EXHIBIT 10.16
FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT - TERM LOAN (this
"Amendment") is entered into as of the 30th day of November, 2004, (the
"Amendment Date") by and between BRIDGE OPPORTUNITY FINANCE, LLC ("Lender"), and
Crdentia Corp. ("Crdentia"), ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc. ("▇▇▇▇▇"), Nurses
Network, Inc. ("Nurses Network"), New Age Staffing, Inc. ("New Age"), PSR
Nurses, Ltd. ("PSR Ltd."), PSR Nurse Recruiting, Inc. ("PSR Recruiting"), PSR
Nurses Holdings Corp. ("PSR Holding"; and together with Crdentia, ▇▇▇▇▇, Nurses
Network, New Age, PSR Ltd., and PSR Recruiting, each a "Crdentia Proper
Borrower"), CRDE Corp. ("Acquisition Subsidiary"), Arizona Home Health
Care/Private Duty, Inc. ("AHHC"), Care Pros Staffing, Inc. ("Care Pros"; and
together with Acquisition Subsidiary and AHHC, each a "New Borrower") (Crdentia
Proper Borrowers and New Borrowers are referred to individually and collectively
as "Borrower").
W I T N E S S E T H:
WHEREAS, Lender and Borrower are parties to that certain Loan and Security
Agreement - Term Loan dated as of August 31, 2004 (as amended, restated,
supplemented or otherwise modified from time to time, the "Agreement");
WHEREAS, pursuant to that certain Agreement and Plan of Reorganization
dated as of August 31, 2004 by and among Crdentia, Acquisition Subsidiary, AHHC
Acquisition Corporation ("AHHC Acquisition", a wholly owned subsidiary of
Acquisition Subsidiary), AHHC, and the former shareholders of AHHC, AHHC
Acquisition merged with and into AHHC with AHHC being the surviving entity;
WHEREAS, pursuant to that certain Agreement and Plan of Reorganization
dated as of August 31, 2004, by and among Crdentia, Acquisition Subsidiary, CPS
Acquisition Corporation ("CPS Acquisition", a wholly owned subsidiary of
Acquisition Subsidiary), Care Pros and the former shareholders of Care Pros,
Care Pros merged with and into CPS Acquisition with CPS Acquisition being the
surviving entity and immediately upon such merger changed its name to "Care Pros
Staffing, Inc."; and
WHEREAS, Lender and Borrower desire to amend certain provisions of the
Agreement in accordance with this Amendment.
NOW, THEREFORE, for and in consideration of the premises and mutual
agreements herein contained and for the purposes of setting forth the terms and
conditions of this Amendment, the parties, intending to be bound, hereby agree
as follows:
Section 1. Incorporation of the Agreement. All capitalized terms which are
not defined herein shall have the same meanings as set forth in the Agreement,
and the Agreement, to the extent not inconsistent with this Amendment, is
incorporated herein by this reference as though the same were set forth in its
entirety. To the extent any terms and provisions of the Agreement are
inconsistent with the amendments set forth in Section 2 below, such terms and
provisions shall be deemed superseded hereby. Except as specifically set forth
herein, the Agreement shall remain in full force and effect and its provisions
shall be binding on the parties hereto.
Section 2. Amendment of the Agreement. Borrower and Lender hereby agree to
amend the Agreement as of the Amendment Date as follows:
(a) Section 2(b)(A) of the Agreement shall be amended and restated in its
entirety to read as follows:
"(A) the Acquisition Subsidiary shall have, on a pro forma basis,
independent and separate from the Crdentia Proper Borrowers hereunder: (x)
a coverage ratio of Target Pro Forma EBITDA to Target Pro Forma Debt
Service of at least 1.5 to 1.0, (y) a ratio of Target Pro Forma Senior
Debt to Target Pro Forma EBITDA of not more than 4.0 to 1.0, and (z) a
ratio of Target Pro Forma Term Loan Debt to Target Pro Forma EBITDA of not
more than 2.5 to 1.0;"
(b) Section 2(b)(E) of the Agreement shall be amended and restated in its
entirety to read as follows:
"(E) Excess Availability of the Crdentia Proper Borrowers under the
Revolving Loan Agreement or any Replacement Revolving Loan Agreement shall
be an amount mutually agreed upon between Lender and Borrower but in no
event less than $250,000 after giving effect to the proposed Acquisition;"
(c) Section 2(b)(F) of the Agreement shall be amended and restated in its
entirety to read as follows:
"(F) the amount of (i) the revolving borrowing base attributable to the
Acquisition Subsidiary, as determined by the Lender in its good faith
credit judgment, less (ii) the sum of the outstanding Revolving Loans
attributable to Acquisition Subsidiary, shall be an amount mutually agreed
upon between Lender and Borrower;"
(d) Section 5(c) of the Agreement shall be amended and restated in its
entirety to read as follows:
"(c) Possessory Collateral. Immediately upon Borrower's receipt of any
portion of the Collateral evidenced by an agreement, Instrument or
Document, including, without limitation, any Tangible Chattel Paper and
any Investment Property consisting of Certificated Securities, Borrower
shall deliver the original thereof (i) to BHF, to hold pursuant to the
terms of the Revolving Loan Agreement or any Replacement Revolving Loan
Agreement (other than equity interests of any Borrower pledged by Crdentia
to Lender under the Pledge Agreement, which shall be delivered to Lender
pursuant to the terms of the Pledge Agreement), or (ii) to the extent both
the Revolving Loan Agreement and Replacement Revolving Loan Agreement have
been terminated, to Lender together with an appropriate endorsement or
other specific evidence of assignment thereof to Lender (in form and
substance acceptable to Lender). If an endorsement or assignment of any
such items shall not be made for any reason, Lender is hereby irrevocably
authorized, as Borrower's attorney and agent-in-fact, to endorse or assign
the same on Borrower's behalf."
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(e) Section 9(c) of the Agreement shall be amended and restated in its
entirety to read as follows:
"(c) Financial Statements. Borrower shall deliver to Lender the following
financial information, all of which shall be prepared in accordance with
GAAP consistently applied (except where such calculations otherwise
require), and shall be accompanied by a certificate in the form of Exhibit
A hereto, which compliance certificate shall include a calculation of all
financial covenants contained in this Agreement, including the financial
tests set forth in Section 13(j)(iii): (i) no later than fifteen (15) days
after each calendar month, copies of internally prepared financial
statements, including, without limitation, balance sheets and statements
of income, retained earnings and cash flow of the Crdentia Proper
Borrowers on a Crdentia Proper Consolidated Basis and of the Acquisition
Subsidiary and its Subsidiaries on an Acquisition Subsidiary Consolidated
Basis, certified by the Chief Financial Officer of Borrower; (ii) no later
than forty-five (45) days after the end of each of the first three
quarters of Borrower's Fiscal Year, copies of internally prepared
financial statements, including, without limitation, balance sheets,
statements of income, retained earnings, cash flows and reconciliation of
surplus for the Crdentia Proper Borrowers on a Crdentia Proper
Consolidated Basis and of the Acquisition Subsidiary and its Subsidiaries
on an Acquisition Subsidiary Consolidated Basis, certified by the Chief
Financial Officer of Borrower; and (iii) no later than ninety (90) days
after the end of each of Borrower's Fiscal Years, audited annual financial
statements of the Borrowers on a consolidated basis, and unaudited
financial statements of the Crdentia Proper Borrowers on a Crdentia Proper
Consolidated Basis and of the Acquisition Subsidiary and its Subsidiaries
on an Acquisition Subsidiary Consolidated Basis, with an unqualified
opinion as to the audited financial statements by independent certified
public accountants selected by Borrower and reasonably satisfactory to
Lender. The report of such accounts shall be accompanied by copies of any
management letters sent to the Borrower by such accountants."
(f) Section 12(m) of the Agreement shall be amended and restated in its
entirety to read as follows:
"(m) Subordination Agreement. On or before November 30, 2004, Borrower
shall use its commercially reasonable efforts to deliver to Lender a
Subordination Agreement executed by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, in form and substance
acceptable to Lender, with respect to the Indebtedness (i) under that
certain convertible subordinated promissory note dated December 2, 2003 in
the original principal amount of $2,525,000 made payable to Professional
Staffing Services, Inc. and (ii) under that certain convertible
subordinated promissory note dated December 2, 2003 in the original
principal amount of $200,000 made payable to Professional Staffing
Services, Inc. and Nursing Services Registry of Savannah, Inc."
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(g) Section 14(a) of the Agreement shall be amended and restated in its
entirety to read as follows:
"(a) Tangible Net Worth. Borrower's Tangible Net Worth, on a Crdentia
Proper Consolidated Basis, shall not at any time be less than the Minimum
Tangible Net Worth; "Minimum Tangible Net Worth" being defined for
purposes of this Subsection as (i) $(1,500,000) at all times from the
Closing Date through September 30, 2004, (ii) $0 at all times from October
1, 2004 through October 31, 2004, and (iii) thereafter, from the last day
of each fiscal quarter of the Crdentia Proper Borrowers through the day
prior to the last day of each immediately succeeding fiscal quarter of the
Crdentia Proper Borrowers, the Minimum Tangible Net Worth during the
immediately preceding period plus seventy-five percent (75%) of the
Crdentia Proper Borrowers' net income (but without reduction for any net
loss) for the Fiscal Year ending on the first day of such period as
reflected on the Crdentia Proper Borrowers' audited year end financial
statement; and "Tangible Net Worth" being defined for purposes of this
Subsection as the Crdentia Proper Borrowers' shareholders' equity
(including retained earnings) less the book value of all intangible assets
of the Crdentia Proper Borrowers as determined solely by Lender on a
consistent basis plus the amount of any Subordinated Debt of the Crdentia
Proper Borrowers, all as determined under GAAP applied on a basis
consistent with the financial statement dated March 31, 2004 except as set
forth herein."
(h) Section 14(h) of the Agreement shall be amended by deleting the amount
"$100,000" and inserting in place thereof the amount "$300,000"."
(i) Annex I of the Agreement shall be amended by inserting the following
new definitions in the appropriate alphabetical order to read as follows:
"Acquisition Subsidiary Consolidated Basis" shall mean the financial
reporting by Acquisition Subsidiary and all of its direct or indirect
subsidiaries, on a consolidated basis.
"Pledge Agreement" shall mean that certain Pledge Agreement dated as of
August 31 2004 between Crdentia and Lender, as amended, restated, supplemented
or otherwise modified from time to time.
(j) Annex I of the Agreement shall be amended by amending and restating in
their entirety the following definitions:
"Acquisition Subsidiary EBITDA" shall mean, with respect to any period,
Acquisition Subsidiary's, on an Acquisition Subsidiary Consolidated Basis, net
income after taxes for such period (excluding any after-tax gains or losses and
excluding other after-tax extraordinary gains or losses) plus interest expense,
income tax expense, depreciation and amortization for such period, plus or minus
any other non-cash charges or gains which have been subtracted or added in
calculating net income after taxes for such period. In the event that the period
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of measurement is less than 12 months, the Acquisition Subsidiary EBITDA shall
be determined on an annualized basis. Upon each Permitted Acquisition and the
addition of a Target to the consolidated financial reporting of the Acquisition
Subsidiary, the portion of the Acquisition Subsidiary EBITDA attributable to the
Target shall be calculated on an annualized basis, until such Target has been a
part of the Acquisition Subsidiary for 12 months.
"Capital Expenditures" shall mean with respect to any period, the
aggregate of all expenditures (whether paid in cash or accrued as liabilities
and including Capital Lease Obligations) by Borrowers during such period that
are required by GAAP, consistently applied, to be included in or reflected by
the property, plant and equipment or similar fixed asset accounts (or intangible
accounts subject to amortization) on the balance sheet of Borrowers, excluding
expenditures for any assets or equity interests acquired pursuant to a Permitted
Acquisition.
"Crdentia Proper Borrowers" shall mean Crdentia and all of its
Subsidiaries, except for Acquisition Subsidiary and its Subsidiaries.
"Crdentia Proper Consolidated Basis" shall mean the financial reporting by
the Borrowers of Crdentia all of their Subsidiaries, except for Acquisition
Subsidiary and its Subsidiaries, on a consolidated basis.
"EBITDA" shall mean, with respect to any period, Crdentia Proper
Borrowers', on a Crdentia Proper Consolidated Basis, net income after taxes for
such period (excluding any after-tax gains or losses and excluding other
after-tax extraordinary gains or losses) plus interest expense, income tax
expense, depreciation and amortization for such period, plus or minus any other
non-cash charges or gains which have been subtracted or added in calculating net
income after taxes for such period.
(k) Annex I of the Agreement shall be amended by deleting in its entirety
the definition "Revolving Pledge Agreement", and also deleting the reference to
"Revolving Pledge Agreement" from the definition of "Revolving Loan Documents".
(l) Exhibit A of the Agreement shall be amended by amending and restating
paragraph 4a in its entirety to read as follows:
"a. Borrower shall maintain a Minimum Tangible Net Worth, on a
Crdentia Proper Consolidated Basis, of (i) $(1,500,000) at all
times from the Closing Date through September 30, 2004, (ii)
$0 at all time from October 1, 2004 through October 31, 2004,
and (iii) thereafter, from the last day of each fiscal quarter
of the Crdentia Proper Borrowers through the day prior to the
last day of each immediately succeeding fiscal quarter of the
Crdentia Proper Borrowers, the Minimum Tangible Net Worth
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during the immediately preceding period plus seventy-five
percent (75%) of the Crdentia Proper Borrowers' net income
(but without reduction for any net loss) for the Fiscal Year
ending on the first day of such period as reflected on the
Crdentia Proper Borrowers' audited year end financial
statement. (See attached Schedule A for calculation of
Tangible Net Worth)"
Section 3. Amendment Conditions. As a condition precedent to the
effectiveness of this Amendment, Borrower shall:
(a) Execute and deliver to Lender this Amendment; and
(b) Deliver to Lender such other documents as Lender shall request.
Section 4. No Default. Borrower represents and warrants to Lender that no
Event of Default has occurred and is continuing (other than that certain Events
of Default specifically waived by Lender pursuant to the terms of that certain
Specific Waiver of Default to Loan and Security Agreement dated as of November
4, 2004), and no event has occurred and is continuing which, with the lapse of
time, the giving of notice, or both, would constitute such an Event of Default
under the Agreement as amended by this Amendment.
Section 5. Fees and Expenses. Borrower agrees to pay on demand all
reasonable costs and expenses of or incurred by Lender, including but not
limited to, legal expenses and reasonable attorneys' fees and expenses, in
connection with the evaluation, negotiation, preparation, execution and delivery
of this Amendment.
Section 6. Security. Borrower expressly acknowledges and agrees that all
collateral, security interests, liens, pledges and mortgages heretofore, under
this Amendment, or hereafter granted to Lender, including, without limitation,
such collateral, security interests, liens, pledges and mortgages granted under
the Agreement, and all other supplements to the Agreement, extend to and cover
all of the obligations of Borrower to Lenders, now existing or hereafter arising
including, without limitation, those arising in connection with the Agreement,
as amended by this Amendment, upon the terms set forth in such agreements, all
of which security interests, liens, pledges, and mortgages are hereby ratified,
reaffirmed, confirmed and approved.
Section 7. Representations. Borrower represents and warrants to Lender
that (a) it has all necessary power and authority to execute and deliver this
Amendment and perform its obligations hereunder, (b) this Amendment and the
Agreement, as amended hereby, constitute the legal, valid and binding
obligations of Borrower and are enforceable against Borrower in accordance with
their terms, and (c) all representations, warranties and covenants of Borrower
contained in the Agreement, as amended, and all other agreements, instruments
and other writings relating thereto, are true, correct and complete as of the
date hereof.
Section 8. Incorporation. The parties hereto acknowledge and agree that
the terms and provisions of this Amendment amend, add to and constitute a part
of the Agreement. Except as expressly modified and amended by the terms of this
Amendment, all of the other terms and conditions of the Agreement and all
documents executed in connection therewith or referred to or incorporated
therein remain in full force and effect and are hereby ratified, reaffirmed,
confirmed and approved.
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Section 9. Conflict. If there is an express conflict between the terms of
this Amendment and the terms of the Agreement, or any of the other agreements or
documents executed in connection therewith or referred to or incorporated
therein, the terms of this Amendment shall govern and control.
Section 10. Governing Law. This Amendment was executed and delivered in
Chicago, Illinois and shall be governed by and construed in accordance with the
internal laws (as opposed to conflicts of law provisions) of the State of
Illinois.
Section 11. Effectuation. The amendments to the Agreement contemplated by
this Amendment shall be deemed effective immediately upon the full execution of
this Amendment and without any further action required by the parties hereto.
Section 12. Counterparts. 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.
[SIGNATURE PAGE FOLLOWS]
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(Signature Page to First Amendment to Loan and Security Agreement)
IN WITNESS WHEREOF, the parties hereto have duly executed this First
Amendment to Loan and Security Agreement as of the date first above written.
CRDENTIA CORP.,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, INC.,
a California corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
NURSES NETWORK, INC.,
a California corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
NEW AGE STAFFING, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
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(Signature Page to First Amendment to Loan and Security Agreement)
PSR NURSES, LTD.,
a Texas limited partnership
By: PSR NURSE RECRUITING, INC.
Its: General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Chief Executive Officer
PSR NURSE RECRUITING, INC.,
a Texas corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
PSR NURSES HOLDINGS CORP.,
a Texas corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
CRDE CORP.,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name:
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Title:
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ARIZONA HOME HEALTH CARE/PRIVATE
DUTY, INC., an Arizona corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name:
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Title:
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Signature Page to Loan and Security Agreement
CARE PROS STAFFING, INC.,
a Texas corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name:
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Title:
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(Signature Page to First Amendment to Loan and Security Agreement)
BRIDGE OPPORTUNITY FINANCE, LLC, a
Delaware limited
liability company, as Lender
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name:
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Title:
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