In re

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE
Chapter 11
CRDENTIA CORP., et al.,
1
Case No. 10-10926 (BLS)
Debtors. (Joint Administration Requested)
Re: Docket No. 16
EXHIBIT SUPPLEMENT TO MOTION FOR ORDER
(A) AUTHORIZING DEBTORS TO OBTAIN INTERIM POST-PETITION
FINANCING AND GRANT SECURITY INTERESTS AND
SUPERPRIORITY ADMINISTRATIVE EXPENSE STATUS
(B) PURSUANT TO 11 U.S.C. 105 AND 364(c); (B) MODIFYING THE
AUTOMATIC STAY PURSUANT TO 11 U.S.C. 362; (C)
AUTHORIZING DEBTORS TO ENTER INTO AGREEMENTS WITH
COMVEST CAPITAL LLC; AND (D) SCHEDULING A FINAL
HEARING PURSUANT TO BANKRUPTCY RULE 4001
Attached are the following exhibits in connection with the Motion for Order (A)
Authorizing Debtors to Obtain Interim Post-Petition Financing and Grant Security Interests and
Superpriority Administrative Expense Status Pursuant to 11 U.S.C. 105 and 364(c); (B)
Modifying the Automatic Stay Pursuant to 11 U.S.C. 362; (C) Authorizing Debtors to Enter
Into Agreements with Comvest Capital LLC; and (D) Scheduling a Final Hearing Pursuant to
Bankruptcy Rule 4001 [Docket No. 16].
Exhibit A: Prepetition Financing Agreements
Exhibit B: Ratification and Amendment Agreement
Exhibit C: DIP Budget
The Debtors, along with the last four digits of their federal tax identification numbers, are: Crdentia
Corp.(5701), ATS Universal, LLC (3980), Baker Anderson Christie, Inc. (3631), CRDE Corp. (2509), GHS
Acquisition Corporation (9736), Health Industry Professionals, LLC ( 4246), HIP Holding, Inc. (3468), MP Health
Corp. (4403), New Age Staffing, Inc. (1214) and Nurses Network, Inc. (6291) .. The Debtors' mailing address for
purposes of these cases is 1964 Howell Branch Road, Ste. 206, Winter Park, Florida 32792.
{BAY:01513154vl}
March 18,2010
Wilmington, Delaware
'.
BAYARD,P.A.
Is/ Jamie L. Edmonson
Jamie L. Edmonson (No. 4247)
222 Delaware Avenue, Suite 900
Wilmington, DE 19801
Phone: (302) 655-5000
Fax: (302) 658-6395
-and-
GERSTEN SAVAGE, LLP
Paul Rachmuth
600 Lexington A venue
New York, New York 10022
Telephone: (212) 752-9700
Facsimile: (212) 980-5192
Proposed Counsel for the Debtors and
Debtors in Possession
2
EXHIBIT A
Prepetition Financing Agreements
..
'.
LOAN AND SECURITY AGREEMENT
THIS LC:\ 'l A'!'J :la'ec as ::.f ll'e Acceptar.ce Date (as ;;enr..;:C in Exl'ibit 8 a:::act-ed ii'COlX!rated into
Ag:eer.le!"t t:y pmag<lph 1) is e:-.tered Into CAPITAL TEMPFUNOS, a division of BUSI.':ESS CR2::J!T LLC.
a Delaware ll;rJicC ..,..;lh :s t::lace ol at '7CC Bmac.vay, 19" New Yoik. New 10019.
(herelral<:er referrec .o as '"TEMPf'VNDS"l, anti Borrcwer deflr.ed In ;;xhib:l B. 2l. Borrower a.1c' TEJ,t?FC:-!DS agree as

?URPOSE 0:" AG3:0E.\IE'li
a:'.d!or
BcrrJwer Ce9ires 10 cblalr> !rom TEII.WFUNDS. The purpose IMis finar.c'l'g is not ror housef"dd. ;al"l:y.
2. 'Aoccu1t(s)'" means a!! receivable due Borrower, and other {o;TM of obliga;.!ons now or :1ereatter owing lc
3ormwer, whefr1er /rom sale or lease of goods or the of services by Borrower {inelu::ilnq, wllhoul Ilm:talio,,, any
!hat might be chilracteriz&d as ar. account, contrn.c: rigM\, generai Jr.t:angible or chattel paper under tl;e Code), all of Borrower's rights !n, :a
U.lder ali orders now or received by Borrower for gocds and services, !lll rnMies due or to due to Sorrov:er
u.1der ul! con;mc!s for the sale or lease o( goods ::lr 'J1e rendition ol se!'.i,oss by Borrower (whether or not yet earned) (inc'.udlf19, 'Nilhout
limitation, !he b receive lhe proceeds of said purchase crders and o::mlme'.s), and ail co:late!'!ll security and guarantees of any kirui g!:en
b)' any o!Jiigor wllh respect to any of !he /orego!rg.
3. "Acce-pt!lb!e AcccL!ofs" rnear:s and those Accounts (f) which have been validly assign ad to TE:'1PFUNOS, (II)
s:rlct!y comply with ali of Borrowers wauar.tles and representations lo TE,\lPFUNDS, {W) payment terms of not greater !tan t!le Term
Days (as defined on ExhlbU B, paragr<!ph 3) from lrt'1oice date, (iv) are not past due more !han U1e n"Jmber of Days (as defined on
B, paragraph 4), (v) are i,woiced not i.ater thM!en (',0) clays from the last daw ol serJice or def1very ('li) are inV>:liced on not greater
than a month!)' cycle, and (vi!) olher ttum those Accounts where TS\1PFUNDS has nolified Borrower lhel, in TEM?FUNOS sole
which shall be In a <Xlmll'erclal!y reasonable manner, !he Account or Customer Is not acceptable to TEMPFUNDS,
Without limif1ng TEMPFUNDS rights !o deem any Account not acceptabie, as a general guideli,1e Acceptab[e AccoUills shall not in::Jude the
following: (a) fcoounls v.i!h respect to whlctl the Customer has common officers, employees, directol"$ cr agents wllh aouower, or is a
subsidiary of, related to or effi!iated with Borroll'er; (b) Accounts wllh respect to which services or gocds are on guaranteed sale or olhar
terms by reason of which the paymenl by the Customer may be ccndWonal: (c) Accounts wlth respect to which the Customer is not a resident
of !he United Stoles: {d) Aecou.11s wlth respect to which !he Customer is !he United Stales or any department, agency or inslrumen\alily of the
United States: thai an Account shall nol be deemed Ineligible by reesor. of this clause if tho Jggregale amount of such
Accounts does not exceed five percent {5%) of the total ofBoaower's Accounts, or In the event the aggregate amounl or such Accounts does
exceed five percent {5%) of the total of Borrower's Acc;ounts, and L'lat Borrower has completed ai steps necessal)', in the opir.ion of
TEt11PFUNDS, to comply with lhe Fndaral Assignment of Claims Act of 1940 (31 U.S.C. Section 3727): (e) Acrounts with respect to whlcll
\ha Customer is any state of 1he Unl!ed Slates or any city, town, municipality, county or division !hereof; provided however that an Account
shall not be deemect ineligible by reason of this clause {e) illhe a!T'I.lUn1 of stlch Accounts does not exceed five percent (5%) of thEl
Ictal of Borrower's Accounts outstanding, or in the event the aggregate of such Accounts. does exceed ffve percent {5%) of !he total of
Borrower's Acco1.1nts, the Account can be assigned to TEMPFUNDS In a manner reasonably acceptable to TEMPFUNDS, and !he Account
cen be oollec'.ed b)' 80TrOVIef In lha ordinal)' course, in tha same manner as its other trade accounts receivable: {f) Accounts not previously
approved by TE,\.!PFUNOS where tl1e expected doDarvalu!l forsudl Customer fs greater than len (10"/o) percent of Borrowe(5 Accounts or !he
1\laxirnum ConcontmUon Amount {as deftned on Exhibit B, paragraph 5), whichever is Jess; {g) all of tho Accounts owed by an Customer\'lhere
the Cross Aging Percentage (us defined on Exhibit El, paragraph 6) or mom of ell of !he Accounts awed by that customer aro unpaid more
than the Past Ol!e Days (as defined on Exhibit B, paragraph 7) from !he Invoice dale; (h) forwhkh !he seMces have no! yot been
rendered to tho Customer or llle goods sold have not )e! been delivered to the Customer (commonly referred to as "pre-billed accounts''), {I)
Accounts subject to a Cuslomer Dispute. as defined below; end (i) Accounts, if any, specfficaily on 8, paragrllph 8.
4. !his Loan and SeCIIrity Agreement end amendnlents and Supplements thereto.
5. 'Customer" means Borrower's customer or !he account debtor.
6_ "Customer D)spul' means (!) a da!m by any Customer against Borrower of any kind or (II) llnanoial inability of a
Cuslol11r to pay its obligations as tley beromo due, including, without limitation, a Cuslomer who to any Insolvency, il"lcludlng wm1ou!
limitalicm, tile appoirllmentof a receiver orlrustee, !!Je ll:ing by or against suclt Customer of a bankruptcy proceeding or the making of an assignment fer
\he Lenefll of or (ii1) any mistaken, Incorrect and/or erroneousA=untsubmmed bvBorrower to TEMPFUNOS.
A "Customer Dispute" may arise from any klnd of disagreement be!weon Customer and Borrcwerwhatsoover, whelimr roch disagreement is
valid orirwalid, and may also allse at any tirr.e, bolh before andlor afler the signing of lhisAgreementor the f:nancing of the Ao::ounl wlth TEMPFUNDS.
7. "lnelinlble Aocounr means en Account that Is not 11r1 AcCilplab!e Account as ir1 Section 3.
8. The term \'GiE!!( or as w&ed in fhis Agrwment m'*lns to guaren!ee, as a malarial etemenlofthls AgreemenL Bach
separate wammty herein isa\60 an independent to TEMPFUNDSduUes
WARRANTlES AND COVENANTS BY BORROWER
M an inducement for TEMPFUNOS inlo this Agreement lull knowledgE! lhatltlo truth und of the vmrmntles
In this Ag1ecment aro being rel!ed upon by TEMPFUNDS in erJtaring into this A{Jreemant and in moklr.g the loans described herein, Borro>.ver
warrants and/or ccwenants Ill at
9. Borrower's name as of the date hereof, as ll appei!fl; in !he official MUng till! state of lis organlzalion is ss sill forlh In
EXhibit B, paragraph2, Borrower's onlY state of organization or !ncorporallon Is !n the State. as defined in ExhPi! B, p11ragraph
9. Pursuant to !he Borrower's bylaws, <1nly one orllcer is required to executa thls AgrMm!!inl, and the pa1ly slonlng tills Agreement on behalf
of the Borrower Is an o!Hcer.
10. Borrower is duly organized snd In good stamfmg under the laws of Its Oiganizaf1onal Sta!a, properly (iconsed and
aulhori;::ed to opemle as o ror profit buslnellllin all states in which sucll business is conducted.
11. Borrower's !rode lisled !n ExhiM B, paragraph 10 are !he on1y names underwhidl the Borrowerconduds business mld
<Ill been properly lllerJ and published as required by law.
12. BomMal's Fedeml Tax ID nur!'ber is listed In E011bll B, paragraph 11. Borrower's Organ!l:ational Numb!ll" is li&led in B,
P<lr.J!Jraph 12.
13. Borro.ver is in compliance 1\iUl all laws, rules 'llld regulafions eppflcable lo its bus!ness. Furthermom, Borrowar. in all
respocls.llas In the past, is oummtly In compliance. ef!d at all tlmM will comply with any and al! foderal, state end local statutes, laws and
regulations concem'1ng 1he preservation of the environment ;md the use and disposal o( hozardous and loxlc malartals and substances
(collectill!lly \he "Enviionmental Laws').
Corp
lnd
July 2008
I of 17
14. 'lo.'fO'Ner's !Jusiri?SS
1
s fhe of i:s exceed \'il:Ue cf "ts :abit':ies ey,c;;C:ng de':>\ SL:bcrc!rstcC to
::u;suanl lc a :o T::::.\lP."UNJS in "ts so:e
a1C :t :sable to rreo;t it3 as they ::ecoTe
6. 8orrcwer is. anc at all Ull1es :-:e lem1 of lh-s A!;--ee:--rer: -.vii; be, !t'e iawfu' owne.- :1 :,ave gxd and Lr.disptM:d t!t!e to aJ
Acco:..:nts tree ard ::ear or any of ar:y !Qrd
7. '::ach Ac:::ount is t:ndispu\2d :rt<ltflrrent qf :ndeb:eonass owirg by a Cus:ower to 8on-.;:wer for a ceFt<l-:n sum
wh'ch is Cue ar.d payable rere/ot or '"'iiNn su;:/1 b'rre Ia agree: lc. in by T'::MPFUNDS ano 8-::rr:::>Mor,' ara is no: to ar1y
Cc:er.ses, se:Offs ms of any am-: Is 1C: \o ary dis:::::un!s, decuc:ors. e\i[h"Jare-es cr otherc:;r:;-a unless so
ro :t-e ir,o:-::"' and ':;y c.:Jy a'..t".o!U:ec: ;:::'.cer rl TFJ<PF\Ji\DS \n <rn::ls an ac::.rate cr J txr:a tide sale. de: Ivery
em! cr goods, pei'='r.r.arce o: service b)' to a
18. All flrardal recc:us, s:atemen:s, or sPoM1 or p;--::,iC'd to TEMP"'UNDS by Borrower o.\ any ljrr:e,
before or after t'le al th"sAc;reeme,1t, ara ma!oria!y tn:e ard as detOJr;nlned by its romrner:::aly discretion.
,g_ Barmwer 11ii nat uc;der any or tn any "a0ner whatsoever. Interfere "N;Ih any o! TE.\IPFUNDS r'gh!s under
A{Jreeme.1l
20. F::r as lorg as ar.y :r._debtecr.'!SS whatsoe1er -emair,s ewing !Jy BQiro,Jer to TEU.Pr:UNOS, Bcrrovrerv:ll fac'.o:, assign,
transfer, pledge a security interest 'n, c; A=unts. except for !;1e seclJf<ty interest granted to Co:l".Vest Capital, LLC ("ComVes() In
with its subo:-diratod (the "Comves: Svb Dcbr). Furtllerrrcre, unfjl :ha Obl'galicns am pa:d full, not file any
f.nanchg or amecndment or s!atement wilh respect to any financing statement filed In ravor ofTE!VtPFUNDS, axo;ptwilh the p<lor
wrlllen c:mser.! of TEMP FUNDS.
21. Borrol'ler.l'as not transferred, pledged or gr<mled a sawlity in! eros! In any or Borrower's or ether as deli'ned
bebt.', ID anycther party ol:!er than CcmVesl in with the Com Vest Sub Debt and not transfer, p!edge a lr.lerest
b any other party :n saki Acr;oun\s or other for (1m or this Agreexenl i!nd for as as 8ormwef' is lo TEMPFUNDS
haroundor; provided, :1cwevcr, have- a perb:l c! !hirly (30) days to cure any Defauillhol arises in oomectlon with the granllr.g of a security
Interest in tile So;rowers equipmen!, furniture and 1ixtures. In addH!on, Elor.ower has, and will have lh!UUghout !he term of U1ls Agreement.
grod to !he Collateral.
22. 8orrow'ilr'.vill not or modily !ha terms of any Accc;llat>le Account with any Customer unless TEMPFUNDS f;rst ronoon!s
In wr)llng kl such change arto:rr recaiving priOf written of suc.'l proposed change or modifica1ion from Borrower.
23. for(a) other securily interests llstnd on E>:hit>it 8, pmagraph 13 as "Oiher Security lr.teresto; and (p) equipment
!11ases w11:ch in lha aggregate will not at any time axwed S2.00,000.00, !here are liens, sa<:urity interests or encumbrances on anY ol
Borrower's pe."llDnal properly, !nci.!Cir.g, wilhout llm!llltion, the Collateral, and Bo:rmver shall not commnl to !he placement of any lien, security interest or
e11CUmbrance upon any or personal property of any type and wherever located not Otherwise pledged or assigned lo TEMPFUNDS wllhou\
TEMPFUNDS prior V!ritlen cor:sent, and Bo:ra.vcr shalf provide written to T5\<!PFUNOS wrthin five (5) days o! 8or1oWer obtaining any
know!Bdgc, !mm any source, of the flli119, r<;!cordfng or perfeclion by aey moons, of any non--oorlsenwal ffen, dalm or encumbrance against the
pro;J!!rty of BoJrolver.
24. BoiTDwer maintain such insurance ccvering Borrower's and/or !he of the SoiTO\ver as reasonably required
by r.::MPFUNDS and as lnd!catad under Other lnsurmco, as provided in Exhlbll8, paragrap:, 14, and will maintain wo!ilers" rompansaffon insumnce In
accordance with applicable law and wlll name TEMPFUNDS as holder on all such wo!ilers' compansaUon policies,
25. Borrower 1vijl notifY TEMPFUNOS in wr'ilirlg at feast thlrty (30) day.; p!ior to any change in Borrowol's place(s) of business or
change ill ):;)cation of any or if Bon ower has or lntend3 to acquire or add any adOitionat place(s) ofbusiiless, or any chMge h Borrower's ch!er
exa"tiUve omce, !he omce or offices where- books and records conceming Accounts are or !n the- even! Borrml'er Intends to change its
Slate.
?.6. BornJWer wnl notify TEMPFUNDS !il wrning at least thirty days prior lo any change of Borrower's name. Identity, legal entity,
corporule use of add!Honal trade nama(s), ami/or ny proposed change In ony of thn officero, p;jndpals, partners. and!or owrreiS of Borrower.
27. Borrower will deilver\o TEMP FUNDS wtlhin !he Periodic Period, as defined in Exhib:t B, parograph 15, if appicable snd within llle
Armual Period, as defir.ed In Exhibit B, paragraph 16, a b.-..lance shae! together wllh related 3'l,,ternents c( In-come, relained earnings, and now in
form reaso:mbly ao::eplabla to TE,\1PFUNDS as rnora fUlly described in 8, paragraph 17 under RnbnolaJ Staternenls. Borrcwer
wi!J also p:ovido TEMPFUNOS \YJples oral[ of ils im:ome and payrolllru(returns, federnl, stale ar.d JoCf!l, uprlll min[) with !he appro;J!lale authorities.
Borrower shaU execute and deliver to TEMPFUNDS within frva {5) days alter the and of each month during the term ol this Agrooment,
raffectlng the statCJs as of the end of each month, certified by any or officers of Borrower as being trua and correal, (I) a current
detailed aging, by total and by customer, of Borrower's Accoun1s. {II) a current detailed aging. by total and by vendor, or Borrower's accounts
payable 1Wf (Ill) a Certificate In the form from one of the ofncers or Borrower certKylng that no Default curront!y
!Jx.ists under this Agreement, all of which shall bo set forth in u form and shalf contain such informal!on as Is reasonably aoceplable lo
TEMPFUNDS.
28. Borrower's assignment of any Accounts to TEMPFUNDS pursuant to this A9reement will not at Ume violate any
iedera!, stale and/or local law, rule or regulullon. court or other \fOVemmental order or decree or lerms of any COrllract relating to such
Accounts.
29, (a) Borrower posses9ss ull necess!lry trademarks, trade names, copyrights. patents, patent rights and licenges lo
corrdu.;t its business '-'Snow operated, without any knowtl conmct wllh any trademarks, trade names, oopyrights. patents and license rights of
any other or entity.
{b) The Borrower Is In compliance- wllh all federal and slalo laws omd regulaU<ms with respect to the Issuance of sm:uritias,
including bul tlO! fimlled to, disclosure and reporting obligations and a!! other mat!ars rele.tlva thereto.
(c) The Borrower wl/1 not engage In any uncovered ShOll sales ol Hs common stock.
{d) In co<"Jneclion with lhe Unbliled Accounts (defined below), the Borrower may pay employees and!or independent oo . .,tractors who
perform sorvicos !hat may be billed to Its CtJstomern Immediately upon completion of the services, anri rrlor to billir1g the Customer for such services.
The prospective amount to be bBied to Cus\Omers lor such ser.rices shall be defined as \he "Unbl!ed Accounts" and consist or services lhst have bean
full)' provk!ed and ao::epled by the Cuslcrner, and other U1e racllhat the !nvok:e cannot be pflys!cally presented to lhe Cus\omcrunm the end of the
applicable period, complies with !!lllhe representat:ons and warranties or !h1s Agrosmenl, bo,jtnot l!m?.ed to the !hose In Section 17, and
forwt1ich the crnploy:Cs amlforindependentconlr3c\ors wl1o proVided such seiVices hnve received for s.uch services randored.
(e) ts only one (1) ho:der remaining of \he 2006 Convertible DebeniUres issued by lhe Borrower (!he ''Debenture"), lhat holder
is Alplla Cap:taiAG, and tho amount outstanding on such Debenture Is 5525,000.00.
FURTHER PROMISES
Cn:lcnriaCcorp
lc>an and Secu:i!y
July 201/S
l'age2ofl7
3J. TI\T::R::ST!CCL:..t\--:-E:'\1\'...: As a ro: l.o e-!er lnlo this as
f:::r ai: of E!orrower :o TH/PFC.'-::05 lC"N o:dstin a1o a:isr:g, :!ire<:: cr a!:lsoh .. !a O' <::Je or
to be:x.me :!le :col'ec:iveiy \t'e ob:gafonS' ), gran's. ass'gns, and to -::MP;::l-:-lCS, a iaterest tr.e New
York .;1if::r:-JJ Co:::e 'Code'), n lhe l'oil:wing desO".!:Ie:! (he-eir01rter ::o!lectivc>y caled "CcJl'llernr:: AI' or
'1efeaA<Or row cr he:eet.er acq,;irec. indt:d'n>i al; addit':;rs, ac=srors, Increases, .,:oris, ,ncone,
and (i) Acco:.mts. ac:cun!s righ!s. c;attel Rapet elec'.:or'c paper). Co<::-Jwents,
{bc'uclng reMrves, :-eserve a:cc:.J:'lt:l ccrn:r:e:dal b1l daims, rmmtes, gcne:11l if'1tangC!;>1es Ia:<
:eftnds, irlfar"fJies, lists. 1:-ader.tarks, tracenanes, licenses, 'cerslrg :opyr'gh:S and
.igrl'l) af. to::ks and records relaf;l'!g '.o '.le Accounts a:ld d. p:oceeds d !he fcrego'ng p:cperty, i.lSCTI<l.1CC pro::eeds, ami gr.y
rerewais, and ex!ersic:>s oflhe ::lropertJ ami ell p:oceeds the-eo'; (ii) al! c: Bcrr::lwar's r-ghls 'o payme:;!s l'r.:lm ary and for any
roascr.l (whell-or d'arac!erizeo as accounfs, -ece.va!::Je, chatlel pape:, c!"Cs..s-ifl acllor.: corrtrad IJ!Ifl!!ra[ t-strumtnts,
securr.'es. noi!!S or clher.visc) wll>out Borrowers rigr.t b receive oa)>ll'.er':s for goods and o!he!' ;Jrud:;cts sold c; leasec or for
SC'IYI= r<J.1demd, whether net eewnd by or o: b:Hed:;:, \iii) a'l. ::f Bon";Jwel's cornacl rlg/13 !ncl.1d[ng, W<tho:.:t
l!rd!ation, 3om:l'ers .'igh:s;raer c:Jr.1racts, 1rar.;;.'1ise agmemanls, ;icer:se sakls a:mtacl.s, a.:slon1e; ::rders, 'ease
agree!l"ents; (fv} all of 8oriO".ver's cas1, drafls, of and Ceposi! a'l cf 8crnwe(s assets, prormrt-J an::! :i<;t:\s row or
l"':ereafter 111he possess'on of-!':MPC'U!'-iDS or :l.o! agents; all 8oocw.er's s.t.ppcrting ob\'galio.1s, inv%:menl property ano :et\e!'of credit rights, as
cefine<i in lhe Co-le: (vl:) ah ir.ver.to:y, wherever :ocated. ;'\OVI owned or hero:>atter acqu:red, lnc'.uclng Wltf1oul raw ma!er;aJs, wcrr. ir'l
fln'shed ;oods, l'la1erials and supplies, aJmp'.Jler :mf!:ware, programs, stored dala, 'mpossessions, deposits and c:ec:ii: ba:ances
relating thereto; and (viii) a1l !easermld 'umiture, 11achinery ar.d equipment, and computer hardware a!ong with all
inc:eases, replacements, additions. accessions of Borrower r.;,rat:r.g thereto, wimrcver silJat!!d, now owned ':ly Borrower or
hereafter aqu!:ed, (Ix) s'.!Ch cti'.er asseos c( Silma cass or classes as 1!-.e foregoing herea/!er cwned or acqu'rre:i. by BO!roW!!r; excluding (x)
an)i ':ems of personal properly described in Exhlbft B, paragraoh 18 under
31. PERFECTION Of SECURITY INTEREST: Borrower shall execu!e and deliver to TEMPFUNDS, concrrrr!!nl wilh
Bo;rowe(s !!XSCulion of this Agreement, and al any tl.rne cr fimes hereafter at lhe request of TE.\1P;::UNDS. a!l staloments,
nnanc:Jng statemenls, security agreements, assignments, affidavits, rsports, notices, schedules of accounts,
letters ofauthority and all other documents lhat TEJviPFUNOS may request. In form and substance satlsfacloly to TEMPf'JNDS, to pe;iec!
or maintain perfection of TEMPFUNDS liens in !he Co!!ateral and In order to tully ar give effect to ell of lransacllons
con I'm' plate<.! under !his Agreement Borrower does hereby 3Uthotize TEMPFUNOS to file financing sla!ements, v.ilhout limitation,
original finar.cing statements, amendments and continuation stal9ments against the Borrowel and authorizes lo file ilnandng
sta:ements thfll rlcsc:ibe !he Cc!lntcral as aij assets of lhe Borrower, or warns of similar effect.
If Borrower shall at any !Tme acquire a commerdal tort c'E<Im, as de.,ned In the Code, Borrower shalt 1,11medialety noUfy
rEMPFUNOS in a writir.g signed by Borrower ol the brief details thereof and gr11nt to TEMPFUNOS in such writing a security lntsresl t!lereln
and in lhe proceeds all upon the ienn.s or this Agreement. with such writing to be in form ur.d substance satisfactory to
In the event that any Collateral. including proceeds, is e1idenced by or conslsls of promissory ncles, Borrower shall, upon
request of TEMPFUNOS, lmmed'rately and assign promissory notes over to TEMPFUNDS anti deliver aotuai physical
of the promissory !o TEMPFUNDS.
Borrower will cooperate with TEMPFUNDS In obtaining control wllh respect to Collateral of daposil accounts, investment
property, letter of r.redlt rlghls and electronic chattel paper.
32. NOTIFICATION: TEMPFUNDS may at <my 'flme allel a Default has occllfl'e<i and at its sole notify any Customer of
Borrmver or sny tl1ifd party payer to make payments dlrectiy to TEMPFUNDS. TEMPFUNDS may require Borrower to plar.e nny legend or o\11er
slalemenlon lrwolces lnd!cat'ng the assignment of tlm invoice lo TEMP FUNDS.
33. ASSIGNMENT: BoiTO\'ter shan from t!ma to present Accounls to TEMPFUNDS for approval and approved Accounts shall
be by atld subsequent written assignments on a form lo be provided to Borrov.er by TEMPFUNDS knO\'I!l "SchedUle of
Accounts".
34. ADVANCES: TE-.\PFUNDS may advance funds to Borrower in an amount up ta the Rate and !he ,\olax!mum Credit
Faclity, both as r.efined in E'(hllit B, paragrnphs 2Q emd 21 respecliwly. TE!viPFUNDS reserves the righl to retain certain against advances,
including, wilho'-lt lhe Dliulbrt Reserve, as deffned In Exhibit B, parag;"aph :22. BOlTO\'Ief agrees to reJmy to TEMPFUNOS the amount of each
suril advance, with lnter>?SI and fees as set forth below and on A. As considemlion fur each 51.1d1 advance, TEMPFUNDS shell be paid In
accordance wiLIJ !he rate sclmdult3 hereto as A and b1corporated Into this Agreement by reference {the "Rale Schedule"). Borrower
promises 1o repay each adv11nce, and each such advunce :;hall be due and payable, It not sooner paid by aorrowerorthruugh a:JIIection of the assTgned
on or before :he Maximum Days (the "Advunce Pef.od"). Unless otherwise extended, all advances end any unpaid Interest end lees shaM be
paid by Borrov.>er to TEMPFUNDS :;s aforesaid or, a1 TEMPFUNDS may 00 charged to Sormwer's loan A=unt (as de!ined in Exhibit B,
paragraph :23) or mny be wi!loheld and paid to TEMP FUNDS from any advance mads to Bo;rower. In eddillon lo !he amounts set forth on
lhe Ra!e -SchedUle, TEMPFUNDS may charge Interest at (he rate of eighteen percent (18%) por annvm (!he "Defu!.ill Rate") on any adV81lces l':hich
rerriain unpaid on and afler !11e oa;urrenca of an event of Defuu!t (irrespeclive of lhe dale lhat TEMPFUNDS the Borrower of such Da/aull)
and/or aner judgmenl TEMP FUNDS s,1all be entilled to charge 1ha Default Rate vihether or not II payment of lila Obligations or a:<ercl:res any
of its righ!s and remedies harnunder or under any other agreement between the- Borrov.er and TEMPFUNDS. All interest s!mll be computed for the
actual number of days elapsed on lho basis of a year consisling of 360 days. Borrower nc:knowledges Ura! accrues Interest on aff
advances on a daUy basis, however, such !nterestls due 011 a monthly basis, un!ess o!f1erwlsepayable as provided htiraunder. lnll1a oven\ !hat, al any
Ume and lor any reason. the amount of advances made pursuant lo \his Agreement exceed the Advance R'lte andfor lhe Maximum Credit
Facility (an "Over Advance'}, then Borrower, upon TEMPFUNDS elecHon and demand, shall immediately pay to TEMf'FUNOS, in cash, tf1e
amor.mt af suc.1 excoss. In !tre event of the exislence of an Over Advaw:e, Borrower shaU pay lo TEMPFUNDS, al TEMPFUNDS discretkm,
an Over Fee of .0!193 % of lhe amount of the Over Advance for each dny that the Over Is ou!slar.ding. Nothing provided
herein shall c=-nsli!ute consanl by TEMPFUNOS to such Over Advoncc.
Borrower irrevocably waive!! the rig til to direct the application of any and all paymonts and collecUons ot any lime or time$
received bl' TEMPFUNOS from ar on behalf of Borrower, and Borrower does hemby Irrevocably agree that TEMPFUNDS shall have lh<'l
continuing exclusive rig11f lo apply mid reapply and all such payments and colfecl!ons received at any Umo cr limes hereafter by
TEi ..tPFUNDS or its agent against the Obflgallons, in manner as TEMPFUNDS may d!!em advisable. The advances shall cMstllu\e
one general Obligation of Borrower, and be by TEMPFUNDS lien upon all ollhe Col!aleraL
IT IS THE INTENTION OF THE PARTIES HERETO NOT TO MAKE ANY AGREEM!i'NT IN VIOLATION OC: THE LAWS OF
THE STATE OF NEW YORK OR THE UNITED STATES RELArtNG TO USURY. IN NO EVENT, THEREFORE, SHALL ANY
INTEREST DUE HEREUNDER BE AT A RATE IN EXCESS OF THE HIGHEST LAWFUL RATE, i.e,, IN NO EVENT SHALL
TEMPFUNDS CHARGE OR SHALL BORROWER BE REQUIRED TO PAY ANY INTEREST THAT, WITH ANY OTHER
CHARGES HEREUNDER THAT MAY BE DEEMED TO BE IN THE NATURE OF INTEREST, HOWEVER COMPUTED, EXCEEDS THE
MAXIMUM LAWFUL RATF. OF INTEREST AllOWABLE UNDER THE LAWS OF THE STATE OF NEW YORK AND!OR OF THE
UNITED STATES. SHOUlD ANY PROVISION OF THIS AGREEi'I'IENT OR ANY OTHER AGREEME'NT BETWEEN BORROWER AND
TE:MPfUNDS BE CONSTRUED TO REQUIRE THE PAYMENT OF INTEREST THAT EXCEEDS SUCH MAXIMUM LAWFUL RATE,
ANY SUCH SHAll, fJE AND IS EXPRESSLY HEREBY WAIVED BY TEMPFUNDS. SHOULD ANY EXCESS INTEREST IN
FACT BE PAID, SUCH EXCF..SS SHAll BE DEEMED TO BE A PAYMENT OF THE PRiNCIPAl AMOUNT OF OUTSTANDING
iNDEBTEDNESS OWING BY BORROWER TO TEMPFUNDS AND SHALL BE APPLIED TO SUCH PRINCIPAL.
In ordor to s.a11sty any ol !he ObHgatlons, aulhorizes TEMPFUNDS, or Its affiliates, or depository bank(s) to initiate
electronic debit or credil enlries lhrough the ACH system to or from any daposil ac::ount maintained by Borrower ('ACH Transfers").
Barraw<Jr :;hail be kblc ror, >and TEMP FUNDS <l'EY ch.uge Borrower's account :all reasonable Costs end Expenses as in
B, perngraph 19 under <lnd Expenses. Such costs and expenses shai! lle considered advancad undOf th!s Agm-=menl
Crdcnria Corp
Lon!\ r.tld
July2lJQS

35. R;ct..::;:E::> r:CJR/J,S: Along wth He SctedLie =f ,\ccour.ls. 3orrower s1a I TE\IPFUN::>S, t:001 reqt.:es\, ,:ith
c:::aes d bvoicos. "rcofs :l ce!"very cr ser;i:e. <;;r:-ac'.s o: P'S::hase o:co:s, o:"de as !o !J"e o'
8-:;,rro;,e:, aU 1:\ for:r a: ,1ose r.e:rs set res
3!3. NC-:lCE CF DISPUTE: :E,V.P""lJNCS Cuslo:'"lcr i1vo;'llng !n excess c:
S1 i),:!CO.GO f:::r cr.e Cusbme:, an:l c( ary i'J;;atilf.l ::.rocee<;;'.-,g, pan(!rg cr:llrealered, b1or against 3oTower
37. INELGIBLE A R'GHT CJF CFFSET: Upon nolioo d ary cr in !he any
CeroTes an lneii;J!ble ACX{."n\,

rr.ay, .r. acer:rnt ;o an'/ c\t:er 1h!s Oed3m Account Ia te ir,e"igil:le far
Borrower w]l pay to TEw.CJFUNDS all to Borrower agailcst 'll..CM A=ur,l -:-::;:0..\PFUNSIS may, at
!:s ;.:::!e d::Jrge. am:::t::"Jis lo l!"!e l.::an Accct.;nl orc:f3et against an.y atlvar.""...s or r. 'Nould make :o any
atJ'ounts. O",VI>tl !o st:cM Aco::::.mts rerna."n as Coile.teral lor TE\\PFUNDS as
here:n,
33. STA7E1111E.'ITS: Fm:n lima :\1 time, shail proviCe VIM &;;;uwer l:X"gers an:i otl1ar
Sc::ll re::o::s sha:l be r.nal nild 0011cl:.JSive 9ormwer anc' TEMPFUNDS aslo ti'e ccnlonts of sa:d reports excep! for ;=my errors
o' vkli:h Sonnwoc"sheH i'.sve no!N'ieci TEHP!"UNDS k! v.'fili:Jg 'Nit'l1n ll1irty (:;0) days aner the dele cf reozip! !Jy Borrower of such re:JoOr'.S and
TE\IPFUNDS, In Its good faith dls.::refoo determines l'la\ are acc:Jra:e and makes an aoprcpriate ad"Jllslrr.enl.
39. SOLE TO PAYMSNT: 0(h!wthan lo lhe ComVest Sub Oebl, whCdJ is st!bject to a :n :avorof
TE:W'fUNDs, the b rrom lhe G-.:slcmers of lha 9orro-.ver as :o A=unts is coUaterally as:s:Gned !o Ar.y
interference, lnd!.lctir.g but not lim'led Borrower lo comply Sedon 40 1Je!01v or Scrrower's unauthoized and cf cor:ateral
pm:;eeds wi:l consijtJle a De:aull and may resuH of future advances Co the Borrower.
40. COLL.EC"l"IONS; Bonower wH nct\fy all of l\s Customer.! fo:ward ail payments to the lock box address Indicated In 3.
paragraoh 24 {'he 'Lo:k Box"}. In lhe ever.! !hal ar.y paymenls flom Customers c:Jme into Borrcwer's poss_esskm, Bor.cwerwlll hold same in tr11st
an-j and imrMdiale:Y deoosit l'le Lock Box lhe ida"llic:al check or other form of payment rF!ce:Ve:l \Jy Bcmower, prcpelly enrlorsed,
dectron!o or v.ice transfers. S!Jou!d 8orrcwer come inlo cf a check or o!her rorm c( ;Jayrnent whicll payment of ei\he'
A-:::eolo:lble Accrnmls arrl'clr lnefgitie A=unl.s. lmmed"1aleiyremit such paymen!(s} lo the Be.'<.
In the event thai the Borrower fails to oompfy wll:h !he provisions ol this Section 40, in addition to all olher remedies cf
TEM:;>FVNDS hare!.lnCer, Borrower shall P<l)' a Mi$direcUon Fee eql.lal to 2.5% of tho emoun! of lhe funds which Borrower deposfls in any
bank acoount oL1er than aceounts as directed by TEMPFUNDS under lhis Agreement or in \he Lock 80)(, or are olhefllli5e nol remitted
lo TE;VlPFUNDS as required herein (tho "Misdirected Funds"). No!hing pro\'lded herein shaU in any manner au!hmi<;a \he Borrower
mlsdirm:t funds as prohibited by the Agreement. No!wllhstan<ilng the foregoing, in !he event that coltedfons of customers are remi1ted to the
account or k:lck. box controlled by ComVest (!he "ComVest Colloclions"}, and so long as ComVest remits such payments to TEMPFUNDS as
provided In the payol!lettcr between ComVest and TEMPFUNDS, no Misdirection Fee Shall be assessed in connection with suth ComVest
Collections.
Any wlre transfer "of flmds, check, or other ilen1 of payment received by TEMPFUNDS $hall be credlled to Borrower when applied
by TEMPF\JNDS w'rll be appfled to conditionally reduce Obligations, but sll<!!l not be consldereti a paymenl on accoufl! unless
and unlil such check or other method or item of payment is honored when presented lor payment. The receipt of any or other or
method Item of pa}'ment cleposiled into the LocK Box shall be deemed to have been paid to TEMPFUNDS at the expiration of the Collectiort
Day Period {as denned In Exhibit B, pDragraph 25) afler tile dale TEMPFUNDS actuDIIy receives p!.)Sses$lon of such check or other method
or Hem of Into tha Wire Account refe!red to in Exhibit 3, paragraph 26. Absent legal Pr<Xess t:l !he coolrary and pnwided that !he
outslandtng due TEMPFUNDS does nol exceed the avaijablllty hereunder and so long ns there is not a OefauJI hereunder, then; 0)
amollll!s co!flll:larl and applied to Ao.::ounts In excess of outsWndl119 obltgaijons dus will be a-edited, \.vlthout to Borrower, Qi)
payment of Accounts not assigned to TEMPFUNDS or agaifist Ineligible Ao::oun\s vill be credited, wi'J1out interest to Bonower, and Qlj) t'Je amounts
crl'Kfrtod SorrO".ver under (i] and (\i} will be available to Bo:ro.ver.
41. ACCESS TO BOOKS AND RECORDS, ACCOUNT AND FINANCIAL INFORMATION: Upon request, Borrower will fumisil
TEMPFUNDS accounijng records, financial inlorrnaHon or other !nformaHon perlainfng to 1J1e operation of Bonowe(s business end will aiiO'N
TEMPFUNDS to review nnano'al rerords kept by Borrowerwi!h respect lo its business. The fomgoing righ! of access shu!! Include, wi!hou!
!he right of TEMP FUNDS to ctJnduct field examinallons wi\11 access lo Borro1vw's business fadlllles end the right, after a Default, :o OJntact Custormrs
and/or ilnY lhlrd pally payers for any inc11Kling lhe oonlirmalbn of any or an invoices or statements. Borrower agrees to 1101::! TEMPFUNDS
from and against ros!s, olailns, expol'ses or by TEMPFUNDS ;>rising out of or to ony act.'ons or o;ri.sslons or
TEMP FUNDS permK!ed by this 41 or laKen or refrained !mm boing !allen in rer.anca on any lnforrnafion received !rom Borrower herevnd!Jr.
Borrower promptly reimburse TEMPFUNDS for the expenses ol P.<Jch neld examinaijon as provided in Exhillil B, p<L""agmph 27 under Field

In addition, the Borrowenvil! provldeto TEMPFUNDS: (a} promptly Jpon receipt !hereol, copies of any reporis submiUed by
Independent certilred public aG",ounlants in conneclion with examination of lhe financial statements of lho Borrower or any subsldlal)l or any
Guarantor made by such accountants;
(b) promptly after I he fllmislling lllmeof, copies of nny s!atement or report furnished to any olher.pnrty p!.Jrswmt 10 lhe terms of any
indenture, lo<ln or debenture ond nol otherwise required lobe furnished llJ TEMPFUNDS;
(c) prompUy after lhe sending or filing copies or all proxy statenients, financial statements and reports which !he
Borrower or mw subsidiary sends to lis and copies of all regular, periodic end speci"!l reports, and all registraliO!J
Glatements wh!ch !he Borrower or any subsidiary Illes wiU1 the SEC or any govemmentaf authority which may i:te subsUMsd
there/ore, or wllh any national security exchange.
{d) promplly urtcr recelvlng, any from the SEC or Dny govetnmental which may be subsli!Uted
there lore, or with national 6ecur!ly exChange relating to the Borrower's securities.
42. TAX COMPLIANCE: Bonower to provide to TEMPFUNOS, as and when requested, evidance of timely payment of ail
Slate and/or local !axos due in ronnedion with Borrovler's business enlerprises whether related to this Agreement or no!, induding, paymentcf
ernplcyoe wil.hhokling taxes.
43. NOTICE OF LEVY: Bonuw"r wilt promp11y notify TEMPFUNDS of any attachment, !ax 11"11, judgment !!e;J, cr
other legal process levied Borrower or a"ny of Hs assets o: if Borrower becomes aware, of any of Customern assets.
44. NO PLEDGE: Bor,owarwill not the creo'U of TEMP FUNDS to any person or business for any purp0$!1 whatsoever.
45. LICENSE.'A6REEMENTS: Borrower will keep each License Agreement, If any, tn full/orca and effect lor so \oog as.
Borrower has any inventOr)' !lla n"l<lnufacture, safe or of which is Ill any manner governed by or subject to such License
Agreemenl, and p;uv!do TEMPFUNDS, upon 1'1ilh copies of ea<::h such Uco!]se Agreement and all amendments, extenslonG or
thereto. "License Agreement" as used herein shall mean any licenses held by the Borrower for the sale of prodlH:ts.
46. BOOK ENTRY: Borrower wilt, immediately upon asstg"nmet1t o( Accounts !o TEMPFUNOS, make proper entries on its books
and recofl:!sdisclosing !he of said AcCOI!nls to TEMPFUNDS.
Co:p
Loun and Security
July 20DS
Page4 ofl7
LEGA'... C'EES: .1. at ary o; agara.ess or whell>er or 11ot a Default ll""e11 :rcurs legal ot
experses ':::r ary ctl":er c::::sts or expenses irt c:m1ector. wi\11\ha !car b"ansado:c -:!escibeC "erei:;,
(i) :l'e ard c: lt"is ;;:r any a:nor>CT.en: of or :t'ocif.cat!cn is Agreement cr any o;t!;e o!/":er loan
ir. c:::rnecEcn Nit!" :his Cocumet:ls"); be of :his or o/ !1-e olher Leer
Dccur.1erts anc \tars9ct:ons hceby a:1c 11ereby: {Hi) a:-:y liUption. ru::test. sull, cr
by Bo:r:)wer any pe-scn) ir Jry say r91ating o Co:.a\e:-al. :"is Agree.Te!ll a!ly ol t1e L!:'an
Jc::ur1wls Bor:me-"s alfa.rs, ard and pro:)a:a: ('"1) ar."j at:err;.Jt :o enlo.""Ce. ary cf
T:::Y1PFUNC3 Jr otl:er :Je-sc:""l '"!hlcl mar :.e o::!igale:J lo TE.\1PF!J.'IDS v:1ce of Agreeme.1l or any ct'lar
:...car Jocu;f'ents. a:;y or guamr.tor cf obh;;atio:\S ('1) any
_:egardir.g Agreerren: cr any olf-er Loan .Jre;:<Jrat'on the1More. or I he fna1cing exterded o.- (vi) ary
atlei"T'p( to insFed, veify. preserve, ::>e:fecl of7EMPEJC>lDS liers upoP.. res:ore. seil, or
of :Jr realize c;>on !he Cvllaterai: :'1e:J ai" su;;h reasonable legal and an! o:her roasor:aole ccs:s and
ou:-d-pcc:{ot exper:ses ol TEMPFI.;NDS shal; be to Borrouer. Legal shall Include ali fees of TE\\PFUNDS In cc'.lnssl.
AI! such legal fees shall tie upo.1 the usvai rates fer ally :en de red enG net up:n any fixed percentage ol :he
balance l;ereur:Ger. All ::hargeatlle to 3orrower Jnde: Sec!lon 47 be Otlligalions securad by all of
Collateral, sha:l be payable :Jn cemand lo TE\-\PFUNDS, and slmiJ bear lnteres. tl-,e date such Cenvmd '.s made until oald ln /u"!l et t.'le
rate on Exll:bil A. !n .'<dd:ticn, in \he event Bctr:J"I'.<er fs i:l 0e:au.1 under Agreemalt. Borrower :o pay ar.y and adcificnal costs
inc;;r.ed ::.y 71':/v:P::'IJNDS :n such ir,dudir;g, without :'le cost o! fie:d eXaf!'S, aCdit:onallegal a<d 'he
oostofprovid:n;; of De7acll, sale, or assi!;nn:enl, ek:.
POWER OF A7TORNEY: irrevocably appoints 7EMPFUNDS, or a".y p-erson or enl:l:y Ces'gnated by TE\-IPC:UNOS,
its speci:li<Jlio:ney Jn fact. cr ,.,lttl poweob:
:a) after lhe C:::o:;.Jrrence of a Default. strike OIJI Borro;ver's address on afi Acrounls mailed tJ and put
n:MPFVNDS' address on all Acc:wn:s.
{0) afler lhe oc::or:-anoe of a o.:>en and of al! mH!I addressed lo 6orrower, to Borrowers
ne.:tlous b-ade r.ame and ta nctlfy the Un!l.ed Stales Pos:.al Se('lice lo t'1e adCre!l.S ol Sooower an addmss designated by
T2MPFUNDS.
(c) en:lcrse r.eme of So!TO\ver or Borrowe(s fi:f.lbus ITade r.ame en any cr evidences ol payment tllat
may into the possession ofTEMPFUNDS o; pursuant to Dereu:t an-:! on any ether documenls to any cf !he Accounts o: to the
Cot"ateraL
(d) aile; the occ..trrence of B DefauH. in Borrower's r.ame, orolile!Wise, demand, S\Je for, ccllect, and give releases for any
;Jnd all mon;es due crlo become dtJe. on Acroun!ll.
(e) afler !he oo:;urrence of a Def<lult, coonpn;mise, prcsewte, o; defend any acfon, claim or pnx:eecllng lo said
Accounts. including making dalms on any insurance polic!es,
(f) dEJpos1\ into the Lock Box any checks o; other remittances rn:.:e!ved 011 AC('.ounts rega;dlsss of no!allons or condilior.s
p!a:::cd lilereon by Customers ordeduc!ions thereby and t:J charge the amount of any sudl ded'.lction to Sorrcwer. However, in the
event that a CUstomer who has asserted a claim Viilh rospe.d to en)' Account makes a P<1rtl11l !XIyment of that Account, and sudl payment
contaiM a statenmnt to the effect that such peffial ccnsfFlu\es full safisfacUon of the amount owed, lhen, Borrower agree!\ upon
TE!V\PFUNDS requasl, lo refund sucll parllBI paymen! t-:l the Customer and teassign such Acccunl to TEMPFUNDS.
(g) aner lhe occurrence of a Del!wll, place any legend or other statement on the Borrower's in'loloes indicating the
as&ignmenl o/ \he invoice !o TEMPFUNDS.
(h) Uniform Commercial Code nnandr,g statements, lnclud!11g, wi\houl limitatlon, o;iginal Hilanc:ng staternents,
amo;ndments and c:onlJnuallons.
(i) after occurmnce of a Deftmll, draw and endor.::e any cheds or promi550I)' notes on bank in which
Borrower may have an "coounl und do any and all matters and H1ings connec!ed wilh BoiTOWer's accounts In lhe said bank(s) In
which Borrower may heve an ac:ount. which Borrower itself might Qr could do.
(j) do any and all things necessal)' and proper to 03/1)' oul tha purpxe intended by !his Agmement. as detenl1ined by
TEMPFUNDS in its reasonable dtscretion.
The au(horit) granted TEMPFVNOS hereunder shell rernnln In ruJI Ioree and e!fect until aH assigned Accoul"lls are pa1"d in lull and any Obligatlons ore
discharged in full In a=lrlance wi!t"l the IMITS and cond!tlons ot lhis Agreement.
49. INDEMNIFICATION: Borrower hereby lndemntnes and holds TEMPFUNDS and executive commiltees, affiliates,
deposl\o!y flAnks, Sllbsldlar!es, agents, directors. officers, employees, agents, and their successors <!lid assigns (collecllve!y the "'ln:demnified Parties'1
harmless against any damages or claims arising from TEMP FUNDS rol!ecting or ellernptlng lo t:alleci any Accounts and from any and all costs,
expenses, actions and liabililks, lncludtng fees of atlomcys and ctl1er and experts, costs of Sl.lll and interest. arising out of any failure by
Borrower or documentation to aM applicable Jsws, rules and regulations.
Sholild any excise, sales, dorumenl>uy lllamp, Intangible, seJViC"' or cthertax be imposed by state, federal er bcal aulhorities with respect lo
acy of g,e hereunder k1 such form !hal TEMP FUNDS is required to withhold. r.:ollwl or pay such !axes, Borrower agreeslo disclose such
requirem!!!nt \o TEMPFUNDS and to ;ndemnify the lndamnified Parties with to such payments, end TEMPFUNDS shall be enfjUaci to ctmrgo
and collect such p<l}monls from ao::ount. In addifion, ;,nd lf applicable, -Borrower agrees \hal if the Department of Revenue of the
Slale of Florida, at any time hereal\er, including after the te_m1ination of this Agreement. lakes the pos!tlon that documentary stamp taxes or
nonrecurring lnlenglb!e taxes, or both, are applicable to lhis Agreement or eny renewals or extensions thereof, or TEililPFUNDS n1ake suoh
determination, TEMPFUNDS will pay all such taxes, 1.11"1.0 any Interest end pena!Ues or other tiabill!ies in connection therewith. TEMPFUNDS
expressly disclaims nny obl'garon to Boi"T"OI'<ervillh respect !0 local or Federal :ncome lmla!lon end the preparaHon of inco;ne tax. re;>orts or retums,
excopt as agreed to between the part'es herein. It is agrelld UJ;Jt TF..MPFUNDS s!1eJ not In any way be considered a party in amnec:lion
with lhe payment ol any taxes on behalf of Ba;ower.
Borrower hereby lndemni:ies and holds Indemnified Parties harmless from any and all claims damages, including fees of
altomeyc (including in-house roun.o;.el tbr the l11demnmed Parties) and other professionals and expefls, oost:s of sui\ and Jnlerest wtrl.;h any of the
lndnmnilied Parffes rney incur ss a resullof!he failure of Bo<TQV\<erto pay any taxes due and pilyable to IID:ing eulhml!y. Boll'O'Nel" does further agree
to lmmedla!ely notify TEMPFUNDS ol any fai!ure b pay federal, slil!s or local !axes due h al!1necti!lll with any of (Is business enlerprises. BoJTOwer
further agrees to provide to TE,\APFUNDS !rue and aOOJrate copies of any lax !len' or warning noices received by Bo!TP'Mlr in connection wllh lis
businrn;s snlerprises whether related lo lh/s Agreement or nol
Borrower hereby releasBs, d;scharges and holds harmless Indemnified Pl!lrtiG9 from allllahmUes, actions, suits, causes of action, costs,
expenses, pe!l"ilffies, claims, Judgments demands whetsoeverwhich the 80il0\\-er or any other peroo!i or had.or may haw now agal11st
one or mom cf th<:!(ll under or out of 1lls Agreement between Bonower and TEMPFUNDS, or any acts or omis::l!ons In connecUon herewith;
provided, however, that nothing llare:n shall preclude the enfoo:ement fly Borrower and TE:MPFUNDS or all rights and benefrts confefl"ed in this
Agrwmenl.
Bo:rower does hereby 'lvammt that them has boon no mortfjage or Joan bmker invohed in oonnec:IJQ.1 with llle transaction am!Gmplatad by
lh!s Agreement o!her !hAn as set forth on Exhibi( 8, paragraph ?.8, whose lees v.ill be paid bY Borrower, and Borrower t" indemnify and
hold krrmles:;. llle lndemnifiOO Pml!cs rrom any and all liability, claims and darnages, including foes of aHorneys (!nciudlr.g oounsel for
Crden1!u Carp
and See1ri1y Agnm<>.cm
July 200&
of l 7
TI:\IPF\.. \DS) clhy il!r:i ex;1ert:s, of suit and i1te'e-St w!':!cl may ino.:r as a resdto: arr,o of
payatle l0 ;;my Oro!<er!n t/lh l'3r.sacti:::n conlempla!ed by :'l's Ag-ee.Tent
!!orrower r.ereQy arc holds 11Ce;'1rlfieo Parties harm ess from any arC at ia::>:Jlty, da'ms am! damao;es, incrJd:,g o'
(!r.o'o;ding :n..f'::ll!se :::xr.se. TE\:?FU."'JDSi ::.!l':e!" arc experls, =ts of su:t Br'O :ntercstwhi:n 1:/.IPFl,;:'\DS .Tay inctir
as a cf the d 3cnmoto rorrplywi:h !he E."V/ronmrmta L.aws.
DE?"AULTS; A'lY 0111 o: mere c/ 'Jm fo:kN/ng here;:nder.
(a) faf. pay anyinde::>ted:Jess lo Ti:.V.PFU:-JDS (whe!l':er aris'ng when cue.
(b} Bc';UIIer shall breach any !erm. p"UV/slor . or reprcoonlatioo under lh:s Agre-eiT'ent cr t:nder
cll'er <::f ax1tracis, 3r.d 7EMP:::UNCS or cbl!ga!ioa o! 3o:rower to ar.d as relates b '!le
fcllcwlr.g an:: '.\'a"!'lt1tees 01:!)', sctch breach Js n::>t ru:ed !ly Bor;n..verwi!hir. :hirty {30) c!ays oa::urrence:
SecSon 10
Section 11
Seqlon 13
Section 11
Section 22, providoo, hawever, no!h'ng p:uv'ded herein sM1I in any way restri:;: TEMPFUNDS' ebl.lly !o require a
rese:ve for sud1
Se::lion '24. ou: no Cure .oerod forwmkets .::;::rnpens3lion l1surance or any other lnsur.mce !ha\ Borrower is required
to ca;ry any of its agreements Custcmi'XS
Section 27
8, paragrapl133, wl1ich as to (1.1) can only be by the So:rower Infusing addF.orul cap. tal inlo the 8orrcwer
addi1io1'1ai capRal or Subcrd'naled Debt In ra:m and amount !a TEMPFUNDS ..
(c) Tile appoin!mantof any receiver or !n;slee of Iilii or a wbstanlial porlf011 oflhe assets ofBcrrm,er.
(d) Borrower shall become Jnsot>.mnl or ur.able to pay debts as beoome due, shall maka 11 genernl assignment for!h11
of oredito/S or shall \IOIUntan1y me under an)' hankrVplcy or slmliar law.
(e} Arlyinvo'.Urtal'jlllllition in banki\lplcy shaU be died 'lainst Borrowerwhi:::h is ro\ dismissed wllhin fort)-nve ('-5) days,
provldc<l. hD'Ne\fi!t, lhal during such time TEMPPUNDS shall have the oplion to required COUri approval prbr !o provkJir,g any advances to
Borrower.
(Q Any levies ol attachment, execut:Ons, !ax assessments, tax or shall be issued against
ftle Colbleral or tho ol:islence of ar1yot'1er lien, claim or olher enc1.1mtmmce against the Cotatero!. Notltitl1stamjing H1a fofegoing, other 'han
in connection wilh liel'lS, so !ong 3S levies of attachment, executions, tax asseS$111en!s, or similar process do r.ol a!led
TF.MPfUNOS' perfee.!on ft!St prlOiity sectJrity inleres! ';n !he Colla feral, BorrOV'Ier shall have a perlo:l of thirty (30) days to have !he same
released.
{g) Any !inanc!Gll statements. pror.t ond loss slale:nents, bonowing ceriifle<rtes or or olher statements or
representalions of any kind furnished or made by Bormwer to TEMPFVNDS prove mll!eri<\l[y false or Incorrect as detennlne<j by
TEMPFUNOS In i\s cnmmercial!y reasonable dlscretiort.
(h) 80ffilWI!r shall larrn!nale/oease assignments hereunder while TEMP FUNDS has unpaid Accollnts ou!standing.
(I) The occtm-ence of a Mate<iaiAdveroe E!:'ecl {a$ dennoo below).
Q) The sale or transfer, directly or indlret.1iy, of any of capttal stodl, partnership intsrest, membership lnlerest owner's
equity orussets, as the case may be, of Bonowarwilhout U1e prtorwrillen approval ofTEMPFUNDS.
(k) Boii'QI'Ier shall fail to pay \Wlen due any federal, state or local taxes or fall to maka llflY required tax withholding
poyrroenl, rx slmll t'<lil to maintain required v.rorkern' compensaffon or olher Insurance coverage reqUired by lw. or this A<;Jreement, provided,
8crrower shall have a periml of thirty {30) days to .;:ure enY to pay lha above !axes so long as tho failure to pay shall not rooull in a
upon any of the Colla.eml, and 801ltlWel' sha'l have a peoirxi ofthirt;; (30) days to cure anyfaiJure to havt1 insurance roverogc, other than Jn
connection wiU1 worker's oompensaUon Insurance and any other Insurance required under arry oflhe llgre<Jments between Borrower and
Customers.
(I) The aHamptea revocalion of any guar:anly of !he of Borrower hereunC!erby any gvara11lor, lhe dealJl of any
guarantor unless a substitute gll<lf!Jntor a=plable lo TEMPFUNOS enle!S into a guaranty, In form acceptable lo n:;MPFUNDS,
wi!hln thilty {30)days ofsuc.'l death, or thenon"'mpHance or Defauft under such guarnntt.
{m} The retenU011 oratlempled retention by Borrower of any payment, or partial payment, ofeny A=Lnt
(n) If Borrower Is enjoined, restrained, or In any way prevented by the Ol'der of any rourt or any administrative or
regulatory agency from conducting any malarial pari of Borrower's business; or
(o) The loss, suspension or revoc<l!ion of or failure to renew, any materiaiiiG1lnse or permH now held or hereafter
acquired by Borrower, whicl1 loss, suspension, revocallon or failure 10 renew rnighl have e Material Adverse Effect (which shall
mean a material adverse e!lect upon ll1e business, operations, propar1ies, assets or oonditlon, flnandal or olheJWise,-of Borrower
on an individual basb or tal1en as a whole which impairs Borrower's <Jbtllly lo perform in all malarial respects Borrower's obligations
under this Agreemant or TE:MPFUNOS ability lo enforce or coUect any obligations) and sudl loss, S(l.'!penslon, revocaflori or failure
lo renew continuos for more than thirty (30) days after such occurranoe, provided !hoi suc.l grace period not apply, and such
event shall conslitl.lte 11n e'lent ol Default, If suc11 ev!!nt may no!. In TEMPfUNOS reasonable delerm!nalion, be culed by Borrower
during such !hlrty (30) day grace pen'od.
(p) If Bonoi'I'Cr mal:es a payment on any Subordinated Deb\ in violetlcn of any Agreement il'1 /avor of
TEMPFUNDS. whloh is not cumd wiltin thirty (3(}) days ofl!s payment. '
(q} M Event of DeJault by Bo/IUwer under any obligation ow1ng b ComVest or any oUw party holding kmg lerm dllbt of
Y1e Borrower, alter the expirat!on of all periods;
(r} under the term of an)' pre/erred slack, debenture or any other sem11ily, o!her than a deraulllhel
wou:d be caused by Borrower entering into !his AgroemetJt
{s) So long as the Bo<rower Is a public rompany, in the evert lha\ lhe SEC or any sl3to securil'les aulhorlty or anY
s!ook oxehanga takes or threatens lo lake any nclion ageinsl the Borrower, or In the avon! !hat trading ol Borrower's stock is
suspended by any stock exchange, or in the evenllhet \he Borrower's stock is delis\ '3d by any stoc!t exchange.
{\) The entering Into an agreement for the acquisition of lhe stock or assets of another oompany, or any merger
or business combination 1vlthoullhe priorwritlen consent of IEMPFUNOS.
Corp
Loao nrrd Security Agr.,.,men(
July 1!108
Pagdi of 17
(v) The <:.:fa Saie. 'Sa'e' stlall mean any lrarsac!'on or series cf relale::i l!ansac:ions (a) whereby a
o/ :he oo..:ts!am:iir<; :::a;;,l!a-1 sleek of :he Bcrrower whici! ardir.alily powe for the elec'Jon cf directors (inc-'.ld'ng
on an "as cont.,fled' bass in:o com:ron sleek and stock cr a dih.:l!i!C basis) is sole".
assigned o. L-ans:erred, ;b) w:Jereto) isst.:es shares cf its capita! slo;;k afler glvln;) elf eel to svcl1tcansacbn or
a cf !he capilai stoc,; d Borrower whic'l o:dkatE)' has vctlng powur fo: the O?lect'on
of c::ecto-s (inc::.:::i!r.g ;.>referrec slc;;% cmmlcC: c:-r an 'as ccnvelie.:! btc commo:-r and corr:mon 0;"1 a fu:;y
diluted is). whereby "f I he 801r:::wer is by a Perso.--: (or group of Pe;sons adng ;n concert) who dc2s net hold
suer en d:'!!e of i1 v:.1icl; ti";e 3o:rower is a :::onstitt;e1l part; to an)' or consclidalion and as
e result (i)
1
.1-.e o! t:le ou'.s\a;J<Jing rnpital of 'he Borrower crC:nari:)' has voting po-.ver 'or U;e eiec:lon of
preferred sto:.:'<: C:JU.1!ed ar: '"as ccnve""tej" co.1"'.'1Cn slcck) prier :o such merger
consc::dation cease lo own a the ou:staTJdir.g capllal s:cck of \he Borrower o;dlrtari;y has voting power lor the
ol c;redors pre:errad stock an as ccrJVerted' hasls sleek), or (ii) llle Sorrowar :s not
the sutviving corp:ua!!or;, or (o) whereby ail or afly rnatarlal pcdcn of the assels of tile Borrower are sc:d. or trarsrarred:
'r..Wt>ott!, !hat a "Sale"' shal! r.ot be deemed :0 r.a\'a by reason of a11y of lte afo.-edescribed \rar.saclions
!han a sale of assets) if, aF.er 9:ving effect lo L'la summation cf \he 1:-ansacticn, (A) the Bo;rower or the svtviving
in t:a:Jsac:icn shall ':le a c.::Jrootat:on whose common stock :s lracad or listed on any national sec:.ui!iM e:-::change, :he Nasdaq
M:;rkel, or lhe Nasdaq Global Se:ec: or is actively on 'he OTC B'.!Uetirt Board, (B) if the surviving entity is not
the 8cr-ower, then such sur,tiving er.tity assumes all of the 9orrower"s (C) the Borrower or other surviving er.tily Is
By one or more Persons cf lhe Bor;ower on date of this Agreemanl, and (D) no Default occurred In the performance
of the sutoject tmnsacUo11 or exisW. upon the of subject transaction . 'Person'" shall mean any im:l"IVIdVal,
.:>arfn'i:rship, corporation, JimlleC llabilily company. benklng associati:m, tovslrwss !Just, joint stock company, trust. unincorporated
joint venture, govemmerrtal or other en:tty of whatever nature. canlr.::ol" shall mean the possession, directly or
lndkecfy, of !he power to direct cr ::ause direction of !he management or policies of a Person, whether !hrough the ownership of
votir1g sec:.:rl\les, by contract ar oUlerwisa, and \he terms "Cantroi!lnq' ar1d have correlative thereto.
51. REMEDIES AFTER DEi=AUL T: In the evant of any Default TE:-.APF\JNDS may do any one or mere of llle followir1g;
ta) Dedare any llld!.."<:Jing amounts advanced aga!nstoutslanding Accounts ;rr.medi<J!ely due and pa)f<lble.
fo) Notify arw to fl'ake payment of Acco'.:n\s direclly to TEMPFUNDS or Its agent and take p001;ession of
and collect My A=unls without judicial procros.
(o) Reqvire Borrower to assem!lla !he Colla!ar;::d and \he mcords perla'ning to Ao::nunl!i aM all)' other Collateral 1.1nd
make t'Jem available \o TEMPFUNDS at a place des.;gnaled by TEMPFUNOS.
(d) Enter the premises of Borrower and taka po=ssion o/ the Col!ataral and of !he reoords pertaining \a !hi! Accounts
ai!d any olher
(e) Grant extensions. c:Jmpromlse daims and settle Accounts :ess than race valve, In !Is discrnlion. Any
suc.'l seltleme111 or compll:lmiSI! agraed and/or aoce;J\ed by TEMPf'UNDS does not re!!eve or conslilvlll a of and
obliga1ionfarUJe repayment in M of advances byTEMPFUNOS w\lh such Accounts.
(f) Use, In conn!ldion wilh any assemb:y or d(;posffion of the Col:ateral, any fr.!dP.mark, tr:ade name, lrade style,
copyright, patent right cr technical used by BoiTO\'Ier.
(g) E;o:ercise all rights of a secured party under the COOe. In the event any is required, !he parties agree !hat len
(10) calendar daysshail be a reasonabfe noUce.
{h) Hold Borto\Vtlrliab!e for .. nyc!enciency.
{I) W!!hhold further adva11ces pursuant b par.lg(.3Ph 34 above for suah perind !he Dl:!faull o:m!inues, Wf'.hout det!aring
Immediately due or accelerating amounts previousty advanced aga!nsl outsl!!ndlng Accounts orolheiW!se availing itself of olhar remedies
a1ailable, during which period of withholding further advances fees shall continue lo aCCflle co all monies previously advanced.
Notw:thstandlng an eleGlbn to Wllllhold further advances as provided above, TEMPFUNDS may a! any Hme !\$elf of any or all of the
aUler remedies lisled above without rurther
fj) Se!off aga[nsl all sums standing to Borrower's 0.1 Th\IIPFUNDS books end ol Bon:o.,e(s property in
TEMPFUNDS possessbn, or upon orin Vlhlch TEMP FUNDS has a Hen Interest In addilion lo and not In limltation of lila above,
wrth respect to any deposits or propert,' of in TEMPFUNDS possession or control, TEMPFUNDS stmll have the right lo sotoffatl or
any portion lhereo/.
(k) TEMPFUi'IDS may saWe or compromise any Customer Dispute lrl Its sole discrelion. /'wj such sellfament or
comprmnisa agreed and/cr ao;;ceptcd by TEMPFUNDS Coes net relieve or conslil\J\e a waiver of Borrower's fla"ol.lly and for \he
repayment in of advances by TEMPFUNDS wfth respect to such Accounts.
0) TEMPFUNDS may cease providing the clan! ledgers, reports and (:flmpu\er access to !he safl'e, as provided In
Soc!ion 38 above. Upon pal 'men\ of a& TEMP FUNDS will provide cfJentledgern to !he Borrower.
(m) this Agmamant. \\!hlch shall not terminate, extinguish, or remove <my liens or lnleres!s gronted to
TEMP FUNDS heraundar vntm l'k;lrrolll'er shall have fully paid and discharged any and all obl!gnl!ons and indebtedness due TEMPFUNDS.
From Md atler the effective dale of termination, a![ arnounta charged or dlargeable to Borrower and all Bonowets obllgaUons and
l!1debledness dua TE:MPFUNOS shall become lmmedialoly due and wilhovt further nolice or demand.
52. Agreement sha:ll conUnue in fui force and effect fCI" ttJe Term as de"ned In Exhibit B, paragraph 29 but shaf. be
automatlcal\y renewed for o;msor.ulivfl !>No (2) )'ear terms unless terminated b)' written nofC"J of party sl.\iy (60) days prior to !he end of the loltla!
Term or nny renewal Term.
53. POST-TERMINATION: Aflsr termination Borrower shall continue to be mabie to TEMFFUNDS for the rua and prompt
performanco and paymenl of !he full amount of all Obligations to T5\liPFUNDS which for any reason or olheiVIise ere, then cul$!andlng and
unpaid, whelhcr<.ilspuled or undisputed. TEMPFUNDS Mil to havs a securlty lrtleres! in !he Ccllateral of Borrower until anynnd ell Obligalklns
are paid Jn M. W'hen TEMPFUNDS has r\lcoived payment and performance In fUll of all Ob/lgat!MS and an acknowledgment from Borrower
that !tIs no Jongar nntltlod to request any advances rrom TEMPFUNDS under this AgreemGnl. TEMPFUNDS shall execute a terminatiorl of al!
securily !nlernsls glv.:!n by Borrower lo TEMPFUNDS, upon !ha a:o::acution and delivery or genernl mlaases by 60ITtlWer, any guarantor or
of Borrower's ObllgaUoM lo TEMPFUNDS.
54. BINDING ON FUTIJru;: PARTIES; This Agreement inures to the benefit of and is binding upon !he heirs, ewculorG,
adminlstratorn, svccessof!i and assigns crthe partiGs !hemlo.
55. CUMUlATIVE RIGHTS: All rights, remedies and pOVII'lra granted to TEMP FUNDS In this or In any note or oL'ler
agreement given by Borrower to TEMPFUNDS, are curnuledivo and may be exerdsed slngu!arly or concurremjy Mth such olh11r rights as TEMPFUNDS
may have. 11'\ll!le rights may bo exerc"1ssd from Grne to tlme as to all or any part of the pledg-ed Col!alcrol as TEMPFUNDS in its discret!on may
determ1ne,
Crdemlt Corp
Loan a11d Seturity Agreement
July2(108
P".'l,.,<>e7ofl7

55, ':'.'AI\'0:?.: CI/F'FUNCS "'9Y ro: wolve Hs r'ghts a"d !ho waNe Ia ln wrffing a".d slg.1ed by
TO:,V.:>RJ.'IDS. A waiver ':'EMPFUNCS a rght o- romecy vnder Ag:een;ent 01 cccas'on !s a waiver-of !he o;- 'l!rredy on any
c.:::::asio1
ST. CHOICE OF'-\','/: -:1le va:clty of 'J"Iis .!.greement, :,s ano and Of :he
parties ard .:u:-:cerr'.1; Ire Collateral, st'al. uoder, C\', and cor:s::ued in :av1s cf the
State ol New ne agree that all 3cl'o:-:s c.- proceedlr:gs In co:-:necHon with Agreement be lrie<:! one in
t"e sta:e ar.d le:!eral 'X':.:ts \few York_ o_: 1'\ew Yock. or at TE\.IPFL:.'lDS option. in anr ccvrt ;rl whi::h
':'E.\IPF'.:\IDS shu'i lega1 or -'lr:d has rmtter jw:iscic:'cn over the majer i:l cootn::versy. 3or,-::v,er
wailes llr'Y 1:11!Y \'.ave to asse:t llle co::;lrine or fort:m non convenien. or to t:: an1 suer, ve11t:e anti hereby 'Xli1Sents any
ordered re!:er.
. 58. . L\IVA'_ID if an}' :>:ov;slcm of \Ills A11lemen: be lle;;al or CO:llrary 1:> mv. agreed lllat su=ll
pccv:sJC.'lS shall be ar.d co:1tirwe in ft.J:ca sv1 pr.::W>k:n had no! been :r=r;x:rated\'ere\:1.
59. E\ITIRE AGREEViENT: This inslmmenl conl<!ins: lhe Ag-reemen! between frle parties Jliafi.'lg to '!he se! fo;ih
J:ereln. My acce,.,dum or T-Odii'callof! here!o willl:e signed by bo'h parties and al!ache-G h\l'Tilto.
60. E;::FECTlVE: ThisAgreem\ln'.beoomes effective when it is acceptad and executed by an au!ho;izo;d omoer ofTE.VIPFUNOS.
51. ASS!G,'lMENT TEfJ,PFUHOS may !his Agreement tD eny party a-nd such asslgnea shaH :Je entted
tc n!l !ighll p;tvnegss iJeraunder, may not assign t1is Agreement. reserves the right \o sal!, assign, ltansler, neg ella!"
or grant part'cipatiDns in or any part of, or 11111' Interest in, TEMPFUNDS rights ami benefits hereunder, and Borrower consenl'llt'>
TEMPFU,'lDS sl1aring of all financial bformation regardif'!g the Borrower with any such
62. R!":SERVED
63 COi\oiPUANCE: Borrower agrees lhatlf requested by TE/l.WFUNDS or TEMPFUNDS counsel, It will fully cooperate end
execute and!or re-execute any rlocumeol or do::uments due to clerical mrors, scrivener's errors or to addltklnal dunlo recel::ot
a.1d review of misooilaneocs requireC: post closing, '-lSir,g reasonable discce\ion ol TEMP!"U,\40S and TEMPFUNDS Counsel, and
hereby aulhorize and TEMPFUNDS Counsel to date this Agreeml3nt and any loan DoC\!ments, and to complete, C!l behalf of
Borrower, any Olanks In lhe Agreement and any Loan Oocuments.
64. AUTHORIZED ?ARTIES: fl.s en ancommodatlon lo Borrower, TEMPFUNOS may permit telephonic, electronic oro!her
transmittal of inst'IJctions or requests lor advances, autho:1zatlons, agreements, assignment sheets, assignment schedules, requests for
advances or reporis between TEMPFUNDS end Borrower, received from or sent by any one or mO!'e M the employees (Including conlract or
1eaSect employees), officers, dlmclars, managers or consullunls of the Borrower {collecflvely the ''Authorized Si9na!orios'). Borrower
specifically alrucls TEMPFUNOS in wriUng not to accept or act 11po11 telephonic, t"'l"'oopfed, eleclronio or o'!her communications from
Borrower or to only accept instruclicns from .certain specifiod employees. or officers of Borrower, TEMPFUNDS shall have no llabijjly to
Borrower fer an)' loss or damage suffered by Borrower as a result of TEMPFUNDS honoring of any requests, execution of any inslruclions,
authorlzallons or agreements or reliance on any reports communicated \0 TEMPFUNDS and purpor1!ng to have been sent to TEiv1PFUNDS
by Borrower and TEMP FUNDS shaU have no duty to verify the origin of any such communiC<ltion or tle auft1orlty of the person sending it.
Pursuant to ihe terms hereof, Borrower will deliver to TEMPFUNDS, from time to t!me, essignnient schedules of Borrower's
Accounts on TEMPFUNOS form of Schedule of Assigned Acrounls signed by one of the Authorized Signatories, all of which 19 subject to ltle
procedures sat lorlh herein and In !he 'Fumfmg Procedures Memo" by TEMPFUNOS to the Borrower as amended and/or updaled
from lime lo Ume {the "Procedures Manuel"). Tha Borrower specmcalty requests that TEMPFUNDS agree to accept any signature or
facslm!le on any Schedule of Assigned Accounts or any notice whioh TEMPFUNOS In Its sole discretion be!lelVes to ha'!e been sent
or forwarded to TEMPFUNDS by one of the AuUtorl7.;ed Signatories. The BoriQWer hereby agrees to follow up any of said facsimile
transmissions with lhe original of sam"' no later lhan the next Business Day following any such facsimil"' transmission.
In adriltion lo the other indemnifications s"'t forlh hme!n, the aorrowef hereby i.,demn!nmr and holds all lndsmnined Parties
hmr11tess (rom and against any and all claim3, demands, losses, llablll11es, scUcns, lawsuits and other proceedings, judgments and awards,
and from cosls and expenses (induding wilhout limilatiDn reasonable attorney's fees) arising or indiwctly, In whole of In parl, out of !he
negligorme, wUiful misconduct, misuse or unlawful or unflutllortz:ed use of nny facsimile message or, facs!mlla s111na!tJre or signatures of any
person or persons, Including lhe Borrower or its officers, directors, e.g!ll'lts or emp!o\'!!!IS, whether within 01 beyond the scope of
such Individual's duties or authorfty thereunder. Furll1er, tho Borrower agrees. to assume full lor 11ny and 111l advances and
aclions taken by fEMPFUNDS in reliance upon eny facsimile tnmsmlsslon or, facslmilll or ,tgnatures ol any persOll or persons,
Including the Borrower or its partners, officers, dlrecfors, agents or employees, signing on behalf of the Borrower.
Borrower that TEMPFUNOS shall not b!! responslb!!! for any communication or miscommunication by any Individual
claiming to or which TEMPFUNOS In lis discretion believes to have proper authority to giVII an)' facsimile \rnnsmlssion.
65. TRANSMITTAl OF FUNDS. Borrower understands 1hat TF.:MPFUNDS <1 Wire Fee (es defined in Exhibit 8,
paragraph 30) !or Incoming and outgoing wire transfer of end that \here Is no fee for ACH transfers. TEMPFVNDS may Initiate a wire
or ACH for lhe approved amount of a transfer no later than the second Sus!nass Dlly oller receipt of all necessary documentation In
GOnneclion wilh tho assignment of Accounts and !he advance. Borrower underslands and agrees tllat TEMP FUNDS cannot conltol the lime
il will for Borrower's bank to credit an ACH tram;fer to Borrower'!! account. Accordingly, Borrower instructs TEMPFUNDS to send all
transfers to Borrower's account based upoo the set forth in Exhl!til B, paragraph 31.
66. WAIVER OF JUIW TR!Al. AS AN INDUCEMENT FOR TEMPFUNOS TO ENTER INTO THIS AGREEMENT AND TO
MAKE. ANY LOANS OR ADVANCES TO BORROWER, BORROWER AND TEMPFUNDS HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WANE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION BASED HEREON, OR
ARlSING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT AND, OTHER DOCUMENTS OR TERMS AND CONDITIONS
STIPULATED HEREIN OREXECUTEO IN CONNECTION THEREWITH.
fl7. JOINT AND SEVERAL OBliGATIONS: DEALINGS WITH MULTIPLE BORROWERS. If more than one peraon or
named as Borrower hereunder, all Obligations, representations, warranties. covonan!s end indemnll/e9 set forth herein or In any
othl'lr loan documents betwaen lho Borrower, 'fEMPFUNOS and any guaranlora of the Borrower's obligations to TEMPFUNDS {collectively
the "loan Documents") !o which 9uch person or entity Is a 3ha!l be ]oint and severaL TEJ\1PFUNDS shall have the rigl1t to doal with
any individual ol any Borrower v1llh regard to all matters concerning the rights and obligations of TEMP FUNDS and Borrower hefeunder and
pursuant to applicable law with regard to the contemplated. under U1e Loan Documenls. All acUons or Inactions of the oW cars,
managors, membe1s end/or agents of any Borrower with regard to the transactions contemplated under the Loan Documanls shaH be
deemed with /uH auL1orlty and blndlnQ upon all Borrowers Mereunder, Each Borrower appoints each olh11r Borrower !!!llts true and
lawful atlomey-ln-lact, wl!h full right and power, for purposes of exercising all rights oF such person hereunder and under app!loable law wl!h
rega'n:J to '!he transactions contemplaled under lhe loan Documents, and the Borrower hereby appolllt Cr:ientla Corp,, to act on behalf ol all
of them, 'trn'l!l such time e.s -the Bo.-rower advises TEMPFUNDS in wriling of a change in the parly to act on their behalf. The roregclng Is o
materi-al inducement to the agreement ol TEMPFUNDS to entar into this Agreement e:nd to consummate lhe transactions contemplated
hereby, The ropresents that Crdentia Cmp., CRDE Carp., GHS Acquisition Corporation, S!atf Search Acc;uisil!on Corp., MP
He!!llh-Corp., Prime Slaff, LP, Mint Medical Staffing Odessa. LP, and ATS Univer&al, LLC are operated as part of one consolidated
business entity and are direclly dependent upon each other for and in connection with their rospeclive business nc!ivi!ies and finandal
resources. Each Borrower instructs TEMPFUNDS 'oo lund all advances to Crdentla Corp., and Crdentla Corp .. shall disllibllte the loan
Corp
Loun Security
July 2008
ofl7
advances to a:! olher Borrowers 'aseC porl'c-n of eacl1 advarnoa. Borrower will -,c,lve !l e::oncm'c ard f.nencla!
bene!lt hJ:r. !he O!:lli:;la.Uo"s inct:rreci under 1:.1s :md of Ob'igati011s is in best of sach 3o;rov'"''
Crden!l& Corp
Lo11:1 and S>:-curity
July 1008

[fHE REMAJNOEROFTH!S PAGE iS INTENTIONALLY LEFT BLANK!
srAn:or= Te y a. :.
coUNTY oc D a /Ia s
CR:OE:--1-;-IA CORP., a Je!aware
CRDO:: Col'., a :}e!aware corpo.<J:Ion
Gf-'S Ae<:uisi:icJ' a Clelawme c:Jro::rnlfon
Slafl Sa<Jrch 1'-t:ilLr:sitio:""l Corp,. a Te.xss :orpora!l:::r:
1.'.? He Cor? . a Delaware corpcral\cn
. Pf.r.m Sl>!F., LP, a -:-exas 1117lited
By: CfOE Co:p., C!s General Part11er
.\ledica/ o::essa, !.? . a -:-exas lirn':ad parlnarsr.io
5y: CRDE Corp., :ts Gcmeral Partner
A -:-s Un:versal. LLC, a <'lorida imile:i liabiiily <;:Jmpany
The foregoing tr.stivment me lhis znd day of July 2008, by john 8. Koiser, as Chief Sre.rulive Officer of
CRDENTIA CORP., a Delaware CD!po:aticn, CRDE Corp,, a Delaware carporntlon, GHS Corporation, a Delaware corpora!:on, Staff
Search A!::qUisi!ion Corp., :1 Texas corporallon, MP Health Corp., a Delaware Prime Staff, L?, a Tax'ls partnership, Mir1t
Medical Sl<!ffrng Odc11911, LP, a Texas limiled partnership, and ATS Universal, LLC, a Florida tlm!ted l!ablll!y company on behalf crt the
corporalions, companies and limiTed parl!"lerships. He is pernonal<y :<rown !c me or has as
lclentmcation 1101) lake an oalh.

(NOTARY SEAL)
LUCIA MORENO
NOTARY PUBLIC
STATE OF TEXAS
MyComm. Exp, 7-5-2010
STATE OF ;/(,e._ . /.'"

, ignaiurn)
Lw: .. J C.. t1J DrtOCl
(Notary Name Prinled)
NOTARY PUBLIC Commission No. ________ _
Aceepted by TEMPFlJNDS lhls4._dayof
1/.{! (herelnatter,lheAccep!anooDale.)
CAPlTAl TEMPFUNDS, a division of CAPITAL BUSINESS CREDIT LLC, <1

J",V: -p,
(CO!po;ate )
The, foregomg lllS!nJment was EJd<nowlcdged be'ore me th!s ....3 day of ,. 2001l, by , M
S y, /-' of CAPITAL TE1V1PFUNDS, a division of CAPITAL a habiltty c pany on
behalf of the Hers persOflally known fo me or has produoed as iden!ificaliOfl and did (did not} take an oalh

(NOTARY SEAL)
Crdcntia Corp
lll!d Seeurity
July 2008

(Notary Name Ptinled) /
NOTARYPU8LlC Commission No. _______________ _
REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY
EXHIBIT "A"KATE SCHEDULE
As :nr acvan::es mace TE:V.PFU:IDS urdao this Agreemen!, TEW.PFU:'>IDS shai! ;,a paid lle ro::owing Fees anc
irte;est:
(aj upor: the nee cf an)' to Borrower a'!d 'nte:-est app.icable lo l'le o; to expanses
to '.1 t':is Ag'l!e:nen:, !:a cl'.arged as cf the last day cf each mon:h at a rate tile {I) eight and one half percent (6.50%) per
oor (ll) the -ate o: intomsl desig'laled by Wall Street as the 'Pnme Rate" plus The ='rh'!!!!o shall "11ean. at any
f1me. tMe rate q'.loted in be Wall Street .oumal. \1oi1ey Hates Sectlo;J as "Prlfl'e ''l.a:e" (CLirrenUy defined as :11e t<Jse rate un
cmporate loans f'OSicd >;,y at least 75':', o! rallon's :hirty (30) largest :.anks). In the eve!ll that !he Wall Street Jour.1el c,votes mere
O:-Je rate. or a :ange ol rates as t'le Prime Rate, then the Pima Rate shall mean the highest of !he QUoted rates. In the event that !he Wall
Street Jouma! ceases :o _:;m:.llsh a Prime Rate, tr.en =>rime Rate shall be the averege :::f the l'lree largest U.S. mo.1ey cenlc:' commerc'al
bnr:ks. as de!errr.lned by Any 'TSV,PFUNDS lrteresl rate. dOW<!Warti or wlll'oecome er'eclive
:::n flrst day of the mon!h follcwl:lg the mon!h 1;1 Vihkh tt>e "rime !'\ale of interest is reduced or HOI'\' EVE."-, in no event
the --a!e of lo or cMarged to Borrower .1erounder s:xcsed lhe maxirn\!m ra1e ollnterest permitted to be agreed to or charged :o
Borrower under app!lcable law.
(b) For TE"-\Pf'UNDS seiVices h::rolinder, Borrower shaU PEtY lJe enl'lled to rsro-.,-e a
fee equal :0 nneen hun(i;edt'1s ot one r:ercent (0.15%) of !he average ou'standng each mon!h {the"S!anc';mf Rate"} payab:a.
on firs! day ar.er !he end of each month. In tl-j(l event !he lflree (3) c::mseC'JHve of pcs!Uve Cash Flow (as C:el'ined below), lila
rr.onU1Iy monitoring lee shnl' be re<!uced to one Qf one percant of the Cbliga60f's ou:standing for each month,
however. thai !he monthly fe.e viilmsuma to !he Slandmd Hn',e In !he eventt.'lere Is negalive Gash F!owln any qua-ter. Cash Flow
shall mea,l (i) na\ im;ome plus (1i) and amortiultloo and other noncash expanses, less (iii) debt sruvice, and divide.ldS and
nm .. financed capllai exoend!tures.
(c) Cfgsing Eml.; 3arrower wiH pay !o TEMPFUNDS a closing lee in the amount equsl to 5135,000.00 due '.lpOn executkln Cllthis
Agreement, but as a courtesy to Borrower, pi11yable In three {3) paymsnls of S45,0::J0.00 each, one O;J February 22, 2009 one on August 22,
2009 and the final payment on March 1, 2010.11 L'lis is renewed, a renew11l fee In the amount equal to eight.tenths oi one percent
(.80%) of the Maximum Credit Facility shnll be due and payable en March 1 of each year during each renewal 'Term. unle3s such rene.\'al fee
is waived by TEMPFUNDS 1.1 writing prior to each rene'l,tal Sur.h fees shall be ru!ly earned on the date when due and shall not bo
ref\mdable to the Borrower il'l any event
(d) I ock Fe&: The Borrower shall be responsible for lhe costs of malnlaining the Box and the lock box account.
(e) Earty Tennlnal!on If t.,_,e Bo;rower seeks to tenninale this Agraemenl or prepay lhe Obligations Prior to the of the
initial Term, In addlllon to all other amounts due hereunder, lhe 8o1rower shall pay lo TEMPFUNDS an early lermina\ion fee equal to ONE
P!:RCENT (1.0%) of the Maximum Credll Facility. together with the unpaid facility fees and monthly monitoring lees for !he remlllnder of tho
Term. In the even! tl1at payment of the Obligations shall be accelerated for any reason whatsoever by TE:MPFUNDS, the prepayment fee in
effect as of the dale of such aoce!er<J!!on shafJ be paid and such prepayment fee shall also be added to the outstanding balance of \he
Obligations in determining the dabt for the purposes of any Judgment of foreclosure cf any loan documents given to secure the Obligations.
Cr&nrin Cotp
THIS EXHIBIT'' A" IS MADE A PART OF AND INCORPORATED INTO THE LOAN AND SECURITY
AGREEMENT.
'.
Loon a!ld Security Agreement
July200JI
Qfl7
1. -he /l_o;:;;ep!<!r::::e Dole relarre:! :; :if! :::;:en<.1g ;;arag-;aph cf INs Agre<>Jrent IT'e<lrs !l'_e cate sigrcd a;d aoce:>led by e- Co.:lv 1u;:ha-.zed
cf --:-E;,.:P."L":-.103.
2 8ormwrlr :eferrec: to In p:;rag.dph Crde!'::a Co:p., a Delaware oorparaUcn with its place of !:>us\ness -a.r:(i
chief clf.ce. SD0"1 L3J #850, oar as, rx 75244 rcrde11t'a l CRDE Carp., a corporation, wllh ils
p:ace of :>\lsmess and execufi'le oiTi:e ai5Q01 '---BJ Freeway, if.'J50, :l!!olas, 7):: ('CRDF). GHS
a ccrporatio,;, W1lh. iis prir,cipal ::la-::e ol bl:lsiness am: executive office at SD{I1 -BJ Freeway, #85C',
TX 75244 ("GHS"). Stoff Aqufsilicn Corp .. a -:-exas C:Jmo::a1ior;, its prbc'pal of business ano Chief
exec:.rtlve office 8240 .'J. \'opac E.>;pre.ssway. Suile 150, Austin, TX 78759 ("Slalf'),MP CcQ .. a Dela11are cmpora;lon,
w;lh its p:inci::m! place of buslneS$ and executive omce at 201 Beacon "'a11way Wost. Suite 404, Birmingham. Al 35209
(",\1P") , Prime StaF, l?, a Tex<Js iimi!ed wilt! !!S prir.c:nal :J!ace of business and cMiel exec-.;tfva office at 24 ::.
Greem.-ay Plaza, S'.lite iS03, Hous!on, TX 77046 ('Prime"), .'<lint r:.aoiwi,Stat:'lng Odessa, LP, a Texas limited par.nershlp,
ils prinoioal p!ace of bcslness ano ch'.e/ exec'.Jtive cfflce ai202C :=ast fi" t:itreel, Odessa, TX 7!3761(".\lint"), and ATS Universal.
LLC, a ::;arioa !idled Fabilily company, with :1s ;:>rinci;.al piil::e :::f business <il'd chief at 2250 Lee Road, Suits 201,
Park, FL 32789 ("ATS"), hereinafter collectively referred as 8orrnvJer'. Borrower is tl'e ass'gnor of the A=l.:nts an.d
debtor.mder ti1e cede. Bomwerrnay eJso be to as c;lenL
3. "Term Days' as refe;red \o h Sec!icn 3 {fi) rr.eails: {3Cl) days.
4. ",
1
Aaxim:J!Tl Day-s" as referred Ia in Sacllc:ns 3 [fv) and 34 mear.s: One- hundi"E!d twer.ty (120) da)'S ft"Dm date of pro\lk!ad the- hvoice
dale is rot llfealllr than len {10) days from the last dale
5. "l..t.axrmum Concenlmffon Amount" as to in Sacilon 3 (!) means: S21Xl,OOO.OO, unless olherwl;a approved by TE.\ilPf'"UNDS In
.WI'.:ng.
6. "Cress Aging Percentage" as referred !o in Section3 (g) means: Forty percent (40%).
7. "Past Due Dilys" as referred lo In Section 3 {g) means: 120 days.
8. The following is aoded at the end of Section 3: "'Permanent Placement Accauflts" which m!l!ln any Accounts which arise rrom the
permanent placement of an employee who will be hired by a Customer and will be an addition tc the ongoing payroll of ths
CL'stomer (hereinafter "PPA'). !he foregoing, PPAs may be considered Acceplable Accounts provided they are
otherwise in with !he PfOvisions of Sections 2 1:1nd 3 of the Agreement and the amployee, which is the subJect oflhe
Account, h<ls repo:1ed to the Customer's place of employment {which may be verified by in its sole discretion),
and the total of suoh Accounls are less than five percent (5%) o! lhe total amount of !he Acceptable Accounts. TEMPFUNDS shall
a)so a dilution reserve on Acceptable Accounts which are lhe result ol PPAs of percent (5%) of the Invoice amount
plus actual DlluUon.
9. organtzat'onel St:Jle' as referred to lrt Section 9 means:
{a) IllS to CrdenUn: Delaware:
(b) as to CRDE: Delaware:
(c) as to GHS: Do!aware;
(d) as lo Staff: Texas:
(e) to MP: Dslaware;
(r} as to Prime: Tex:as;
{g) as to Min!: Texes;
(h) as to ATS: Florida.
10. Borrower"s Trade names as referenced i11 Section 11 are as follows: None.
11. Elorrovle:'s Federollde11tilicaf!on Number as referBrlced in section 121s:
12. Borrower's Orga11lzatlonal Number as referenced In Sedion 12 is:
(e) as to Crdentla: 76-0585701:
(b) !IS to CRDE:20-1472S09;
(c) as !o GHS: 20-2639736;
(d) as lo Staff: 20-1942759;
(e) asIa MP:26-1564403;
(f) <Ui 6H405307;
(g) as to Minl: 020661284;
(h) as to ATS: 550863980,
(a) as to Cfden!ia: 2611491;
(b) as to CRD8: 3840764;
(a) as to GHS: 3950557;
{d) as to Staff: 500632536;
(11) as to MP: 4387519;
(f) as (o Prfme: 60005g1J1;
(g) as !o Mint: 60016<1477;
(h) as lo ATS: l04000031301,
13. ''OH1er security Interest' as referred to in Section 23 means: (a} as to Crden!fa: UCC me #80657<112, filed February 25, 2008 by Com Vest Cepl!el,
llC v.ith !he Delaware Se-::relaryof Stale.
(b) ns to CRDE: UCC lt8C-657376, fi!ad FebruSFy 25,2008 byComVesl Capital, LLC with the !Jejaware Secrolary of State
(c) as to GHS'. UCC nie #80567.343, fried February 25,2008 by COm Vest Capital, LLCwith the Delavrora Secretary ofSblle
(d) as to Start: UCC file #08-0006977815, February27, 2008 by ComVestCapila!, LLC with lhe Texas secrelaJY of State:
{!1) as lo MP: UCC fi!e #8066n36, rued Febf\mry 25,2008 by comvest Capi!:af, LLC wil.h the Del11111-are Sec:relary of Slat a;
(f) as lo Prime: UCC me #OB-00069n704, f,k!d FebruaJY27, 2008 by Com Vest Cap1".al, LLC with the Texas secrelaJY cfstate;
(g) as to Mint: UCC lite #ol}{l()06977693, filed February 21, 2008 by Com Vest Capitai,LLC with !he Texas Secretarycl Sl<l!e;
(h) as to ATS: Ucc ti'a ft200807722101, filed Febnmry 25,2008 by ComVestCap!tal, LLC with !he florida Transac\ions Reg-is!ry.
Collateral Is all Assels Borrower, which financing sll!tomenls and security inleresls arn subordinate to the interests and UCC of
TEMPFUNDS the terms of aSJbo:cflnalkm Ag.:eernent between TE!'1>1PFUNDS and Com Vest
NOTE: As to !he listed above, the listing !hereof in this loan <md Security Agreement shall not, In any manner whatsoever, be
deemed to be an acknowlodgemont by TEMPFIJNDS as to tha perfection, prlorlly, validity or enforceability !hereof.
14. "Oillcr Insurance" as referred to In Sec1Jon 24 means: I) Uab:lity k1surance ooverage wilh TEMPFUNDS named as addiUonallnsured
C1dentia Corp
Loan and
July 2008
Pagt t 2 of\ 7
5. Per'o:iie as :iesc-i!::eO h Sec on '27 rreans: 45 a!!_er ard 45 days after every ct.:arter. provided,
:':a: Borrower being l<lke:1 r:o !orger being a ou':l':c sta:e11en!s 1,ir no :Je !e<:JUired.
16. Per'od" as Cescri:lel;! in 27 rr.esns: "\lnety (90) days after !f'e er,o d e<til B:m'Jwer's f. seal y.'!ars.
17. 'Flranda Slalef:'lert" rr.eana en a cor.sdkiated <md consdtbfng basis: (1) at :'le end or eac'l fn!e!':'la/y
b>; Botn\.er's r::ar.agement; and c(e<;c!'; ffscal sta!ements wr"1ou: any exceplicns, by a
Certifieci accepta':lle 'n TEMPFUNDS.
18. ::xduded C::[laterar as re:e:md lo h Sectioo 30 means: None
;9. "Cas!s ar.ci Exoonses' as loin Borrower Is fable r":Jr. a:-;CIEMP;:UNOS may B=wer's wilh, all
ccs:orr,ary lisual out of w:re &arges "'nd o\'cm!gi';t e:o:penses, :;nd all :ea...<:anable cos!!l and of l!'lng
or taxes). searc.'ms. ar.d any atlol';ley's fees ar;d exper.ses may be inc-Jrred hy
In pelfeC::ng, .:;role:=llrg. ,:,reserving, modifYing, or enforcing its security Interest and righls
20. 'Aovar;ce Rill!!" as referred In Seclilln 34 means: (i) ninety pe1cenl (90%) of the face amou.1l of ea::h Ac:eol!!ble A<Dlllnl appr.:lved by
and assigr.ed ':Jy Bomwer on a Srlmdu:e d 1\=u.1!s: and (ii} eig:.ty percent (80%) or the Unbf!ed Aro:run1s, approved
TEMPFUC.:DS and b) Bo!rower an a &l'1edule of Accoums.
21. "Maximum Facility'' as referred to in Sect!on 34 means: Subject to lhe temls and of. and in rnllance upon
represenlal!ons and warranties made in Agreement Iota/ advances outstanding to 3olfower at any time during
tho term of this Agreement shall not exceed S&ven Million Five Hundred Timusind a11d no {S7,50il,rlOO) Dollars ",\1axlmum
Creel!!. !I any advances oujstandlng at any 1'1me should exceed the Max/mum cn;.;:r: Facility such advances shall
constll:Jte Obl:gations und"lr lhls Agreement or Indebtedness to TEMPFUNOS and be s'.lbjett lo the terms and cono:iltlons ol t1is
Agmement. Subjilc:! Ia lhe terms anci of, and in reliancu upon Sormwer's represer.taUo.1s end W;!I!Tanties made il'l
Agreement the total acival'\ces to Borrower ageins1: (I) UnOilled Accounts at any llme during the term of this Agreement
shall nol exceed Flve Hund;sd Thousand and no Do!!ars (SSOO,OOG.OO) in lhe aggregate; fii).Accounls due from individual patients
al any Ume during the !erm of !hi' Agreemenl shall not exceed Throe Hundrsd Thousand and no Dollars ($300,000,00) in !he
aggregate; and (IIQ Accounts due /rom al! slats Medicaid programs anci providers at ar1y lime during the term of lhis Agreement
shall not ex:ceed Five Hundred Thousand and no Dollars (5500,000.00) in !he aggregate.
22. 'DlMion Reserve referred to in Section 34 means ttle Dilvtion Perce111age less !he Base DUuUon, The Dilutlon Perwnlllge Is defined es: (I}
uncollecled sales (as determined by TEMP FUNDS in ils so:e dlsae!lofl, BX>!lrcised in a manner, and all
sales subjill:t loa Cuslomer Dispute) lhal remah unpaid but are co!ectable, dMded by (ii) total sales and (iji) slated as a
percefitage, Base means: two fl!lrront {2%}. The Diluilon Rese!Ve will not be effecdve unbl ninety {9:1) days afler !he Acceplam:e
Dale.
23. "loan as referred lo In Section 34 means that account established on TEMPFUNDS books, upon Whlc/1 TEMPFUNDS
shall enter all advances as debits to the loan Account and shall Ellso record In !he Loan Account all payman!s made by Borrower on
any Oblig:llions and all proceeds of Collateral which are finally paid \o TEMPFUNDS, and may record therein, in accordance with
cuslomary acoount!ng practice, ather debits and credits, including interest ar1d a!l charges e.nd expenses proper!y charl}eable to
Borro...,er.
24. Lock Box add;Bss as referenced in SecL'on40 shall be:
The.Lock Box address can be changed byTEMPRJNDS frum time to upon prior written r1oUce to Borrower.
25. ''Collection Day Perlod' as referenced in Section 40 3 days.
2.6. "Wire Account" referred to In Section 40 shall mean:
WACHDVlA BANK
Charlotte, NC 28256-3970
Forlhe or
CAPITAL TEMPFUNDS. a di,ision of CAPt TAL BUSINESS CREDITlLC
Account #201 0000354382
ABA#053207766
For Further Credit (CRDENIIA CORP.
1
et
For ptoper r::rodi/, please bs sum your-customers
inol'oale their name and l11vo/r;a numbers being
paid in tho of /he
27. 'Flcl:l E:<penses' as refefl'eQ !0 in Secij01141 means: In the Event of DafaUII, 0111 of pocket expenses t1cluding, but notllml:ed1o;
!ransportation, hole!, parking, and meals plus $850 per TEMP FUNDS representative per clay lor ead1 day or the F.eld examination and induding
propal'i!Uon orthe field B)(Bmiootion report.
2S. The broker, ir any, referred loin Section 49 is: NONE.
29, 'Term" referred to In 52 Febltlary 28,2011.
30. "Wim Faa' as referred loIn Section 65 means $25.00 per wire.
31. In accordance willl Section 65, please send all our translers via: {clrde Of\ e)
lnstruc:Uons are as fo!(ows:
Bank Name
Bank
Crdoda Corp
S<;mit; Agreement
JU!)'2{]0S
Page 13 of !7
Wire
Comelica Bank
250 lytton Avsnue
Palo Allo, CA 94301-4-359
3ar:k Pl-o::e 65:)....:52-6<55
3ank Nira CcrteJ:.
Nurtber (A3Nt) 121137522
Na.T"e {on Ccrp:
Address 5"0:J< L3J FeeMI)', 9:50
Ca!'as, :-x 75244
Ac:cunt N..:mber 18922754()3
T)pe of
32. The Supplemen\s and Addendum app!y to lhis Agmement and are incorporated alld attached hereto: Elect'onlc Da!a
Transmission Agreement.
33. The Borrower shall limes rrainta!n 1he r::ova1ents:
a. Borrower's Cash Flow shall:(!) not be negative more \han 1WO MILLION DOLLARS (S2,000,000,00) from the dete lhls
Agreement December 31, 2008; and (il) beginning Janua.y 1, 2009 ar.<:llhereafter, at all times i::>e positive, measured quarterly.
b. The Borrower wil! not make, -direc!ly or cap:tal for !he purchase, fabrlcallon, creation or leose of fixed
assets, including ref.tals en leased Items, In excess of an aggregate of "TWO HVNDRE:D FIFTY THOUSAND DOLLARS ($250,000.00)
per armJm (noncumulative). For purposes of this paragraph, the word shall refer to:
-i)iil the event of a purchase, (he entire purchsse price of U1e nxed asset: or
il)in the case of a lease, the enlire rental ror lim ierm.
All of the above finem:lel covenants shall be detem1!ned In accordance with GAAP, tlrlless o!herwlse prol'lded. 'GMP" means ge;"Jerally
accepted acoountlng principles set forth In the opinions and pronouncements of tl\e Accotmlir.g Principles Board of the American
lostilu:e of Certified Public Accountants and statemen\11 and pronouncemen\s of the Financial Standards Board thai are
applicable lo the drcumstai"Lces as of the date or determination and applied on a cons!stenl basis.
Corp
THIS EXHIBIT "8"18-MADE APART OF AND INCORPORATED INTO THE LOAN AND SECURITY
AGREEMENT.
Loan J\nd Seeurity
July 200&
Plge l4ofl7
CAPITAL TEMPFUNOS
a :livision of CAPIIALBUSINESS CRE:liT l!...C
'799 W. Oaklanc "'ark Blvd
Fl LauCerda,e, Flcrida
of Bvn:werl
Ca\e
Th"! u;;dersigned, L'le Chief =xecutive of CORP., a Delaware corpcration, CR::>E
Gorp., a DelaNara Gr.s Atouisition Co:-poraticn. a Ce1aware Stall Search AccuisiUon Corp"' a Texas corporation,
1
/,p Health Corp .. a Delaware ?rime Stat;', '...P, a Texas 'imtled partnership, ,V.Inl Medical Odassa, :.P. a Texas li!T'IIed
and AIS Ur.iversal, lLC, a Florida l!mi!ed l!abil<ty compeny (collect[vety ''Borrower"), gives this ceri!rtcate CAPITAL
TEMPFUNOS, a divisio;'l oi CAPITAL 3USINESS CREDIT lLC ("lender') in ae"._ordance wltl1 the requirements of lhat certain Loan and
-Sec-Jril)' Agreement dsted as of ___ , 2008, between Borrower and Lander Agreement-). Capilal':o:o'!d \arms used In this
Cer1ificate, clhe:wlse <!eOned herein, shall have the meanings ascribed to In the Loan Agroomenl
No Event of Default exis!S on \h!! date hereof, other tl1an''-______________ _jif nona, so slllte).
1) Borrower's Cash Flow for the per;od ending---------is eo:;uallo ------"
2) Borrower's Capital for tlle fiscal ysar ending December 31 ___ Vo'ere equal
As of the dale hereof, Borrower is current in il$ payment of all accrued rani and other charges to persons Vlho own or lease any
premises where any o/\he Collateml is located, and there are no prmdlng >:lispu\es or claims regarding Borrower's raRure to pay or delay In
payment of any such rent or other charges.
Crd<>:rtia Corp
Lotn aod Seeuri!y ,\greament
July 2008
Pt.gel5ofl7
Yours truly,
ST,\T;:;. OF
C:)U'\!OF
AFFIDAVIT OF OUT-OF-STATE DELiVERY
8-EFC::tE ME. aJtl'or'ty, perscrally a, li!l Int. ,..cff"'!jtc-S ,.../ {L"e
'Affiant"), who oeing flrst cuty :.:pol" oat!-. deposes and says
1. 'sa .:5 ? ' of CAPITAL TE.\1?"U1'-lDS, a di\'isior. of CAPITAL BUSINESS C::tEDIT LLC. a
:r:1ited l\ab
1
llty C-:lr:1pany ('TEMP=VNOS"), ard !he Affiar.\ is duly at!:horized to anrl aces th:s al;;cal'i\ h said on
behalf of -:-aJ.PFUNiJS.
2. 7tat :he .fJ OH)' of 2C09, 1 executed on behnl( o:11he dale referenced be,ow t:1a! ee.1ai"' an<.!
Agreemer.l ('he "Agreement"), wt",ic:h Ag:-eement is between CROENTIA CORP., a Delaware c?rporaUon. CRDE Corp., a Delaware
G!-!S Aca'.!isi:ior Corporation, a oe:awa;e Staff Search Co:p., a carpo,.t:on, .lAP Heal!r, Corp., a
De!aware LP, a Texas limited S:a!Eng Odessa, LP, a Texas <:rr.ited ::artnership, arC ATS
Un've:;;al, '..LC, a Flc:ida limited liability ':'.Orrpnrty as and CAPITAL TEMPFUNDS, a division oi CAPITAL BUSINESS CREDIT
LLC, a Delaware limited ro:r;>ary, as lender.
3. \Gal :he of the A9roemer:t by TEI/,?;:U:-.IDS lock ple:::s in .
AFFIANT SAYE:TH NAUGHT.
SWORNTOANDSUBSCRIBEObefor0melhis J_dayofJuly,2008by ';;fA_/._- J -
who appeared before me, anci who is personally knowo1 to me. #
Corp
Lolln Md Sco:u.-iry
July 20!lS
Page !7 ofl7

NotaryPublic.Slateol
Print Name: J1.l/iy y 121 >f"'1 zf:s
My Commission Expires:
SEFORE .\IE, t::e the Jc:11 B. Kaiser who t!e:ng lfrst duly S"NCm
cath Ceposes aoc says !tat he.' she is I he Ct;ief of CRDEHT\A CORP., a De aware CRDE Corp., a
corporation, GHS Ccrporaior., :3 De:aware S'.a.;r Sear-:;:J A:;quis.'jcn Corp., a T.:oxas corporalio."l, 1:,p 'cie<Jil'1 Corp .. a
De:aware cor:>vra:ian, Prirr.e Sla/f, LP. a pi'lrtr.ersh:p, ,\ledleal Slaflir.g Odessa, L."', a -:-exas limited partnership. ard ATS
Universal, L_LC. a Fiorida t:miled 'iabi:lty :crPpar.i' as 3otroNer, :o me we!i known aro wr.o deposed and said !hat he and Ce!ivere:!
!h'>l cer!ain :..oan Hn<l Security Agreement o:lateo as of Juiy __ , 2008. 'n :he maximum amo:.:nt cr Five Hundred T::ousar.d
a,"td 'W;;co (S7.SCO,OCO.OO} {lt":e Ag.-ee171ent is CRDENT!i\ CORP., a oeraware
CROE Co;p., a Qe!aware GHS Acc_'.lisi!ron Cornoratlon, a Delaware Sla!f Search Acquisition Corp., a Texas
corporation, M.O Heai:h Corp., a oorj)oration, Pr::ne Slalf, l.?, a Texas i:mi!ed partnership, :V:inl Stamng Odessa, !...P, a
Texas :!171ited parlnershio, and ATS L
1
_C, a Fiorkia limHed 'iabil'ly compaf,y, as Borrower. and CAPITAL n:;:,lPfUNOS, e division
o(J"CAPITAL_ 6USiNESS CREDIT LLC, a Oe'aware limited l!aoillly company, as :ender, !n the c:ty of CX. l\9.-<., , Slate of
t.)(c-d ;
AFFIANT SAY6TH NAUGHT.
SWORN TO AND SUBSCRl81:0 before me this lnd day of July, 2008 by John B. Kaiser, who personaily before me, and who J
/(.] is personally known to me or [ J has-produCed , as kientlrlcaUan.
Crdntia Cotp
Lo1111 and Agreement
July 2008

Notfr)'Ptli;JJc, State ol
Print Name:/ 1/C ri VV] Oy'"'..n ()
My Commissioo Expires:
!NOTARIAL SEAL]
LUCIA MORENO
NOTARY PUBLIC
STATE OF TEXAS
Mycomm. Exp. 7-5-2010
'.
Jun-22-09 02:03P
520 844 5636 P.01
!<1RST A:VlENDl'<lliNT TO J"OAN AND SECURffY AGREEMEN';[
THIS FIRST AMENHMF.NT TO LOAN ANH SECURITY AGRimMENT
("A mcndmcnt"). doted as o[ June _,2k\-. __ . 2009. \ entered into by and hetween WELLS FARGO
BANK. acting throngh its WELLS fARGO <:REnJT opemting division
in interest to Capital TempFunds, a divi.l'ion of Capital 13.usiness Cwdit LLC
('TFMPf'i.JNDS"), '"ith " place of buoine;<S at 101 NE Third Avenue, Suite ill 00, fort Lauderdale,
Florida 3JJO l and Crdcntia Corp a Delavlare corporathm v,:Jth its principH1 place of busines3 at SOm
LBJ Freeway, #g){), Dallas, TX 75244 {"Crdentia"), CRDE Coq>., a Delammo corpnralion. with its
principal place ol'busincss t\1 5001 L.BJ Freeway, 11850, Dalla;, TX 75144("CRDE"), GHS AcquisitiQn
Corpnrution. a with princip.al pb1ce of business at 500 l LBJ Free\vayt
Dallas, rx 75244 SlafF Senl'ch Acquisition a T-exas corporation, with principal
place ofbuF;iness ut 82-40 N. 1vlnpac. Suite Austin, TX 78759 ("StaW'},lvlP Health
Corp.
1
a corporatJnn, \Yith its prim:ipal place of business at 201 Beaco11 Park wHy Suite
404, Binninghmr1, ,\I" 35209 ('"MP"), P1ime Stofl: LP, a Texa' limi'ltxl partnership, with its principal
place nfbu,,;n,,ss at 2'1 E. Greenway Plaza. Suite 1508, Houston, TX 77046 ("Prime"), il-'lint Medical
Statring Odessa, LP. a Texas limited partnership, with its principal place of business at 2020 East 8
11
'
Ode::bfl, TX 79761('':\Hnf'l .. and ATS LLC, a Florida limited lklbility with
its principal plnce nf busines;; ut 2250 Loe Road. Suite 20 l, Winter Park, FL 32789 ("ATS")
(colkdivdy "BORHOWER'').
a) TEMI'FliNDS ;md BORROWER are partk:s tn a Loan and Security Agreement dated as Qf Jul) 3,
2008, as may been amended from time to time (hereJnatler refi::ned t? as the '"Agreement").
b) Tht"! and all loans, collatt1ral, guarantees and other doeuments relating thereto have
assigned by TEMPF1;:.:DS to \VFBC.
") 130RRO\VER <md WFBC ilavt agl't:cd to certain modificalions of the Agrccmem as a result ot' lhe
ongolng relationship berwcen the pmtics.
AGRILEMENT
IX CONSliJF;RATJON of the ab<)v>' recitals and for otltcr good and valual>le C(msidenuion, the
receip1 and su fTkienf.'Y of \Vh ich are acknowl-cdgerl, the parries heret-o hereby agree as follows:
l. The -above ree-itals are true and correct and are incorporated here-in hy tJ1is reference.
2. Each of the terms defined in the Agreement unless otherv,isc dctined ht!J'cin. shall ha.ve
the stime- mec.lnlng l\-'l)en
3. In the. event of a con-met between the tenns rmd provisions of this and the
fenn.s and pwvisluns llfthc Agn:.cment. the terms and pro'lisions of this Amendmern
Fir{-;\ CrdAI1lia
June 2oos-
! of 8
Jun-22-09 02:04P
520 844 6636 P.02
4. The tenns of the Agreemetlt are hereby amended as follows:
(a} The first ( 1:;
1
) paragraph of Section 34 of the Agreement is by the
add1iion of the_ thll(lwi.ng at the of such paragraph:
"'ln addition to the advanees referenc-ed above, TEI\JPPt,;::-..-DS shall make available to Borrov:er.
m an overadvance (the in
amotllli. of$&64.000.00. which amount may be irtcre>1sed or decrease<! by TEMPFllNDS
in its so{ediscretion from time Ln time. rhe amounts owjng. under tfle Overadvance Facility shaJl
a.ccrue interest at the rates. provided and shall also be subject to nn mlditinnal interc:;t
c:harg_e of seven p-e-rcc-111 permmuru. T11e Ove-radvance Fae-ifity shall be inc:luded within the
tr.::nn
(b) Item 21 of Exhibit is hereby dele-ted m it::; -entirety ;:md replaced with the
JOilmving:
"2 I. Credit as to .in Section 34 means: Subje-et to the terms and
condition::; ot and in rdiance upon Borrower's. and "\-Vttrranties. made i11 H1is
Agre--emem -uv;:: total advances outstanding to Borrovver at any lime during the term of this
1\gt'Ctm.:nt shall not exceed Six Dollars ($6,000,000), (the ''Maximum Credit
If twy out-;t.anding at any Hme should e:\Ge-ed t11e Credit Fadlit)-' such
shall constitule under this. Agreement Ol' indebtedness to TEWfPFUNDS
and be- to the and condllions ofthis Agreem-ent S.ub_ject.to the terms and conditions
o-f. and in upon Borrower's representations tllld w.armrnks. made in t11is Agreement the
total ad ... ance-s outslanding to Bormwe-r against: (i) Accounts n:t any time during the
term of this 1\greemem sh"ll nol exceed Five Hundred Thousand and no Dollars (.$500,000.00)
Jn the {ii) Accounts due from individual parie::nts at any time dur.ing the teml of this
Agrt,emcnt shnll no! <:xceed Three Hundred Thousand und no Dollars ($300,000.00) in
aggregalc; and (iii) due ftom atl MedkBid programs and provMt:-fs. at any time
durir\g the tt::rm of this Agreement shall not exceed Five Hundred Thousand and 110 DoHars
($500.000.00) in til<
5. Upon the of this Amendment, each ref0rcncc itl Lhe AP..recment to the
or \-"-'ords <Jf like impo11 referrin_g to 1!-Jc ;\greement shalf
rnean and be a tdE!ence to the as amended b}' thls Amendment.
6. This Amendment shall be deemed to be a contrud under and s"l:uect ro and shall be
fi)r an purposes and in <:lC(!Onianc-e with the laws ofthc State ofNew York
7_ The Subordinated Creditur, COMVEST CAPITAL, LLC, a .Dcl:m>arc limited Iiabiliiv
C-Ompany by signing bekn.v, consent l_o the terms of rhis First Amendment to Luan and
Security reaffirms the tct1ns of Hs Subordination AgreemetJl dated as of 7, 2-D08. ns
amende.d fmm t.ime to time (the- and that th{] Subordination
Agreeme-nt is ln full fOrce and efh:d: and binding upon it \.Vithout any setoffs. or counterclaims
,1\mendrn-enr- croantia
Jl!ne
2 or .s
Jun-22-09 02:05P
520 844 6636 P.03
of any kind und that the Stfbordinution Agreement is in favor of \\/FBC !lS if it '\VUS the
original recipient of the Suhordinution Agreemt.nt.
&. To induce \VFBC- to enter into this Amendment, Borro\ver acknowledge and agre-e
tha1 no right of C1f'f'i-et. defense, claim or objection exi!.iS in of Bnrmwer ugainst
WFBC aris.ing of or with n::spect Lo the the other Loan l)ocuments, the or
any other or relationship between \VFBC and nnd {b) aequit. remise and
\VFBC and hs aHiHates and all of their past, and fUture oftlccrs. directors.
nttm11C:)'S., sucteSS(Jrs and a!>signs from any and ail dairns, demands,
actions. and of action, at la\\' or in equ.11y and whether kno'tvn or unknown, which
Borrower may have by mason of any manner, C-a11sc or things to and including the dar.e of this
A mendmern with rcspcc-r to matters mising out ni' or with respect to tht.':. Lonn Agreement, the other Loan
the or any ot11er arrangement or Oetwecn \VFBC and Borrower.
9 BlJtr(W.I:!r and Creditor ack11owledgc and agree tlmt the assets or Capital TempFundsj a
of Cap1tnl Hlt:'ii-nes5 Credit LLC, illc:luding. without lintiration, the Loon Agreement and the
Suhor-t:linatit'm Agrcemenl \VCre acquil'ed hy FARGO N.A.
1
acling through jt;;
FARGO UUSINESS CREIHT operating division, and "gree tt> trc'tlt V.'ELLS FARGO
BANK, . ac:ting its WELLS FAR(;O HVSINESS CilliDIT operating division as the
lender the i...otm the Subonliuatinn Agreement and hereunder.
l 0. Except as hel'ein amended, the Agre-ement remains in t\111 fotL-"C and and binding upon
the Borrower without any iTS or nf any kind lvhatsnc.ver.
ll. This Amendment may he ex-ecuted in two or more coLmterrarts, each of which shall be
dee.med an and all 1..1f \Yiikh togelher shall consdtnte one and the same instrumem.
Frst Amendme'nf - Crd>m1iv
7.UtJH
Pege 3 cf e
Jun-22-09 02:06P
520 844 6636
P.04
IN WITNUiS WBlcRl,OJ<, the parties have executed and delivered 11,;, Amembnent wl1ich
shall be ellective wi11lthe date ofthe Anwndme11t.
BORROWER:
CRDENTIA CORP., a DdawareCorp<:>r;ttian
CRDE COI'p., a Delaware corporution
GHS Acquisition Corpora1ion, t\ Delaware cnrporation
Staff Search Acquisition Corp., l:l Texas corporation
J\-1P He-alth Corp . a DeJa corporation
Prime SwH; LP, a Texas lim \ted partnership
By: C:RDE Corp., lt> General Partner
Mint Medical Staffmg Odessa, L.P, a Texas limitt:d partnership
By: CRDE Corp.
1
Its General Partner
ATS liability company
,'! i .. . f'
#,.., .-:;!tl-'"' _ -'-!f.tafl r'
By .. 2:2'tit ''(. .. ". "- " " -<:''< __ , ___ .......... .

as President and ChiefOpemting Officer

The fOrcg{1ing instrument acknowledged hdhre me this day of June, 2009, by Jean Stewart,
President and ChiefOrerating OHicer ofCRDJ:NTIA CORP., a co:'J'omtion, CRDE Corp., a
Dcltn.\';are corp0r:ntion. GHS Acqu!sitinn Corporath)n, a. Delaware S1aff Search Aequisiii,m
a Tex-as c.orp-orat]on. MP Hc-J:tlth Corp., a Delaware Prime a 11rnited
partnership. r-- .. tint Mr:dical Odessa., LP, a Texas limited partnership, tmd 1\TS LLC, i1
Florida limited liability cernpany on behalf of the corporations, limited liability wmpm!ics and limited
pa1tnerships.. She is I J personally known to me or [ .><:" ) has produced
... ...... _ oath.

(No1lllJ Sigmm,n-e)
(NOTARY
NOTA.IlY PlHl-UC-
COUNTY
!,r:-f
1
Firol Jl..mcndn'IP.Jii Grl!!:!nlll.\
Jur\t:J ?..OO!J
4
_j-iJ.;; kr: .. _____ , ___ _
{Notary "N"rune Printed)
NOTARY PUBLJC Commission No ...
Jun-22-09 02:06P
520 844 6636
CREDITOR:
COM\TST CAl'fJ'AL, LLC " Dolawal"c limited liability
compan:...-
Jiy: Cc>mVe.l Management LLC, it< Mm:.ger
By: ______ , ......... ------
N('!me: ..----------------
Title:---..---------------
STATE OF _______ , .................... _
COUNTY OF __ _
tfll'egoing instrurm;nt ackno\.vlcdgcd before me this _____________ day of by
___ -... --................... ns ............................... ____ of Com Management LlX, liS Mana:;.,, of
COM VEST CAPITAL, LI,C, a Delaware limited liability company, on beh<llf of the company.
i':> pets.otlalb known to me or has as identificatioJl mtd did 1flk-e an oath.
(NOTARY SEA Lj
Fits.! An1;;;mkrwn1 -
June20\lfl

---------------------
(Nutat}' Signature)
(Nolary Name Printed)
NOTARY PUBLIC Cmnmission No.
P .. OS
Jun-22-09 02:07P
STATE 01' TEXAS
COUNIT OF DALLAS
520 844 6636
WEl.LS FARGO BUSNESS CRL'J)JT:
by WFBC this _day or __ 21J09
(hcrciowftcr, tloe Accept:mce Dato_,)
'Wells Fargo Bnnk, N.A. lltting tlll'ongh its Wells Fargo
Business Credit O(Jer.ating d.ivision
.. --.. .. --....................... .
Signature!rit(e
The Instrument wns ackno-wledged befbre me dH.Y of ________ by
... as . ___... _.............. of Wells fargo Bank1 N . .r'\ .. acting through its
'Vlelb Furgo Business Credit operating division. He/She is [ ] personally knnwn to me. or [ j has
produced______ u;'l idernitl?ation and did (dld 11<1t) take an oath.
(NOTARY SEAL)
Firsl Amtfndmeni Gruentia
JlUJ<;.12009
Pag:>-Q ol"8
.. --:-----
(Notary Signature)
(Notary Name Printed)
NOTARY F'UBLIC Commission ;-.io ... _, _________ _
P.06
Jun-22-09 02:08P 520 844 6636
AFFIDAVIT FOR EXECUTION OF AMENDMENT TO LOAN AND SECUTOTY
-------A OF f:'l.Q_R I Df3 ----
STA-rE ()F ______________________
COUNTY OF ________ -------
BEFORE ME. the under>ign.xl authority. personally the undersi:;ne..l, km Stewa!'t (rhe

who being first duly upon oath, deposes and says tlmt she. is the Pres-ident and Chief
Operaling OfHccr of CRDENTIA CORP., a Delaware corporation, CRDE Cmp., a Delaware
cotporation, GHS Acquisition Corporation, a Delm:vare Staff Stareh .o\cqnisition Corp., a
Ttxas MP Heatlh Corp .. a Delav.;me Ptime Stafr, fl limiled
partnership, M!nt Medical Staffing Odessa, U', a Texas limited plll'fll(:rship, and ATS Universal, LLC, a
Florida Hmlted liahiii)' as Bnrro\ver. to me well knnwn and "vho dcpo.'ied and said that she
executed and delive-red thi1t certain Firs1 Amendment to I.oan and Af!:reernetit as of June
... ' 20CW, in the maximum amount nf Six Million and NOJJOO DOi.LARS ($6,UOO,IJOO.!JO) {the
"Amcndmenl'"), whi:h :\rnendment is between CRDEKTli\ CORP., n Ddawar< <OOrporation, CRDE
a Delaware GHS Acquisition Corporation, a. Delaware S1a1T Search
Acquisi1ion Texag corp(ll'ation, 1v1J> Health a Delaware <:orporofJon\ Prime Staf:C LP, a
limftcd t"ilnt Medical Staffing LP, a Tcxa!:< limited partnership. and AT'S
Universd, LLC ;l Flt>tida limited li11bility company, as Borrower, and WICIJLS FARGO BANK, KA.,
acting through its WELLS FARGO BVSJNESS CREDIT operating division, as lender, in the City of
------------ Srtti.c' of ... _ .............. ______________ ......... ..
FURTHER AFFIA'-:T SA YETH NACGHT.
SWORN TO AND SUlSCRIBED bdorc me this 2 < dav of June, 2009 ]J,, Jelln Stewnrt. who
pcrsorwUy appeared me .. mll1 \vl;to J: j is kno\vn to me o; tXr ha::; produced
... _ ...... fL'i identifieation.
f-b"st - Crdenlia
June 20M
f'lilfjf: 7 t:lfB
[NOTARIAL SEAL]
P.07
Jun-22-09 02:09P
520 844 6636
STt\TEOF )
)
AFI'll>A Vrl' OF OliT-OF-STATF. DELIVERY
BEFORE f\ .otE, the personaHs appeared the undersigned-------
(;he 'Aft1anf'), who being first duly sworn upon oath, deposes ami say< that:
I. "T"he Affiant is n ...................................... nf :fARGO :UANK. N.A-, acting i;s WRI . .LS
l'ARGO DUS!Nt;ss CREDIT operating division <."WFBC"), and the Aff10n1. is duly authorized wand
dnes make this affidavit in said capacity on beha1f nf\VF-'BC.
2. ''!"hat un !he---------- day of June. 2(l09,. I executed on behalf of \VFBC on the dme reiefenced
bdow that Fir5t An1endment tu Loan Sewity Agreen1ent (the

which
is between CRDENTlA CORP .. a Delaware COI'Poration, CRl:!E C01p., a Delawar<'
enrporation. GHS AC(juisilion Corporation, a Delaware Staff Senmh AcqHisition Corp .. :i
Texas coq:>ot1rti<)tL MP Hmllth Corp., a DeiRware corporation, Prime Statl; l..P. a Texas limited
pmtnershir. :Vlint !vkdical Staffing Odc"'a, LP, a Texas limited partnership, nnd 1\.TS l:niver"tl, LLC."
Florida limited liability iis and 'VELLS FARGO BANK, acting through
WELLS FARGO CHEDlT operating division, as lender.
3. Tll!ll the- of the 1\greement hy \VFBC took place in Dallus, Texas.
Fl.'R"HICR AFF!ANT SAYFTH NAUGHT.
------------
____ Al1iunt
___ _Title
SWORN TO AND SUBSCRIBED before me this _______ day of June, 2009 by----..:_ __
. who persona fly ap.pcared befOre me .. and is personally knmvn {O n1e .
Flf'.'J.t 1\mendmt!ril
,lull!!
Pa.t;Jt! s oro
.......,:-:-:-=-:----------------
[NOTARIAL SEA!.]
Notary Public. State of _______________ ,. ________ ,.
Print Na.i'rH;:
P.OS
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
TIDS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
("Amendment"), dated as o f ~ l l ' 1- , 2009, is entered into by and between WELLS FARGO
BANK, N.A., acting through its WELLS FARGO BUSINESS CREDIT operating division
("WFBC"), successor "in inteJ'est to Capital TempFunds, a division of Capital Business Credit LLC
("TEMPFUNDS"), with a place of business at 101 NE Third Avenue, Suite #100, Fmt Lauderdale,
Florida 33301 and Crdentia Corp., a Delaware corporation with its principal place of business at 5001
LBJ Freeway, #850, Dallas, TX 75244 ("Crdentia"), CRDE Cmp., a Delaware corporation, with its
principal place of business at 5001 LBJ Freeway, #850, Dallas, TX 75244("CRDE"), GHS Acquisition
Corporation, a Delaware corporation, with its principal place of business at 5001 LBJ Freeway, 11850,
Dallas, TX 75244 ("GHS"), Staff Search Acquisition Corp., a Texas corporation, with its principal
place of business at 8240 N. Mopac Expressway, Suite ISO, Austin, TX 78759 ("Staff'),MP Health
Corp., a Delaware corporation, with its principal place of business at 201 Beacon Parkway West, Suite
404, Birmingham, AL 35209 ("MP"), Prime Staff, LP, a Texas limited partnership, with its principal
place of business at 24 E. G!'eenway Plaza, Suite 1508, Houston, TX 77046 ("Prime"), Mint Medical
Staffing Odessa, LP, a Texas limited partnership, with its principal place of business at 2020 East 8"'
Street, Odessa, TX 79761 ("Mint"), and A TS Universal, LLC, a Florida limited liability company, with
its principal place of business at 2250 Lee Road, Suite 201, Winter Park, FL 32789 ("ATS")
(collectively "BORROWER").
a) TEMPFUNDS and BORROWER are patties to a Loan and Security Agreement dated as of July 3,
2008, as was amended by the terms of that certain First Amendment to Loan and Security Ag!'eement
between WFBC and BORROWER dated as of June 22, 2009, as may have been amended from time to
time (hereinafter referred to as the "Agreement").
b) BORROWER and WFBC have agreed to ce1tain modifications of the Agreement as a result of the
ongoing business relationship between the parties.
AGREEMENT
IN CONSIDERATION of the above recitals and for other good and valuable consideration, tl1e
receipt and sufficiency of which are hereby acknowledged, the pa1iies hereto hereby agree as follows:
1. The above recitals are true and correct and are incorporated herein by this reference.
2. Each of the terms defined in the Agreement unless otherwise defined hemin, shall have
the same meaning when used herein.
3. In the event of a conflict between the terms and provisions of this Amendment and the
terms and provisions of the Agreement
1
the terms and provisions of this Amendment shall control.
First Amendment- Crdentia
June 2009
Page1 of7
4. The terms of the Agreement are hereby amended as follows:
(a) The first (I") paragraph of Section 34 of the Agreement is amended by the
addition of the following at the end of such paragraph:
"In addition to the advances referenced above, TEMP FUNDS shall make available to Borrower,
at TEMPFUNDS' sole discretion, an overadvance facility (the "Overadvance Facility") in the
original amount of $1,064,000.00, which amount may be increased or decreased by
TEMPFUNDS in its sole discretion ftom time to time. The amounts owing under the
Overadvance Facility shall accrue interest at the rates provided herein, and shall also be subject
to an additional interest chatge of seven percent (7%) per annum. The Overadvance Facility
shall be included within the term "Obligations,"
5. Upon the effectiveness of this Amendment, each reference in the Agreement to the
"Agreementu, uhmein", "hereof>, or words of like import referring to the Agreement shall
mean and be a reference to the Agreement as amended by this Amendment.
6. This Amendment shall be deemed to be a contract under and subject to and shall be
construed for all purposes and in accordance with the laws of the State ofNew York.
7. The Subordinated Creditor, COMVEST CAPITAL, LLC, a Delaware limited liability
company ("Creditor"), by signing below, consent to the terms of this Second Amendment to Loan and
Security Agreement, reaffirms the terms of its Subordination Agreement dated as of July 7, 200&, as
amended from time to time (the "Subordination Agreement''), and confirms that the Subordination
Agreement is in full force and effect and binding upon it without any defenses, setoffs or countewlaims
of any kind whatsoever, and that the Subordination Agreement is in favor of WFBC as if it was the
original recipient of the Subordination Agreement.
8. To induce WFBC to enter into this Amendment, Borrower (a) acknowledge and agree
that no right of offset, defense, counterclaim, claim or objection exists in favor of Borrower against
WFBC arising out of or with respect to the Agreement, the other Loan Documents, the Obligations, or
any other arrangement or relationship between WFBC and BotTower, and (b) release, acquit, remise and
forever discharge WFBC and its affiliates and all of their past, ptesent and future officers, directors,
employees, agents, representatives, successors and assigns from any and aU claims, -demands,
actions and causes of action, whether at law or in equity and whether lffiown or unknown, which
Borrower may have by reason of any manner, cause or things to and including the date of this
Amendment with t'espect to matters arising out of Ol' with respect to the Loan Agreement, the other Loan
Documents, the Obligations, or any other arrangement or relationship between WFBC and Borrower.
9. Except as herein amended, the Agreement remains in full force and effect and binding upon
the Borrower without any defenses, setoffs or counterclaims of any kind whatsoever.
I 0. This Amendment may be executed in two or more counterparts, each of which shall be
deemed an original and all of which together shall constitute one and the same instrument.
Second Amendment- Ctdenlla
June20D9 '
Page2of7
IN WITNESS WHEREOF, the parties have executed and delivered this Amendment which
shall be effective with the date of the Amendment.
STATEOF
COUNTY OF ttc;. vf h
BORROWER:
CRDENTIA CORP., a Delaware Corporation
CRDE Corp., a Delaware corpomtion
GHS Acquisition Corpmation, a Delaware corporation
Staff Search Acquisition Corp., a Texas corporation
MP Health Corp., a Delaware corporation
Prime Staff, LP, a Texas limited partnership
By: CRDE Corp., Its General Partner
Mint Medical Staffing Odessa, LP, a Texas limited partnership
By: CRDE Corp., Its General Partner
A TS Univetsal, C, Florida limited liability company
The fotegoing instmment acknowledged before me this .i1__ day of JWi, 2009, by Jean Stewmt,
President and Chief Operating Officer of CRDENTIA CORP., a Delaware corporation, CRDE Corp., a
Delaware cmporation, GHS Acquisition Corporation, a Delaware cotporation, Staff Seatch Acquisition
Corp., a Texas corpomtion, MP Health Cmp., a Delaware corporation, Prime Staff, LP, a Texas limited
partnership, Mint Medical Staffing Odessa, LP, a Texas limited pattnership, and ATS Universal, LLC, a
Florida limited liability company on behalf of the cmporations, limited liability C9J:rlpanics and limited
partnerships. She is [ ] personally known to me or [ / ] produced
0. U"i'<>'1> L,; c g and 1&1. (did not) take an oath.

(Notary Signature)
(NOTARY SEAL)
_{?A T ,&L.__ ___
(Notmy Name Printed)
1
NOTARY PUBLIC Commission No. f"J._ bh ;,l'?,&'J-1
Second Amendment- Crdenlla
June20D9 , .
Page3 (lf7
CREDITOR:
COMVEST CAPITAL, LLC, a Delaware limited liability
company
By: ComVestManagcment LLC, its Manager
By:, __________ __
Name:
Title: _________ _
STATE OF _______ _
COUNTY OF--------
The foregoing in,trument aclmowledged before me t h i s - ~ day of June, 2009, by
-c-cc-=-c-----' as of Com Vest Management LLC, as Manager of
COMVEST CAPITAL, LLC, a Delaware limited liability company, on behalf ofthe company,
He/She is personally known to me OJ' has produced as identification and did take an oath.
(NOTARY SEAL)
Second Amendment- Crdenlia
June2009
Page 4 of7
(Notary Signature)
(Notary Name Printed)
NOTARY PUBLIC Commission No.
STATEOl'TEXAS
COUNTY OF DALLAS
WELLS FARGO BUSINESS CREDIT:
Accepted by WFBC this _day of 2009
(hereinafter, the AcccptanceDate.)
Wells Fargo Bank, N.A. acting through its Wells Fargo
Business Credit operating division
B Y - - - - - - - - - - ~ ~ ~ - - - - - - -
Signaturetritle
The foregoing instrument was acknowledged before me this ___ day of 2009, by
_________ _-,-> as of Welts Fargo Bank, N.A. acting through its
Wells Fargo Business Credit operating division. He/She is [ ] personally known to me or [ ] has
produced as identification and did (did not) take an oath.
(NOTARY SEAL)
Second Amendment- Crdentla
June 2009
P3g6 5ol7
(Notary Signature)
(Notaty Name Pl'intcd)
NOTARYPUBLICCommissionNo .._____ _
AFFIDAVIT FOR EXECUTION OF SECOND AMENDMENT TO LOAN AND SECURITY
AGREEMENT WITHOUT THE STATE OF FLORIDA
STATE OF __ __ )
COUNTY OF _ _,_ftL""=Y"-<r-'"D"'-____ )
BEFORE ME, the undersigned authority, personally appeared the undersigned, Jean Stewatt (the
"Mfiant"), who being first duly sworn upon oath, deposes and says that she is the President and Chief
Operating Officer of CRDENTIA CORP., a Delaware corporation, CRDE Corp., a Delaware
corporation, GHS Acquisition Corpomtion, a Delaware corporation, Staff Search Acquisition Corp., a
Texas corporation, MP Health Corp., a Delaware corporation, Prime Staff, LP, a Texas limited
partnership, Mint Medical Staffing Odessa, LP, a Texas limited partnership, and ATS Universal, LLC, a
Florida limited liability company, as Borrower, to me well known and who deposed and said that she
'executed and delivered that certain Second Amendment to Loan and Secmity Agreement dated as of
Jv- W 2009, in the maximum amount of Six Million and N0/1 00 DOLLARS ($6,000,000.00) (the
"Amendment"), which Amendment is between CRDENTIA CORP., a Delaware corporation, CRDE
Corp., a Delaware ootporation, GHS Acquisition Corporation, a Delaware corporation, Staff Search
Acquisitiotl Corp., a Texas corporation, MP Health Col'p., a Delaware cotpol'ation, Prime Staff, LP, a
Texas limited partnership, Mint Medical S'taffing Odessa, LP, a Texas limited pattnership, and ATS
Universal, LLC, a Florida limited liability company, as Borrowet, and WELLS FARGO BANK, N.A.,
acting through its WELLS FARGO .BUSINESS CREDIT operating division, as .lender, in the City of
_____ ,State of _____ _
FURTHER AFFIANT SA YETII NAUGHT.
,)ll,l'l
SWORN TO AND SUBSCRIBED before me this _[_ day of .1<trie, 2009 by Jeay Stewatt,. who
personally appe red before me, and who [ ] is personally known lo me or [ VJ has produced
i'oAt: , as identification.
Second Amendment- Crdenlia
June 2009 '
Page6of7

otary Publtc, State of
Print Name: 06 rnrfno/."" !7:
My Commission Expire;: Ci '?iii
[NOTARIAL SEAL]
'""W'"' CHRISTOPHER J. FOYl ]

: : 5 My commission Expires
AUQUS! \2,2012
,,,,, ,,,, --
STATE OF )
COUNTY OF )
AFFIDAVIT OF OUT-OF-STATE DELIVERY
BEFORE ME, the undersigned authority, personally appeared the undersigned--,----
"Affiant"), who being first duly sworn upon oath, deposes and says that:
I. The Affiant is a of WELLS FARGO BANK, N.A., acting through its WELLS
FARGO BUSINESS CREDIT operating division ("WFBC"), and the Affiant is duly authorized to and
does make this affidavit in said capacity on behalf ofWFBC.
2. That on day of June, 2009, I executed on behalf of WFBC on the date referenced
below that certain Second Amendment to Loan and Security Agreement (the "Amendment"), which
Amendment is between CRDENTIA CORP., a Delaware corporation, CRDE Corp., a Delaware
corporation, GHS Acquisition Corporation, a Delaware COl]JOration, Staff Search Acquisition Corp .. a
Texas corporation, MP Health Cmp., a Delaware corporation, Prime Staff, LP, a Texas limited
partnership, Mint Medical Staffing Odessa, LP, a Texas limited partnership, and ATS Universal, LLC, a
Florida limited liability company as Borrower, and WELLS FARGO BANK, N.A., acting through its
WELLS FARGO BUSINESS CREDIT operating division, as lender.
3. That the execution of the Agreement by WFBC took place in Dallas, Texas.
FURTHER AFFIANT SA YETH NAUGHT.

____________ Title
SWORN TO AND SUBSCRlBED before me this __ day of June, 2009 by ___ _
_____ ,who personally appea1ed before me, and who is personally known to me.
Secohd Amendment- Crdentla
June 2009 '
Page 7 of7
[NOTARIAL SEAL]
Notaty Public, State of ____________ _
Print Name:----------------
My Commission Expires:------------
'.
REVOLVING CREDIT AND TERM LOAN AGREEMENT
THIS AGREEMENT (this "Agres:_ment") is made and entered into as of the
22nd day of February, 2008, by and between COMVEST CAPITAL LLC, a Delaware limited
liability company (the "Lender"), and CRDENTIA CORP., a Delaware corporation (the
"Borrower").
Vi'HEREAS, the Borrower and its Active Subsidiaries are engaged in the business of
providing healthcare staffing services to hospitals and other healthcare facilities throughout the
United States (the "Business Operati<mi'); and
'WHEREAS, in order to enable the Bonower to repay certain outstanding Indebtedness
and to finance potential future business acquisitions, and for the Borrower's working capital and
other general corporate purposes, the Borrower has requested the Lender to extend to the
Borrower a revolving credit facility and term loans on the terms and conditions of this
Agreement; and
WHEREAS, the Lender is willing and able to provide such revolving credit facility and
make such term loans to the Borrower on the tenus and conditions of this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the parties hereby agree as follows:
I. DEFINITIONS
Section 1.0 I. Defined Terms. In addition to the other terms defined elsewhere in this
Agreement, as used herein, the following terms shall have the following meanings:
"Accounts" shall mean "accounts" (as defined in the UCC) of the Borrower and
its Domestic Subsidiaries from time to time.
"Account Debtor" shall mean any Person who is obligated on an Account.
"Act" shall mean the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
"Active Subsidiaries" shall mean those Subsidiaries listed as such on Schedule_
1.01 of the Disclosure Schedule.
"Advances" shall mean the principal amounts loaned to the Borrower from time
to time pursuant to Section 2.01 below.
"Affiliate" shall mean, with respect to any Person, any other Person in Control of,
Controlled by, or under common Control with the first Person, and any other Person who has a
substantial iutcrcst, direct or indirect, in the first Person or any of its Affiliates, including,
without limitation, any officer or director of the first Person or any of its Affiliates; provided,
however, that, except as otherwise provided herein, neither the Lender nor any of its Affiliates
NY 238,652,469v4
shall be deemed an "Affiliate" of the Borrower for any purposes of this Agreement. For the
purpose of this definition, a "substantial interest" shall mean the direct or indirect legal or
btmeficial ownership of more than ten (10%) percent of any class of stock or similar interest.
"Agreement" shall mean this Revolving Credit and Tem1 Loan Agreement as it
may from time to time be amended, modified, supplemented and/or restated.
"Applicable Law" shall mean all applicable provisions of all (a) constitutions,
statutes, ordinances, rules, regulations and orders of all governmental and/or quasi-governmental
bodies, (b) Government Approvals, and (c) order, judgments and decrees of all courts and
arbitrators.
"Availability" shall mean the amount (if any) by which, at the time of
determination, (a) the Revolving Credit Commitment exceeds (b) the outstanding principal
amount of Advances.
"Borrowing Base" shall mean an amount, determined in accordance with the most
recent borrowing base report provided to the Lender under Section 5.04(e) hereof, equal to the
sum of (a) 85% of Eligible Accounts, plus (b) the lesser of (i) 50% of Eligible Unbilled
Accounts, or (ii) $500,000, minus (c) such reserves as the Lender may establish from time to
time in its Permitted Discretion (including, without limitation, to account for concentration and
other risks of collection, and for payroll, taxes or other liabilities). In the event that the Borrower
has not timely delivered a current Borrowing Base report in accordance with Section 5.04(e)
below, then the applicable Borrowing Base shall be such amount as is established by the Lender,
until such time as the Borrower has delivered a current Borrowing Base report.
"Borrowing Date" means the Business Day on which the Lender makes a Loan
hereunder.
"Business Day" shall mean a day other than (a) a Saturday, (b) a Sunday, or (c) a
day on whieh banking institutions in either the State of Florida or the State of Texas arc
authorized or required by law or executive order to close.
"Qm;lital Expenditures" shall mean with respect to any Person, all expenditures of
such Person for tangible assets" which are capitalized, and the fair value of any tangible assets
leased by such 'Person under any lease which would be a Capitalized Lease, determined in
accordance with GAAP, including all amounts paid or accrued by such Person in connection
with the purchase (whether on a cash or deferred payment basis) or lease (including Capitalized
Lease Obligations) of any machinery, equipment, real property, improvements to real property
(including leasehold improvements), or any other tangible asset of such Person which is
required, in accordance with GAAP, to be treated as a fixed asset on the consolidated balance
sheet of such Person.
"Capitalized Lease" shall mean any lease which is or should he capitalized on the
balance sheet of the lessee thereunder in accordance with GAAP.
'.
2
NY 238.652,469v4
"Capitalized Lease Obligation" shall mean with respect to any Person, the amount
of the liability which reflects the amount of future payments under all Capitalized Leases of such
Person as at any date, determined in accordance with GAAP.
"Cash shall mean (a) marketable securities issued, or directly and
fully guaranteed or insured, by the United States of America or any agency or instrumentality
thereof (provided that the full faith and credit of the United States of America is pledged in
support thereof) having maturities of not more than twelve (12) months from the date of
acquisition; (b) time deposits, demand deposits, certificates of deposit, acceptances or prime
commercial paper issued by, or repurchase obligations for underlying securities of the types
described in clause (a) entered into with any commercial bank having a short-term deposit rating
of at least A-2 or the equivalent thereof by Standard & Poor's Corporation or at least P-2 or the
equivalent thereof by Moody's Investors Service, Inc.; (c) commercial paper with a rating of A-1
or A-2 or the equivalent thereof by Standard & Poor's Corporation or P-1 or P-2 or the
equivalent thereof by Moody's Investors Service, Inc. and in each case maturing within twelve
(12) months after the date of acquisition; (d) marketable direct obligations issued by any state in
the United States or any agency or instrumentality thereof maturing within twelve (12) months
from the date of acquisition thereof and, at the time of acquisition, have one of the two highest
ratings generally obtainable fiom either Standard & Poor's Corporation or Moody's Investors
Services, Inc.; (c) tax-exempt commercial paper of United States municipal, state or local
governments rated at least A-2 or the equivalent thereof by Standard & Poor's Corporation or at
least P-2 or th<;> equivalent thereof by Moody's Investors Services, Inc. mid maturing within
twelve (12) months after the date of acquisition thereof; (f) any other items selected by the
Borrower and approved by the Lender (which approval shall not be unreasonably withheld or
delayed); or (g) any mutual fund or other pooled investment vehicle which invests principally in
the foregoing obligations.
"Closing Date" shall mean the date of this Agreement, simultaneously with the
funding ofthe Term Loans.
"Closing Fees" shall mean, collectively, (a) a facility fee in the amount of
$125,000 with respect to the Revolving Credit Commitment, and (b) a closing tee in the amount
of$100,000 with respect to the Term Loans, both of which shall he payable in accordance with
Section 2.03(a) below.
"Code" shall mean the Internal Revenue Code of 1986, and the rules and
regulations promulgated thereunder, as in effect from time to time.
"Collateral" shall mean all collateral pledged by the Borrower and/or any of the
Subsidiaries as security for the payment and performance of the Obligations, whether pursuant to
the Collateral Agreement or any other Security Document.
"Collateral Agreement" shall mean !he Collateral Agreement, dated as of the
Closing Date, by and among the Borrower, the Active Subsidiaries and the Lender, as same may
be amended, modified, supplemented and/or restated from time to time.
'.
3
NY 238,652,469v4
"Common Stock" shall mean the authorized common stock of the Company,
$.0001 par value per share.
"Confidential Information" shall mean information that the Borrower furnishes to
the Lender pursuant to any Loan Document, but does not include any such information once such
information has become, or if such information is, generally available to the public or available
to the Lender from a source other than the Bonower which is not, to the Lender's knowledge,
bound by any confidentiality agreement in respect thereof.
"Contract" shall mean any indenture, agreement (other than this Agreement),
other contractual restriction, lease in which the Borrower or any Subsidiary is a lessor or lessee,
license or instrument.
"Control" shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether through the ownership
of voting securities, by contract or otherwise, and the terms "Controlling" and "Controlled" shall
have meanings correlative thereto.
''Control Agreement" shall mean, with respect to each bank account (including
lockbox service) and/or securities account maintained by or in the name of the Borrower or any
Subsidiary (other than a Dissolving Subsidiary) from time to time, an agreement executed and
delivered by the Borrower (or the subject Subsidiary, as applicable) and the account
intermediary, whereby the account intennediary acknowledges the Lender's Lien on such
account and all funds or property therein, and "control" (within the meaning of the UCC) over
such account is established in favor ofthe Lender.
"Default" shall mean any of the events specified in Article VII hereof, whether or
not any requirement for the giving of notice, the lapse of time, or both, or any other condition,
has been satisfied.
"Disclosure Schedule" shall mean tl1e disclosure schedule, dated as ofthe Closing
Date, executed and delivered by the Borrower to the Lender, the section numbers of which
correspond to the Section numbers of this Agreement.
"Dissolving Subsidiaries" shall mean those Subsidiaries listed as such on
.S.chedule 1.0 I of the Disclosure Schedule.
"Dollars" or " ~ " shall mean United States Dollars, lawful currency for the
payment of public and private debts.
"Domestic Subsidiary" shall mean any Subsidiary which is incorporated or
formed under the laws of the United States, any State or Commonwealth in the United States, or
the District of Columbia.
"EBITDA" shall mean, for the subject period, for the Borrower and its
Subsidiaries on a consolidated basis, the sum of (a) Net Income, plus (b) Interest Expense
deducted in the calculation of such Net Income, plus (c) all income taxes deducted in the
calculation of such Net Income, pill. (d) depreciation and amortization expense deducted in the
4
NY 23B,652,469v4
calculation of such Net Income, plus (e) other non-cash charges and expenses deducted in the
calculation of such Net Income, excluding accruals for cash expenses made in the ordinary
course of business, minus (f) any and all dividends and distdbutions made by the Borrower to its
stockholders.
"Eligible Account" shall mean the face amount of each trade Account of the
Borrower or a Domestic Subsidiary (provided that such Domestic Subsidiary is a party to the
Guaranty Agreement and the Cotlateral Agreement) for services rendered or goods and products
sold in the ordinary course of the Business Operations which !he Lender, in its Permitted
Discretion, deems to be an Eligible Account; provided, however, that an Account shall not be
deemed an Eligible Account unless it meets all of the following conditions:
(a) the subject services or products and goods have been rendered, shipped or
delivered on an absolute sale basis to an Account Debtor which is not an Affiliate, vendor or
Stlpplier of the Borrower or a Subsidiary, with an invoice date contemporaneous with or within
ten (10) calendar days after the date of shipment or service, and which does not constitute a
consignment sale, bill-and-hold sale, sale-and-return or other such arrangement and is not subject
to any other repurchase, return or offset agreement binding upon the Borrower or a Subsidiary;
the subject services or products and goods have been rendered, shipped and delivered (or shipped
f.o.b.) to such Account Debtor on an open account basis (or with payment guaranteed by a
domestic letter of credit, drawn on or by a domestic financial institution, acceptable to the
Lender in all respects), and no part of the subject services, products or goods has been returned,
rejected, lost or damaged; the Account is not evidenced by chattel paper or an instrument of any
kind; and such Account Debtor, unless pre-approved in writing by the Lender, is not insolvent or
the subject of any bankruptcy or insolvency proceeding of any kind in any jurisdiction;
(b) if the Account Debtor is located outside the continental United States,
payment for the subject services or goods shall be secured by an. irrevocable letter of credit,
which letter of credit shall have been issued or confirmed by a financial institutional reasonably
acceptable to the Lender payable in the full amount of the face value of the Account in lawful
currency of the United States;
(c) it is a valid, legally enforceable obligation of the Account Debtor
thereunder payable in Dollars and is not subject to any recoupment, offset or other defense or
any discount or chargeback on the part of such Account Debtor (provided that prompt payment
discounts granted in the ordina'ry course of business shaH not cause an Account to be disqualified
hereunder, so long as only the discounted amount of such Account, if not otherwise disqualified,
is included in the calculation of the Borrowing Base) or to any claim on the part of such Account
Debtor denying liability thereunder (provided that the undisputed portion may be considered to
be an Eligible Account);
(d) it is subject to no Lien whatsoever except for the Lien of the Lender, and
the Lender has a perfected first priority Lien in such Account;
(e) it has not remained unpaid in whole or in part for a period exceeding one
hundred (wenly ( 120) days after the invoice date;
5
NY 238, 652,469v4
(t) it does not arise out of a transaction (whether direct or indirect) with an
employee, officer, agent, director or Affiliate of the Borrower or any Subsidiary or with any
entity controlled by any employee, officer, agent or director of the Borrower or any Subsidiary;
(g) it is not subject to any contract retainage or other withholding of any
portion of payments on amounts invoiced, whether to secure the Borrower's or any Subsidiary's
pertonnance or otherwise;
(h) it does not represent the unpaid portion of an Account any portion of
which was previously paid or agreed to be paid through the issuance or delivery of equity
securities or other non-cash consideration;
(i) if the Account Debtor is the United States, any State, or any department,
agency or instrumentality thereof, the Borrower or the applicable Domestic Subsidiary has duly
assigned its rights to payment of such Account to the Lender pursuant to the federal Assignment
of Claims Act and any comparable state statutes;
(j) such Account is not payable by any person other than the Account Debtor
(such as a beneficiary, recipient or subscriber individually), provided that the portion thereof
which is payable by the Account Debtor may be considered to be an Eligible Account;
(k) at least sixty ( 60%) percent in dollar amount of the total Accounts owed
by such Account Debtor and/or its Affiliates constitute Eligible Accounts;
(J) the total Accounts owed by the subject Account Debtor and/or its
Affiliates constitute less than ten (10%) percent of the net collectible dollar value of all Eligible
Accounts (provided that only the excess over ten (1 0%) percent shall be disqualified under this
clause (1), unless the Lender has otherwise consented in writing to the inclusion of all or any
portion of such excess);
(m) such Account is payable solely to the Borrower or a Domestic Snbsidiary,
and the Borrower or such Domestic Subsidiary is not aware of any dispute by the Account
Debtor with respect to such Account (provided that (i) routine billing questions by the Account
Debtor, without denial of any payment obligation, which are handled by the Borrower or. the
subject Domestic Subsidiary in the ordinmy course of business, shall not be deemed a
disqualifying dispute hereunder, and (ii) if the Account Debtor has affirmatively stated .in 'vriting
to the Borrower or the subject Domestic Subsidiary that the Account Debtor will timely pay the
undisputed portion of such Account, then the undisputed portion of such Account will not be
disqualified by reason of a dispute relating to such Account); and
(n) it is not otherwise determined by the Lender, in the Lender's Permitted
Discretion, to be difficult to collect, uncollectible or otherwise unacceptable for any reason.
"Eligible Unbilled Account" shall mean the amount that would then be billable by
the Borrower or a Domestic Subsidiary (provided that such Domestic Subsidiary is a party to the
Guaranty. ~ g r e e m e n t and the Collateral Agreement) fur each unbilled Account of the Borrower
or such Domestic Subsidiary arising in the ordinary course of the Business Operations for the
sale of goods or rendering of services within the ten (I 0) calendar days immediately preceding
6
NY 238,652, 469V4
the calculation date of the subject Borrowing Base, and which, other than being unbilled,
satisfies all ofthe otherconditions contained in the definition of Eligible Account.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
in effect fi-om time to time.
"ERISA Affiliate" shall mean, with respect to any Person, any other Person which
is under common control with the first Person within the meaning of Section 4!4(h) or 4!4(c) of
the Code; provided, however, that with respect to the Borrower, no Person which is an Affiliate
of the Lender (other than the Borrower and its Subsidiaries) shall be deemed an ERISA Affiliate
for purposes of this Agreement
"Event of .Qefuult" has the meaning set forth in Article Vll below.
"Exchange Act" shall mean the Securities Exchange Act of !934, as amended.
"Financial Statements" has the meaning set forth in Section 3.0l(a) below.
"Fiscal Year" shall mean the fiscal year of the Borrower which ends on December
31 of each year.
"Fixed Charges" shall mean, for the period in question, the sum of (a) all principal
payments scheduled or required to be made during or with respect to such period in respect of
Indebtedness of the Borrower and its Subsidiaries, plus (b) all Interest Expense of the Borrower
and its Subsidiaries for such period, plus (c) all income taxes paid or accrued for the Borrower
and its Subsidiaries for such period.
"Foreign Subsidiary" shall mean any Subsidiary which 1s not a Domestic
Subsidiary.
"GAAP" shall mean generally accepted accounting principles in the United States
of America, consistently applied, unless the context otherwise requires, with respect to any
financial terms contained herein, as then in effect with respect to the preparation of financial
statements.
, "Govfrnment Approval" shall mean an authorization, consent, non-action,
approval, license or exemption ot; registration or filing with, or report to, any governmental or
quasi-governmental department, agency, body or other unit.
"Guaranty", "Guaranteed" or to "Guarantee", as applied to any Indebtedness,
liability or other obligation, shall mean (a) a guaranty, directly or indirectly, in any manner,
including by way of endorsement (other than endorsements of negotiable instruments for
collection in the ordinary course of business), of any part or all of such obligation, and (b) an
agreement, contingent or otherwise, and whether or not constituting a .guaranty, assuring, or
intended to assure, the payment or performance (or payment of damages in the event of non-
performarlcc) of any part or all of such obligation by any means (including, without limitation,
the purchase of securities or obligations, the purchase or sale of property or services, or the
supplying of funds).
7
NY 238,652.469v4
"Guaranty Agreement" shall mean the Guaranty Agreement, dated as of the
Closing Date (and as same may be amended, modified, supplemented and/or restated from time
to time), executed by each Active Subsidiary in favor of the Lender, pursuant to which the
Active Subsidiaries will guaranty the full and timely payment and performance of all of the
Obligations.
"Indebtedness" shall mean (without duplication), with respect to any Person, (a)
all obligations or liabilities, contingent or otherwise, for borrowed money, (b) any and all
obligations represented by promissory notes, bonds, debentures or the like, or on which interest
charges are customarily paid, (c) any liability secured by any mortgage, pledge, lien or security
interest on property owned or acquired, whether or not such liability shall have been assumed,
(d) obligations of such Person under conditional sale or other title retention agreements relating
to property or assets purchased by such Person, (e) all obligations of such Person issued or
assumed as the deferred purchase price of property or services (excluding trade payables and
accrued obligations incurred in the ordinary course of business), (f) any obligations (contingent
or otherwise) of such Person as an account party or applicant in respect oflctters of credit and/or
bankers' acceptances, and (g) Guarantees, endorsements (other than for collection in the ordinary
course of business) and other contingent obligations in respect of the obligations of others.
"Interest Expense" shaJI. mean, for the relevant period, interest expense
(including, without limitation, interest attributable to Capitalized Leases in accordance with
GAAP) and fees with respect to Indebtedness.
"Investment", as applied to the Borrower or any Subsidiary, shaJI mean: (a) any
shares of capital stock, evidence of Indebtedness or other security issued by any other Person to
the Borrower or any Subsidiary, (b) any loan, advance or extension of credit to, or contribution
to the capital of, any other Person, other than credit terms extended to customers in the ordinary
course of business, (c) any other investment by the Borrower or any Subsidiary in any assets or
securities of any other Person, and (d) any commitment to make any Investment.
"Knowledge" or "Known" or words of similar import shall mean, with respect to
the Borrower and/or any Subsidiary, the actual knowledge of John B. Kaiser and/or James J.
TerBeest, after reasonable inquiry of the appropriate managerial employees of the Borrower and
the Subsidiaries.
"Landlord Waiver" shall mean a landlord waiver, subordination and/or access
agreement, in form and substance reasonably satisfactory to the Lender, executed in favor of the
Lender by the landlord of a Real Property which is leased by the Borrower or a Subsidiary as
lessee.
"Liabilities and Contingencies" has the meaning set forth m Section 3.0l(c)
below.
"Lien", as applied to the property or assets (or the income or profits therefrom) of
the Borrower or any Subsidim-y, shall mean (in each case, whether the same is consensual or
nonconseqeual or arises by contract, operation of law, legal process or otherwise): (a) any
mortgage, lien, pledge, hypothecation, attachment, assignment, deposit arrangement,
8
NY 238,652,469v4
encumbrance, charge, lease constituting a Capitalized Lease Obligation, conditional sale or other
title retention agreement, or other security interest or encumbrance of any kind in respect of any
property (including, without limitation, stock of any Subsidiary) of the Borrower or any
Subsidiary, or upon the income or profits therefrom; (b) any arrangement under which any
property of the Borrower or any Subsidiary is transferred, sequestered or otherwise identified for
the purpose of subjecting or making available the same for the payment of Indebtedness or the
performance of any other liability in priority to the payment of the general, unsecured creditors
of the Borrower or any Subsidiary; (c) any Indebtedness or liability which remains unpaid after
the same shall become due and payable and which, if unpaid, by law or otherwise is given any
priority whatsoever over the general unsecured creditors of the Borrower or any Subsidiary; and
(d) aoy agreement (other than this Agreement) or other arrangement which, directly or indirectly,
prohibits the Borrower or any Subsidiary from creating or incurring any lien on any of its
properties or assets or which conditions the ability to do so on the security, on a nro rata or other
basis, of Indebtedness other than Indebtedness outstanding under this Agreement.
"Loan Documents" shall mean the collective reference to this Agreement, the
Notes, the Security Documents, the Wanant, the Registration Rights Agreement, and any and all
other agreements, instrument.,, certificates and other documents as may be executed and
delivered by the Borrower and/or any of the Subsidiaries pursuant hereto or thereto.
"Loans" shall meao, collectively, the Advances and the Term Loans.
"Material Adverse Effect" shall mean any event, act, omission, condition or
circumstance which has or would reasonably be expected to have a material adverse effuct on (a)
the business, operations, properties, assets or condition, financial or otherwise, of the Borrower
and the Subsidiaries, taken as a whole, (b) the ability oftbe Borrower or any Subsidiary to pay or
perform any of its obligations under any of the Loan Documents, or (c) the validity or
enforceability of, or tbe.Lender's rights and remedies under, any of the Loan Documents, other
than due to the acts or omissions oftl1e Lender or any of its Affiliates.
"Monitoring Fee" shall mean the fees payable to the Lender pursuant to Section
2.03(b) below.
''Net Income" shall mean the consolidated net income (or loss) of the Borrower
and its Subsidiaries for the period in question, after giving effect to deduction of or provision for
all operating expenses, all taxes and reserves (including reserves for deferred taxes) and all other '
proper deductions, all determined in .accordance with GAAP; provided, however, that for
purposes of calculating Net Income, there shall be excluded and no effect shall be given to (a)
any restoration of any contingency reserve, except to the extent that provision for such reserve
was made out of income for the subject period, and (b) any Net Income attributable to any
Subsidiary to the extent that the Borrower (or any Subsidiary through which the Borrower owns
the subject Subsidiary) is prohibited (by law, Contract, minority ownership rights or otherwise)
from receiving a distribution of such Net Income from such Subsidiary.
"Notes" shall mean, collectively, the Revolving Credit Note and the Term Notes.
9
NY 238,652,469v4
"Obligations" shall mean the collective reference to all Indebtedness and other
liabilities and obligations of every kind and description owed by the Borrower and/or any
Subsidiaries to the Lender from tithe to time under or pursuant to this Agreement, the Notes, the
Security Documents and the other Loan Documents (excluding the Warrant and Registration
Rights Agreement, other than amounts payable from time to time pursuant to Section 2(c) of the
Registration Rights Agreement), and/or otherwise in respect of the Loans, however evidenced,
created or incurred, fixed or contingent, now or hereafter existing, due or to become due,
"Organic Documents" shall mean, with respect to any Person, the certificate of
incorporation, articles of incorporation, certificate of formation, certificate oflimited partnership,
by-laws, operating agreement, limited partnership agreement or other such document of such
Person.
"Permitted Discretion" shall mean a determination or judgment made by the
Lender in good faith in the exercise of reasonable business judgment from the perspective of a
secured lender.
"Penni!ted Indebtedness" shall mean any and all Indebtedness expressly
permitted pursuant to Section 6.01 below.
"Petmitted Liens" shall mean those Liens expressly permitted pursuant to Section
6.02 below.
"Person" shall mean any individual, partnership, corporation, limited liability
company, banking association, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever nature.
"Qualified Proceeds" shall mean any and all net proceeds received by the
Borrower (or any successor entity) or any Subsidiary at any time and from time to time from any
issuance or sale of common stock, preferred stock or other equity securities (including securities
convettible into or exchangeable for capital stock of the Borrower), except to the extent that such
proceeds are, within sixty (60) days after the receipt thereof, applied to pay the purchase price
and/or directly associated expenses of the Borrower's acquisition (directly or through a Wholly-
Owned Subsidiary) of another business, in each case subject to the requirements of this
Agreement and the Collateral Agreement. In determining the amount of such net proceeds, (a) in
the case of an issuance or sale of common stock, preferred stock or other equity securities, the
gross proceeds of the subject offering, issuance or sale, net of only those reasonable expenses
incurred by the Bonower or the subject Subsidiary directly relateq to the subject issuance or sale,
exclusive of any fees or commissions paid to any officer, director or other Affiliate of the
Bonower or any Affiliate of any of the foregoing, and (b) in the case of any "reverse merger,"
share exchange or other such transaction, the total consolidated cash and cash equivalents of the
other party or parties to such transaction at the time of the consummation of such transaction, net
of only those reasonable expenses incurred by such other party or parties directly related to such
transaction, exclusive of any fees or commissions paid to any officer, director or other Affiliate
of the Borrower or such other party or parties or any Affili&te of any ofthe foregoing.
'.
10
NY 238,652,469v4
"Real Properties" shall mean, collectively, any real properties (land, buildings
and/or improvements) now owned or leased or occupied by the Borrower or any of the
Subsidiaries, and, during the period of the Bonower's and/or Subsidiary's occupancy thereof,
any other real properties heretofore owned or leased by the Borrower or any Subsidiary
(provided that, with respect to leased properties, the term "Real Property" shall refer only to the
portion of the s u ~ j e c t property (excluding common areas) leased by the Borrower or a
Subsidiary).
"Registration Rights Agreement" shall mean the Registration Rights Agreement,
to be dated as of the Closing Date, made by the Borrower for the benefit of the Lender and any
subsequent Holders (as such term is defined in the Registration Rights Agreement), as same may
be amended, modified, supplemented and/or restated fiom time to time.
"RcvoLying Credit Commitment" shall mean the Lender's agreement to make
Advances to the Bonowcr within the limitations set forth in Section 2,0 I below.
"Revolving Credit Maturity Date" shall mean February 28, 2010, subject to
extension in accordance with Section 2.0l(h) below; provided, however, that in the event that the
Term Loans are prepaid (or are, in accordance with this Agreement or the Term Notes, required
to be prepaid) in fitll, then the Revolving Credit Maturity Date shall be deemed to have occurred
simultaneously with such prepayment or required prepayment.
"Revolving Credit Note" shall mean the promissory note of the Borrower issued
to the Lender to represent the Advances and interest thereon, as described in Section 2.0l(t)
below.
"Sale" shall mean any transaction or series of related transactions (a) whereby a
majority of the outstanding capital stock of the Borrower which ordinarily bas voting power for
the election of directors (including preferred stock counted on an "as converted" basis into
common stock and common stock counted on a fully diluted basis) is sold, assigned or
transferred, (b) whereby the Borrower issues shares of its capital stock which, after giving effect
to such transaction or transactions, constitute a majority of the outstanding capital stock of the
Borrower which ordinarily has voting power for the election of directors (including preferred
stock counted on an "as converted" basis into common stock and common stock counted on a
fully diluted basis), (c) whereby Control of the Borrower is held by a Person (or group of Persons
acting in concert) who does not hold such Control on the date of this Agreement, (d) in which
the Borrower is a constituent party to any merger or consolidation and as a result thereof (i) the
holders of the outstanding capital stock of the Borrower which ordinarily has voting power for
the election of directors (including preferred stock counted on an "as converted" basis into
common stock) immediately prior to such merger or consolidation cease to own a majority of the
outstanding capital stock of the Bonower which ordinarily has voting power for the election of
directors (including preferred stock counted on an "as converted" basis into common stock), or
(ii) the Borrower is not the surviving corporation, or (e) whereby all or any material portion of
the assets of the Borrower or any Subsidiary are sold, assigned or transferred; provided,
however, that a "Sale" shall not be deemed to have occurred by reason of any of the
aforedescribcd transactions (other than a sale of assets) if, after giving effect to the
consummation of the subject transaction, (A) the Bonower or the surviving entity in such
I I
NY 238,652,469v4
transaction shall be a corporation whose common stock is traded or listed on any national
securities exchange, the Nasdaq Global Market, or the Nasdaq Global Select Market or is
actively quoted on the OTC Bulletin Board, (B) if the surviving entity is not the Borrower, then
such surviving entity assumes all of the Borrower's obligations under the Warrant (on the same
exchange or conversion basis as the outstanding Common Stock was treated in the subject
transaction) and the Registration Rights Agreement, (C) the Borrower or other surviving entity is
Controlled By one or more Persons of the Borrower on the date of this Agreement, and (D) no
Default or Event of Default occurred in the performance of the subject transaction or exists upon
the consummation of the subject transaction.
"SEC" shall mean the United States Securities and Exchange Commission, and
any successor agency performing the functions thereof.
"SEC Reports" shall mean the periodic and current reports, registration
statements, proxy statements and other reports filed or required to he filed by the Borrower with
the SEC pursuant to the Act and/or the Exchange Act, and any amendments or supplements
thereto filed with the SEC.
"Securitv Documents" shall mean the Collateral Agreement, any collateral
assignments, control agreements, financing statements or other such agreements or documents
pursuant thereto, the Guaranty Agreement, the Validity Guaranties, and any other agreement<; or
instruments (including, without limitation, Control Agreements and Landlord Waivers) securing
or creating or evidencing Liens securing the Obligations.
"Subordinated Debt" shall mean all Indebtedness fur money borrowed and other
liabilities of the Borrower, whether or not evidenced by promissory notes, which is contractually
subordinated in right of payment, in a manner satisfactory to the Lender (as evidenced by the
Lender's prior written approval thereof), to all Obligations of the Borrower to the Lender.
"Subsidiary'' or "Subsidiaries" shall mean the individual or collective reference to
any corporation, limited liability company or other entity of which 50% or more of the
outstanding shares of stock or other equity interests of each class having ordinary voting power
and/or rights to profits (other than stock having such power only by reason ofthe happening of a
contingency) is at the time owned by the Borrower, directly or indirectly through one or more
Subsidiaries of the Borrower.
"Term Loans" shall mean the collective reference to the Tranche A Term Loan
and the Tranche B Term Loan.
"Term Notes" shall mean the promissory notes of the Borrower issued to the
Lender as described in Section 2.02( e) below.
"Term Notes Maturity Date" shall mean February 28, 20 I I.
"Tranche A Term Loan" shall mean the term loan in the principal amount of
$2,500,000 to be made pursuant to Section 2;02(a)(i) below.
''
12
NY 238,652,469v4
"Tranche A Term Note" shall mean the promissory note of the Borrower to be
issued pursuant to Section 2.02(e) below to evidence the Tranche A Term Loan.
"Tranche B Term Loan" shall mean the term loan in the principal amount of
$2,500,000 to be made pursuant to Section 2.02(a)(ii) below.
'Tranche B Term Note" shall mean the promissory note of the Borrower to be
issued pursuant to Section2.02(e) below to evidence the Tranche B Term Loan.
"UCC" means the Uniform Commercial Code as in effect in the State of New
York on the date hereof and hereafter from time to time.
"Validity Guaranties" shall mean the collective reference to the Validity
Guaranties, to be dated as of the Closing Date, by and among the Lender, the Borrower and John
B. Kaiser, and by and among the Lender, the Borrower and the James J. TerBeest, respectively.
"Warrant" shall mean the warrants to purchase shares of Common Stock (such
warrant covering an aggregate.of8,000,000 shares of Common Stock, subject to adjustment) to
be issued by the Borrower to the Lender on the Closing Date.
"Wholly-Owned Subsidiary" shaH mean each Domestic Subsidiary of which all of
the outstanding equity securities (other than directors' qualifYing shares) are owned by the
Borrower or another such Wholly-Owned Subsidiary.
Section 1 . 0 ~ . Use of Defined Terms. All terms defined in this Agreement shall have
their defined meanings when used in the Notes, the Security Documents, the other Loan
Documents, and all certificates, reports or other documents made or delivered pursuant to this
Agreement, unless otherwise defined therein or unless the specific context shall otherwise
require.
Section 1.03. Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP.
Section 1.04. Other Definitional Provisions. The words "hereof," "herein", "hereto" and
"hereunder" and words of similar impmt when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and Section
references are to this Agreement unless otherwise specified. The meanings given to terms
defined herein shall be equally applicable to both the singular and plural forms of such terms.
The word "including" and words of similar import when used in this Agreement shall mean
"including, without limitation," unless otherwise specified.
U. GENERAL TERMS
Section 2.0 1. Revolving Credit Loans.
(a) Subject at all times to all of the terms and conditions of this Agreement,
the Lender' hereby agrees to extend to the Borrower a secured revolving credit facility, from the
Closing Date to the Revolving Credit Maturity Date, in an aggregate principal amount not to
13
NY 238,652,469V4
exceed, at any time outstanding, the lesser of (i) the BmTowing Base at the subject time, or (ii)
$5,200,000 (the "Revolving Credit
(b) Such revolving credit loans are herein sometimes referred to individually
as an "Advance" and collectively as the "Advances." Subject at all times to all of the terms and
conditions of this Agreement, from the Closing Date to the Revolving Credit Maturity Date and
within the limits of the Revolving Credit Commitment, the Lender shall lend, and the Borrower
may borrow, prepay (without premium or penalty) and rebmTow under this Section 2.01. Each
request for an Advance (i) shall be irrevocable, (ii) shall be deemed to constitute an express
affirmation that all conditions precedent set forth in part B of Article IV below are satisfied on
the date of such request and will be satisfied on the requested Borrowing Date, and (iii) shall be
made to the Lender in writing, not later than three (3) Business Days prior to the requested
Borrowing Date, by an authorized officer of the Borrower or by telephonic communication by
such authorized officer to the Lender, which shall be confirmed by written notice to the Lender
to be delivered to the Lender by the Business Day next following the subject request. In no
event shall the Borrower request, or shall the Lender be required to honor, (A) any request for an
Advance in an amount greater than the Availability at such time, (B) any request for an Advance
in an amount less than $100,000, or (C) more than one request for the borrowing of Advances in
any seven (7) calendar day period.
(c) The Borrower shall pay the Lender interest on all Advances at the rate(s)
per annum as in effect from time to time in accordance with the Revolving Credit Note. Such
interest shall be payable monthly in arrears on the first day of each calendar month and on the
Revolving Credit Maturity Date, and shall be computed on the daily unpaid balance of all
Advances made under the Borrower's revolving credit loan accounts with the Lender, based on a
three hundred sixty (360) day year, counting the actual number of days elapsed. The Bonower
hereby authorizes the Lender to charge the Borrower's revolving credit loan accounts for all such
interest; provided, that the Lender shall be under no obligation to make any such
charge to the Borrower's revolving credit loan accounts (including, without limitation, ifthere is
insufficient Availability at the time such interest is due and payable).
(d) In the event and to the extent that, at any time, the outstanding principal
amount of Advances exceeds the Revolving Credit Commitment then in effect, then the
Borrower shall, within three (3) Business Days, without notice or demand, make a payment to
the Lender in respect of the Advances in an amount sufficient to cause the outstanding principal
amount of Advances to be equal to or less than the Revolving Credit Commitment then in effect.
(e) Unless sooner due and payable by reason of an Event of Default hereunder
having occurred, the Borrower shall pay in full all of the Obligations to the Lender in respect of
all Advances on or prior to the Revolving Credit Maturity Date.
(l} All Advances shall be evidenced by a secured Revolving Credit Note of
the Borrower payable to the Lender or registered assigns.
(g) The Borrower may, at its option, without payment of any premium or
penalty,'tcrminate the Revolving Credit Commitment at any time by giving ten (10) Business
Days' prior written notice thereof to the Lender, and paying to the Lender, on the date fixed for
14
NY 238,652,469v4
termination, an amount equal to the sum of all outstanding principal and accrued interest of the
Advances.
(h) Provided that the Revolving Credit Commitment has not previously been
terminated, the Borrower may, at its option, by written notice to the Lender given not earlier than
December 31, 2009 and not later than January 31, 2010, elect to extend the Revolving Credit
Maturity Date to February 28, 2011, provided that, at the time of such notice and on the
scheduled Revolving Credit Maturity Date, no Default or Event of Default shall have occuned
and be continuing. The Borrower's extension notice shall expressly certify to the satisfaction of
such conditions, and once given, any such notice shall be irrevocable.
Section_2.02. Tenn Loans.
(a) Subject at all times to all of the terms and conditions of this Agreement,
the Lender hereby agrees to extend to the Bonower (i) a Term Loan in the principal amount of
$2,500,000, and (ii) an additional Term Loan in the principal amount of$2,500,000. Each of the
Term Loans shall be borrowed in a single borrowing on the Closing Date, and any principal
amounts repaid in respect of the Term Loans may not be reborrowed.
(b) The Term Loans shall be repayable in accordance with the schedules of
payments set forth in the Term Notes. The Borrower shall be required to prepay the Term Loans
(i) in fill upon the consummation of any Sale, and (ii) in part from time to time in the event and
to the extent of 33% of any and all Qualified Proceeds received by the Borrower or any
Subsidiary fiom time to time. With respect to any prepayment under the foregoing clause (ii),
same shall be due and payable as and when the amount of Qualified Proceeds is determined (i.e.,
upon receipt of such Qualified Proceeds in the event that no acquisition transaction is then
pending, or sixty (60) days after receipt of such Qualified Proceeds to the extent that such
Qualified Proceeds have not been applied to the purchase price and/or related expenses of a
consummated business acquisition), and shall be applied to the principal of the Tenn Notes
ratably in proportion to the respective principal balances thereof.
(c) The Borrower shall pay the Lender interest on the principal balance of the
Term Loans at the rate(s) per annum as in effect from time to time in accordance with the Term
Notes. Such interest shall be payable monthly in arrears on the first day of each calendar month
and on the Term Loans Maturity Date, and shall be computed on ,the daily unpaid balance of
each Tenn Loan, based on a three hundred sixty (360) day year, counting the actual number of
days elapsed. The Borrower hereby authorizes the Lender to charge the Borrower's revolving
credit loan accounts for aU such interest and/or for any or all principal amounts due and payable
in respect of the Term Loans; provided, however, that the Lender shall be under no obligation to
make any such charge to the Borrower's revolving credit loan accounts (including, without
limitation, if there is insufficient Availability at the time such interest and/or principal is due and
payable).
(d) Unless sooner due and payable by reason of an Event of Default hereunder
having occurred, the Borrower shall pay to the Lender all of the then-outstanding Obligations in
respect of the Term Loans on the Term Loans Maturity Date.
15
NY 238,652,469v4
(e) The Tranche A Term Loan shall be evidenced by a secured Term Note of
the Borrower payable to the Lender or registered assigns, and the Tranche B Term Loan shall be
evidenced by a secured Term Note of the Borrower payable to the Lender or registered assigns.
Sec_tion 2.03. Fees and Pre.!lliums.
(a) The Borrower shall pay the Closing Fees to the Lender simultaneously
with the funding of the Term Loans on the Closing Date. The Closing Fees shall be deemed
fully earned on the Closing Date, and shall not be refundable in whole or in part and shall not be
subject to reduction or set-offunder any circumstances.
(b) The Borrower shall further pay to the Lender, on the first (I") day of each
calendar month prior to the Revolving Credit Maturity Date or the earlier termination of the
Revolving Credit Commitment and payment of the Obligations in accordance with Section
2.0l(g) above, and upon the termination of the Revolving Credit Commitment and payment of
the Obligations thereon, a collateral monitoring, availability and administrative fee in an amount
equal to one-tenth of one percent (0.1 0%) of the average daily outstanding principal amount of
Advances during the immediately preceding calendar month (which shall be appropriately
prorated, based on a 30-day month, for any pruiial calendar month).
(c) In the event of any prepayment of all or any portion of the Tranche B
Term Loan at any time prior to the second (2"d) anniversary of the Closing Date, in addition to
the payment of the subject principal amount and all unpaid accrued interest thereon, the
Borrower shall be required to pay to the Lender a prepayment premium in an amount equal to
two (2%) percent of the principal amount being prepaid; nrovided, however, that no such
prepayment premium shall be required in respect of any mandatory prepayment pursuant to
Section 2. 02(b )(ii) above.
(d) Payments received in respect of the Obligations after 2:00 p.m. Eastem
time on any day shall be deemed to be received on the next succeeding Business Day, and if any
payment is received other than by wire transfer of immediately available funds, such payment
shall be subject to three (3) Business Days' clearance prior to being credited to the Obligations
for interest calculation purposes.
(e) In the event that the Lender notifies the Borrower that the Lender is ready,
willing and able to fund the Loans on substantially the terms of this Agreement' and the Closing
Date has not occurred within ten (I 0) days thereafter other than due to the fault of the Lender,
then the Lender may, at any time thereafter until the Closing Date, terminate this Agreement by
written notice to the Borrower, in which event the Borrower shall immediately pay to the Lender
(i) an amount equal to all out-of-pocket costs, charges and expenses incurred by the Lender in
respect of the transactions contemplated by this Agreement (over and above the $30,000 deposit
heretofore paid to the Lender by the Borrower), and (ii) an additional fee in the amount of
$100,000. This Section 2.03(e) shall survive any termination of this Agreement.
Section 2. 04. Use of Proce,eds. The BoiTower shall utilize the proceeds of the Loans (a)
on the Clo;;ing Date, to repay all then-outstanding Indebtedness owed by the Borrower to
Textron Financial Corporation (assignee of Systran Financial Services Corporation) and to
16
NY 238,652, 469v4
Comerica Bank, and approximately $1,000,000 of principal Indebtedness owed by the Borrower
to Fatboy Capital, L.P., and (b) rrom and after the Closing Date, to finance business acquisitions
and for working capital and other general corporate purposes of the Borrower.
Section .. 2.05. Further Obligation>. With respect to all Obligations for which the interest
rate is not otherwise specified herein or in the Term Notes or applicable Loan Documents
{whether .such Obligations arise hereunder, pursuant to the Notes or Security Documents, or
otherwise), such Obligations shall bear interest at the rate(s) in effect from time to time pursuant
to the Revolving Credit Note.
Section 2.06. AQplication of Payments. All amounts paid to or received by the Lender in
respect of the Obligations fl'om whatever source (whether fi'atn the Borrower, any Subsidiary
pursuant to the Guaranty Agreement, any realization upon any Collateral, or otherwise) shall,
unless otherwise specified in this Agreement or otherwise directed by the Borrower with respect
to any particular payment (unless an Event of Default shall then be continuing, in which event
the Lender may disregard the Bonower's direction), be applied (a) first, to reimburse the Lender
for all out-of-pocket costs and expenses incuned by the Lender which are reimbursable to the
Lender in accordance with this Agreement, the Notes and/or any of the other Loan Documents,
(b) next, to any accrued but unpaid fees or prepayment premiums, (c) next, to unpaid accrued
interest on the Tranche A Term Loan, (d) next, to unpaid accrued interest on the Tranche B Term
Loan, (e) next, to unpaid accrued interest on the Advances, (f) next, to the outstanding principal
of the Tranche A Term Loan, to the extent then due and payable, (g) next, to the outstanding
principal of the Tranche B Term Loan, to the extent then due and payable, (h) next, to the
outstanding principal of the Advances, and (i) finally, to the payment of any other outstanding
Obligations; provided, however, that during the continuance of an Event of Default, the Lender
may apply any and all such amounts to such of the Obligations as the Lender may determine in
its sole and absolute discretion. After payment in full of the Obligations, any further amounts
paid to or received by the Lender in respect of the Obligations shall be paid over to the Borrower
or such other Person(s) as may be legally entitled thereto.
Section 2.07. Sale or Maturity Date. Anything elsewhere contained in this Agreement
and/or the Notes to the contrary notwithstanding, (a) the Revolving Credit Commitment shall
terminate and all Obligations shall become immediately due and payable, without requirement of
notice or demand, upon the consummation of any Sale, and (b) the Revolving Credit
Commitment shall tenninate and all Obligations shall become i!Jlmediately due and payable,
without requirement of notice or demand, on the Revolving Credit Maturity Date or sooner upon
the prepayment (or required prepayment) and/or conversion in full of the Tenn Loans.
Section 2.08. Obligations Unconditional.
(a) The payment and performance of all Obligations shall constitute the absolute and
unconditional obligations of the Borrower, and shall be independent of any defense or right' of
set-off, recoupment or counterclaim which the Borrower might otherwise have against the
Lender. All payments required by this Agreement and/or the Notes shall be paid free of any
deductions or withholdings for any taxes or other amounts and without abatement, diminution or
set-off. If !he Borrower is required by law to make such a deduction or withholding from a
payment hereunder, the Borrower shall pay to the Lender such additional amount as is necessary
17
NY 238,652. 469v4
to ensure that, after the making of such deduction or withholding, the Lender receives (free from
auy liability in respect of any such deduction or withholding) a net sum equal to the sum which it
would have received and so retained had no such deduction or withholding been made or
required to be made. The Borrower shall (i) pay the full amount of any deduction or
withholding, which it is required to make by-law, to the relevant authority within the payment
period set by the relevant law, and (ii) promptly after any such payment, deliver to the Lender an
original (or certified copy) official receipt issued by the relevant authority in respect of the
amount withheld or deducted or, if the relevant authority does not issue such official receipts,
such other evidence of payment of the amount withheld or deducted as is reasonably acceptable
to the Lender.
(b) If, at any time and from time to time after the Closing Date, (i) any change in any
existing law, regulation, treaty or directive or in the interpretation or application thereof, (ii) any
new law, regulation, treaty or directive enacted or application thereof, or (iii) compliance by the
Lender with any request or directive (whether or not having the force of law) from any
governmental authority (A) subjects the Lender to any tax, levy, impost, deduction, assessment,
charge or withholding of any kind whatsoever with respect to any Loan Document, or changes
the basis of taxation of payments to the Lender of any amount payable thereunder (except for net
income taxes, or franchise taxes imposed in lieu of net income taxes, imposed generally by
federal, state or local taxing authorities with respect to interest or commitment fees or other fees
payable hereunder or changes in the rate of tax on the overall net income of the Lender or its
members), or (B) imposes on the Lender any other condition or increased cost in connection with
the transactions contemplated thereby or participations therein, and the result of any of the
foregoing is to increase the cost to the Lender of making or continuing any Loan or to reduce any
amount receivable hereunder, then, in any such case, the Borrower shall promptly pay to the
Lender any additional amounts necessary to compensate the Lender, on an after-tax basis, for
such additional cost or reduced amount as determined by the Lender. If the Lender becomes
entitled to claim any additional amounts pursuant to this Section 2.08(b), the Lender shall
promptly notify the Borrower of the ev.ent by reason of which the Lender has become so entitled,
and each such notice of additional amounts payable pursuant to this Section 2.08(b) submitted by
the Lender to the Borrower shall, absent manifest en-or, be final, conclusive and binding for all
purposes.
Section 2.09. Reversal of Payments. To the extent that any payment or payments made
to or received by the Lender pursuant to this Agreement or any other Loan pocument are
subsequently invalidated, declared to be fraudulent or preferential, set aside, or required to be
repaid to any trustee, receiver or other person under any state or federal bankruptcy or other such
law, then, to the extent thereof, such amounts shall be revived as Obligations and continue in full
force and effect hereunder as if such payment or payments had not been received by the Lender.
III. REPRESENTATIONS AND WARRANTIJt:S
As of the Closing Date and on each Borrowing Date (unless the representation .and
wan-anty refers to a specific date, in which case such representation and warranty shall continue
to relate to such specific date), the Borrower hereby makes the following representations and
warranties to the Lender, all of which representations and warranties shall survive the Closing
Date, the delivery of the Notes and the making of the Loans, shall be continuing in nature so long
18
as any Obligations are outstanding or the Revolving Credit Commitment remains in effect, and
are as follows:
S_ection 3.01. Financial Matters.
(a) The Borrower has heretofore furnished to the Lender (i) the audited
consolidated financial statements (including balance sheets, statements of income and statements
of cash flows) of the Borrower and its Subsidiaries as at December 31, 2004, 2005 and 2006, and
for the Fiscal Years then ended, and (ii) the unaudited consolidated financial statements of the
Borrower and its Subsidiaries as of December 31, 2007 and for the twelve ( 12) months then
ended (collectively, the "Financial Statements").
(b) The Financial Statements (i) have been prepared in accordance with
GAAP and Regulation S-X promulgated under the Act on a consistent basis for all periods
{subject, in the case of unaudited statements, to the absence of full footnote disclosures, and to
normal non-material audit adjustments), (ii) are complete and con-ect in all material respects, (iii)
fairly present the consolidated financial condition of the Borrower and its Subsidiaries as of said
dates, and the results of their operations for the periods stated, {iv) contain and reflect all
necessary adjustments and accruals for a fair presentation of the Company's consolidated
financial condition and the results of its consolidated operations as of the dates of and for the
periods covered by such Financial Statements, and (v) make full and adequate provision, subject
to and in accordance with GAAP, for the various assets and liabilities (including, without
limitation, deferred revenues) of the Company and its Subsidiaries, fixed or contingent, and the
results of their operations and transactions in their accounts, as of the dates and for the periods
referred to therein.
(c) Except as set forth in Schedule 3.01 of the Disclosure Schedule, the
Borrower and its Subsidiaries do not have any liabilities, obligations or commitments of any kind
or nature whatsoever, whether absolute, accrued, contingent or otherwise (collectively
"Liabilities and Contingencies"), including, without limitation, Liabilities and Contingencies
under employment agreements and with respect to any "earn-outs", stock appreciation rights, or
related compensation obligations, except: (i) Liabilities and Contingencies disclosed in the
Financial Statements or footnotes thereto, (ii) Liabilities and Contingencies incurred in the
ordinary course of business and consistent wiih past practice since the date of the most recent
Financial Statements, or (iii) those LiabHities and Contingencies which are not required to be
disclosed under GAAP. The reserves, if any, reflected on the consolidated balance sheet of the
Borrower and its Subsidiaries included in the most recent Financial Statements are appropriate
and reasonable. Neither the Borrower nor any of its Subsidiaries has had or presently has any
Indebtedness for money botTowed, outstanding obligations for the purchase price of property,
contingent obligations or liabilities for taxes, or any unusual forward or long-term commitments,
except as specifically set forth or provided for in the Financial Statements or in Schedule 3cQl of
the Disclosure Schedule.
(d) Since the date of the most recent Financial Statements, except for the
transactions pursuant to the Loan Documents and except as set forth in Sci]eqyle 3.01 of the
Disclosure Schedule, there has been no material adverse change in the working capital, condition
(financial or otherwise), assets, liabilities, reserves, business, management or Business
19
NY 238,652,469v4
Operations of the Borrower or any of its Subsidiaries, including, without limitation, the
following:
(i) there has been no material change in any assumptions underlying,
or in any methods of calculating, any bad debt, contingency or other reserve relating to the
Borrower or any Subsidiary;
(ii) there have been (A) no write-downs in the value of any inventory
of, and there have been no write-offs as uncollectible of any notes, accounts receivable or other
receivables of, the Borrower or any Subsidiary other than write-offs of accounts receivable
reserved in full as of the date of the most recent financial statements delivered to the Lender
which would not have a Material Adverse Effect, and (B) no reserves established for the
uncollectibility of any notes, Accounts or other receivables of the Borrower or any Subsidiary
except to the extent that same have been disclosed to the Lender in writing and would not,
individually or in the aggregate, cause the outstanding Advances to exceed the Revolving Credit
Commitment;
(iii) no debts have been cancelled, no claims or rights of substantial
value have been waived and no properties or assets (real, personal or mixed, tangible or
intangible) have been sold, transferred, or otherwise disposed of by the Borrower or any
Subsidiary except (A) dispositions of worn-out or obsolete personal property, and (B) otherwise
in the ordinary course of business and consistent with past practice;
(iv) there has been no change in any method of accounting or
accounting practice utilized by the Borrower or any Subsidiary;
(v) no material casualty, loss or damage has been suffered by the
Borrower or any Subsidiary, regardless of whether such casualty, loss or damage is or was
covered by insurance;
(vi) there have been no announced changes in the policies or practices
of any customer, supplier or referral source which would reasonably be expected to have a
Material Adverse Effect;
(vii) there has been no incurrence by the Company or any Subsidiary of
(A) any liability or obligation outside ofthe ordinary course of business, or (B) any Indebtedness
other than Permitted Indebtedness;
(viii) there has been no declaration, setting aside or payment of any
dividend or distribution or any other payment of any kind by the Borrower to or in respect of any
equity securities of the Borrower; and
(ix) No action described in this Section 3.01(d) has been agreed to be
taken by the Borrower or any Subsidiary.
. . (c) The Borrower and its Subsidiaries have in place adequate systems of
internal controls and disclosure controls and procedures sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's general or specific
20
NY 23B.652,469v4
authorizations, (ii) transactions are recorded as necessary to permit preparation of financial
statements in accordance with GAAP and Regulation S-X and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's general or specific
authorization, (iv) the recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any differences, and (v) the
Borrower and its management are able to obtain timely and accurate information regarding the
Business Operations and all material transactions relating to the Borrower and the Subsidiaries;
and no material deficiency exists with respect to the Borrower's or any Subsidiary's systems of
internal controls.
(f) All of the SEC Reports, as ofthe respective dates thereof, complied in all
material respects, as applicable, with the Act and the Exchange Act.
Section 3.02. Organization; Corporate Existence.
(a) The Borrower (i) is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, (ii) has all requisite corporate power and
authority to own its properties and to cany on its business as now conducted and as proposed
hereafter to be conducted, (iii) is qualified to do business as a foreign corporation in each
jurisdiction (including, without limitation, the State of Texas) in which the failure of the
Borrower to be so qualified would have a Material Adverse Effect, and (iv) has all requisite
corporate power and authority to execute and deliver, and perform all of its obligations under,
the Loan Documents. True and complete copies of the Organic Documents of the Borrower,
together with all amendments thereto, have been furnished to the Lender.
(b) On the date of this Agreement, the outstanding capital stock of the
Company, and the number and amount of all outstanding options, warrants, convertible
securities, subscriptions and other rights to acquire capital stock of the Company, are as set forth
in Schedule 3.02 of the Disclosure Schedule.
(c) Schedule 3.02 of the Disclosure Schedule further sets forth, with respect to
each Active Subsidiary on the date of this Agreement, (i) its proper legal name, (ii) its
jurisdiction of incorporation or formation, (iii) the jurisdictions in which it is qualified to do
business as a foreigo entity, {iv) the number of shares of capital stock or ownership interests
outstanding, and (v) the owner of such outstanding capital stock or other ownership interests.
Each of the Active Subsidiaries (A) is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or formation, (B) has all requisite
power and authority to own its properties and to carry on its business as now conducted and as
proposed hereafter to be conducted, and to execute and deliver, and perform all of its obligations
under, the Loan Documents to which it is a party, and (C) is not required to be qualified to do
business as a foreign entity in any jurisdiction in which it is not so qualified and the failure to be
so qualified would reasonably be expected to have a Material Adverse Effect. True and
complete copies of the Organic Documents of each Active Subsidiary, together with all
amendments thereto to the date hereof, have been furnished to the Lender.
{d) On the date of this Agreement, the Bonower has no Subsidiaries other
than the Active Subsidiaries and the Dissolving Subsidiaries. Each of the Dissolving
21
NY 238,652, 469v4
Subsidiaries (i) has no material assets or liabilities, (ii) is not engaged in the conduct of any
active business operations, and (iii) is actively pursuing its dissolution as a legal entity.
Section 3.03. Authorization.
(a) The execution, delivery and perfonnance by the Borrower and the Subsidiaries of
their respective obligations under the Loan Documents have been duly authorized by all requisite
corporate, company, partnership and other action and will not, either prior to or as a result of the
consummation of the transactions contemplated by this Agreement: (i) violate any provision of
Applicable Law, any order of any court or other agency of government, any provision of the
Organic Documents of the Borrower or any Subsidiary, or any Contract, indenture, agreement or
other instrument to which the Bonower or any of the Subsidiaries is a party, or by which the
Borrower or any of the Subsidiaries or any of its assets or properties arc bound, or (ii) be in
conflict with, result in a breach of, or constitute (after the giving of notice or lapse of time or
both) a default under, or, except as may be provided in the Loan Documents, result in the
creation or imposition of any Lien of any nature whatsoever upon any of the property or assets of
the Borrower or any of the Subsidiaries pursuant to, any such Contract, indenture, agreement or
other instrument. When executed and delivered, each Loan Document to which the Borrower or
any Subsidiary is a party will constitute the valid and binding obligation of the Borrower or such
Subsidiary (as applicable), enforceable against the Borrower or such Subsidiary in accordance
with its terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights generally, and by general principles of
equity.
(b) Neither the Borrower nor any of the Subsidiaries is required to obtain any
Government Approval, consent or authorization fmm, or to file any declaration or statement
with, any governmental instrumentality or agency in connection with or as a condition to the
exe.cution, delivery or performance of any of the Loan Documents.
Section 3.04. Litigation. Except as disclosed on Schedule 3.04 of the Disclosure
Schedule, there is no action, suit or proceeding at law or in equity or by or before any
governmental instrumentality or other agency now pending or, to the knowledge of the
Borrower, threatened against or affecting the Borrower or any of the Subsidiaries or any of their
respective assets, which, if adversely determined, would have a Material Adverse Effect. The
Borrower has no Knowledge of any state of facts, events, conditions or circumstances which
would properly constitute grounds for or the basis of any meritorious suit, action, arbitration,
proceeding or investigation (including, without limitation, any unfair labor practice charges,
interference with union organizing activities, or other labor or employment claims) against or
with respect to the Borrower or any Subsidiary which, if adversely determined, would have a
Material Adverse Effect.
Section 3.05. Material Contracts. Except as disclosed on Schedule 3.05 of the
Disclosure Schedule, neither the Borrower nor any of the Subsidiaries is (a) a pmty to any
Contract, agreement or instrument or subject to any charter or other corporate or organizational
restriction which has had or could reasonably be expected to have a Material Adverse Effect, (b)
a party to any collective bargaining agreement, or (c) in default in the performance, observance
or fulfillment of any of the obligations, covenants or conditions contained in any Contract,
22
NY 238,652,469v4
agreement or instrument to which it is a party or by which any of its assets or properties is
bound, which default, individually or in the aggregate, would have or could reasonably be
expected to have a Material Adverse Effect.
Section 3.06. Title to Properties. The Borrower and each of the Subsidiaries has good
title to all of its properties and assets, free and clear of all mortgages, security interests,
restrictions, encumbrances or other Liens of any kind, except for restrictions on the nature of use
thereof imposed by Applicable Law, and except for Permitted Liens, none of which materially
interfere with the use and enjoyment of such properties and assets in the normal course of the
Business Operations as presently conducted, or materially impair the value of such properties
and assets for the purpose of such business.
Section 3.07. Real Property. 3.07 of the Disclosure Schedule sets forth a
correct and complete list of all Real Ptoperties currently leased or occupied by the Borrower
and/or any of the Subsidiaries. Neither the Borrower nor any of the Subsidiaries owns any Real
Properties. The Borrower and each Subsidiary has a valid lessee's interest in each Real Property
currently leased or occupied by the Borrower or such Subsidiary. Neither the Borrower, any
Subsidiary, or, to the Borrower's Knowledge, any other party thereto, is in material breach or
violation of any requirements of any such lease; and such Real Properties are in good condition
(reasonable wear and tear excepted) and are adequate for the current and proposed businesses of
the Borrower and the Subsidiaries.
Section 3.08. Maehine1y and Equipment. The machinery and equipment owned andfor
used by the Borrower and the Subsidiaries is, as to each individual material item of machinery
and equipment, and in the aggregate as to all such equipment, in good and usable condition and
in a state of good maintenance and repair (reasonable wear and tear excepted), and adequate for
its use in the Business Operations.
Section 3.09. Capitalization. Except as set forth in Schedule 1.01 or Schedule 3.02 of
the Disclosure Schedule and for new Subsidiaries formed in accordance with Section 5.11 below,
the Borrower does not, directly or indirectly, own any capital stock of or any form of equity
interest in any other Person.
Section 3.1 0. Solvency. After giving effect to the Loans and the other transactions
contemplated hereby, the borrowings made and/or to be made by the Borrower under this
Agreeri1ent do not and will not render the Borrower insolvent or with unreasonably small capital
for its business; the fuir saleable value of all of the assets and properties of the Borrower does
now, and will, upon the funding of the Loans contemplated hereby, exceed the aggregate
liabilities and Indebtedness of the Borrower (including contingent liabilities); the Borrower is not
contemplating either the filing of a petition under any state or federal bankruptcy or insolvency
law, or the liquidation of all or any substantial portion of its assets or property; the Borrower has
no knowledge of any Person contemplating the filing of any such petition against the Bonower;
and the Borrower reasonably anticipates that it will be able to pay its debts as they mature.
Section 3.11. No Investment Company. The Borrower is not an "investment company"
or a company "controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
23
NY 238_652,469v4
Section 3.12. Margin Securities. The Borrower does not own or have any present
intention of acquiring any "margin security" or any "margin stock" within the meaning of
Regulations T, U or X of the Board of Governors of the Federal Reserve System (herein called
"margin secmity" and "margin stock"). None ofthe proceeds of the Loans will be used, directly
or indirectly, for the purpose of purchasing or carrying, or for the purpose of reducing or retiring
any Indebtedness which was originally incuned to purchase or carry, any margin security or
margin stock or for &ny other purpose which might constitute the transactions contemplated
hereby a "purpose credit" within the meaning of said Regulations T, U. or X, or cause this
Agreement to violate any other regulation of the Board of Governors of the Federal Reserve
System or the Exchange Act, or any rules or regulations promulgated under such statntes.
Section 3.13. Taxes.
(a) All federal, state and local tax returns and tax reports required to he filed
by the Borrower and/or any Subsidiary have been timely filed with the appropriate governmental
agencies in all jurisdictions in which such returns and reports are required to be filed. All
federal, state and local income, franchise, sales, use, property, excise, ad valorem, value-added,
payroll and other taxes (including interest, penalties and additions to tax and including estimated
tax installments where required to be filed and paid) due from or with respect to the Borrower
and the Subsidiaries have been paid to the extent due and payable, and appropriate accruals have
been made on the Borrower's books for taxes not yet due and payable. All taxes and other
assessments and levies which the Bonower and/or any Subsidiary is required by law to withhold
or to collect have been duly withheld and collected, and have been paid over to the proper
governmental authorities to the extent due and payable. Except as set forth in Schedule 3.13 of
the Disclosure Schedule, there are no outstanding or pending material claims, deficiencies or
assessments for taxes, interest or penalties with respect to any taxable period of the Borrower or
any Subsidiary, and no outstanding tax Liens.
(h) Except as disclosed in Schedule }.,11 of the Disclosure Schedule, the
Borrower has no Knowledge and has not received notice of any pending audit with respect to any
federal, state or local tax retnrns of the Borrower or any Subsidiary, and no waivers of statutes of
limitations have been given or requested with respect to any tax years or tax filings of the
Borrower or any Subsidiary.
Section 3.14 ... ~ E R I S A . Except as set forth in Schedule 3.14 of the Disclosure Schedule,
neither the Borrower nor any ER1SA Affiliate of the' Borrower maintains or has any obligation to
make any contributions to any pension, profit sharing or other similar plan providing for deferred
compensation to any employee. With respect to any such plan(s) as may now exist or may
hereafter be established by the Bonower or any ERISA Affiliate of the Borrower, and which
constitntes an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA,
except as set forth on Schedule 3.14 of the Disclosure Schedule: (a) the Borrower or the subject
ERISA Affiliate has paid and shall cause to be paid when due all amounts necessary to fund such
plan(s) in accordance with its terms, (b) except for normal premiums payable by the Borrower to
the Pension Benefit Guaranty Corporation ("PBGC:"), the Borrower or the subject ERISA
Affiliate has not taken and shall not take any action which could result in any liability to the
PBGC, or any of its successors or assigns, (c) the present value of all accrued benefits thereunder
shall not at any time exceed the value of the assets of such plan(s) allocable to such accrued
24
NY 238,6!i2,469v4
benefits, (d) there have not been and there shall not be any transactions such as would cause the
imposition of any tax or penalty under Section 4975 of the Code or under Section 502 ofERlSA,
which would adversely affect the funded benefits attributable to the Borrower or the subject
ERlSA Affiliate, (e) there has not been and there shall not be any termination or partial
termination thereof (other than a partial termination resulting solely from a reduction in the
number of employees of the Borrower or an ERISA Affiliate of the Bonower, which reduction is
not anticipated by the Bonower), and there has not been and there shall not be any "reportable
event" (as such term is defined in Section 4043(b) of ERISA) on or after the effective date of
Section 4043(b) of ERISA with respect to any such plan(s) subject to Title IV of ERISA, (f) no
"accumulated funding deficiency" (as defined in Section 412 of the Code) bas been or shall be
incurred on or after the effective date of Section 412 of the Code, (g) such plan(s) have been and
shall be determined to be "qualified" within the meaning of Section 401(a) of the Code, and have
been and shall be duly administered in compliance with ERISA and the Code, and (h) the
Borrower is not aware of any fact, event, condition or cause which might adversely affect the
qualified status thereof. As respects any "multi-employer plan" (as such term is defined in
Section 3(37) of ERlSA) to which the Borrower or any ERlSA Affiliate thereof has heretofore
been, is now, or may hereafter be required to make contributions, the Borrower or such ERISA
Affiliate has made and shall make all required contributions thereto, and there has not been and
shall not be any "complete withdrawal" or "pa1tial withdrawal" (as such terms are respectively
defined in Sections 4203 and 4205 of ERISA) therefrom on the part of the Borrower or such
ERISA Affiliate.
Section 3.15. Intellectual PropCitY. The Bonower and the Subsidiaries own or have the
valid right to use all material patents, trademarks, copyrights, software, computer programs,
equipment designs, network designs, equipment configurations, technology and other intellectual
property used, marketed and sold in the Business Operations, and the Borrower and the
Subsidiaries are in compliance in all material respects with all licenses, user agreements and
other such agreements regarding the use of intellectual property used in the Business Operations;
and the Borrower has no Knowledge that or received notice claiming that any of such intellectual
properly infi"inges upon or violates the rights of any other Person.
Section 3.16. Compliance with Laws. The Borrower and the Subsidiaries are in
compliance with all occupational safety, health, wage and hour, employment discrimination,
environmental, flammability, labeling and other Applicable Law (including, without limitation,
healthcare laws and regulations, and healthcare reimbursement laws and regulations) which are
material to the Business Operations, except where such non-compliance would not, individually
or in the aggregate, have a Material Adverse Effect. To the Borrower's Knowledge, there are no
state or facts, events, conditions or occurrences which may now or hereafter constitute or result
in a violation of any Applicable Law, or which may give rise to the assertion of any such
violation, which could have a Material Adverse Effect. Neither the Borrower nor any Subsidiary
has received written notice of default or violation, nor is the Borrower or any Subsidiary in
default or violation, with respect to any judgment, order, writ, injunction, decree, demand or
assessment issued by any court or any federal, state, local, municipal or other governmental
agency, board, commission, bureau, instrumentality or department, domestic or foreign, relating
to any aspect of the Bonower's or any Subsidiaries' business, affairs, properties or assets, which
default(s) or 'violation(s) would, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect. Neither the Borrower nor any Subsidiary has received written notice
25
NY 238,652,469v4
of or been charged with, or is, to the Bonower's Knowledge, under investigation with respect to,
any violation(s} of any provision of any Applicable Law, which violation(s) would, individually
or in the aggregate, have a Material Adverse Effect.
.Section 3.17. Licenses and Permits. The Bon-ower and each Subsidiary has all federal,
state and local licenses and permits required to be maintained in connection with the Business
Operations, except where the failure to maintain any such license or permit would not,
individually or in the aggregate, have a Material Adverse Effect; and all such licenses and
permits are valid and in full force and effect The Borrower and each Subsidiary has complied
with the requirements of such licenses and permits in all material respects, and has received no
notice of any pending or threatened proceedings for the suspension, termination, revocation or
limitation thereof. There is no circumstance or condition Known to the Borrower that would
cause or permit any of such licenses or permits to be voided, revoked or withdrawn.
Section 3.18. Insurance. Schedule 3.18 of the Disclosure Schedule lists all insurance
coverages maintained by the Borrower and the Subsidiaries, including the names of insurers,
policy limits and deductibles. Neither the Bon-ower nor any Subsidiary has received written
notice of cancellation or intent not to renew any of such policies, and to the Borrower's
Knowledge, there has not occurred, and there does not exist, any condition (other than general
industry-wide conditions) such as would cause any of such insurers to cancel any of such
insurance coverages, or would be reasonably likely to materially increase the premiums charged
to the Company and the Subsidiaries fur coverages consistent with the scope and amounts of
coverages as in effect on the date ofthis Agreement.
Section 3.19. Environmental Laws.
(a) The Bon-ower and each Subsidiary has complied with all Environmental
Laws relating to its business and properties, except where non-compliance would not,
individually or in the aggregate, have a Material Adverse Effect; and to the Borrower's
Knowledge, there exist no Hazardous Substances in amounts in violation of applicable
Environmental Laws on any of the Real Properties the existence of which would have a Material
Adverse Effect, except those that arc stored and used in compliance with Applicable Laws.
(b) Neither the Borrower nor any Subsidiary has received notice of any .
pending or threatened litigation or administrative proceeding which in any instance (i) asserts or
alleges any violation of applicable Environmental Laws on the part of the Borrower or any
Subsidiary, (ii) asserts or alleges that the Borrower or any Subsidiary is required to clean up,
remove or otherwise take remedial or other response action due to the disposal, depositing,
discharge, leaking or other release of any Hazardous Substances or materials, or (iii) asserts or
alleges that the Bon-ower or any Subsidiary is required to pay all or any portion of the costs of
any past, present or future cleanup, removal or remedial or other response action which arises out
of or is related to the disposal, depositing, discharge, leaking or other release of any hazardous
substances or materials by the Borrower or any Subsidiary. To the Borrower's Knowledge,
neither the Borrower nor any Subsidiary is subject to any judgment, decree, order or citation
related to or arising out of any Environmental Laws. To the Borrower's Knowledge, neither the
Borrower nor any Subsidiary has been named or listed as a potentially responsible party by any
governmental body or agency in any matter arising under any Environmental Laws. Neither the
26
NY 238,652, 469v4
Borrower nor any Subsidiary is a participant in, nor does the Borrower have Knowledge of, any
governmental investigation involving any of the Real Properties.
(c) Neilher the Borrower or any Subsidiary nor, to the Borrower's
Knowledge, any olhcr person, firm, corporation or governmental entity has caused or permitted
any Hazardous Substances or other materials to be stored, deposited, treated, recycled or
disposed of on or at any of the Real Properties which materials, if known to be present, would
reasonably be expected to require or authorize cleanup, removal or other remedial action under
any applicable Environmental Laws.
(d) As used in this Section 3.19 and in Section 5.08 below, the following
terms have the following meanings:
"Environmental Laws" include all federal, state, and local laws, rules, regulations,
ordinances, permits, orders, and consent decrees agreed to by the Borrower or any Subsidiary,
relating to health, safety, and environmental matters applicable to the business and property of
the Borrower or any Subsidiary. Such laws and regulations include but are not limited to the
Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. 6901 et seq., as amended; the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42
U.S.C. 9601 et seq., as amended; the Toxic Substances Control Act ("TSCA"), 15 U.S.C.
2601 et seq., as amended; and the Clean Water Act, 33 U.S.C. 1331 et seq., as amended.
"Hazardous Substances", "Release", "Respond" and "Response" shall have the
meanings assigned to them in CERCLA, 42 U.S.C. 9601, as amended.
"Notice" means any actual summons, citation, directive, information request,
notice of potential responsibility, notice of violation or deficiency, order, claim, complaint,
investigation, proceeding, judgment, letter, or other .written communication from the United
States Environmental Protection Agency or other federal, state, or local agency or authority, or
any other entity or individual, public or private, concerning any intentional or unintentional act
or omission which involves management of Hazardous Substances in amounts in violation of
Environmental Laws on or transported off any Real Properties; the imposition of any liens
asserted by government entities in connection with any Borrower's or Subsidiary's response to
tbe presence or Release of Hazardous Substances in amounts in violation of Environmental
Laws; and any alleged violation of or responsibility under any Environmental Laws.
Section 3.20. Sensitive Payments, Neither the Borrower nor any Subsidiary has (a)
made any contributions, payments or gifts to or for the private use of any governmental official,
employee or agent where either the payment or the purpose of such contribution, payment or gift
is illegal under the laws of the United States or the jurisdiction in which made, (b) established or
maintained any unrecorded fund or asset for any purpose or made any false or artificial entries on
its books, (c) made any payments to any person with the intention that any part of such payment
was to be used for any purpose other than that described in the documents supporting the
payment, or (d) done business with or proposes to do business with any country, or any Person in
any country, which is prohibited or restricted under any Applicable Law of lhc United States, or
engaged irt or proposes to engage in any "trading with the enemy" or other transactions violating
27
NY 238,652,469V4
any rules or regulations of the Office of Foreign Assets Control or any similar laws, rules or
regulations of any federal, state, local or foreign government or governmental agency.
Section 3.21. Full Disclosure. No statement of fact made by the Borrower in this
Agreement or any other Loan Document, in any SEC Report, or in any information
memorandum, business summary, agreement, certificate, schedule or other written statement
furnished by the Borrower to the Lender pursuant hereto, contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact necessary to make
any statements contained herein or therein not misleading, in any manner or instance in which
the correction of such statement would indicate, result in or reflect a Material Adverse Effect
relative to the represented facts. Except for matters of a general economic or political nature
which do not affect the Borrower or any Subsidiary uniquely, there is no fact presenlly known to
the Borrower or any Subsidiary which has nol been disclosed to the Lender, which has had or
would reasonably be expected to have a Material Adverse Effect.
Section 3.22. Reaffirmation. Each and every request by the Borrower for Advances shall
constitute a reaffirmation of the truth and accuracy of the Borrowers' representations and
warranties made in this Agreement and the Security Documents on and as of the date of such
request.
IV. CONDITIONS OF MAKING THE LOANS
A. The obligation of the Lender to make the initial Loans hereunder and to
consummate the other transactions contemplated hereby are subject to the following conditions
precedent:
Section 4.01. Representations and Warranties. The representations and Wdrranties set
forth in Article III hereof and in. the other Loan Documents shall be true and correct on and as of
the Closing Date.
Section 4.02. Loan Documents. The Borrower and the Active Subsidiaries (as
applicable) shall have duly executed and/or delivered to the Lender all of the following:
(a) The Notes;
(b} The Guaranty Agreement, the Collateral Agreement, the Validity
Guaranties (which shall also have been executed and delivered by John B. Kaiser and James J.
TerBeest, respectively) and any and all other Secu!ity Documents required by the Lender at tbe
Closing Date (including, without limitation, any Landlord Waivers or consents required by the
Lender);
(c) The Warrant;
(d) The Registration Rights Agreement;
(e) A certificate or certificates of insurance, with loss payable endorsements,
evidencing tlie insurance required by Section 5.0l(d) hereof;
28
N\' 238,652.469v4
{1) A current Borrowing Base report in conformity with Section 5.04(e)
hereof, and a written request for the borrowing of the Term Loans (and, if applicable, the initial
Advance);
(g) A certificate of the Secretary or an Assistant Secretary of the Borrower
and each Active Subsidiary, certifYing the votes of the Boards of Directors or other applicable
governing body of the Borrower and the Active Subsidiaries, authorizing and directing the
execution and delivery of the Loan Documents to which they are a party and all further
agreements, instruments, certificates and other documents pursuant hereto and thereto;
(h) A certificate of the Secretary or an Assistant Secretmy of the Borrower
and each Active Subsidiary, certifYing the names of the officers of the Borrower and the Active
Subsidiaries who are authorized to execute and deliver the Loan Documents and all other
agreements, instruments, certificates and other documents to be delivered by the Borrower or
such Active Subsidiary pursuant hereto and thereto, together with the true signatures of such
officers. The Lender may conclusively rely on such certificate until the Lender shall receive any
further such cetiificate canceling or amending the prior certificate and submitting the signatures
of the officers named in such further certificate;
(i) Certified copies of the Organic Documents of the Borrower and each
Active Subsidiary, and a certificate of the Secretary of State or other appropriate official of the
jurisdiction of incorporation ofthe Borrower and each Active Subsidiary (and, in tbe case of the
Borrower, the State of Texas), dated reasonably prior to the Closing Date, stating that the
Borrower or the subject Active Subsidiary is duly formed and in good standing in such
jurisdiction; and
(j) Such other agreements, instruments, documents and certificates
(including, without limitation, satisfactory lien and judgment searches respecting the Borrower
and the Subsidiaries) as the Lender or its counsel may reasonably request
Section 4.03. Payoff and Release Letters. The Borrower shall have received, and shall
have delivered to the Lender, a payoff and release letters signed by Textron Financial
Corporation (assignee of Systran Financial Services Corporation) and, if available, Comerica
Bank, respectively, in form and substance satisfactory to the Lender, (a) confirming the amount
required to be paid to each such lender on the Closing Date in order to pay all of the Borrower's
and its Subsidiaries' obligations to such lender, (b) affirming that, upon receipt of such amount
on the Closing Date, all liens, encumbrances and security interests held by such lender shall be
terminated and released, and all collateral shall be released and retuned to the Borrower, and, (c)
authorizing the filing, upon receipt of such amount on the Closing Date, of termination
statements in respect of all lien filings against the Borrower and/or the Subsidiaries in respect of
such liens, encumbrances and security interests of such lender. The Borrower shall pay such
amounts to such creditors on the Closing Date out of the proceeds of the Term Loans and, if
applicable, the initial Advance.
Section 4.04. Legal Opinion. The Lender shall have received the favorable written
opinions--of Kane Russell Coleman & Logan, P.C., Morrison & Foerster, and any local firm(s) as
29
IVY 238,652.469v4
required, counsel for the Borrower and the Active Subsidiaries, dated the Closing Date,
reasonably satisfactory to the Lender and its counsel in scope and substance.
Section 4.05. Interest, Fees and Reimbursements. The Borrower shall have paid the
Closing Fees, and shall have paid or reimbursed the Lender for its reasonable
costs, charges and expenses incurred to the Closing Date; and in connection herewith, the
Borrower hereby irrevocably authorizes the Lender to charge such amounts as Advances to the
Borrower's revolving credit loan account. Failure of the Lender to effect any such charge shall
not excuse the Borrower from its obligation to pay such amounts.
Section 4.06. Further Matters. All legal matters, and the form and substance of all
documents, incident to the transactions contemplated hereby shall be satisfactory to counsel for
the Lender.
Section 4.07. No Default. No Default or Event of Default shall have occurred and be
continuing.
B. The obligation of the Lender to make any Advances subsequent to the Closing
Date is subject to (a) the representations and warranties set forth in Article III and in the other
Loan Documents being true and correct in all material respects (except that, to the extent that any
representation or warranty is already qualified by concepts of materiality and/or Material
Adverse Effect, then such representations and warranties shall be true and correct in all respects
while giving effect to the materiality and/or Material Adverse Effect qualifiers therein) on and as
of the subject Borrowing Date, (b) the Lender's receipt of a current Borrowing Base repmt in
conformity with Section 5.04(e) hereof, (c) the execution and delivery of such further Security
Documents as the Lender may have reasonably requested pursuant to the Security Documents
theretofore executed and delivered, and (d) there being no continuing Default or Event of
Default.
V. AFFIRMATIVE COVENANTS
The Borrower hereby covenants and agrees that, from the date hereof and until all
Obligations (whether now existing or hereafter arising) have been paid in full and the Revolving
Credit Commitment has been terminated, unless the Lender shall otherwise consent in writing,
the Bon-ower shall, and shall cause each of its Subsidiaries to:
Section 5.0 I. Corporate and Insurance. Do or cause to be done all things necessary to at
all times (a) preserve, renew and keep in full force and effect its corporate or other legal
existence, rights, licenses, permits and franchises (except that the Dissolving Subsidiaries shall
continue diligently to pursue and complete their dissolution), (b) comply with the Loan
Documents and any other agreements and instruments executed and delivered hereunder and
thereunder (to the extent a party thereto), (c) maintain, preserve and protect all ofits franchises
and material trade names, and preserve all of its material property used or useful in the conduct
of its business and keep the same in good repair, working order and condition (reasonable wear
and tear excepted), and from time to time make, or cause to be made, all needed and proper
repairs, renywals, replacements, betterments and improvements thereto, so that the Business
Operations carried on in connection therewith may be properly and advantageously conducted at
30
NY238,652,469v4
all times, (d) maintain insurance in amounts, on such terms and against such risks (including fire
and other hazards insured against by extended coverage, public liability insurance covering
claims for personal injury, death or property damage, and professional liability insurance) as are
customary for companies of similar size in the same or similar businesses and opemting in the
same or similar locations, as well as all such other insurance as is required by the Collateral
Agreement, each of which policies (other than workers compensation) shall be issued by a
financially sound and reputable insurer reasonably satisfactory to the Lender and shall name the
Lender as loss payee and additional insured as its interest appears and provide for the Lender to
receive written notice thereof at least thirty (30) days prior to any cancellation of the subject
policy, and (e) comply in all material respects with all material Contracts and m a t ~ r i a l
obligations to which it is a party or by which it is bound, all benefit plans which it maintains or is
required to contribute to, and all Applicable Law (including, without limitation, Environmental
Laws, healthcare laws and regulations and healthcare reimbursement laws and regulations)
material to its Business Operations, and all requirements of its insurers, whether now in effect or
hereafter enacted, promulgated or issued. TI1e Borrower will provide to the Lender a certificate
of the foregoing insurance, promptly upon request.
Section 5.02. Payment of Taxes. File, pay and discharge, or cause to be paid and
discharged, all material taxes, assessments and governmental charges or levies imposed upon the
Borrower and/or any Subsidiary or upon its income and profits or upon any of its property (real,
personal or mixed) or upon any part thereof, before the same shall become in default, as well as
all lawful claims for labor, materials, supplies and otherwise, which, if unpaid when due, might
become a Lien or charge upon such property or any part thereof; provided, however, that neither
the Borrower nor any Subsidiary shall be required to pay and discharge or cause to be paid and
discharged any such tax, assessment, charge, levy or claim so long as (a) the validity thereof
shall be contested in good faith by appropriate proceedings and the Borrower or such Subsidiary
shall have set aside on its books adequate reserves with respect to any such tax, assessment,
charge, levy or claim so contested, and (b) payment with respect to any such tax, assessment,
charge, levy or claim shall be made before any of the Borrower's or such Subsidiary's property
shall be seized or sold in satisfaction thereat:
Section 5.03. Notices. Give prompt written notice to the Lender of' (a) the filing by the
Borrower of any SEC Reports, (b) any proceedings instituted against the Borrower or any
Subsidiary in any federal or state court or before any commission or other regulatory body,
whether federal, state or local, which,, if adversely determined, could r<;:asonably be expected to
have a Material Advers<;: Effect, and (c) the occurrence of any material casualty to any Collateral,
any Material Adverse Effect, or any Default (if the Borrower knows or reasonably should know
of the existence thereof) or Event of Default, and the action that the Borrower has taken, is
taking, or proposes to take with respect thereto.
Section 5.04. Periodic Reports. Furnish to the Lender:
(a) Within ninety (90) calendar days after the end of each Fiscal Year,
consolidated balance sheets, and consolidated and consolidating statements of income,
statements of stockholders' equity, and statements of cash flows of the Borrower and its
Subsidiaries," together with footnotes and supporting schedules thereto, certified (as to the
consolidated statements) by independent certified public accountants selected by the Borrower
31
NY 238,652,469v4
and reasonably satisfactory to the Lender, showing the financial condition of the Borrower and
its Subsidiaries at the close of such Fiscal Y car and the results of operations of the Borrower and
its Subsidiaries during such Fiscal Year;
(b) Within thirty (30) calendar days after the end of each calendar month
(forty-five (45) calendar days in the case of the end of a fiscal quarter), consolidated (and, if
specifically requested by the Lender reasonably in advance, but not more frequently than
quarterly, consolidating) unaudited balance sheets, statements of income and statements of cash
flows of the Borrower and its Subsidiaries, together with supporting schedules thereto, prepared
by the Borrower and certified by the BoiTower's Chairman, President, Chief Executive Officer,
Chief Financial Officer or Chief Accounting Officer, such balance sheets to be as of the close of
such calendar month and such statements of income and statements of cash flows to be for the
period from the beginning of the then-current Fiscal Year to the end of such calendar month,
together with comparative statements of income and cash flows for the corresponding period in
the immediately preceding Fiscal Year, in each case subject to normal audit and year-end
adjustments;
(c) Concurrently with the delivery of each of the financial statements required
by Sections 5.04(a) and 5.04(b) above, a certificate on behalf of the Borrower (sigoed by the
Chairman, President, Chief Executive Officer, Chief Financial Officer or Chief Accounting
Officer of the BoiTower), certifying that he has examined the provisions of this Agreement and
that no Default or Event of Default has occulTed and/or is continuing;
(d) Within fifteen (15) calendar days after the end of each calendar month, an
accounts receivable aging report and an accounts payable aging report for the Borrower and the
Subsidiaries {each on a consolidated and consolidating basis);
(e) On or prior to the fifteenth (15th) calendar day of each calendar month, a
detailed calculation of the BoiTowing Base as of the close of the immediately preceding calendar
month (which shall include a roll-forward from such month-end to as recent a day as practicable,
reflecting sales and collections (separately for billed Accounts and unbilled Accounts) since the
of the preceding calendar month); and on or prior to the last calendar day of each
calendar month, a reasonably detailed calculation of the Borrowing Base as of the fifteenth day
of such calendar month (which shall include a roll-forward to as recent a day as practicable,
reflecting sales and collections (separately for billed Accounts and unbilled Accounts) since the
fifteenth day of such calendar month); all such Borrowing Base reports to in form and
substance, and with supporting documentation, reasonably satisfactory to the Lender;
(J) As soon as approved by the Borrower's Board of Directors (but in any
event not later than after the beginning of each Fiscal Year), a budget and operating plan (on a
month-by-month basis) for such Fiscal Year, in such detail as may reasonably be required by the
Lender;
(g) As and when distributed to the Borrower's stockholders, copies of all
proxy materials, reports and other information which the Borrower provides to its stockholders in
their capacity as such; and as and when distributed to any other holders of Indebtedness of the
32
NY 238,652,469v4
Borrower or the Subsidiaries, copies of all reports, statements and other information provided in
writing to such lenders; and
(h) Promptly, from time to time, such other information regarding the
Bonower's or any Subsidiary's operations, assets, business, affairs and financial condition, as
the Lender may reasonably request.
To the extent that the financial statements required by Sections 5.04(a) and 5.04(b) are contained
in any SEC Reports filed by the Borrower within the required time period for the delivery of
such financial statements, then the Borrower shall be deemed to have complied with the subject
financial statement delivery by notif'ying the Lender of the filing of the subject SEC Report.
To the extent that any report or other delivery required under this Section 5.04 or elsewhere in
this Agreement will, at the time of anticipated delivery to the Lender, contain any material non-
public information, the Borrower will notif'y the Lender thereof as promptly as practicable prior
to the delivery of such report (but without disclosing the specific items of material non-public
information or the nature thereof), and if so requested hy the Lender prior to the required date of
the information delivery hereunder, the Borrower shall (x) if reasonably practicable, redact such
material non-public information from the subject report prior to the delivery thereof to the
Lender, or (y) defer delivery of such report until such time as tbe Bon-ower has made public
disclosure of the subject material information or the Lender has affirmatively requested delivery
of such report. Absent timely request by the Lender as aforesaid, the Borrower shall make the
required delivery to the Lender on a timely basis.
Section __S.OS. Books and Records; Inspection. Maintain centralized books and records
regarding all of the Business Operations at the Borrower's principal place of business, and
permit agents or representatives of the Lender at reasonable intervals to inspect, at any time
during normal business hours, upon reasonable notice, and without undue material disruption of
the Business Operations, all of the Borrower's and its Subsidiaries' various facilities, books and
records (wherever located), to make copies, abstracts and/or reproductions thereof, and to discuss
the business and affairs of the Borrower and the Subsidiaries with the management of the
Borrower; and without limitation of the foregoing, the Lender may engage an independent
auditing firm to conduct an audit of the Collateral and the Bonower's books and records on an
annual basis.
'
Section 5 .06. Accounting. Maintain a standard system of accounting in order to permit
the preparation of financial statements in accordance with GAAP and Regulation S-X
promulgated under the Act.
Section 5.07. Reimbursements. Pay or reimburse the Lender or other appropriate
Persons on demand for all reasonable costs, expenses and other charges incurred or payable from
time to time in connection with the transactions contemplated by this Agreement, any routine
SEC filings required to report the Lender's and its Affiliates' beneficial ownership of Common
Stock, any waivers or amendments in respect of any Loan Documents, any "workouf' or
enforcement action, and any bankruptcy or insolvency proceedings relating to the Borrower or
any Subsidiary, including but not limited to any and all search fees, recording fees, costs of
inspections and legal and accounting fees; provided that, except for any such audit conducted
33
NY 238,652,469v4
during the continuance of an Event of Default, the Borrower shall not be obligated to pay or
reimburse the Lender for the cost of more than one audit performed by an independent auditing
firm (as contemplated by Section 5.05 above) in any twelve (12) month period.
Section 5.08. Environmental Response. ln the event of any material discharge, spill,
injection, escape, emission, disposal, leak or other Release of Hazardous Substances in amounts
in violation of applicable Environmental Laws by the Borrower or any Subsidiary on any Real
Property owned or leased by the Borrower or any Subsidiary, which is not authorized by a permit .
or other approval issued by the appropriate governmental agencies and which requires
notification to or the filing of any report with any federal or state governmental agency, the
Borrower shall promptly: (a) notifY the Lender; and (b) comply with the notice requirements of
the Environmental Protection Agency and applicable state agencies, and take all steps necessary
to promptly clean up such discharge, spill, injection, escape, emission, disposal, leak or other
Release in accordance with all applicable Environmental Laws and the Federal National
Contingency Plan, and, if required by Applicable Law, receive a certification from all applicable
state agencies or the Environmental Protection Agency, that such Real Property has been cleaned
up to the satisfaction of such agency(ies).
Section 5.09. Cause James B Kaiser to continue to be employed or to
function as the chief executive officer oftbe Borrower, and James J. TerBeest to be employed or
to function as the chief financial officer of the Borrower, unless a successor is appointed within
sixty (60) days after the termination of such individual's employment, and such successor is
reasonably satisfactory to the Lender.
Section 5.1 0. Use of Proceeds. Cause all proceeds of the Loans to be utilized solely in
the manner and for the purposes set forth in Section 2.04 hereof.
Section 5.1 1. Future Subsidiaries. At any time and from time to time when the Borrower
or any of its Subsidiaries proposes to form or acquire any Subsidiary subsequent to the Closing
Date, or in the event that and at such time as any of the Dissolving Subsidiaries shall have or
hold any material assets or shall engage in active business operations, the Borrower shall give
written notice thereof to the Lender reasonably in advance of the formation or acquisition of such
Subsidiary or such change of status of a Dissolving Subsidiary, providing information therefor of
the type called for in Schedule 3.02 of the Disclosure Schedule; and contemporaneously with the
formation or acquisition of such new Subsidiary or such change of status of a Dissolving
Subsidiary, the Borrower shall cause such new Subsidiary or affected Dissolving Subsidiary to
execute and deliver (a) a guaranty agreement in substantially the form. of the Guaranty
Agreement (or a joinder agreement with respect to the existing Guaranty Agreement in form and
substance reasonably satisfactory to the Lender), and (b) a Collateral Agreement (with completed
perfection certificate and other appropriate Security Documents) in substantially the form of the
Collateral Agreement as currently in place (or a joinder agreement with respect to the existing
Collateral Agreement in form and substance reasonably satisfactory to the Lender) and other
Security Documents as reasonably requested by the Lender. Nothing contained in this Section
5. I I shall be deemed to constitute any waiver by the Lender of any consent otherwise required
under this Agreement or any other Loan Document with respect to the formation or acquisition
of any Subsidiary or any change in status of a Dissolving Subsidiary.
34
NY 23B,652,469v4
Section 5.12. Landlord Waivers. To the extent reasonably requested by the Lender from
time to time subsequent to the Closing Date, use commercially reasonable efforts to obtain,
within thirty (30) days after the Lender's request therefor, in form and substance reasonably
satisfactory to the Lender, any and all bailee waivers, warehousemen's waivers, Landlord
Waivers and/or access agreements requested by the Lender in respect of locations where there is
stored or held any material books or records, or any other Collateral having an aggregate fair
market value in excess of $25,000 (including, without limitation, existing offices in Dallas,
Texas).
Section 5.13. Deposit Accounts. NotifY the Lender upon opening any new bank account
or securities account, and cause the subject bank or securities intermediary promptly to execute
and deliver to the Lender a Control Agreement in respect of such bank account or securities
account; and this Section 5.13 shall also be applicable to any and all bank accounts for which
Control Agreements have not been entered into on the Closing Date if (a) the funds in such bank
account exceed $10,000, or (ii) the funds held in the Bank Accounts for which Control
Agreements are not in place exceed $25,000 in the aggregate; and to the extent that a required
Control Agreement is not entered into within thirty (30) days after the Closing Date, then the
subject bank account(s) shall be promptly closed and the funds held therein shall be transferred
to one or more accounts at another banking institution whiCh has eKecuted and delivered a
Control Agreement in respect of such account(s) in form and substance satisfactory to the
Lender.
VI. NEGATIVE COVENANTS
The Borrower hereby covenants and agrees that, until all Obligations (whether now
existing or hereafter arising) have been paid in full and the Revolving Credit Commitment has
been terminated, unless the Lender shall otherwise consent in writing, the Borrower shall not,
and shall not permit any Subsidiary to, directly or indirectly:
Section 6.01. Indebtedness. Incur, create, assume, become or be liable in any manner
with respect to, or permit to exist, any Indebtedness, other than:
(a) Indebtedness to the Lender pursuant to the Loan Documents;
(b) liabilities with respect to trade obligations, accounts payable, or other
similar payments, operating leases and other normal accruals incurred in the ordinary course of
business, or with respect to which the Borrower or the subject Subsidiary is contesting in good
faith the amount or validitythereofby appropriate proceedings, and then only to the extent that
the Borrower or the subject Subsidiary has set aside on its books adequate reserves therefor;
(c) Indebtedness existing on the date of this Agreement owed to those
Persons, in those amounts and having those maturities as set forth in Schedule 6.0 l of the
Disclosure Schedule;
(d) Capitalized Leases reflected in the Financial Statements, and Capitalized
Leases entered into by the Borrower or its Subsidiaries in the ordinary course of the
Business Operations;
35
NY 238,652,469V4
(e) purchase money Indebtedness incurred in connection with the Borrower's
or its Subsidiaries' acquisition of capital assets in the ordinary course of the Business Operations;
(Q Subordinated Debt in such amounts and upon such terms and conditions as
shall be acceptable to the Lender in its sole and absolute discretion;
(g) intercompany Indebtedness between the Borrower and any Wholly"Owned
Subsidiary or between Wholly-Owned Subsidiaries; and
(h) Guarantees to the extent permitted pursuant to Section 6.03 below.
Section 6.02. Liens. Create, incur, assume or suffer to exist any Lien or other
encumbrance of any nature whatsoever on any of its assets, now or hereafter owned, other than:
(a) subject to Section 5.02 above, Liens securing the payment of taxes which
are either not yet due or the validity of which is being contested in good faith by appropriate
proceedings, and as to which the Borrower or the subject Subsidiary shall have set aside on its
books adequate reserves;
(b) deposits under" workers' compensation, unemployment insurance and
social security laws, or to secure the performance of bids, tenders, contracts (other than for the
repayment of money borrowed) or leases, or to secme statutory obligations or surety or appeal
bonds, or to secure indemnity, performance or other similar bonds in the ordinary course of
business;
(c) statutory Liens of landlords and Liens imposed by law, such as, carriers',
warehousemen's, materialmen's or mechanics' liens, incurred by the Borrower or any Subsidiary
in good faith in the ordinary course of business and discharged promptly after same are incurred;
fully bonded Liens arising out of a judgment or award against the Borrower or any Subsidiary
with respect.to which the Borrower or such Subsidiary shall currently be prosecuting an appeal, a
stay of execution pending such appeal having been secured; and Liens arising out of a judgment
or award against the Borrower or any Subsidiary which are fully covered by insurance (subject to
applicable deductibles) and for which the relevant insurer has not denied or disclaimed coverage;
(d) other Liens incurred in connection with Indebtedness expressly permitted
pursuant to Section 6.0l(d) and/or Section 6.0l(e) above, provided that such Liens do not extend
to any assets or property other than the specific assets or properties acquired pursuant to such
permitted Indebtedness;
(e) encumbrances consisting of easements, rights-of-way, survey exceptions
and other similar restrictions on the use of Real Property, or minor irregularities in title thereto
which do not materially impair the use of such property in the operation of the business of the
Borrower and its Subsidiaries (provided that the placement by the owner of any leased Real
Property of a mortgage or deed of trust on the subject land and/or building shall not be deemed a
Lien on the leasehold interest ofthe Borrower or the subject Subsidiary);
..
(f) Liens in existence on the date of this Agreement, as set forth on Schedule
.02 oftbe Disclosure Schedule;
36
N ~ ' 238,652, 469v4
(g) Liens arising out of judgments or awards (i) which are fully covered by
insurance (subject to applicable deductibles) and for which the relevant insurer has not denied or
disclaimed coverage, or (ii) with respect to which the Borrower or the subject Subsidiary shall be
prosecuting an appeal in good faith and in respect of which a stay of execution shall have been
issued;
(h) Liens in favor of the Lender; and
(i) extensions, renewals or replacements of any Lien referred to in clauses (a)
through (g) above, provided that same shall not effect any increase in any principal amount
secured thereby.
Section 6.03. Guarantees. Guarantee, endorse or otherwise in any manner become or be
responsible for obligations of any other Person, except (a) endorsements of negotiable
instruments for collection in the ordinary course of business, and (b) guarantees by the Borrower
of obligations of Wholly-Owned Subsidiaries (other than Dissolving Subsidiaries) in the
ordinary course of business.
Section 6.04. Sales of Assets and Management. (a) Sell, lease, transfer, encumber or
otherwise dispose of any of the Borrower's or any Subsidiary's properties, assets, rights, licenses
or franchises (including, without limitation, equity interests in Subsidiaries) other than (i) sales
of inventory in the ordinary course of business, (ii) licenses, joint ventures and related
transactions entered into, modified or terminated in the ordinary course of busiuess, or (iii) the
disposition of surplus or obsolete personal properties in the ordinary course of business, or (b)
permit any Affiliate of the Borrower (other than a Domestic Subsidiary which is a party to the
Collateral Agreement) to own or obtain any patent, patent application, copyright, copyright
application, trademark, trademark application, license, or other intangible asset relating to the
Business Operations except in the normal course of business on terms and conditions no less
favorable to the Borrower or any Subsidiary than those which could be obtained in an arms'
length transaction with an unaffiliated third party.
Section 6 . 0 5 . ~ Sale-Leaseback. Enter into any arrangement with any Person whereby the
Borrower or any Subsidiary shall sell or transfer any property (real, personal or mixed) used or
useful in the Business Operations, whether now owned or hereafter acquired, and thereafter rent
or lease such property.
Section 6.06. Investments; Acquisitions. Make any Investment in, or otherwise acquire
or hold securities (including, without limitation, capital stock and evidences of Indebtedness) of,
or make loans or advances to, or enter into any arrangement for the purpose of providing funds
or credit to, any other Person (including any Affiliate), except:
(a) Investments in Wholly-Owned Subsidiaries which have complied with the
requirements of Section 5.11 hereof;
(b) advances (to the extent permitted by Applicable Law, including federal
securities la)>xs) to employees of the Borrower or any Wholly-Owned Subsidiaries (other than
37
NY 2-38,652,469l'4
Dissolving Subsidiaries) for normal business expenses not to exceed at any time $25,000 in the
aggregate;
(c)
Equivalents; and
investments of excess cash generated in the Business Operations in Cash
(d) Investments of cash in overnight deposits or other customary cash
management Investments with commercial banks or in commercial paper satisfying the criteria
for such hanks or commercial paper as set forth in the definition of Cash Equivalents.
Section 6.07. Real Property; Corporate Form; Acquisitions. Acquire or hold any fee
interest in any Real Property; or dissolve or liquidate, or consolidate or merge with or into, sell
all or substantially all of the assets of the Borrower or any Subsidimy to, or acquire all or
substantially all of the securities, assets or properties of, any other Person, except for (a)
consolidations of a Subsidiary with a Wholly-Owned Subsidiary (other than a Dissolving
Subsidiary); (b) mergers of a Wholly-Owned Subsidiary into the Borrower or into a Wholly-
Owned Subsidiary (other than a Dissolving Subsidiary); (c) sales to the Borrower or another
Subsidiary for fair value; or (d) the dissolution of the Dissolving Subsidiaries.
Section 6.08. Dividends and Red\_>mptions. Declare or pay any dividends, or make any
distribution of cash or property, or both, to any Person in respect of any of the shares of the
capital stock or other equity securities of the Borrower or any other Person, or directly or
indirectly redeem, purchase or otherwise acquire for consideration any securities or shares of the
capital stock or other equity securities of the Borrower or any other Person; provided, that this
Section 6.08 shall not be deemed to prohibit the payment of dividends or distributions by any
Subsidiary to the Borrower or to any otl1er direct or indirect Wholly-Owned Subsidiary.
Section 6.09. Compensation. Pay any compensation of any types or in any amounts to
any .. executive officers of the Borrower except (a) in accordance with the employment
agreements between the Borrower and such executive officers as in effect on the Closing Date,
(b) in accordance with the compensation levels disclosed in Schedule 6.09 of the Disclosure
Schedule, or (c) as otherwise approved by the independent Compensation Committee of the
Board of Directors of the Borrower but in no case in any amount or amounts which would cause
or reasonably beexpected to cause a Material Adverse Effect.
Section 6.10. Change of Business. (a) Engage in a business materially different from the
general nature of the Business Operations (i) as now being conducted, or (ii) as the same may
hereafter be reasonably expanded from time to time in like areas of business; (b) cause or permit
any of the Dissolving Subsidiaries to own or hold any material assets or engage in any active
business operations; (c) wind up the Business Operations or cease substantially all of its normal
Business Operations for a period in excess of ten (10) consecutive days; or (d) suffer any
material disruption, interruption or discontinuance of a material portion of its nonnal Business
Operations for a period in excess of ten (I 0) consecutive days; provided, however, that the
dissolution of the Dissolving Subsidiaries shall not constitute aviolation of this Section 6.1 0.
Section 6.11. Receivables. Sell or assign in any way any accounts receivable,
promissory notes or trade acceptances held by the Borrower or any Subsidiary with or without
38
NY 238,652. 469v4
recourse, except for (a) collections (including endorsements) in the ordinary course of business,
and (b) transfers to or among the Borrower and Domestic Subsidiaries which are party to the
Guaranty Agreement and the Collateral Agreement.
Section 6.12. Certain Amendments. Agree, consent, permit or otherwise undertake to
amend any of the terms or provisions of the Bonower's or any Subsidiary's Organic Documents
in a manner which may impair in any respect any of the Lender's rights under any of the Loan
Documents.
Section 6.13. Affiliate Enter into any Contract, agreement or transaction
with any Affiliate of the Borrower except (a) as disclosed in Schedule 6.13 of the Disclosure
Schedule, (b) for intercompany Indebtedness between the Borrower and any Wholly-Owned
Subsidiary (other than a Dissolving Subsidiary) or between any Wholly-Owned Subsidiaries
(other than Dissolving Subsidiaries), or (c) in the normal course of business on tenns and
conditions no less favorable to the Borrower or any Subsidiary than those which could be
obtained in an arms' length transaction with an unaffiliated third party.
Section 6.14. ,Fiscal Year. Amend its Fiscal Year.
Section 6.!5 .. Subordinated Debt. Prepay, redeem or purchase any Subordinated Debt.
Section 6.16. Capital Expenditures. Make aggregate Capital Expenditures (whether
through cash purchase, principal payments under Capitalized Leases, or otherwise), in the
aggregate for"the Borrower and all Subsidiaries, in excess of$250,000 in any Fiscal Year.
Section 6.17. Coverage Test. Permit the ratio of EBITDA to Fixed Charges to be less
than (a) 0.85 to 1.00 for the six (6) months ending June 30, 2008, (b) 1.00 to 1.00 for the nine (9)
months ending September 30, 2008, (c) 1.10 to 1.00 for the four (4) consecutive fiscal quarters
ending December 31, 2008, and (d) !.25 to 1.00 for the four (4) consecutive fiscal quarters
ending as of the end of any quarter of any Fi seal Year thereafter.
VII. DEFAULTS
Section 7.0!. Events of Default Each of the following events is herein, and in the Notes,
sometimes referred to as an Event of Default:
(a) if any representation or warranty made herein or in any other Loan
Document, or in any certificate, financial statement, Borrowing Base report, instrument or other
written statement furnished by the Borrower or any Subsidiary in connection with this
Agreement or any of the borrowings hereunder, shall be false, inaccurate or misleading in any
material respect when made or when deemed made hereunder if the correction of such
representation or warranty would indicate, result in or reflect a Material Adverse Effect relative
to the representation or warranty as made; or if the Borrower or any Subsidiaries repeatedly
make false, inaccurate or misleading representations or wananties in connection with this
Agreement or any ofthe bonowings hereunder, regardless of whether any such Material Adverse
Effect is presented thereby;
..
39
NY 238,652,469v4
(b) any default in the payment of any principal or interest under any of the
Notes or any other Obligations when the same shall be due and payable, whether at the due date
thereof or at a date required for prepayment or by acceleration or otherwise, and the continuance
of any such non-payment (in whole or in part) for a period of three (3) Business Days (provided
that such grace period shall not apply with respect to Section 2.0l(d) above, as to which the
grace period is as specified in Section 2.0l(d));
(c) any default in the due observance or performance of any covenant,
condition or agreement contained in any Section of Article VI hereof, which, if capable of being
cured, is not fully cured within thirty (30) days after the occurrence thereof; PIQ,Vided, however,
that if such Default is capable of cure but is not capable of being cured with reasonable diligence
within such thirty (30) day period, then such cure period shall be extended for up to an additional
thirty (30) days provided that (i) the Borrower or the subject Subsidiary commenced such cure
promptly within the original thirty (30) day cure period and thereafter continuously continues to
effect such cure with reasonable diligence (and in any event completes such cure within the
extended cure period provided herein), and (ii) no Material Adverse Effect exists or arises in
respect of such Default;
(d) any default in the due observance or performance of any covenant,
condition or agreement to be observed or performed under Article V hereof, or otherwise
pursuant to the terms hereof or any other Loan Document and not addressed in Sections 7.01 (a),
(b) or (c), and the continuance of such default unrcmedied for a period of thirty (30) days (five
(5) Business Days in the case of Section 5.01(d) hereof) after written notice thereof to the
Borrower, or such other cure period as may be provided in the applicable Loan Document;
nrovided, however, that if such Default (other than in the case of Section 5.0l(d) above) is
capable of cure but is not capable of being cured with reasonable diligence within such thirty
(30) day period, then such cure period shall be extended for up to an additional thirty (30) days
provided that (i) the Borrower or the subject Subsidiary commenced such cure promptly within
the original thirty (30) day cure period and thereafter continuously continues to effect such cure
with reasonable diligence (and in any event completes such cure within the extended cure period
provided herein), and (ii) no Material Adverse Effect exists or arises in respect of such Default;
(e) any default with respect to any Indebtedness for money borrowed of the
Borrower or any of the Subsidiaries (other than to the Lender) in an amount in excess of
$75,000, if the effect of such default is to permit the holder, with or without notice or lapse of
time or both, to accelerate the maturity of any such Indebtedness for money borrowed or to cause
such Indebtedness for money borrowed to become due prior to the stated maturity thereof;
(i) if the Borrower or any Subsidiary shall: (i) apply for or consent to the
appointment of a receiver, trustee, custodian or liquidator of it or any of its properties, (ii) admit
in writing its inability to pay its debts as they mature, (iii) make a general assignment for the
benefit of creditors, (iv) be adjudicated a bankrupt or insolvent or be the subject of an order for
relief under Title II of the United States Code, or (v) file a voluntary petition in bankruptcy, or a
petition or an answer seeking reorganization or an arrangement with creditors or to take
advantage or any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or
liquidation law or statute, or an answer admitting the material allegations of a petition filed
40
NY 23B,652,469v4
against him or it in any proceeding under any such law, or (vi) take or permit to be taken any
action in furtherance of or for the purpose of effecting any of the foregoing;
(g) if any order, judgment or decree shall be entered, without the application,
approval or consent of the Borrower or any Subsidiary, by any court of competent jurisdiction,
approving a petition seeking reorganization of the Borrower or any Subsidiary, or appointing a
receiver, trustee, custodian or liquidator of the Borrower or any Subsidiary, or of all or any
substantial part of its assets, and such order, judgment or decree shall continue unstayed and in
effect for any period of ninety (90) days;
(h) if final judgment(s) for the payment of money in an uninsured amount in
excess of $75,000 individually or in the aggregate shall be rendered against the Borrower and/or
any Subsidiary, and the same shall remain undischarged or unbonded for a period of thirty (30)
consecutive days, during which execution shall not be effectively stayed;
(i) the occurrence of any levy upon or seizure or attachment of, or any
uninsured loss of or damage to, any property of the Borrower or any Subsidiary having an
aggregate fair value or repair cost (as the case may be) in excess of$75,000 individually or in the
aggregate, and any such levy, seizure or attachment shall not be set aside, bonded or discharged
within thhiy (30) days after the date thereof;
{j) if any Lien purported to be created by any Security Document shall cease
to be a valid perfected first priority Lien (subject only to any priority accorded by law to
Permitted Liens) on the assets or properties covered thereby (provided that if such condition is
due to a change in Applicable Law or any rectifiable event or occurrence which terminates the
ability to place a Lien on the subject asset, an Event of Default shall not be deemed to exist by
reason thereof unless the Borrower or the subject Subsidiary fails, within ten (10) days after
wl'itten notice from the Lender, to take other lawful action which shall provide to the Lender
substantially the same benefit as the lost Lien), or the Borrower or any Subsidiary shall assert in
writing that any Lien purported to be created by any Security Document is not a valid perfected
first priority lien (subject only to any priority accorded by law to Permitted Liens) on the assets
or properties purported to be covered thereby;
(k) if (i) any of the Loan Documents shall cease to be in full force and effect
(other than as a result of the discharge thereof in accordance with the terms thereof or by written
agreement of all parties thereto), provided that if such condition is due to a change in Applicable
Law, an Event of Default shall not be deemed to exist by reason thereof unless the Borrower or
the subject Subsidiary fails, within ten (10) days after written notice fiom the Lender, to take
other lawful action which shall provide to the Lender substantially the same rights and benefits
as were provided to the Lender immediately prior to such change in Applicable Law, or (ii) the
Borrower or any Subsidiary shall disclaim or deny the validity of any Loan Document or its
obligations thereunder;
(I) if the Common Stock (or the common stock of any survtvmg entity
described in the proviso to the definition of "Sale" above) shall not be listed or traded on any
national securities exchange, or shall cease to be actively quoted on the OTC Bulletin Board, tor
any period in excess of thirty (30) consecutive days; or
41
NY 238,652,469v4
(m) if the Borrower or any Subsidiary shall be indicted for or convicted of any
felony or crime of moral turpitude.
Section 7 .02. Remedies. Upon the occurrence of any Event of Default, and at all times
thereafter during the continuance thereof: (a) the Notes, and any and all other Obligations, shall,
at the Lender's option (except in the case of Sections 7.0l(f) and 7.0l(g) hereof, the occurrence
of which shall automatically effect acceleration, regardless of any action or forbearance in
respect of any prior or ongoing Default or Event of Default which may be inconsistent with such
automatic acceleration), become immediately due and payable, both as to principal, interest and
other charges, without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived, anything contained herein or in the Notes or other evidence of such
Obligations to the contrary notwithstanding, (b) all outstanding Obligations under the Notes, and
all other outstanding Obligations, shall bear interest at the default rate of interest provided in the
Notes, (c) the Lender may file suit against the Borrower on the Notes and against the Borrower
and the Subsidiaries under the other Loan Documents and/or seek specific performance or
injunctive relieftherennder (whether or not a remedy exists at law or is adequate), (d) the Lender
shall have the right, in accordance with the Security Documents, to exercise any and all remedies
in respect of such or all of the Collateral as the Lender may determine in its discretion (without
any requirement of marshalling of assets, or other such requirement), and (c) the Revolving
Credit Commitment shall, at the Lender's option (except in the case of Sections 7.01(1) and
7/0 I (g) hereof, the occurrence of which shall automatically effect termination, regardless of any
action or forbearance in respect of any prior or ongoing Default or Event of Default which may
be inconsistent with such automatic termination), be immediately terminated or reduced, and the
Lender shall be under no further obligation to consider making any further Advances.
VIII. PARTICIPATING LENDERS; ASSIGNMENT.
Section 8.01. ParticiR.alions. Anything in this Agreement to the contrary
notwithstanding, the Lender may, at any time and from time to time, without in any manner
affecting or impairing the validity of any Obligations, transfer, assign or grant participating
interests in the Loans as the Lender shall in its sole discretion determine, to such other Persons
(the "Participilllts") as the Lei1der may determine. Upon any such transfer, assignment or
granting of participating interests, the Participants shall be deemed to be included within the term
"Lender" for all purposes ofthis Agreement, subject to such agreements and arrangements as the
Lender and the Participants may agree upon. Notwithstanding the granting of any such
participating interests: (a) the Borrower shall look solely to the Lender for all purposes of this
Agreement and the transactions contemplated hereby, (b) the Borrower shall at all times have the
right to rely upon any waivers or consents signed by the Lender as being binding upon all of the
Participants, and (c) all communications in respect of this Agreement and such transactions shall
remain solely between the Borrower and the Lender (exclusive of Participants) hereunder.
Section 8.02. Transfer. Anything in this Agreement to the contrary notwithstanding, the
Lender may, at any time and from time to time, without in any manner affecting or impairing the
validity of any Obligations, transfer and assign all or any portion of its interest in this
Agreement, the Notes and the other Loan Documents to any Person (an "Assignee Lender") as
the Lendel' tnay determine. Upon any such transfer or assignment, the Assignee Lender shall be
deemed to succeed (to the extent of the interest assigned) to the rights and obligations of the
42
NY 238,652,469v4
Lender for all purposes of this Agreement. In the event of any transfer and assignment of the
Lender's entire interest in this Agreement, the Notes and the Security Documents, the Lender
shall be replaced by the Assignee Lender as "Secured Party" under the Collateral Agreement and
aU other Security Documents.
Section 8.03. Recordation of Assignment. In respect of any negotiation, transfer or
assignment of all or any portion of any Lender's interest in this Agreement, any Note and/or any
other Loan Documents at any time and from time to time, the following provisions shall be
applicable;
(a) The Borrower, or any agent appointed by the Borrower, shall maintain a
register (the "Register") in which there shall be recorded the name and address of each Person
holding any Note( s) hereunder or any commitment to lend hereunder, and the principal amount
payable to such Person under such Person's Note(s) or committed by such Person under such
Person's lending commitment. The Borrower hereby irrevocably appoints the Lender (and/or
any subsequent Lender appointed by the Lender then maintaining the Register) as the Borrower's
agent for the purpose of maintaining the Register.
(b) In connection with any negotiation, transfer or assignment as aforesaid,
the transferor/assignor shall deliver to the Lender then maintaining the Register an assignment
and assumption agreement executed by the transferor/assignor and the transferee/assignee,
setting forth the specifics of the subject transaction, including but not limited to the amount and
nature of Obligations and/or lending commitments being transfen-ed or assigned (and being
assumed, as applicable), and the proposed effective date of such transfer or assignment and the
related assumption (if applicable).
(c) Subject to receipt of completed tax forms (indicating withholding status, or
exemption from withholding, as applicable, of the transferee/assignee) reasonably required by
the Person then maintaining the Register, and (if required by such Person) sun-ender of the
negotiated, transferred or assigned Note(s) for reissuance by the Borrower, such Person shall
record the subject transfer, assignment and assumption in the Register. Anything contained in
any Note or other Loan Document to the contrary notwithstanding, no negotiation, transfer or
assignment shall be effective until it is recorded in the Register pursuant to this Section 8.03(c).
The entries in the Register shall be conclusive and binding for all purposes, absent manifest
error; and the Borrower and each Lender shall treat each Person whose name is recorded in the
Register as a Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Bon-ower and each Lender at any reasonable time and from time
to time upon reasonable prior notice.
IX. MISCELLANEOUS
Section 9.01. Survival. This Agreement and all covenants, agreements, representations
and warranties made herein and in the certificates delivered pursuant hereto, shall sun,ive the
making by the Lender of the Loans and the execution and delivery to the Lender of the Notes,
and shall continue in full force and effect for so long as the Notes or any other Obligations arc
outstanding and unpaid or the Revolving Credit Commitment remains outstanding. Whenever in
this Agreement any of the parties hereto is refeJTed to, such reference shall be deemed to include
43
NY 23B,652,469v4
the successors and pennitted assigns of such party; and all covenants, promises and agreements
in this Agreement contained, by or on behalf of the Borrower shall inure to the benefit of the
successors and assigns of the Lender.
Section 9 .02. Indenmification. The Borrower shall indemnifY the Lender and its
managers, directors, ofiicers, employees, attorneys and agents against, and shall hold the Lender
and such Persons harmless from, any and all losses, claims, damages and liabilities and related
expenses, including reasonable counsel fees and expenses, incurred by the Lender or any such
Person arising out of, in any way connected with, or as a result of: (a) the use of any of the
proceeds of the Loans made by the Lender to the Borrower; (b) this Agreement, the ownership
and operation of the Borrower's and any Subsidiary's assets, including all Real Properties and
improvements or any Contract, the performance by the Borrower or any other Person of their
respective obligations thereunder, and the consummation of the transactions contemplated by this
Agreement; (c) any finder's fee, brokerage commission of other such obligation payable or
alleged to be payable in respect of the transactions contemplated by this Agreement which arises
or is alleged to arise f\om any agreement, action or conduct of the Borrower or any of its
Affiliates, and/or (d) any claim, litigation, investigation or proceeding relating to any of the
foregoing, whether or not the Lender or its managers, directors, officers, employees, attorneys or
agents are a party thereto; provided that such indemnity shall not apply to any such losses,
claims, damages, liabilities or related expenses arising from (i) any unexcused breach by the
Lender of any of its obligations under this Agreement, (ii) the willful misconduct or gross
negligence of the Lender as detennined by a final, non-appealable judgment of a court of
competent jurisdiction, or (iii) the breach of any commitment or legal obligation of the Lender to
any Person other than the Borrower or its Affiliates, provided that such breach is determined
pursuant to a final and nonappealable decision of a court of competent jurisdiction. The
foregoing indemnity shall remain operative and in full force and effect regardless of the
expiration or any tennination of this Agreement, the consummation of the transactions
contemplated by this Agreement, the repayment of the Loans, the invalidity or unenforceability
of any tenn or provision of any Loan Document, any investigation made by or on behalf of the
Lender, and the content or accuracy of any representation or warranty made by the BotTower or
any Subsidiary in any Loari Document All amounts due under this Section 9.02 shall be payable
on written demand therefor.
Section 9.03. Governing Law. This Agreement and the other Loan Documents shall
(irrespective of where same are executed and delivered) be governed by and construed in
accordance with the laws of the State of New York (without giving effect to principles of
conflicts oflaws).
Section 9.04. Waiver and Amendment Neither any modification or waiver of any
provision of this Agreement, the Notes, or any other Loan Document, nor any consent to any.
departure by the Borrower or any Subsidiary therefrom, shall in any event be effective unless !he
same shall be set forth in writing duly signed or acknowledged by the Lender and all parties to
such Loan Document, and then such waiver or consent shall be effective only in the specific
instance, and for the specific purpose, for which given. No notice to or demand on the Borrower
in any instance shall entitle the Bonower to any other or future notice or demand in the same,
similar or oilier circumstances.
44
NY 238,652,469V4
Section 9.05. Reservation of Remedies. Neither any failure nor any delay on the part of
the Lender in exercising any rigllt, power or privilege hereunder or under the Notes or any other
Loan Document shall operate as a waiver thereof, nor shall a single or partial exercise thereof
preclude any other or future exercise, or the exercise of any other right, power or privilege.
Section 9.06. Notices. All notices, requests, demands and other communications under
or in respect of this Agreement or any transactions hereunder shall be in writing (which may
include telegraphic or telecopicd communication) and shall be personally delivered or mailed (by
prepaid registered or certified mail, return receipt requested), sent by prepaid recognized
overnight courier service, or telegraphed or telecopied by facsimile transmission to the
applicable party at its address or telecopicr number indicated below.
lfto the Lender:
Com Vest Capital, LLC
One North Clematis, Suite 300
West Pahn Beach, FL 33401
Attention: ChicfFinancial Officer
Telecopier: (212) 829-5986
with a copy to:
Greenberg Traurig, LLP
200 Park A venue
New York, New York 10166
Attention: Shahe Sinanian, Esq.
Telecopier: (212) 801-6400
If to the Borrower:
Crdentia Corp.
5001 LBJ Freeway, Suite 850
Dallas, Texas 75244
Attention: James TerBeest
Telccopier: (972) 392-2722
with a copy to:
Kane RusseJI Coleman & Logan, P.C.
1601 Elm Street, Suite 3700
Dallas, Texas 75201
Attention: Patrick V. Stark, Esq.
Telecopier: (214) 777-4299
or, as to each party, at such other address or telecopier number as shal! be designated by such
party in a ~ r i t t e n notice to the other party delivered as aforesaid. All such notices, requests,
demands and other communications shaJI be deemed given (a) when personally delivered, (b)
three (3) Business Days after being deposited in the mails with postage prepaid (by registered or
45
NY 238,652,469v4
certified mail, return receipt requested), (c) one (l) Business Day after being delivered to the
telegraph company or overnight courier service, if prepaid and sent overnight delivery, addressed
as aforesaid and with all charges prepaid or billed to the account ofthe sender, or (d) when sent
by facsimile transmission to a telecopier number designated by such addressee.
Section 9.07. Binding Effect. This Agreement shall be binding upon and inure to the
beneftt of the Borrower and the Lender and their respective successors and assigns, except that
the Bon-ower shall not assign any of its rights or obligations hereunder without the prior written
consent of the Lender.
Section 9.08. Consent to Jurisdiction; Waiver of Jury Trial. The Borrower 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 Agreement, any other Loan Document, any other
agreements, instruments, certificates or other documents executed in connection herewith or
therewith, or any of the transactions contemplated hereby or thereby, or any of the Borrower's or
any Subsidiary's obligations hereunder or thereunder. The Borrower hereby waives the right to
interpose any counterclaims (other than compulsory counterclaims) in any action brought by the
Lender hereunder or in respect of any other Loan Document, provided that this waiver shall not
preclude the Borrower from pursuing any such claims by means of separate proceedings. THE
BORROWER HEREBY EXPRESSLY W AlVES ANY AND ALL OBJECTIONS WHICH IT
MAY HAVE AS TO VENUE IN ANY OF SUCH COURTS, AND ALSO W AlVES TRIAL BY
JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING. The Lender may file a copy of this
Agreement as evidence ofthe foregoing waiver of right to jury trial.
Section 9.09. CeJtain Waivers. The Borrower and the Lender each hereby waives any
claims for special, consequential or punitive damages in any way arising out of or relating to this
Agreement, any of the other Loan Documents, or any breach hereof or thereof.
Section 9.1 0. Severability. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid or unenforceable, either in its entirety or by virtue of its
scope or application to given circumstances, such provision shall thereupon be deemed modified
only to the extent necessary to render same valid, or not applicable to given circumstances, or
excised from this Agreement, as the situation may require, and this Agreement shall be construed
and enforced as if such provision had been included herein as so modified in scope or
application, or had not been included herein, as the case may be.
Section 9.1 I. Captions. The Article and Section headings in this Agreement are included
herein for convenience of reference only, and shall not affect the construction or interpretation of
any provision of this Agreement.
Section 9.12. Sole and Entire Agreement. This Agreement, the Notes, the other Loan
Documents, and the other agreements, instruments, certificates and documents referred to or
described herein and therein constitute the sole and entire agreement and understanding between
the parties hereto as to the subject matter hereof, and supersede all prior discussions, agreements
and understandings of every kind and nature between the parties as to such subject matter.
46
NY 238,652,469v4
Section 9.13. Confidentiality. The Lender shall not disclose any Confidential
Infonnation to any Person without the prior consent of the Borrower; provided, however, that
nothing herein contained shall limit any disclosure of the tax structure of the transactions
contemplated hereby, or the disclosure of any information (a) to the extent required by statute,
rule, regulation or judicial process, (b) to counsel, accountants and other professional advisors
for the Lender, (c) to bank examiners, auditors, accountants or, if required by law, any regulatory
authority, (d) to the officers, partners, managers, directors, employees, agents and advisors
(including independent auditors and counsel) of the Lender, (e) in connection with any litigation
which relates to this Agreement to which the Lender is a party, (f) to a subsidiary or Affiliate of
the Lender, or (g) to any assignee or participant (or prospective assignee or participant) which
agrees to be bound by this Section 9.13, and further provided, that in no event shall the Lender
he obligated or required to return any materials furnished by the Borrower. The obligations of
the Lender under this Section 9.13 shall supersede and replace the obligations of the Lender
under any confidentiality letter in respect of this financing previously signed and delivered by the
Lender to the Bonower.
Section 9.14. Counterparts; Fax Signatm:!J.o. This Agreement may be executed in any
number of counterparts, all of which shall constitute one and the same agreement. This
Agreement may be executed by fax signatures, each of which shall be fully binding on the
signing party.
Section 9.15. Short Selling. Until the earlier of(a) the Term Loans Maturity Date, or (b)
the repayment in full of the Term Loans, Com Vest Capital, LLC and its Affiliates shall not
engage in any uncovered shmt sales of Common Stock (provided that, for purposes of this
Section 9.15, the sale of or commitment to sell shares which may be acquired by Com Vest
Capital, LLC from the exercise of the Warrant shall not be deemed to be an uncovered shott
sale).
[The remainder of this page is intentionaHy blank]
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NY 238,652,469v4
IN WITNESS WHEREOF, the prutics hereto have caused this Agreement to be duly
executed by their duly authorized officer as of the day and year first written above.
'.
NY 238,652,469v4
CRDENTIA CORl'.
By: _____________ _
Name: John B. Kaiser
Title; ChlefExecutive Officer
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their duly authorized officer as ofthe day and year first written above.
NY238,652,469v4
COMVEST CAPYrAL, LLC
By: ______________ _
Name: Gary E. Jaggard
Title: Managing Director
lm B. Kaiser
f Executive Officer
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AMENDED AND RESTATED TERM LOAN AGREEMENT
TIDS AGREEMENT (this "Agreement") is made and entered into as of the 7th
day of July, 2008, by and between COMVEST CAPITAL LLC, a Delaware limited liability
company (the "Lender"), and CRDENTIA CORP., a Delaware corporation (the "Borrower").
WHEREAS, the Borrower and its Active Subsidiaries are engaged in the business of
providing healthcare staffmg services to hospitals and other healthcare facilities throughout the
United States (the "Business Operations"); and
WHEREAS, the Lender and the Borrower are parties to a Revolving Credit and Term
Loan Agreement dated as. of February 22, 2008 (the "Original Agreement") pursuant to which
the Lender has made available to the Borrower a revolving credit facility and two term loans;
WHEREAS, in connection with certain other transactions being consummated on the
Closing Date (as such term is hereinafter defined), the Borrower desires to refinance with
another lender the revolving credit facility heretofore provided to the Borrower by the Lender, to
obtain an increase in the term loans provided by the Lender, and to redeem from the Lender the
Original Warrant (as such term is hereinafter defined); and
WHEREAS, the Lender is willing and able to effect such modifications and such
redemption, on the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the parties hereby agree as follows:
I. DEFINITIONS
Section 1.01. Defined Terms. In addition to the other terms defined elsewhere in this
Agreement, as used herein, the following terms shall have the following meanings:
"Act" shall mean the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
"Active Subsidiaries" shall mean those Subsidiaries listed as such on Schedule
1. 0 1 of the Disclosure Schedule.
"Affiliate" shall mean, with respect to any Person, any other Person in Control o ~
Controlled by, or under common Control with the first Person, and any other Person who has a
substantial interest, direct or indirect, in the first Person or any of its Affiliates, including,
without limitation, any officer or director of the first Person or any of its Affiliates; provided,
however, that, except as otherwise provided herein, neither the Lender nor any of its Affiliates
shall be deemed an "Affiliate" of the Borrower for any purposes of this Agreement. For the
purpose of this definition, a "substantial interest" shall mean the direct or indirect legal or
beneficial ownership of more than ten (1 0%) percent of any class of stock or similar interest.
NY 238,652, 469v8
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"Agreement" shall mean this Amended and Restated Term Loan Agreement as it
may from time to time be amended, modified, supplemented and! or restated.
"Applicable Law" shall mean all applicable provisions of all (a) constitutions,
statutes, ordinances, rules, regulations and orders of all governmental and/or quasi-governmental
bodies, (b) Government Approvals, and (c) order, judgments and decrees of all courts and
arbitrators.
"Business Day" shall mean a day other than (a) a Saturday, (b) a Sunday, or (c) a
day on which banking institutions in either the State of Florida or the State of Texas are
authorized or required by law or executive order to close.
"Capital Expenditures" shall mean with respect to any Person, all expenditures of
such Person for tangible assets which are capitalized, and the fair value of any tangible assets
leased by such Person under any lease which would be a Capitalized Lease, determined in
accordance with GAAP, including all amounts paid or accrued by such Person in connection
with the purchase (whether on a cash or deferred payment basis) or lease (including Capitalized
Lease Obligations) of any machinery, equipment, real property, improvements to real property
(including leasehold improvements), or any other tangible asset of such Person which is
required, in accordance with GAAP, to be treated as a fixed asset on the consolidated balance
sheet of such Person.
"Capitalized Lease" shall mean any lease which is or should be capitalized on the
balance sheet of the lessee thereunder in accordance with GAAP.
"Capitalized Lease Obligation" shall mean with respect to any Person, the amount
of the liability which reflects the amount of future payments under all Capitalized Leases of such
Person as at.any date, determined in accor.dancewithGAAP . - ~ - - - - - - - - - - ~ - - - ---- - ~ - ~ - - - - - ~ - ~
"Cash Equivalents" shall mean (a) marketable securities issued, or directly and
fully guaranteed or insured, by the United States of America or any agency or instrumentality
thereof (provided that the full faith. and credit of the United States of America is pledged in
support thereof) having maturities of not more than twelve (12) months from the date of
acquisition; (b) time deposits, demand deposits, certificates of deposit, acceptances or prime.
commercial paper issued by, or repurchase obligations for underlying securities of the types
described in clause (a) entered into with any commercial bank having a short-term deposit rating
of at least A-2 or the equivalent thereof by Standard & Poor's Corporation or at least P-2 or the
equivalent thereof by Moody's Investors Service, Inc.; (c) commercial paper with a rating of A-I
or A-2 or the equivalent thereof by Standard & Poor's Corporation or P-I or P-2 or the
equivalent thereof by Moody's Investors Service, Inc. and in each case maturing within twelve
(12) months after the date of acquisition; (d) marketable direct obligations issued by any state in
the United States or any agency or instrumentality thereof maturing within twelve (12) months
from the date of acquisition thereof and, at the time of acquisition, have one of the two highest
ratings generally obtainable from either Standard & Poor's Corporation or Moody's Investors
Services, Inc.; (e) tax-exempt commercial paper of United States municipal, state or local
governments rated at least A-2 or the equivalent thereof by Standard & Poor's Corporation or at
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least P-2 or the equivalent thereof by Moody's Investors Services, Inc. and maturing within
twelve (12) months after the date of acquisition thereof; (f) any other items selected by the
Borrower and approved by the Lender (which approval shall not be unreasonably withheld or
delayed); or (g) any mutual fund or other pooled investment vehicle which invests principally in
the foregoing obligations.
"Closing Date" shall mean the date on which the conditions set forth in Article IV
below have been satisfied, the additional incremental portion of the Tranche B Term Loan is
funded to the Borrower, and the Borrower has issued to the Lender the Tranche C Term Note.
"Closing Fees" shall mean a closing fee in the amount of $45,000, which shall be
payable to the Lender in accordance with Section 2.03(a) below.
"Code" shall mean the Internal Revenue Code of 1986, and the rules and
regulations promulgated thereunder, as in effect from time to time.
"Collateral" shall mean all collateral pledged by the Borrower and/or any of the
Subsidiaries as security for the payment and performance of the Obligations, whether pursuant to
the Collateral Agreement or any other Security Document.
"Collateral Agreement" shall mean the Collateral Agreement, dated as of the
Original Closing Date, by and among the Borrower, the Active Subsidiaries and the Lender, as
same may be amended, modified, supplemented and/or restated from time to time ..
"Common Stock" shall mean the authorized common stock of the Company,
$. 0001 par value per share.
"Confidential Information" shallJ.AeiJ!!infg_l}l1_aJjon tl111t thej3orrower furn!she t()__ _____ .
the Lender pursuant to any Loan Document, but does not include any such information once such
information has become, or if such information is, generally available to the public or available
to the Lender from a source other than the Borrower which is not, to the Lender's knowledge,
bound by any confidentiality agreement in respect thereof.
"Contract" shall mean any indenture, agreement (other than this Agreement),
other contractual restriction, lease in which the Borrower or any Subsidiary is a lessor or lessee,
license or instrument.
"Control" shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether through the ownership
of voting securities, by contract or otherwise, and the terms "Controlling" and "Controlled" shall
have meanings correlative thereto.
"Control Agreement" shall mean, with respect to each bank account (including
lockbox service) and/or securities account maintained by or in the name of the Borrower or any
Subsidiary ( o,t)ler than a Dissolving Subsidiary) from time to time, an agreement executed and
delivered by the Borrower (or the subject Subsidiary, as applicable) and the account
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intermediary, whereby the account intermediary acknowledges the Lender's Lien on .such
account and all funds or property therein, and "control" (within the meaning of the UCC) over
such account is established in favor of the Lender.
"Default" shall mean any of the events specified in Article VII hereof, whether or
not any .requirement for the giving of notice, the lapse of time, or both, or any other condition,
has been satisfied.
"Disclosure Schedule" shall mean the disclosure schedule, dated as of the Closing
Date, executed and delivered by the Borrower to the Lender, the section numbers of which
correspond to the Section numbers of this Agreement.
"Dissolving Subsidiaries" shall mean those Subsidiaries listed as such on
Schedule 1.01 of the Disclosure Schedule.
"Dollars" or ".s;" sbaii mean United States Dollars, lawful currency for the
payment of public and private debts.
"Domestic Subsidiarv" shall mean any Subsidiary which is incorporated or
formed under the laws of the United States, any State or Commonwealth in the United States, or
the District of Columbia.
"EBITDA" shall mean, for the subject period, for the Borrower and its
Subsidiaries on a consolidated basis, the sum of (a) Net Income, plus (b) Interest Expense
deducted in the calculation of such Net Income, plus (c) all income taxes deducted in the
calculation of such Net Income, plus (d) depreciation and arnortizaticm expense deducted in the
calculation of such Net Income, plus (e) other non-cash charges and expenses deducted in the
_._.m _ _Qalculation of such Net Income, excluding accruals JoJ..QJ;tsh eXQensell_:made in the
course. of business, minus (f) any and all dividends and distributions made by the Borrower to its
stockholders.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
in effect from time to tirne.
"ERISA Affiliate" shall mean, with respect to any Person, any other Person which
is under common control with the first Person within the meaning of Section 414(b) or 414(c) of
the Code; provided, however, that with respect to the Borrower, no Person which is an Affiliate
of the Lender (other than the Borrower and its Subsidiaries) shall be deemed an ERISA Affiliate
for purposes of this Agreement
"Event of Default" has the meaning set forth in Article VII below.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Financial Statements" has the meaning set forth in Section 3.0l(a) below.
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"Fiscal Year" shall mean the fiscal year of the Borrower which ends on December
31 of each year.
"Fixed Charges" shall mean, for the period in question, the sum of (a) all principal
payments scheduled or required to be made during or with respect to such period in respect of
Indebtedness of the Borrower and its Subsidiaries, plus (b) all Interest Expense of the Borrower
and its Subsidiaries for such period, plus (c) all income taxes paid or accrued for the Borrower
and its Subsidiaries for such period.
"Foreign Subsidiary" shall mean any Subsidiary which is not a Domestic
Subsidiary.
"GAAP" shall mean generally accepted accounting principles in the United States
of America, consistently applied, unless the context otherwise requires, with respect to any
financial terms contained herein, as then in effect with respect to the preparation of financial
statements.
"Government Approval" shall mean an authorization, consent, non-action,
approval, license or exemption of, registration or filing with, or report to, any governmental or
quasi-governmental department, agency, body or other uuit.
"Guaranty", "Guaranteed" or to "Guarantee", as applied to any Indebtedness,
liability or other obligation, shall mean (a) a guaranty, directly or indirectly, in any manner,
including by way of endorsement (other than endorsements of negotiable instruments for
collection in the ordinary course of business), of any part or all of such obligation, and (b) an
agreement, contingent or otherwise, and whether or not constituting a guaranty, assuring, or
intended to assure, the payment or performance (or payment of damages in the event of non-
.. __ perforrnance) .. of.any_parLoLalLof.such_obligation. by_ an.y___means_(including,_wi1hontJimitation, ____ _
the purchase of securities or obligations, the purchase or sale- of property or services, or the
supplying of funds).
"Guarantv Agreement" shall mean the Guaranty Agreement, dated as of the
Original ClosingDate {and as same may he amended, modified, supplemented and/or restated
from time to time), executed by each Active Subsidiary in favor of the Lender, pmsuant to which
the Active Subsidiaries will guaranty the full and timely payment and performance of all of the
Obligations.
"Indebtedness" shall mean (without duplication), with respect to any Person, (a)
all obligations or liabilities, contingent or otherwise, for borrowed money, (b) any and all
obligations represented by promissory notes, bonds, debentures or the like, or on which interest
charges are customarily paid, (c) any liability secured by any mortgage, pledge, lien or security
interest on property owned or acquired, whether or not such liability shall have been assumed,
(d) obligations of such Person under conditional sale or other title retention agreements relating
to property or assets purchased by such Person, (e) all obligations of such Person issued or
assumed as the deferred purchase price of property or services (excluding trade payables and
accrued obligations incurred in the ordinary course of business), (f) any obligations (contingent
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or otherwise) of such Person as an account party or applicant in respect of letters of credit and/or
bankers' acceptances, and (g) Guarantees, endorsements (other than for collection in the ordinary
course of business) and othercontingent obligations in respect of the obligations of others.
"Interest Expense" shall mean, for the relevant period, interest expense
(including, without lirrritation, interest attributable to Capitalized Leases in accordance with
GAAP) and fees with respect to Indebtedness.
"Investment", as applied to the Borrower or any Subsidiary, shall inean: (a) any
shares of capital stock, evidence of Indebtedness or other security issued by any other Person to
the Borrower or any Subsidiary, (b) any loan, advance or extension of credit to, or contribution
to the capital of, any other Person, other than credit terms extended to customers in the ordinary
course of business, (c) any other investment by the Borrower or any Subsidiary in any assets or
securities of any other Person, and (d) any comrrritment to make any Investment.
"Knowledge" or "Known" or words of sirrrilar import shall mean, with respect to
the Borrower and/or any Subsidiary, the actual knowledge of John B. Kaiser and/or James J.
TerBeest, after reasonable inquiry of the appropriate managerial employees of the Borrower and
the Subsidiaries.
"Landlord Waiver" shall mean a landlord waiver, subordination and/or access
agreement, in form and substance reasonably satisfactory to the Lender, executed in favor of the
Lender by the landlord of a Real Property which is leased by the Borrower or a Subsidiary as
lessee.
"Liabilities and Contingencies" has the meaning set forth in Section 3.0l(c)
below.
"Lien", as applied to the property or assets (or the income or profits therefrom) of
the Borrower or any Subsidiary, shall mean (in each case, whether the same is consensual or
nonconsensual or arises by contract, operation of law, legal process or otherwise): (a) any
mortgage, lien, pledge, hypothecation, attachment, assignment, deposit arrangement,
encumbrance, charge, lease constituting a Capitalized Lease Obligation, conditional sale or other
title retention agreement, or other security interest or encumbrance of any kind in respect of any
property (including, without lirrritation,' stock of any Subsidiary) of the Borrower or any
Subsidiary, or upon the income or profits therefrom; (b) any arrangement under which any
property of the Borrower or any Subsidiary is transferred, sequestered or otherwise identified for
the purpose of subjecting or making available the same for the payment of Indebtedness or the
performance of any other liability in priority to the payment of the general, unsecured creditors
of the Borrower or any Subsidiary; (c) any Indebtedness or liability which remains unpaid after
the same shall become due and payable and which, if unpaid, by law or otherwise is given any
. .
priority whatsoever over the general unsecured creditors of the Borrower or any Subsidiary; and
(d) any agreement (other than this Agreement) or other arrangement which, directly or indirectly,
prohibits the Borrower or any Subsidiary from creating or incurring any lien on any of its
properties or' assets or which conditions the ability to do so on the security, on a pro rata or other
basis, of Indebtedness other than Indebtedness outstanding under this Agreement.
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"Loan Documents" shall mean the collective reference to this Agreement, the
Notes, the Security Documents, the Warrant, the Registration Rights Agreement, and any and all
other agreements, instruments, certificates and other documents as may be executed and
delivered by the Borrower and/or any of the Subsidiaries pursuant hereto or thereto.
"Loans" shall mean, collectively, the Term Loans.
"Material Adverse Effect" shall mean any event, act, mmsswn, condition or
circumstance which has or would reasonably be expected to have a material adverse effect on (a)
the business, operations, properties, assets or condition, financial or otherwise, of the Borrower
and the Subsidiaries, taken as a whole, (b) the ability of the Borrower or any Subsidiary to pay or
perform any of its obligations under any of the Loan Documents, or (c) the validity or
enforceability of, or the Lender's rights and remedies under, any of the Loan Documents, other
than due to the acts or omissions of the or any of its Affiliates.
"Net Income" shall mean the consolidated net income (or loss) of the Borrower
and its Subsidiaries for the period in question, after giving effect to deduction of or provision for
all operating expenses, all taxes and reserves (including reserves for deferred taxes) and all other
proper deductions, all determined in accordance with GAAP; provided, however, that for
purposes of calculating Net Income, there shall be excluded and no effect shall be given to (a)
any restoration of any contingency reserve, except to the extent that provision for such reserve
was made out of income for the subject period, and (b) any Net Income attributable to any
Subsidiary to the extent that the Borrower (or any Subsidiary through which the Borrower owns
the subject Subsidiary) is prohibited (by law, Contract, minority ownership rights or otherwise)
from receiving a distribution of such Net Income from such Subsidiary.
"Notes" shall mean, collectively, the Term Notes.
"Obligations" shall mean the collective reference to all Indebtedness and other
liabilities and of every kind and description owed by the Borrower and/or any
Subsidiaries to the Lender from time to time under or pursuant to this Agreement, the Notes, the
Security Documents and the other Loan Documents (excluding the Warrant and Registration
Rights Agreement, other than amounts payable from time to time pursuant to Section 2( c) of the
Registration Rights Agreement), and/or otherwise in respect of the Loans, however eyidenced,
created or incurred, fixed or contingent, now or hereafter existing, due or to become due.
"Organic Documents" shall mean, with respect to any Person, the certificate of
incorporation, articles of incorporation, certificate of formation, certificate of limited partnership,
by-laws, operating agreement, limited partnership agreement or other such document of such
Person.
"Original Agreement" has the meanmg ascribed thereto in the second
"WHEREAS" paragraph above .
. . "Original Closing Date" shall mean the "Closing Date" under and as defined in
the Original Agreement, which was February 22, 2008.
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"Original Warrant" shall mean the "Warrant" under and as defined in the Original
Agreement.
"Permitted Indebtedness" shall mean any and all Indebtedness expressly
permitted pursuant to Section 6.01 below.
"Permitted Liens" shall mean those Liens expressly permitted pursuant to Section
6.02 below.
"Person" shall mean any individual, partnership, corporation, limited liability
company, banking association, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever nature.
"Qualified Proceeds" shall mean any and all net proceeds received by the
Borrower (or any successor entity) or any Subsidiary at any time and from time to time from any
issuance or sale of common stock, preferred stock or other equity securities (including securities
convertible into or exchangeable for capital stock of the Borrower), except to the extent that such
proceeds are, within sixty (60) days after the receipt thereof, applied to pay the purchase price
and/or directly associated expenses of the Borrower's acquisition (directly or through a Wholly-
Owned Subsidiary) of another business, in each case subject to the requirements of this
Agreement and the Collateral Agreement. In determining the amount of such net proceeds, (a) in
the case of an issuance or sale of common stock, preferred stock or other equity securities, the
gross proceeds of the subject offering, issuance or sale, net of only those reasonable expenses
incurred by the Borrower or the subject Subsidiary directly related to the subject issuance or sale,
exclusive of any fees or commissions paid to any officer, director or other Affiliate of the
Borrower or any Affiliate of any of the foregoing, and (b) in the case of any "reverse merger,"
share exchange or other such transaction, the total consolidated cash and cash equivalents of the

of only those reasonable expenses incurred by such other party or parties directly related to_ such
transaction, exclusive of any fees or commissions paid to any officer, director or other Affiliate
of the Borrower or such other party or parties or any Affiliate of any of the foregoing.
"Real Properties" shall mean, collectively, any real properties (land, buildings
and/or improvements) now owned or leased or occupied by the Borrower or any of the
Subsidiaries, and, during the period of the Borrower's and/or Subsidiary's occupancy thereof,
any other real properties heretofore owned or leased by the Borrower or any Subsidiary
(provided that, with respect to leased properties, the term "Real Property" shall refer only to the
portion of the subject property (excluding common areas) leased by the Borrower or a
Subsidiary).
"Registration Rights Agreement" shall mean the Amended and Restated
Registration Rights Agreement, to be dated as of the Closing Date, made by the Borrower for the
benefit of the Lender and anY subsequent Holders (as such term is defined in the Registration
Rights Agreement), as same may be amended, modified, supplemented and/or restated from time
to time.
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"Revolving Loan Agreement" shall mean the Loan and Security Agreement,
dated as of the Closing Date, by and between Capital TempFunds, a division of Capital Business
Credit LLC, and the Borrower, as same may be amended, modified, supplemented and/or
restated from time to time.
"Revolving Obligations" shall mean the Borrower's obligations under Revolving
Loan Agreement and any related promissory notes, security agreements or other related
agreements from time to time.
"Sale" shall mean any transaction or series of related transactions (a) whereby a
majority of the outstanding capital stock of the Borrower which ordinarily has voting power for
the election of directors (including preferred stock counted on an "as converted" basis into
common stock and common stock counted on a fully diluted basis) is sold, assigned or
transferred, (b) whereby the Borrower issues shares of its capital stock which, after giving effect
to such transaction or transactions, constitnte a majority of the outstanding capital stock of the
Borrower which ordinarily has voting power for the election of directors (including preferred
stock counted on an "as converted" basis into common stock and common stock counted on a
fully diluted basis), (c) whereby Control of the Borrower is held by a Person (or group of Persons
acting in concert) who does not hold such Control on the date of this Agreement, (d) in which
the Borrower is a constitnentparty to any merger or consolidation and as a result thereof (i) the
holders of the outstanding capital stock of the Borrower which ordinarily has voting power for
the election of directors (including preferred stock counted on an "as converted" basis into
common stock) immediately prior to such merger or consolidation cease to own a majority of the
outstanding capital stock of the Borrower which ordinarily has voting power for the election of
directors (including preferred stock counted on an "as converted" basis into common stock), or
(ii) the Borrower is not the surviving corporation, or (e) whereby all or any material portion of
the assets of the Borrower or any Subsidiary are sold, assigned or transferred; provided,
however, norbe-Qeemed -m--have --occurredoy reason of any-of-tlie -
aforedescribed transactions (other than a sale of assets) if, after giving effect to the
consummation of the subject transaction, (A) the Borrower or the surviving entity in such
transaction shall be a corporation whose common stock is traded or listed on any national
securities exchange, the Nasdaq Global Market, or the Nasdaq Global Select Market or is
actively quoted on the OTC Bulletin Board, (B) if the surviving entity is not the Borrower, then
such surviving entity assumes all of the Borrower's obligations under the Warrant (on the same
exchange or conversion basis as the outstanding Common Stock was treated in the subject
transaction) and the Registration Rights Agreement, (C) the Borrower or other surviving entity is
Controlled by one or more substantial stockholders of the Borrower on the date of this
Agreement, and (D) no Default or Event of Default occurred in the performance of the subject
transaction or exists upon the consummation of the subject transaction.
"SEC" shall mean the United States Securities and Exchange Commission, and
any successor agency performing the functions thereof
.. "SEC Reports" shall mean the periodic and current reports, registration
statements, proxy statements and other reports filed or required to be filed by the Borrower with
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the SEC pursuant to the Act and/or the Exchange Act, and any amendments or supplements
thereto filed with the SEC.
"Security Documents" shall mean the Collateral Agreement, any collateral
assignments, control agreements, financing statements or other such agreements or documents
pursuant thereto, the Guaranty Agreement, the Validity Guaranties, and any other agreements or
instruments (including, without limitation, Control Agreements and Landlord Waivers) securing
or creating or evidencing Liens securing the Obligations.
"Subordinated Debf' shall mean all Indebtedness for money borrowed and other
liabilities of the Borrower, whether or not evidenced by promissory notes, which is contractoally
subordinated in right of payment, in a manner satisfactory to the Lender (as evidenced by the
Lender's prior written approval thereof), to all Obligations of the Borrower to the Lender.
"Subsidiary" or "Subsidiaries" shall mean the individual or collective reference to
any corporation, limited liability company or other entity of which 50% or more of the
outstanding shares of stock or other equity interests of each class having ordinary voting power
and/or rights to profits (other than stock having such power only by reason of the happening of a
contingency) is at the time owned by the Borrower, directly or indirectly through one or more
Subsidiaries of the Borrower.
"Term Loans" shall mean the collective reference to the Tranche A Term Loan,
the Tranche B Term Loan and the Tranche C Term Loan.
"Term Notes" shall mean the promissory notes of the Borrower issued to the
Lender as described in Section 2.02(e) below.
-----.--- "Term Notes Maturity Date" shall mean February
"Tranche A Term Loan" shall mean the term loan in the principal amount of
$2,500,000 made pursuant to the Original Agreement, and as amended pursuant to the terms of
the Tranche A Term Note.
"Tranche A Term Note" shall mean the amended and restated promissory note of
the Borrowedo be issued pursuant to Section 2.02(e) below to evidence the amended Tranche A
Term Loan.
"Tranche B Term Loan" shall mean the term loan in the principal amount of
$4,000,000 made pursuant to the Original Agreement and as increased pursuant to Section
2.02(a) below.
"Tranche B Term Note" shall mean the amended and restated promissory note of
the Borrower to be issued pursuant to Section 2.02(e) below to evidence the increased Tranche B
Term Loan.
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"Tranche C Term Loan" shall mean the term loan in the principal amount of
$2,400,000 to be made pursuant to Section 2.02(a) below.
"Tranche C Term Note" shall mean the promissory note of the Borrower to be
issued pursuant to Section 2.02(e) below to evidence the Tranche C Term Loan.
"UCC" means the Uniform Commercial Code as in effect in the State of New
York on the date hereof and hereafter from time to time.
"Validity Guaranties" shall mean the collective reference to the Validity
Guaranties, dated as of the Original Closing Date, by and among the Lender, the Borrower and
John B. Kaiser, and by and among the Lender, the Borrower and James J. TerBeest, respectively.
"Warrant" shall. mean the warrant to purchase shares of Common Stock (such
warrant covering an aggregate of 525,000 shares of Common Stock, subject to adjustment) to be
issued by the Borrower to the Lender on the Closing Date.
"Wholly-Owned Subsidiary" shall mean each Domestic Subsidiary of which all of
the outstanding equity securities (other than directors' qualifYing shares) are owned by the
Borrower or another such Wholly-Owned Subsidiary.
Section 1.02. Use of Defined Terms. All terms defined in this Agreement shall have
their defined meanings when used in the Notes, the Security Documents, the other Loan
Documents, and all certificates, reports or other documents made or delivered pursuant to this
Agreement, unless otherwise defined therein or unless the specific context shall otherwise
require.
Section 1.03. Accounting Terms. All acEounting terms not specifiEil!ly defined herein_
shall be construed in accordance with GAAP.
Section 1.04. Other Definitional Provisions. The words "hereof," "herein", "hereto" 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 Section
references are to this Agreement unless otherwise specified. The meanings given to terms
defined herein shall be equally applicable to both the singular and plural forms of such terms.
The word "including" and words of similar import when used in this Agreement shall mean
"including, withoutlimitation," unless otherwise specified.
II. GENERAL TERMS
Section 2.01. Revolving Credit Loans.
(a) The Lender and the Borrower hereby confirm that the Revolving Credit
Commitment pursuant to the Original Agreement is hereby terminated and of no further force or
effect, s u b j ~ q t only to the required repayment of all Advances and unpaid accrued interest
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thereon and accrued Monitoring Fees (as such term is defined in the Original Agreement) on the
Closing Date as contemplated by Section 4.03 below.
(b) By reason of the termination of Revolving Credit Commitment, the
Lender shall be under no further obligation to make any Advances (as such term is defined the
Original Agreement) to the Borrower.
Section 2.02. Term Loans.
(a) The Lender has heretofore loaned to the Bo ower (i) a Tranche A Term
Loan in the principal amount of$2,500,000, which has a current p cipal balance of $2,500,000,
and (ii) a Tranche B Term Loan in the principal amount of $ ,500,000, which has a current
principal balance of$2,500,000. On the Closing Date, subject to the terms and conditions of this
Agreement, (A) the Lender shall loan to the Borrower an additional principal amount of
$1,500,000, which shall be added to the principal of the Tranche B Term Loan, and (B) the
Lender shall sell to the Borrower, and the Borrower shall purchase and redeem from the Lender,
the Original Warrant for an aggregate purchase price of $2,400,000, which shall be evidenced by
and paid pursuant to the terms of the Tranche C Term Note (the principal amount of which is
referred to herein as the "Tranche C Term Loan"). Any principal amounts repaid in respect of
the Term Loans may not be reborrowed.
(b) The Term Loans shall be repayable in accordance with the schedules of
payments set forth in the Term Notes. The Borrower shall be required to prepay the Term Loans
(i) in full upon the consummation of any Sale, and (ii) in part from time to time in the event and
to the extent of 33% of any and all Qualified Proceeds received by the Borrower or any
Subsidiary from time to time. With respect to any prepayment under the foregoing clause (ii),
same shall be due and payable as and when the amount of Qualified Proceeds is determined (i.e.,

pending, or sixty (60) days after receipt of such Qualified Proceeds to the extent that such
Qualified Proceeds have not been applied to the purchase price and/or related expenses of a
consununated business acquisition), and shall be applied to the principal of the Term Notes
ratably in proportion to the respective principal balances thereof.
(c) The Borrower shall pay the Lender interest on the principal balance of the
Term Loans at the rate( s) per annum as in effect from time to time in accordance with the Term
Notes. Such interest shall be payable monthly io arrears on the first day of each calendar month
and on the Term Loans Maturity Date, and shall be computed on the daily unpaid balance of
each Term Loan, based on a three hundred sixty (360) day year, counting the actual number of
days elapsed.
(d) Unless sooner due and payable by reason of an Event of Default hereunder
having occurred, the Borrower shall pay to the Lender all of the then-outstanding Obligations in
respect of the Term Loans on the Term Loans Maturity Date.
(e) The Tranche A Term Loan shall be evidenced by a secured Amended and
Restated Term Note of the Borrower payable to the Lender or registered assigns, the Tranche B
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Term Loan shall be evidenced by a secured Amended and Restated Term Note of the Borrower
payable to the Lender or registered assigns, and the Tranche C Term Loan shall be evidenced by
a secured Term Note of the Borrower payable to the Lender or registered assigns.
(f) In order to induce the Borrower to redeem the Original Warrant and issue
the Tranche CTerm Note, the Lender hereby represents and warrants to the Borrower that (i) the
Lender is a limited liability company duly formed, validly existing and in good standing uoder
the laws of the State of Delaware, (ii) the Lender has full power and authority to sell the Original
Warrant to the Borrower hereunder, and such sale has been duly authorized by all necessary
company action on the part ofthe Lender, (iii) the Lender is sole legal and beneficial owner and
holder of Original Warrant, free and clear of any and all liens, pledges, security interests,
encumbrances or other adverse claims or interests of any kind whatsoever, and (iv) the sale of
the Original Warrant to the Borrower hereunder does not constitute a breach or violation of, or
conflict with, any other agreements or commitments to which the Lender is a party or by which
the Lender is bound, or require the Lender to obtain the consent of any other Person. The Lender
makes no other representations or warranties with respect to Original Warrant or the value
thereof, and the Borrower hereby acknowledges that it has formed its 0\'1'!1 independent
determination of the terms and conditions of its purchase of the Original Warrant hereuoder.
Section 2.03. Fees and Premiums.
(a) The Borrower shall pay the Closing Fees to the Lender simultaneously
with the funding of the incremental portion of the Tranche B Term Loan, and the exchange of the
Original Warrant for the Tranche C Term Note, on the Closing Date. The Closing Fees shall be
deemed fully earned on the Closing Date, and shall not be refundable in whole or in part and
shall not be subject to reduction or set-offunder any circumstances.
c ----------'EbJ--m--the-eventc.of--ID:ly-iJrepayment-ef-aU-er-any--peruen-of-the-'I'r1lllehe--B-----
Term Loan at any time prior to February 22, 2010, in addition to the payment of the subject
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principal amount and all unpaid accrued interest thereon, the Borrower shall be required to pay to
the Lender a prepayment premium in an amount equal to two (2%) percent of the principal
amount being prepaid; provided, however, that no such prepayment premium shall be required in
respect of any mandatory prepayment pursuant to Section 2.02(b)(ii) above.
(c) Payments received in respect of the Obligations after 2:00 p.m. Eastern
time on any day shall be deemed to be received on the next succeeding Business Day, and if any
payment is received other than by wire transfer of immediately available funds, such payment
shall be subject to three (3) Business Days' clearance prior to being credited to the Obligations
for interest calculation purposes.
Section 2.04. Use of Proceeds. The Borrower shall utilize the proceeds of incremental
additional Tranche B Term Loan to finance business acquisitions and for working capital and
other general corporate purposes of the Borrower.
Section 2.05. Further Obligations. With respect to all Obligations for which the interest
rate is not otherwise specified herein or in the Term Notes or applicable Loan Documents
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(whether such Obligations arise hereunder, pursuant to the Notes or Security Documents, or
otherwise), such Obligations shall bear interest at the rate(s) in effect from time to time pursuant
to the Notes.
Section 2.06. Application of Payments. All amounts paid to or received by the Lender in
respect of the Obligations from whatever source (whether from the Borrower, any Subsidiary
pursuant to the Guaranty Agreement, any realization upon any Collateral, or otherwise) shall,
unless otherwise specified in this Agreement or otherwise directed by the Borrower with respect
to any particular payment (unless an Event of Default shall then be continuing, in which event
the Lender may disregard the Borrower's direction), be applied (a) first, to reimburse the Lender
for all out-of-pocket costs and expenses incurred by the Lender which are reimbursable to the
Lender in accordance with this Agreement, the Notes and/or any of the other Loan Documents,
(b) next, to any accrued but unpaid fees or prepayment premiums, (c) next, to unpaid accrued
interest on the Tranche A Term Loan, (d) next, to unpaid accrued interesi:on the Tranche B Term
Loan, (e) next, to unpaid accrued interest on the Tranche C Term Loan, (f) next, to the
outstanding principal of the Tranche A Term Loan, to the extent then due and payable, (g) next,
to the outstanding principal of the Tranche B Term Loan, to the extent then due and payable, (h)
next, to the outstanding principal of the Tranche C Term Loan, to the extent then due and
payable, and (i) finally, to the payment of any other outstanding Obligations; provided, however,
that during the continuance of an Event of Default, the Lender may apply any and all such
amounts to such of the Obligations as the Lender may determine in its sole and absolute
discretion. After payment in full of the Obligations, any further amounts paid to or received by
the Lender in respect of the Obligations shall be paid over to .the Borrower or such other
Person(s) as may be legally entitled thereto.
Section 2.07. Sale. Anything elsewhere contained in this Agreement and/or the Notes to
the contrary notwithstanding, all Obligations shall become immediately due and payable, without
requirementofnotice or demand, upon the consunjjjjlffion of any Sale.
Section 2.08. Obligations Unconditional.
(a) The payment and performance of all Obligations shall constitute the absolute and
unconditional obligations of the Borrower, and shall be independent of any defense or rights of
set-off, recoupment or counterclaim which the Borrower might otherwise have against the
Lender. All payments required by this Agreement and/or the Notes shall be paid free of any
deductions or withholdings for any taxes or other amounts and without abatement, diminution or
set-off. If the Borrower is required by law to make such a deduction or withholding from a
payment hereunder, the Borrower shall pay to the Lender such additional amount as is necessary
to ensure that, after the making of such deduction or withholding, the Lender receives (free from
any liability in respect of any such deduction or withholding) a net sum equal to the sum which it
would have received and so retained had no such deduction or withholding been made or
required to be made. The Borrower shall (i) pay the full amount of any deduction or
withholding, which it is required to make by-law, to the relevant authority within the payment
period set b:v, the relevant law, and (ii) promptly after any such payment, deliver to the Lender an
original (or certified copy) official receipt issued by the relevant authority in respect of the
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amount withheld or deducted or, if the relevant authority does not issue such official receipts,
such other evidence of payment of the amount withheld or deducted as is reasonably acceptable
to the Lender.
(b) If, at any time and from time to time after the Closing Date, (i) any change in any
existing law, regulation, treaty or directive or in the interpretation or application thereof, (ii) any
new Jaw, regulation, treaty or directive enacted or application thereof, or (iii) compliance by the
Lender with any request or directive (whether or not having the force of law) from any
governmental authority {A) subjects the Lender to any tax, levy, impost, deduction, assessment,
charge or withholding of any kind whatsoever with respect to any Loan Document, or changes
the basis of taxation of payments to the Lender of any amount payable thereunder (except for net
income taxes, or franchise taxes imposed in lieu of net income taxes, imposed generally by
federal, state or local taxing authorities with respect to interest or commitment fees or other fees
payable hereunder or changes in the rate of tax on the overall net income of the Lender or its
members), or (B) imposes on the Lender any other condition or increased cost in connection with
the transactions contemplated thereby or participations therein, and the result of any of the
foregoing is to increase the cost to the Lender of making or continuing any Loan or to reduce any
amount receivabk hereunder, then, in any such case, the Borrower shall promptly pay to the
Lender any additional- amounts necessary to cOmpensate the Lender, on an after-tax basis, for
such additional cost or reduced amount as determined by the Lender. If the Lender becomes
entitled to claim any additional amounts pursuant to this Section 2.08(b), the Lender shall
promptly notify the Borrower of the event by reason of which the Lerider has become so entitled,
and each such notice of additional amounts payable pursuant to this Section 2.08(b) submitted by
the Lender to the Borrower shall, absent manifest error, be fmal, conclusive and binding for all
purposes.
Section 2.09. Reversal of Payments. To the extent that any payment or payments made
-----ro or receiveoo-ytlie tender pursuantto tlii:s-Agreemeillof any otheCLoanDocumern are
subsequently invalidated, declared to be fraudulent or preferential, set aside, or required to be
repaid to any trustee, receiver or other person under any state or federal bankruptcy or other such
law, then, to the extent thereof, such amourits shall be revived as Obligations and continue in full
force and effect hereunder as if such payment or payments had not been received by thl'< Ll'<nder.
III. REPRESENTATIONS AND WARRANTIES
The Borrower hereby makes the following representations and warranties to the Lender,
all of which representations and warranties shall survive the Closing Date, the delivery of the
Notes and the making of the Loans, shall be continuing in nature so long as any Obligations are
outstanding:
Section 3.01. Financial Matters ..
(a) The Borrower has heretofore furnished to the Lender (i) the audited
consolidated financial statements (including balance sheets, .statements of income and statements
of cash flow's) of the Borrower and its Subsidiaries as at December 31, 2005, 2006 and 2007, and
for the Fiscal Years then ended, and (ii) the unaudited consolidated financial statements of the
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Borrower and its Subsidiaries as of March 31, 2008 and for the three (3) months then ended
(collectively, the "Financial Statements").
(b) The Financial Statements (i) have been prepared in accordance with
GAAP and Regulation S-X promulgated under the Act on a consistent basis for all periods
(subject, in the case of unaudited statements, to the absence of full footnote disclosures, and to
normal non-material audit adjustments), (ii) are complete and correct in all material respects, (iii)
fairly present the consolidated financial condition of the Borrower and its Subsidiaries as of said
dates, and the results of their operations for the periods stated, (iv) contain and reflect all
necessary adjustments and accruals for a fair presentation of the Company's consolidated
financial condition and the results of its consolidated operations as of the dates of and for the
periods covered by such Financial Statements, and (v) make full and adequate provision, subject
to and in accordance with GAAP, for the various assets and liabilities (including, without
limitation, deferred revenues) of the Company and its Subsidiaries, fixed or contingent, and the
results of their operations and transactions in their accounts, as of the dates and for the periods
referred to therein.
(c) Except as set forth in Schedule 3.01 of the Disclosure Schedule, the
Borrower and its Subsidiaries do not have any liabilities, obligations or commitments of any kind
or nature whatsoever, whether absolute, accrued, contingent or otherwise ( eollectively
"Liabilities and Contingencies"), including, without limitation, Liabilities and Contingencies
under employment agreements and with respect to any "earn-outs", stock appreciation rights, or
related compensation obligations, except: (i) Liabilities and Contingencies disclosed in the
Financial Statements or footnotes thereto, (ii) Liabilities and Contingencies incurred in the
ordinary course of business and consistent with past practice since the date of the most recent
Financial Statements, or (iii) those Liabilities and Contingencies which are not required to be
disclosed under GAAP. The reserves, if any, reflected on the consolidated balance sheet of the
-- -- -sorrower-ana-ttsSubsidtarles"iriCliideo-m-tlre mosr recenrFihanciarstatements are appTOpriite _ ... .... --.... ------
and reasonable. Neither the Borrower nor any of its Subsidiaries has had or presently has any
Indebtedoess for money borrowed, outstanding obligations for the purchase price of property,
contingent obligations or liabilities for taxes, or any unusual forward or long-term commitments,
except as specifically set forth or provided for in the Financial Statements or in Schedule3.01 of
the Disclosure Schedule.
(d) Since the date of the most recent Financial Statements, except for the
transactions pursuant to the Loan Documents and except as set forth in Schedule 3.01 of the
Disclosure Schedule, there has been no material adverse change in the working capital, condition
{financial or otherwise), assets, liabilities, reserves, bilsiness, management or Business
Operations of the Borrower or any of its Subsidiaries, including, without limitation, the
following:
(i) there has been no material change in any assumptions underlying,
or in any methods of calculating, any bad debt, contingency or other reserve relating to the
Borrower or,ap.y Subsidiary;
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(ii) there have been (A) no write-downs in the value of any inventory
of, and there have been no write-offs as uncollectible of any notes, accounts receivable or other
receivables of, the Borrower or any Subsidiary other than write-offs of accounts receivable
reserved in full as of the date of the most recent financial statements delivered to the Lender
which would not have a Material Adverse Effect, and (B) no reserves established for the
uncollectibility of any notes, Accounts or other receivables of the Borrower or any Subsidiary
except to the extent that same have been disclosed to the Lender in writing and would not,
individually or in the aggregate, cause the outstanding Advances to exceed the Revolving Credit
Commitment;
(iii) no debts have been cancelled, no claims or rights of substantial
value have been waived and no properties or assets (real, personal or mixed, tangible or
intangible) have been sold, transferred, or otherwise disposed of by the Borrower or any
Subsidiary except (A) dispositions of worn-out or obsolete personal property, and (B) otherwise
in the ordinary course of business and consistent with past practice;
(iv) there has been no change in any method of accounting or
accounting practice utilized by the Borrower or any Subsidiary;
(v) no material casualty, loss or damage has been suffered by the
Borrower or any Subsidiary, regardless of whether such casualty, loss or damage is or was
covered by insurance;
(vi) there have been no announced changes in .the policies or practices
of any customer, supplier or referral source which would reasonably be expected to have a
Material Adverse Effect;
_ . ____ _ ___ _ __ _ . _ ..... {viij ___ there..has.heen no.incurrence .. by.the.Company_ or .. any_Snbsidiary. oL.____ _ _ ______ _
(A) any liability or obligation outside of the ordinary course of business, or (B) any Indebtedness
other than Permitted Indebtedness;
(viii) there has been no declaration, setting aside or payment of any
dividend or distribution or any other payment of any kind by the Borrower to or in respect of any
equity securities of the Borrower; and
(ix) No action described in this Section 3.0l(d) has been agreed to be
taken by the Borrower or any Subsidiary.
(e) The Borrower and its Subsidiaries have in place adequate systems of
internal controls and disclosure controls and procedures sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit preparation of financial
statements in accordance with GAAP and Regulation S-X and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's general or specific
authorization; (iv) the recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any differences, and (v) the
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Borrower and its management are able to obtain timely and accurate information regarding the
Business Operations and all material transactions relating to the Borrower and the Subsidiaries;
and no material deficiency exists with respect to the Borrower's or any Subsidiary's systems of
internal controls.
(f) All oftheSEC Reports, as of the respective dates thereof, complied in all
material respects, as applicable, with the Act and the Exchange Act.
Section 3 .02. Organization; Comorate Existence.
(a) The Borrower (i) is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, (ii) has all requisite corporate power and
authority to own its properties and to carry on its business as now conducted and as proposed
hereafter to be conducted, (iii) is qualified to do business as a foreign corporation in each
jurisdiction (including, without limitation, the State of Texas) in which the failure of the
Borrower to be so qualified would have a Material Adverse Effect, and (iv) has all requisite
corporate power and authority to execute and deliver, and perform all of its obligations under,
the Loan Documents. True and complete copies of the Organic Documents of the Borrower,
together with all amendments thereto, have been furnished to the Lender.
(b) On the date of this Agreement, the outstanding capital stock of the
Company, and the number and amount of all outstanding options, warrants, convertible
securities, subscriptions and other rights to acquire capital stock of the Company, are as set forth
in Schedule 3.02 of the Disclosure Schedule.
(c) Schedule 3.02 of the Disclosure Schedule further sets forth, with respect to
each Active Subsidiary on the date of this Agreement, (i) its proper legal name, (ii) its
.jurisdiction_ofincorporation...orJorrnation, .. (iii) the.
business as a foreign entity, (iv) the number of shares of capital stock or ownership interests
outstanding, and (v) the owner of such outstanding capital stock or other ownership interests.
Each of the Active Subsidiaries (A) is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or formation, (B) has all requisite
power and authority to own its properties and to carry on its business as now conducted and as
proposed hereafter to be conducted, and to execute and deliver, and perform alJ of its obligations
under, the Loan Documents to which it is a party, and (C) is not required to be qualified to do
business as a foreign entity in any jurisdiction in which it is not so qualified and the failure to be
so qualified would reasonably be expected to have a Material Adverse Effect. True -and
complete copies of the Organic Documents of each Active Subsidiary, together with a1J
amendments thereto to the date hereof, have been furnished to the Lender.
(d) On the date of this Agreement, the Borrower has no Subsidiaries other
than the Active Subsidiaries and the Dissolving Subsidiaries. Each of the Dissolving
Subsidiaries (i) has no material assets or liabilities, (ii) is not engaged in the conduct of any
active business operations, and (iii) is actively pursuing its dissolution as a legal entity.
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Section 3.03. Authorization.
(a) The execution, delivery and performance by the Borrower and the Subsidiaries of
their respective obligations under the Loan Documents have been duly authorized by all requisite
corporate, company, partnership and other action and will not, either prior to or as a result of the
consummation of the transactions contemplated by this Agreement: (i) violate any provision of
Applicable Law, any order of any court or other agency of government, any provision of the
Organic Documents of the Borrower or any Subsidiary, or any Contract, indenture, agreement or
other instrument to which the Borrower or any of the Subsidiaries is a party, or by which the
Borrower or any of the Subsidiaries or any of its assets or properties are bound, or (ii) be in
conflict with, result in a breach of, or constitute (after the giving of notice or lapse of time or
both) a default under, or, except as may be provided in the Loan Documents, result in the
creation or imposition of any Lien of any nature whatsoever upon any of the property or assets of
the Borrower or any of the Subsidiaries pursuant to, any such Contract, indenture, agreement or
other instrument. When executed and delivered, each Loan Document to which the Borrower or
any Subsidiary is a party will constitute the valid and binding obligation of the Borrower or such
Subsidiary (as applicable), enforceable against the Borrower or such Subsidiary in accordance
with its terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights generally, and by general principles of
equity.
(b) Neither the Borrower nor any of the Subsidiaries is required to obtain any
Government Approval, consent or authorization from, or to file any declaration or statement
with, any governmental instrumentality or agency in connection with or as a condition to the
execution, delivery or performance of any of the Loan Documents.
Section 3.04. Litigation. Except as disclosed on Schedule 3.04 of the Disclosure
---Schedule;-there-is-no-action,suit--orproceeiling at-lawur-in-equity-or-by-orlrefore-any
governmental instrumentality or other agency now pending or, to the knowledge of the
Borrower, threatened against or affecting the Borrower or any of the Subsidiaries or any of their
respective assets, which, if adversely determined, would have a Material Adverse Effect. The
Borrower has no Knowledge of any state of facts,. events, conditions or circumstances which .
would properly constitute grounds for or the basis of any meritorious suit, action, arbitration,
proceeding or investigation (including, without limitation, any unfair labor practice charges,
interference with union organizing activities, or other labor or employment claims) against or
with respect to the Borrower or any Subsidiary which, if adversely determined, would have a
Material Adverse Effect.
Section 3.05. Material Contracts. Except as disclosed on Schedule 3.05 of the
Disclosure Schedule, neither the Borrower nor any of the Subsidiaries is (a) a party to any
Contract, agreement or instrument or subject to any charter or other corporate or organizational
restriction which has had or could reasonably be expected to have a Material Adverse Effect, (b)
a party to any collective bargaining agreement, or (c) in default in the performance, observance
or fulfillment of any of the obligations, covenants or conditions contained in any Contract,
agreement or instrument to which it is a party or by which any of its assets or properties is
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bound, which default, individually or in the aggregate, would have or could reasonably be
expected to have a Material Adverse Effect.
Section 3.06. Title to Properties. The Borrower and each of the Subsidiaries has good
title to all of its properties and assets, free and clear of all mortgages, security interests,
restrictions, encumbrances or other Liens of any kind, except for restrictions on the nature of use
thereof imposed by Applicable Law, and except for Permitted Liens, none of which materially
interfere with the use and enjoyment of such properties and assets in the normal course of the
Business Operations as presently conducted, or materially impair the value of such properties
and assets for the purpose of such business.
Section 3.07. Real Propertv. Schedule 3.07 of the Disclosure Schedule sets forth a
correct and complete list of all Real Properties currently leased or occupied by the Borrower
and/or any of the Subsidiaries. Neither the Borrower nor any of the Subsidiaries owns any Real
Properties. The Borrower and each Subsidiary has a valid lessee's interest in each Real Property
currently leased or occupied by the Borrower or such Subsidiary. Neither the Borrower, any
Subsidiary, or, to the Borrower's Knowledge, any other party thereto, is in material breach or
violation of any requirements of any such lease; and such Real Properties are in good condition
(reasonable wear and tear excepted) and are adequate for the current and proposed businesses of
the Borrower and the Subsidiaries.
Section 3.08. Machinery and Equipment. The machinery and equipment owned and/or
used by the Borrower and the Subsidiaries is, as to each individual material item of machinery
and equipment, and in the aggregate as to all such equipment, in good and usable condition and
in a state of good maintenance and repair (reasonable wear and tear excepted), and adequate for
its use in the Business Operations,
c - Dr-Sehedule---3. 02--<Jf-- --- - -- --
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the Disclosure Schedule and for new Subsidiaries formed in accordance with Section 5.11 below,
the Borrower does not, directly or indirectly, own any capital stock of or any form of equity
interest in any other Person.
Section 3.10. Solvency. After giving effect to the Loans and the other transactions
contemplated hereby, the borrowings made and/or to be made by the Borrower under this
Agreement do not and will not render the Borrower insolvent or with unreasonably small capital
for its business; the fair saleable value of all- of the assets and properties of the Borrower does
now, and will, upon the funding of the Loans contemplated hereby, exceed the aggregate
liabilities and Indebtedness of the Borrower (including contingent liabilities); the Borrower is not
contemplating either the filing of a petition under any state or federal bankruptcy or insolvency
law, or the liquidation of all or any substantial portion of its assets or property; the Borrower has
no knowledge of any Person contemplating the filing of any such petition against the Borrower;
and the Borrower reasonably anticipates that it will be able to pay its debts as they mature.
Section 3.11. No Investment Company. The Borrower is not an "investment company"
or a company "controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
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Section 3.12. Margin Securities. The Borrower does not own or have any present
intention of acquiring any "margin security" or any "margin stock" within the meaning of
Regulations T, U or X of the Board of Governors of the Federal Reserve System (herein called
"margin security" and "margin stock"). None of the proceeds of the Loans will be used, directly
or indirectly, for the purpose of purchasing or carrying, or for the purpose of reducing or retiring
any Indebtedness which was originally incurred to purchase or carry, any margin security or
margin stock or for any other purpose which might constitute the transactions contemplated
hereby a "purpose credit" within the meaning of said Regnlations T, U or X, or cause this
Agreement to violate any other regulation of the Board of Governors of the Federal Reserve
System or the Exchange Act, or any rules or regnlations promulgated under such statutes.
Section 3.13. Taxes.
(a) All federal, state and local tax returns and tax reports required to be filed
by the Borrower and/or any Subsidiary have been timely flied with the appropriate governmental
agencies in all jurisdictions in which such returns and reports are required to be filed. All
federal, state and local income, franchise, sales, use, property, excise, ad valorem, valuecadded,
payroll and other taxes (including interest, penalties and additions to tax and including estimated
tax installments where required to be flied and paid) due from or with respect to the Borrower
and the Subsidiaries have been paid to the extent due and payable, and appropriate accruals have
been made on the Borrower's books for taxes not yet due and payable. All taxes and other
assessments and levies which the Borrower and/or any Subsidiary is required by law to withhold
or to collect have been duly withheld and collected, and have been paid over to the proper
governmental authorities to the extent due and payable. Except as set forth in Schedule 3.13 of
the Disclosure Schedule, there are no outstanding or pending material claims, deficiencies or
assessments for taxes, interest or penalties with respect to any taxable period of the Borrower or
any Subsidiary, and no outstanding tax Liens.
(b) Except as disclosed in Schedule 3.13 of the Disclosure Schedule, the
Borrower has no Knowledge and has not received notice of any pending audit with respect to any
federal, state or local tax returns of the Borrower or any Subsidiary, and no waivers of statutes of
limitations have been given or requested with respect. to any tax years or tax filings of the
Borrower or any Subsidiary.
Section 3.14. ERISA. Except as set forth in Schedule 3.14 of the Disclosure Schedule,
neither the Borrower nor any ERISA Affiliate of the Borrower maintains or has any obligation to
make any contributions to any pension, profit sharing or other similar plan providing for deferred
compensation to any employee. With respect to any such plan(s) as may now exist or may
hereafter be established by the Borrower or any ERISA Affiliate of the Borrower, and which
constitutes an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA,
except as set forth on Schedule 3.14 of the Disclosure Schedule: (a) the Borrower or the subject
ERISA Affiliate has paid and shall cause to be paid when due all amounts necessary to fund such
plan(s) in accordance with its terms, (b) except for normal premiums payable by the Borrower to
the Pension. !3enefit Guaranty Corporation ("PBGC"), tl1e Borrower or the subject ERISA
Affiliate has not taken and shall not take any action which could result in any liability to the
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PBGC, or any of its successors or assigns, (c) the present value of all accrued benefits thereunder
shall not at any time exceed the value of the assets of such plan(s) allocable to such accrued
benefits, (d) there have not been and there shall not be any transactions such as would cause the
imposition of any tax or penalty under Section 4975 of the Code or under Section 502 of ERISA,
which would adversely affect the funded benefits attributable to the Borrower or the subject
ERISA Affiliate, (e) there has not been and there shall not be any termination or partial
termination thereof (other than a partial termination resulting solely from a reduction in the
number of employees of the Borrower or an ERISA Affiliate oftheBorrower, which reduction is
not anticipated by the Borrower), and there has not been and there shall not be any "reportable
event" (as such term is defmed in Section 4043(b) of ERISA) on or after the effective date of
Section 4043(b) of ERISA with respect to any such plan(s) subject to Title IV of ERISA, (f) no
"accumulated funding deficiency" (as defined in Section 412 of the Code) has been or shall be
incurred on or after the effective date of Section 412 of the Code, (g) such plan(s) have been and
shall be determined to be ''qualified" within the meaning of Section 401 (a) of the Code, and have
been and shall be duly administered in compliance with ERISA and the Code, and (h) the
Borrower is not aware of any fact, event, condition or cause which might adversely affect the
qualified status thereof. As respects any "multi-employer plan" (as such term is defmed in
Section 3(37) of ERISA) to which the Borrower or any ERISA Affiliate thereof has heretofore
been, is now, or may hereafter be required to make contributions, the Borrower or such ERISA
Affiliate has made and shall make all required contributions thereto, and there has not been and
shall not be any "complete withdrawal" or "partial withdrawal" (as such terms are respectively
defined in Sections 4203 and 4205 of ERISA) therefrom on the part of the Borrower or such
ERISA Affiliate.
Section 3.15. Intellectual Propertv. The Borrower and the Subsidiaries own or have the
valid right to use all material patents, trademarks, copyrights, software, computer programs,
equipment designs, network designs, equipment configurations, technology and other intellectual
propertY used, marketed and sold in the Business Operations; ahd the Borrower -and the
Subsidiaries are in compliance in all material respects with all licenses, user agreements and
other such agreements regarding the use of intellectual property used in the Business Operations;
and the Borrower has no Knowledge that or received notice claiming that any of such intellectual
property infringes upon or violates the rights of any other Person.
Section 3.16. Compliance with Laws. The Borrower and the Subsidiaries are in
compliance with all occupational safety, health, wage and hour, employment discrimination,
environmental, flanunability, labeling and other Applicable Law (including, without limitation,
healthcare laws and regulations, and healthcare reimbursement laws and regulations) which are
material to the Business Operations, except where such non-compliance would not, individually
or in the aggregate, have a Material Adverse Effect. To the Borrower's Knowledge, there are no
state or facts, events, conditions or occurrences which may now or hereafter constitute or result
in a violation of any Applicable Law, or which may give rise to the assertion of any such
violation, which could have a Material Adverse Effect. Neither the Borrower nor any Subsidiary
has received written notice of default or violation, nor is the Borrower or any Subsidiary in
default or vialation, with respect to any judgment, order, writ, injunction, decree, demand or
assessment issued by any court or any federal, state, local, municipal or other governmental
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agency, board, commission, bureau, instrumentality or department, domestic or foreign, relating
to any aspect of the Borrower's or any Subsidiaries' business, affairs, properties or assets; which
default(s) or violation(s) would, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect. Neither the Borrower nor any Subsidiary has received written notice
of or been charged with, or is, to the Borrower's Knowledge, under investigation with respect to,
any violation(s) of any provision of any Applicable Law, which violation(s) would, individually
or in the aggregate, have a Material Adverse Effect.
Section 3.17. Licenses and Permits. The Borrower and each Subsidiary has all federal,
state and local licenses and permits required to be maintained in connection with the Business
Operations, except where the failure to maintain any such license or permit would not,
individually or in the aggregate, have a Material Adverse Effect; and all such licenses and
permits are valid and in full force and effect. The Borrower and each Subsidiary has complied
with the requirements of such licenses and permits in all material respects, and has received no
notice of any pending or threatened proceedings for the suspension, termination, revocation or
limitation thereof. There is no circumstance or condition Known to the Borrower that would
cause or permit any of such licenses or permits to be voided, revoked or withdrawn.
Section 3.18. Insurance. Schedule 3.18 of the Disclosure Schedule lists all insurance
coverages maintained by the Borrower and the Subsidiaries, including the names of insurers,
policy limits and deductibles. Neither the Borrower nor any Subsidiary has received written
notice of cancellation or intent not to renew any of such policies, and to the Borrower's
Knowledge, there has not occurred, and there does not exist, any condition (other than general
industry-wide conditions) such as would cause any of such insurers to cancel any of such
insurance coverages, or would be reasonably likely to materially increase the premiums charged
to the Company and the Subsidiaries for coverages consistent with the scope and amounts of
coverages as in effect on the date of this Agreement.
Section 3 .19. Environmental Laws.
(a) The Borrower and each Subsidiary has complied with all Environmental
Laws relating. to its business and properties, except where non-compliance would not,
individually or in the aggregate, have a Material Adverse Effect; and to the Borrower's
Knowledge, there exist no Hazardous Substances in amounts in violation of applicable
Environmental Laws on any of the Real Properties the existence of which would have a Material
Adverse Effect, except those that are stored and used in compliance with Applicable Laws.
(b) Neither the Borrower nor any Subsidiary has received notice of any
pending or threatened litigation or administrative proceeding which in any instance (i) asserts or
alleges any violation of applicable Environmental Laws on the part of the Borrower or any
Subsidiary, (ii) asserts or alleges that the Borrower or any Subsidiary is required to clean up,
remove or otherwise take remedial. or other response action due to the disposal, depositing,
discharge, leaking or other release of any Hazardous Substances or materials, or (iii) asserts or
alleges that ):he Borrower or any Subsidiary is required to pay all or any portion of the costs of
any past, present or future cleanup, removal or remedial or other response action which arises out
of or is related to the disposal, depositing, discharge, leaking or other release of any hazardous
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substances or materials by the Borrower or any Subsidiary. To the Borrower's Knowledge,
neither the Borrower nor any Subsidiary is subject to any judgment, decree, order or citation
related to or arising out of any Environmental Laws. To the Borrower's Knowledge, neither the
Borrower nor any Subsidiary has been named or listed as a potentially responsible party by any
governmental body or agency in any matter arising under any Environmental Laws. Neither the
Borrower nor any Subsidiary is a participant in, nor does the Borrower have Knowledge of, any
govern.IDental investigation involving any of the Real Properties.
(c) Neither the Borrower or any Subsidiary nor, to the Borrower's.
Knowledge, any other person, firm, corporation or governmental entity has caused or permitted
any Hazardous Substances or other materials to be stored, deposited, treated, recycled or
disposed of on or at any of the Real Properties which materials, if known to be present, would
reasonably be expected to require or authorize cleanup, removal or other remedial action under
any applicable Environmental Laws.
(d) As used in this Section 3.19 and in Section 5.08 below, the following
terms have the following meanings:
"Environmental Laws" include all federal, state, and local laws, rules, regulations,
ordinances, permits, orders, and consent decrees agreed to by the Borrower or any Subsidiary,
relating to health, safety, ami envirortmental matters applicable to the business and property of
the Borrower or any Subsidiary. Such laws and regulations include but are not limited to the
Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. 6901 et seq., as amended; the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42
U.S.C. 9601 et seq., as amended; the Toxic Substances Control Act ("TSCA"), 15 U.S.C.
2601 et seq., as amended; and the Clean Water Act, 33 U.S.C. 1331 et seq., as amended.
"Hazardous Substances", "Release", "Respond" and "Response" shall have the
meanings assigned to them in CERCLA, 42 U.S.C. 9601, as amended.
"Notice" means any actual summons, citation, directive, information request,
notice of potential responsibility, notice of violation or deficiency, order, claim, complaint,
investigation, proceeding, judgment, letter, or other written communication from the United
States Environmental Protection Agency or other federal, state, or local agency or authority, or
any other entity or individual, public or private, concerning any intentional or unintentional act
or omission which involves management of Hazardous Substances in amounts in violation of
Environmental Laws on or transported off any Real Properties; the imposition of any liens
asserted by government entities in connection with any Borrower's or Subsidiary's response to
the presence or Release of Hazardous Substances in amounts in violation of Environmental
Laws; and any alleged violation of or responsibility under any Environmental Laws.
Section 3.20. Sensitive Payments. Neither the Borrower nor any Subsidiary has (a)
made any contributions, payments or gifts to or for the private use of any governinental official,
employee or agent where either the payment or the purpose of such contribution, payment or gift
is illegal under the laws of the United States or the jurisdiction in which made, (b) established or
maintained any unrecorded fund or asset for any purpose or made any false or artificial entries on
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its books, (c) made any payments to any person with the intention that any part of such payment
was to be used for any purpose other than that described in the documents supporting the
payment, or (d) done business with or proposes to do business with any country, or any Person in
any country, which is prohibited or restricted under any Applicable Law of the United States, or
engaged in or proposes to engage in. any "trading with the enemy" or other transactions violating
any rules or regulations of the Office of Foreign Assets Control or any similar laws, rules or
regulations of any federal, state, local or foreign government or governmental agency.
Section 3.21. Full Disclosure. No statement of fact made by the Borrower in this
Agreement or any other Loan Document, in any SEC Report, or in any information
memorandum, business summary, agreement, certificate, schedule or other written .ststement
furnished by the Borrower to the Lender pursuant hereto, contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact necessary to make
any statements contained herein or therein not misleading, in any manner or instaoce in which
the correction of such statement would indicate, result in. or reflect a Material Adverse Effect
relative to the represented facts. Except for matters of a general economic or political nature
which do not affect the Borrower or any Subsidiary uniquely, there is no fact presently known to
.the Borrower or any Subsidiary which has not been disclosed to the Lender, which has had or
would reasonably be expected to have a Material Adverse Effect.
Section 3 .22. Revolving Loan Agreement. All representations and warranties made by
the Borrower in the Revolving Loan Agreement are true and correct in all respects on and as of
the Closing Date.
IV. CONDITIONS TO CLOSING
The obligation of the Lender to make the incremental additional Tranche B Term Loan
hereunder, sell the Original Warrant hereunder, and consun:imate .the other tranSactions
contemplated hereby are subject to the follmving conditions precedent:
Section 4.01. Representations and Warranties. The representations and warranties set
forth in Article III hereof and in the other Loan Documents shall be true and correct on and as of
the Closing Date.
Section 4.02. Loan Documents. The Borrower and the Active Subsidiaries (as
applicable) shall have duly executed and/or delivered to the Lender all of the following:
(a) The Notes;
(b) The Warrant;
(c) The Registration Rights Agreement;
(d) A certificate of the Secretary or an Assistaot Secretary of the Borrower,
certifying the vote of the Board of Directors of the Borrower authorizing and directing the
execution and delivery of this Agreement and the other Loan Documents to be executed and
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delivered by the Borrower hereunder, the Revolving Loan Agreement and/or related promissory
notes, security agreements and other documents, and all further agreements, instruments,
certificates and other documents pursuant hereto and thereto;
(e) A certificate of the Secretary of State of the State of Delaware, dated
reasonably prior to the Closing Date, stating that the Borrower is duly formed and in good
standing in such jurisdiction; and ,
(f) Such other agreements, instruments, documents and certificates
(including, without limitation, satisfactory lien and judgment searches respecting the Borrower
and the Subsidiaries) as the Lender or its counsel may reasonably request.
Section 4.03. Repayment of Revolving Credit Advances. The Borrower shall have
executed and delivered the Revolving Loan Agreement and all related promissory notes, security
agreements and other documents required thereunder (all of which shall be in form and substance
reasonably satisfactory to the Lender), and shall have repaid to the Lender, out of the initial
advances made under the Revolving Loan Agreement, all Advances (as such term is defmed in
the Original Agreement) and all unpaid accrued interest thereon and Monitoring Fees (as such
t= is defined in the original Agreement) to the Closing Date.
Section 4.04. Eqnitv Contribution. Subseqoent to June 1, 2008, the Borrower shall have
received (and provided evidence thereof satisfactory to the Lender) net equity proceeds in an
amount not less than $1,000,000 from the issuance and sale of Common Stock on terms and
conditions satisfactory to the Lender.
Section 4.05. Fees and Reimbursements. The Borrower shall have paid the Closing
Fees, and shall have paid or reimbursed the .Lender for its reasonable out-of-pocket costs,
charges and expenses incurred to the Closing Date in conoection with the transactions
contemplated by this Agreement.
Section 4.06. Further Matters. All legal matters, and the form and substance of all
documents, incident to the trsnsactions contemplated hereby shall be satisfactory to counsel for
the Lender.
Section 4.07. No Default. No Default or Event of Default shall have occurred and be
continuing.
V. AFFIRMATIVE COVENANTS
The Borrower hereby covenants and agrees that, from the date hereof and until all
Obligations (whether now existing or hereafter arising) have been paid in full, unless the Lender
shall otherwise consent in writing, the Borrower shall, and shall cause each ofits Subsidiaries to:
Section 5.01. Corporate and Insurance. Do or cause to be done all things necessary to at
all times (a) preserve, renew and keep in full force and effect its corporate or other legal
existence, rights, licenses, permits and franchises (except that the Dissolving Subsidiaries shall
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continue diligently to pursue and complete their dissolution), (b) comply with the Loan
Documents and any other agreements and instruments executed and delivered hereunder and
thereunder (to the extent a party thereto), (c) maintain, preserve and protect all of its franchises
and material trade names, and preserve all of its material property used or useful in the conduct
of its business and keep the same in good repair, working order and condition (reasonabie wear
and tear excepted), and from time to time make, or cause to be made, all needed and proper
repairs, renewals, replacements, betterments and improvements thereto, so that the Business
Operations carried on in connection therewith may be properly and advantageously conducted at
all times, (d) maintain insurance in amounts, on such terms and against such risks (including fire
and other hazards insured against by extended coverage, public liability insurance covering
claims for personal injury, death or property damage, and professional liability insurance) as are
customary for companies of similar size in the same or similar businesses and operating in the
same or similar locations, as well as all such other insurance as is required by the Collateral
Agreement, each of which policies (other than workers compensation) shall be issued by a
financially sound and reputable insurer reasonably satisfactory to the Lender and shall name the
Lender as loss payee and additional insured as its interest appears and provide for the Lender to
receive written notice thereof at least thirty (30) days prior to any cancellation of the subject
policy, and (e) comply in all material respects with all material Contracts and material
obligations to which it is a party or by which it is bound, all benefit plans which it maintains or is
required to contribute to, and all Applicable Law (including, without limitation, Environmental
Laws, healthcare laws and regulations and healthcare reimbursement laws and regulations)
material to its Business Operations, and all requirements of its insurers, whether now in effect or
hereafter enacted, promulgated or issued. The Borrower will provide to the Lender a certificate
of the foregoing insurance, promptly upon request.
Section 5.02. Payment of Taxes. File, pay and discharge, or cause to be paid and
discharged, all material taxes, assessments and goverrunental.charges or levies imposed upon the .
Borrower and/or any Subsidiary or upon its income and profits or upon any of its property (real,
personal or mixed) or upon any part thereof, before the same shall become in default, as well as
all lawful claims for labor, materials, supplies and otherwise, which, if unpaid when due, might
become a Lien or charge upon such property or any part thereof; provided, however, that neither
the Borrower nor any Subsidiary shall be required to pay and discharge or cause to be paid and
discharged any such tax, assessment, charge, levy or claim so long as (a) the validity thereof
shall be contested in good faith by appropriate proceedings and the Borrower or such Subsidiary
shall have set aside on its books adequate reserves with respect to any such tax, assessment,
charge, levy or claim so contested, and (b) payment with respect to any such tax, assessment,
charge, levy or claim shall be made before any of the Borrower's or such Subsidiary's property
shall be seized or sold in satisfaction thereof.
Section 5.03. Notices. Give prompt written notice to the Lender of (a) the filing by the
Borrower of any SEC Reports, (b) any proceedings instituted against the Borrower or any
Subsidiary in any federal or state court or before any commission or other regulatory body,
whether federal, state or local, which, if adversely determined, could reasonably be expected to
have a Material Adverse Effect, and (c) the occurrence of any material casualty to any Collateral,
any Material Adverse Effect, or any Default (if the Borrower knows or reasonably should know
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of the existence thereof) or Event of Default, and the action that the Borrower has taken, is
taking, or proposes to take with respect thereto.
Section 5.04. Periodic Reports. Furnish to the Lender:
(a) Within ninety (90) calendar days after the end of each Fiscal Year,
consolidated balance sheets, and consolidated and consolidating statements of income,
statements of stockholders' equity, and statements of cash flows of the Borrower and its
Subsidiaries, together with footnotes and supporting schedules thereto, certified (as to the
consolidated statements) by independent certified public accountants selected by the Borrower
and reasonably satisfactory to the Lender, showing the fmancial condition of the Borrower and
its Subsidiaries at the close of such Fiscal Year and the results of operations of the Borrower and
its Subsidiaries during such Fiscal Year;
(b) Within thirty (30) calendar days after the end of each calendar month
(forty-five (45) calendar days in the case of the end of a fiscal quarter), consolidated (and, if
specifically requested by the Lender reasonably in advance, but not more frequently than
quarterly, consolidating) unaudited balance sheets, statements of income and statements of cash
flows of the Borrower and its Subsidiaries, together with supporting schedules thereto, prepared
by the Borrower and certified by the Borrower's Chairman, President, Chief Executive Officer,
Chief Financial Officer or Chief Accounting Officer, such balance sheets to be as of the close of
such calendar month and such statements of income and statements of cash flows to be for the
i period from the beginning of the then-current Fiscal Year to the end of such calendar month,
together with comparative statements of income and cash flows for the corresponding period in
the immediately preceding Fiscal Year, in each case subject to normal audit and year-end
adjustments;
c (c) Concurrently with the-delivery of each of the fmancial statements required
by Sections 5.04(a) and 5.04(b) above, a certificate on behalf of the Borrower (signed by the
Chairman, President, Chief Executive Officer, Chief Financial Officer or Chief Accounting
Officer of the Borrower), certifying that he has examined the provisions of this Agreement and
that no Default or Event of Default has occurred and/or is continuing;
(d) Within fifteen ( 15) calendar days after the end of each calendar month, an
accounts receivable aging report and an accounts payable aging report for the Borrower and the
Subsidiaries (each on a consolidated and consolidating basis);
(e) As soon as approved by the Borrower's Board of Directors (but in any
event not later than the beginning of each Fiscal Year), a budget and operating plan (on a month-
by-month basis) for such Fiscal Year, in such detail as may reasonably be required by the
Lender;
(f) As and when distributed to the Borrower's stockholders, copies of all
proxy materials, reports and other information which the Borrower provides to its stockholders in
their capacitY 'as such; and as and when distributed to any other holders of Indebtedness of the
Borrower or the Subsidiaries (including, without limitation, the holders of the Indebtedness
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under the Revolving Loan Agreement), copies of all reports, statements and other information
provided in writing to such lenders; and
(g) Promptly, from time to time, such other information regarding the
Borrower's or any Subsidiary's operations, assets, business, affairs and financial condition, as
the Lender may reasonably request.
To the extent that the financial statements required by Sections 5.04(a) and 5.04(b) are contained
. in any SEC Reports filed by the Borrower within the required time period for the delivery of
such financial statements, then the Borrower shall be deemed to have complied with the subject
financial statement delivery by notifYing the Lender of the filing of the subject SEC Report.
In the event that, subsequent to the completion of the presently planned deregistration of the
Common Stock under the Exchange Act, the Borrower has any class of equity securities
registered under the Exchange Act, then, to the extent that any report or other delivery required
under this Section 5.04 or elsewhere in this Agreement will, at the time of anticipated delivery to
the Lender, contain any material non-public information, the Borrower will notifY the Lender
thereof as promptly as practicable prior to the delivery of such report (but without disclosing the
specific items of material non-public information or the nature thereof), and if so requested by
the Lender prior to the required date of the information delivery hereunder, the Borrower shall
(x) if reasonably practicable, redact such material non-public information from the subject report
prior to the delivery thereof to the Lender, or (y) defer delivery of such report until such time as
the Borrower has made public disClosure of the subject material information or the Lender has
affirmatively requested delivery of such report. Absent timely request by the Lender as
aforesaid, the Borrower shall make the required delivery to the Lender ori a timely basis.
Section 5.05. Books and Records; Inspection. Maintain centralized books and records
regarding all of the Business Operations at the Borrower's principal place of business, and
permit agents or representatives of the Lender at reasonable intervals to inspect, at any time
during normal business hours, upon reasonable notice, and without undue material disruption of
the Business Operations, all of the Borrower's and its Subsidiaries' various facilities, books and
records (wherever located), to make copies, abstracts and/or reproductions thereof, and to discuss
the business and affairs of the Borrower and the Subsidiaries with the management of the
Borrower; and without limitation of the foregoing, the Lender may engage an independent
auditing firm to conduct an audit of the Collateral and the Borrower's books and records on an
annual basis.
Section 5.06. Accounting. Maintain a standard system of accounting in order to permit
the preparation of financial statements in accordance with GAAP.
Section 5.07. Reimbursements. Pay or reimburse the Lender or other. appropriate
Persons on demand for all reasonable costs, expenses and other charges incurred or payable from
time to time in connection with the transactions contemplated by this Agreement, any waivers or
amendments in respect of any Loan Documents, any "workout" or enforcement action, and any
bankruptcy or insolvency proceedings relating to the Borrower or any Subsidiary, including but
not limited to any and all search fees, recording fees, costs of inspections and legal and
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accounting fees; provided that, except for any such audit conducted during the continuance of an
Event of Default, the Borrower shall not be obligated to pay or reimburse the Lender for the cost
of more than one audit performed by an independent auditing firm (as contemplated by Section
5.05 above) in any twelve (12) month period.
Section 5.08. Environmental Response. In the event of any material discharge, spill,
injection, escape, emission, disposal, leak or other Release of Hazardous Substances in amounts
in violation of applicable Environmental Laws by the Borrower or any Subsidiary on any Real
Property owned or leased by the Borrower or any Subsidiary, which is not authorized by a permit
or other approval issued by the appropriate governmental agencies and which requires
notification to or the filing of any report with any federal or state governmental agency, the
Borrower shall promptly: (a) notify the Lender; and (b) comply with the notice requirements of
the Environmental Protection Agency and applicable state agencies, and take all steps necessary
to promptly clean up such discharge, spill, injection, escape, emission, disposal, leak or other
Release in accordance with all applicable Environmental Laws and the Federal National
Contingency Plan, and, if required by Applicable Law, receive a certification from all applicable
state agencies or the Environmental Protection Agency, that such Real Property has been cleaned
up to the satisfaction of such agency(ies).
Section 5.09. Management. Cause James B Kaiser to continue to be employed or to
function as the chief executive officer of the Borrower, and James J. TerBeest to be employed or
to function as the chief financial officer of the Borrower, unless a successor is appointed within
sixty (60) days after the termination of such individual's employment, and such successor is
reasonably satisfactory to the Lender.
Section 5.1 0. Use of Proceeds. Cause all proceeds of the Loans to be utilized solely in
the maoner and for the purposes set forth in Section 2.04 hereof.
Section 5.11. Future Subsidiaries. At any time and from time to time when the Borrower
or any of its Subsidiaries proposes to form or acquire any Subsidiary subsequent to the Closing
Date, or in the event that and at such time as any ofthe Dissolving Subsidiaries shall have or
hold any material assets or. shall engage in active business operations, the Borrower shall give
written notice thereof to the Lender reasonably in advance of the formation or acquisition of such
Subsidiary or such change of status of a Dissolving Subsidiary, providing information therefor of
the type called for in Schedule 3.02 of the Disclosure Schedule; and contemporaneously with the
formation or acquisition of such new Subsidiary or such change of status of a Dissolving
Subsidiary, the Borrower shall cause such new Subsidiary or affected Dissolving Subsidiary to
execute and deliver (a) a guaranty agreement in substantially the form of the Guaranty
Agreement (or a joinder agreement with respect to the existing Guaranty Agreement in form and
substance reasonably satisfactory to the Lender), and (b) a Collateral Agreement (with completed
perfection certificate and other appropriate Security Documents) in substantially the form of the
Collateral Agreement as currently in place (or a joinder agreement with respect to the existing
Collateral Agreement in form and substance reasonably satisfactory to the Lender) and other.
Security Documents as reasonably requested by the Lender. Nothing contained in this Section
5.11 shall be deemed to constitute any waiver by the Lender of any consent otherwise required
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under this Agreement or any oilier Loan Document wiili respect to ilie formation or acquisition
of any Subsidiary or any change in status of a Dissolving Subsidiary.
Section 5.12. Landlord Waivers. To ilie extent reasonably requested by ilie Lender from
time to time subsequent to ilie Closing Date, use commercially reasonable efforts to obtain,
within thirty (30) days after the Lender's request ilierefor, in form and substance reasonably
satisfactory to ilie Lender, any and all bailee waivers, warehousemen's waivers, Landlord
Waivers and/or access agreements requested by ilie Lender in respect oflocations where iliere is
stored or held any material books or records, or any oilier Collateral having an aggregate fair
market value in excess of $25,000 (including, wiiliout limitation, existing offices in Dallas,
Texas).
VI. NEGATIVE COVENANTS
The Borrower hereby covenants and agrees iliat, until all Obligations (wheilier now
existing or hereafter arising) have been paid in full, unless ilie Lender shall oilierwise consent in
writing, ilie Borrower shall not, and shall not permit any Subsidiary to, directly or indirectly:
Section 6.01. Indebtedness. Incur, create,. assume, become or be liable in any manner
with respect to, or permit to exist, any Indebtedness, oilier than:
(a) Indebtedness to the Lender pursuant to the Loan Documents;
(b) liabilities with respect to trade obligations, accounts payable, or oilier
similar payments, operating leases and other normal accruals incurred in the ordinary course of
business, or with respect to which the Borrower or the subject Subsidiary is contesting in good
faith the amount or validity thereof by appropriate proceedings, and then only to the extent iliat
the Borrower or the subject Subsidiary has set aside on its books adequate reserves therefor;
(c) Indebtedness existing on ilie date of this Agreement owed to those
Persons, in those amounts and having those maturities as set forfu in Schedule 6.01 of ilie
Disclosirre Schedule;
(d) Capitalized Leases reflected in ilie Financial Statements, and Capitalized
Leases hereafter entered into by the Borrower or its Subsidiaries in the ordinary course of ilie
Business Operations;
(e) purchase money Indebtedness incurred in connection wiili the Borrower's
or its Subsidiaries' acquisition of capital assets in the ordinary course ofilie Business Operations;
(f) Subordinated Debt in such amounts and upon such terms and conditions as
shall be acceptable to ilie Lender in its sole and absolute discretion;
(g) intercompany Indebtedness between the Borrower and any Wholly-Owned
Subsidiary 9 ~ between Wholly-Owned Subsidiaries;
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(h) Guarantees to the extent permitted pursuant to Section 6.03 below; and
(i) Indebtedness under the Revolving Loan Agreement (subject to the
limitations set forth in Section 6.12(b) below).
Section 6.02. Liens. Create, incur, assume or suffer to exist any Lien or other
encumbrance of any nature whatsoever on any of its assets, now or hereafter owned, other than:
(a) subject iO Section 5.02 above, Liens securing the payment of taxes which
are either not yet due or the validity of which is being contested in good faith by appropriate
proceedings, and as to which the Borrower or the subject Subsidiary shall have set aside on its
books adequate reserves;
(b) deposits under workers' compensation, unemployment insurance and
social security laws, or to secure the performance of bids, tenders, contracts (other than for the
repayment of money borrowed) or leases, or to secure statutory obligations or surety or appeal
bonds, or to secure indemnity, perforroance or other similar bonds in the ordinary course of
business;
(c) statutory Liens of landlords and Liens imposed by law, such as, carriers',
warehousemen's, materialmen's or mechanics' liens, incurred by the Borrower or any Subsidiary
in good faith in the ordinary course of business and discharged promptly after same are incurred;
fully bonded Liens arising out of a judgment or award against the Borrower or any Subsidiary
with respect to which the Borrower or such Subsidiary shall. currently be prosecuting an appeal, a
. stay of execution pending such appeal having been secured; and Liens arising out of a judgment
or award against the Borrower or any Subsidiary which are fully covered by insurance (subject to
applicable deductibles) and for which the relevant insurer has not denied or disclaimedcoverage;
(d) other Liens incurred in connection with Indebtedness expressly perroitted
pursuant to Section 6.0l(d) and/or Section 6.0l(e) above, provided that such Liens do not extend
to any assets or property other than the specific assets or properties acquired pursuant to such
permitted Indebtedness;
(e) encumbrances consisting of easements, rightscof-way, survey exceptions
and other similar restrictions on the use of Real Property, or minor irregularities in title thereto
which do not materially impair the use of such property in the operation of the business of the
Borrower and its Subsidiaries (provided that the placement by the owner of any leased Real
Property of a mortgage or deed of trust on the subject land and/or building shall not be deemed a
Lien on the leasehold interest of the Borrower or the subject Subsidiary);
(f) Liens in existence on the date of this Agreement, as set forth on Schedule
6.02 of the Disclosure Schedule;
(g) Liens arising out of judgments or awards (i) which are fully covered by
insurance (subject to applicable deductibles) and for which the relevant insurer has not denied or
disclaimed coverage, or (ii) with respect to which the Borrower or the subject Subsidiary shall be
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prosecuting an appeal in good faith and in respect of which a stay of execution shall have been
issued;
(h) Liens in favor of the Lender;
(i) Liens under the Revolving Loan Agreement; and
G) e:>.1:ensions, renewals or replacements of any Lien referred to in clauses (a)
through (g) above, provided that same shall not effect any increase in any principal amount
secured th_ereby.
Section 6.03. Guarantees. Guarantee, endorse or otherwise in any manner
become or be responsible for obligations of any other Person, except (a) endorsements of
negotiable instruments for collection in the ordinary course of business, (b) guarantees by the
. Borrower of obligations of Wholly-0\\>ned Subsidiaries (other than Dissolving Subsidiaries) in
the ordinary course of business, and (c) guarantees by Wholly-Owned Subsidiaries (other than
Dissolving Subsidiaries) of the Borrower's obligations underthe Revolving Loan Agreement.
Section 6.04. Sales of Assets and Management. (a) Sell, lease, transfer, encumber or
otherwise dispose of any of the Borrower's or any Subsidiary's properties, assets, rights, licenses
or franchises (including, without limitation, equity interests in Subsidiaries) other than (i) sales
of inventory in the ordinary course of business, (ii) licenses, joint ventures and related
transactions entered into, modified or terminated in the ordinary course of business, or (iii) the
disposition of surplus or obsolete personal properties in the ordinary course of business, or (b)
permit any Affiliate of the Borrower (other than a Domestic Subsidiary which is a party to the
Collateral Agreement) to own or obtain any patent, patent application, copyright, copyright
application, trademark, trademark application, license, or other intangible asset relating to the
Business Operations except in the noimhl c()u:tse of business on teims alJ.d conditions no less
favorable to the Borrower or any Subsidiary than those which could be obtained in an arms' .
length transaction with an unaffiliated third party.
Section 6.05;. Sale-Leaseback. Enter into any arrangement with any Person whereby the
Borrower or any Subsidiary shall sell or transfer any property (real, personal or mixed) used or
useful in the Business Operations, whether now owned or hereafter acquired, and thereafter rent
or lease such property.
Section 6.06. Investments; Acquisitions. Make any Investment in, or otherwise acquire
or hold securities (including, without limitation, capital stock and evidences of Indebtedness) of,
or make loans or advances to, or enter into any arrangement for the purpose ofproviding funds
or credit to, any other Person(including any Affiliate), except:
(a) Investments in Wholly-Owned Subsidiaries which have complied with the
requirements of Section 5.11 hereof;
(b) advances (to the extent permitted by Applicable Law, including federal
securities laws) to employees of the Borrower or any Wholly-Owned Subsidiaries (other than
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Dissolving Subsidiaries) for normal business expenses not to exceed at any time $25,000 in the
aggregate;
(c)
Equivalents; and
Investments of excess cash generated in the Business Operations in Cash
(d) Investments of cash in overnight deposits or other customary cash
management Investments with commercial banks or in commercial paper satisfying the criteria
for such banks or commercial paper as set forth in the definition of Cash Equivalents.
Section 6.07. Real Property; Corporate Form; Acquisitions. Acquire or hold any fee
interest in any Real Property; or dissolve or liquidate, or consolidate or merge with or into, sell
all or substantially all of the assets of the Borrower or any Subsidiary to, or acquire all or
substsntially all of the securities, assets or properties of, any other Person, except for (a)
consolidations of a Subsidiary with a Wholly-Owned Subsidiary (other than a Dissolving
Subsidiary); (b) mergers of a Wholly-Owned Subsidiary into the Borrower or into a Wholly-
Owned Subsidiary (other than a Dissolving Subsidiary); (c) sales to the Borrower or another
Subsidiary for fair value; or (d) the dissolution of the Dissolving Subsidiaries.
Section 6.08. Dividends and Redemptions. Declare or pay any dividends, or make any
distribution of cash or property, or both, to any Person in respect of any of the shares of the
capital stock or other equity securities of the Borrower or any other Person, or directly or
indirectly redeem, purchase or otherwise acquire for consideration any securities or shares of the
capital stock or other equity securities of the Borrower (other than payments not exceeding
$50,000 in the aggregate prior to September 30, 2008 for redemptions of Common Stock as part
of the Borrower's contemplated "going private" transaction) or any other Person; provided, that
this Section 6.08 shall not be deemed to prohibit the payment of dividends or distributions by
any Subsidiary to the Borrower or to ariy other cfuect or indirect Subsidiary.
Section 6.09. Compensation. Pay any compensation of arty types or in any amounts to
any executive officers of the Borrower except (a) in accordance with the employment
agreements between the Borrower and such executive officers as in effect on the Closing Date,
(b) in accordance with the compensation levels disclosed in SchedUle 6.09 of the Disclosure
SchedUle, or (c) as otherwise approved by the independent Compensation Committee of the
Board of Directors of the Borrower but in no case in any amount or amounts which would cause
or reasonably be expected to cause a Material Adverse Effect.
Section 6.1 0. Change of Business. (a) Engage in a business materially different from the
general nature of the Business Operations (i) as now being conducted, or (ii) as the same may
hereafter be reasonably expanded from time to time in like areas of business; (b) cause or permit
any of the Dissolving Subsidiaries to own or hold any material assets or engage in any active
business operations; (c) wind up the Business Operations or cease substantially all of its normal
Business Operations for a period in excess of ten (I 0) consecutive days; or (d) suffer any
material disruption, interruption or discontinuance of a material portion of its normal Business
Operations for a period in excess of ten (1 0) consecutive days; provided, however, that the
dissolution of the Dissolving Subsidiaries shall not constitute a violation of this Section 6.1 0.
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Section 6.11. Receivables. Sell or assign in any way any accounts receivable,
promissory notes or trade acceptances held by the Borrower or any Subsidiary with or without
recourse, except for (a) collateral assignment thereof as security for the Borrower's obligations
under the Revolving Loan Agreement, (b} collections (including endorsements) in the ordinary
course of business, and (c) transfers to or among the Borrower and Domestic Subsidiaries which
are party to the Guaranty Agreement and the Collateral Agreement.
Section 6.12. Certain Amendments. Agree, consent, permit or otherwise undertake to
amend any of the terms or provisions of (a) the Borrower's or any Subsidiary's Organic
Documents in a manner which may impair in any respect any of the Lender's rights under any of
the Loan Documents, and (b) the Revolving Loan Agreement and/or any related promissory
notes, security agreements or other documents in any manner such as would increase the
maximum amount available to be borrowed thereunder, increase the interest rate applicable to
any such borrowings, extend then maturity date thereunder, or in any other manner which would
be materially adverse to the Lender's rights as a subordinated creditor (subordinate only to the
obligations under the Revolving Loan Agreement).
Section 6.13. Affiliate Transactions. Enter into any Contract, agreement or transaction
with any Affiliate of the Borrower except (a) as disclosed in Schedule 6.13 of the Disclosure
Schedule, (b) for intercompany Indebtedness between the Borrower and any Wholly-Owned
Subsidiary (other than a Dissolving Subsidiary) or between any Wholly-Owned Subsidiaries
(other than Dissolving Subsidiaries), or (c) in the normal course of business on terms and
conditions no less favorable to the Borrower or any Subsidiary than those which could be
obtained in an arms' length transaction with an unaffiliated third party.
Section 6.14. Fiscal Year. Amend its Fiscal Year.
Sectimi 6.15.- Suoordiniited Debt. Prepay, redeem or purchase iiny Subordinated Debt.
Section 6.16. Capital Expenditures. Make aggregate Capital Expenditures (whether
through cash purchase, principal payments under Capitalized Leases, or otherniise ), in the
aggregate for the Borrower and all Subsidiaries, in excess of $250,000 in any Fiscal Year.
Section 6.17. Minimum EBIWA; Coverage Test. Permit (a) EBTIDA to be Jess than
zero (i.e., a negative number) for the six (6) month period from July 1, 2008 through
December 31,2008, or (b) the ratio of EBITDA to Fixed Charges to be less than 1.00 to 1.00 for
(i) the fiscal quarter ending March 31, 2009, (ii) the six (6) month period from January I, 2009
thro11gh June 30, 2009, (iii) the nine (9) month period from January!, 2009 through
September 30, 2009, or (iv) any four (4) consecutive fiscal quarters ending on or after
December 31,2009.
Section 6.18. ERISA. Suffer or permit any condition or circumstance contrary to or in
violation of Section 3.14 above.
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Vll. DEFAULTS
Section 7.01. Events of Default Each of the following events is herein, and in the Notes,
sometimes referred to as an Event of Default:
(a) if any representation or warranty made herein or in any other Loan
Document, or in any certificate, financial statement, Borrowing Base report, instrument or other
written statement furnished by the Borrower or any Subsidiary in connection with this
Agreement or any of the borrowings hereunder, shall be false, inaccurate or misleading in any
material respect when made or when deemed made hereunder if the correction of such
representation or warranty would indicate, result in or reflect a Material Adverse Effect relative
to the representation or warranty as made; or if the Borrower or any Subsidiaries repeatedly
make false, inaccurate m misleading representations or warranties in connection with this
Agreement or any of the borrowings hereunder, regardless of whether any such Material Adverse
Effect is presented thereby;
(b) any default in the payment of any principal or interest under any of the
Notes or any other Obligations when the same shall be due and payable, whether at the due date
thereof or at a date required for prepayment or by acceleration or otherwise, and the continuance
of any such non-payment(in whole or in part) for a period of three (3) Business Days;
(c) any default in the due observance or performance of any covenant,
condition or agreement contained in any Section of Article VI hereof, which, if capable of being
cured, is not fully cured within thirty (30) days after the occurrence thereof; provide<i, however,
that if such Default is capable of cure but is not capable of being cured with reasonable diligence
within such thirty (30) day period, then such cure period shall be extended for up to an additional
thirty (30) days provided that (i) the Borrower or the subject Subsidiary commenced such cure
- jiroiriptlywithin the ongiiiiil thirtY (30J ctay-ciif'eperioirand thereaftercoiitiiiiioiisly-co-iitinues to
effect such cure with reasonable diligence (and in any event completes such cure within the
extended cure period provided herein), and (ii) no Material Adverse Effect exists or arises in
respect of such Default;
(d) any default in the due observance or performance of any covenant,
condition or agreement to be observed or performed under Article V hereof, or otherwise
pursuant to the terms hereof or any other Loan Document and not addressed in Sections 7.-0l(a),
(b) or (c), and the continuance of such default uuremedied for a period of thirty (30) days (five
(5) Business Days in the case of Section 5.01(d) hereof) after written notice thereof to the
Borrower, or such other cure period as may be provided in the applicable Loan Document;
provided, however, that if such Default (other than in the case of Section 5.0l(d) above) is
capable of cure but is not capable of being cured with reasonable diligence within such thirty
(30) day period, then such cure period shall be extended for up to an additional thirty (30) days
provided that (i) the Borrower or the subject Subsidiary commenced such cure promptly within
the original thirty (30) day cure period and thereafter continuously continues to effect such cure
with reasonal;Jle diligence (and in any event completes such cure within the extended cure period
provided herein), and (ii) no Material Adverse Effect exists or arises in respect of such Default;
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(e) any "Default" under and as defined in the Revolving Loan Agreement, or
any default with respect to any Indebtedness for money borrowed of the Borrower or any of the
Subsidiaries (other than to the Lender) in an amount in excess of $75,000, if the effect of such
default is to permit the holder, with or without notice or lapse of time or both, to. accelerate the
maturity of any such Iodebtedness formoney borrowed or to cause such Indebtedness for money
borrowed to become due prior to the stated maturity thereof;
(f) if the Borrower or any Subsidiary shall: (i) apply for or consent to the
appointment of a receiver, trustee, custodian or liquidator of it or any of its properties, (ii) admit
in writing its inability to pay its debts as they mature, {iii) make a general assignment for the
benefit of creditors, (iv) be adjudicated a bankrupt or insolvent or be the subject of an order for
relief under Title 11 of the United States Code, or (v) file a voluntary petition in bankruptcy, or a
petition or an answer seeking reorganization or an arrangement with creditors or to take
advantage or any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or
liquidation law or statute, or an answer admitting the material allegations of a petition filed
against him or it in any proceeding under any such law, or (vi) take or permit to be taken any
action in furtherance of or for the purpose of effecting any of the foregoing;
(g) if any order, judgment or decree shall be entered, without the application,
approval or consent of the Borrower or any Subsidiary, by any court of competent jurisdiction,
approving a petition seeking reorganization of the Borrower or any Subsidiary, or appointing a
receiver, trustee, custodian or liquidator of the Borrower or any Subsidiary, or of all or any
substantial part of its assets, and such order, judgment or decree shall continue unstayed and in
effect for any period of ninety (90) days;
(h) if final judgment(s) for the payment of money in an uninsured amount in
excess of$75,000 individually or in the aggregate shall be rendered against the Borrower and/or
. any Subsiilfruj; anililie sa.Ille siiallrema1n-undlschargdor unboni:lei:lfor a period ofiliiJ:ii (30)
consecutive days, during which execution shall not be effectively stayed;
(i) the occurrence of any levy upon or seizure or attachment of, or any
uninsured loss of or damage to, any property of the Borrower or any Subsidiary having an
aggregatefair value or repair cost (as the case may be) in excess of$75,000 individually or in the
aggregate, and any such levy, seizure or attachment shall not be set aside, bonded or discharged
within thirty (30) days after the date thereof;
G) if any Lien purported to be created by any Security Document shall cease
to be a valid perfected first priority Lien (subject ouly to any priority accorded by law to
Permitted Liens) on the assets or properties covered thereby (provided that if such condition is
due to a change in Applicable Law or any rectifiable event or occurrence which terminates the
ability to place a Lien on the subject asset, an Event of Default shall not be deemed to exist by
reason thereof unless the Borrower or the subject Subsidiary fails, within ten (1 0) days after
written notice from the Lender, to take other lawful action which shall provide to the Lender
substantiallY, the same benefit as the lost Lien), or the Borrower or any Subsidiary shall assert in
writing that any Lien purported to be created by any Security Document is not a valid perfected
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first priority lien (subject only to any priority accorded by law to Permitted Liens) on the assets
or properties purported to be covered thereby;
(k) if (i) any of the Loan Documents shall cease to be in full force and effect
(other than as a result of the discharge thereof in accordance with the terms thereof or by written
agreement of all parties thereto), provided that if such condition is due to a change in Applicable
Law, an Event of Default shall not be deemed to exist by reason thereof unless the Borrower or
the subject Subsidiary fails, within ten (10) days after written notice from the Lender, to take
other lawful action which shall provide to the Lender substantially the same rights and benefits
as were provided to the Lender innnediately prior to such change in Applicable Law, or (ii) the
Borrower or any Subsidiary shall disclaim or deny the validity of any Loan Document or its
obligations thereunder; or
(l) if the Borrower or any Subsidiary shall be indicted for or convicted of any
felony or crime of moral torpitude.
Section 7.02. Remedies. Upon the occurrence of any Event of Default, and at all times
thereafter during the continuance thereof: (a) the Notes, and any and all other Obligations, shall,
at the Lender's option (except in the case of Sections 7.0l(f) and 7.0J(g) hereof, the occurrence
of which shall automatically effect acceleration, regardless of any action or forbearance in
respect of any prior or ongoing Default or Event of Default which may be inconsistent with such
automatic acceleration), become innnediately due and payable, both as to principal, interest and
other charges, without presenilnent, demand, protest or notice of any kind, all of which are
hereby expressly waived, anything contained herein or in the Notes or other evidence of such
Obligations to the contrary notwithstanding, (b) all outstanding Obligations under the Notes, and
all other outstanding Obligations, shall bear interest at the default rate of interest provided in the
Notes, (c) the Lender may file suit against the Borrower on the Notes and against the Borrower
8nci tlie sti68idiaries under i:he otiler toan. Documents and!orseek:speCffic ieifoiin.ance or
injunctive relief thereunder (whether or not a remedy exists at law or is adequate), (d) the Lender
shall have the right, in accordance with the Security Documents, to exercise any and all remedies
in respect of such or all of the Collateral as the Lender may determine in its discretion (without
any requirement of marshalling of assets, or other such requirement), and (e) the Revolving
Credit Commitment shall, at the Lender's option (except in the case of Sections 7.01(!) and
7/0J(g) hereof, the occurrence of which sh;ill automatically effect termination, regardless of any
action or forbearance in respect of any prior or ongoing Default or Event of Default which may
be inconsistent with such automatic termination), he innnediately terminated or reduced, and the
Lender shall be under no further obligation to consider making any further Advances.
VIII. PARTICIPATING LENDERS; ASSIGNMENT.
Section 8.01. Participations. Anything in this Agreement to the contrary
notwithstanding, the Lender may, at any time and from time to time, without in any manner
affecting or impairing the validity of any Obligations, transfer, assign or grant participating
interests in the Loans as the Lender shall in its sole discretion determine, to such other Persons
(the "Participants") as the Lender may determine. Upon any such transfer, assignment or
granting of participating interests, the Participants shall be deemed to be included within the term
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"Lender" for all purposes of this Agreement, subject to such agreements and arrangements as the
Lender and the Participants may agree upon. Notwithstanding the granting of any such
participating interests: (a) the Borrower shall look solely to the Lender for all purposes of this
Agreement and the transactions contemplated hereby, (h) the Borrower shall at all times have the
right to rely upon any waivers or consents signed by the Lender as being binding upon all of the
Participants, and (c) all communications in respect of this Agreement and such transactions shall
remain solely between the Borrower and the Lender (exclusive of Participants) hereunder.
Section 8.02. Transfer. Anything in this Agreement to the contrary notwithstanding, the
Lender may, at any time and from time to time, without in any manner affecting or impairing the
validity of any Obligations, transfer and assign all or any portion of its interest in this
Agreement, the Notes and the other Loan Documents to any Person (an "Assignee Lender") as
the Lender may determine. Upon any such transfer or assignment, the Assignee Lender shall be
deemed to succeed (to the extent of the interest assigned) to the rights and obligations of the
Lender for all purposes of this Agreement. In the event of any transfer and assignment of the
Lender's entire interest in this Agreement, the Notes and the Security Documents, the Lender
shall be replaced by the Assignee Lender as "Secured Party" under the Collateral Agreement and
all other Security Documents.
Section 8.03. Recordation of Assilmment. In respect of any negotiation, transfer or
assignment of all or any portion of any Lender's interest in this Agreement, any Note and/or any
other Loan Documents at any time and from time to time, the following provisions shall be
applicable:
(a) The Borrower, or any agent appointed by the Borrower, shall maintain a
register (the "Register") in which there shall be recorded the name and address of each Person
. anx <)f!lll}'_{;()_EJl1litrJJ.enttolend ai11()U1lt
payable to such Person under such Person's Note(s) or committed by such Person under such
Person's lending commitment. The Borrower hereby irrevocably appoints the Lender (and/or
any subsequent Lender appointed by the Lender then maintaining the Register) as the Borrower's
agent for the purpose of maintaining the Register.
(b) 1n connection with any negotiation, transfer or assignment as aforesaid,
the transferor/assignor shall deliver to the Lender then maintaining the Register an assignment
and assumption agreement executed by the transferor/assignor and the transferee/assignee,
setting forth the specifics of the subject transaction, including but not limited to the amount and
nature of Obligations and/or lending commitments being transferred or assigned (and being
assumed, as applicable), and the proposed effective date of such transfer or assignment and the
related assumption (if applicable).
(c) Subject to receipt of completed tax forms (indicating withholding status, or
exemption from withholding, as applicable, of the transferee/assignee) reasonably required by
the Person then maintaining the Register, and (if required by such Person) surrender of the
negotiated, transferred or assigned Note(s) for reissuance by the Borrower, such Person shall
record the subject transfer, assignment and assumption in the Register. Anything contained in
any Note or other Loan Document to the contrary notwithstanding, no negotiation, transfer or
39
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assignment shall be effective until it is recorded in the Register pursuant to this Section 8.03(c).
The entries in the Register shall be conclusive and binding for all purposes, absent manifest
error; and the Borrower and each Lender shall treat each Person whose name is recorded in the
Register as a Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower and each Lender at any reasonable time and from time
to time upon reasonable prior notice.
I ~ NUSCELLANEOUS
Section 9.01. Survival. This Agreement and all covenants, agreements, representations
and warranties made herein and in the certificates delivered pursuant hereto, shall survive the
making by the Lender of the Loans and the execution and delivery to the Lender of the Notes,
and shall continue in full force and effect for so long as the Notes or any other Obligations are
outstanding and unpaid. Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the stJCcessors and permitted assigns of such party;
and all covenants, promises and agreements in this Agreement contained, by or on behalf of the
Borrower shall inure to the benefit of the successors and assigns ofthe Lender.
Section 9.02. Indemnification. The Borrower shall indemnify the Lender and its
managers, directors, officers, employees, attorneys and agents against, and shall hold the Lender
and such Persons harmless from, any and al!Josses, claims, damages and liabilities and related
expenses, including reasonable counsel fees and expenses, incurred by the Lender or any such
Person arising out of, in any way connected with, or as a result of: (a) the use of any of the
proceeds of the Loans made by the Lender to the Borrower; {b) this Agreement, the ownership
and operation of the Borrower's and any Subsidiary's assets, including all Real Properties and
improvements or any Contract, the performance by the Borrower or any other Person of their
respective obligations thereunder, and the consummation of the transactions contemplated by this
- -.Agt-eemeiit; (c)-a:ny:tmcter'Sf'ee, lJI'okerage-coillinisSloii ofoilier-silcli. ofl!lgation ]Jayaflfe-or
alleged to be payable in respect of the transactions contemplated by this Agreement which arises
or is alleged to arise from any agreement, action or conduct of the Borrower or any of its
Affiliates, and/or (d) any claim, litigation, investigation or proceeding relating to any of the
foregoing, whether or not the Lender or its managers, directors, officers, employees, attorneys or
agents are a party thereto; provided that such indemnity shall not apply to any such losses,
claims, damages, liabilities ,or related expenses arising from (i) any unexcused breach by the
Lender of any of its obligations under this Agreement, (ii) the willful misconduct or gmss
negligence of the Lender as determined by a final, non-appealable judgment of a court of
competent jurisdiction, or (iii) the breach of any commitment or legal obligation of the Lender to
any Person other than the Borrower or its Affiliates, provided that such breach is determined
pursuant to a final and nonappealable decision of a court of competent jurisdiction. The
foregoing indemnity shall remain operative and in full force and effect regardless of the
expiration or any termination of this Agreement, the consummation of the transactions
contemplated by this Agreement, the repayment of the Loans, the invalidity or unenforceability
of any term or provision of any Loan Document, any investigation made by or on behalf of the
Lender, and. the content or accuracy of any representation or warranty made by the Borrower .or
40
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any Subsidiary iu any Loan Document. All amounts due under this Section 9.02 shall be payable
on written demand therefor.
Section 9.03. Governing Law. This Agreement and the other Loan Documents shall
(irrespective of where same are executed and delivered) be governed by and construed iu
accordance with the laws of the State of New York (without giviug effect to principles of
conflicts oflaws).
Section 9.04. Waiver and Amendment. Neither any modification or waiver of any
provision of this Agreement, the Notes, or any other Loan Document, nor any consent to any
departure by the Borrower or any Subsidiary therefrom, shall in any event be effective unless the
same shall be set forth in writing duly signed or acknowledged by the Lender and all parties to
such Loan Document, and then such waiver or consent shall be effective only iu the specific
instance, and for the specific purpose, for which given. No notice to or demand on the Borrower
in any instance shall entitle the Borrower to any other or future notice or demand in the same,
similar or other circumstances.
Section 9.05. Reservation of Remedies. Neither any failure nor any delay on the part of
the Lender in exercisiug any right, power or privilege hereunder or under the Notes or any other
Loan Document shall operate as a waiver thereof, nor shall a siugle or partial exercise thereof
preclude any other or future exercise, or the exercise of any other right, power or privilege.
Section 9.06. Notices. All notices, requests, demands and other communications under
or in respect of this Agreement or any transactions hereunder shall be iu writing (which may
iuclude telegraphic or telecopied communication) and shall be personally delivered or mailed (by
prepaid registered or certified mail, return receipt requested), sent by prepaid recognized
overnight courier service, or telegraphed or telecopied by facsimile transmission to the
applicable piinyat its address or telecoj)iernuml5er indicated below.
NY 238,652,469v&
If to the Lender:
.Com Vest Capital, LLC
One North Clematis, Suite 300
West Palm Beach, FL 33401
Attention: Chief Financial Officer
Telecopier: (212) 829-5986
with a copy to:
Greenberg Traurig, LLP
200 Park Avenue
NewYork,NewYork 10166
Attention: Shahe Sinanian, Esq.
Telecopier: (212) 801-6400
If to the Borrower:
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Crdentia Corp.
5001 LBJ Freeway, Suite 850
Dallas, Texas 75244
Attention: James TerBeest
Telecopier: (972) 392-2722
with a copy to:
Kane Russell Coleman & Logan, P .C.
1601 Elm Street, Suite 3700
Dallas, Texas 7520 I
Attention: Patrick V. Stark, Esq.
Telecopier: (214) 777-4299
or, as to each party, at such other -address or telecopier number as shall be designated by such
party in a written notice to the other party delivered as aforesaid. All such notices, requests,
demands and other communications shall be deemed given (a) when personally delivered, (b)
three (3) Business Days after being deposited in the mails with postage prepaid (by registered or
certified mail, return receipt requested), (c) one (1) Business Day after being delivered to the
telegraph company or overuight courier service, if prepaid and sent overuight delivery, addressed
as aforesaid and with all charges prepaid or billed to the account of the sender, or (d) when sent
by facsimile transmission to a telecopier number designated by such addressee.
Section 9.07. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the Borrower and the Lender and their respective successors and assigns, except that
the Borrower shall not assign any of its rights or obligations hereunder without the prior written
consent of the Lender.
Section 9.08. Consent to Jurisdiction; Waiver of Jurv TriaL The Borrower 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 Agreement, any other Loan Document, any other
agreements, instruments, certificates or other documents executed in connection herewith or
therewith, or any of the transactions contemplated hereby or thereby, or any of the Borrower's or
any Subsidiary's obligations hereunder or thereunder. The Borrower hereby waives the right to
interpose any counterclaims (other than compulsory counterclaims) in any action brought by the
Lender hereunder or in respect of any other Loan Document, provided that this waiver shall not
preclude the Borrower from pursuing any such claims by means of separate proceedings. THE
BORROWER HEREBY EXPRESSLY WAIVES ANY AND ALL OBJECTIONS WHICH IT
MAY HAVE AS TO VENUE IN ANY OF SUCH COURTS, AND ALSO WAIVES TRIAL BY
JURY IN ANY SUCH SUIT, ACTION ORPROCEEDING. TheLender may file a copy of this
Agreement as evidence of the foregoing waiver of right to jury trial.
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42
NY 238,652,469v8
Section 9.09. Certain Waivers. The Borrower and the Lender each hereby waives any
claims for special, consequential or punitive damages in any way arising out of or relating to this
Agreement, any of the other Loan Documents, or any breach hereof or thereof.
Section 9.1 0. Severability. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid or unenforceable, either in its entirety or by virtue of its
scope or application to given circumstances, such provision shall thereupon be deemed modified
only to the extent necessary to render same valid, or not applicable to given circumstances, or
excised from this Agreement, as the situation may require, and this Agreement shall be construed
and enforced as if such provision had been included herein as so modified in scope or
application, or had not been included herein, as the case may be.
Section 9 .11. Captions. The Article and Section headings in this Agreement are included
herein for convenience of reference only, and shall not affect the construction or interpretation of
any provision of this Agreement.
Section 9.12. Sole and Entire Agreement. This Agreement, the Notes, the other Loan
Documents, and the other agreements, instruments, certificates and documents referred to or
described herein and therein constitute the sole and entire agreement and understanding between
the parties hereto as to the subject matter hereof, and supersede all prior discussions, agreements
and understandings of every kind and nature between the parties as to such subject matter.
Section 9.13. Confidentialitv. The Lender shall not disclose .any Confidential
Information to any Person without the prior consent of the Borrower; provided, however, that
nothing herein contained shall limit any disclosUre of tbe tax structure of the transactions
contemplated hereby, or the disclosure of any information (a) to the extent reqnired by statute,
rule, regnlation or judicial process, (b) to counsel, accountants and other professional advisors
fot the Lender, (c) tobilhk: exilihiliers, auditors;- accountilh1s or; ifi'equlfed lly law, aiiyregulatory
authority, (d) to the officers, partners, managers, directors, employees; agents and advisors
(including independent auditors and counsel) of the Lender, (e) in connection with any litigation
which relates to this Agreement to which the Lender is a party, (J) to a subsidiary or Affiliate of
the Lender, or (g) to any assignee or participant (or prospective assignee or participant) which
agrees to be bound by this Section 9.13, and further provided, that in no event shall tbe Lender
be obligated or required to return any materials furnished by the Borrower. The obligations of
the Lender under this Section 9.13 shall supersede and replace the obligations of tbe Lender
under any confidentiality letter in respect of this financing previously signed and delivered by the
Lender to the Borrower.
Section 9.14. Counterparts; Fax Signatures. This Agreement may be executed in any
number of counterparts, all of which shall constitute one and the same agreement. This
Agreement may be executed by fax signatures, each of which shall be fully binding on the
signing party.
Section 9.15. Short Selling. Until the earlier of (a) tbe Term Loans Maturity Date, or (b)
tbe repayment in full of the Term Loans, Com Vest Capital, LLC and its Affiliates shall not
engage in any uncovered short sales of Common Stock (provided that, for purposes of this
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Section 9.15, the sale of or commitment to sell shares which may be acquired by Com Vest
Capital, LLC from the exercise of the Warrant shall not be deemed to be an uncovered short
sale).
Section 9.16. Effect on other Loan Documents. From and after the Closing Date, (a) this
Agreement shall amend; modify and supersede the Original Agreement in its entirety, provided
that this Agreement shall not revoke any transactions effected under the Original Agreement or
effect a novation of ariy Obligations outstanding under the Original Agreement, (b) all references
to the "Loan Agreement" in the various Loan Documents shall be deemed to refer to this
Agreement, and (c) all references to the "Notes" contained in the various Loan Documents shall
mean and refer to the Notes issued pursuant to this Agreement.
[The remainder of this page is intentionally blank]
44
NY 238,6S2,469v8
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IN WITNESS WHEREOF, the parties hereto hive caused thiB Agreement to be duly
executed by their duly authorized officer as of the day aud year first written above.
NY 23&,652,469v8
e: g
Title: Mauagmg Director
CRDENTIA CORP.
By:

Title: Chief Executive Officer
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their duly authorized officer as of the day and year first written above.
NY 238,652,469v8
COMVEST CAPITAL, LLC
By: ___ ~ - - - - - - - - - - , - -
Name: Gary E. laggard
Title: Managing Director
45
EXHIBITB
Ratification and Amendment Agreement
'.
Execution Copy
RATIFICATION AND AMENDMENT AGREEMENT
RATIFICATION AND AMENDMENT AGREEMENT (the "Ratification Agreement")
dated as of March 17, 2010, by and among CRDENTIA, INC., a Delaware corporation
("Crdentia"), CRDE CORP., a Delaware corporation ("CRDE"), GHS ACQUISITION
CORPORATION, a Delaware corporation ("GHS"), HIP HOLDING INC., a Delaware
corporation ("HIP"), MP HEALTH CORP., a Delaware corporation ("MP"), NEW AGE
STAFFING, INC., a Delaware corporation ("NAS"), NURSE NETWORK INC., a California
corporation ("NNI"), BAKER ANDERSON CHRISTIE INC., a California corporation ("BAC"),
HEALTH INDUSTRY PROFESSIONALS, LLC, a Michigan limited liability company, ("HIP
LLC") and ATS UNIVERSAL, LLC, a Florida limited liability company ("A TS"), (each,
individually, a "Debtor" and, collectively, the "Debtors" or "Borrower"), and Com Vest Capital,
LLC ("Lender"), as Lender and as successor-in-interest to Wells Fargo Bank, N.A., acting
through its Wells Fargo Business Credit, operating division ("WFBC").
WIT N E S S E T H:
WHEREAS, each Debtor intends to commence a case (collectively, the "Bankruptcy
Cases") under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy
Court (the "Bankruptcy Code") for the District of Delaware (the "Bankruptcy Court") and
Debtors intend to retain possession of their respective assets and each be authorized under the
Bankruptcy Code to continue the operation of their businesses as debtor-in-possession;
WHEREAS, Lender, as assignee of WFBC pursuant to the Loan Purchase Agreement
between Lender and WFBC, as assignee of TempFunds, dated as of September 30, 2009, made
loans and advances to Borrower secured by substantially all assets and properties of Borrower as
set forth in the Existing Financing Agreements (as hereinafter defined);
WHEREAS, Debtors will seek entry by Bankruptcy Court of a Financing Order (as
hereinafter defined) pursuant to which Lender may make post-petition loans, advances and other
financial accommodations to Borrower secured by all assets and properties of the Debtors, as set
forth in the Financing Order and the Existing Financing Agreements;
WHEREAS, the Financing Order will provide that as a condition to the making of such
post-petition loans, advances and other financial accommodations, Borrower shall have executed
and delivered this Ratification Agreement;
WHEREAS, the Debtors desire to reaffirm their obligations pursuant to the Existing
Financing Agreements and acknowledge their continuing liabilities to Lender thereunder in order
to induce Lender to make such post-petition loans and advances to Borrower; and
WHEREAS, Debtors have also requested that Lender make post-petition loans to
Borrower and make certain amendments to the Loan Agreement (as hereinafter defined) and
Lender is willing to do so subject to the terms and conditions contained herein .
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24019/2
03/07/2010 !3736139.1
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NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and
agreements contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Lender and Borrower mutually covenant,
warrant and agree as follows:
I. DEFINITIONS
1.1 Additional Definitions. As used herein, the following terms shall have the
respective meanings given to them below and the Existing Financing Agreements (as defined
herein) shall be deemed and are hereby amended to include, in addition and not in limitation,
each of the following definitions:
(a) "Bankruptcy Code" shall mean the United States Bankruptcy Code, being
Title 11 of the United States Code as enacted in 1978, as the same has heretofore been or may
hereafter be amended, recodified, modified or supplemented, together with all rules, regulations
and interpretations thereunder or related thereto.
(b) "Bankruptcy Court" shall mean the United States Bankruptcy Court or the
United States District Court for the District of Delaware.
(c) "Budget" shall mean the initial budget delivered to Lender and attached as
Exhibit A hereto setting forth the Projected Information (as such term is defined in Section 5.3
hereof) for the periods covered thereby, or any subsequent or amended budget, satisfactory in
form and substance to Lender, setting forth Projected Information for any such period or any
subsequent period or periods.
(d) "Cash Collateral" shall have the meaning ascribed to the term in Section
363( a) of the Bankruptcy Code.
(e) "Chapter 11 Cases" shall mean the Chapter 11 cases of the Debtors, which
will be commenced in the Bankruptcy Court.
(f) "Collateral" shall mean, collectively, the Pre-Petition Collateral (as defined
herein) and the Post-Petition Collateral (as defmed herein).
(g) "Debtor" shall have the meaning ascribed to such term in the first paragraph
of this Ratification Agreement.
(h) "Debtor-in-Possession" shall mean the Debtors, as they shall exist on and after
the Petition Date and until such time as the effective date of the Plan, so long as the Debtors are
debtors in possession pursuant to Bankruptcy Code Section 1107.
(i) "Disclosure Statement" means the disclosure statement with respect to the
Plan, dated as of March 17,2010.
G) "Existing Financing Agreements" shall mean the Loan Agreement as in effect
immediately- prior to the Petition Date, together with all supplements, agreements, .notes,
documents, instruments and guarantees at any time executed and/or delivered in connection
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therewith or related thereto, as all of the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
(k) "Financing Agreements" shall mean the Existing Financing Agreements, this
Ratification Agreement, together with all supplements, agreements, notes, documents,
instruments and guarantees at any time executed and/or delivered in connection therewith or
related thereto, as all of the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
(!) "Financing Order" shall mean the Interim Financing Order, the Permanent
Financing Order and such other orders relating thereto or authorizing the granting of credit by
Lender to Borrower on an emergency, interim or permanent basis pursuant to Section 364 of the
Bankruptcy Code as may be issued or entered by the Bankruptcy Court in the Chapter 11 Cases.
(m) "Interim Financing Order" shall have the meaning ascribed thereto in Section
9.8 hereto.
(n) "Leasehold Interests" shall mean each leasehold estate or interest of any
Debtor together with its interest in any of the improvements and fixtures located upon or
appurtenant to each leasehold estate.
(o) "Lien Search" shall mean the results of the lien search performed by National
Corporate Research at the direction of Debtors' counsel that were delivered to Lender's counsel
on or about March 10,2010.
(p) "Loan Agreement" shall mean (1) Loan and Security Agreement, dated July 3,
2008, by and between Borrower and Lender, as successor to Tempfunds, the First Amendment
dated as of June 22, 2009, between WFBC, successor in interest to Tempfunds, and the Second
Amendment to Loan and Security Agreement, dated July 7, 2009 (as the same has heretofore
been amended, supplemented, modified, extended, renewed, restated and/or replaced at any time
prior to the Petition Date, the "Existing Loan Agreement"), and (2) all other agreements,
documents, and instruments executed and/or delivered with, to, or in favor of Secured Lender,
including, without limitation, the security agreements, notes, guarantees, mortgages, and
Uniform Commercial Code financing statements and all other related agreements, documents,
and instruments executed and/or delivered in connection therewith or related thereto.
I
( q) "Permanent Financing Order" shall have the meaning ascribed thereto in
Section 9.9 hereto.
(r) "Petition Date" shall mean the date of the commencement of the Chapter 11
Cases.
(s) "Plan" shall mean the Plan of Reorganization dated March 17, 2010, as may
be amended pursuant to which the Debtors propose to modify their capital structure and emerge
from chapter 11 pursuant to section 1129 of the Bankruptcy Code.
(t) "Post-Petition Collateral" shall mean, collectively, all now existing or
hereafter acquired real and personal property of each Debtor's estate, wheresoever located, of
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any kind, nature or description, whether pursuant to the Financing Agreements or the Financing
Order or any other order entered or issued by the Bankruptcy Court, and shall include, without
limitation:
property;
(i) All of the Collateral (as defined in the Loan Agreement);
(ii) all accounts;
(iii) all general intangibles, including without limitation, all intellectual
(iv) all goods, including, without limitation, inventory and equipment;
(v) all real property and fixtures;
(vi) all leasehold interests;
(vii) all chattel paper (including all tangible and electronic chattel paper);
(viii) all instruments (including all promissory notes);
(ix) all documents;
(x) all deposit accounts;
(xi) all letters of credit, banker's acceptances and similar instruments and
including all letter-of-credit rights;
(xii) all supporting obligations and all present and future liens, security
interests, rights, remedies, title and interest in, to and in respect of Accounts and other Collateral,
including (A) rights and remedies under or relating to guaranties, contracts of suretyship, letters
of credit and credit and other insurance related to the Collateral, (B) rights of stoppage in transit,
replevin, repossession, reclamation and other rights and remedies of an unpaid vendor, lienor or
secured party, (C) goods described in invoices, documents, contracts or instruments with respect
to, or otherwise representing or evidencing, Receivables or other Collateral, including returned,
repossessed and reclaimed goods, and (D) deposits by and property of account debtors or other
persons securing the obligations of account debtors;
(xiii) all (A) investment property (including Marketable Securities, other
securttJes, whether certificated or uncertificated, securities accounts, security entitlements,
commodity contracts or commodity accounts) and (B) monies, credit balances, deposits and
other property of Borrower and Guarantors now or hereafter held or received by or in transit to
Lender or any of their respective Affiliates or at any other depository or other institution from or
for the account of Borrower or Guarantors, whether for safekeeping, pledge, custody,.
transmission, collection or otherwise;
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(xiv) all commercial tort claims;
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(xv) to the extent not otherwise described above, all Accounts (as defined
in the Loan Agreement);
(xvi) all claims, rights, interests, assets and properties recovered by or on
behalf of each Debtor or any trustee of such Debtor (whether in the Chapter 11 Cases or any
subsequent case to which any of the Chapter 11 Cases is converted), including, without
limitation, all property recovered as a result of transfers or obligations avoided or actions
maintained or taken pursuant to Sections 544, 545, 547, 548, 549, 550, 551 and 553 of the
Bankruptcy Code;
(xvii) all books and records of the Debtors; and
(xviii) all products and proceeds of the foregoing, in any form, including
insurance proceeds and all claims against third parties for loss or damage to or destruction of or
other involuntary conversion of any kind or nature of any or all of the other Collateral.
(u) "Post-Petition Obligations" shall mean all now existing and hereafter arising
loans, advances, letter of credit obligations, debts, obligations, liabilities, covenants and duties of
each Debtor to Lender of every kind and description, however evidenced, whether direct or
indirect, absolute or contingent, joint or several, secured or unsecured, due or not due, primary or
secondary, liquidated or unliquidated, arising on and after the Petition Date and whether arising
on or after the conversion or dismissal of the Chapter 11 Cases, or before, during and after the
confirmation of any plan of reorganization in the Chapter 11 Cases, and whether arising under or
related to this Ratification Agreement, the Existing Financing Agreements, a Financing Order,
by operation of law or otherwise, and whether incurred by such Debtor as principal, surety,
endorser, guarantor or otherwise and including, without limitation, all principal, interest,
financing charges, letter of credit fees, unused line fees, servicing fees, DIP facility fees, early
termination fees, other fees, commissions, costs, expenses and attorneys', accountants' and
consultants' fees and expenses incurred in connection with any of the foregoing.
(v) "Pre-Petition Collateral" shall mean all "Collateral" as such term is defined in
the Loan Agreement and all other security for the Pre-Petition Obligations as provided in the
Existing Financing Agreements immediately prior to the Petition Date.
(w) "Pre-Petition Obligations" shall mean all loans, advances, letter of credit
obligations, debts, obligations, liabilities, indebtedness, covenants and duties of Borrower to
Lender of every kind and description, however evidenced, whether direct or indirect, absolute or
contingent, joint or several, secured or unsecured, due or not due, primary or secondary,
liquidated or unliquidated, arising before the Petition Date and whether arising under or related
to the Existing Financing Agreements, by operation of law or otherwise and whether incurred by
such Debtor as principal, surety, endorser, guarantor or otherwise and including, without
limitation, all principal, interest, financing charges, letter of credit fees, unused line fees,
servicing fees, early termination fees, other fees, commissions, costs, expenses and attorneys,
accountants and consultants fees and expenses incurred in connection with any of the foregoing.
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(x) "Ratification Agreement" shall mean this Ratification and Amendment
Agreement by and among Debtors and Lender, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
(y) "Tempfunds" shall mean Capital Tempfunds, a division of Capital Business
CreditLLC.
(z) 'Term Loan Agreement" shall mean the Revolving Credit and Term Loan
Agreement between Lender and Crdentia, dated as of February 22, 2008 as amended and restated
in the Amended and Restated Term Loan Agreement dated as of July 7, 2008 (as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced).
(aa) "WFBC" shall mean Wells Fargo Bank, N.A., acting through its Wells
Fargo Business Credit and Operating Division.
1.2 Amendments to Definitions in Financing Agreements.
(a) All references to the term "Collateral" in any of the Existing Financing
Agreements or any other term referring to the security for the Pre-Petition Obligations shall be
deemed and each such reference is hereby amended to mean, collectively, the Pre-Petition
Collateral and the Post-Petition Collateral.
(b) All references to Debtors, including, without limitation, to the terms
"Borrower" or "Debtors" in any of the Existing Financing Agreements, shall be deemed and
each such reference is hereby amended to mean and include the Debtors as defined herein, and
their successors and assigns (including any trustee or other fiduciary hereafter appointed as its
legal representative or with respect to the property of the estate of such corporation whether
under Chapter I I of the Bankruptcy Code or any subsequent Chapter 7 case and its successor
upon conclusion of the Chapter I 1 Cases of such corporation).
(c) All references to the term "Loan Agreement" in any of the Existing Financing
Agreements, shall be deemed and each such reference is hereby amended to mean the Loan
Agreement, as defmed herein and amended hereby and ratified, assumed and adopted by
Borrower pursuant to the terms hereof and the Financing Order, as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.
(d) All references to the term "Material Adverse Effect" and "material adverse
change" in this Ratification Agreement and in any of the Existing Financing Agreements, shall
be deemed and each such reference in the Existing Financing Agreements is hereby amended to
add at the end thereof: "provided, that, the commencement of the Chapter I I Cases shall not
constitute a Material Adverse Effect".
(e) All references to the term "Obligations" in this Ratification Agreement and in
any of the Existing Financing Agreements shall be deemed and each such reference in the
Existing Financing Agreements is hereby amended to mean, both the Pre-Petition Obligations
and the Post-Petition Obligations.
1.3 Interpretation.
(a) For purposes of this Ratification Agreement, unless otherwise defined or
amended herein, including, but not limited to, those terms used and/or defmed in the recitals
hereto, all terms used herein shall have the respective meanings assigned to such terms in the
Loan Agreement.
(b) All references to the terms "Lender", or any other person pursuant to the
definitions in the recitals hereto or otherwise shall include its respective successors and assigns.
(c) All references to any term in the singular shall include the plural and all
references to any term in the plural shall include the singular.
(d) All terms not specifically defined h e r ~ l n which are defined in the UCC shall
have the meaning set forth therein, except that the term "Lien" or "lien" shall have the meaning
set forth in 101(37) of the Bankruptcy Code.
2. ACKNOWLEDGMENT
2.1 Pre-Petition Obligations. Borrower hereby acknowledges, confirms and agrees
that Borrower is indebted to Lender for the Pre-Petition Obligations, as of March 17,2010, in
respect of all Pre-Petition Obligations (a) consisting of Revolving Loans made pursuant to the
Existing Financing Agreements in the aggregate principal amount of not less than $5,736,551.72,
together with interest accrued and accruing thereon, and (b) consisting of term loans made
pursuant to the Term Loan Agreement in the principal amount of $10,693,240.81 together with
interest accrued and accruing thereon, in each case together with costs, expenses, fees (including
attorneys' fees and legal expenses) and other charges now or hereafter owed by Borrower to
Lender, all of which are unconditionally owing by Borrower to Lender, without offset, defense
or counterclaim of any kind, nature and description whatsoever.
2.2 Acknowledgment of Security Interests. The Debtors each hereby acknowledge,
confirm and agree that Lender has and shall continue to have valid, enforceable and perfected
first priority and senior security interests in and liens upon all Pre-Petition Collateral heretofore
granted to Lender pursuant to the Existing Financing Agreements as in effect immediately prior
to the Petition Date to secure all of the Obligations, as well as valid and enforceable frrst priority
and senior security interests in and liens upon all Post-Petition Collateral granted to Lender under
the Financing Order or hereunder or under any of the other Financing Agreements or otherwise
granted to or held by Lender.
2.3 Binding Effect of Documents. The Debtors each hereby aclmowledge, confirm
and agree that: (a) each of the Existing Financing Agreements to which it is a party was duly
executed and delivered to Lender by Borrower and each is in full force and effect as of the date
hereof, (b) the agreements and obligations of Borrower contained in the Existing Financing
Agreements constitute the legal, valid and binding obligations of Borrower enforceable against
Borrower in accordance with its respective terms and Borrower has no valid defense, offset or
counterclaiJ;ll, to the enforcement of such obligations, and (c) Lender is and shall be entitled to all
of the rights, remedies and benefits provided for in the Existing Financing Agreements and the
Financing Order.
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3. ADOPTION AND RATIFICATION
Borrower hereby (a) ratifies, assumes, adopts and agrees to be bound by the Existing
Financing Agreements and (b) agrees to pay ail of the Pre-Petition Obligations in accordance
with the terms of the Existing Financing Agreements and the Financing Order. All of the
Existing Financing Agreements are hereby incorporated herein by reference and hereby are and
shall be deemed adopted and assumed in full by each Debtor, as Debtor and Debtor-in-
Possession, and considered as agreements between such Debtor and Lender, as applicable. Each
Debtor hereby ratifies, restates, affirms and confirms all of the terms and conditions of the
Existing Financing Agreements, as amended and supplemented pursuant hereto and the
Financing Order, and each Debtor agrees to be fully bound, as Debtor and Debtor-in-Possession,
by the terms of the Financing Agreements to which such Debtor is a party.
4. GRANT OF SECURITY INTEREST
As collateral security for the prompt performance, observance and payment in full of ail
of the Obligations (including the Pre-Petition Obligations and the Post-Petition Obligations),
Borrower, as Debtors and Debtors-in-Possession, hereby grants, pledges and assigns to Lender,
and also confirms, reaffirms and restates the prior grant to Lender of, continuing security
interests in and liens upon, and rights of setoff against, all of the Collateral.
5. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS
In addition to the continuing representations, warranties and covenants heretofore and
hereafter made by each Debtor to Lender, whether pursuant to the Financing Agreements or
otherwise, and not in limitation thereof, each Debtor hereby represents, warrants and covenants
to Lender the following (which shall survive the execution and delivery of this Ratification
Agreement), the truth and accuracy of which, or compliance with, to the extent such compliance
does not violate the terms and provisions of the Bankruptcy Code, shall be a continuing
condition of the making ofloans by Lender:
5.1 Financing Order. The Financing Order shall du1y entered and valid, subsisting
and continuing not later than March 19, 2010 and thereafter (a) shall not be vacated, modified,
reversed on appeal, or vacated or modified by any order of the Bankruptcy Court (other than as
consented to by Lender) and (b) shall not subjecfto any pending appeal or stay.
5.2 Use of Proceeds.
(a) All Loans provided by Lender to Borrower pursuant to the Financing Orders,
the Loan Agreement or otherwise, shall be used by Borrower for general operating and working
capital purposes in the ordinary co\Jrse of business of Borrower and in compliance with the
Budget. Unless authorized by the Bankruptcy Court and approved by Lender in writing, no
portion of any administrative expense claim or other claim relating to the Chapter 11 Cases shall
be paid with the proceeds of such Revolving Loans provided by Lender to Borrower, other than
those administrative expense claims and other claims relating to the Chapter II Cases directly
attributable to the operation of the business of Borrower in the ordinary course of such business
in accordan'ce with the Existing Financing Agreements.
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(b) Borrower is authorized to use proceeds of Revolving Loans made pursuant to
the Financing Order and the Loan Agreement for the purpose of paying Allowed Professional
Fees (as such term is defined in the Financing Order) in accordance with the terms of the
Financing Order. Debtors shall report to Lender the amount of each post-petition Revolving
Loan advanced by Lender, which is used by Debtors for the purpose of paying Allowed
Professional Fees and shall promptly provide copies of the statements (which may be redacted to
exclude privileged information) received from each Professional seeking Allowed Professional
Fees. At all times on and after any Event of Default, Debtors shall promptly obtain statements
from each Professional and report to Lender the amount of the accrued and unpaid Allowed
Professional Fees as of such date. Amounts available to satisfy accrued and unpaid Allowed
Professional Fees, which are Carve-Out Expenses (as such term is defmed in the Financing
Order) shall be disbursed Jl!Q rata among the Professionals in accordance with the terms of the
Financing Order.
5.3 Budget.
(a) The initial Budget has been prepared by Borrower and presented to Lender.
Such Budget has been thoroughly reviewed by Debtors and its management and sets forth: (i)
projected weekly operating cash receipts for each week commencing with the week ending as of
March 19, 2010, (ii) projected weekly cash disbursements for each week commencing with the
week ending as of March 19, 20 10, and (iii) projected aggregate principal amount of outstanding
Loans for each week commencing with the week ending as of March 19, 201 0 (collectively, the
"Projected Information"). In addition to the initial Budget attached hereto as Exhibit A,
Borrower shall furrtish to Lender on Wednesday of each week commencing March 24, 2010, a
report that sets forth for the period under review a comparison of the actual cash receipts,
disbursements and loan balances of the prior week to the projected cash receipts, disbursements
and loan balances for such weekly periods set forth in the then current Budget on a cumulative,
weekly roll-forward basis, together with a certification of the chief financial officer that no
Material Budget Deviation (as defined in Section 5.3(b)) has occurred.
(b) Material Budget Deviation. It shall constitute a material deviation from the
Budget and an additional Event of Default under the Loan Agreement if (i) on a rolling basis,
commencing with the week ending as of March 19, 2010 and for each week thereafter, the actual
aggregate weeldy receipts as of the end of any such week set forth on the Budget (on a
cumulative basis together with each of the previous two weeks set forth on the Budget) are less
than ninety percent (90%) of the projecled aggregate weekly receipts as of the end of any such
week set forth on the Budget (on a cumulative basis together with each of the previous two
weeks set forth on the Budget), (ii) on a rolling basis, commencing with the week ending as of
March 19, 2010 and for each week thereafter, the actual aggregate weekly disbursements as of
the end of any such week set forth on the Budget (on a cumulative basis together with each of the
previous two weeks set forth on the Budget) are more than one-hundred ten percent (11 0%) of
the projected aggregate weekly disbursements as of the end of any such week set forth on the
Budget (on a cumulative basis together with each of the previous two weeks set forth on the
Budget), and (iii) commencing with the week ending as of March 19, 2010 and for each week
thereafter until Obligations are repaid in full, the actual aggregate principal amount of
outstanding' Loans as of the end of any such week exceeds one-hundred ten percent (110%) of
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the projected aggregate principal amount of outstanding Loans as of the end of any such week set
forth on the Budget.
(c) Borrower will act strictly in accordance with the Budget and Lender has relied
upon the Budget in determining to enter into the post-petition financing arrangements provided
for herein.
5.4 Consultant. So long as any Obligations remain outstanding, Debtors hereby agree
to continue to retain RVR Consulting Group II, LLC ("RVR") or another management and
consulting firm acceptable to Lender ("RVR" or such other consultant referred to herein, as
"Consultant"), which shall assist or continue to assist, as the case may be, Debtors in the
management of their business and properties and in connection with maximizing the value of the
Collateral and Debtors hereby permit the Consultant to share with Lender all budgets, records,
projections, financial information, reports and other information relating to the Collateral, or the
financial condition or operations of the. Debtors' business. Debtors agree to provide the
Consultant with complete access to all of the Debtors' books and records, all of Debtors'
premises and to Debtors' management as and when deemed necessary by the Consultant.
5.5 Sale Process.
(a) On or before March 17, 2010, the Debtors shall file with the Bankruptcy
Court the Plan and Disclosure Statement, a motion seeking approval of the Disclosure Statement
and a motion seeking approval of procedures for solicitation of offers for the purchase of the
Debtors' assets (the "Bid Procedures").
(b) On or before Aprill5, 2010, the Debtors shall obtain orders of the Bankruptcy
Court approving (i) the Disclosure Statement and (ii) the Bid Procedures.
(c) On or before May 15, 2010, the Debtors shall obtain an order of the
Bankruptcy Court (i) confirming the Plan or (ii) approving the sale of the Debtors' assets to a
party other than Lender for a purchase price of not less than $10,000,000.
(d) On or before May 31, 2010, make the Plan effective or close the sale
described in subparagraph 5.5(c)(ii) hereof.
6. AMENDMENTS
6.1 Advances: The first (1st) paragraph of Section 34 of the Loan Agreement is
amended by the addition of the following at the end of such paragraph:
. "In addition to the advances referenced above, TEMPFUNDS shall make available to
Borrower, at TEMPFUNDS' sole discretion, a debtor-in-possession facility (the "DIP
Facility") in the amount of $900,000.00. The amounts owing under the DIP Facility shall
accrue interest at the a rate of twelve percent (12%) per annum. The DIP Facility shall be
included within the term "Obligations."
6.2 Payments. Section 40 of the Loan Agreement is hereby amended by adding the
following new paragraph at the conclusion thereof:
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"Without limiting the generality of the foregoing, Lender may, in its
discretion, apply any such amounts collected first to the Pre-Petition
Obligations (as such term is defined in this Agreement) until such
Pre-Petition Obligations are paid and satisfied in full."
6.3 Additional Financial Reporting Requirements. Section 41 of the Loan Agreement
is hereby amended by adding the following new subparagraph (e):
"(e) Borrower shall also provide Lender with copies of all financial
reports, schedules and other materials and information at any time
furnished by Borrower, or on its behalf, to the Bankruptcy Court, or the
U.S. Trustee or to any creditors' committee or Borrower's shareholders,
concurrently with the delivery thereof to the Bankruptcy Court, creditors'
committee, U.S. Trustee or shareholders, as the case may be."
6.4 Financial Covenant. Exhibit B, paragraph 33 of the Loan Agreement is hereby
deleted in its entirety. Section 14 of the Loan Agreement is hereby deleted in its entirety.
6.5 Events of Default. Section 50 of the Loan Agreement is hereby amended as
follows:
(a) The words "Section 14" and "Exhibit B, paragraph 33, which as to (a) can
only be cured by the Borrower infusing additional capital into the Borrower through additional
capital or Subordinated Debt in form and amount acceptable to TEMPFUNDS" are deleted from
subparagraph (b).
following:
(b) Subparagraph (d) is hereby deleted m its entirety and replaced with the
"Borrower shall incur any indebtedness other than trade debt incurred in
the ordinary course of business."
(c) Subparagraph (f) is amended to add the following to the conclusion thereof:
"Notwithstanding the foregoing, the existence of the liens reflected on the
Lien Search shall not constitute an Event of Default hereunder."
(d) Subparagraph (v) is added as follows:
"Borrower shall make any capital expenditures without the consent of
Lender, which consent shill! be granted in Lender's reasonable discretion."
(e) Subparagraph (w) is added as follows:
"Borrower shall sell any assets outside the ordinary course of business
without the consent of Lender, which consent shall be granted in Lender's
, . sole discretion."
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6.6 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver. Section
57 of the Loan Agreement is hereby amended by adding the following at the end thereof:
"except to the extent that the provisions of the Bankruptcy Code are applicable and specifically
conflict with the foregoing."
6.7 Notices. Section 62 of the Loan Agreement is hereby amended by adding that
any notices, requests and demands be sent to the following parties:
If to Lenders with a copy to:
Ifto Debtors with a copy to:
7. RELEASE
7.1 Release of Pre-Petition Claims.
LOWENSTEIN SANDLER PC
65 Livingston A venue
Roseland, New Jersey 07068
Facsimile No.: 973-597-2371
Attn: Thomas A. Pitta, Esq.
GERSTEN SAVAGE, LLP
600 Lexington Avenue
New York, New York I 0022
Facsimile No.: (212) 980-5192
Attn: Paul Rachmuth, Esq.
(a) Upon entry of the Financing Order, and in consideration of the agreements of
Lender contained herein and the making of any Loans by Lender, the Debtors, pursuant to the
Loan Agreement, and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, on behalf of itself and its and their respective successors,
assigns, and other legal representatives, hereby absolutely, unconditionally and irrevocably
releases, remises and forever discharges the Lender, its respective successors and assigns, and its
respective present and former shareholders, affiliates, subsidiaries, divisions, predecessors,
directors, officers, attorneys, employees and other representatives (Lender and all such other
parties being hereinafter referred to collectively as the "Releasees" and individually as a
"Releasee"), of and from all demands, actions, causes of action, suits, covenants, contracts,
controversies, agreements, promises, sums of money, accounts, bills, reckonings, damages and
any and all other claims, counterclaims, defenses, rights of set-off, demands and liabilities
whatsoever (individually, a "Pre-Petition Released Claim" and collectively, "Pre-Petition
Released Claims") of every name and natnre, known or unknown, suspected or unsuspected,
both at law and in equity, which any Borrower, or any of their respective successors, assigns, or
other legal representatives may now or hereafter own, hold, have or claim to have against the
Releasees or any of them for, upon, or by reason of any nature, cause or thing whatsoever which
arises at any time on or prior to the day and date of this Agreement, including, without limitation,
for or on account of, or in relation to, or in any way in connection with the Loan Agreement, as
amended and supplemented through the date hereof, and the other Financing Agreements.
. . (b) Upon entry of the Financing Order, each Debtor, on behalf of itself and its
respective successors, assigns, and other legal representatives, hereby absolutely, unconditionally
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and irrevocably, covenants and agrees with each Releasee that it will not sue (at law, in equity, in
any regulatory proceeding or otherwise) any Releasee on the basis of any Pre-Petition Released
Claim released, remised and discharged by Borrower pursuant to this Section 8. If Borrower
violates the foregoing covenant, Borrower agrees to pay, in addition to such other damages as
any Releasee may sustain as a result of such violation, all attorneys' fees and costs incurred by
any Releasee as a result of such violation.
7.2 Release of Post-Petition Claims. Upon the receipt by Lender of indefeasible
payment in full of the Obligations in cash or other inunediately available funds and tel'IIllnation
of the Financing Agreements (the "Payment Date"), in consideration of the agreements of Lender
contained herein and the making of any Loans by Lender, each Debtor hereby covenants and
agrees to execute and deliver in favor of Lender a valid and binding termination and release
agreement (in form and substance satisfactory to Lender), pursuant to which, inter alia, each
Debtor, on behalf of itself and its respective successors, assigns, and other legal representatives,
shall absolutely, unconditionally and irrevocably release, remise and forever discharge each
Releasee, of and from all demands, actions, causes of action, suits, covenants, contracts,
controversies, agreements, promises, sums of money, accounts, bills, reckonings, daroages and
any and all other claims, counterclaims, defenses, rights of set-off, demands and liabilities
whatsoever (individually, a "Post-Petition Released Claim" and collectively, "Post-Petition
Released Claims") of every name and nature, known or unknown, suspected or unsuspected,
both at law and in equity, which such Debtor, or any of its respective successors, assigns, or
other legal representatives may now or hereafter own, hold, have or claim to have against the
Releasees or any of them for, upon, or by reason of any nature, cause or thing whatsoever, which
arises at any time on or prior to the Payment Date, including, without limitation, for or on
account of, or in relation to, or in any way in connection with the Loan Agreement, as amended
and supplemented through the Payment Date, and the other Existing Financing Agreements or
the Financing Order.
7.3 Releases Generally.
(a) Borrower understands, acknowledges and agrees that the releases set forth
above in Sections 8.1 and 8.2 may be pleaded as a full and complete defense and may be used as
a basis for an injunction against any action, suit or other proceeding which may be instituted,
prosecuted or attempted in breach of the provisions of such reieases.
(b) Borrower agrees that no fact, event, circumstance, evidence or transaction
which could now be asserted or which may hereafter be discovered shall affect in any manner the
final and unconditional nature of the releases set forth above in Sections 8.1 and 8.2.
8. CONDITIONS PRECEDENT
In addition to any other conditions contained herein or the Loan Agreement, as in effect
immediately prior to the Petition Date, with respect to the Loans and other financial
accommodations available to Borrower (all of which conditions, except as modified or made
pursuant to this Ratification Agreement shall remain applicable to the Loans and be applicable to
other finan<;ial accommodations available to Borrower), the following are conditions to Lender's
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I
t
obligation to extend further loans, advances or other financial accommodations to Borrower
pursuant to the Loan Agreement:
8.1 Debtors shall furnish to Lender all financial information, projections, budgets,
business plans, cash flows and such other information, including a Budget, as Lender shall
reasonably request from time to time;
8.2 as of the Petition Date, there shall have been no termination of the Existing
Financing Agreements;
8.3 no trustee, examiner or receiver or the like shall have been appointed or
designated with respect to any Debtor, as Debtor and Debtor-in-Possession, or its business,
properties and assets and no motion or proceeding shall be pending seeking such relief;
8.4 the execution and delivery of this Ratification Agreement and all other Financing
Agreements to be delivered in connection herewith by the Debtors in form and substance
satisfactory to Lender;
8.5 the Interim Financing Order shall ratify and amend the Deposit Account Control
Agreements to reflect the commencement of the Chapter II Cases, that each Debtor, as Debtor
and Debtor-in-Possession, is the successor in interest to Borrower, that the Obligations include
both the Pre-Petition Obligations and the Post-Petition Obligations, that the Collateral includes
both the Pre-Petition Collateral and the Post-Petition Collateral as provided for herein and the
other terms and conditions of this Ratification Agreement;
8.6 the execution and/or delivery to Lender of all agreements, documents and
instruments which, in the good faith judgment, of Lender are necessary or appropriate;
8.7 satisfactory review by counsel for Lender of legal issues attendant to the
post-petition financing transactions contemplated hereunder;
8.8 each Debtor shall comply in full with the notice and other requirements of the
Bankruptcy Code and the applicable Bankruptcy Rules with respect to any relevant Financing
Order in a manner acceptable to Lender and its counsel, and an Interim Financing Order shall
have been entered by the Bankruptcy Court (the "Interim Financing Order") authorizing the
secured financing under the Financing Agreements, as ratified and amended hereunder on the
terms and conditions set forth in this Ratification Agreement and, inter alia, modifying the
automatic stay, authorizing and granting the senior security interest in liens in favor of Lender
described in this Ratification Agreement and in the Financing Order, and granting super-priority
expense claims to Lender with respect to all obligations due Lender. The Interim Financing
Order shall authorize post-petition financing under the terms set forth in this Ratification
Agreement in an amount acceptable to Lender, in its sole discretion, and it shall contain such
other terms or provisions as Lender and its counsel shall require;
8.9 with respect to further credit after expiration of the Interim Financing Order, on or
before the expiration of the Interim Financing Order, the Bankruptcy Court shall have entered a
Permanent 'Financing Order authorizing the secured financing on the terms and conditions set
forth in this Ratification Agreement, granting to Lender the senior security interest and liens
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described above and super-priority administrative expense claims described above (except as
otherwise specifically provided in the Interim Financing Order), modifYing the automatic stay
and other provisions required by Lender and its counsel ("Permanent Financing Order"). Lender
shall not provide any Loans (or other financial accommodations) other than those authorized
under the Interim Financing Order unless, on or before the thirtieth day following the Petition
Date, the Permanent Financing Order shall have been entered, and there shall be no appeal or
other contest with respect to either the Interim Financing Order or the Permanent Financing
Order and the time to appeal to contest such order shall have expired;
8.10 other than the voluntary commencement of the Chapter 11 Cases, no material
impairment of the priority of Lender's security interests in the Collateral shall have occurred
from the date of the latest field examinations of Lender to the Petition Date;
8.11 no Event of Default shall have occurred or be existing under any of the Existing
Financing Agreements, as modified pursuant hereto, and assumed by Borrower and Guarantors;
and
8.12 Each Debtor shall deliver to Lender a Secretary's Certificate with attached (i) list
of incumbent officers, certificate of incorporation, bylaws, directors and shareholders'
resolutions and consents, and good standing certificates.
9. MISCELLANEOUS
9.1 Amendments and Waivers. Neither this Ratification Agreement nor any other
instrument or document referred to herein or therein may be changed, waived, discharged or
terminated orally, but only by an instturoent in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is sought.
9.2 Further Assurances. The Debtors shall, at their expense, at any time or times duly
execute and deliver, or shall cause to be duly executed and delivered, such further agreements,
instruments and documents, including, without limitation, additional security agreements,
collateral assignments, Uniform Commercial Code financing statements or amendments or
continuations thereof, landlord's or mortgagee's waivers of liens and consents to the exercise by
Lender of all the rights and remedies hereunder, under any of the Existing Financing
Agreements, any Financing Order or applicable law with respect to the Collateral, and do or
cause to be done such further acts as may be necessary or proper in Lender's reasonable opinion
to evidence, perfect, maintain and enforce the security interests of Lender, and the priority
thereof, in the Collateral and to otherwise effectuate the provisions or purposes of this
Ratification Agreement, any of the Existing Financing Agreements or the Financing Order.
Upon the reasonable request of Lender, at any time and from time to time, Borrower shall, at its
cost and expense, do, make, execute, deliver and record, register or file, financing statements,
mortgages, deeds of trust, deeds to secure debt, and other instruments, acts, pledges, assignments
and transfers (or cause the same to be done) and will deliver to Lender such instruments
evidencing items of Collateral as may be requested by Lender.
9.3 , . Headings. The headings used herein are for convenience only and do not
constitute matters to be consiaered in interpreting this Ratification Agreement.
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9.4 Counterparts. This Ratification Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which shall together
constitute one and the same agreement. In making proof of this Ratification Agreement, it shall
not be necessary to produce or account for more than one counterpart thereof signed by each of
the parties hereto. Delivery of an executed counterpart of this Ratification Agreement by
telefacsimile shall have the same force and effect as delivery of an original executed counterpart
of this Ratification Agreement. Any party delivering an executed counterpart of this Ratification
Agreement by telefacsimile also shall deliver an original executed counterpart of this Ratification
Agreement, but the failure to deliver an original executed counterpart shall not affect the validity,
enforceability, and binding effect of this Ratification Agreement as to such party or any other
party.
9.5 Additional Events of Default. The parties hereto acknowledge, confirm and agree
that the failure of Borrower to comply with any of the covenants, conditions and agreements
contained herein or in any other agreement, document or instrument at any time executed by
such Borrower in connection herewith shall constitute an Event of Default under the Financing
Agreements.
9.6 Costs and Expenses. Borrower shall pay to Lender on demand all reasonable
costs and expenses that Lender pays or incurs in connection with the negotiation, preparation,
consummation, administration, enforcement, and termination of this Ratification Agreement and
the Financing Order, including, without limitation: (a) reasonable attorneys' and paralegals' fees
and disbursements of counsel to Lender; (b) costs and expenses (including reasonable attorneys'
and paralegals' fees and disbursements) for any amendment, supplement, waiver, consent, or
subsequent closing in connection with this Ratification Agreement, the Financing Order and the
transaCtions contemplated thereby; (c) taxes, fees and other charges for recording any
agreements or documents with any governmental authority, and the filing of UCC financing
statements and continuations, and other actions to perfect, protect, and continue the security
interests and liens of Lender in the Collateral; (d) sums paid or incurred to pay any amount or
!alee any action required of Borrower under this Ratification Agreement or the Financing Order
that Borrower fail to pay or take; (e) costs of inspections and verifications of the Collateral and
including travel, lodging, and meals for inspections of the Collateral and the Borrower operations
by Lender or its agent and to attend court hearings or otherwise in connection with the Chapter
11 Cases; (f) costs and expenses of preserving and protecting the Collateral; and (g) costs and
expenses (including attorneys' and paralegals' fees and disbursements) paid or incurred to obtain
payment of the Obligations, enforce the security interests and liens of Lender, sell or otherwise
realize upon the Collateral, and otherwise enforce the provisions of this Ratification Agreement,
the other Financing Agreements and the Financing Order, or to defend any claims made or
threatened against Lender arising out of the transactions contemplated hereby (including, without
limitation, preparations for and consultations concerning any such matters). The foregoing shall
not be construed to limit any other provisions of the Financing Agreements regarding costs and
expenses to be paid by Debtors. All sums provided for in this Section 10.6 shall be part of the
Obligations, shall be payable on demand, and shall accrue interest after demand for payment
thereof at the highest rate of interest then payable under the Financing Agreements. Lender is
hereby irrevocably authorized to charge any amounts payable hereunder directly to any of the
account(s) maintained by Lender with respect to any Debtor.
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9. 7 Effectiveness.
(a) This Ratification Agreement shall become effective upon the execution hereof
by Lender and the entry of the Interim Financing Order.
(b) Notwithstanding Sections 5.1 and 10.7(a), Debtors are authorized to use Cash
Collateral to pay expenses of the Debtors from the Petition Date until the entry of the Interim
Financing Order in an amount not to exceed $50,000.00 so long as:
'.
(i) such expenses are consistent with the Budget; and
(ii) other than the voluntary commencement of the Chapter 11 Cases, no
Events of Default shall have occurred.
[REMAINDER OF TillS PAGE lNTENTIONALL Y LEFT BLANK]
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IN WITNESS WREREOF, the parties he.reto have caUSild this Ratification Agreement to
be duly executed as of the day and year first above written.
"BORROWER"
CIDJENTIA, INC.,
Debtor and Debtor-in-Possession



CRDECORP.,
Debtor and :Ocbtol'-in-Possession

Title:------
GJfS ACQUISITION CORPORATION,
.72!;2b;e

Title:
NlJRSES NETWORK INC.,
Debtor lilld Debtor-in-Po.,ossion
Ml' HEALTH CORP.
Debtor and
-IS-
HEALTH JNDUS1RY :PROFESSIONALS LLC
Debtor and Debtor-in-Possession

By.
Title: _______ _
ATS UNIVERSAL, LLC
Debtor and Debtor-in-Possession
HlP HOLDJNG Jl'ilc.
Debtor and Debtor-in-Possession
NEW AGE STAFFING, INC.


Title:---------
-19-
'.
"LENDER"
COMVEST CAPITAL LLC
?
By: \------ ,
Name: Ra bu-f 11. oS .... i/; VY 0
Title: t1"" q (j'' a:J fh.iMr
-20-
EXHIBITC
DIP Budget
WEEKS SHOWN
Cash Flow Projection
Outstanding AJP Checks
Beginning Outstanding Checks
Plus: Checks Issued
Less: Checks Cleared
Ending Out>Wlding
Beginning Cash B:::d:ancos
Cash R..,eipk
Revenue
10% Holdbsck
Cosh Net of Ineligibles
Un.billd
CNeraiDlance
Debt proceeds
Equity
Miscellaneous deposits
O.,h Pishursements:
Cash In
WIRESIACH DIRECT DEBITS:
Finoncj& Advances and Othe:r
Pay-off Com Vest revolve:r
Monthlyin:t=t&fees
Note Pnncipal Payments
Bank Sezvice Chmge
ComVest Fees
I ACHJ Tr.msfezs.
Heolth I Dental/ Life l'nsUOUlCe claims
Flnancing, Advances and Other subtotal
Payroll
Payroll- Bi-weekly 9V3 (Office)
Weekly Bonus
Payroll- Weekly 9V3 (Nmses)
Daily Pay
40l(k) AUTODEBIT
Payroll Fees
Payroll subtotal
"""" WO!kom Comp Pn:nrium
D&O Insurance
Genend Liability/Other Insurance
Office Rent
Committed Payables
Other A<::coun.-,; Payable
Check subtotal
Cash Out
Ending Cash Balances
Total for Total for
WeekEnded WeekEnded
3/26/2010 4/2/2010
Total for
WeekEnded
4/9/2010
Total for
Week Ended
4/16/2010
Total for
WeekEnded
4/23/2010
Total for
WeekEnded
4/30/2010
Total for
WeekEnded
517/2010
7
Total for
Week Ended
5114/2010
Total for
WeekEnded
5121/2010
Total for
WeekEnded
5128/2010
10 11
Total for
WeekEnded
6/4/2010
Total for
WeekEnded
6/11/2010
" "
Total for
WeekEnded
6/18/2010
55,299 $ 110,191 $ 106,113 $ 81,851 $ 101,058 $ 1.37,212 $ 127,194 $ 94,299 $ 112,135 $ 85,407 $ 69,624 $ 78,006 s 65,254
86,153 48,304 21,325 58,585 86,153 48,304 21,325 58,585 21,325 21,325 48,304 21,325 21,325
(31,2611 152,3831 145,5sn 139,377) r5o.oool (58,3221 f54,220l (40,7491 r4s,o53l @71081 !39,9231 (34,0771 (28,8551
110,191 $ 106,113 $ 81,851 $ 101,058 $ 137,212 $ 127,194 S 94,299 $ 112,135 $ 85,407 $ 69,624 $ 78,006 $ 65,254 $ ST,725
395 $
325,872
32,071
325,356
(2,000)
(64,266) $
325,872
(32,51:rl)
32,071
325,356
(257,884) $
355,006
(35,501)
32,071
351,576
(2,000)
(205,996) $
355,006
(35,501)
32,071
(313,175) $
355,006
(35,501}
32,071
(386,116} $
355,006
(35,501)
32,071
(483,014) $
369,778
(36,978)
32,071
(468,723) $
369,778
(36,978)
32,071
(573,499) $
369,778
(36,978)
32,071
351,576 351,576 351,576 364,871 364,871 364,871
(2,000) (2,000) (2,000)
(516,208) $
369,778
(36,978)
32,071
364,871
(643,724) $
369,778
(36,978)
32,071
364,871
(2,000)
(92,000) {40,000) (40,000)
60,000 60,000 60 000
(653,413) s
409,293
(40,929)
40,929
409,293
(800,454)
409,293
(40,929)
40,929
409,293
(2,000)
(62,000) (92,000) {2,000) {62,000) (42,000) (2,000) (60,000) {42,000) (2,000)
(126,807) (126,807) (126,807) (126,807) (126,807) (138,807)
(12,000) (12,000) (12,000) (12,000) (12,000) (12,000) (12,000) (12,000) (12,000) (12,000) (12,000)
{154,863) (167,863) (189,363) (189,363) (189,363) (189,363) (200,256) (200,256) (200,256) (200,256) (200,256) (324,203) (324,203)
(72,000) (72,000) (72,000) (72,000) (72,000) (72,000} (72,000) (72,000) (72,000) (72,000) (72,000) (72,000) (72,000)
(3,000) (3,000) (3,000) (3,000)
(241,863) (378,669) {276,363) {400,170) {276.363) (400,170) (287,256) (411,062) (!84,256) (411,062) G84,2$6J (535,009) (396,203)
(64,828)
(26,979)
(18,800)
{3,460)
(64,828)
(26,979)
(18,800)
(3,460)
(15,000) (15,000)
(26,979)
(21,325) {21,325) (21,315) l21,325) !21,325) {21,325) (21,325) j21,315) j21,315) {21,325) (21,325) (21,315) (21,325)
(86,153) (48,3041 (21.325) (58,585) (86,153) (48,3041 (21J25J (58,585) (21,325) {21,325) {2_P25} (21,325)
(390,016) (518,974) (458,755) (424,517) (448,474) (350,581) (307,581) (492,387) (374,560) (556,334) (419,528)
(64,266) s {257,884) s (205,996) $ (31.3,175) s (386,116) s (483,014) $ (468,723) s (573,499) $ (516,208) $ (643;724) s (t\5:),4J_3}$ {800,454) $ (810,688)