all
Liens of any such prior lender on any property of Borrower in respect thereof
will be terminated immediately upon such payment;


 


(d)                                 Lender shall have received evidence
satisfactory to it that the insurance policies required under Section 5
are in full force and effect, together with written evidence showing loss
payable or additional insured clauses or endorsements in favor of Lender as
required under such section;


 


(e)                                  Since March 31, 2004, no event shall
have occurred which has had or could reasonably be expected to have a Material
Adverse Effect on any Obligor, as determined by Lender in its reasonable credit
judgment, determined in good faith;


 


(f)                                    Lender shall have received payment in full of
all fees and expenses payable to it by Borrower or any other Person in
connection herewith, on or before disbursement of the Loans hereunder,
including, without limitation, payment of all underwriting fees as agreed to by
the parties;


 


(g)                                 Lender shall have reviewed the results of,
and found such results acceptable, in its sole discretion, a takedown audit
including verification of payment of all due and owing taxes;


 


(h)                                 Lender shall have received the results of an
audit of the Target of any proposed Acquisition, which shall be satisfactory to
Lender in its sole discretion;


 


(i)                                     There
is no material default in any of the Borrower’s obligations under any contract
to which Borrower is a party;


 


(j)                                     Borrower
shall be in compliance with all applicable laws;


 


35





















 


(k)                                  Lender
shall have received an opinion from Borrower’s counsel, in form and substance
reasonably acceptable to the Lender in connection with any Permitted
Acquisition;


 


(l)                                     Borrower
shall have delivered to Lender, with respect to each Deposit Account maintained
by Borrower, a deposit account control agreement in form and substance
satisfactory to the Lender, executed by the financial institution at which such
Deposit Account is maintained;


 


(m)                               Borrower
shall have delivered all due diligence materials pertaining to the Target and
to Borrower to the Lender as Lender has requested;


 


(n)                                 Lender
shall have reviewed general background verifications of select principals,
officers and directors of the Target that will remain after the closing of any
Acquisition;


 


(o)                                 Lender
shall have received the Warrant Agreement, together with the Warrant
Certificate contemplated therein, fully executed by Crdentia;


 


(p)                                 Lender
shall have received the following stock pledges:  (i) by Crdentia of each of its direct
and indirect Subsidiaries (including CRDE), and (ii) by CRDE of each of
its direct and indirect Subsidiaries;


 


(q)                                 Lender
shall have received satisfactory evidence that Borrower has secured the
services of a third-party payroll tax service provider;


 


(r)                                    Lender
shall have received a Subordination Agreement, in form and substance acceptable
to Lender, with respect to any seller Indebtedness outstanding as of the
Closing Date;


 


(s)                                  Lender
shall have received an executed intercreditor agreement, in form and substance
acceptable to Lender, from the Arizona Home Health Care / Private Duty, Inc.
seller with respect to the account receivables of such seller; and


 


(t)                                    Lender
shall have received the Makewell Agreement, in form and substance acceptable to
Lender, executed by MedCap Partners L.P..


 


18.                                 JOINT
AND SEVERAL LIABILITY.


 


(a)                                  Each
Borrower hereby irrevocably designates Borrowing Agent to be its attorney and
agent and in such capacity to borrow, sign and endorse notes, and execute and
deliver all instruments, documents, writings and further assurances now or
hereafter required hereunder, on behalf of such Borrower or Borrowers, and
hereby authorizes Lender to pay over or credit all loan proceeds hereunder in
accordance with the request of Borrowing Agent.


 


(b)                                 The
handling of this credit facility as a co-borrowing facility with a borrowing
agent in the manner set forth in this Agreement is solely as an accommodation
to Borrowers and at their request. 
Lender shall not incur liability to Borrowers as a result thereof.  To induce Lender to do so and in
consideration thereof, each Borrower hereby indemnifies 


 


36





















 


Lender
and holds Lender harmless from and against any and all liabilities, expenses,
losses, damages and claims of damage or injury asserted against Lender by any
Person arising from or incurred by reason of the handling of the financing
arrangements of Borrowers as provided herein, reliance by Lender on any request
or instruction from Borrowing Agent or any other action taken by Lender with
respect to this Section 18 except due to willful misconduct or gross (not
mere) negligence by the indemnified party.


 


(c)                                  Notwithstanding
anything to the contrary contained herein, all Obligations of each Borrower
hereunder shall be joint and several obligations of Borrowers.


 


(d)                                 Notwithstanding
any provisions of this Agreement to the contrary, it is intended that the joint
and several nature of the Obligations of Borrowers, and the liens and security
interests granted by Borrowers to secure the Obligations, not constitute a “Fraudulent
Conveyance” (as defined below). 
Consequently, Lender and Borrowers agree that if the Obligations of a
Borrower, or any liens or security interests granted by such Borrower securing
the Obligations, would, but for the application of this sentence, constitute a
Fraudulent Conveyance, the Obligations of such Borrower and the liens and
security interests securing such Obligations shall be valid and enforceable
only to the maximum extent that would not cause such Obligations or such lien
or security interest to constitute a Fraudulent Conveyance, and the Obligations
of such Borrower and this Agreement shall automatically be deemed to have been
amended accordingly.  For purposes
hereof, “Fraudulent Conveyance” means a fraudulent conveyance under Section 548
of Chapter 11 of Title II of the United States Code (11 U.S.C. § 101,
et seq.), as amended (the “Bankruptcy Code”),
or a fraudulent conveyance or fraudulent transfer under the applicable
provisions of any fraudulent conveyance or fraudulent transfer law or similar
law of any state, nation or other governmental unit, as in effect from time to
time.


 


(e)                                  Each
Borrower assumes responsibility for keeping itself informed of the financial
condition of the each other Borrower, and any and all endorsers and/or
guarantors of any instrument or document evidencing all or any part of such
other Borrower’s Obligations, and of all other circumstances bearing upon the
risk of nonpayment by such other Borrowers of their Obligations and each
Borrower agrees that Lender shall not have any duty to advise such Borrower of
information known to Lender regarding such condition or any such circumstances
or to undertake any investigation not a part of its regular business
routine.  If Lender, in its sole
discretion, undertakes at any time or from time to time to provide any such
information to a Borrower, Lender shall not be under any obligation to update
any such information or to provide any such information to such Borrower on any
subsequent occasion.


 


(f)                                    Lender
is hereby authorized, without notice or demand and without affecting the
liability of a Borrower hereunder, to, at any time and from time to time, (i) renew,
extend, accelerate or otherwise change the time for payment of, or other terms
relating to, a Borrower’s Obligations or otherwise modify, amend or change the
terms of any promissory note or other agreement, document or instrument now or
hereafter executed by a Borrower and delivered to Lender; (ii) accept
partial payments on a Borrower’s Obligations; (iii) take and hold security
or collateral for the payment of a Borrower’s Obligations hereunder or for the
payment of any guaranties of a Borrower’s Obligations or other liabilities of a
Borrower and exchange, enforce, waive and release any such security or
collateral; (iv) apply such security or collateral and direct the order or
manner of sale thereof as Lender, in its sole discretion, may determine; 


 


37





















 


and (v) settle,
release, compromise, collect or otherwise liquidate a Borrower’s Obligations
and any security or collateral therefor in any manner, without affecting or
impairing the obligations of the other Borrowers.  Lender shall have the exclusive right to
determine the time and manner of application of any payments or credits,
whether received from a Borrower or any other source, and such determination
shall be binding on such Borrower.  All
such payments and credits may be applied, reversed and reapplied, in whole or
in part, to any of a Borrower’s Obligations as Lender shall determine in its
sole discretion without affecting the validity or enforceability of the
Obligations of the other Borrowers.


 


(g)                                 Each
Borrower hereby agrees that, except as hereinafter provided, its obligations
hereunder shall be unconditional, irrespective of (i) the absence of any
attempt to collect a Borrower’s Obligations from any Borrower or any guarantor
or other action to enforce the same; (ii) the waiver or consent by Lender
with respect to any provision of any instrument evidencing Borrowers’
Obligations, or any part thereof, or any other agreement heretofore, now or
hereafter executed by a Borrower and delivered to Lender; (iii) failure by
Lender to take any steps to perfect and maintain its security interest in, or
to preserve its rights to, any security or collateral for Borrowers’
Obligations; (iv) the institution of any proceeding under the Bankruptcy
Code, or any similar proceeding, by or against a Borrower or Lender’s election
in any such proceeding of the application of Section 1111(b)(2) of
the Bankruptcy Code; (v) any borrowing or grant of a security interest by
any Borrower as debtor-in-possession under Section 364 of the Bankruptcy
Code; (vi) the disallowance, under Section 502 of the Bankruptcy
Code, of all or any portion of Lender’s claim(s) for repayment of any of
Borrowers’ Obligations; or (vii) any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.


 


(h)                                 Until
the Obligations of Lender have been paid in full, no payment made by or for the
account of a Borrower, including, without limitations, (i) a payment made
by such Borrower on behalf of another Borrower’s Obligations or (ii) a
payment made by any other person under any guaranty, shall entitle such
Borrower, by subrogation or otherwise, to any payment from such other Borrower
or from or out of such other Borrower’s property and such Borrower shall not
exercise any right or remedy against such other Borrower or any property of
such other Borrower by reason of any performance of such Borrower of its joint
and several obligations hereunder.


 


19.                                 RELEASES; INDEMNITIES.


 


(a)                                  To
the fullest extent permitted by applicable law, in consideration of Lender’s
entering into this Agreement, and for other good and valuable consideration,
the receipt and sufficiency of which Borrower hereby acknowledges, Borrower, on
its own behalf and on behalf of its successors (including, without limitation,
any receiver or trustee acting on behalf of Borrower and any
debtor-in-possession with respect to Borrower), assigns, subsidiaries and
Affiliates (collectively, the “Releasors”), hereby forever release, discharge
and acquit Lender and its parents, subsidiaries, shareholders, Affiliates,
partners, trustees, officers, employees, directors, agents and attorneys and
their respective successors, heirs and assigns (collectively, the “Releasees”)
from any and all claims, demands, liabilities, responsibilities, disputes, causes,
damages, actions and causes of actions (whether at law or in equity)
indebtedness and obligations (collectively, “Claims”) of every type, kind,
nature, description or character, 


 


38





















 


including, without
limitation, any so-called “lender liability” claims or defenses, and
irrespective of how, why or by reason of what facts, whether such Claims have
heretofore arisen, are now existing or hereafter arise, or which could, might
or be claimed to exist, of whatever kind or nature, whether known or unknown,
suspected or unsuspected, liquidated or unliquidated, matured or unmatured,
fixed or contingent, each as though fully set forth herein at length, which may
in any way arise out of, are connected with or in any way relate to actions or
omissions which occurred on or prior to the date hereof with respect to
Borrower, this Agreement, the Obligations, any Collateral, the Prior
Agreements, any other Loan Document and any third parties liable in whole or in
part for the Obligations, other than such Claims arising out of the gross
negligence or willful misconduct of a Releasee. 
This provision shall survive and continue in full force and effect
whether or not Borrower shall satisfy all other provisions of this Agreement or
the Loan Documents, including payment in full of the Obligations.


 


(b)                                 Each
of the Releasors further agrees to indemnify the Releasees and hold the
Releasees harmless from and against any and all such Claims (as such term is
defined in the immediately preceding paragraph) which may be brought against
any of the Releasees on behalf of any entity or Person, including, without
limitation, officers, directors, agents, trustees, creditors, partners or
shareholders of any of the Releasors, whether threatened or initiated,
asserting any claim for legal or equitable remedy under any statutes,
regulation or common law principle arising from or in connection with the
negotiation, preparation, execution, delivery, performance, administration and
enforcement of this Agreement or any other Loan Document, the Obligations, any
Collateral or the Prior Agreements, other than such Claims arising out of the
gross negligence or willful misconduct of a Releasee.  The foregoing indemnity shall survive the
payment in full of the Obligations and the termination of this Agreement and
the other Loan Documents.


 


20.                                 NOTICE.


 


All written notices and
other written communications with respect to this Agreement shall be sent by
ordinary, certified or overnight mail, by telecopy or delivered in person, and
in the case of Lender shall be sent to it at 233 South Wacker Drive, Suite 5350,
Chicago, Illinois 60606, Attention: 
Chief Credit Officer, facsimile number: 
(312) 334-4450, and in the case of Borrower shall be sent to it at
its principal place of business set forth on Schedule 11(b) hereto
or as otherwise directed by Borrower in writing.  All notices shall be deemed received upon
actual receipt thereof or refusal of delivery.


 


21.                                 CHOICE
OF GOVERNING LAW; CONSTRUCTION; FORUM SELECTION.


 


This Agreement and the
Other Agreements are submitted by Borrower to Lender for Lender’s acceptance or
rejection at Lender’s principal place of business as an offer by Borrower to
borrow monies from Lender now and from time to time hereafter, and shall not be
binding upon Lender or become effective until accepted by Lender, in writing,
at said place of business.  If so
accepted by Lender, this Agreement and the Other Agreements shall be deemed to
have been made at said place of business. 
THIS AGREEMENT AND THE OTHER
AGREEMENTS SHALL BE GOVERNED AND CONTROLLED BY THE INTERNAL LAWS OF THE STATE
OF ILLINOIS AS TO INTERPRETATION, ENFORCEMENT, VALIDITY, CONSTRUCTION, EFFECT,
AND IN ALL OTHER RESPECTS, 


 


39





















 


INCLUDING,
WITHOUT LIMITATION, THE LEGALITY OF THE INTEREST RATE AND OTHER CHARGES, BUT
EXCLUDING PERFECTION OF THE SECURITY INTERESTS IN COLLATERAL LOCATED OUTSIDE OF
THE STATE OF ILLINOIS, WHICH SHALL BE GOVERNED AND CONTROLLED BY THE LAWS OF
THE RELEVANT JURISDICTION IN WHICH SUCH COLLATERAL IS LOCATED.  If any provision of this
Agreement shall be held to be prohibited by or invalid under applicable law,
such provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or remaining
provisions of this Agreement.


 


To induce Lender to
accept this Agreement, Borrower irrevocably agrees that, subject to Lender’s
sole and absolute election, ALL ACTIONS OR
PROCEEDINGS IN ANY WAY, MANNER OR RESPECT, ARISING OUT OF OR FROM OR RELATED TO
THIS AGREEMENT, THE OTHER AGREEMENTS OR THE COLLATERAL SHALL BE LITIGATED IN
COURTS HAVING SITUS WITHIN THE CITY OF CHICAGO, STATE OF ILLINOIS.  BORROWER HEREBY CONSENTS AND SUBMITS TO THE
JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURTS LOCATED WITHIN SAID CITY AND
STATE.  BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON SUCH
BORROWER BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED
TO BORROWER AT THE ADDRESS SET FORTH FOR NOTICE IN THIS AGREEMENT AND SERVICE
SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.  BORROWER
HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY
LITIGATION BROUGHT AGAINST BORROWER BY LENDER IN ACCORDANCE WITH THIS SECTION.


 


22.                                 MODIFICATION
AND BENEFIT OF AGREEMENT.


 


This Agreement and the
Other Agreements may not be modified, altered or amended except by an agreement
in writing signed by Borrower or such other Person who is a party to such Other
Agreement and Lender.  Borrower may not
sell, assign or transfer this Agreement, or the Other Agreements or any portion
thereof, including, without limitation, Borrower’s rights, titles, interest,
remedies, powers or duties hereunder and thereunder.  Borrower hereby consents to Lender’s sale,
assignment, transfer, pledge or other disposition, at any time and from time to
time hereafter, of this Agreement, or the Other Agreements, or of any portion
thereof, or to Lender granting participations in the Obligations and related
Loan Documents, including, without limitation, Lender’s rights, titles,
interest, remedies, powers and/or duties. 
Borrower agrees that it shall execute and deliver such documents as
Lender may request in connection with the foregoing.  Borrower further consents to the pledge or
collateral assignment and grant of a security interest, by Lender, in
connection with its’ own financing, including all rights, benefits, warranties,
representations, covenants, indemnities and remedies, and all proceeds of the
foregoing, contained in this Agreement and any of the Other Agreements.


 


40





















 


23.                                 HEADINGS
OF SUBDIVISIONS.


 


The headings of
subdivisions in this Agreement are for convenience of reference only, and shall
not govern the interpretation of any of the provisions of this Agreement.


 


24.                                 POWER
OF ATTORNEY.


 


Borrower acknowledges and
agrees that its appointment of Lender as its attorney and agent-in-fact for the
purposes specified in this Agreement is an appointment coupled with an interest
and shall be irrevocable until all of the Obligations are satisfied and paid in
full and this Agreement is terminated.


 


25.                                 CONFIDENTIALITY.


 


Lender hereby agrees to
use commercially reasonable efforts to assure that any and all information
relating to Borrower which is (i) furnished by Borrower to Lender (or to
any affiliate of Lender); and (ii) non-public, confidential or proprietary
in nature shall be kept confidential by Lender or such affiliate in accordance
with applicable law; provided, however, that such information and other credit
information relating to Borrower may be distributed by Lender or such affiliate
to Lender’s or such affiliate’s directors, officers, employees, attorneys,
affiliates, assignees, participants, auditors, agents and regulators, and upon
the order of a court or other governmental agency having jurisdiction over
Lender or such affiliate, to any other party, as long as such person or entity
has been informed of Lender’s confidentiality obligation hereunder and has
agreed to abide by its terms.  Borrower
and Lender further agree that this provision shall survive the termination of
this Agreement.  Notwithstanding the
foregoing, Borrower hereby consents to Lender publishing a tombstone or similar
advertising material relating to the financing transaction contemplated by this
Agreement.


 


26.                                 BROKERAGE FEES.


 


Borrower represents and
warrants to Lender that, with respect to the financing transaction contemplated
herein, no Person (other than Roth Capital Partners, LLC) is entitled to any
brokerage fee or other commission and Borrower agrees to indemnify and hold
Lender harmless against any and all such claims.


 


27.                                 PUBLICITY.


 


Lender is hereby authorized
to issue appropriate press releases and to cause a tombstone to be published
announcing the consummation of this transaction and the aggregate amount
thereof.


 


28.                                 LIMITATION OF ACTIONS.


 


Borrower agrees that any
claim or cause of action by Borrower against Lender, or any of Lender’s
directors, officers, employees, agents, accountants or attorneys, based upon,
arising from, or relating to this Agreement, or any other present or future
agreement, or any other transaction contemplated hereby or thereby or relating
hereto or thereto, or any other matter, cause or thing whatsoever, whether or
not relating hereto or thereto, occurred, done, omitted or 


 


41





















 


suffered to be
done by Lender, or by Lender’s directors, officers, employees, agents,
accountants or attorneys, whether sounding in contract or in tort or otherwise,
shall be barred unless asserted by Borrower by the commencement of an action or
proceeding in a court of competent jurisdiction by the filing of a complaint
within one (1) year after the first act, occurrence or omission upon which
such claim or cause of action, or any part thereof, is based and service of a
summons and complaint on an officer of Lender or any other Person authorized to
accept service of process on behalf of Lender, within thirty (30) days
thereafter.  Borrower agrees that such
one-year period of time is a reasonable and sufficient time for Borrower to
investigate and act upon any such claim or cause of action.  The one-year period provided herein shall not
be waived, tolled, or extended except by a specific written agreement of
Lender.  This provision shall survive any
termination of this Agreement or any other agreement.


 


29.                                 LIABILITY.


 


Neither Lender nor any
Lender Affiliate shall be liable for any indirect, special, incidental or
consequential damages in connection with any breach of contract, tort or other
wrong relating to this Agreement or the Obligations or the establishment,
administration or collection thereof (including without limitation damages for
loss of profits, business interruption, or the like), whether such damages are
foreseeable or unforeseeable, even if Lender has been advised of the
possibility of such damages.  Neither Lender,
nor any Lender Affiliate shall be liable for any claims, demands, losses or
damages, of any kind whatsoever, made, claimed, incurred or suffered by the
Borrower through the ordinary negligence of Lender, or any Lender Affiliate.


 


30.                                 COUNTERPARTS.


 


This Agreement, any of
the Other Agreements, and any amendments, waivers, consents or supplements may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which, when so executed and delivered, shall be
deemed an original, but all of which counterparts together shall constitute but
one agreement.


 


31.                                 ELECTRONIC
SUBMISSIONS.


 


Upon not less than thirty
(30) days’ prior written notice (the “Approved
Electronic Form Notice”), Lender may permit or require that any
of the documents, certificates, forms, deliveries or other communications,
authorized, required or contemplated by this Agreement or the Other Agreements
be submitted to Lender in “Approved
Electronic Form” (as hereafter defined), subject to any reasonable
terms, conditions and requirements in the applicable Approved Electronic Forms
Notice.  For purposes hereof, “Electronic Form” means e-mail, e-mail
attachments, data submitted on web-based forms or any other communication
method that delivers machine readable data or information to Lender, and “Approved Electronic Form” means an
Electronic Form that has been approved in writing by Lender (which
approval has not been revoked or modified by Lender) and sent to Borrower in an
Approved Electronic Form Notice. 
Except as otherwise specifically provided in the applicable Approved
Electronic Form Notice, any submissions made in an applicable Approved
Electronic Form shall have the same force and effect that the same
submissions would have had if they had been submitted in any 


 


42





















 


other applicable
form authorized, required or contemplated by this Agreement or the Other
Agreements.


 


32.                                 WAIVER
OF JURY TRIAL; OTHER WAIVERS.


 


(a)                                  BORROWER
AND LENDER EACH HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, ANY OF THE
OTHER AGREEMENTS, THE OBLIGATIONS, THE COLLATERAL, ANY ALLEGED TORTUOUS CONDUCT
BY BORROWER OR LENDER OR WHICH, IN ANY WAY, DIRECTLY OR INDIRECTLY, ARISES OUT
OF OR RELATES TO THE RELATIONSHIP BETWEEN BORROWER AND LENDER.  IN NO EVENT
SHALL LENDER BE LIABLE FOR LOST PROFITS OR OTHER SPECIAL, EXEMPLARY, PUNITIVE
OR CONSEQUENTIAL DAMAGES.


 


(b)                                 Borrower hereby waives demand, presentment,
protest and notice of nonpayment, and further waives the benefit of all
valuation, appraisal and exemption laws.


 


(c)                                  Borrower hereby waives the benefit of any law
that would otherwise restrict or limit Lender or any affiliate of Lender in the
exercise of its right, which is hereby acknowledged and agreed to, to set-off
against the Obligations, without notice at any time hereafter, any
indebtedness, matured or unmatured, owing by Lender or such affiliate of Lender
to Borrower, including, without limitation, any deposit account at Lender or such
affiliate.


 


(d)                                 BORROWER
HEREBY WAIVES ALL RIGHTS TO NOTICE AND HEARING OF ANY KIND PRIOR TO THE
EXERCISE BY LENDER OF ITS RIGHTS TO REPOSSESS THE COLLATERAL OF BORROWER
WITHOUT JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON SUCH COLLATERAL,
PROVIDED THAT IN THE EVENT LENDER SEEKS TO ENFORCE ITS RIGHTS HEREUNDER BY
JUDICIAL PROCESS OR SELF-HELP, LENDER SHALL PROVIDE BORROWER WITH SUCH NOTICES
AS ARE REQUIRED BY LAW.


 


43





















 


(e)                                  Lender’s failure, at any time or times
hereafter, to require strict performance by Borrower of any provision of this
Agreement or any of the Other Agreements shall not waive, affect or diminish
any right of Lender thereafter to demand strict compliance and performance
therewith.  Any suspension or
waiver by Lender of an Event of Default under this Agreement or any default
under any of the Other Agreements shall not suspend, waive or affect any other
Event of Default under this Agreement or any other default under any of the
Other Agreements, whether the same is prior or subsequent thereto and whether
of the same or of a different kind or character.  No delay on the part of Lender in the
exercise of any right or remedy under this Agreement or any Other Agreement
shall preclude other or further exercise thereof or the exercise of any right
or remedy.  None of the undertakings,
agreements, warranties, covenants and representations of Borrower contained in
this Agreement or any of the Other Agreements and no Event of Default under
this Agreement or default under any of the Other Agreements shall be deemed to
have been suspended or waived by Lender unless such suspension or waiver is in
writing, signed by a duly authorized officer of Lender and directed to Borrower
specifying such suspension or waiver.


 


33.                                 AMENDMENT
AND RESTATEMENT.  This Agreement shall
become effective, and shall amend and restate the Original Loan Agreement, as
amended by the First Term Loan Amendment, the Second Term Loan Amendment and
the Third Term Loan Amendment, upon the execution of this Agreement by Borrower
and Lender; and from and after such effective time, (i) all references
made to the “this Agreement” or “the Loan Agreement” in the Loan Documents or
in any other instrument or document executed and/or delivered pursuant thereto
shall, without anything further, be deemed to refer to this Agreement and (ii) the
Original Loan Agreement, as amended by the First Term Loan Amendment, the
Second Term Loan Amendment and the Third Term Loan Amendment, shall be deemed
amended and restated, without novation, in its entirety hereby.  All the Other Agreements are hereby
reaffirmed and shall continue in full force and effect.  Borrower acknowledges that the Term Loans and
other Obligations evidenced by the Original Loan Agreement, as amended by the
First Term Loan Amendment, the Second Term Loan Amendment and the Third Term
Loan Amendment, including the Other Agreements and all the other instruments,
documents and agreements executed and delivered in connection with the Original
Loan Agreement, as amended by the First Term Loan Amendment, the Second Term
Loan Amendment and the Third Term Loan Amendment, , have not been satisfied but
instead have become part of the Term Loans and Obligations under this Agreement
and under the other Loan Documents. 
Borrower further acknowledges that all of the Liens granted by Borrower
under the Original Loan Agreement, as amended by the First Term Loan Amendment,
the Second Term Loan Amendment and the Third Term Loan Amendment, and all
instruments, documents and agreements executed in connection therewith are
hereby reaffirmed and shall continue hereafter to secure the Obligations under
the Loan Documents, until all Obligations are repaid in full in cash and this
Agreement is terminated.


 


SIGNATURE PAGES FOLLOW


 


44





















 


Signature Page to Amended and Restated

Loan and Security Agreement – Term Loan


 


Signature
Page to Amended and RestatedLoan and Security Agreement – Term Loan


 


IN WITNESS WHEREOF, the
parties hereto have duly executed this Agreement as of the date first written
above.


 


 


	
   

  	
  CRDENTIA CORP.,

  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Pamela G. Atherton 

  	
   

  
	
   

  	
   

  	
  Pamela G. Atherton 

  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BAKER ANDERSON CHRISTIE, INC.,

  a California corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Pamela G. Atherton 

  	
   

  
	
   

  	
   

  	
  Pamela G. Atherton

  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  NURSES NETWORK, INC.,

  a California corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Pamela G. Atherton 

  	
   

  
	
   

  	
   

  	
  Pamela G. Atherton 

  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NEW AGE STAFFING, INC.,

  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Pamela G. Atherton 

  	
   

  
	
   

  	
   

  	
  Pamela G. Atherton

  President

  



 





















 


	
   

  	
  PSR NURSES, LTD.,

  a Texas limited partnership

  
	
   

  	
   

  
	
   

  
	
   

  	
  By:

  	
  PSR NURSE RECRUITING, INC.

  
	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Pamela G. Atherton

  	
   

  
	
   

  	
  Pamela G. Atherton

  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PSR NURSE RECRUITING, INC.,

  a Texas corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Pamela G. Atherton 

  	
   

  
	
   

  	
   

  	
  Pamela G. Atherton

  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PSR NURSES HOLDINGS CORP.,

  a Texas corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Pamela G. Atherton 

  	
   

  
	
   

  	
   

  	
  Pamela G. Atherton 

  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CRDE CORP.,

  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Pamela G. Atherton 

  	
   

  
	
   

  	
   

  	
  Pamela G. Atherton

  President

  
								



 





















 


	
   

  	
  ARIZONA HOME HEALTH CARE/PRIVATE 

  DUTY, INC.,

  an Arizona corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Pamela G. Atherton 

  	
   

  
	
   

  	
   

  	
  Pamela G. Atherton 

  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CARE PROS STAFFING, INC.,

  a Texas corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Pamela G. Atherton 

  	
   

  
	
   

  	
   

  	
  Pamela G. Atherton

  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HIP HOLDING, INC.,

  a Delaware corporation 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Pamela G. Atherton 

  	
   

  
	
   

  	
   

  	
  Pamela G. Atherton 

  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HEALTH INDUSTRY PROFESSIONALS,

  L.L.C.,

  a Michigan limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Pamela G. Atherton 

  	
   

  
	
   

  	
   

  	
  Pamela G. Atherton

  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TRAVMED USA, INC., a North Carolina

  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Pamela G. Atherton 

  	
   

  
	
   

  	
   

  	
  Pamela G. Atherton

  President

  



 





















 


	
   

  	
  GHS ACQUISITION CORPORATION,

  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Pamela G. Atherton 

  	
   

  
	
   

  	
   

  	
  Pamela G. Atherton 

  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PRIME STAFF, LP,

  a Texas limited partnership

  
	
   

  
	
   

  	
  By:

  	
  CRDE CORP.

  
	
   

  	
  Its:

  	
  General Partner 

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Pamela G. Atherton 

  	
   

  
	
   

  	
  Pamela G. Atherton

  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MINT MEDICAL STAFFING ODESSA, LP,

  a Texas limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  CRDE CORP.

  
	
   

  	
  Its:

  	
  General Partner 

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Pamela G. Atherton 

  	
   

  
	
   

  	
  Pamela G. Atherton

  President

  
							



 





















 


Signature
Page to Term Loan Agreement


 


 


	
   

  	
  BRIDGE OPPORTUNITY FINANCE, LLC,

  a Delaware limited liability company 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Randy Abrahams

  	
   

  
	
   

  	
   

  	
  Randy Abrahams

  Chief Executive Officer

  



 





















 


ANNEX 1-DEFINED TERMS


 


“Account” shall mean all present and future
accounts and payment intangibles (in respect of Staffing Services), as such
terms are defined in the UCC, of Borrower, including, without limitation, all
obligations for the payment of money (including, without limitation, all
amounts due and owing from Government Authorities to the extent such amounts
are deemed to be or construed to be general intangibles) arising out of the
sale, lease, license or other disposition of goods or other Property or the
rendering of services and all proceeds thereof.


 


“Account Debtor” shall mean, with respect to
any Account, the Person obligated to pay under such Account.  The term “Account Debtor” specifically
includes, without limitation, any insurer or Government Reimbursement Program.


 


“Acquisition” shall mean the purchase by
Crdentia (or another Borrower) of all of the issued and outstanding equity
interests or substantially all of the operating assets of any Person in the
healthcare staffing industry pursuant to the Acquisition Documents.


 


“Acquisition Documents” shall mean all
agreements, instruments and documents executed or delivered in connection with
an Acquisition.


 


“Affiliate” shall mean any Person (i) which
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, Borrower, (ii) which
beneficially owns or holds five percent (5%) or more of the voting control or
equity interests of Borrower, or (iii) five percent (5%) or more of the
voting control or equity interests of which is beneficially owned or held by
Borrower.


 


“Authorized Officer”  shall mean, as applied to any Person, any
individual holding the position of chairman of the board (if an officer), chief
executive officer, president or one of its vice presidents (or the equivalent
thereof), and such Person’s chief financial officer or treasurer.


 


“BHF” shall mean Bridge Healthcare Finance,
LLC.


 


“Borrowed
Money” shall mean, as applied to any Person, without
duplication, (a) all Indebtedness of such Person, (b) all debt of
such Person, whether or not evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such Person as lessee under Capital
Leases which have been or should be recorded as liabilities on a balance sheet
of such Person in accordance with GAAP, (d) all obligations of such Person
to pay the deferred purchase price of property or services (excluding trade
accounts payable in the ordinary course of business), (e) all indebtedness
secured by a Lien on the property of such Person, whether or not such
indebtedness shall have been assumed by such Person; provided that if such
Person has not assumed or otherwise become liable for such indebtedness, such
indebtedness shall be measured at the fair market value of such property
securing such indebtedness at the time of determination, (f) all
obligations, contingent or otherwise, with respect to the face amount of all
letters of credit (whether or not drawn), bankers’ acceptances and similar
obligations issued for the account of such Person (including the Letters of
Credit), (g) all hedging, swap, or similar obligations of such Person, (h) all
Contingent Liabilities of such Person and (i) all debt of any partnership,
limited liability company, or other entity (only if such partnership, limited
liability company or other entity is a Borrower) of which such Person is a
majority owner.


 


 


Annex 1 - 1





















 


“Borrower” and “Borrowers” shall mean, individually and collectively, each of
the Borrowers named in the first paragraph hereof provided that each reference
to “Borrower” herein shall mean each Borrower individually and all Borrowers
collectively, as the context requires.


 


“Borrowing Agent” shall mean Crdentia.


 


“Business Day” shall mean any day other than
a Saturday, a Sunday or any day that banks in Chicago, Illinois are required or
permitted to close.


 


“Capital Expenditures” shall mean with
respect to any period, the aggregate of all expenditures (whether paid in cash
or accrued as liabilities and including Capital Lease Obligations) by Borrowers
during such period that are required by GAAP, consistently applied, to be
included in or reflected by the property, plant and equipment or similar fixed
asset accounts (or intangible accounts subject to amortization) on the balance
sheet of Borrowers, excluding expenditures for any assets or equity interests
acquired pursuant to a Permitted Acquisition.


 


“Capital
Lease” shall mean, as to any Person, a lease of any interest
in any kind of property or asset, whether real, personal or mixed, or tangible
or intangible, by such Person as lessee that is, or should be, recorded as a “capital
lease” on the balance sheet of such Person prepared in accordance with GAAP.


 


“Capital
Lease Obligations” shall mean, as to any Person, indebtedness
represented by obligations under a Capital Lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.


 


“Closing Date” shall mean May 16, 2005.


 


“Closing Document List” shall have the
meaning set forth in Section 17 hereof.


 


“Collateral” shall mean all of the property
of Borrower described in Section 5 hereof, together with all other
real or personal property of any Obligor or any other Person now or hereafter
pledged to Lender to secure, either directly or indirectly, repayment of any of
the Obligations.


 


“Concentration Account” shall have the
meaning set forth in Section 8(a) of the Revolving Loan Agreement.


 


“Contingent
Liability” shall mean any agreement, undertaking or
arrangement by which any Person guarantees, endorses or otherwise becomes or is
contingently liable upon (by direct or indirect agreement, contingent or
otherwise, to provide funds for payment, to supply funds to or otherwise to
invest in a debtor, or otherwise to assure a creditor against loss) any
Indebtedness, obligation or other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other
Person.  The amount of any Contingent
Liability shall (subject to any limitation set forth herein) be deemed to be
the outstanding principal amount (or maximum permitted principal amount, if
larger) of the Indebtedness, obligation or other liability guaranteed or
supported thereby.


 


 


Annex 1 - 2





















 


“CRDE” shall mean CRDE Corp., the Subsidiary
of Crdentia formed to hold all Target entities acquired in Permitted
Acquisitions, and shall mean, collectively, CRDE Corp. and each of its direct
or indirect subsidiaries.


 


“CRDE Account Debtor Collection Lockbox Account”
shall mean an account or accounts maintained at the Lockbox Bank into which all
collections of Accounts of CRDE are paid directly; the CRDE Account Debtor
Collection Lockbox Account shall be an account in the name of Lender (or
Borrower for the sole benefit of Lender), and shall be the sole and exclusive
property of Lender.


 


“Default”
shall mean an event which, with the giving of notice or passage of time or
both, would constitute an Event of Default.


 


“Derivative
Obligations” shall mean every obligation of a Person under
any forward contract, futures contract, exchange contract, swap, option or
other financing agreement or arrangement (including, without limitation, caps,
floors, collars and similar agreement), the value of which is dependent upon
interest rates, currency exchange rates, commodities or other indices.


 


“EBITDA” shall mean, with respect to any
period, net income of the Borrower, on a consolidated basis, after taxes for
such period (excluding any after-tax gains or losses and excluding other
after-tax extraordinary gains or losses) plus interest expense, income
tax expense, depreciation and amortization for such period, plus or minus
any other non-cash charges or gains which have been subtracted or added in
calculating net income after taxes for such period.


 


“Eligible Account” shall have the meaning
set forth in the Revolving Loan Agreement.


 


“Environmental Laws” shall mean all federal,
state, district, local and foreign laws, rules, regulations, ordinances, and
consent decrees relating to health, safety, hazardous substances, pollution and
environmental matters, as now or at any time hereafter in effect, applicable to
Borrower’s business or facilities owned or operated by Borrower, including laws
relating to emissions, discharges, releases or threatened releases of
pollutants, contamination, chemicals, or hazardous, toxic or dangerous
substances, materials or wastes into the environment (including, without
limitation, ambient air, surface water, ground water, land surface or
subsurface strata) or otherwise relating to the generation, manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials.


 


“ERISA” shall mean the Employee Retirement
Income Security Act of 1974, as amended, modified or restated from time to
time.


 


“Event of Default” shall have the meaning
specified in Section 15 hereof.


 


“Excess Availability” shall mean, as of any
date of determination by BHF, the excess, if any, of the lesser of (i) the
Maximum Revolving Loan Limit less the sum of the outstanding Revolving Loans
and (ii) the Revolving Borrowing Base Amount less the sum of the
outstanding Revolving Loans, in each case as of the close of business on such
date and assuming, for purposes of calculation, that all accounts payable of
the Borrower which remain unpaid more than thirty (30) days after the due dates
thereof (except for professional fees and amounts 


 


 


Annex 1 - 3





















 


contested in good
faith) as of the close of business on such date are treated as additional
Revolving Loans outstanding on such date.


 


“Fiscal Year” shall mean each twelve (12)
month accounting period of Borrower, which ends on December 31st of each year.


 


“GAAP”
shall mean generally accepted accounting principles, using the accrual basis of
accounting and consistently applied with prior periods to the extent required
under Section 1(b); provided, however, that GAAP with respect to
any interim financial statements or reports shall be deemed subject to fiscal
year-end adjustments and footnotes made in accordance with GAAP.


 


“Governmental Authorization” means any
permit, license, registration, authorization, certificate, accreditation, plan,
directive, consent order or consent decree of or from, or notice to, any
Government Authority.


 


“Government Authority” means any federal,
state, District of Columbia, municipal, national or other government,
governmental department, commission, board, bureau, court, agency or
instrumentality or political subdivision thereof or any entity or officer
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to any government or any court, in each case whether
associated with a state of the United States, the United States, or a foreign
entity or government.


 


“Government Reimbursement Program” shall
mean (i) the Medicare program established under the Title XVIII of the
Federal Social Security Act, the Federal Employees Health Benefit Program under
5 U.S.C. §§ 8902 et seq., the TRICARE program established by the
Department of Defense under 10 U.S.C. §§ 1071 et seq. or the Civilian
Health and Medical Program of the Uniformed Services under 10 U.S.C. §§ 1079
and 1086, (ii) the Medicaid program of any state or the District of
Columbia acting pursuant to a health plan adopted pursuant to Title XIX of the
Federal Social Security Act or (iii) any agent, administrator,
intermediary or carrier for any of the foregoing.


 


“Hazardous Materials” shall mean any
hazardous, toxic or dangerous substance, materials and wastes, including,
without limitation, hydrocarbons (including naturally occurring or man-made
petroleum and hydrocarbons), flammable explosives, asbestos, urea formaldehyde
insulation, radioactive materials, biological substances, polychlorinated
biphenyls, pesticides, herbicides and any other kind and/or type of pollutants
or contaminants (including, without limitation, materials which include
hazardous constituents), sewage, sludge, industrial slag, solvents and/or any
other similar substances, materials, or wastes and including any other
substances, materials or wastes that are, or become, regulated under any
Environmental Law (including, without limitation any that are, or become, classified
as hazardous or toxic under any Environmental Law).


 


“Healthcare Regulations” means any and all
current or future Laws relating to HMOs, healthcare service providers,
Government Reimbursement Programs, Persons engaged in the Healthcare Service
Business, healthcare-related insurance companies, or any other similar Person
and any rule, regulation, directive, order or decision promulgated or issued
pursuant thereto.  Healthcare Regulations
shall include the Food, Drug and Cosmetic Act (21 U.S.C. § 301 et seq.),


 


 


Annex 1 - 4





















 


federal
anti-kickback statute (42 U.S.C. § 1320a-7b), the False Claims Act (31
U.S.C. §§ 3729 et seq.), the Health Insurance Portability and
Accountability Act of 1996 (Pub. L. No. 104-191, 110 Stat. 1936 (1996))
and the federal physician self-referral laws (42 U.S.C. § 1395nn).


 


“Indebtedness”
of any Person shall mean, without duplication, (a) all indebtedness of
such Person for borrowed money, whether or not evidenced by bonds, debentures,
notes or similar instruments, (b) all Capital Lease Obligations of such
Person, (c) all obligations of such Person to pay the deferred purchase
price of property or services (excluding trade accounts payable in the ordinary
course of business), (d) all indebtedness secured by a Lien on the
property of such Person, whether or not such indebtedness shall have been
assumed by such Person, (e) all obligations, contingent or otherwise, with
respect to the face amount of all letters of credit (whether or not drawn) and
banker’s acceptances issued for the account of such Person, (f) all
Derivative Obligations of such Person, (g) all Contingent Obligations, and
(h) all liabilities of any partnership or joint venture of which such
Person is a general partner or joint venturer.


 


“Information Certificate” means the document
attached hereto as Exhibit C.


 


“Intellectual
Property” shall mean all past, present and future:  trade secrets (including, without limitation,
customer lists), know-how and other proprietary information; trademarks,
Internet domain names, service marks, trade dress, trade names, business names,
designs, logos, slogans (and all translations, adaptations, derivations and
combinations of the foregoing), indicia and other source and/or business identifiers,
and the goodwill of the business relating thereto and all registrations or
applications for registrations which have heretofore been or may hereafter be
issued thereon throughout the world; copyrights (including copyrights for
computer programs) and copyright registrations or applications for
registrations which have heretofore been or may hereafter be issued throughout
the world and all tangible property embodying the copyrights; unpatented
inventions (whether or not patentable); patent applications and patents;
industrial designs, industrial design applications and registered industrial
designs; license agreements related to any of the foregoing and income
therefrom; books, records, writings, computer tapes or disks, flow diagrams,
specification sheets, computer software, source codes, object codes, executable
code, data, databases and other physical manifestations, embodiments or
incorporations of any of the foregoing; the right to sue for all past, present
and future infringements of any of the foregoing; all other intellectual
property; and all common law and other rights throughout the world in and to
all of the foregoing.


 


“Lender Affiliate” shall mean Lender’s
directors, officers, employees, agents, attorneys or any other Person or entity
affiliated with or representing Lender.


 


“Lien”
shall mean any mortgage, pledge, claim, hypothecation, judgment lien or similar
legal process, title retention lien, or other lien or security interest,
including, without limitation, the interest of a vendor under any conditional
sale or other title retention agreement and the interest of a lessor under a
lease of any interest in any kind of property or asset, whether real, personal
or mixed, or tangible or intangible, that is, or should be, accounted for as a Capital
Lease.


 


“Loan Documents” shall mean this Agreement
and the Other Agreements.


 


 


Annex 1 - 5





















 


“Loans” shall mean all loans and advances
made by Lender to or on behalf of Borrower hereunder or under the Revolving
Loan Agreement.


 


“Lockbox” shall have the meaning specified
in Subsection 8(a) hereof.


 


“Lockbox Bank” shall have the meaning
specified in Subsection 8(a) hereof.


 


“Makewell Agreement” means that certain
Makewell Agreement executed by MedCap Partners L.P., a Delaware limited
partnership, dated as of the date hereof in favor of the Lender, as the same
may be amended, restated, supplemented or otherwise modified from time to time.


 


“Material Adverse Effect” shall mean a
material adverse effect on the business, property, assets, prospects,
operations or condition, financial or otherwise, of a Person.


 


“Maximum
Revolving Loan Limit”
means the maximum commitments of BHF under the Revolving Loan Agreement.


 


“Obligations” shall mean any and all
obligations, liabilities and Indebtedness of Borrower to Lender (other than
Revolving Loan Obligations), or to any parent, affiliate or subsidiary of
Lender, of any and every kind and nature, howsoever created, arising or
evidenced and howsoever owned, held or acquired, whether now or hereafter
existing, whether now due or to become due, whether primary, secondary, direct,
indirect, absolute, contingent or otherwise (including, without limitation,
obligations of performance), whether several, joint or joint and several, and
whether arising or existing under written or oral agreement or by operation of
law.


 


“Obligor” shall mean Borrower and each other
Person who is or shall become primarily or secondarily liable for any of the
Obligations.


 


“Operating Cash Flow” means, for any period,
Borrower’s consolidated net income or loss (excluding the effect of any
extraordinary gains or losses), determined in accordance with GAAP, plus
or minus each of the following items on a consolidated basis, to the
extent deducted from or added to the revenues of Borrower in the calculation of
consolidated net income or loss: (i) depreciation; (ii) amortization
and other non-cash charges; (iii) interest and fee expenses paid or
accrued; (iv) total federal and state income tax expense determined as the
accrued liability of Borrower in respect of such period, regardless of what
portion of such expense has actually been paid by Borrower during such period;
and (v) gain or loss on the sale of property, plant or equipment of
Borrower; and (vi) management fees and other fees paid to subordinating
creditors to the extent permitted hereunder, and under the applicable
subordination agreement(s), but only to the extent any such item was expensed
in the calculation of net income and after deduction for each of (a) federal
and state income taxes, to the extent actually paid during such period; (b) any
non-cash income and gains from the sale of property; and (c) all actual
Capital Expenditures made during such period and not financed.


 


“Original Closing Date” shall mean August 31,
2004.


 


“Other Agreements” shall mean all
agreements, makewell agreements, instruments and documents, other than this
Agreement and the Revolving Loan Documents, including, without limitation,
guaranties, mortgages, trust deeds, pledges, powers of attorney, consents, 


 


 


Annex 1 - 6





















 


assignments,
contracts, notices, security agreements, leases, financing statements,
subordination agreements, and all other writings heretofore, now or from time
to time hereafter executed by or on behalf of Borrower or any other Person and
delivered to Lender in connection with the Obligations or the transactions
contemplated hereby, as each of the same may be amended, modified or
supplemented from time to time.


 


“Parent” shall mean any Person now or at any
time or times hereafter owning or controlling (alone or with any other Person)
at least a majority of the issued and outstanding equity of Borrower and, if
Borrower is a partnership, the general partner of Borrower.


 


“PBGC” shall have the meaning specified in Subsection 12(b)(iv) hereof.


 


“Permitted Acquisition” shall have the
meaning set forth in Section 2(b) hereof.


 


“Permitted Liens” shall mean (i) statutory
Liens of landlords, carriers, warehousemen, processors, mechanics, materialmen
or suppliers incurred in the ordinary course of business and securing amounts
not yet due or declared to be due by the claimant thereunder in excess of
fifteen (15) days or amounts which are being contested in good faith and by
appropriate proceedings and for which Borrower has maintained adequate
reserves; (ii) Liens in favor of Lender; (iii) zoning restrictions
and easements, licenses, covenants and other restrictions affecting the use of
real property that do not individually or in the aggregate have a material
adverse effect on Borrower’s ability to use such real property for its intended
purpose in connection with Borrower’s business; (iv) Liens in connection
with purchase money indebtedness and Capital Leases otherwise permitted
pursuant to this Agreement, provided, that such Liens attach only to the assets
the purchase of which was financed by such purchase money indebtedness or which
is the subject of such Capital Leases; (v) Liens set forth on Schedule 1;
(vi) Liens specifically permitted by Lender in writing; (vii) involuntary
Liens securing amounts less than $50,000 and which are released or for which a
bond acceptable to Lender in its reasonable credit judgment, determined in good
faith, has been posted within ten (10) days of its creation; (viii) Liens
for taxes not yet due and payable or for taxes being contested in good faith by
appropriate proceedings and as to which the Borrower has deposited with the
Lender an amount sufficient in the Lender’s sole discretion to pay such taxes,
together with all estimated interest and penalties in connection therewith; and
(ix) Liens in favor of BHF.


 


“Person” shall mean any individual, sole
proprietorship, partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability company, institution, entity, party
or foreign or United States government (whether federal, state, county, city,
municipal or otherwise), including, without limitation, any instrumentality,
division, agency, body or department thereof.


 


“Plan” shall have the meaning specified in Subsection 12(b)(iv) hereof.


 


“Pledge Agreement” shall mean that certain
Pledge Agreement dated as of August 31 2004 between Crdentia and
Lender, as amended, restated, supplemented or otherwise modified from time to
time.


 


“Prime Rate” shall mean the prime rate
publicly announced by LaSalle Bank, N.A., in effect from time to time.


 


 


Annex 1 - 7





















 


“Property” shall mean, with respect to any
Person, any interest of such Person in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible, including capital stock in,
and other securities of, any other Person.


 


“Revolving Borrowing Base Amount” shall have
the meaning set forth in the Revolving Loan Agreement.


 


“Revolving Loan Agreement” shall have the
meaning set forth in the recitals hereto.


 


“Revolving Loan Documents” shall mean the
Revolving Loan Agreement and all agreements, instruments and documents,
executed by or on behalf of Borrower or any other Person and delivered to BHF
in connection with the transactions contemplated by the Revolving Loan
Agreement.


 


“Revolving Loan Obligations” shall mean all
indebtedness and obligations of every kind and nature of Borrowers in respect
of the Revolving Loan Documents.


 


“Revolving Loans” shall mean those certain
Revolving Loans of BHF to Borrowers pursuant to the Revolving Loan Agreement.


 


“Seller Notes” shall mean, collectively, the
notes listed on Schedule 11(n) hereto and any other notes
representing Subordinated Debt incurred as a part of the purchase price of a
Permitted Acquisition subject to a Subordination Agreement acceptable to the
Lender.


 


“Senior Debt Service” means, for any period
with respect to the Borrowers, the sum of payments made or required to be made
by Borrower during such period for (i) interest only payments due on the
Revolving Loans facility, and (ii) interest and scheduled principal
payments due on any and all other Indebtedness for Borrowed Money excluding the
Subordinated Debt.


 


“Staffing Services” means arranging to
provide healthcare-related staffing services, long-term care or any business or
activity that is reasonably similar thereto or a reasonable extension,
development or expansion thereof or ancillary thereto.


 


“Subordinated Debt” shall mean Indebtedness
of Borrower or any Subsidiary of Borrower that is subordinated to the
Obligations in a manner satisfactory to Lender, and contains terms, including,
without limitation, payment terms, satisfactory to Lender.


 


“Subordination Agreements” shall mean,
individually and collectively, all subordination agreements, intercreditor
agreements, consent and similar agreements among either Borrower, Lender and
any holder of Indebtedness, whether entered into on or prior to the date hereof
or from time to time hereafter, together with all modifications, amendments and
restatements of any of the foregoing, including, without limitation, the
Subordination Agreements listed on Schedule 11(n) hereto in respect
of the Seller Notes existing on the Original Closing Date.


 


“Subsidiary” shall mean any corporation of
which more than fifty percent (50%) of the outstanding capital stock having
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether, at the time, stock of any other class of 


 


 


Annex 1 - 8





















 


such corporation
shall have or might have voting power by reason of the happening of any
contingency) is at the time, directly or indirectly, owned by Borrower, or any
partnership, joint venture or limited liability company of which more than
fifty percent (50%) of the outstanding equity interests are at the time,
directly or indirectly, owned by Borrower or any partnership of which Borrower
is a general partner.


 


“Tangible Net Worth” shall have the meaning
specified in Subsection 14(a) hereof.


 


“Target” shall mean, the entity which is the
subject of an Acquisition.


 


“Term” shall have the meaning specified in Section 10
hereof.


 


“Term Loan “ shall have the meaning
specified in Subsection 2(a) hereof.


 


“Total Debt Service” means, for any period,
the sum of payments made (or, as to clause (i) of this sentence, required
to be made) by Borrower, on a consolidated basis, during such period for (i) Senior
Debt Service, (ii) interest, fees and scheduled principal payments due on
the Term Loans, (iii) pursuant to the scheduled Subordinated Debt payments
permitted by this Agreement and the applicable subordination agreement, and (iv) interest
and scheduled principal payments due on any and all other Indebtedness for
Borrowed Money of Borrower.


 


“Travmed Subordinated Debt” shall mean the
Indebtedness of Borrower owed to Robert Litton, Steve Williams, or any other
Person, including all of their respective successors and assigns, which is in
connection with the acquisition by Borrower of Travmed USA, Inc.


 


“Travmed Subordinated Debt Default” shall
mean a “Default” as defined in any of the Travmed Subordinated Notes.


 


“Travmed Subordinated Notes” shall mean (i) that
certain Subordinated Promissory Note dated as of March 28, 2005, issued by
Crdentia in favor of Robert Litton (including all of his successors and
assigns) in the original principal amount of $1,607,745, and (ii)  that
certain Subordinated Promissory Note dated as of March 28, 2005, issued by
Crdentia in favor of Robert Litton (including all of his successors and
assigns) in the original principal amount of $1,607,745.


 


“UCC” shall mean the Uniform Commercial Code
as in effect from time to time in the State of Illinois.


 


“Warrant Agreement” shall mean that certain
Warrant Agreement dated as of the date hereof between Crdentia Corp. and
Lender.


 


“Warrant Certificate” shall mean a
certificate evidencing one or more warrants, substantially in the form of Exhibit A
to the Warrant Agreement, with such changes therein as may be required to
reflect any adjustments made pursuant to Section 12 of the Warrant
Agreement.


 


 


Annex 1 - 9





















 


INDEX OF EXHIBITS AND SCHEDULES


 


	
  Exhibits

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  Compliance Certificate

  
	
   

  	
   

  	
   

  
	
  Exhibit B

  	
   

  	
  Closing Checklist

  
	
   

  	
   

  	
   

  
	
  Exhibit C

  	
   

  	
  Information Certificate

  



 


	
  Schedules

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 1

  	
   

  	
  Permitted Liens

  
	
   

  	
   

  	
   

  
	
  Schedule 11(b)

  	
   

  	
  Business and Collateral Locations

  
	
   

  	
   

  	
   

  
	
  Schedule 11(b)

  	
   

  	
  Certain Collateral

  
	
   

  	
   

  	
   

  
	
  Schedule 11(g)

  	
   

  	
  Litigation

  
	
   

  	
   

  	
   

  
	
  Schedule 11(i)

  	
   

  	
  Affiliate Transactions

  
	
   

  	
   

  	
   

  
	
  Schedule 11(j)

  	
   

  	
  Names & Trade Names

  
	
   

  	
   

  	
   

  
	
  Schedule 11(n)

  	
   

  	
  Indebtedness

  
	
   

  	
   

  	
   

  
	
  Schedule 11(p)

  	
   

  	
  Parent, Subsidiaries and Affiliates

  
	
   

  	
   

  	
   

  
	
  Schedule 11(q)

  	
   

  	
  Defaults

  
	
   

  	
   

  	
   

  
	
  Schedule 11(t)

  	
   

  	
  Environmental Matters

  
	
   

  	
   

  	
   

  
	
  Schedule 11(v

  	
   

  	
  Government Reimbursement Program Matters

  
	
   

  	
   

  	
   

  
	
  Schedule 11(y)

  	
   

  	
  Licenses and Permits

  



 


 


EXHIBIT A - 1





















 


EXHIBIT A –
COMPLIANCE CERTIFICATE


 


Date:


 


	
  TO:

  	
   

  	
  Bridge Opportunity Finance, LLC

  
	
   

  	
   

  	
  233 South Wacker Drive, Suite 5350

  
	
   

  	
   

  	
  Chicago, Illinois 60606

  



 


Gentlemen and Ladies:


 


The undersigned Borrower hereby certifies to you the following pursuant
to Section 9(c) of the Amended and Restated Loan and Security
Agreement-Term Loans (the “Agreement”) dated as of May 16, 2005,
among Crdentia Corp., a Delaware corporation (“Crdentia”), Baker Anderson Christie, Inc., a California
corporation (“Baker”), Nurses
Network, Inc., a California corporation (“Nurses Network”), New Age Staffing, Inc., a Delaware
corporation (“New Age”), PSR
Nurses, Ltd., a Texas limited partnership (“PSR
Ltd.”), PSR Nurse Recruiting, Inc., a Texas corporation (“PSR Recruiting”), PSR Nurses Holdings
Corp., a Texas corporation (“PSR Holding”),
CRDE Corp., a Delaware corporation (“CRDE”),
Arizona Home Health Care/Private Duty, Inc., an Arizona corporation (“AHHC”), Care Pros Staffing, Inc., a
Texas corporation (“Care Pros”),
HIP Holding, Inc., a Delaware corporation (“HIP”), Health Industry Professionals, L.L.C., a Michigan
limited liability company (“HIP LLC”),
Travmed USA, Inc., a North Carolina corporation (“Travmed”), GHS Acquisition Corporation, a
Delaware corporation (“GHS”),
Prime Staff, LP, a Texas limited partnership (“Prime Staff”), and Mint Medical Staffing Odessa, LP, a Texas
limited partnership (“MMSO”; and
together with Crdentia, Baker, Nurses Network, New Age, PSR Ltd., PSR
Recruiting, PSR Holding, CRDE, AHHC, Care Pros, HIP, HIP LLC, Travmed, GHS and
Prime Staff, each referred to individually and collectively, as “Borrower”), a d Bridge Healthcare Finance,
LLC (the “Lender”).


 


1.               As of            ,
no event of default or event which with the lapse of time or the giving of
notice, or both, would become an event of default (an “unmatured event of
default”) has occurred or, if such a change has occurred, a writing attached
hereto specifies the nature thereof and the action that Borrower has taken or
proposes to take with respect thereto.


 


2.               No material adverse
change in the condition, financial or otherwise, business, property, or results
of operations of Borrower has occurred since                                                             [date
of last Compliance Certificate/last financial statements delivered prior to
closing], or, if such a change has occurred, a writing attached hereto
specifies the nature thereof and the action that Borrower has taken or proposes
to take with respect thereto.


 


3.               Borrower is in
compliance with the representations, warranties and covenants in the Agreement
or, if Borrower is not in compliance with any representations, warranties 


 





















 


or covenants in the Agreement, a writing
attached hereto specifies the nature thereof and the action that Borrower has
taken or proposes to take with respect thereto.


 


4.               As of                  ,
Borrower maintains the following financial covenants pursuant to Section 14
of the Agreement.


 


a.               Borrower shall
maintain a Minimum Tangible Net Worth of (i) ($5,000,000) at all times
from the date hereof through June 30, 2005, and (ii) thereafter, from
the last day of each fiscal quarter of the Borrowers through the day prior to
the last day of each immediately succeeding fiscal quarter of the Borrowers,
the Minimum Tangible Net Worth during the immediately preceding period plus
seventy-five percent (75%) of the
Borrowers’ net income (but without reduction for any net loss) for the Fiscal
Year ending on the first day of such period as reflected on the Borrowers’
audited year end financial statement. 
(See attached Schedule A for calculation of Tangible Net
Worth)


 


Compliance                             Yes:           No:           


 


b.              Senior Debt
Service Coverage Ratio.  As of the
last day of each applicable period, the ratio of the Borrower’s Operating Cash
Flow to Borrower’s Senior Debt Service for each period set forth below (which
ratio shall be tested as of the last day of each such period) must be at least
the following: (See attached Schedule B for calculation)


 


	
  Time Frame

  	
   

  	
  Date Tested

  	
   

  	
  Senior Debt Service Coverage
  Ratio

  	
   

  	
  Based on

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly

  	
   

  	
  6/30/05

  	
   

  	
  0.5 to 1.00

  	
   

  	
  Trailing 3 months

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly

  	
   

  	
  9/30/05

  	
   

  	
  1.00 to 1.00

  	
   

  	
  Trailing 6 months

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly

  	
   

  	
  12/31/05

  	
   

  	
  1.15 to 1.00

  	
   

  	
  Trailing 9 months

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly

  	
   

  	
  3/31/06

  	
   

  	
  1.5 to 1.00

  	
   

  	
  Trailing 12 months

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly

  	
   

  	
  6/30/06 and each fiscal quarter thereafter

  	
   

  	
  1.5 to 1.00

  	
   

  	
  Trailing 12 months

  



 


	
  Actual Debt
  Service Coverage

  Ratio:

  	
   

  	
  Compliance:

  	
   

  	
  Yes:

  	
   

  	
  No:

  



 


c.               Minimum EBITDA.  Borrower shall not permit EBITDA of Borrower
to be less than the amount set forth below for the corresponding period set
forth below: (See attached Schedule C for calculation):


 





















 


	
  Time Frame

  	
   

  	
  Date Tested

  	
   

  	
  Minimum EBITDA

  	
   

  	
  Based on

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly

  	
   

  	
  6/30/05

  	
   

  	
  $100,000

  	
   

  	
  Trailing 3 months

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly

  	
   

  	
  9/30/05

  	
   

  	
  $300,000

  	
   

  	
  Trailing 6 months

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly

  	
   

  	
  12/31/05

  	
   

  	
  $600,000

  	
   

  	
  Trailing 9 months

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly

  	
   

  	
  3/31/06

  	
   

  	
  $1,000,000

  	
   

  	
  Trailing 12 months

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly

  	
   

  	
  6/30/06 and each fiscal quarter thereafter

  	
   

  	
  $1,000,000

  	
   

  	
  Trailing 12 months

  



 


Compliance                                            Yes:           No:           


 


d.  Term Loan Debt Leverage Ratio.  Borrower shall note permit the ratio of Term
Loan Debt to EBITDA to be more than the following for each period set forth
below:  (See Schedule D for
calculation) 




	
  Time Frame

  	
   

  	
  Date
  Tested

  	
   

  	
  Coverage

  	
   

  	
  Based
  on:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly

  	
   

  	
  3/31/06

  	
   

  	
  2.70 to 1

  	
   

  	
  Trailing 12 Months

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly

  	
   

  	
  6/30/06 and each fiscal quarter thereafter

  	
   

  	
  2.50 to 1

  	
   

  	
  Trailing 12 Months

  



 


	
  Actual Term
  Loan Debt 

  Leverage Ratio:

  	
   

  	
  Compliance:

  	
   

  	
  Yes:

  	
   

  	
  No:

  



 


e.  Capital Expenditure Limitation:  the aggregate cost of all fixed assets
purchased or otherwise acquired shall not exceed $500,000 during any Fiscal
Year.


 


	
  Total
  Capital Expenditures

  (YTD):

  	
   

  	
  Compliance:

  	
   

  	
  Yes:

  	
   

  	
  No:

  



 


f.  Operating Lease Obligations:  payments made pursuant to operating lease
obligations shall not exceed $700,000 during any Fiscal Year.


 


	
  Operating
  Lease Payments

  (YTD):

  	
   

  	
  Compliance:

  	
   

  	
  Yes:

  	
   

  	
  No:

  



 


The financial
statements, reports and information submitted concurrently herewith have been
prepared in accordance with generally accepted accounting principles
consistently applied, where applicable, and there have been no material changes
in accounting policies 


 





















 


or financial reporting
practices of Borrower since                                                           [date
of last Compliance Certificate/last financial statements delivered prior to
closing], or, if such a change has occurred, a writing attached hereto specifies
the nature thereof and the action that Borrower has taken or proposes to take
with respect thereto.


 





















 


Any and all
initially capitalized terms set forth in this certificate without definition
shall have the respective meanings ascribed thereto in the Agreement.


 


 


	
   

  	
   

  	
  Crdentia Corp.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
					



 





















 


Schedule A


 


 


Tangible Net Worth


 


Tangible Net Worth


 


	
  Shareholders’
  equity (including retained earnings and preferred stock) of Borrowers

  	
   

  
	
   

  	
   

  
	
  Less:Book
  value of all intangible assets

  	
   

  
	
   

  	
   

  
	
  Add:Amount
  of debt of Borrowers subordinated to 

  Lender

  	
   

  
	
   

  	
   

  
	
  Tangible Net
  Worth

  	
   

  



 





















 


Schedule B


 


Senior Debt Service Coverage Ratio


 


	
  Operating Cash Flow

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Net income
  (Loss) of the Borrowers excluding extraordinary gains or losses

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Add:

  	
  Depreciation

  	
   

  	
   

  
	
   

  	
  Amortization
  and other non-cash charges

  	
   

  	
   

  
	
   

  	
  Interest and
  fee expenses paid or accrued

  	
   

  	
   

  
	
   

  	
  Total
  federal and state income tax expenses accrued regardless of whether paid
  during such period

  	
   

  	
   

  
	
   

  	
  Management
  fees and other fees paid to subordinated creditors

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Add/Less:

  	
   

  	
   

  
	
   

  	
  Gain or loss
  on the sale of property, plant or Equipment

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Subtotal

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Less:

  	
  Cash Capital
  Expenditures made during such period of the Borrowers

  	
   

  	
   

  
	
   

  	
  All taxes
  paid or required to be paid during such period and all non-cash income of the
  Borrowers

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Total
  Operating Cash Flow

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Senior Debt Service

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Add:

  	
  Interest due
  on Revolving Loans of the Borrowers

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Scheduled
  principal and interest payments made or required to be made on all other
  indebtedness of the Borrowers (excluding Subordinated Debt)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Total Senior
  Debt Service

  	
   

  	
   

  
	
   

  
	
  Total Operating Cash Flow:

  Total Senior Debt Service

  	
   

  	
  =         to
  1.0

  
							



 





















 


Schedule C


 


EBITDA


 


	
  EBITDA

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Net income
  (Loss) of the Borrowers (excluding any after-tax gains or losses and
  excluding other after-tax extraordinary gains or losses)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Add:

  	
  Interest
  expense

  	
   

  	
   

  
	
   

  	
  Income tax
  expense

  	
   

  	
   

  
	
   

  	
  Depreciation

  	
   

  	
   

  
	
   

  	
  Amortization

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Add/Less:

  	
   

  	
   

  
	
   

  	
  Other
  non-cash charges or gains

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total EBITDA

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Minimum
  EBITDA

  	
  $

  	
  Total EBITDA

  	
  $

  	
   

  	
   

  
							



 





















 


Schedule D


 


Term Loan Debt Leverage Ratio


 


	
  Term Loan Debt

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Aggregate
  principal amount of Term Loan outstanding

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EBITDA (from Schedule C)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Term Loan Debt to EBITDA

  	
   

  	
  =          to
  1.0

  	
   

  	
   

  
					



 


 


EXHIBIT B - 1





















 


Exhibit B


Closing Checklist


(See Attached)


 


 


EXHIBIT B - 2





















 


Exhibit C


Information Certificate


(See Attached)


 


 


EXHIBIT B - 3





















 


Exhibit D


Subordination Agreement


(See Attached)


 


 


EXHIBIT B - 4





















 


SCHEDULE 1 – PERMITTED LIENS


 


 


SCHEDULE 1 - 1





















 


SCHEDULE 11(B) - BUSINESS AND COLLATERAL LOCATIONS; 

CERTAIN COLLATERAL


 


Attached to and made a
part of that certain Loan and Security Agreement of even date herewith between
CRDENTIA CORP., a             corporation
(“Borrower”) and BRIDGE
OPPORTUNITY FINANCE, LLC (“Lender”).


 


A.                                   Borrower’s
business locations (please indicate which location is the principal place of
business and at which locations originals and all copies of Borrower’s books,
records and accounts are kept).


 


1.


 


2.


 


B.                                     Other
locations of Collateral (including, without limitation, warehouse locations,
processing locations, consignment locations) and all post office boxes of
Borrower.  Please indicate the
relationship of such location to Borrower (i.e., public warehouse, processor,
etc.).


 


1.


 


2.


 


C.                                     Bank
Accounts of Borrower:


 


	
   

  	
   

  	
  Bank (with address)

  	
   

  	
  Account Number

  	
   

  	
  Type of Account

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


D.                                    Certain
Collateral


 


a.                                       Intellectual
Property


 


b.                                      Instruments


 


c.                                       Deposit
Accounts


 


d.                                      Investment
Property


 


e.                                       Letter-of-Credit
Rights


 


f.                                         Chattel
Paper


 


g.                                      Documents


 


 


SCHEDULE 11(B) - 1





















 


h.                                      Commercial
Tort Claims


 


i.                                          Certificate
of Title Goods


 


j.                                          Collateral
with Third Parties


 


 


SCHEDULE 11(B) - 2





















 


SCHEDULE 11(G) –
LITIGATION


 


 


SCHEDULE 11(G) - 1





















 


SCHEDULE 11(I) – AFFILIATE TRANSACTIONS


 


 


SCHEDULE 11(I) - 1





















 


SCHEDULE 11(J)
– NAMES & TRADE NAMES


 


 


SCHEDULE 11(J) - 1





















 


SCHEDULE 11(N)
– INDEBTEDNESS


 


 


SCHEDULE 11(J) - 1





















 


SCHEDULE 11(P) – PARENT, SUBSIDIARIES AND AFFILIATES


 


 


SCHEDULE 11(X) - 1