Document:

Exhibit 10.5

 

THIS NOTE, THE MAKER’S OBLIGATIONS HEREUNDER, AND THE PAYEE’S RIGHTS
HEREUNDER, ARE SUBORDINATE TO CERTAIN SENIOR INDEBTEDNESS OF THE MAKER, AS, IN
THE MANNER AND TO THE EXTENT PROVIDED IN THOSE CERTAIN SUBORDINATION AGREEMENTS
OF EVEN DATE HEREWITH BY AND AMONG THE PAYEE AND CAPITAL TEMPFUNDS (AS SAME MAY BE
AMENDED, MODIFIED, SUPPLEMENTED AND/OR RESTATED FROM TIME TO TIME).

 

	
  $4,000,000

  	
   

  	
  July     , 2008

  

 

AMENDED AND RESTATED TERM NOTE

(Tranche B)

 

FOR VALUE RECEIVED, the
undersigned, CRDENTIA CORP., a Delaware corporation (the “Maker”), hereby promises to pay to ComVest
Capital, LLC, a Delaware limited liability company (“ComVest),
or registered assigns (hereinafter, collectively with ComVest, the “Payee”), the sum of Four Million
($4,000,000) Dollars (the “Principal”),
with interest thereon, on the terms and conditions set forth herein and in the
Amended and Restated Revolving Credit and Term Loan Agreement of even date
herewith by and between the Maker and ComVest (the “Loan Agreement”).  Terms defined in the Loan Agreement and not
otherwise defined herein shall have the meanings assigned thereto in the Loan
Agreement.

 

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

 

1.                                       Payments.

 

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

 

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

 

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

 

2.                                       Prepayment.

 

(a)                                  Optional
Prepayment of Principal.  All
or any portion of the unpaid Principal balance of this Note, together with all
accrued and unpaid Interest on the Principal 

 

 

amount being prepaid, may at the Maker’s option be prepaid in whole or
in part, at any time or from time to time, upon ten (10) days’ prior
written notice to the Payee, provided that the Payee shall retain the
right to convert all or any portion of such Principal amount called for
prepayment, together with any or all Interest accrued thereon, at any time
prior to the date fixed for prepayment, and thereafter until such prepayment is
actually made.  Any optional prepayment
of Principal hereunder paid on or prior to February 22, 2010 shall require
the simultaneous payment of a prepayment premium in an amount equal to two (2%)
percent of the Principal amount being prepaid; any optional prepayment made
after February 22, 2010 may be made without premium or penalty.

 

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

 

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

 

3.                                       Conversion.

 

(a)                                  Optional and
Mandatory Conversion.  The Payee
may, at its option, upon written notice to the Maker given at any time and from
time to time, convert all or any portion of the unpaid Principal balance of
this Note, and/or any accrued Interest thereon, into shares of common stock of
the Maker (“Common Stock”), at a price of
$0.30 per share of Common Stock (as same may be adjusted from time to time in
accordance herewith, the “Conversion Price”).  The effective date of any conversion hereunder
is herein referred to as the “Conversion Date.”  To the extent that this Note is converted
only in part, then such conversion shall be treated as a prepayment of the
Principal amount converted in accordance with Section 2(d) above,
provided that no prepayment premium shall be required in respect of any
conversion.

 

(b)                                 Mechanics of
Conversion.  Upon notice
to the Maker of the Payee’s conversion election as provided in Section 3(a),
the Maker shall, in accordance with Section 3(c), issue to the Payee (or to
the Payee’s designee(s) set forth in the Payee’s conversion election) the
number of shares of Common Stock to which the Payee shall be entitled upon such
conversion, and shall deliver or cause to be delivered to the Payee or such
designee(s) the certificates representing such shares of Common
Stock.  All shares of Common Stock issued
or delivered upon any conversion hereunder shall, when issued or delivered, be
duly authorized, validly issued, fully paid and nonassessable.  In lieu of any fractional shares to which the
Payee would otherwise be entitled, the Maker shall pay cash equal to such
fraction multiplied by the per share Conversion Price.

 

(c)                                  Issuance of
Common Stock Upon Conversion.  Within a reasonable time, not exceeding five (5) Business
Days after the Conversion Date, the Maker shall deliver or cause to be
delivered, to or upon the written order of the Payee of this Note so converted,
certificates representing the number of fully paid and nonassessable shares of
Common Stock into which this 

 

2

 

Note has been converted in accordance with the provisions of this Section 3.  If so requested by the Maker, the Payee
shall, within a reasonable time (not exceeding five (5) Business Days
after receipt by the Payee of such certificates), surrender this Note to the
Maker for cancellation, against delivery of a replacement Note representing the
remaining balance (if any) of this Note which has not been converted.  Subject to the following provisions of this Section 3,
such conversion shall be deemed to have occurred on the Conversion Date, so
that the Payee or the Payee’s designee(s) shall be treated for all
purposes as having become the record Payee of such shares of Common Stock at
such time.

 

(d)                                 Taxes on
Conversion.  The
issuance of certificates for shares for Common Stock upon the conversion of
this Note shall be made without charge by the Maker to the converting Payee for
any tax in respect of the issuance of such certificates and such certificates
shall be issued in the name of, or in such names as may be directed by, the
Payee of this Note; provided, however, that the Maker shall not be required to
pay any tax which may be payable in respect of any transfer involved in the
issuance or delivery of any such certificate in a name other than that of the
Payee of this Note, and the Maker shall not be required to issue or deliver
such certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Maker the amount of any such tax or shall have
established to the satisfaction of the Maker that any such tax has been paid.

 

(e)                                  Adjustment of Shares.

 

(i)                                     Stock
Dividends, Distributions or Subdivisions.  In the event that, at any time and from time
to time from and after the date of this Note, the Maker shall issue additional
shares of Common Stock (or securities convertible into Common Stock) in a stock
dividend, stock distribution or subdivision paid with respect to Common Stock,
or declare any dividend or other distribution payable in additional shares of
Common Stock (or securities convertible into Common Stock) or effect a split or
subdivision of the outstanding shares of Common Stock, then, concurrently with
the effectiveness of such stock dividend, stock distribution or subdivision,
the then-effective Conversion Price shall be proportionately decreased, and the
number of shares of Common Stock issuable upon conversion of this Note shall
thus be proportionately increased.

 

(ii)                                  Combinations or
Consolidations.  In the event
that, at any time and from time to time from and after the date of this Note,
the outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
then, concurrently with the effectiveness of such combination or consolidation,
the then-effective Conversion Price shall be proportionately increased, and the
number of shares of Common Stock issuable upon conversion of this Note shall
thus be proportionately decreased.

 

(iii)                               Other Dividends
or Distributions.  If the
Maker, at any time or from time to time after the issuance of this Note, makes
a distribution to the holders of Common Stock which is payable in securities of
the Maker other than Common Stock, then, in each such event, provision shall be
made so that the Payee shall receive upon conversion of this Note, in addition
to the number of shares of Common Stock, the amount of such securities of the
Maker which would have been received if the portion of this Note so converted
had been exercised for 

 

3

 

Common Stock on the date of such event, subject to adjustments
subsequent to the date of such event with respect to such distributed
securities which shall be on terms as nearly equivalent as practicable to the
adjustments provided in this Section 3(e)(iii) and all other
adjustments under this Section 3(e). 
Nothing contained in this Section 3(e)(iii) shall be deemed to
permit the payment of any distribution in violation of the Loan Agreement.

 

(iv)                              Merger,
Consolidation or Exchange.  If,
at any time or from time to time after the date of this Note, there occurs any
merger, consolidation, arrangement or statutory share exchange of the Maker
with or into any other person or entity, then, in each such event, provision
shall be made so that the Payee shall receive upon conversion of this Note the
kind and amount of shares and other securities and property (including cash)
which would have been received upon such merger, consolidation, arrangement or
statutory share exchange by the Payee if the portion of this Note so converted
had been exercised for shares of Common Stock immediately prior to such merger,
consolidation, arrangement or statutory share exchange, subject to adjustments
for events subsequent to the effective date of such merger, consolidation,
arrangement or statutory share exchange with respect to such shares and other
securities which shall be on terms as nearly equivalent as practicable to the
adjustments provided in this Section 3(e)(iv) and all other
adjustments under this Section 3(e). 
Nothing contained in this Section 3(e)(iv) shall be deemed to
permit any such transaction in violation of the Loan Agreement.

 

(v)                                 Recapitalization
or Reclassification.  If, at any
time or from time to time after the date of this Note, the shares of Common
Stock issuable upon conversion of this Note are changed into the same or a
different number of securities of any class of the Maker, whether by
recapitalization, reclassification or otherwise (other than a merger,
consolidation, arrangement or statutory share exchange provided for elsewhere
in this Section 3(e)), then, in each such event, provision shall be made
so that the Payee shall receive upon conversion of this Note the kind and
amount of securities or other property which would have been received in
connection with such recapitalization, reclassification or other change by the
Payee if the portion of this Note so converted had been converted immediately
prior to such recapitalization, reclassification or change, subject to
adjustments for events subsequent to the effective date of such
recapitalization, reclassification or other change with respect to such
securities which shall be on terms as nearly equivalent as practicable to the
adjustments provided in this Section 3(e)(v) and all other
adjustments under this Section 3(e).

 

(vi)                              Extraordinary
Dividends or Distributions.  If, at any time or from time to time after
the date of this Note, the Maker shall declare a dividend or any other
distribution upon the Common Stock payable otherwise than out of current
earnings, retained earnings or earned surplus and otherwise than in shares of
Common Stock, then the Conversion Price in effect immediately prior to such
declaration shall be reduced by an amount equal, in the case of a dividend or
distribution in cash, to the amount thereof payable per share of Common Stock
or, in the case of any other dividend or distribution, to the value thereof per
share of Common Stock at the time such dividend or distribution was declared,
as determined by the Board of Directors of the Maker in good faith.  Such reductions shall take effect as of the
date on which a record is taken for the purposes of the subject dividend or
distribution, or, if a record is not taken, the date as of which the holders of
record of Common Stock entitled to such dividend 

 

4

 

or distribution are to be determined. 
Nothing contained in this Section 3(e)(vi) shall be deemed to permit
the payment of any dividend or distribution in violation of the Loan Agreement.

 

(vii)                           Dilutive
Issuances.  (A) 
If the Maker, at any time or from time to time, issues or sells any Additional
Shares of Common Stock (as defined below), other than as provided in the
foregoing subsections of this Section 3(e), for a price per share (which,
in the case of options, warrants, convertible securities or other rights,
includes the amounts paid therefor plus the exercise price, conversion price or
other such amounts payable thereunder) that is less than the Conversion Price
then in effect, then and in each such case, the then applicable Conversion
Price shall automatically be reduced as of the opening of business on the date
of such issue or sale, to a price determined by multiplying the Conversion
Price then in effect by a fraction (i) the numerator of which shall be (A) the
number of shares of Common Stock deemed outstanding (as determined below)
immediately prior to such issue or sale, plus (B) the number of shares of
Common Stock which the aggregate consideration received by the Maker for the
total number of Additional Shares of Common Stock so issued would purchase at
such Conversion Price, and (ii) the denominator of which shall be the
number of shares of Common Stock deemed outstanding (as defined below)
immediately prior to such issue or sale plus the total number of Additional
Shares of Common Stock so issued; provided, however, that upon
the expiration or other termination of options, warrants or other rights to
purchase or acquire Common Stock which triggered any adjustment under this Section 3(e)(vii),
and upon the expiration or termination of the right to convert or exchange
convertible or exchangeable securities (whether by reason of redemption or otherwise)
which triggered any adjustment under this Section 3(e)(vii), if any
thereof shall not have been exercised, converted or exchanged, as applicable,
the number of shares of Common Stock deemed to be outstanding pursuant to this Section 3(e)(vii) shall
be reduced by the number of shares as to which options, warrants and rights to
purchase or acquire Common Stock shall have expired or terminated unexercised,
and as to which conversion or exchange rights shall have expired or terminated
unexercised, and such number of shares shall no longer be deemed to be
outstanding; and the Conversion Price then in effect shall forthwith be
readjusted and thereafter be the price that it would have been had adjustment
been made on the basis of the issuance only of the shares of Common Stock
actually issued.  For purposes of the
preceding sentence, the number of shares of Common Stock deemed to be
outstanding as of a given date shall be the sum of (x) the number of
shares of Common Stock actually outstanding, (y) the number of shares of
Common Stock into which this Note could be converted on the day immediately
preceding the given date, and (z) the number of shares of Common Stock
which could be obtained through the exercise or conversion of all other rights,
options and convertible securities outstanding on the day immediately preceding
the given date.  “Additional
Shares of Common Stock” shall mean all shares of Common Stock, and
all options, warrants, convertible securities or other rights to purchase or
acquire Common Stock, issued by the Maker other than (i) shares of Common
Stock issued pursuant to the exercise of options, warrants or convertible
securities outstanding on the date hereof (without giving effect to any
voluntary reduction of the exercise price or conversion price thereunder), or
hereafter issued from time to time pursuant to and in accordance with stock
purchase or stock option plans as in effect on the date hereof, and (ii) shares
of Common Stock and/or options, warrants or other Common Stock purchase rights
for up to an aggregate of 5,000,000 shares of Common Stock (such number to be
subject to adjustment in accordance with Sections 3(e)(i) and 3(e)(ii) above),
where such options, warrants or other rights are issued both (x) with
exercise prices per share of 

 

5

 

Common Stock at the then-current fair market value of a share of Common
Stock, as determined in good faith by the Board of Directors of the Maker or
the Compensation Committee thereof, and (B) to employees, officers or
directors of, or consultants to, the Maker or any Subsidiary pursuant to stock
purchase or stock option plans or other arrangements that are approved by the
Maker’s Board of Directors or the Compensation Committee thereof, and by the Maker’s
stockholders.

 

(B)                                In the event
that the exercise price, conversion price, purchase price or other price at
which shares of Common Stock are purchasable pursuant to any options, warrants,
convertible securities or other rights to purchase or acquire Common Stock is
reduced at any time or from time to time (other than under or by reason of
provisions designed to protect against dilution), then, upon such reduction
becoming effective, the Conversion Price then in effect hereunder shall
forthwith be decreased to such Conversion Price as would have been obtained had
the adjustments made and required under this Section 3(e)(vii) upon
the issuance of such options, warrants, convertible securities or other rights
been made upon the basis of (and the total consideration received therefor) (i) the
issuance of the number of shares of Common Stock theretofore actually delivered
upon the exercise, conversion or exchange of such options, warrants,
convertible securities or other rights, (ii) the issuance of all of the
Common Stock and all other options, warrants, convertible securities and other
rights to purchase or acquire Common Stock issued after the issuance of the
modified options, warrants, convertible securities or other rights, and (iii) the
original issuance at the time of the reduction of any such options, warrants,
convertible securities or other rights then still outstanding.

 

(C)                                In no event
shall an adjustment under this Section 3(e)(vii) be made if it would
result in an increase in the then applicable Conversion Price.

 

(viii)                        Certificate of
Adjustment.  Whenever
the Conversion Price and/or the number of shares of Common Stock receivable
upon conversion of this Note is adjusted, the Maker shall promptly deliver to
the Payee a certificate of adjustment, setting forth the Conversion Price
and/or shares of Common Stock issuable after adjustment, a brief statement of
the facts requiring the adjustment and the computation by which the adjustment
was made.  The certificate of adjustment
shall be prima facie evidence of the correctness of the adjustment.

 

(ix)                                Successive
Application.  The
provisions of this Section 3(e) shall be applicable successively to
each event described herein which may occur subsequent to the date of this Note
and prior to the conversion in full of this Note.

 

(x)                                   Fractional
Shares.  No fractional shares of Common
Stock shall be issuable by reason of any adjustments made pursuant to this Section 3(e);
and in lieu of any such fractional shares, the Maker shall pay cash therefor in
accordance with Section 3(b) above.

 

(f)                                    No Impairment. The Maker
will not, by amendment of its incorporation documents or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder but will at all times in good faith assist in the carrying out of all
the provisions of this Section 3 and in the taking of all such action as may
be necessary or appropriate in order to protect the conversion rights of the 

 

6

 

Payee of this Note against impairment. 
In the event of any merger or consolidation in which the Maker is not
the surviving entity, the Maker shall make appropriate arrangements in order
that, upon any subsequent conversion of this Note, the Payee shall become
entitled to receive the same securities or other consideration that such Payee
would have received had such conversion been made immediately prior to the
consummation of such merger or consolidation, subject to further adjustments,
of the type provided in this Note, with respect to any events relating to any
such securities occurring subsequent to the consummation of such merger or
consolidation.

 

(g)                                 Common Stock
Reserved.  The Maker
shall at all times reserve and keep available out of its authorized but
unissued Common Stock such number of shares of Common Stock as shall from time
to time be sufficient to effect the full conversion of this Note into Common
Stock.

 

(h)                                 Restricted
Securities.  The shares
of Common Stock issuable to the Payee hereunder (the “Shares”)
may not, at the time of issuance, have been registered under any federal or
state securities laws, and may constitute “restricted securities” within the
meaning of federal and state securities laws. 
By its receipt of Shares, if the Shares are not then the subject of an
effective registration statement under the Securities Act, the Payee will be
deemed to acknowledge and confirm that it is receiving such Shares for its own
account for investment, and not with a view to the resale or distribution
thereof in violation of any federal or state securities laws.

 

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

 

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

 

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

 

7

 

exchange or substitute any personal property or other collateral
security now held or which may hereafter be held as security for the payment of
this Note.

 

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

 

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

 

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

 

10.                                 Collection
Costs.  In the event that the Payee
shall place this Note in the hands of an attorney for collection during the
continuance of any Event of Default, the Maker shall further be liable to the
Payee for all costs and expenses (including reasonable attorneys’ fees) which
may be incurred by the Payee in enforcing this Note, all of which costs and
expenses shall be 

 

8

 

obligations under and part of this Note; and the Payee may take
judgment for all such amounts in addition to all other sums due hereunder.

 

11.                                 Effect on Prior
Note.  This Note amends, restates and
supercedes in its entirety the Term Note (Tranche B) dated February 22,
2008 issued by the Maker to ComVest, provided that this Note does not effect a
novation of the outstanding obligations under such prior Amended and Restated
Convertible Term Note (all of which obligations shall henceforth be evidenced
by this Note).

 

[The remainder of this page is intentionally blank]

 

9

 

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

 

	
   

  	
  CRDENTIA CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  John B. Kaiser

  
	
   

  	
   

  	
  Name:
  John B. Kaiser

  
	
   

  	
   

  	
  Title:
  Chief Executive Officer

  

 

10Exhibit 10.6

 

THIS NOTE, THE MAKER’S OBLIGATIONS HEREUNDER, AND
THE PAYEE’S RIGHTS HEREUNDER, ARE SUBORDINATE TO CERTAIN SENIOR INDEBTEDNESS OF
THE MAKER, AS, IN THE MANNER AND TO THE EXTENT PROVIDED IN THOSE CERTAIN
SUBORDINATION AGREEMENTS OF EVEN DATE HEREWITH BY AND AMONG THE PAYEE AND
CAPITAL TEMPFUNDS (AS SAME MAY BE AMENDED, MODIFIED, SUPPLEMENTED AND/OR
RESTATED FROM TIME TO TIME).

 

	
  $2,400,000

  	
  July     , 2008

  

 

TERM NOTE

(Tranche C)

 

FOR VALUE RECEIVED, the
undersigned, CRDENTIA CORP., a Delaware corporation (the “Maker”), hereby promises to pay to ComVest
Capital, LLC, a Delaware limited liability company (“ComVest),
or registered assigns (hereinafter, collectively with ComVest, the “Payee”), the sum of Two Million Four
Hundred Thousand ($2,400,000) Dollars (the “Principal”),
with interest thereon, on the terms and conditions set forth herein and in the
Revolving Credit and Term Loan Agreement of even date herewith by and between
the Maker and ComVest (the “Loan Agreement”).  Terms
defined in the Loan Agreement and not otherwise defined herein shall have the
meanings assigned thereto in the Loan Agreement.

 

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

 

1.                                       Payments.

 

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

 

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

 

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

 

2.                                       Prepayment.

 

(a)                                  Optional
Prepayment of Principal.  All
or any portion of the unpaid Principal balance of this Note, together with all
accrued and unpaid Interest on the Principal 

 

 

amount being prepaid, may at the Maker’s option be prepaid in whole or
in part, at any time or from time to time, without premium or penalty, upon ten
(10) days’ prior written notice to the Payee.

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

3

 

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

 

	
   

  	
  CRDENTIA CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  John B. Kaiser

  
	
   

  	
   

  	
  Name:
  John B. Kaiser

  
	
   

  	
   

  	
  Title:
  Chief Executive Officer

  

 

4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00144-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00144-of-00352.parquet"}]]