Exhibit 10.2


 


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


 


SECURED PROMISSORY NOTE


 


	
  Principal Amount: $1,500,000.00

  	
   

  	
  San
  Francisco, California

  
	
  Interest Rate: 5.00% per annum

  	
   

  	
  November 18,
  2005

  



 


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


 


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


 





















 


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


 


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


 


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


 


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


 


2





















 


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


 


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


 


8.  Holder
Representations.


 


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


 


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


 


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


 


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


 


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


 


3





















 


Regulation D promulgated under the 1933 Act.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


[signature pages follow]


 


4





















 


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


 


	
   

  	
  CRDENTIA CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James D.
  Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title: Chief
  Executive Officer

  
						



 


	
   

  	
  BAKER ANDERSON CHRISTIE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James D.
  Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title: Chief
  Executive Officer

  
						



 


 


	
   

  	
  NURSES NETWORK, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James D.
  Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title: Chief
  Executive Officer

  
						



 


 


	
   

  	
  NEW AGE STAFFING, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James D.
  Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title: Chief
  Executive Officer

  
						



 


5





















 


	
   

  	
  PSR NURSES, LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  PSR Nurse
  Recruiting, Inc.

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:  General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James D.
  Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title: Chief
  Executive Officer

  
							



 


 


	
   

  	
  PSR NURSE RECRUITING, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James D.
  Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title: Chief
  Executive Officer

  
						



 


 


	
   

  	
  PSR NURSES HOLDINGS CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James D.
  Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title: Chief
  Executive Officer

  
						



 


 


	
   

  	
  CRDE CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James D.
  Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title: Chief
  Executive Officer

  
						



 


 


	
   

  	
  ARIZONA HOME HEALTH

  CARE/PRIVATE DUTY, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James D.
  Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title: Chief
  Executive Officer

  
						



 


6





















 


	
   

  	
  CARE PROS STAFFING, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James D.
  Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title: Chief
  Executive Officer

  
						



 


 


	
   

  	
  HIP HOLDING, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James D.
  Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title: Chief
  Executive Officer

  
						



 


 


	
   

  	
  HEALTH INDUSTRY 

  PROFESSIONALS, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By: HIP
  Holding, Inc.

  
	
   

  	
   

  
	
   

  	
  Its:  Managing Member

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James D.
  Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title: Chief
  Executive Officer

  
						



 


	
   

  	
  TRAVMED USA, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James D.
  Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title: Chief
  Executive Officer

  
						



 


	
   

  	
  PRIME STAFF, LP

  
	
   

  	
   

  
	
   

  	
  By: CRDE
  Corp.

  

  Its:  General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James D.
  Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title: Chief
  Executive Officer

  
						



 


7





















 


	
   

  	
  MINT MEDICAL STAFFING 

  ODESSA, LP

  
	
   

  	
   

  
	
   

  	
  By: CRDE
  Corp.

  

  Its:  General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James D.
  Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title: Chief
  Executive Officer

  
						



 


	
   

  	
  GHS ACQUISITION CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James D.
  Durham

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title: Chief
  Executive Officer

  
						



 


8





















 


Acknowledged
and Agreed to:


 


MEDCAP
PARTNERS L.P.


 


	
  By:

  	
  MedCap Management & Research LLC

  	
   

  
	
  Its:

  	
  General Partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ C. Fred
  Toney

  	
   

  	
   

  
	
   

  	
  Name:   C.
  Fred Toney

  	
   

  
	
   

  	
  Title:
  Managing Member

  	
   

  
				



 


9