Document:

Exhibit 10.3

 

	
  $2,500,000

  	
   

  	
  February 22, 2008

  

 

TERM NOTE

(Tranche A)

 

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 Five
Hundred Thousand ($2,500,000) 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 monthly in arrears on the first day of each calendar
month commencing March 1, 2008, and upon the maturity hereof.

 

(b)      Principal.  The outstanding Principal of this Note shall
be payable (i) in twenty-three (23) equal monthly installments of
$104,166.67 each, due and payable on the first day of each calendar month
commencing March 1, 2009 and continuing through and including January 1,
2011, and (ii) a final installment due and payable on February 28,
2011, in an amount equal to the entire remaining Principal balance of this
Note.

 

(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 unpaid accrued Interest on the Principal amount being prepaid,
and then to Principal.  Any and all
prepayments of Principal hereunder shall be applied to the installments under Section 1(b) above
in the inverse order of their maturity.

 

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

  

 

4Exhibit 10.4

 

	
  $2,500,000

  	
   

  	
  February 22, 2008

  

 

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 Two Million Five
Hundred Thousand ($2,500,000) 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 monthly in arrears on the first day of each calendar
month commencing March 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.  Any option
prepayment of Principal hereunder paid on or prior to the second (2nd
) anniversary of the date hereof 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 the second (2nd)
anniversary of the date hereof 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.     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

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