TillS IS NOT A SOLICITATION OF ACCEPTANCE OR REJECTION OF THE

PLAN. ACCEPTANCES OR REJECTIONS MAY NOT BE SOLICITED UNTIL A

DISCLOSURE STATEMENT HAS BEEN APPROVED BY THE BANKRUPTCY
COURT. TillS DISCLOSURE STATEMENT IS BEING SUBMITTED FOR
APPROVAL BUT HAS NOT BEEN APPROVED BY THE BANKRUPTCY COURT.
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re Chapter 11
CRDENTIA CORP., et al.,
1
Case No. 10-10926 (BLS)
Debtors. Joint Administration Requested
DISCLOSURE STATEMENT PURSUANT TO
SECTION 1125 OF THE BANKRUPTCY CODE FOR
DEBTORS' JOINT CHAPTER 11 PLAN OF REORGANIZATION
Paul Rachmuth
Gersten Savage LLP
600 Lexington Avenue, 9th Floor
NewYork,NewYork 10022
Telephone: 212-752-9700
Facsimile: 212-980-5192
Jamie L. Edmonson (No. 4247)
Bayard, P.A.
222 Delaware Avenue, Suite 900
Wilmington, DE 19801
Telephone: 302-655-5000
Facsimile: 302-658-6395
The Debtors, along wifu fue last four digits of fueir federal tax identification numbers, are: Crdentia
Corp.(5701), ATS Universal, LLC (3980), Baker Anderson Christie, Inc. (3631), CRDE Corp. (2509), GHS
Acquisition Corporation (9736), Hcalfu Industry Professionals, LLC ( 4246), IDP Holding, Inc. (3468), MP Healfu
Corp. (4403), New Age Staffing, Inc. (1214) and Nurses Network, Inc. (6291). The Debtors' mailing address for
purposes ofthese cases is 1964 Howell Branch Road, Ste. 206, Winter Park, Florida 32792.
{BAV01512597vl}
Crdentia Corp. ("Crdentia") and ATS Universal, LLC, a Florida limited liability
company ("ATS"), Baker Anderson Christie, Inc. a California corporation ("BAC"),
CRDE Corp. a Delaware corporation ("CRDE"), GHS Acquisition Corporation, a
Delaware corporation ("GHS"), Health Industry Professionals, LLC, a Michigan limited
liability company ("HIP LLC"), HIP Holding, Inc., a Delaware corporation ("HIP"), MP
Health Corp., a Delaware corporation ("MP Health"), New Age Staffing, Inc., a Delaware
corporation ("NAS"), and Nurses Network, Inc., a California corporation ("NNP'). (each of
ATS, BAC, CRDE, GHS, HIP LLC, IDP, MP Health, NAS and NNI, a "Subsidiarv" or a
"Debtor" and collectively, the "Subsidiaries") believe that the Debtors' Joint Chapter 11
Plan Of Reorganization dated March 17, 2010, attached as Exhibit A to this Disclosure
Statement (as the same may be amended or modified, the "Plan"), is in the best interests of
creditors. All creditors entitled to vote thereon are urged to vote in favor of the Plan
2

THIS DISCLOSURE STATEMENT AND ITS RELATED DOCUMENTS ARE THE
ONLY DOCUMENTS AUTHORIZED BY THE BANKRUPTCY COURT TO BE USED IN
CONNECTION WITH THE SOLICITATION OF VOTES TO ACCEPT OR REJECT THE
PLAN. NO REPRESENTATIONS HAVE BEEN AUTHORIZED CONCERNING THE
DEBTORS, THEIR BUSINESS OPERATIONS OR THE VALUE OF THEIR ASSETS,
EXCEPT AS EXPLICITLY SET FORTH IN THIS DISCLOSURE STATEMENT.
THIS DISCLOSURE STATEMENT CONTAINS ONLY A SUMMARY OF THE
PLAN, AND IS NOT INTENDED TO REPLACE A CAREFUL AND DETAILED REVIEW
AND ANALYSIS OF THE PLAN BUT TO AID AND SUPPLEMENT SUCH REVIEW. THIS
DISCLOSURE STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
MORE DETAILED PROVISIONS SET FORTH IN THE PLAN. IN THE EVENT OF A
CONFLICT BETWEEN THE PLAN AND THE DISCLOSURE STATEMENT, THE
PROVISIONS OF THE PLAN WILL GOVERN.
ALL HOLDERS OF CLAIMS ARE ENCOURAGED TO REVIEW THE FULL TEXT
OF THE PLAN AND TO READ CAREFULLY THIS ENTIRE DISCLOSURE STATEMENT,
INCLUDING ALL EXHIBITS HERETO, BEFORE DECIDING WHETHER TO VOTE TO
ACCEPT THE PLAN.
THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE
MADE AS OF THE DATE HEREOF AND THE DELIVERY OF THIS DISCLOSURE
STATEMENT DOES NOT IMPLY THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AT ANY TIME SUBSEQUENT TO THE DATE HEREOF.
HOLDERS OF CLAIMS AND INTERESTS SHOULD NOT CONSTRUE THE
CONTENTS OF THIS DISCLOSURE STATEMENT AS PROVIDING ANY LEGAL,
BUSINESS, FINANCIAL OR TAX ADVICE. EACH SUCH HOLDER SHOULD,
THEREFORE, CONSULT WITH ITS OWN LEGAL, BUSINESS, FINANCIAL AND TAX
ADVISORS AS TO ANY SUCH MATTERS CONCERNING THE SOLICITATION, THE
PLAN AND THE TRANSACTIONS CONTEMPLATED THEREBY.
2
All capitalized terms not defined herein have the meaning ascribed to them in the Plan.
{BAY:01512597vl) 11
AS TO CONTESTED MATTERS, ADVERSARY PROCEEDINGS AND OTHER
ACTIONS OR THREATENED ACTIONS, TillS DISCLOSURE STATEMENT SHALL NOT
BE CONSTRUED AS AN ADMISSION OR STIPULATION BUT, RATHER, AS A
STATEMENT MADE IN SETTLEMENT NEGOTIATIONS.
{BAYo01512597vl} Ill
TABLE OF CONTENTS
ARTICLEL
INTRODUCTION AND SUMMARY OF THE PLAN ....................................................................................... 1
A. Overview of the Plan ................................................................................................................ 1
B. Voting ..................................................................................................................................... 5
C. Solicitation Process .................................................................................................................. 5
D. Voting Procedures .................................................................................................................... 6
E. Confirmation Heating .............................................................................................................. 8
F. Objection to Confirmation ........................................................................................................ 8
ARTICLE IT.
GENERAL BACKGROUND .............................................................................................................................. 9
A. The Debtors' Business ............................................................................................................. 9
B. Capital Structure .................................................................................................................... 10
C. Events Leading to the Debtors' Chapter 11 Cases ................................................................... 12
ARTICLEffi
tHE REORGANIZATION CASE ...................................................................................................................... 16
A. Commencement of the Bankruptcy Case ................................................................................ 16
B. Motions and Other Pleadings Filed on the Petition Date .......................................................... 16
C. Schedules and Claims Bar Date .............................................................................................. 16
D. Cash Collateral and DIP Loan ................................................................................................ 17
E. Bidding Procedures in Cmmection with Sale of the Debtors or their Assets ............................. 17
ARTICLE IV.
SUMMARY OF THE PLAN ............................................................................................................................. 17
1. Unclassified Claims (not entitled to vote on the Plan)... ............................................. 18
2. Unimpaired Classes of Claims (deemed to have accepted the Plan and not
entitled to vote on the Plan) ...................................................................................... 18
3. Impaired Classes of Claims ...................................................................................... 18
4. Classes oflnterests ................................................................................................... 18
ARTICLEV.
TREATMENT OF CLAIMS AND INTERESTS ............................................................................................... 19
B. Allowed Claims; Deemed Allowed Claims ............................................................................. 22
C. Reservation of Rights to Object to Claims .............................................................................. 22
D. Objections to Claims .............................................................................................................. 22
{BAY:Ol512597vl )i
ARTICLEVL
TABLE OF CONTENTS
(continued)
ACCEPTANCE OR REJECTION OF THE PLAN ............................................................................................ 22
A. Impaired Classes of Claims Entitled to Vote ........................................................................... 22
B. Acceptance by an Impaired Class ........................................................................................... 23
C. Presumed Acceptances by Unimpaired Classes ....................................................................... 23
D. Classes Deemed to Reject Plan ............................................................................................... 23
E. Summary of Classes Voting on the Plan ................................................................................. 23
F. Confirmation Pursuant to Bankruptcy Code section 1129(b) ................................................... 23
ARTICLEVll.
A. Corporate Existence and Re-vesting of Assets ........................................................................ 23
B. Board of Directors of Reorganized Crdentia ........................................................................... 24
C. Officers of Reorganized Crdentia ........................................................................................... 24
D. Vesting of Assets ................................................................................................................... 24
E. Consolidation of Debtors' Estates for Plan Purposes: .............................................................. 24
F. Cancellation of Existing Interests in Crdentia ......................................................................... 25
G. Distribution to Holders of Claims and Interests ....................................................................... 25
H. Execution of Documents and Corporate Action ...................................................................... 25
I. Surrender of Instruments ........................................................................................................ 26
J. Bankruptcy Code Section 1145 Determination ........................................................................ 26
K. Release of Liens ..................................................................................................................... 26
L. Exemption from Certain Transfer Taxes ................................................................................. 27
M. Release of Trade Vendor Avoidance Actions .......................................................................... 27
N. Effectuating Documents; Further Transactions ....................................................................... 27
ARTICLE VIIL
PROVISIONS GOVERNING DISTRIBUTIONS .............................................................................................. 27
A. Delivery of Undeliverable or Unclaimed Distributions ............................................................ 27
B. Prepayment. ........................................................................................................................... 28
C. Means of Cash Payment... ...................................................................................................... 28
D. Sources of Cash for Plan Distribution ..................................................................................... 28
E. Disbursement Agent. .............................................................................................................. 28
F. Record Date for Distribution .................................................................................................. 28
G. Interest on Claims .................................................................................................................. 29
H. Withholding and Reporting Requirements .............................................................................. 29
I. Setoffs ................................................................................................................................... 29
{BAY,01512597vl) 11
TABLE OF CONTENTS
(continued)
J. Procedure for Treating and Resolving Disputed, Contingent, and/or Unliquidated Claims ....... 29
K. De Minimis Distributions ....................................................................................................... 30
L. Fractional Dollars .................................................................................................................. 30
M. Allocation of Plan Distributions Between Principal and Interest.. ............................................ 30
ARTICLE IX.
TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES ............................................... 30
A. Assumption and Rejection of Executory Contracts and Unexpired Leases ............................... 30
B. Cure Procedures ..................................................................................................................... 31
ARTICLE X.
CONDITIONS PRECEDENT TO CONFIRMATION AND CONSUMMATION OF THE PLAN ..................... 32
A. Conditions Precedent to Confirmation .................................................................................... 32
B. Conditions Precedent to Effective Date ................................................................................... 33
1 . The Confirmation Order shall have been entered on the docket in the
Bankruptcy Cases ..................................................................................................... 33
2. The effectiveness of the Confirmation Order shall not have been stayed and any
motion for reconsideration or rehearing shall have been deuied or overrnled by a
Court of competentjurisdiction ................................................................................. 33
3. All actions, documents, and agreements necessary to implement the Plan shall
have been effected or executed ................................................................................. 33
4. The DIP Loan Claims shall have been paid in accordance with the terms of the
Final DIP Order and Article III of the Plan. ............................................................... 3 3
C. Waiver of Conditions ............................................................................................................. 33
ARTICLE XI.
ALLOWANCE AND PAYMENT OF CERTAIN ADMINISTRATIVE CLAIMS ............................................. 33
1. Final Fee Applications .............................................................................................. 33
2. Employment of Professionals after the Effective Date ............................................... 34
ARTICLE XII.
EFFECTS OF CONFIRMATION ...................................................................................................................... 34
A. Binding Effect ....................................................................................................................... 34
B. Discharge .............................................................................................................................. 34
C. Injunction .............................................................................................................................. 35
D. Term of Bankruptcy Injunction or Stays ................................................................................. 35
E. Compromises and Settlements ................................................................................................ 36
F. Satisfaction of Subordination Rights ....................................................................................... 36
G. Release of Secured Lender and DIP Lender ............................................................................ 36
{BAY:01512597vl} Ill
TABLE OF CONTENTS
(continued)
H. Exculpation and Limitation of Liability ......................... "' ....................................................... 37
I. Indenmification Obligations ................................................................................................... 37
ARTICLE XIII.
RETENTION OF JURISDICTION ................................................................................................................... 38
ARTICLE XIV. . ............................................................................................................................... 40
CONFIRMATION ................................................................................................................................ 40
A. Acceptance ............................................................................................................................ 41
B. Feasibility .............................................................................................................................. 41
C. Best Interests Test; Liquidation Analysis ................................................................................ 41
D. Compliance with Applicable Provisions of the Bankruptcy Code ............................................ 42
ARTICLE XV.
CERTAIN RISK FACTORS TO BE CONSIDERED ........................................................................................ 42
1. Objection to Classifications ...................................................................................... 43
2. Risk of Non-Confirmation of the Plan ....................................................................... 43
ARTICLEXVL
CERTAIN FEDERAL INCOME TAX CONSEQUENCES ............................................................................... 43
A. Allocation of Consideration to Interest ................................................................................... 44
ARTICLE XVll.
ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN ...................................... 44
ARTICLE XVIll.
CONCLUSIONS AND RECOMMENDATION ................................................................................................ 45
{BAY:Ol512597vl} IV
Exhibit A
Exhibit B
{BAY:Ol512597vl}
TABLE OF EXHIBITS
Joint Chapter 11 Plan of Reorganization
Plan Support Agreement
ARTICLEL
INTRODUCTION AND SUMMARY OF THE PLAN
This Disclosure Statement is being furnished by the Debtors, the sole proponents of the
Plan, to all known Creditors of the Debtors pursuant to section 1125 of the Bankruptcy Code, in
connection with the solicitation of votes to accept or reject the Joint Chapter 11 Plan of
Reorganization of the Debtors, dated March 17, 2010, a copy of which appears as Exhibit A to
this Disclosure Statement. The purpose of this Disclosure Statement is to provide sufficient
information to enable creditors who are entitled to vote on the Plan to make an informed decision
on whether to accept or reject the Plan. Unless otherwise defined herein, all capitalized terms
shall have the meanings given to them in the Plan. The following summary is qualified in its
entirety by, and should be read in conjunction with, the more detailed information appearing
elsewhere in this Disclosure Statement.
This Disclosure Statement sets forth certain information regarding (i) the Debtors'
prepetition operating and financial history; (ii) the Debtors' need for restructuring of their
financial obligations (the "Financial Restructuring"); (iii) the terms of the Plan and alternatives
to the Plan; (iv) certain effects of confirmation of the Plan; (v) certain risk factors associated with
securities to be issued under the Plan; (vi) the manner in which distributions will be made under
the Plan; (vii) the confirmation process and the voting procedures that holders of Claims entitled
to vote under the Plan must follow for their votes to be counted; (viii) significant events that are
expected to occur during the Reorganization Case; and (ix) the anticipated organization,
operations, liquidity and financial projections of Crdentia upon emergence from chapter 11 of the
Bankruptcy Code ("Reorganized Crdentia").
A. Overview of the Plan
Chapter 11 is the chapter of the Bankruptcy Code primarily used for business
reorganization. The fundamental purpose of a chapter 11 case is to formulate a plan to
restructure a debtor's finances so as to maximize recoveries to its creditors and shareholders. A
chapter 11 plan sets forth and governs the treatment and rights to be afforded to creditors and
stockholders with respect to their claims against, and equity interests in, a debtor's bankruptcy
estate. The purpose of this Disclosure Statement is to assist each holder of Claims entitled to vote
on the Plan in making an informed judgment regarding whether to vote to accept or reject the
Plan.
The Plan provides for (i) the emergence of the Debtors from bankruptcy as Reorganized
Crdentia and the re-vesting of the Debtors' assets in Reorganized Crdentia free and clear of any
liens, encumbrances or other interests; (ii) the vesting of all equity in Reorganized Crdentia in
Com Vest Capital, LLC., Debtors' prepetition secured lender, or its designee (the "Secured
Lender"); (iii) the opportunity for third parties to purchase the Debtors or their assets free and
clear of any liens, encumbrances or other interests at a fraction of the amount of the Secured
Lender's debt; and (iv) the resolution of all outstanding Claims against and Interests in the
Debtors.
{BAY:Ol512597vl} 1
The Plan divides most Claims against, and Interests in, the Debtors into Classes.
Administrative Claims and Priority Tax Claims remain unclassified in accordance with section
1123(a)(1) of the Bankruptcy Code. The Plan assigns all other Claims and Interests into nine
classes, which will receive distributions under the Plan, if any, as described below.
Holders of unclassified Administrative Claims and Priority Tax Claims will be
paid in full under the Plan.
Class 1 consists of Other Priority Claims, the holders of which will receive (i)
Cash equal to the unpaid portion of the Face Amount of such Allowed Other
Priority Claim, or (ii) such other treatment as to which such holder and the
Debtors shall have agreed upon in writing.
Class 2 consists of Secured Lender Claims, the holders of which shall receive in
full satisfaction, settlement, release, and discharge of and in exchange for all
Secured Lender Claims against the Debtors, 100% of the Reorganized Crdentia
Equity. The Holder of Class 2 Claims has executed a Plan Support Agreement (A
copy of which is annexed hereto as Exhibit "B"), in which it has agreed to vote in
favor of the Plan as filed. In the event a third party purchases the assets of or the
interests in the Debtors (as described more fully in Section V.E. below), Class 2
will receive the proceeds of such sale, less the specified distributions to the other
Claimholders, up to the amount of the Class 2 Claims.
Class 3 consists of Other Secured Claims, the holders of which will receive (i)
Cash equal to the value of its Allowed Other Secured Claim, (ii) a return of the
holder's collateral securing the Other Secured Claim, or (iii) such other treatment
as to which such holder and Reorganized Teton shall have agreed upon in writing.
Class 4 consists of DIP Loan Claims, the holders of which will be paid in full in
Cash on the Effective Date.
Class 5 consists of General Unsecured Claims, the holders of which shall, in full
satisfaction, settlement, release, and discharge of and in exchange for such
Allowed General Unsecured Claim, receive a Pro Rata share of the General
Unsecured Claim Consideration.
Class 6 consists of Trade Claims, the holders of which shall receive, in full
satisfaction, settlement, release, and discharge of and in exchange for such
Allowed Trade Claim, Cash equal to the amount of its Allowed Trade Claim (i) as
paid pursuant to any Trade Vendor Order prior to the Effective Date of the Plan,
and/or (ii) as paid pursuant the Plan, which Plan distribution shall be made as
soon as reasonably practicable after the later of (x) the Effective Date, or (y) the
date immediately following the date such Trade Claim becomes an Allowed
Trade Claim.
{BAY:01512597vl) 2
Class 7 consists oflntercompany Claims, which shall be canceled and each holder
thereof shall not be entitled to, and shall not receive or retain any property or
interest in property on account of, such Interests.
Class 8 consists oflnterests in the Subsidiaries, and the holder of which, Crdentia,
will retain such Interests.
Class 9 consists of Interests in Crdentia, which shall be canceled and each holder
thereof shall not be entitled to, and shall not receive or retain any property or
interest in property on account of, such Interests.
The following table briefly summarizes the classification, treatment and estimated
recoveries of Claims and Interests under the Plan. The table also identifies the Class entitled to
vote on the Plan under the rules established by the Bankruptcy Code.
Class Treatment Estimated Recovery Status
[Allowed Claim or
Amount of
Interest]
Claims in
Class
3
N/A Payment in full, in Undetermined 100% Unclassified
[Administrative
Cash, or as otherwise and not entitled
Claims]
agreed, or, if incurred in to vote
the ordinary course, in
accordance with the
terms and conditions of
any agreements relating
thereto.
N/A Payment in full, in $ 100% Unclassified
[Priority Tax Claims]
Cash, or as otherwise and not entitled
agreed. to vote
3
"Estimated Amount of Claims in Class" refers to Claims within a given Class as determioed based on,
among otber tbings, tbe Debtors' books and records as of February 28, 2010. The Debtors reserve tbe right to
dispute, or assert offsets or defenses to, any Claim as to amount, liability or statos regardless of whetber it was
included in tbe Estimated Amount of Claims in Class set forth above. All amounts stated have been rounded to tbe
nearest whole dollar.
{BAY:Ol5!2597vl} 3
Class Treatment Estimated Recovery Status
[Allowed Claim or
Amount of
Interest]
Claims in
Class
3
Class 1 Payment in full, in $ 100% Unimpaired;
[Other Priority
Cash, or as otherwise deemed to have
Claims]
agreed. accepted the
Plan and not
entitled to vote
Class 2 Receipt of 100% of $18,995,353.01 20%
4
Impaired;
[Secured Lender
Crdentia Equity. entitled to vote
Claims]
Class 3 Payment in full, in $0 100% Unimpaired;
[Other Secured
Cash, a return of the deemed to have
Claims]
Collateral, or as accepted the
otherwise agreed. Plan and not
entitled to vote
Class 4 Payment in full, in Up to 100% Unimpaired;
[DIP Loan Claims]
Cash, on the Effective
$900,000
deemed to have
Date. accepted the
Plan and not
entitled to vote
Class 5 Pro Rata share of the $ 2.5% Impaired;
[General Unsecured
Cash Contribution. entitled to vote
Claims]
Class 6 Payment in full, in $ 100% Unimpaired,
[Trade Claims]
Cash, pursuant to any deemed to have
Trade Vendor Orders accepted the
and/or on or as soon as Plan and not
practicable after the entitled to vote
Effective Date.
Class 7 Cancelled, extinguished $ 0% Impaired,
[Intercompany
and discharged. deemed to have
Claims]
rejected the
Plan and not
entitled to vote
4
The stated distribution percentage presumes no third party purchase of the assets of or interests in the
Debtors.
{BAY:01512597vl} 4
Class Treatment Estimated Recovery Status
[Allowed Claim or
Amount of
Interest]
Claims in
Class
3
Class 8 Retain all Interests on N/A 100% Unimpaired;
[Interests in the
the Effective Date. deemed to have
Subsidiaries]
accepted the
Plan and not
entitled to vote
Class 9 Cancelled, extinguished N/A 0% Impaired,
[Interests in Crdentia]
and discharged. deemed to have
rejected the
Plan and not
entitled to vote
B. Voting
Any Creditor or holder of an Interest whose legal, contractual, or equitable rights are
altered, modified, or changed by the proposed treatment under the Plan or whose treatment under
the Plan is not provided for in section 1124 of the Bankruptcy Code is considered "impaired."
All holders of Claims against, or Interests in, the Debtors will receive a copy of this Disclosure
Statement.
Only Persons who hold Claims that are impaired under the Plan and are not deemed to
have rejected the Plan are entitled to vote on the Plan. Classes 2 and 5 are deemed impaired, and
the votes from Claimholders in those Classes will be solicited with respect to the Plan. The
Secured Lender, as the holder of Class 2 Claims, has executed the Plan Support Agreement,
which is annexed hereto as Exhibit "B". Class 2 is, therefore, obligated to vote in favor of the
Plan.
The Plan provides a for a recovery to holders of Class 5 Claims; which recovery would
not occur if the case were filed as a liquidation under chapter 7 of the Bankruptcy Code. If Class
5 votes to reject the Plan, the Debtors will seek to confirm the Plan over Class 5's objection
under section 1129(b)(2)(B)(ii) of the Bankruptcy Code. The Debtor believes that the Plan
should be approved by the Bankruptcy Court under section 1129(b)(2)(B)(ii) of the Bankruptcy
Code because (a) it does not "discriminate unfairly" by paying Trade Creditors in a manner
different than General Unsecured Creditors; and (b) it is "fair and equitable", as no Class of
Claims or Equity Interests junior to the General Unsecured Creditors will receive or retain any
property under the Plan on account of such junior Claims or Equity Interests.
C. Solicitation Process
The following documents and materials will constitute the Debtors' "Solicitation Package":
PLAN,
{BAY:Ol512597vl} 5
DISCLOSURE STATEMENT,
ORDER APPROVING THE DISCLOSURE STATEMENT AND RELATED
SOLICITATION PROCEDURES ("DISCLOSURE STATEMENT ORDER''),
APPROPRIATE BALLOT AND VOTING INSTRUCTIONS, AND
PRE-ADDRESSED, POSTAGE PREPAID RETURN ENVELOPE.
Pursuant to the Order (I) Approving Disclosure Statement, (II) Establishing Procedures
For Solicitation And Tabulation Of Votes To Accept Or Reject Joint Chapter 11 Plan Of
Reorganization, (III) Establishing Voting Record Date, (IV) Scheduling A Hearing On
Confirmation Of Joint Plan Of Reorganization, (V) Approving The Form Of Ballots And
Solicitation Materials, (VI) Approving Related Notice Procedures, (Vll) Approving The
Balloting Agent, (VIII) Approving Cure Procedures And (IX) Granting Related Relief (Docket
No. [ ], the "Disclosure Statement Order''), the Debtors will distribute the Solicitation
Packages no fewer than thirty (30) calendar days before the Voting Deadline. The Debtors
submit that distribution of the Solicitation Packages at least thirty (30) calendar days prior to the
Voting Deadline and at least twenty-five (25) days prior to the objection deadline will provide
the requisite materials to holders of Claims entitled to vote on the Plan in compliance with
Bankruptcy Rules 3017(d) and 2002(b).
The Solicitation Package (including ballots and voting instructions) will be distributed to
holders of Claims in Classes 2 and 5 as of the Petition Date and in accordance with the
procedures for Solicitation established by the Court. The Debtors have selected Omni
Management Group as their balloting agent in connection with the Bankruptcy Cases (the
"Balloting Agent"). The Solicitation Package (except the Ballots) may also be obtained
contacting the Balloting Agent or Debtors' counsel at the following addresses:
Paul Deutch
Omni Management Group
1120 Avenue of the Americas
New York, NY 10036
Telephone: (212) 302-3580
Facsimile: (212) 302-3820
paul@omnimgt. com
Paul Rachmuth
Gersten Savage LLP
600 Lexington Avenue
New York, New York 10022-6018
Telephone (212) 752-9700
Facsimile (212) 980-5192
prachmuth@gerstensavage. com
Other non-voting parties entitled to receive the Solicitation Packages, will be served
paper copies of the order approving the Disclosure Statement, the Disclosure Statement and all
exhibits to the Disclosure Statement, including the Plan and the Confirmation Hearing Notice.
D. Voting Procedures
Only Persons who hold Claims on the Voting Record Date and certain other parties
specified by the Bankruptcy Court, are entitled to receive a copy of this Disclosure Statement
{BAY:01512597vl) 6
and all of the related materials. The Voting Deadline is 4:00 p.m. prevailing Eastern Time on
[ , 2010. To ensure that a vote is counted, holders of Claims in Classes 2 and 5
must: (a) complete the Ballot; (b) indicate a decision either to accept or reject the Plan; and (c)
sign and return the Ballot to the address set forth on the enclosed pre-addressed envelope
provided in the Solicitation Package or by delivery by first-class mail, overnight courier, or
personal delivery, so that all Ballots are actually received no later than the Voting Deadline, by
the Balloting Agent at the address below.
The Plan and Disclosure Statement only will be distributed to holders of Priority Tax
Claims and Claims in Classes 1, 3 and 6.
Copies of the Plan and Disclosure Statement are also available and may be examined by
interested parties at the website maintained for these cases at the address
www. omnimgt. com/sblite/crdentia.
Holders of Interests in Class 9 - Interests in Crdentia - will only receive a notice of the
Solicitation, substantially in form of the Notice to Interest Holders as defined in the Disclosure
Statement Order.
ANY BALLOT THAT IS PROPERLY EXECUTED BUT THAT DOES NOT
CLEARLY INDICATE AN ACCEPTANCE OR REJECTION OF THE PLAN OR
INDICATES BOTH AN ACCEPTANCE AND A REJECTION OF THE PLAN WILL NOT BE
COUNTED.
EACH HOLDER OF A CLAIM MUST VOTE ALL OF ITS CLAIM WITHIN A
PARTICULAR CLASS EITHER TO ACCEPT OR REJECT THE PLAN AND MAY NOT
SPLIT SUCH VOTES. IF YOU CAST MORE THAN ONE BALLOT VOTING THE SAME
CLAIM ON OR BEFORE THE VOTING DEADLINE, THE LAST BALLOT RECEIVED
BEFORE THE VOTING DEADLINE WILL BE DEEMED TO REFLECT YOUR INTENT
AND THUS WILL SUPERCEDE ALL PRIOR BALLOTS.
BALLOTS
Ballots must be actually received by the
Balloting Agent by the Voting Deadline at the following address:
Crdentia Corp.
c/o Omni Management Group, LLC
16161 Ventura Blvd., Suite C
PMB 426
Encino, CA 91436
{BAY:Ol512597vl} 7
If you have any questions on the procedures for voting on the Plan,
please contact Nova George at the Balloting Agent at the following telephone number:
818-906-8300
IF A BALLOT IS RECENED AFTER THE VOTING DEADLINE, IT WILL NOT
BE COUNTED UNLESS THE DEBTORS DETERMINE OTHERWISE.
Prior to deciding whether and how to vote on the Plan, each holder in a voting Class
should consider carefully all of the information in this Disclosure Statement, especially the risk
factors described herein.
For further information and general instructions on voting to accept or to reject the Plan,
see Article V1 ofthis Disclosure Statement and the instructions accompanying your ballot.
THE DEBTORS URGE ALL HOLDERS OF CLASS 2 AND 5 CLAIMS TO
EXERCISE THEm RIGHT TO VOTE BY COMPLETING THEm BALLOTS AND
RETURNING THEM AS QUICKLY AS POSSIBLE.
E. Confirmation Hearing
The Bankruptcy Court will hold the Confirmation Hearing commencing at L[ __
_ .m.] Eastern Time, on [ ], 2010 at the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court"), 824 Market Street, Courtroom No. L_],
Wilmington, Delaware 19801, or such other location as the Bankruptcy Court directs, before the
Honorable [ ], United States Bankruptcy Judge. The Confirmation Hearing may
be adjourned from time to time without further notice. At the Confirmation Hearing, the
Bankruptcy Court will (i) determine whether the requisite vote has been obtained from the
Classes entitled to vote, (ii) hear and determine objections, if any, to the Plan and to confirmation
of the Plan that have not been previously disposed of, (iii) determine whether the Plan meets the
confirmation requirements of the Bankruptcy Code, (iv) determine whether to confirm the Plan,
and (v) grant such other and further relief as the Bankruptcy Court deems reasonable and
appropriate.
F. Objection to Confirmation
Any objection to confirmation of the Plan must be in writing, state the basis of such
objection with specificity, and be filed with the Bankruptcy Court and served in a manner so as
to be received on or before [ ], 2010 at 4:00p.m. Eastern Time by: (1) counsel to
the Debtors, Gersten Savage, LLP, Attn: Paul Rachmuth, Esq, 600 Lexington Avenue, New
York, New York 10017 and Bayard, P.A., Attn: Jamie L. Edmonson, Esq., 222 Delaware
Avenue, Suite 900, Wilmington, Delaware 19899 (2) the Office of the United States Trustee for
the District of Delaware, 844 King Street, Suite 2207, Wilmington, Delaware 19801, Attn:
L_ ____ _.; (3) counsel to the Secured Lender, Lowenstein Sandler PC, Attn: Thomas A.
{BAYo01512597vl} 8
Pitta, Esq, 65 Livingston Avenue, Roseland, New Jersey 07068; and (4) counsel to any statutory
committee appointed in these chapter 11 cases.
ARTICLE IT.
GENERAL BACKGROUND
A. The Debtors' Business
Crdentia's predecessor was originally formed in the State of Delaware on November 10,
1997 with the name Digivision International, Ltd. The company changed its name to Lifen, Inc.
on June 22, 2000, and then to Crdentia Corp. on May 29, 2003. Until 2003, Crdentia existed as a
shell company, without operations or revenues. In 2003, Crdentia completed its first acquisition
of a healthcare staffing business and began offering healthcare staffing services.
Over the next five years, Crdentia acquired a total of twelve (12) companies located
throughout the United States, adding employees, services and customers.
The Debtors provide healthcare staffing services to hospitals and other healthcare
facilities in eleven locales in 5 states and also provides home healthcare services to patients in
their homes in 4 of those states. The Debtors currently serve over 1,000 hospital, government,
clinic, nursing home, and home care clients, and facilitates the placement of staff across the
following services groups:
a. Travel Nurses are recruited domestically as well as internationally, and placed on
temporary assignments at healthcare facilities across the United States;
b. Per Diem and Block Assignment Nurses are local nurses placed at healthcare
facilities on typically on short-term, day-to-day assignments, although this group
also includes block assignments which are longer term contractual clinical
services;
c. Physicians (Locum Tenens) contract with Crdentia to perform medical services
for healthcare organizations for a specified length of time;
d Allied Staffing consists of the per diem and short -term contractual use of non-
nursing medical professionals; assignments include: diagnostic imaging,
respiratory, laboratory, therapies and administrative modalities; and
e. Private Duty Home Care group provides nursing case management and staffing
for skilled and non-skilled care in the home.
Crdentia is headquartered in Winter Park, Florida (formerly headquartered in Dallas,
Texas), and is comprised of 11 hub locations throughout the Sunbelt states, between North
Carolina and Arizona. These hubs are located in Austin, TX; Birmingham, AL; Charlotte, NC;
Dallas, TX; Houston, TX; Jacksonville, FL; Lubbock, TX; Orlando, FL; Phoenix, AZ; Tampa,
FL; and Tucson, AZ. Each hub is administered by local hub managers as supported by the
Corporate office in Winter Park, FL.
Each Subsidiary is a wholly owned subsidiary of Crdentia. Each Subsidiary is a Debtor
in the Chapter 11 cases. The Subsidiaries currently function as shell companies; the Company's
{BAY:01512597vl} 9
operations, employees and customer contracts are at the parent level. Crdentia' s financial
statements are prepared on a consolidated basis with those of the Subsidiaries.
B. Capital Structure
Common Stock
Crdentia's common stock began quotation on the OTC Bulletin Board under the symbol
"CRNC" in 2003. In connection with a 1-for-3 reverse split of Crdentia' s common stock on June
29, 2004, the trading symbol was changed to "CRDE", and in connection with a 1-for-10 reverse
split ofCrdentia's common stock on April4, 2006, the symbol was changed again to "CRDT."
In August 2008, Crdentia initiated a 1,000:1 reverse split of its publicly-traded common
stock in order to take the Company private. The Board of Directors and Crdentia's shareholders
approved the split, and the split became effective on August 9, 2008. Prior to the stock split,
Crdentia had 54,140,447 shares of its common stock outstanding as of July 22, 2008, and
approximately 491 holders of record. As a result of the split, there were approximately 54,000
shares of Crdentia's common stock (based on the number of shares outstanding on July 22,
2008), and less than 300 record holders. The reduction in the number of holders enabled Crdentia
to satisfy the filing of a Certification And Notice Of Termination Of Registration Under Section
12(G) Of The Securities Exchange Act Of 1934 Or Suspension Of Duty To File Reports Under
Sections 13 And 15(D) Of The Securities Exchange Act Of 1934 (a "Form 15") and cease its
reporting responsibilities as required by the rules of the Securities and Exchange Commission.
Crdentia filed the Form 15 on August 13, 2008.
As a result of filing the Form 15 and "going dark", Crdentia realized substantial cost
savings as it no longer incurred the public company costs associated with reporting, auditing, and
filing.
As of the Petition Date, there are 56,898 shares of Crdentia's common stock outstanding
and 176 holders of record.
Secured Debt
On February 22, 2008, Crdentia entered into a $10.2 million debt refinancing (the "Credit
Facility") with the Secured Lender, Com Vest Capital, LLC ("Com Vest"). The Credit Facility
was comprised of a two-year $5.2 million Revolving Credit Note, bearing interest at the greater
of the Prime Rate plus 2% or 8.5%, and two separate three-year term loans, each amounting to
$2.5 million and bearing annual interest at 12.5%. Upon the occurrence of certain events of
default, Com Vest was entitled to immediately collect any obligation under the Credit Facility
and increase interest rates to much higher default rates.
The Company also issued Com Vest a warrant to purchase 8,000,000 common shares at
an exercise price of $0.001 per share which expire in February 2014. (Such warrant was subject
to the 1,000:1 reverse stock split, resulting in 8,000 post-split share warrant.) This warrant was
subsequently exchanged for the Tranche C Note; see below.
{BAY,Ol512597vl} 10
On July 2, 2008, Crdentia and certain of its subsidiaries signed agreements with Capital
TempFunds ("Capital TempFunds"), a division of Capital Business Credit LLC, to have it take
over from Com Vest a majority of the then-outstanding revolving Credit Facility and to increase
the Credit Facility from $5.2 million to $7.5 million. The expanded revolving Credit Facility
bears interest at the greater of(a) the prime rate of interest quoted in the Wall Street Journal plus
2.0% or (b) 8.5% per annum. The Credit Facility with Capital TempFunds was funded on July 7,
2008.
On July 2, 2008 (effective as of July 7, 2008), Crdentia and certain of its subsidiaries
entered into a series of agreements revising its obligations with Com Vest. As noted above, the
existing revolving Credit Facility with Com Vest was repaid and moved to Capital TempFunds.
The term debts in place and owed to Com Vest (two tranches of three-year term debts of $2.5
million each) were revised as follows: (i) the principal payments on the Tranche A Term Note
were delayed and amortization will commence in September 2009, and (ii) $1.5 million was
added to the principal amount of the Tranche B Term Note to increase the principal amount from
$2.5 million to $4 million. The new Tranche B Term Note is convertible at the option of
Com Vest upon certain triggering events at the same price of the equity financing ($0.30 per
share). Finally, the original warrant to Com Vest to purchase shares ofCrdentia's common stock
was redeemed in exchange for a Tranche C Term Note in the principal amount of$2.4 million.
The Tranche A Term Note bears interest at 12.5% per annum and requires that (a) interest
payments be made on the first calendar day of each month commencing on July 1, 2008 and (b)
principal payments be made in seventeen (17) equal monthly installments of $104,166.67
beginning on September 1, 2009 and continuing through and including January 1, 2011, with the
final payment due on February 28, 2011 in an amount equal to the entire remaining principal
balance of the note. The Tranche B Term Note bears interest at 12.5% per annum and requires
that (a) interest payments be made on the first calendar day of each month commencing on July
1, 2008 and (b) that the principal be paid in full on February 28, 2011. Com Vest, at its option,
may convert all or any portion of the unpaid principal balance and/or any accrued interest
thereon into shares of the Company's common stock at a price of $0.30 per share. The Tranche
C Term Note bears interest at 12.5% per annum and requires that (a) interest be payable upon the
maturity or required prepayment in full of the note and (b) the outstanding principal of the note
shall be due and payable in full on February 28, 2011.
In addition to the above, Crdentia issued on July 2, 2008 a Warrant to Purchase Shares of
Common Stock to ComVest to purchase up to five hundred twenty five thousand (525,000)
shares ofCrdentia's common stock with an exercise price of$0.35 per share. (Such warrant was
subject to the 1,000:1 reverse stock split, resulting in 525 post-split share warrant.) This warrant
is exercisable at any time after July 2, 2008 and expires on June 30, 2013. The warrant contains
put options that allow Com Vest to require Crdentia to redeem and purchase 80% of the warrant
for a cash purchase p r ~ c e ranging from $420,000 to $635,000 until June 30, 2013 in certain
circumstances.
In September 2009, Wells Fargo Bank (new owner of Capital TempFunds) terminated its
relationship with Crdentia, and Com Vest assumed the revolving Credit Facility.
{BAY:Ol512597vl} 11
Each of the Subsidiaries are obligors and/or guarantors of Crdentia's obligations on the
Credit Facility.
As of the Petition Date, Crdentia's total outstanding balance on the Com Vest debt is
$18,995,353.01, comprised of$16,429,792.53 in principal amount and $2,562,569.02 in accrued
and unpaid interest through the Petition Date, and $2,991.46 in fees.
Recent Financial Information
As of February 28, 2010, the Debtors had consolidated assets totaling approximately $7.5
million and consolidated liabilities totaling approximately $22.5 million. Total assets have
declined from December 31, 2008 to 2009 by $15.6 million, of which $12.0 million resulted
from the write down of intangible assets which were created as a large portion of the purchase
price consideration given on various acquisition transactions. The Debtors' consolidated
revenues for its fiscal year ended December 31, 2009 and 2008 were $22,974,000 and
$40,130,000, respectively. The Debtors' accounts receivable, net of the allowance for doubtful
accounts, were $2,549,000 and $5,374,000 at December 31, 2009 and 2008, respectively and
represent the only liquid asset of the Company. The Debtors have generated negative cash from
operations for more than two years and frequently rely on additional funding extended by
Com Vest to support its operations, sometimes weekly.
C. Events Leading to the Debtors' Chapter 11 Cases
The Debtors are in a severe liquidity crisis attributable to a host of factors, including,
among others, (a) an industry-wide decline in demand, (b) material deterioration of the travel
nursing market segment, (c) re-entry of formerly retired or part-time healthcare professionals
into institutional full-time positions, which causes a reduction in the need for personnel from
staffing agencies, (d) a decline in markets served by Crdentia due to office closures, (e) the
Debtors' lack of focus on building a sales organization with a disciplined approach to managing
the sales function, (f) mix of types of business that was unfavorable to appropriate profitability,
(g) inability to hire quality local hub managers in a timely manner, (h) failure to capitalize on
new contractual opportunities with new clients, (i) failure to reach critical scale at the operating
locations sufficient to fund the corporate overhead, and (j) utilizing debt and equity funding to
acquire entities/operations which did not produce the positive results expected. As the revenues
declined and gross margins contracted, Crdentia' s management chose a path of cost reductions
and office closures which provided only a partial solution and limited relief
Since the fall of 2008, the Debtors have been in default on their obligations to Com Vest.
The first default occurred in the fall of 2008 due to the Debtors' failure to satisfy an EBITDA
covenant. Currently, the defaults include failure to pay interest, failure to pay interest timely,
failure to provide audited financial statements, and failure to maintain required financial ratios in
the debt covenants agreed to by the Debtors.
In light of their dire financial condition, the Debtors contemplated a reorganization of the
Debtors and considered a sale of substantially all of the assets and/or the equity of the Debtors,
sale of certain operating units (locations), pursuit of other investors/lenders, foreclosure on the
secured debt and the commencement of a Chapter 11 proceeding. Management attempted to find
{BAY:Ol512597vl} 12
a strategic or financial buyer of all or part of the Debtors, or one or more new investors of
mezzanine debt or preferred equity in an effort to satisfy the Debtors creditors.
Management engaged an investment banking firm, Genesis Capital, LLC ("Genesis") on
September 12, 2008. Gensis' first report was rendered on February 20, 2009, and was updated in
March 2009. Genesis contacted 57 potential acquirers, of which five submitted official
indications of initial interest by the March 17, 2009 deadline (the "Genesis Interested Parties").
Each of these five Genesis Interested Parties signed Non-Disclosure Agreements and obtained
corporate information packages.
Solicitations were based upon annualized revenues of $39 million and earnings before
interest, taxes, depreciation and amortization ("EBITDA") of $244,000; however, the actual
results for the period were revenues of$23 million and $2.7 million negative EBITDA. Potential
valuation amounts of the Debtors ranged widely ($4.7 million to $8.2 million, per Genesis'
calculations).
Despite Genesis' robust marketing efforts, no letters of intent were signed, no due
diligence was completed and no offers were made. During the summer of 2009, one potential
buyer expressed interest in one location of the Debtors' 11 locations, but did not complete the
due diligence process. Of the 52 potential buyers that did not submit indications of interest, 42
received Non-Disclosure Agreements, of which 15 were executed, and six potential buyers
claimed they needed more time or otherwise did not pursue any further action.
The reasons for the lack of interest by the potential buyers as reported in Genesis' March
2009 included, among other things, "discomfort with negative EBITDA/cashflow businesses,
lack of visibility on 2009 projections and certainty of adequate restructuring to meet budgeted
results, hub location margins too low, concerns related to the condition and outlook of the entire
healthcare staffing industry, Per Diem component too great in overall business mix, other
competing acquisition opportunities in the nurse staffing space, below size threshold/above size
threshold, and inability to secure adequate debt financing in today' s market."
Genesis' engagement with the Debtors is still in effect. Genesis stands to be paid a bonus
upon sale and would be motivated to continue working toward a successful completion of a
transaction post the March 17, 2009 submission date; however, no additional offers have been
received since that time.
In September 2008, RVR was engaged to perform an independent analysis on specific
aspects of the operations of Crdentia and to provide a report thereon to Com Vest. R VR' s
October 2008 report included validation of certain representations made by management
including new capital contributions, execution of specific cost-cutting measures, savings to be
realized from ceasing to be a public reporting entity, review of the projections for the remainder
of the 2009 calendar year, insurance coverages and costs, evaluation of Management, and
recommendations on a course(s) of action. Based on their analysis, RVR valued the Debtors at
$6 to $9 million, and suggested four possible courses of action: (a) Sell the business in its
entirety; (b) Sell non-performing offices, downsize corporate operations, and grow five regions
and position them for sale in the next twelve (12) to eighteen (18) months; (c) Sell all branches in
a parcel sale, or (d) Bankruptcy.
{BAY:015!2597vl} 13
Com Vest contracted with RVR again in June 2009 for an update of their October 2008
report. The RVR report noted the following significant issues/metrics: (a) Annualized current
revenue run rate of$25.8 million based on May 2009 revenue compared to $34.1 million trailing
twelve month revenue at May 31, 2009, compared to $40.4 million trailing twelve month
revenue at August 31, 2008; (b) the business mix had worsened with further shift toward Per
Diem Staffing and serious deterioration of the Travel Staffing business line; (c) Monthly
negative cash flow of $150,000; and (d) $3.3 million in negative EBITDA for the twelve months
ended May 31, 2009. Additionally, many of the operational issues noted in October 2008 were
still present in June 2009. As a result, R VR determined a valuation of $3 to $7.5 million, only to
a strategic buyer capable of leveraging their own corporate office to serve Crdentia' s branches.
RVR suggested three possible courses of action: (a) Operational and Management Restructuring,
(b) Sell all branches individually or by region or as fits a strategic buyer, or (c) Bankruptcy.
As a result of the June 2009 work, Crdentia retained RVR effective August 1, 2009, to
assist, and eventually take over, management of the Debtors' business. RVR's proposal to the
stakeholders of Crdentia included the following: (a) Restructuring the organization to become a
sales-driven company including training, accountability and introduction of an incentive-based
pay for the sales staff; (b) Outsourcing the Human Resources (HR) function including a
centralized recruiting solution; (c) Mechanizing payroll-related tasks to increase accuracy,
reduce costs of processing and improve speed of processing; and (d) Considering replacement of
certain personnel and locations based on cost/benefit analysis of future returns.
RVR was instrumental in providing Crdentia and Com Vest with an evaluation of the
Debtors' business and the potential restructuring alternatives, based on RVR's observations and
interactions with Crdentia, its management and R VR' s knowledge of the capital markets. In
mid-October 2009, RVR presented to Crdentia and Com Vest its findings and recommendations.
A primary theme of the findings related to unfavorable decisions made by the Company's
management and the resulting effects including missed opportunities for improvement. R VR
implemented a sales and service strategy, established weekly sales goals, incentives, objectives
and accountabilities, repaired relations between the corporate office and the hub locations and
began streamlining and evaluating the corporate office staff and functions while studying the
Company's results of operations. RVR determined a valuation of the Debtors of $2.6 to $6.6
million depending on one of three suggested possible courses of action: (a) Foreclosure by
Com Vest, the secured lender, on the Debtors' assets; (b) Maintain the current course by driving
revenue and restructuring corporate office/structure for cost savings; or (c) filing for protection
under Chapter 11 of the Bankruptcy Code or filing an Assignment for the Benefit of Creditors.
After considering the available alternatives, the Board of Directors, after consulting with
its advisors, concluded, that negotiating a plan of reorganization with Com Vest, whereby
Com Vest receives all of the equity of the reorganized Crdentia was in the best interests of
Crdentia and its creditors, and for the Debtors to commence the Chapter 11 cases.
The pre-negotiated Joint Chapter 11 Plan of Reorganization of the Debtors, dated March
17, 2010, contemplates (i) the emergence of the Debtors from bankruptcy as Reorganized
Crdentia and the re-vesting of the Debtors' assets in Reorganized Crdentia free and clear of any
liens, encumbrances or other interests; (ii) the vesting of 100% of the equity in Reorganized
Crdentia in Com Vest or its designee (iii) the opportunity for third parties to purchase the assets
{BAY:OI512597vl} 14
of or the equity in the Debtors free and clear of any liens, encumbrances or other interests; and
(iv); the resolution of all outstanding Claims against and Interests (as such terms are defined in
the Plan) in the Debtors. The Plan is subject to approval by the Bankruptcy Court and the
consideration by the Debtors of higher or better competing bids at an Auction (as defined in the
Plan) and establishes certain provisions to distribute the proceeds of the auction of the assets
among the Debtors' creditors in accordance with the priorities established under the Bankruptcy
Code.
On the Petition Date, the Debtors filed a motion with the Bankruptcy Court seeking an
order approving the bidding and auction procedures by which third parties may bid for the
Debtors or their assets (the "Bidding and Auction Procedures Order"). Pursuant to the Bidding
and Auction Procedures Order, the initial bid amount will be set at $10 million, which is
approximately 53% of Com Vest's Claim. In the event no party submits a submit Qualified Bid
(as defined in the Bidding and Auction Procedures Order) to become the Third Party Purchaser
(as defined in the Bidding and Auction Procedures Order), Com Vest will receive the equity in
Reorganized Crdentia. In the event a single party submits a Qualified Bid to become the Third
Party Purchaser, such party will become the Third Party Purchaser and no auction will be held.
If two or more parties submit Qualified Bids to become the Third Party Purchaser, the Debtors
will conduct an auction in accordance with the Bidding and Auction Procedures Order.
In order to increase the opportunity for the Debtors to receive competitive bids for the
transfer of the Assets at the Auction, the Debtors will engage in a marketing process. The
Debtors' marketing efforts will include sending company information and bid packages to the
Genesis Interested Parties as well as other potentially interested parties that RVR has identified
based on its knowledge of the healthcare industry.
Additionally, pursuant to terms negotiated between the Debtors, on the one hand, and
Com Vest, as lender (the "DIP Lender"), the DIP Lender has agreed to provide use of cash
collateral and limited postpetition financing (the "DIP Loan") to the Debtors to fund, to the
extent necessary, their postpetition operations. The DIP Loan will provide the Debtors, as
borrowers, with a secured loan in an amount not to exceed $900,000. Borrowings under the DIP
Loan will accrue interest at a rate equal to 12% per annum. The DIP Loan will expire on the
earlier of May 31, 2010 or an occurrence of event of default. Borrowings under the DIP Loan
will be secured shall be secured by the Replacement Liens (as defined in the DIP Loan
documents). The DIP Loan shall be secured, and all interest that accrues thereon shall be
secured, by the DIP Loan Documents, the Replacement Liens and by post-petition liens pursuant
to sections 363(c)(2), 364(c)(3) and 364(d)(l) of the Bankruptcy Code. In addition, the DIP
Loan shall have superpriority administrative expense status under section 364(c)(l) of the
Bankruptcy Code.
{BAY:0!5!2597vl} 15
ARTICLElll.
THE REORGANIZATION CASE
A. Commencement ofthe Bankruptcy Case
On March 17, 2010 (the "Petition Date"), the Debtors filed voluntary petitions for
reorganization under chapter 11 of the Bankruptcy Code in the Bankruptcy Court. The
Bankruptcy Cases are being jointly administered as In re: Crdentia Corp., et al., Case No. 10-
: : - - - - : - - ~ ~ - = - - : - ' ' Jointly Administered. The Bankruptcy Cases were assigned to U.S.
Bankruptcy Judge Judge in the United States Bankruptcy Court for the
District of Delaware.
B. Motions and Other Pleadings Filed on the Petition Date
On the Petition Date, the Debtors filed a number of motions and other pleadings,
including:
i) A motion to approve the bidding procedures to allow for a third party to purchase
the assets of or the equity in the Debtors, free and clear of all liens, claims and
encumbrances, and schedule an Auction if such third party emerges;
ii) A motion to approve the DIP Loan;
iii) A motion to honor prepetition employee obligations in the ordinary course of the
Debtors' business (up to a maximum of $10,950 per employee earned within 180
days prior to the Petition Date);
iv) A motion authorizing, but not requiring the Debtors to pay certain Trade Vendors
in the ordinary course of the Debtors' business;
v) A motion allowing the Debtors to honor their prepetition obligations owed to their
customers in the ordinary course of the Debtors' business;
vi) An application to retain Gersten Savage LLP as counsel to the Debtors; and
vii) An application to retain Bayard, P .A. as counsel to the Debtors.
[The Debtors will update this section prior to the hearing on the disclosure
statement.]
C. Schedules and Claims Bar Date
On , 2010, the Debtors filed their Schedules, identifying its assets and
liabilities. In addition, pursuant to an order dated , 2010 (the "Bar Date
Order") the Bankruptcy Court established the following Bar Dates for the filing of proofs of
Claim in the Bankruptcy Cases: (i) [ ], 2010, as the general Bar Date for all Claims,
other than Claims of governmental units; and (ii) the later of (a) the general Bar Date, and
{BAY,01512597vl} 16
(b) thirty (30) days after the date that a notice of an amendment to the Schedules is served on a
claimant for Claims relating to such amendment to the Schedules.
D. Cash Collateral and DIP Loan
Pursuant to terms negotiated between the Debtors, on the one hand, and ComVest as
postpetition lender (the "DIP Lender"), on the other, the DIP Lender has agreed to provide
limited postpetition financing (the "DIP Loan") to the Debtors to fund, to the extent necessary,
their postpetition operations. Through an amendment of the Credit Facility, the DIP Loan will
provide the Debtors, as borrowers, with a secured loan in an amount not to exceed $900,000.
Borrowings under the DIP Loan will accrue interest at a fixed rate equal 12%. The DIP Loan
will expire on May 31, 2010. The DIP Loan will be repaid in Cash in full upon the Effective
Date. Borrowings under the DIP Loan will be secured by a lien on the Debtors' assets.
E. Bidding Procedures in Connection with Sale of the Debtors or their Assets
In order to increase the opportunity for the Debtors to receive competitive bids for sale of
the Debtor or their assets, the Debtors will engage in an extensive post-petition marketing
process. This marketing effort will include contacting the interested parties who contacted the
Debtors in connection with their prepetition marketing efforts and other parties interested in the
health care staffing industry.
Pursuant a motion filed by the Debtors on the Petition Date, the Debtors received an
order (Docket No. __, the "Bidding and Auction Procedure Order") establishing bidding and
auction procedures for the sale of the Debtors or their assets. Pursuant to the Bidding and
Auction Procedures Order, the initial bid amount will be set at $10 million, which is
approximately two thirds of the Secured Lender's Claim
5
In the event no party submits a submit
Qualified Bid (as defined in the Bidding and Auction Procedures Order) to purchase the Debtors
or their assets, the Secured Lender, as the holder of all Class 2 Claims, will receive the equity in
Reorganized Crdentia. In the event a single party submits a Qualified Bid, such party will
become the purchaser of the Debtors or their assets and no auction will be held. If two or more
parties submit Qualified Bids, the Debtors will conduct an auction in accordance with the
Bidding and Auction Procedures Order.
ARTICLE IV.
SUMMARY OF THE PLAN
TillS SECTION PROVIDES A SUMMARY OF THE STRUCTURE AND
IMPLEMENTATION OF THE PLAN AND THE CLASSIFICATION AND TREATMENT OF
CLAIMS AND EQUITY INTERESTS UNDER THE PLAN. TillS SECTION IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO THE PLAN, WHICH IS EXillBIT A TO TillS
DISCLOSURE STATEMENT. THE PLAN AND THE DOCUMENTS REFERRED TO
THEREIN WILL CONTROL THE TREATMENT OF CLAIMS AGAINST, AND EQUITY
5
The Debtors prepetition marketing process was unable to identify any party willing to purchase the Debtors or
their assets for this amount.
{BAY:Ol512597vl} 17
INTERESTS IN, THE DEBTOR. UPON THE EFFECTIVE DATE, THE PLAN WILL BE
BINDING UPON HOLDERS OF CLAIMS AGAINST, AND EQUITY INTERESTS IN, THE
DEBTOR, THE REORGANIZED DEBTOR AND OTHER PARTIES IN INTEREST. IN THE
EVENT OF ANY CONFLICT BETWEEN THIS DISCLOSURE STATEMENT AND THE
PLAN OR ANY OTHER OPERATIVE DOCUMENT, THE TERMS OF THE PLAN AND/OR
SUCH OTHER OPERATIVE DOCUMENT WILL CONTROL.
All Claims and Interests, except Administrative Claims and Priority Tax Claims, are
placed in the Classes set forth below. In accordance with section 1123(a)(l) of the Bankruptcy
Code, Administrative Claims and Priority Tax Claims, as described below, have not been
classified.
A Claim or Interest is placed in a particular Class only to the extent that the Claim or
Interest falls within the description of that Class, and is classified in other Classes to the extent
that any portion of the Claim or Interest falls within the description of such other Classes. A
Claim is also placed in a particular Class for the purpose of receiving distributions pursuant to
the Plan only to the extent that such Claim is an Allowed Claim in that Class and such Claim has
not been paid, released or otherwise settled prior to the Effective Date.
1. Unclassified Claims (not entitled to vote on the Plan)
1. Administrative Claims
2. Priority Tax Claims
2. Unimpaired Classes of Claims (deemed to have accepted the Plan and not entitled to vote
on the Plan)
1. Class 1: Priority Non-Tax Claims
2. Class 3: Other Secured Claims
3. Class 4: DIP Loan Claims
4. Class 6: Trade Claims
3. Impaired Classes of Claims
1. Class 2: Secured Lender Claims (entitled to vote on the Plan)
2. Class 5: General Unsecured Claims (entitled to vote on the Plan)
3. Class 7: Intercompany Claims (deemed to have rejected the Plan)
4. Classes of Interests
1. Class 8: Interests in the Subsidiaries (unimpaired and deemed to have accepted
the Plan and not required to vote)
{BAY:01512597vl) 18
2. Class 9: Interests in Crdentia (impaired and deemed to have rejected the Plan and
not entitled to vote)
ARTICLEV.
TREATMENT OF CLAIMS AND INTERESTS
1. Unclassified Claims
a. Administrative Claims
Except as otherwise provided herein, and subject to the requirements of the Plan, on, or
as soon as reasonably practicable after the later of (i) the Effective Date or (ii) the date such
Administrative Claim becomes an Allowed Administrative Claim, a holder of an Allowed
Administrative Claim shall receive, in full satisfaction, settlement, release, and discharge of and
in exchange for such Allowed Administrative Claim, (a) Cash equal to the unpaid portion of the
Face Amount of such Allowed Administrative Claim or (b) such other treatment as to which
such holder and the Debtors or Reorganized Crdentia shall have agreed upon in writing;
provided, however, that Allowed Administrative Claims with respect to liabilities incurred by the
Debtors in the ordinary course of business during the Bankruptcy Cases may be paid in the
ordinary course of business in accordance with the terms and conditions of any agreements
relating thereto.
b. Prioritv Tax Claims
Except as otherwise provided herein, and subject to the requirements of the Plan, on, or
as soon as reasonably practicable after the later of (i) the Effective Date or (ii) the date such
Priority Tax Claim becomes an Allowed Priority Tax Claim, a holder of an Allowed Priority Tax
Claim shall receive, when such claim becomes payable under applicable law, in full satisfaction,
settlement, release, and discharge of and in exchange for such Allowed Priority Tax Claim, (a)
Cash equal to the unpaid portion of the Face Amount of such Allowed Priority Tax Claim or (b)
such other treatment as to which such holder and the Debtors or Reorganized Crdentia shall have
agreed upon in writing; provided, however, that the Debtors or Reorganized Crdentia shall have
the right to pay any Allowed Priority Tax Claim, or any remaining balance of any Allowed
Priority Tax Claim, in full at any time on or after the Effective Date without premium or penalty
to the extent permitted under applicable non-bankruptcy law.
2. Unimpaired Claims
a. Class 1: Other Priority Claims
On or as soon as reasonably practicable after, the later of (i) the Effective Date, or (ii) the
date such Other Priority Claim becomes an Allowed Other Priority Claim, a holder of an
Allowed Other Priority Claim shall receive from Reorganized Crdentia, in full satisfaction,
settlement, release, and discharge of and in exchange for such Allowed Other Priority Claim (a)
Cash equal to the unpaid portion of the Face Amount of such Allowed Other Priority Claim, or
(b) such other treatment as to which such holder and Reorganized Crdentia shall have agreed
upon in writing.
{BAY:Ol512597vl} 19
Class 1 is unimpaired and, therefore, holders of Class 1 Claims are not entitled to vote to
accept or reject the Plan.
b. Class 3: Other Secured Claims
On the later of, or as soon as reasonably practicable after the later of (i) the
Effective Date, or (ii) the date on which an Other Secured Claim becomes an Allowed Other
Secured Claim, a holder of an Allowed Other Secured Claim shall receive from Reorganized
Crdentia, in full satisfaction, settlement, release and discharge of and in exchange for, such
Allowed Other Secured Claim, (a) Cash equal to the value of its Allowed Other Secured Claim,
(b) a return of the holder's collateral securing the Other Secured Claim, or (c) such other
treatment as to which such holder and Reorganized Crdentia shall have agreed upon in writing.
The Debtors are currently unaware of any Other Secured Claims.
Class 3 is unimpaired and, therefore, holders of Class 3 Claims are not entitled to
vote to accept or reject the Plan.
c. Class 4: DIP Loan Claims
On the Effective Date, all DIP Loan Claims, if any, shall be paid in Cash by Reorganized
Crdentia.
Class 4 is unimpaired and, therefore, holders of Class 4 Claims are not entitled to
vote to accept or reject the Plan.
d. Class 6: Trade Claims
Holders of Allowed Trade Claims shall receive, in full satisfaction, settlement, release,
and discharge of and in exchange for such Allowed Trade Claim, Cash equal to the amount of its
Allowed Trade Claim (i) as paid pursuant to any Trade Claims Order prior to the Effective Date
of the Plan, and/or (ii) as paid pursuant the Plan, which Plan distribution shall be made as soon as
reasonably practicable after the later of (a) the Effective Date, or (b) the date immediately
following the date such Trade Claim becomes an Allowed Trade Claim.
Class 6 is unimpaired and, therefore, holders of Class 6 Claims are not entitled to vote to
accept or reject the Plan.
3. Impaired Claims
a. Class 2: Secured Lender Claims
The Secured Lender Claims shall be Allowed in full, without setoff, subordination,
avoidance, reduction, defense, recharacterization or counterclaim, in the amount of
$18,995,353.01.
{BAY:01512597vl}
1. In the event there is no Third Party Purchaser, on the Effective Date holders of
Secured Lender Claims, in full satisfaction, settlement, compromise, release,
20
and discharge of and in exchange for the amount of the Secured Lender
Claims shall receive 100% of the Reorganized Crdentia Equity.
2. In the event there is a Third Party Purchaser, on the Effective Date, holders of
Secured Lender Claims, in full satisfaction, settlement, compromise, release,
and discharge of and in exchange for the amount of the Secured Lender
Claims shall receive the Sale Proceeds, less all distributions made or to be
made to all other Claimholders, up to the Secured Lender Claim Amount.
Class 2 is impaired and, therefore, holders of Class 2 Claims are entitled to vote to accept
or reject the Plan.
b. Class 5: General Unsecured Claims
On or as soon as reasonably practicable after the Effective Date, each holder of an
Allowed General Unsecured Claim shall receive a Pro Rata share of the General Unsecured
Claim Consideration.
Class 5 is impaired and, therefore, holders of Class 5 Claims are entitled to vote to accept
or reject the Plan.
c. Class 7: Intercompany Claims
As of the Effective Date, all Intercompany Claims shall be cancelled and will not receive
any distribution from the Debtor or the Estate.
Class 7 Claims receive no distribution under the Plan and, therefore, holders of Class 7
Claims are deemed to reject the Plan and are not entitled to vote to accept or reject the Plan.
4. Interests
a. Class 8: Interests in the Subsidiaries
Crdentia is the holder of 100% of the Interests in all the Subsidiaries,
which constitute all the Allowed Class 8 Interests. On the Effective Date, Reorganized
Crdentia will hold 100% of the Interests in the Subsidiaries.
Class 8 is unimpaired and, therefore, the holder of Class 8 Interests is not
entitled to vote to accept or reject the Plan.
b. Class 9: Interests in Crdentia
On the Effective Date, all Interests in Crdentia shall be canceled and each holder thereof
shall not be entitled to, and shall not receive or retain any property or interest in property on
account of, such Interests.
Class 9 Interests receive no distribution under the Plan and, therefore, holders of Class 9
Interests are deemed to reject the Plan and are not entitled to vote to accept or reject the Plan.
{BAYo01512597vl} 21
B. Allowed Claims; Deemed Allowed Claims
Notwithstanding any provision herein to the contrary, Reorganized Crdentia shall only
make distributions to holders of Allowed Claims. No holder of a Disputed Claim will receive
any distribution on account thereof until (and then only to the extent that) its Disputed Claim
becomes an Allowed Claim. Reorganized Crdentia may, in its discretion, withhold distributions
otherwise due hereunder to any Claimholder until such time as objections thereto may be filed.
Any holder of a Claim that becomes an Allowed Claim after the Effective Date will receive its
distribution in accordance with the terms and provisions of the Plan. The Claims of bona fide
holders of claims in Classes 2 and 8 are deemed Allowed Claims.
C. Reservation of Rights to Object to Claims
Unless a Claim is expressly described as an Allowed Claim pursuant to or under the Plan,
or otherwise becomes an Allowed Claim prior to or after the Effective Date, the Debtors and
Reorganized Crdentia reserve any and all objections to any and all Claims and motions or
requests for the payment of Claims, whether administrative expense, priority, secured, or
unsecured, including, without limitation, any and all objections to the validity or amount of any
and all alleged Claims and security interests, whether under. the Bankruptcy Code, other
applicable law or contract. The Debtors' or Reorganized Crdentia' s failure to object to any
Claim in the bankruptcy cases shall be without prejudice to Reorganized Crdentia' s rights to
contest or otherwise defend against such Claim in the Court when and if such Claim is sought to
be enforced by the holder of such Claim. The Debtors and Reorganized Debtors reserve the right
to utilize any Cause of Action against any claimholder as a setoff against such claimholder' s
Claim or Claims.
D. Objections to Claims
Unless otherwise provided in the Plan or by order of the Court, any objections to Claims
will be filed and served not later than 120 days after the Effective Date, provided that
Reorganized Crdentia may request (and the Court may grant) an extension of such deadline by
filing a motion with the Court, based upon a reasonable exercise of Reorganized Crdentia' s
business judgment. A motion seeking to extend the deadline to object to any Claim shall not be
deemed an amendment to the Plan.
ARTICLE VI.
ACCEPTANCE OR REJECTION OF THE PLAN
A. Impaired Classes of Claims Entitled to Vote
Subject to Article III of the Plan, Claimholders in each Impaired Class of Claims as of the
Voting Record Date are entitled to vote as a Class to accept or reject the Plan.
{BAY:015!2597vl) 22
B. Acceptance by an Impaired Class
In accordance with Bankruptcy Code section 1126(c) and except as provided in
Bankruptcy Code section 1126(c), an Impaired Class of Claims shall have accepted the Plan if
the Plan is accepted by the holders of at least two-thirds in dollar amount and more than one-half
in number of the Allowed Claims of such Class that have timely and properly voted to accept or
reject the Plan.
C. Presumed Acceptances by Unimpaired Classes
Classes 1, 3, 4 and 6 are Unimpaired by the Plan. Under Bankruptcy Code section
1126(f), such Claimholders are conclusively presumed to accept the Plan, and the votes of such
Claimholders will not be solicited.
D. Classes Deemed to Reject Plan
Holders of Claims in Class 7 and Interests in Class 9 are not entitled to receive or retain
any property under the Plan. Under Bankruptcy Code section 1126(g), holders of Claims in
Class 7 and Interests in Class 9 are deemed to reject the Plan, and the votes of such Holders will
not be solicited.
E. Summary of Classes Voting on the Plan
As a result of the provisions of Articles II and III of the Plan, the votes of Claimholders
in Classes 2 and 5 will be solicited with respect to the Plan.
F. Confirmation Pursuant to Bankruptcy Code section 1129(b)
Because Class 9 is deemed to reject the Plan, and because other impaired Classes may
reject the Plan, the Debtors will seek Confirmation of the Plan from the Court under the
procedures set forth in section 1129(b) of the Bankruptcy Code. The Debtors reserve the right to
alter, amend, modify, revoke, or withdraw the Plan or any Plan Supplement (as defined in the
Plan) or schedule as may be necessary to satisfy the requirements of Bankruptcy Code section
1129(b).
ARTICLE VII.
MEANS FOR IMPLEMENTATION OF THE PLAN
A. Corporate Existence and Re-vesting of Assets
Crdentia will continue to exist after the Effective Date and be governed by the Restated
Bylaws and the Restated Certificate of Incorporation, which will be filed as part of the Plan
Supplement. The Restated Certificate of Incorporation will, among other things, (A) authorize
the Reorganized Crdentia Equity and (B) pursuant to section 1123(a)(6) of the Bankruptcy Code,
include a provision prohibiting the issuance of non-voting equity securities to the extent required
by section 1123(a)(6) of the Bankruptcy Code. Any modification to the Restated Certificate of
{BAY:Ol512597vl) 23
Incorporation as originally filed may be filed after the Confirmation Date and may become
effective on or prior to the Effective Date. After the Effective Date, the Reorganized Crdentia
may file Restated Bylaws and the Restated Certificate of Incorporation with the Secretary of
State in any appropriate jurisdiction.
As of the Effective Date, each of the Subsidiaries shall dissolve.
B. Board of Directors of Reorganized Crdentia.
On the Effective Date, the operation of Reorganized Crdentia shall be the responsibility
of its Board, subject to, and in accordance with, the Restated Certificate of Incorporation and the
Restated Bylaws. The Board shall initially be comprised of[_] members. The identities of the
initial Board members shall be disclosed in the Plan Supplements.
C. Officers of Reorganized Crdentia.
The individuals currently serving as the senior officers of Crdentia will continue to serve
in the same capacities with Reorganized Crdentia through and following the Effective Date
subject to any changes disclosed in the Plan Supplement. After the Effective Date, the selection
and removal of officers of Reorganized Crdentia shall be as provided in the respective Restated
Certificate of Incorporation and/or Restated Bylaws or other organizational documents of
Reorganized Crdentia. All employment and management agreements for officers and directors
of Reorganized Crdentia shall be disclosed in the Plan Supplements.
D. Vesting of Assets
On the Effective Date, all assets held by the Debtors immediately before the Effective
Date shall vest in Reorganized Crdentia, free and clear of all liens, claims, encumbrances and
other interests.
E. Consolidation of Debtors' Estates for Plan Purposes:
1. Purpose and Limitation
Pursuant to sections 1123(b)(3) and (6) of the Bankruptcy Code, the Plan treats the
Debtors (pre-Effective Date) as comprising a single Estate solely for purposes of voting on the
Plan, confirmation of the Plan and making distributions under the Plan in respect of Claims
against and Interests in the Debtors under the Plan. Such treatment shall not affect any Debtor's
status as a separate legal entity. The treatment of the Debtors' estates in this section V.E. serves
only as a mechanism to effect a fair distribution of value to the Debtors' constituencies.
2. Result of Consolidation
As a result of the foregoing limited consolidation of the Debtors' estates: (a) all
intercompany claims (including such Claims arising from the rejection of any Executory
Contract or Unexpired Lease) shall not be entitled to any distributions under the Plan, (b) any
obligation of any of the Debtors and all guarantees thereof executed by any of the Debtors will
be deemed to be an obligation of each of the Debtors, and (c) any Claim filed or asserted against
{BAY:01512597vl} 24
any of the Debtors will be deemed a Claim against each of the Debtors. The consolidation of the
Debtors' estates contemplated by this Section V.E. shall not, however, cause any Debtor to be
liable for any Claim or Interest for which it would not otherwise be liable absent the substantive
consolidation under the Plan.
3. Treatment of Guarantees and Multiple-Debtor Claims
On the Effective Date, except as otherwise provided for in the Plan, all Claims based on
guarantees of collection, payment, or performance made by any Debtor concerning the
obligations of another Debtor shall be discharged, released, and without further force or effect.
Additionally, holders of Allowed Claims or Allowed Interests who assert identical Claims
against or Interests in multiple Debtors shall be entitled to a single satisfaction of such Claims or
Interests.
F. Cancellation of Existing Interests in Crdentia
On the Effective Date, (i) the Interests, including but not limited to, any outstanding
common stock and preferred stock, in Crdentia shall be cancelled by entry of the Confirmation
Order, and (ii) the obligations of, Claims against, and Interests in Crdentia arising under,
evidenced by, or relating to any shares of common stock or preferred stock, agreements,
contracts, indentures, certificates of designation, bylaws, certificates or articles of incorporations,
or similar documents governing the Interests in Crdentia shall be released and discharged.
G. Distribution to Holders of Claims and Interests
1. Distribution to Holders of Unclassified Claims and Class 1,3,4,5 and 6 Claims
Reorganized Crdentia shall pay all Unclassified Claims and Class 1,3,4,5 and 6 Claims as
specified in Plan ARTICLE III.
2. Issuance of Reorganized Crdentia Equity
Ifthere is no Third Party Purchaser, then on the Effective Date, the Reorganized Crdentia
Equity shall be issued and distributed to the holders of Class 2 Claims. If there is a Third Party
Purchaser, then on the Effective Date, the Reorganized Crdentia Equity shall be issued and
distributed to the Third Party Purchaser.
H. Execution of Documents and Corporate Action
Upon the occurrence of the Effective Date, all actions contemplated by the Plan shall be
deemed authorized and approved in all respects, including (i) adoption or assumption, as
applicable, of the agreements with existing management, (ii) selection of the directors and
officers for Reorganized Crdentia, (iii) the issuance and distribution of the Reorganized Crdentia
Equity, (iv) the adoption of the Restated Certificate oflncorporation and Restated Bylaws, and
(v) all other actions contemplated by the Plan (whether to occur before or on the Effective Date).
All matters provided for in the Plan involving the corporate structure of the Debtors or
Reorganized Crdentia, and any corporate action required by the Debtor or Reorganized Crdentia
{BAY:Ol512597vl} 25
in connection with the Plan, shall be deemed to have occurred and shall be in effect, without any
requirement of further action by the equity security holders, directors or officers of the Debtors
or Reorganized Crdentia. On or (as applicable) prior to the Effective Date, the appropriate
officers of the Debtors or Reorganized Crdentia, as applicable, shall be authorized and directed
to issue, execute and deliver the agreements, documents, securities, and instruments
contemplated by the Plan (or necessary or desirable to effect the transactions contemplated by
the Plan) in the name of and on behalf of Reorganized Crdentia and any and all other
agreements, documents, securities and instruments relating to the foregoing. The Debtors and
Reorganized Crdentia are authorized and directed to deliver all documents and perform all
actions reasonably contemplated with respect to implementation of the Plan. Rebecca Irish, the
Chief Financial Officer of Crdentia, is designated as the authorized representative of each Debtor
(i) to execute on behalf of each Debtor, in a representative capacity and not individually, any
documents or instruments after the Confirmation Date or the Effective Date that may be
necessary to consummate the Plan, and (ii) to undertake any other action on behalf of each
Debtor to consummate the Plan.
I. Surrender oflnstruments
Each Claimholder holding a certificate or instrument evidencing a Claim against any of
the Debtors or property of the Estates and whose Claims are treated under the Plan shall
surrender such certificate or instrument to the Debtors or their designee (as applicable) on the
Effective Date as a prerequisite to receiving any distribution under the Plan, unless the non-
availability of such certificate or instrument is established to the satisfaction of the applicable
party. If any holder of an Allowed Claim evidenced by a certificate or instrument canceled
pursuant to the Plan fails to surrender such certificate or instrument, within one year after the
Effective Date, its Claim for a distribution under the Plan on account of such certificate or
instrument shall be discharged, and such holder shall be forever barred from asserting such
Claim against the Debtors, Reorganized Crdentia or their property. In such case, any property
held on account of such Claim shall be disposed of pursuant to the provisions relating to
unclaimed distributions in Article VI of the Plan.
J. Bankruptcy Code Section 1145 Determination
Confirmation of the Plan shall constitute a determination, in accordance with Bankruptcy
Code section 1145, that (except with respect to an entity that is an underwriter as defined in
Bankruptcy Code section 1145(b)) section 5 of the 1933 Act and any state or local law requiring
registration for the offer or sale of a security or registration or licensing of an issuer of,
underwriter of, broker or dealer in, a security do not apply to the offer, sale, or issuance of any
securities under the Plan.
K. Release of Liens
Except as otherwise pro.vided in the Plan, the Confirmation Order or in any document,
instrument or other agreement created in connection with the Plan, on the Effective Date, all
mortgages, deeds of trust, liens, encumbrances, security interests, or other interests against the
property of the Estates shall be released.
{BAYo015!2597vl) 26
~ ;
{
L. Exemption from Certain Transfer Taxes
Pursuant to Bankruptcy Code section 1146(a), any transfers from the Debtors or
Reorganized Crdentia to any other Person or entity pursuant to the Plan in the United States shall
not be subject to any stamp tax or similar tax, including without limitation state and county
transfer and recordation taxes, and the Confirmation Order shall direct the appropriate state or
local governmental officials or agents to forgo the collection of any such tax or governmental
assessment and to accept for filing and recordation any of the foregoing instruments or other
documents without the payment of any such tax or governmental assessment.
M. Release of Trade Vendor Avoidance Actions
In accordance with Bankruptcy Code section 1123(b)(3), all Trade Vendor
Avoidance Actions and other similar claims arising under applicable state laws, including,
without limitation, fraudulent transfer claims, if any, and all other causes of action of a trustee
and debtors-in-possession under the Bankruptcy Code shall be released and extinguished upon
the consummation of the Plan.
N. Effectuating Documents; Further Transactions
The Debtors and the Reorganized Crdentia, subject to the terms and conditions of the
Plan, shall be authorized to execute, deliver, file, or record such contracts, instruments, releases,
indentures, and other agreements or documents, and take such actions as may be necessary or
appropriate to effectuate and further evidence the terms and conditions of the Plan. The DIP
Lender and the Secured Lender shall execute and deliver such documents as Reorganized
Debtors shall reasonably request to effectuate or further evidence the terms and conditions of the
Plan.
ARTICLE VIII.
PROVISIONS GOVERNING DISTRIBUTIONS
A. Delivery of Undeliverable or Unclaimed Distributions
If the distribution to any holder of an Allowed Claim is returned to the Disbursement
Agent as undeliverable or is otherwise unclaimed, no further distributions shall be made to such
holder unless and until Reorganized Crdentia is notified in writing of such holder's then-current
address, at which time all missed distributions shall be made to such holder without interest.
Any holder of an Allowed Claim that does not assert a claim pursuant to the Plan for an
undeliverable or unclaimed distribution within 90 days after the Effective Date shall be deemed
to have forfeited its Claim for such undeliverable or unclaimed distribution and shall be forever
barred and enjoined from asserting any such claim for an undeliverable or unclaimed distribution
against the Debtors, Reorganized Crdentia, the Disbursement Agent and their respective agents,
attorneys, representatives, employees or independent contractors, and/or any of its and their
property. In such case, any Cash otherwise reserved for undeliverable or unclaimed distributions
shall become the property of the Estates free of any restrictions thereon and notwithstanding any
federal or state escheat laws to the contrary and shall be distributed in accordance with the terms
{BAY:Ol512597vl} 27
of the Plan. Nothing contained in the Plan shall require the Debtors, the Disbursement Agent or
Reorganized Crdentia to attempt to locate any holder of an Allowed Claim.
B. Prepayment
Except as otherwise provided in the Final DIP Order, the Plan or in the Confirmation
Order, the Debtors shall have the right to prepay, without penalty, all or any portion of an
Allowed Administrative Claim, Allowed Priority Tax Claim, Allowed Other Priority Claim or
Allowed Other Secured Claim at any time.
C. Means of Cash Payment
Cash payments made pursuant to the Plan shall be in U.S. dollars and shall be made at the
option and in the sole discretion of Reorganized Crdentia by (i) checks drawn on, or (ii) wire
transfers from a domestic bank.
D. Sources of Cash for Plan Distribution.
Except as otherwise provided in the Plan or Confirmation Order, all Cash required for
payments to be made hereunder shall be obtained from the Debtors' and Reorganized Crdentia's
operations and Cash on hand.
E. Disbursement Agent.
Reorganized Crdentia, as Disbursement Agent, or such other Person designated by
Reorganized Crdentia as Disbursement Agent, shall make all distributions under the Plan. A
Disbursement Agent shall not be required to give any bond or surety or other security for the
performance of its duties unless otherwise ordered by the Bankruptcy Court.
F. Record Date for Distribution.
Distributions shall only be made to the record holders of Allowed Claims as of the
Confirmation Date. At the close of business on the Confirmation Date, all registers maintained
by the Debtors and Reorganized Crdentia, and each of their respective agents, successors and
assigns, shall be deemed closed for purposes of determining whether a holder of such a Claim is
a record holder entitled to distributions under the Plan. The Debtors and Reorganized Crdentia
shall have no obligation to recognize any Claim that is transferred after the Confirmation Date.
Instead, they shall be entitled to recognize only those record holders set forth in the registers as
of the Confirmation Date, irrespective of the number of distributions made under the Plan or the
date of such distributions. Furthermore, if a Claim is transferred twenty (20) or fewer calendar
days before the Confirmation Date, the Disbursement Agent shall make distributions to the
transferee only if the transfer form contains an unconditional and explicit certification and
waiver of any objection to the transfer by the transferor.
If any dispute arises as to the identity of a holder of an Allowed Claim that is entitled to
receive a distribution pursuant to the Plan, the Disbursement Agent may, in lieu of making such
distribution to such Person, make the distribution into an escrow account until the disposition
{BAY:Ol512597vl} 28
thereof is determined by Final Order or by written agreement among the interested parties to
such dispute.
G. Interest on Claims
Unless otherwise specifically provided for in the Plan or the Confirmation Order, or
required by applicable bankruptcy law, postpetition interest shall not accrue or be paid on any
Claims other than the DIP Loan Claim. Interest shall not accrue or be paid upon any Disputed
Claim in respect of the period from the Petition Date to the date a final distribution is made
thereon if and after such Disputed Claim becomes an Allowed Claim.
H. Withholding and Reporting Requirements
In accordance with Bankruptcy Code section 346 and in connection with the Plan and all
distributions hereunder, the Debtors and Reorganized Crdentia shall, to the extent applicable,
comply with all withholding and reporting requirements imposed by any federal, state,
provincial, local, or foreign taxing authority. The Debtors and Reorganized Crdentia shall be
authorized to take any and all actions necessary and appropriate to comply with such
requirements.
All distributions hereunder shall be subject to applicable legal withholding and reporting
requirements. As a condition of making any distribution under the Plan, Reorganized Crdentia
may require the holder of an Allowed Claim to provide such holder's taxpayer identification
number, and such other information, certification or forms as necessary to comply with
applicable tax reporting and withholding laws. Notwithstanding any other provision of the Plan,
each entity receiving a distribution pursuant to the Plan shall have sole and exclusive
responsibility for the satisfaction and payment of tax obligations on account of any such
distribution.
I. Setoffs
Except as otherwise provided by the terms of the Plan, Reorganized Crdentia may, but
shall not be required to, set off against any Claim and the payments or other distributions to be
made under the Plan on account of the Claim, claims of any nature whatsoever that the Debtors
and Reorganized Crdentia may have against the holder thereof, provided, that any such right of
setoff that is exercised shall be allocated, first, to the principal amount of the related Claim, and
thereafter to any interest portion thereof, but neither the failure to do so nor the allowance of any
Claim hereunder shall constitute a waiver or release by the Debtors or Reorganized Crdentia of
any such claim that the Debtors or Reorganized Crdentia may have against such holder.
J. Procedure for Treating and Resolving Disputed, Contingent, aud/or
Unliquidated Claims
1. Prosecution of Objections
From the Confirmation Date through the Effective Date, only the Debtors may file
objections, settle, compromise, withdraw, or litigate to judgment objections to Claims. From and
after the Effective Date, Reorganized Crdentia or, at the option of Crdentia, the Disbursement
{BAY:01512597vl} 29
Agent, may settle or compromise any Disputed Claim without approval of the Court. Nothing
contained herein, however, shall limit the right of Reorganized Crdentia or, at the option of
Crdentia, the Disbursement Agent to object to Claims, if any, filed or amended after the
Effective Date.
2. No Distributions Pending Allowance
Notwithstanding any other provision of the Plan, no payments or distributions shall be
made with respect to all or any portion of a Disputed Claim unless and until all objections to
such Disputed Claim have been settled or withdrawn or have been determined by Final Order,
and the Disputed Claim, or some portion thereof, has become an Allowed Claim.
K. De Minimis Distributions
Reorganized Crdentia and the Disbursement Agent shall have no obligation to make any
distribution, whether final or not, unless and until the total amount of such distribution to a
specific holder of an Allowed Claim is equal to or greater than $10.00.
L. Fractional Dollars
Any other provision of the Plan notwithstanding, Reorganized Crdentia and the
Disbursement Agent shall not be required to make distributions or payments of fractions of
dollars. Whenever any payment of a fraction of a dollar under the Plan would otherwise be
called for, the actual payment shall reflect a rounding of such fraction to the nearest whole dollar
(up or down), with half dollars being rounded down.
M. Allocation of Plan Distributions Between Principal and Interest
To the extent that any Allowed Claim entitled to a distribution under the Plan is
composed of indebtedness and accrued but unpaid interest thereon, such distribution shall be
allocated, for all income tax purposes, to the principal amount of the Claim first and then, to the
extent the consideration exceeds the principal amount of the claim, to the portion of such Claim
representing accrued but unpaid interest.
ARTICLE IX.
TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
A. Assumption and Rejection of Executory Contracts and Unexpired Leases
Pursuant to Sections 365 and 1123 of the Bankruptcy Code, on the Effective Date, the
Reorganized Crdentia shall assume those each executory contract and unexpired lease to which
are set forth in the Schedule of Executory Contract or Unexpired Leases to be Assumed filed as
part of the Plan Supplement and as may be amended (the "Assumed Contract Schedule") to
which the Debtors were a party, unless such contract or lease (i) previously expired or terminated
pursuant to its own terms or by agreement of the parties thereto or (ii) is the subject of a motion
to reject filed by the Debtors on or before the Confirmation Date. The Confirmation Order shall
constitute an order of the Bankruptcy Court under sections 365 and 1123(b) of the Bankruptcy
{BAY:01512597vl) 30
Code approving the contract and lease assumptions or rejections described herein, subject to the
occurrence of the Effective Date. All executory contracts and unexpired leases that are not
specifically assumed by this Section IX. A. shall be deemed rejected as of the Effective Date.
To the extent applicable, all executory contracts of the Debtors assumed by Reorganized
Crdentia pursuant to the Plan shall be deemed modified such that the transactions contemplated
by the Plan shall not be a "change of control," however such term may be defined in the relevant
executory contract, and any required consent under any such contract or lease shall be deemed
satisfied by the confirmation of the Plan, and all executory contracts assumed pursuant to the
Plan shall be assumed notwithstanding any provisions therein that purport to modify any of the
Debtor's rights thereunder as a result of the commencement of these Bankruptcy Cases. Each
executory contract assumed pursuant to the Plan (or pursuant to other Bankruptcy Court order)
shall remain in full force and effect and be fully enforceable by Reorganized Crdentia in
accordance with its terms, except as modified by the provisions of the Plan, or any order of the
Bankruptcy Court authorizing and providing for its assumption or applicable law.
Any license granted to the Debtors by a governmental unit in effect immediately prior to
the Petition Date that is considered to be an executory contract and is not otherwise terminated or
rejected by the Debtors, such license shall be deemed to be assumed under the Plan pursuant to
section 365 of the Bankruptcy Code.
Any monetary amounts required as cure payments on each executory contract and
unexpired lease to be assumed pursuant to the Plan, shall be satisfied pursuant to section
365(b)(l) of the Bankruptcy Code by payment of the Cure amount in Cash on the Effective Date
or as soon thereafter as practicable or upon such other terms and dates as the parties to such
executory contracts or unexpired leases otherwise may agree. If there is a dispute regarding (i)
the nature or amount of any Cure, (ii) the ability of the Reorganized Crdentia to provide
"adequate assurance of future performance" (within the meaning of section 365 of the
Bankruptcy Code) under the contract or lease to be assumed or (iii) any other matter pertaining
to assumption, Cure shall occur following the entry of a Final Order of the Bankruptcy Court
resolving the dispute.
B. Cure Procedures
1. Assumed Contract Schedule
The Assumed Contract Schedule, annexed to the Plan Supplement, as may be amended,
contains a list of the Assumed Executory Contracts and the associated Cure Amounts. The non-
Debtor parties to the Assumed Executory Contracts shall have until the Contract Objection
Deadline to object to (i) the Cure Amounts listed by the Debtors and propose alternative Cure
Amounts, and/or (ii) the proposed assumption of the Assumed Executory Contracts. Any
Contract Objection must be filed with the Court on or before the Contract Objection Deadline
and will be heard and determined by the Court. Any such Contract Objection not filed by the
Contract Objection Deadline shall be waived and forever barred. Unless the Assumed Contract
Schedule indicates differently, all Assumed Executory Contract and Unexpired Lease shall be
deemed to have a Cure Amount equal to zero dollars.
{BAY:Ol512597vl} 31
2. Deemed Assumption Subject to Revocation
To the extent the Court has not determined by the Effective Date the amount of any Cure
Amount that is subject to a pending objection, the Executory Contract or Unexpired Lease
related to such Cure Amount shall, at the option of Reorganized Crdentia, be deemed assumed
by Reorganized Crdentia effective on the Effective Date; provided, however, Reorganized
Crdentia may revoke an assumption of any Executory Contract or Unexpired Lease within ten
(10) days after entry of an order by the Court adjudicating the objection to the Cure Amount
related to such Executory Contract and Unexpired Lease by filing a notice of such revocation
with the Court and serving a copy on the party(ies) whose Executory Contract or Unexpired
Lease is rejected. Any Executory Contract or Unexpired Lease identified in such revocation
notice shall be deemed rejected retroactively on the Effective Date. Any party whose Executory
Contract is rejected pursuant to a revocation notice may file a claim arising out of such rejection
within thirty (30) days after such revocation notice is filed with the Court, and any such rejection
claim not filed by that deadline shall be discharged and forever barred. Reorganized Crdentia
shall have the right to object to any such rejection claim.
3. Payment of Cure Amounts
Within thirty (30) Business Days after the Effective Date, Reorganized Crdentia shall pay
all Cure Amounts that are not disputed by the Debtors or Reorganized Crdentia. Unless
otherwise ordered by the Court, Reorganized Crdentia shall pay all Cure Amounts that are
disputed by the Debtors or Reorganized Crdentia on the later of the date that is ten (10) Business
Days after (i) the Contract Objection Deadline, or (ii) the date of entry of a Final Order resolving
the dispute or approving an agreement between the parties concerning the Cure Amount.
4. Rejection Damages
For all Claims relating to the rejection of Executory Contracts and Unexpired Leases,
Proofs of Claim must be filed with the Court and served on the Debtors or Reorganized Crdentia
on or before the Rejection Claims Bar Date or such Claim shall be forever barred and shall not
be enforceable against the Debtors, Reorganized Crdentia or their successors.
Each Allowed Claim arising from the rejection of an Executory Contract shall be treated
as an Allowed General Unsecured Claim. The Court shall determine the amount, if any, of the
Claim of any entity seeking damages by reason of the rejection of any Executory Contract or
Unexpired Lease.
ARTICLE X.
CONDITIONS PRECEDENT TO CONFIRMATION
AND CONSUMMATION OF THE PLAN
A. Conditions Precedent to Confirmation
The following are conditions precedent to Confirmation of the Plan:
{BAY:Ol512597vl} 32
1. The Court shall have entered an order approving the Disclosure Statement as
containing adequate information within the meaning of section 1125 of the Bankruptcy Code;
2. The Plan satisfies each of the requirements of section 1129 of Bankruptcy Code
as applicable;
3. The proposed Confirmation Order shall be m all respects acceptable to the
Debtors and the Secured Lender; and
4. The Confirmation Order shall be entered no later than May 24, 2010.
B. Conditions Precedent to Effective Date
The following are conditions precedent to the occurrence of the Effective Date, each of
which must be satisfied or waived in accordance with Article VIII of the Plan:
1. The Confirmation Order shall have been entered on the docket in the Bankruptcy
Cases.
2. The effectiveness of the Confirmation Order shall not have been stayed and any
motion for reconsideration or rehearing shall have been denied or overruled by a Court of
competent jurisdiction.
3. All actions, documents, and agreements necessary to implement the Plan shall
have been effected or executed.
4. The DIP Loan Claims shall have been paid in accordance with the terms of the
Final DIP Order and Article ill of the Plan.
C. Waiver of Conditions
Each of the conditions to the Effective Date, set forth above may be waived in whole or
in part by the Debtors without any other notice to parties-in-interest or the Court, provided,
however, that the Debtors have received the prior written consent of the Secured Lender and the
DIP Lender, which consent may be withheld in their sole discretion. The failure to satisfY or
waive any condition to the Effective Date may be asserted by the Debtors regardless of the
circumstances giving rise to the failure of such condition to be satisfied. The failure of any party
to exercise any of its foregoing rights shall not be deemed a waiver of any of its other rights, and
each such right shall be deemed an ongoing right that may be asserted at any time.
ARTICLE XI.
ALLOWANCE AND PAYMENT OF CERTAIN ADMINISTRATIVE CLAIMS
1. Final Fee Applications
All final requests for payment of Professional Fee Claims (the "Final Fee Applications")
must be Filed no later than sixty days after the Effective Date. Objections, if any, to Final Fee
{BAY:Ol512597vl) 33
Applications of such Professionals must be Filed and served on Reorganized Crdentia, the
requesting Professional and the Office of the United States Trustee no later than thirty days from
the date on which each such Final Fee Application is served and filed. After notice and a hearing
in accordance with the procedures established by the Bankruptcy Code and prior orders of the
Court, the allowed amounts of such Professional Fee Claims shall be determined by the Court.
Reorganized Debtors shall be responsible for payment of any Final Fee Applications approved
by the Court. Reorganized Crdentia shall be responsible for payment of any accrued, but unpaid
professional fees, subject to approval of Final Fee Applications, as applicable, reflected in the
budget attached to the Final DIP Order.
2. Employment of Professionals after the Effective Date
From and after the Effective Date, any requirement that professionals comply with
Bankruptcy Code sections 327 through 331 or any order previously entered by the Court in
seeking retention or compensation for services rendered or expenses incurred after such date will
terminate.
ARTICLEXll.
EFFECTS OF CONFIRMATION
A. Binding Effect
The Plan shall be binding upon and inure to the benefit of the Debtors, Reorganized
Crdentia, all present and former holders of Claims and Interests, whether or not such holders will
receive or retain any property or interest in property under the Plan, and their respective
successors and assigns, including, but not limited to, the Debtors and Reorganized Crdentia, and
all other parties in interest in the Bankruptcy Cases.
B. Discharge
Except as otherwise provided in the Plan, the rights granted in the Plan and the treatment
of all Claims and Interests shall be in exchange for, and in complete satisfaction, discharge, and
release of, all Claims and Interests of any nature whatsoever against the Debtors, Reorganized
Crdentia and any of the Estates' property, whether such Claims or Interests arose before or
during the Bankruptcy Cases or in connection with implementation of the Plan. Except as
otherwise provided in the Plan, on the Effective Date, each of the Debtors shall be discharged
and released from any and all Claims and Interests, including demands and liabilities that arose
before the Effective Date, and all debts of the kind specified in Bankruptcy Code
sections 502(g), 502(h), or 502(i), regardless of whether (i) a proof of claim evidencing such debt
was filed or deemed filed under Bankruptcy Code section 501; (ii) a Claim based on such debt is
allowed under Bankruptcy Code section 502; or (iii) the holder of a Claim based on such debt
has accepted the Plan. Except as the Plan may otherwise provide, the Confirmation Order shall
be a judicial determination of discharge of all liabilities of the Debtors. Pursuant to Bankruptcy
Code section 524, the discharge granted under this section shall void any judgment against any
of the Debtors at any time obtained (to the extent it relates to a discharged Claim or Interest), and
operates as an injunction against the prosecution of any action against any of Reorganized
Crdentia or the Estates' property (to the extent it relates to a discharged Claim or Interest).
{BAY:Ol512597vl} 34
Notwithstanding any provision in the Plan, nothing in the Plan discharges, releases,
precludes, or enjoins (i) any environmental liability to any governmental unit that is not a Claim
as such term is defined in section 101 of the Bankruptcy Code or (ii) any environmental Claim of
any governmental unit arising on or after the Effective Date. The Debtors and Reorganized
Debtors reserve the right to assert that any environmental liability is a Claim that arose on or
prior to the Effective Date and that such Claim has been discharged and/or released under
sections 524 and 1141 of the Bankruptcy Code. In addition, nothing in the Plan discharges,
releases, precludes, or enjoins any environmental liability to any governmental unit that any
entity would be subject to as the owner or operator of property after the Effective Date.
Notwithstanding any provision in the Plan, the Confirmation Order and any
implementing Plan documents, including but not limited to notices of assumption and
assignment of executory contracts, any rights of way, pending applications for rights of way,
leases, licenses, authorizations, contracts, agreements or other interests of the federal government
shall be treated, determined and administered in the ordinary course of business as if the
Debtors' bankruptcy cases were never filed and the Debtors and the Reorganized Debtor shall
comply with all applicable non-bankruptcy law, federal regulations and statutes. Moreover,
without limiting the foregoing, nothing in the Plan, Confirmation Order or implementing Plan
documents shall be interpreted to set cure amounts for the cure claim of any governmental unit of
the federal government or to require any such governmental unit of the federal government to
novate or otherwise consent to the transfer of any federal government contract, agreement or
interest. The federal government's rights to offset or recoup any amounts due under, or relating
to, any contracts, agreements or other interests are expressly preserved.
C. Injunction
Except as otherwise provided in the Plan, the Confirmation Order shall provide, among
other things, that from and after the Effective Date all Persons who have held, hold or may hold
Claims against or Interests in the Debtors are permanently enjoined from taking any of the
following actions against the Estates, the Debtors, Reorganized Crdentia, holders of Reorganized
Crdentia Equity or any of their respective property on account of any such Claims or Interests:
(A) commencing or continuing, in any manner or in any place any action or other proceeding;
(B) enforcing, attaching, collecting, or recovering in any manner any judgment, award, decree, or
order; (C) creating, perfecting or enforcing any lien, lis pendens, or other encumbrance against
any of the assets of Reorganized Crdentia; (D) asserting a setoff or right of subrogation of any
kind against any debt, liability, or obligation due to the Debtors; and (E) commencing or
continuing, in any manner or in any place, any action that does not comply with or is inconsistent
with the provisions of the Plan provided, however, that nothing contained therein shall preclude
such Persons from exercising their rights pursuant to and consistent with the terms of the Plan or
the Confirmation Order.
D. Term of Bankruptcy Injunction or Stays
All injunctions or stays provided for in the Bankruptcy Cases under Bankruptcy Code
section 105 or 362, or otherwise, and in existence on the Confirmation Date, shall remain in full
force and effect until the Effective Date. Upon the Effective Date, the injunction provided in
Article XII.C above shall apply.
{BAY:Ol512597vl} 35
E. Compromises and Settlements
Pursuant to Bankruptcy Rule 90 19( a), the Debtors may compromise and settle various
Claims (a) against them and (b) that they have against other Persons. The Debtors expressly
reserve the right (with Court approval, following appropriate notice and opportunity for a
hearing) to compromise and settle Claims against them and claims that they may have against
. other Persons up to and including the Effective Date. After the Effective Date, such right shall
pass to Reorganized Crdentia and shall be governed by the terms ofthe Plan.
F. Satisfaction of Subordination Rights
All Claims against the Debtors and all rights and claims between or among Claimholders
relating in any manner whatsoever to distributions on account of Claims against or Interests in
the Debtors, based upon any subordination rights, whether asserted or unasserted, legal or
equitable, shall be deemed satisfied by the distributions under the Plan to Claimholders or
Interest Holders having such subordination rights, and such subordination rights shall be deemed
waived, released, discharged, and terminated as of the Effective Date. Distributions to the
various Classes of Claims hereunder shall not be subject to levy, garnishment, attachment, or like
legal process by any Claimholder or Interest Holder by reason of any subordination rights or
otherwise, so that each Claimholder shall have and receive the benefit of the distributions in the
manner set forth in the Plan.
G. Release of Secured Lender and DIP Lender
EFFECTIVE ON THE EFFECTIVE DATE, THE DEBTORS AND REORGANIZED
CRDENTIA (IN THEIR OWN RIGHT AND ON BEHALF OF THEIR RESPECTIVE
ESTATES, REPRESENTATIVES, DIRECTORS, OFFICERS, EMPLOYEES,
INDEPENDENT CONTRACTORS, ATTORNEYS AND AGENTS, AND THEIR
SUCCESSORS AND ASSIGNS) (COLLECTIVELY, THE "RELEASING PARTIES")
HEREBY RELEASE, ACQUIT, FOREVER DISCHARGE, AND COVENANT NOT TO
SUE EACH AND EVERY PREPETITION SECURED LENDER AND DIP LENDER AND
THEIR REPRESENTATIVES, DIRECTORS, OFFICERS, EMPLOYEES, INDEPENDENT
CONTRACTORS, ATTORNEYS AND AGENTS, AND THEIR SUCCESSORS AND
ASSIGNS (THE "RELEASED PARTIES") FROM ANY AND ALL ACTS AND
OMISSIONS OF THE RELEASED PARTIES, AND FROM ANY AND ALL CLAIMS,
CAUSES OF ACTION, AVOIDANCE ACTIONS, COUNTERCLAIMS, DEMANDS,
CONTROVERSIES, COSTS, DEBTS, SUMS OF MONEY, ACCOUNTS, RECKONINGS,
BONDS, BILLS, DAMAGES, OBLIGATIONS, LIABILITIES, OBJECTIONS, LEGAL
PROCEEDINGS, EQUITABLE PROCEEDINGS, AND EXECUTIONS OF ANY NATURE,
TYPE, OR DESCRIPTION WHICH THE RELEASING PARTIES HAVE OR MAY COME
TO HAVE AGAINST THE RELEASED PARTIES THROUGH THE EFFECTIVE DATE,
AT LAW OR IN EQUITY, BY STATUTE OR COMMON LAW, IN CONTRACT, IN
TORT, INCLUDING BANKRUPTCY CODE CHAPTER 5 CAUSES OF ACTION,
WHETHER THE LAW OF THE UNITED STATES OR ANY OTHER COUNTRY, UNION,
ORGANIZATION OF FOREIGN COUNTRIES OR OTHERWISE, KNOWN OR
UNKNOWN, SUSPECTED OR UNSUSPECTED.
{BAY:Ol512597vl) 36
H. Exculpation and Limitation of Liability
Except as otherwise specifically provided in the Plan, the Debtors, Reorganized Crdentia,
the Secured Lender, the DIP Lender and any of such entities' respective present or former
members, officers, directors, employees, representatives, attorneys, financial or other
professional advisors, or other agents and any of such parties' successors and assigns, shall not
have or incur any claim, obligation, cause of action or liability to one another or to or from any
Claimholder or Interest Holder, or any other party in interest, or any of their respective agents,
employees, representatives, financial advisors, attorneys or Affiliates, or any of their successors
or assigns, for any act or omission originating or occurring on or after the Petition Date in
connection with, relating to, or arising out of the Debtors, the Bankruptcy Cases, negotiation and
filing of the Plan, filing the Bankruptcy Cases, the pursuit of Confirmation of the Plan, the
consummation of the Plan, the administration of the Plan or the property to be liquidated and/or
distributed under the Plan, except for their willful misconduct, gross negligence, or fraud as
determined by a Final Order of a court of competent jurisdiction, and in all respects shall be
entitled to reasonably rely upon the advice of counsel with respect to their duties and
responsibilities under the Plan.
I. Indemnification Obligations.
Notwithstanding anything to the contrary herein, subject to the occurrence of the
Effective Date, the obligations of the Debtors as provided in the Debtors' certificate of
incorporation and bylaws as in effect through the Effective Date and under applicable law or
other applicable agreements as in effect through the Effective Date to indemnify, defend,
reimburse, exculpate, advance fees and expenses to, or limit the liability of, the current and
former directors, officers and employees of the Debtors (including in the case of officers and
employees serving as directors, managers, officers and employees of any Affiliate of the Debtors
or as trustee (or similar position) of any employee benefit plan or trust (or similar Person) of the
Debtors, in such capacities) against any damages, liabilities, obligations, claims or causes of
action whether direct or derivative, liquidated or unliquidated, fixed or contingent, disputed or
undisputed, matured or unmatured, known or unknown, foreseen or unforeseen, asserted or
unasserted, shall survive confirmation of the Plan, remain unaffected thereby after the Effective
Date and not be discharged under section 1141 of the Bankruptcy Code or otherwise, irrespective
of whether such indemnification, defense, advancement, reimbursement, exculpation or
limitation is owed in connection with an event occurring before or after the Petition Date. Any
Claim based on the Debtors' obligations herein shall not be subject to any objection in either
case by reason of section 502(e)(l )(B) of the Bankruptcy Code.
As of the Effective Date, the Restated Certificate of Incorporation and/or Restated
Bylaws shall provide for the indemnification, defense, reimbursement, exculpation and/or
limitation of liability of, and advancement of fees and expenses to, directors and officers and
employees of Reorganized Crdentia (including in the case of officers and employees serving as
directors, managers, officers and employees of any Affiliate of Reorganized Crdentia or as
trustee (or similar position) of any employee benefit plan or trust (or similar Person) of
Reorganized Crdentia, in such capacities), who were directors, officers or employees of the
Debtors at any time prior to the Effective Date at least to the same extent as provided in the
certificate of incorporation and bylaws of the Debtors in effect on the Petition Date, against any
{BAY:01512597vl} 37
damages, liabilities, obligations, claims or causes of action whether direct or derivative,
liquidated or unliquidated, fixed or contingent, disputed or undisputed, matured or unmatured,
known or unknown, foreseen or unforeseen, asserted or unasserted, in connection with any event
occurring before the Petition Date.
The Debtors and Reorganized Crdentia shall indemnify and hold harmless the Secured
Lender and the DIP Lender and their respective advisors, officers, directors and employees and
each of their respective successors and assigns (collectively, the "Indemnified Persons"), to the
full extent lawful, from and against all losses, claims, damages, and liabilities incurred by them
that are related to or arise out of(a) the formulation, negotiation and pursuit of the confirmation
or consummation of the Plan or (b) the Indemnified Persons' consideration of other proposals for
the reorganization of the Debtor under chapter 11 of the Bankruptcy Code. Notwithstanding the
foregoing, neither the Debtors nor Reorganized Crdentia shall not be obligated to indemnify and
hold harmless any Person or entity for any claim, cause of action, liability, judgment, settlement,
cost or expense that results from such Person's fraud or willful misconduct as determined by a
Final Order.
ARTICLE XIII.
RETENTION OF JURISDICTION
Under Bankruptcy Code sections 105(a) and 1142, and notwithstanding entry of the
Confirmation Order, substantial consummation of the Plan and occurrence of the Effective Date,
the Court shall retain exclusive jurisdiction over all matters arising out of, and related to, the
Bankruptcy Cases and the Plan to the fullest extent permitted by law, including, among other
things, jurisdiction to:
1. Allow, disallow, determine, liquidate, classify, estimate, or establish the
priority or secured or unsecured status of any Claim or Interest, including the resolution of any
request for payment of any Administrative Claim, the resolution of any objections to the
allowance or priority of Claims or Interests and the determination of requests for the payment of
claims entitled to priority under Bankruptcy Code section 507(a)(1), including compensation of
any reimbursement of expenses of parties entitled thereto;
2. Hear and determine all applications for compensation and reimbursement
of expenses of Professionals under the Plan or under Bankruptcy Code sections 330, 331, 503(b ),
1103, and 1129(a)( 4); provided, however, that from and after the Effective Date, the payment of
the fees and expenses of the retained Professionals of the Debtors shall be made in the ordinary
course of business and shall not be subject to the approval of the Court;
3. Hear and determine all matters with respect to the assumption or rejection
of any executory contract or unexpired lease to which the Debtors are a party or with respect to
which the Debtors may be liable, and to hear, determine and, if necessary, liquidate any Claims
arising therefrom;
4. Effectuate performance of and payments under the provisions of the Plan;
{BAY:Ol512597vl} 38
5. Hear and determine any and all adversary proceedings, motions,
applications and contested or litigated matters arising out of, under or related to the Bankruptcy
Cases, or the Plan;
6. Enter such orders as may be necessary or appropriate to execute,
implement or consummate the provisions of the Plan and all contracts, instruments, releases and
other agreements or documents created in connection with the Plan, the Disclosure Statement, or
the Confirmation Order;
7. Hear and determine disputes arising in connection with the interpretation,
implementation, consummation, or enforcement of the Plan, including disputes arising under
agreements, documents, or instruments executed in connection with the Plan;
8. Consider any modifications of the Plan, cure any defect or omission or
reconcile any inconsistency in any order of the Court, including, without limitation, the
Confirmation Order;
9. Issue injunctions, enter and implement other orders or take such other
actions as may be necessary or appropriate to restrain interference by any entity with
implementation, consummation, or enforcement of the Plan or the Confirmation Order;
10. Enter and implement such orders as may be necessary or appropriate if the
Confirmation Order is for any reason reversed, stayed, revoked, modified, or vacated;
11. Hear and determine any matters arising in connection with or relating to
the Plan, the Disclosure Statement, the Confirmation Order or any contract, instrument, release,
or other agreement or document created in connection with the Plan, the Disclosure Statement, or
the Confirmation Order;
12. Enforce all orders, judgments, injunctions, releases, exculpations,
indemnifications, and rulings entered in connection with the Bankruptcy Cases;
13. Except as otherwise limited herein, recover all assets of the Debtors and
property of the Estates, wherever located;
14. Hear and determine matters concerning state, local, and federal taxes in
accordance with Bankruptcy Code sections 346, 505, and 1146;
15. Hear and determine all disputes involving the existence, nature or scope of
the injunctions, indemnification, exculpation, and releases granted pursuant to the Plan;
16. Hear and determine all matters related to (i) the property of the Estates
from and after the Confirmation Date, and (ii) the activities of the Debtors, including (A)
challenges to or approvals of the Debtors' activities, and (B) reporting by and accounting by the
Debtors;
{BAY,OJ512597vl} 39
17. Hear and determine such other matters as may be provided in the
Confirmation Order or as may be authorized under, or not inconsistent with, provisions of the
Bankruptcy Code; and
18. Enter a final decree closing the Bankruptcy Cases.
ARTICLE XIV.
CONFIRMATION
To confirm the Plan, the Bankruptcy Code requires that the Bankruptcy Court make a
series of findings concerning the Plan and the Debtors, including that:
{BAY:015!2597vl)
the Plan has classified Claims and Interests in a permissible manner;
the Plan complies with the applicable provisions of the Bankruptcy Code;
the Debtors have complied with the applicable provisions of the
Bankruptcy Code;
the Debtors, as proponents of the Plan, have proposed the Plan in good
faith and not by any means forbidden by law;

the disclosure required by section 1125 of the Bankruptcy Code has been
made;
the Plan has been accepted by the requisite votes, except to the extent that
cramdown is available under section 1129(b) of the Bankruptcy Code, of
creditors and equity interest holders;
the Plan is feasible;
all fees and expenses payable under 28 U.S.C. 1930, as determined by
the Bankruptcy Court at the Confirmation Hearing, have been paid or the
Plan provides for the payment of such fees on the Effective Date;


the Plan provides for the continuation after the Effective Date of all retiree
benefits, as defined in section 1114 of the Bankruptcy Code, at the level
established at any time prior to Confirmation pursuant to . section
1114(e)(1)(B) or 1114(g) of the Bankruptcy Code, for the duration of the
period that the applicable Debtor has obligated itself to provide such
benefits;
the disclosures required under section 1129(a)(5) of the Bankruptcy Code
concerning the identity and affiliations of persons who will serve as
officers, directors, and voting trustees of the successors to the Debtors
have been made; and
40
the Plan is in the "best interests" of all holders of Claims or Interests in an
impaired Class by providing to creditors or interest holders on account of
such Claims or Interests property of a value, as of the Effective Date, that
is not less than the amount that such holder would receive or retain in a
chapter 7 liquidation, unless each holder of a Claim or Interest in such
Class has accepted the Plan.
A. Acceptance
A plan is accepted by an impaired class of claims if holders of at least two thirds in dollar
amount and a majority in number of claims of that class vote to accept the plan. Only those
holders of claims who actually vote (and are entitled to vote) to accept or to reject a plan count in
this tabulation.
B. Feasibility
Section 1129(a)(ll) of the Bankruptcy Code provides that a chapter 11 plan may be
confirmed only if the Bankruptcy Court finds that such plan is feasible. A feasible plan is one
which will not lead to a need for further reorganization or liquidation of the debtor, unless such
reorganization or liquidation is contemplated by the plan.
The Plan provides for the re-vesting of the Debtors' assets in Reorganized Crdentia.
Accordingly, the Bankruptcy Court will find that the Plan is feasible if it determines that the
Debtors will (a) be able to satisfy the conditions precedent to the Effective Date; (b) have
sufficient funds to meet their post-Confirmation Date obligations to pay for the costs of
administering and fully consummating the Plan and closing the Bankruptcy Cases; and (c)
Reorganized Crdentia will have sufficient working capital to meet its ongoing operational needs.
The Debtors believe that the Plan satisfies the feasibility requirement imposed by the
Bankruptcy Code. The Debtors believe they have or will be able to satisfy all conditions
precedent to the Effective Date. Further, included in the Plan Supplement is a Pro Forma post-
Effective Date balance sheet and a post-Effective Date cash flow projection. These projections,
demonstrate that Reorganized Crdentia will have sufficient funds to meet their post-
Confirmation Date obligations and ongoing operational needs.
C. Best Interests Test; Liquidation Analysis
Notwithstanding acceptance of a plan by each impaired class (or satisfaction of the
"cram down" provisions of the Bankruptcy Code in lieu thereof), for a plan to be confirmed, the
Bankruptcy Court must determine that the plan is in the best interest of each holder of a claim
who is in an impaired class and has not voted to accept the plan. Accordingly, if an impaired
class does not unanimously accept a plan, the best interests test requires the Bankruptcy Court to
find that the plan provides to each member of such impaired class a recovery on account of such
class member's claim that has a value, as of the date such plan is consummated, at least equal to
the value of the distribution that such class member would receive if the debtor proposing the
plan were liquidated under chapter 7 of the Bankruptcy Code on such date.
{BAYo01512597vl} 41
To estimate what holders of Claims or Interests in each impaired Class would receive if
the Debtors were liquidated under chapter 7 of the Bankruptcy Code, the Bankruptcy Court must
first determine the aggregate dollar amount that would be available if the Bankruptcy Cases were
converted to chapter 7 cases under the Bankruptcy Code and the Debtors' assets were liquidated
by a chapter 7 trustee (the "Liquidation Value"). The Liquidation Value of the Debtors would
consist of the net proceeds from such disposition of the Debtors' assets, plus any Cash held by
the Debtors.
R VR has assessed the Debtors business and industry and produced an analysis of the
Debtors' current value; taking into consideration the likely realization of their assets if they were
to be sold (the "Liquidation Analysis"). A copy of the Liquidation Analysis is included in the
Plan Supplement.
Based on the Liquidation Analysis, the Debtors believe that if the Bankruptcy Cases were
converted to chapter 7 cases, the Secured Lender would likely obtain relief from the automatic
stay to foreclose on substantially all of the Debtors' assets. They further believe that, based on
the Liquidation Analysis, in a foreclosure sale, the value realized would be less than the amount
of the Secured Lender's Claims. The result would be that there would be no recovery for any
other Claimholder.
Accordingly, the projected recoveries for each Class of Claims and Interests under the
Plan are at least equal to, if not superior to, the recoveries that could be realized in a chapter 7
case. Because liquidation of the Debtors would not yield more for the holders of Claims or
Interests, the Plan meets the requirements of Section 1129(a)(7) of the Bankruptcy Code as to
any holder of a Claim or Interest in an impaired Class that has not accepted the Plan.
The Debtors believe that this liquidation analysis reflects all relevant information known
as of the date of this Disclosure Statement. The Debtors are not aware of any events subsequent
to such date that would materially affect this liquidation analysis. This liquidation analysis is
provided solely to disclose to holders the effects .of a hypothetical chapter 7 liquidation of the
Debtors, subject to the assumptions set forth herein.
D. Compliance with Applicable Provisions of the Bankruptcy Code
Section 1129(a)(l) of the Bankruptcy Code requires that the Plan comply with the
applicable provisions of the Bankruptcy Code. The Debtors have considered each of these issues
in the development of the Plan and believe that the Plan complies with all provisions of the
Bankruptcy Code.
ARTICLE XV.
CERTAIN RISK FACTORS TO BE CONSIDERED
HOLDERS OF CLAIMS AGAINST THE DEBTORS SHOULD READ AND
CONSIDER CAREFULLY THE FACTORS SET FORTH BELOW, AS WELL AS THE
OTHER INFORMATION SET FORTH IN TillS DISCLOSURE STATEMENT (AND THE
DOCUMENTS DELIVERED TOGETHER HEREWITH AND/OR INCORPORATED
HEREIN BY REFERENCE), PRIOR TO VOTING TO ACCEPT OR REJECT THE PLAN.
{BAY:Ol512597vl} 42
THESE RISK FACTORS SHOULD NOT, HOWEVER, BE REGARDED AS
CONSTITUTING THE ONLY RISKS INVOLVED IN CONNECTION WITH THE PLAN
AND ITS IMPLEMENTATION.
1. Objection to Classifications
Section 1122 of the Bankruptcy Code provides that a plan may place a claim or an
interest in a particular class only if such claim or interest is substantially similar to the other
claims or interests of such class. The Debtors believe that the classification of Claims and
Interests under the Plan complies with the requirements set forth in the Bankruptcy Code.
However, there can be no guaranty that the Bankruptcy Court would reach the same conclusion.
2. Risk of Non-Confirmation of the Plan
Even if the voting classes accept the Plan, the Plan might not be confirmed by the
Bankruptcy Court. Section 1129 of the Bankruptcy Code sets forth the requirements for
confirmation and requires, among other things, that the confirmation of a plan must be proposed
in good faith and is not likely to be followed by the liquidation or the need for further financial
reorganization unless such liquidation is proposed in the plan, and that the value of distributions
to dissenting creditors and equity security holders not be less than the value of distributions such
creditors and equity security holders would receive if the Debtors were liquidated under chapter
7 of the Bankruptcy Code. The Debtors believe that the Plan satisfies all the requirements for
confirmation of a plan under the Bankruptcy Code.
There can be no guaranty, however, that the Bankruptcy Court would also conclude that
the requirements for confirmation ofthe Plan have been satisfied.
ARTICLE XVI.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
THE TAX CONSEQUENCES UNDER THE PLAN TO HOLDERS OF CLAIMS OR
INTERESTS MAY VARY BASED UPON THE PARTICULAR CIRCUMSTANCES OF
EACH HOLDER. MOREOVER, THE TAX CONSEQUENCES OF CERTAIN ASPECTS OF
THE PLAN ARE UNCERTAIN DUE TO THE LACK OF APPLICABLE LEGAL
PRECEDENT AND THE POSSIBILITY OF CHANGES IN THE LAW. NO RULING HAS
BEEN APPLIED FOR OR OBTAINED FROM THE INTERNAL REVENUE SERVICE WITH
RESPECT TO ANY OF THE TAX ASPECTS OF THE PLAN AND NO OPINION OF
COUNSEL HAS BEEN REQUESTED OR OBTAINED BY THE DEBTORS WITH RESPECT
THERETO.
THIS DISCUSSION DOES NOT CONSTITUTE TAX ADVICE OR A TAX OPINION
CONCERNING THE MATTERS DESCRIBED. THERE CAN BE NO ASSURANCE THAT
THE INTERNAL REVENUE SERVICE WILL NOT CHALLENGE ANY OR ALL OF THE
TAX CONSEQUENCES DESCRIBED HEREIN, OR THAT SUCH A CHALLENGE, IF
ASSERTED, WOULD NOT BE UPHELD. ACCORDINGLY, EACH HOLDER OF A CLAIM
OR INTEREST IS STRONGLY URGED TO CONSULT WITH ITS OWN TAX ADVISOR
{BAY:Ol512597vl) 43
REGARDING THE FEDERAL, STATE, LOCAL, FOREIGN, OR OTHER TAX
CONSEQUENCES OF THE PLAN.
INTERNAL REVENUE SERVICE CIRCULAR 230 DISCLOSURE: TO ENSURE
COMPLIANCE WITH REQUIREMENTS IMPOSED BY THE U.S. INTERNAL REVENUE
SERVICE, ANY STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT
(INCLUDING ANY ATTACHMENTS) IS NOT INTENDED OR WRITTEN TO BE USED,
AND CANNOT BE USED, BY ANY TAXPAYER FOR THE PURPOSE OF AVOIDING
TAX-RELATED PENALTIES UNDER THE CODE. STATEMENTS REGARDING TAX
IMPLICATIONS CONTAINED IN THIS DISCLOSURE STATEMENT (INCLUDING ANY
ATTACHMENTS) ARE NOT WRITTEN TO SUPPORT THE MARKETING OR
PROMOTION OF THE TRANSACTIONS OR MATTERS ADDRESSED BY THE
DISCLOSURE STATEMENT. EACH TAXPAYER SHOULD SEEK ADVICE BASED ON
THE TAXPAYER'S PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX
ADVISOR.
A. Allocation of Consideration to Interest
A portion of the consideration received by a holder in satisfaction of an Allowed Claim
pursuant to the Plan may be allocated to the portion of such Allowed Claim (if any) that
represents accrued but unpaid interest. Unless otherwise proscribed under applicable statute or
rule, Distributions under the Plan are allocated first to the principal of a Claim, then to any
accrued interest. If any portion of the Distribution were required to be allocated to accrued
interest, such portion would be taxable to the Holder as interest income, except to the extent the
Holder has previously reported such interest as income.
In that event, only the balance of the Distribution would be considered received by the
Holder in respect of the principal amount of the Allowed Claim. Such an allocation would reduce
the amount of the gain, or increase the amount of loss, realized by the Holder with respect to the
Allowed Claim. If any such loss were a capital loss, it would not offset any amount of the
distribution that was treated as ordinary interest income (except, in the case of individuals, to the
limited extent that capital losses may be deducted against ordinary income).
To the extent that any portion of the Distribution is treated as interest, Holders may be
required to provide certain tax information in order to avoid the withholding oftaxes.
TAX CONSEQUENCES MAY VARY BASED ON THE PARTICULAR
CIRCUMSTANCES OF EACH HOLDER OF A CLAIM OR INTEREST. ACCORDINGLY,
EACH HOLDER OF A CLAIM OR INTEREST IS STRONGLY URGED TO CONSULT
WITH HIS, HER, OR ITS OWN TAX ADVISOR REGARDING THE FEDERAL, STATE,
AND LOCAL INCOME AND OTHER TAX CONSEQUENCES UNDER THE PLAN.
ARTICLE XVII.
ALTERNATNES TO CONFIRMATION AND CONSUMMATION OF THE PLAN
The Debtors have evaluated alternatives to the Plan, including alternative structures and
terms of liquidation for the Debtors. While the Debtors have concluded that the Plan is the best
{BAYo01512597vl} 44
alternative and will maximize recoveries by holders of Claims, if the Plan is not confirmed, the
Debtors or (subject to the Debtors' exclusive periods under the Bankruptcy Code to File and
solicit acceptances of a plan or plans of liquidation) any other party in interest in the Bankruptcy
Cases could attempt to formulate and propose a different plan or plans of reorganization.
Further, if no plan of reorganization under chapter 11 of the Bankruptcy Code can be confirmed,
the Bankruptcy Cases may be converted to chapter 7 cases. In that event, the Prepetition Secured
Lender would likely obtain relief from the automatic stay to foreclose on the Debtors' assets.
Furthermore, in liquidation cases under chapter 7 of the Bankruptcy Code, a trustee or trustees
would be appointed to liquidate the remaining assets, if any, of the Debtors and distribute
proceeds to creditors. The proceeds of the liquidation would be distributed to the respective
creditors of the Debtors in accordance with the priorities established by the Bankruptcy Code.
For further discussion of the potential impact on the Debtors of the conversion of the Bankruptcy
Cases to chapter 7 liquidation, see Article XIV. C of the Disclosure Statement. The Debtors
believes that Confirmation and consummation of the Plan is preferable to the available
alternatives.
ARTICLE XVlll.
CONCLUSIONS AND RECOMMENDATION
The Debtors believe that confirmation and implementation of the Plan is preferable to the
alternative described above because the Plan will provide each creditor with a greater recovery
than it would receive if the Debtors were to liquidate and distribute their assets under chapter 7,
in which case there would likely be a delay in making distributions to creditors, and creditors
would likely receive smaller, or in many instances, no distributions. Thus, the Debtors
recommend confirmation and implementation of the Plan as the best possible outcome for
creditors.
Dated: --------:c--:--c-
___ _,2010
CRDENTIA CORP.

BAKER ANDERSON CHRISTIE, INC.,
CRDECORP.
GHS ACQUISITION CORPORATION
HEALTH INDUSTRY PROFESSIONALS, LLC
HIP HOLDING, INC.
MP HEALTH CORP.
NEW AGE STAFFING, INC.
NURSES NETWORK, INC.
By:
Name: _____________ ___
{BAY:Ol512597vl} 45
Title:
{BAY:Ol512597vl} 46
EXHIBIT A
.--'
~ - - _-,:.
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
Inre Chapter 11
CRDENTIA CORP., et al.,
1
Case No. 10-10926 (BLS)
Debtors. Joint Administration Requested
DEBTORS' JOINT CHAPTER 11 PLAN OF REORGANIZATION
Paul Rachmuth
Gersten Savage LLP
600 Lexington Avenue, 9th Floor
New York, New York 10022
Telephone: 212-752-9700
Facsimile: 212-980-5192
Proposed Counsel to the Debtors
and Debtors-in-Possession
Dated: March 17,2010
Jamie L. Edmonson (No. 4247)
Bayard, P.A.
222 Delaware Avenue, Suite 900
Wilmington, DE 19801
Telephone: 302-655-5000
Facsimile: 302-658-6395
The Debtors, along witb tbe last four digits of tbeir federal tax identification numbers, are: Crdentia
Corp.(5701), ATS Universal, LLC (3980), Baker Anderson Christie, Inc. (3631), CRDE Corp. (2509), GHS
Acquisition Corporation (9736), Healtb Industry Professionals, LLC ( 4246), HIP Holding, Inc. (3468), MP Healtb
Corp. (4403), New Age Staffing, Inc. (1214) and Nurses Network, Inc. (6291) .. The Debtors' mailing address for
purposes oftbese eases is 5001 LBJ Freeway, Suite 850, Dallas, TX 75244.
{BAY:015!2598vl}
TABLE OF CONTENTS
Page
INTRODUCTION ...................................................................................................................... 1
ARTICLE I DEFINITIONS, RULES OF INTERPRETATION AND COMPUTATION
OF TIME ........................................................................................................................... 1
A. Rules of Construction ................................................................................................... 1
B. Definitions ................................................................................................................... 1
C. Computation of Time ................................................................................................. 10
D. GoverningLaw ........................................................................................................... 10
ARTICLE II CLASSIFICATION OF CLAIMS AND INTERESTSError! Bookmark not defined.
A. Introduction .................................................................. Error! Bookmark not defined.
B. Unclassified Claims (not entitled to vote on this Plan) ................................................ 11
C. Unimpaired Classes of Claims (deemed to have accepted this Plan and not
entitled to vote on this Plan) ....................................................................................... 11
D. Impaired Classes of Claims ........................................................................................ 12
E. Classes oflnterests ..................................................................................................... 12
ARTICLE ill TREATMENT OF CLAIMS AND INTERESTS ................................................ 12
A. Unclassified Claims .................................................................................................... 12
B. Unimpaired Claims ..................................................................................................... 13
C. Impaired Claims ......................................................................................................... 14
D. Interests ...................................................................................................................... 15
E. Allowed Claims; Deemed Allowed Claims ................................................................. 15
F. Reservation of Rights to Object to Claims .................................................................. 15
G. Objections to Claims .................................................................................................. 16
ARTICLE IV ACCEPTANCE OR REJECTION OF THIS PLAN ............................................ 16
A. Impaired Classes of Claims Entitled to Vote ............................................................... 16
B. Acceptance by an Impaired Class ............................................................................... 16
{BAYo01512598vl) PLAN -i
C. Presumed Acceptances by Unimpaired Classes ........................................................... 16
D. Classes Deemed to Reject Plan ................................................................................... 16
E. Summary of Classes Voting on this Plan .................................................................... 16
F. Confirmation Pursuant to Bankruptcy Code section 1129(b) ....................................... 17
ARTICLE V MEANS FOR IMPLEMENTATION OF THIS PLAN ......................................... 17
A. Corporate Existence andRe-vesting of Assets ............................................................ 17
:;
B. Board of Directors of Reorganized Crdentia ............................................................... 17
C. Officers of Reorganized Crdentia ............................................................................... 17
D. Vesting of Assets ........................................................................................................ 18
E. Consolidation of Debtors' Estates for Plan Purposes: .................................................. 18
F. Cancellation of Existing Interests in Crdentia ............................................................. 18
G. Distribution to Holders of Claims and Interests ........................................................... 18
H. Execution ofDocuments and Corporate Action .......................................................... 19
I. Surrender oflnstruments ............................................................................................ 19
J. Bankruptcy Code Section 1145 Determination ........................................................... 20
K. Release of Liens ......................................................................................................... 20
L. Exemption from Certain Transfer Taxes ..................................................................... 20
M. Release ofTrade Vendor Avoidance Actions .............................................................. 20
N. Effectuating Documents; Further Transactions ........................................................... 20
ARTICLE VI PROVISIONS GOVERNING DISTRIBUTIONS ............................................... 21
A. Delivery ofUnde1iverable or Unclaimed Distributions ............................................... 21
B. Prepayment ................................................................................................................ 21
C. Means of Cash Payment ............................................................................................. 21
D. Sources of Cash for Plan Distribution ......................................................................... 21
E. Disbursement Agent. .................................................................................................. 21
{BAY,01512598vl} PLAN- ii
F. Record Date for Distribution ...................................................................................... 22
G. Interest on Claims ....................................................................................................... 22
H. Withholding and Reporting Requirements .................................................................. 22
I. S ~ ........................................................................................................................ TI
J. Procedure for Treating and Resolving Disputed, Contingent, and/or
Unliquidated Claims ................................................................................................... 23
K. Fractional Dollars ....................................................................................................... 23
L. Allocation of Plan Distributions Between Principal and Interest ................................. 23
ARTICLE VII TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED
LEASES .......................................................................................................................... 24
A Assumption and Rejection of Executory Contracts and Unexpired Leases .................. 24
B. Cure Procedures ......................................................................................................... 25
C. RejectionDamages ..................................................................................................... 26
ARTICLE VIII CONDITIONS PRECEDENT TO CONFIRMATION AND
CONSUMMATION OF THIS PLAN .............................................................................. 26
A Conditions Precedent to Confirmation ........................................................................ 26
B. Conditions Precedent to Effective Date ....................................................................... 26
C. Waiver of Conditions ................................................................................................. 27
ARTICLE IX ALLOWANCE AND PAYMENT OF CERTAIN ADMINISTRATIVE
CLAIMS .......................................................................................................................... 27
A Professional Fee Claims ............................................................................................. 27
ARTICLE X EFFECTS OF CONFIRMATION ........................................................................ 27
A Binding Effect ............................................................................................................ 27
B. Discharge ................................................................................................................... 28
C. Injunction ................................................................................................................... 29
D. Term of Bankruptcy Injunction or Stays ..................................................................... 29
E. Compromises and Settlements .................................................................................... 29
{BAYo01512598vl) PLAN- iii
F. Satisfaction of Subordination Rights ........................................................................... 29
G. Release of Secured Lender and DIP Lender ................................................................ 30
H. Exculpation and Limitation of Liability ...................................................................... 30
I. Indemnification Obligations ....................................................................................... 30
ARTICLE XI RETENTION OF JURISDICTION ..................................................................... 31
ARTICLE XII MISCELLANEOUS PROVISIONS .................................................................. 33
A Modifications and Amendments ................................................................................. 33
B. Severability of Plan Provisions ................................................................................... 34
C. Successors and Assigns .............................................................................................. 34
D. Payment of Statutory Fees .......................................................................................... 34
E. Revocation, Withdrawal, or Non-Consummation ........................................................ 34
F. Service ofDocuments ................................................................................................. 35
G. Plan Supplement(s) ..................................................................................................... 36
H. Waiver of Stay ........................................................................................................... 36
I. Inconsistency .............................................................................................................. 36
{BAY:01512598vl} PLAN- iv
INTRODUCTION
Crdentia Corp. ("Crdentia") and ATS Universal, LLC, a Florida limited liability
company ("ATS"), Baker Anderson Christie, Inc. a California corporation ("BAC''), CRDE
Corp. a Delaware corporation ("CRDE"), GHS Acquisition Corporation, a Delaware corporation
("GHS"), Health Industry Professionals, LLC, a Michigan limited liability company ("HIP
LLC"), HIP Holding, Inc., a Delaware corporation ("HIP"), MP Health Corp., a Delaware
corporation ("MP Health"), New Age Staffing, Inc., a Delaware corporation ("NAS"), and
Nurses Network, Inc., a California corporation ("NNI"). (each of ATS, BAC, CRDE, GHS, HIP
LLC, HIP, MP Health, NAS and NNI, a "Subsidiary" or a "Debtor" and collectively, the
"Subsidiaries") (the Subsidiaries, together with Crdentia, the "Debtors"), propose the following
joint plan of reorganization (the "Plan") under chapter 11 of 11 U.S. C. 101 et seq. The Plan
provides for (i) the emergence of the Debtors from bankruptcy as Reorganized Crdentia and the
re-vesting of the Debtors' assets in Reorganized Crdentia free and clear of any liens,
encumbrances or other interests; (ii) the vesting of all equity in Reorganized Crdentia in
Com Vest Capital LLC, Debtors' prepetition secured lender, or its designee (the "Secured
Lender"); (iii) the opportunity for third parties to purchase the Debtors or their assets free and
clear of any liens, encumbrances or other interests at a fraction of the amount of the Secured
Lender's debt; and (iv) the resolution of all outstanding Claims against and Interests in the
Debtors. The Debtors are the sole proponents of the Plan within the meaning of Bankruptcy
Code section 1129. Please refer to the Disclosure Statement, distributed herewith, for a
discussion of the Debtors' history and businesses, the background, a summary and analysis of the
Plan, and certain related matters. All holders of Claims who are eligible to vote on the Plan are
encouraged to read the Plan and Disclosure Statement in their entirety before voting to accept or
reject the Plan.
ARTICLE I
DEFINITIONS, RULES OF INTERPRETATION AND COMPUTATION OF TIME
A. Rules of Construction
For purposes of this Plan, except as expressly provided herein or unless the context otherwise
requires, all capitalized terms not otherwise defined shall have the meanings ascribed to them in
Article I of this Plan or any Exhibit hereto. Any term used in this Plan that is not defined herein,
but is defined in the Bankruptcy Code or the Bankruptcy Rules, shall have the meaning ascribed
to that term in the Bankruptcy Code or the Bankruptcy Rules, as applicable. Whenever the
context requires, such terms shall include the plural as well as the singular number.
B. Definitions
(1) "Administrative Claim" means a Claim against the Debtors for payment of
an administrative expense of a kind specified in Bankruptcy Code section 503(b) and entitled to
priority under Bankruptcy Code section 507(a)(l), including, but not limited to: (a) the actual,
necessary costs and expenses, incurred after the Petition Date, of preserving the Debtors'
bankruptcy Estates and operating the business of the Debtors, including wages, salaries, or
{BAY:01512598vl J PLAN-1
commissions for services rendered after the Petition Date, (b) Professional Fee Claims, and (c)
all fees and charges assessed against the Estates under 28 U.S. C. 1930.
(2) "Allowed" means, when used in reference to a Claim within a particular
Class, an Allowed Claim in the specified Class or of a specified type.
(3) "Allowed Claim" means a Claim or any portion thereof (a) that has been
allowed by a Final Order of the Court (or such court as the Debtors and the holders of any such
Claim agree may adjudicate such Claim and any objections thereto), (b) that either (x) has been
Scheduled as a liquidated, non-contingent, and undisputed Claim in an amount greater than zero
on the Schedules, or (y) is the subject of a timely filed Proof of Claim as to which either (i) no
objection to its allowance has been filed (either by way of objection or amendment to the
Schedules) within the periods of limitation fixed by the Bankruptcy Code, this Plan or by any
order of the Court or (ii) any objection to its allowance has been settled, waived through
payment, or withdrawn, or has been denied by a Final Order, or (c) that is expressly allowed in a
liquidated amount in this Plan; provided, however, that with respect to an Administrative Claim,
"Allowed Claim" means an Administrative Claim as to which a timely written request for
payment has been made in accordance with applicable bar dates for such requests set by the
Court (if such written request is required) in each case as to which the Debtors, or any other
party in interest (x) has not interposed a timely objection or (y) has interposed a timely objection
and such objection has been settled, waived through payment, or withdrawn, or has been denied
by a Final Order; provided, further, however, that for purposes of determining the status (i.e.,
Allowed or Disputed) of a particular Claim prior to the expiration of the period fixed for filing
objections to the allowance or disallowance of Claims, any such Claim which has not been
previously allowed or disallowed by a Final Order of the Court or this Plan shall be deemed a
Disputed Claim unless such Claim is specifically identified by the Debtors as being an Allowed
Claim.
(4) "Assumed Contracts Schedule" means the schedule of Executory
Contracts and Unexpired Leases that the Debtors intend to assume under this Plan as amended,
modified or supplemented from time to time through the Confirmation Date.
(5) "Assumed Executory Contracts" means collectively, the Executory
Contracts and Unexpired Leases that (a) will or have been assumed by a Final Order, including
the Confirmation Order; (b) are identified in the Assumed Contracts Schedule, as the same may
be amended, modified or supplemented from time to time through the Confirmation Date; or (c)
are the subject of a motion to assume pending on or before the Effective Date.
(6) "Avoidance Action(s)" means, individually and collectively, all
avoidance or recovery actions under Bankruptcy Code sections 502, 510, 541, 542, 544, 545,
547, 548, 549, 550, 551, and/or 553, or under similar or related state or federal statutes and
common law, including, without limitation, fraudulent transfer or conveyance laws.
(7) "Ballot" means each of the ballot forms distributed with the Disclosure
Statement to holders of Impaired Claims entitled to vote in connection with the Solicitation of
acceptances of this Plan.
{BAY;Ol512598vl) PLAN-2
(8) "Bankruptcy Cases" means the Bankruptcy Cases of the Debtors, to be
jointly administered.
(9) "Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as
codified in title 11 of the United States Code, 11 U.S.C. 101-1532, as now in effect or
hereafter amended prior to the Confirmation of this Plan, to the extent that such amendments
apply to the Bankruptcy Cases.
(1 0) "Bankruptcy Rules" means, collectively, the Federal Rules of Bankruptcy
Procedure and the Official Bankruptcy Forms, as amended, the Federal Rules of Civil Procedure,
as amended, as applicable to the Bankruptcy Cases or proceedings therein, and the local rules of
the Court, as applicable to the Bankruptcy Cases or proceedings therein, as the case may be.
(11) "Bar Date" means the date to be designated by the Court as the last date
for filing proofs of claim or interest in the Bankruptcy Cases.
(12) "Board" or "Board of Directors" means the boards of directors for the
Debtors.
(13) "Business Day" means a day other than a Saturday, Sunday, "legal
holidays" (as defined in Bankruptcy Rule 9006(a)), or other day on which commercial banks in
New York City are authorized or required by Law to close. Any event the scheduled occurrence
of which would fall on a day that is not a Business Day shall be deferred until the next
succeeding Business Day.
(14) "Cash" means legal tender of the United States.
(15) "Causes of Action" means any and all claims, actions, proceedings, causes
of action, Avoidance Actions, suits, accounts, controversies, agreements, promises, rights to
legal remedies, rights to equitable remedies, rights to payment and Claims (as defined in
Bankruptcy Code section 101(5)), whether known, unknown, reduced to judgment, not reduced
to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured and whether asserted or assertable directly or derivatively, in
law, equity or otherwise, that the Debtors and/or the Estates may hold against any Person or
entity.
(16) "Claim" means a right, claim, cause of action, right of recovery and rights
of set-off, recoupment or counterclaim of any kind against the Debtors, whether or not asserted,
as defined in section 101(5) of the Bankruptcy Code.
(17) "Claimholder" means the holder of a Claim.
(18) "Class" means a category of holders of Claims or Interests, as described in
Article II hereof
(19) "Confirmation" means entry by the Court of the Confirmation Order.
(20) "Confirmation Date" means the date of entry of the Confirmation Order.
{BAY:OJ512598vl} PLAN-3
(21) "Confirmation Order" means the order entered by the Court confirming
this Plan under Bankruptcy Code section 1129, and constituting an approval of all its material
terms, the operation or effect of which has not been stayed, reversed, or amended and as to which
Order (or any revision, modification, or amendment thereof) any motion seeking review or
rehearing has been denied or overruled.
(22) "Contract Objection" means any objection filed by a non-Debtor party to
an Assumed Executory Contract to (i) the Cure Amounts listed by the Debtors in the Assumed
Contracts Schedule and (ii) the proposed assumption of the Assumed Executory Contracts.
(23) "Contract Objection Deadline" means L_], the date by which non-
Debtor parties to Assumed Executory Contracts may (i) object to Cure Amounts listed by the
Debtors and propose alternative Cure Amounts, and/or (ii) the proposed assumption of the
Assumed Executory Contracts. Any Contract Objection must be filed with the Court on or
before the Contract Objection Deadline and will be heard and determined by the Court. Any
such Contract Objection not filed by the Contract Objection Deadline shall be waived and
forever barred.
(24) "Court" means the United States Bankruptcy Court for the District of
Delaware or such other court as may have jurisdiction over the Bankruptcy Cases.
(25) "Creditor" means any Person who holds a Claim against the Debtors.
(26) "Cure" means the payment of Cash by the Debtor, or the distribution of
other property (as the parties may agree or the Bankruptcy Court may order) pursuant to an
executory contract or unexpired lease assumed under section 365 or 1123 of the Bankruptcy
Code as necessary to (i) cure a monetary default by the Debtors or (ii) if an objection is filed to
the Debtors' proposed assumption or rejection of an Executory Contract or Unexpired Lease
pursuant to the provisions of this Plan, the amount equal to the unpaid monetary obligations
owing by the Debtors and required to be paid pursuant to section 365(b) of the Bankruptcy Code,
as may be (x) determined by Final Order or (y) otherwise agreed upon by the parties.
(27) "Cure Amount" means the amount due to a non-Debtor contracting party
based upon a Debtor's defaults under an Executory Contract or Unexpired Lease at the time such
Executory Contract or Unexpired Lease is assumed pursuant to Bankruptcy Code section 365.
(28) "Debtors" means collectively, Crdentia and the Subsidiaries.
(29) "DIP Lender" means Com Vest Capital LLC, as postpetition lender.
(30) "DIP Loan Agreement" or "DIP Loan" means the postpetition financing
provided by the DIP Lender pursuant to the DIP Loan Order.
(31) "DIP Loan Claim" means a Claim of the DIP Lender arising under or as a
result of the DIP Loan Agreement and/or the Final DIP Order, classified under this Plan as Class
4 Claim.
{BAY:Ol512598vl} PLAN-4
(32) "DIP Loan Order" means the Order (A) Authorizing Debtors To Obtain
Final 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 Com Vest
Capital LLC; and (D) Scheduling A Final Hearing Pursuant To Bankruptcy Rule 4001 (Docket
No. LJ)
(33) "Disallowed" with reference to a Claim means a Claim, or any portion
thereof, that (a) has been disallowed by a Final Order, (b) is Scheduled at zero or as contingent,
disputed or unliquidated and as to which no Proof of Claim has been filed by the Bar Date or
deemed timely filed with the Court pursuant to either the Bankruptcy Code or any Final Order,
or otherwise deemed timely filed with the Court pursuant to either the Bankruptcy Code or any
Final Order or under applicable law, or (c) is not Scheduled, and as to which (i) no Proof of
Claim has been filed by the Bar Date or deemed timely filed with the Court pursuant to either the
Bankruptcy Code or any Final Order or under applicable law, or (ii) no request for payment of an
Administrative Claim has been filed timely or deemed timely filed with the Court pursuant to
either the Bankruptcy Code or any Final Order or under applicable law.
(34) "Disbursement Agent" means the Debtors, Reorganized Crdentia, or an
entity appointed by the Debtors or Reorganized Crdentia, charged with the responsibility to make
all distributions under this Plan.
(3 5) "Disclosure Statement" means that certain disclosure statement relating to
this Plan, including all exhibits and schedules thereto including this Plan and certain Plan
Supplements, as the same may be amended, supplemented or otherwise modified from time to
time, as approved by the Bankruptcy Court pursuant to section 1125 of the Bankruptcy Code and
rule 3017 of the Bankruptcy Rules.
(36) "Disputed" with reference to a Claim means a Claim, or any portion
thereof, that has not been Allowed pursuant to this Plan or a Final Order, and:
(a) if no Proof of Claim has been filed, or deemed to have been filed,
by the applicable Bar Date, which has been or hereafter is listed on the Schedules as
unliquidated, contingent or disputed, and which has not been resolved by written agreement of
the parties or an order of the Court;
(b) if a Proof of Claim has been filed, or deemed to have been filed, by
the applicable Bar Date (i) a Proof of Claim for which a corresponding Claim has been listed on
the Schedules as unliquidated, contingent or disputed; (ii) a Proof of Claim for which a
corresponding Claim has been listed on the Schedules as other than unliquidated, contingent, or
disputed, but the amount of such Claim as asserted in the Claim varies from the amount of such
Claim as listed in the Schedules; or (iii) a Proof of Claim as to which any party in interest has
timely filed an objection or request for estimation in accordance with this Plan, the Bankruptcy
Code, the Bankruptcy Rules and any orders of the Court, or which is otherwise disputed by the
Debtors in accordance with applicable law; or
{BAY:Ol512598vl} PLAN-5
(c) for which a claim was required to be filed by order of the Court,
but as to which a Claim was not timely or properly filed.
(37) "Disputed Claim Amount" means (a) if a liquidated amount is set forth in
the Proof of Claim relating to a Disputed Claim, (i) the liquidated amount set forth in the Proof
of Claim relating to the Disputed Claim; (ii) an amount agreed to by the Debtors and the holder
of such Disputed Claim; or (iii) if a request for estimation is filed by any party, the amount at
which such Claim is estimated by the Court; (b) if no liquidated amount is set forth in the Proof
of Claim relating to a Disputed Claim, (i) an amount agreed to by the Debtors or Reorganized
Crdentia and the holder of such Disputed Claim, or (ii) the amount estimated by the Court with
respect to such Disputed Claim; or (c) if the Claim was listed on the Schedules as unliquidated,
contingent or disputed and no Proof of Claim was filed, or deemed to have been filed, by the
applicable Bar Date and the Claim has not been resolved by written agreement of the parties or
an order of the Court, zero.
(38) "Effective Date" means the first Business Day on which all conditions to
the consummation of this Plan set forth in Article VITI hereof have been satisfied or waived and
is the day upon which this Plan is substantially consummated.
(3 9) "Encumbrance" means any claim to or lien against any portion of the
assets of the Debtors.
(40) "Estates" means the bankruptcy estates of the Debtors in these Bankruptcy
Cases created under Bankruptcy Code section 541.
(41) "Executory Contract" means a contract (other than an Unexpired Lease) to
which one or more of the Debtors are a party that is subject to assumption or rejection under
Bankruptcy Code section 365.
( 42) "Exhibit" means an exhibit attached to either this Plan or attached as an
appendix to the Disclosure Statement.
( 43) "Face Amount" means (i) when used in reference to a Disputed or
Disallowed Claim, the Disputed Claim Amount, and (ii) when used in reference to an Allowed
Claim, the allowed amount of such Claim.
( 44) "File, Filed, or Filing" means file, filed, or filing with the Court or its
authorized designee in the Bankruptcy Cases.
( 45) "Final DIP Order" means an order authorizing and approving the DIP
Loan and the agreements related thereto on a final basis.
( 46) "Final Order" means an order or judgment of the Court, as entered on the
docket in the Bankruptcy Cases, or any order or judgment of a court properly having jurisdiction
over the Debtors and/or the Estates, the operation or effect of which has not been stayed,
reversed, or amended and as to which order or judgment (or any revision, modification, or
amendment thereof) the time to appeal or seek review or rehearing has expired, notwithstanding
the pendency of any appeal.
{BAYo01512598vl} PLAN-6
(47) "General Unsecured Claim" means a Claim against the Debtors that is not
an Administrative Claim, Priority Tax Claim, Other Priority Claim, Other Secured Claim,
Secured Lender Claim, DIP Loan Claim, Intercreditor Claim, or Trade Claim.
(48) "General Unsecured Claim Consideration" means $100,000, the amount to
be distributed Pro Rata to Allowed General Unsecured Claims.
( 49) "Impaired" when used with reference to a Claim, interest or a Class,
means a Claim, interest or a Class that is impaired within the meaning of Bankruptcy Code
section 1124.
(50) "Intercompany Claims" means all Claims held by any Debtor against any
other Debtor.
(51) "Interests" means the legal and equitable rights of ownership and any
document or writing evidencing such right of ownership, including any equity security in a
Debtor, or any issued, unissued, authorized, or outstanding shares of stock or other forms of
equity interests, together with any warrants, options, or contractual rights to purchase or acquire
such equity securities at any time and all rights arising with respect thereto, or a partnership,
limited liability company, or similar interest in a Debtor or rights to purchase or acquire such
other form of ownership interests.
(52) "Interest Holder" means the holder of an Interest.
(53) "Lien" means a charge against or interest in property to secure payment of
a debt or performance of an obligation.
(54) "Other Priority Claim" means a Claim against the Debtors entitled to
priority under Bankruptcy Code section 507(a), other than an Administrative Claim, a Priority
Tax Claim, or a DIP Loan Claim.
(55) "Other Secured Claim" means a Claim (a) secured by a Lien on property
in which the Estate has an interest other than a Secured Lender Claim, or (b) that is subject to
setoff under section 553 of the Bankruptcy Code and such right of setoff has been asserted by the
holder of such right prior to the Confirmation Date in a properly filed motion for relief from the
automatic stay, to the extent of the value of the Claimholder's interest in the Estate's interest in
such property or to the extent of the amount subject to setoff, as applicable, as determined
pursuant to section 506(a) of the Bankruptcy Code. For the avoidance of doubt, no Secured
Lender Claim shall be an Allowed Other Secured Claim.
(56) "Person" means person as defined in Bankruptcy Code section 101(41).
(57) "Petition Date" means the date on which the Debtors file their petitions for
relief commencing the Bankruptcy Cases.
(58) "Plan Supplement(s)" means, as set forth in Section XII.G., the
compilation(s) of documents and forms of documents, specified in this Plan, that the Debtors will
file with the Court on or before the date that is five ( 5) days prior to the Voting Deadline.
{BAYo01512598vl} PLAN-7
(59) "Priority Tax Claim" means a Claim that is entitled to priority under
Bankruptcy Code section 507(a)(8).
(60) "Pro Rata" means, at any time, the proportion that the Face Amount of a
Claim in a particular Class bears to the aggregate Face Amount of all Claims (including Disputed
Claims, but excluding Disallowed Claims) in such Class.
(61) "Professional" means any professional employed in the Bankruptcy Cases
pursuant to Bankruptcy Code sections 327 or 1103.
(62) "Professional Fee Claim" means a Claim of a Professional pursuant to
Bankruptcy Code sections 327, 328, 330, 331, 503(b), or 1103 for compensation or
reimbursement of costs and expenses relating to services performed after the Petition Date and
prior to and including the Effective Date.
(63) "Proof of Claim" means the proof of claim that must be filed by creditors
on or before the Bar Date.
(64) "Rejection Claims Bar Date" means the first Business Day that is thirty
(30) days after the Effective Date or such earlier date that may be set by the Court concerning a
particular Executory Contract or Unexpired Lease.
( 65) "Reorganized Crdentia" means Crdentia as it shall exist on and after the
Effective Date ofthis Plan.
( 66) "Reorganized Crdentia Equity" means 100% of the equity interests in
Reorganized Crdentia, which equity shall be issued to the Claimholders of Class 2 Claims on the
Effective Date.
(67) "Scheduled" means, with respect to any Claim, the status and amount, if
any, of that Claim as set forth in the Schedules.
(68) "Schedules" means the schedules of assets and liabilities and the
statements of financial affairs filed by the Debtors on or about the Petition Date, as such
schedules or statements have been or may be further amended or supplemented from time to time
in accordance with Bankruptcy Rule 1009 or any orders of the Court.
(69) "Secured Lender" means Com Vest Capital, LLC.
(70) "Secured Lender Claim" means the Claim of the Secured Lender pursuant
to the Existing Loan Agreement, as defined in the DIP Loan Order.
(71) "Secured Lender Claim Amount means $18,995,353.01, the amount of the
Secured Lender Claim as of the Petition Date.
(72) "Solicitation" means the solicitation by the Debtors of acceptances of this
Plan.
{BAYo01512598vl} PLAN-8
(73) "Subsidiaries" means CRDE Corp., Nurses Network, Inc., Baker
Anderson Christie, Inc., New Age Staffing, Inc., PSR Nurse Recruiting, Inc., PSR Nurses
Holding Corp., PSR Nurses, Ltd., Care Pros Staffing, Inc., Arizona Home & Healthcare, Inc.,
Staff Search Acquisition Corp., ATS Universal, LLC, GHS Acquisition Corporation, Prime
Staff, LP, Mint Medical Staffing Odessa, LP, HIP Holding, Inc., MP Health Corp., and Health
Industry Professionals, LLC.
(74) "Taxes" means any and all taxes, levies, imposts, assessments or other
charges of whatever nature imposed at any time by any governmental authority or by any
political subdivision or taxing authority thereof or therein and all interest, penalties or similar
liabilities with respect thereto.
(7 5) "Trade Claims" means prepetltlon Claims of Creditors who provided
goods and services in connection with the Debtors' operations only to the extent identified on the
schedule to be filed as part of the Plan Supplement on or before the deadline for filing this Plan
Supplement (and which may be filed as part of this Plan Supplement and amended at any time
prior to the Confirmation Date).
(76) "Trade Claims Order" means an order entered in the Bankruptcy Cases
authorizing the Debtors to pay Trade Claims in the Debtors' ordinary course of business.
(77) "Trade Vendor Avoidance Actions" means Avoidance Actions against
Creditors who provided goods and services in connection with the Debtors' operations.
(78) "Unexpired Leases" means a contract to which one or more of the Debtors
is a party that is subject to assumption or rejection under Bankruptcy Code section 365.
(79) "Unimpaired" with reference to a Claim or Class, means a Claim or Class
that is not impaired within the meaning of Bankruptcy Code section 1124.
(80) "Voting Deadline" means [ , the date and time by which all Ballots
to accept or reject this Plan must be received in order to be counted.
(81) "Voting Record Date" means [_], the date on which a Claim must be
held by a Claimholder in order for such Claimholder to be entitled to vote to accept or reject the
Plan.
2. Rules of Interpretation
For purposes of this Plan (a) any reference in this Plan to a contract, instrument, release,
indenture, or other agreement or document being in a particular form or on particular terms and
conditions means that such document shall be substantially in such form or substantially on such
terms and conditions, (b) any reference in this Plan to an existing document or exhibit Filed or to
be Filed means such document or exhibit as it may have been or may be amended, modified, or
supplemented, (c) unless otherwise specified, all references in this Plan to Sections, Articles,
Schedules and Exhibits are references to Sections, Articles, Schedules and Exhibits of or to this
Plan, (d) the words "herein" and "hereto" refer to this Plan in its entirety rather than to a
particular portion of this Plan, (e) captions and headings to Articles and Sections are inserted for
{BAY,Ql512598vl} PLAN-9
convenience of reference only and are not intended to be a part of or to affect the interpretation
of this Plan and the rules of construction set forth in Bankruptcy Code section 102 and in the
Bankruptcy Rules shall apply.
C. Computation of Time
In computing any period of time prescribed or allowed by this Plan, the provisions of Bankruptcy
Rule 9006(a) shall apply.
D. Governing Law
Unless a rule oflaw or procedure is supplied by federal law (including the Bankruptcy Code and
Bankruptcy Rules) and except as otherwise provided herein or therein, the laws of (i) the State of
Delaware shall govern the construction and implementation of this Plan and any agreements,
documents, and instruments executed in connection with this Plan and (ii) the laws of the State
of Delaware shall govern governance matters with respect to the Debtors.
{BAY:Ol512598vl} PLAN-10
ARTICLE II
CLASSIFICATION OF CLAIMS AND INTERESTS
A. Introduction
All Claims and Interests, except Administrative Claims and Priority Tax
Claims, are placed in the Classes set forth below. In accordance with Bankruptcy Code
section 1123(a)(l), Administrative Claims and Priority Tax Claims, as described below, have
not been classified.
A Claim or Interest is placed in a particular Class only to the extent that the
Claim or Interest falls within the description of that Class, and is classified in other Classes to
the extent that any portion of the Claim or Interest falls within the description of such other
Classes. A Claim is placed in a particular Class for all purposes, including voting, confirmation,
and distribution, as follows:
Yes
Claims No to
Class 4 DIP Loan No to
Class 5 General Unsecured Claims Impaired Yes
Class 6 Trade Claims Unimpaired No (deemed to accept)
7 Intercompany No to
Class 8 Subsidiary Equity Interests Unimpaired No (deemed to accept)
Class 9 Crdentia Equity Interests Impaired No (deemed to reject)
B. Unclassified Claims (not entitled to vote on this Plan)
1. Administrative Claims
2. Priority Tax Claims
C. Unimpaired Classes of Claims (deemed to have accepted this Plan and not
entitled to vote on this Plan)
1. Class 1: Priority Non-Tax Claims
{BAY:01512598vl} PLAN-ll
2. Class 3: Other Secured Claims
3. Class 4: DIP Loan Claims
4. Class 6: Trade Claims
D. Impaired Classes of Claims
1. Class 2: Secured Lender Claims (entitled to vote on this Plan)
2. Class 5: General Unsecured Claims (entitled to vote on this Plan)
3. Class 7: Intercompany Claims (deemed to have rejected this Plan)
E. Classes ofln terests
I. Class 8: Interests in the Subsidiaries (unimpaired and deemed to have accepted
this Plan and not required to vote)
2. Class 9: Interests in Crdentia (impaired and deemed to have rejected this Plan
and not entitled to vote)
ARTICLE ill
TREATMENT OF CLAIMS AND INTERESTS
A. Unclassified Claims
1. Administrative Claims
Except as otherwise provided herein, and subject to the requirements of this Plan, on, or as soon
as reasonably practicable after the later of (i) the Effective Date or (ii) the date such
Administrative Claim becomes an Allowed Administrative Claim, a holder of an Allowed
Administrative Claim shall receive, in full satisfaction, settlement, release, and discharge of and
in exchange for such Allowed Administrative Claim, (a) Cash equal to the unpaid portion of the
Face Amount of such Allowed Administrative Claim or (b) such other treatment as to which
such holder and the Debtors or Reorganized Crdentia shall have agreed upon in writing;
provided, however, that Allowed Administrative Claims with respect to liabilities incurred by the
Debtors in the ordinary course of business during the Bankruptcy Cases may be paid in the
ordinary course of business in accordance with the terms and conditions of any agreements
relating thereto.
2. Priority Tax Claims
Except as otherwise provided herein, and subject to the requirements of this Plan, on, or as soon
as reasonably practicable after the later of (i) the Effective Date or (ii) the date such Priority Tax
Claim becomes an Allowed Priority Tax Claim, a holder of an Allowed Priority Tax Claim shall
{BAY:Ol512598vl} PLAN-12
receive, when such claim becomes payable under applicable law, in full satisfaction, settlement,
release, and discharge of and in exchange for such Allowed Priority Tax Claim, (a) Cash equal to
the unpaid portion of the Face Amount of such Allowed Priority Tax Claim or (b) such other
treatment as to which such holder and the Debtors or Reorganized Crdentia shall have agreed
upon in writing; provided, however, that the Debtors or Reorganized Crdentia shall have the
right to pay any Allowed Priority Tax Claim, or any remaining balance of any Allowed Priority
Tax Claim, in full at any time on or after the Effective Date without premium or penalty to the
extent permitted under applicable non-bankruptcy law.
B. Unimpaired Claims
1. Class I: Other Priority Claims
On or as soon as reasonably practicable after, the later of (i) the Effective Date, or (ii) the date
such Other Priority Claim becomes an Allowed Other Priority Claim, a holder of an Allowed
Other Priority Claim shall receive from Reorganized Crdentia, in full satisfaction, settlement,
release, and discharge of and in exchange for such Allowed Other Priority Claim (a) Cash equal
to the unpaid portion of the Face Amount of such Allowed Other Priority Claim, or (b) such
other treatment as to which such holder and Reorganized Crdentia shall have agreed upon in
writing.
Class 1 is unimpaired and, therefore, holders of Class 1 Claims are not entitled to vote to accept
or reject this Plan.
2. Class 3: Other Secured Claims
On the later of, or as soon as reasonably practicable after the later of (i) the
Effective Date, or (ii) the date on which an Other Secured Claim becomes an Allowed Other
Secured Claim, a holder of an Allowed Other Secured Claim shall receive from Reorganized
Crdentia, in full satisfaction, settlement, release and discharge of and in exchange for, such
Allowed Other Secured Claim, (a) Cash equal to the value of its Allowed Other Secured Claim,
(b) a return of the holder's collateral securing the Other Secured Claim, or (c) such other
treatment as to which such holder and Reorganized Crdentia shall have agreed upon in writing.
The Debtors are currently unaware of any Other Secured Claims.
Class 3 is unimpaired and, therefore, holders of Class 3 Claims are not entitled to
vote to accept or reject this Plan.
3. Class 4: DIP Loan Claims
On the Effective Date, all DIP Loan Claims, if any, shall be paid in Cash by Reorganized
Crdentia.
Class 4 is unimpaired and, therefore, holders of Class 4 Claims are not entitled to
vote to accept or reject this Plan.
{BAY:Ol512598vl} PLAN-13
4. Class 6: Trade Claims
Holders of Allowed Trade Claims shall receive, in full satisfaction, settlement, release, and
discharge of and in exchange for such Allowed Trade Claim, Cash equal to the amount of its
Allowed Trade Claim (i) as paid pursuant to any Trade Claims Order prior to the Effective Date
of this Plan, and/or (ii) as paid pursuant this Plan, which Plan distribution shall be made as soon
as reasonably practicable after the later of(a) the Effective Date, or (b) the date immediately
following the date such Trade Claim becomes an Allowed Trade Claim.
Class 6 is unimpaired and, therefore, holders of Class 6 Claims are not entitled to vote to accept
or reject this Plan.
C. Impaired Claims
1. Class 2: Secured Lender Claims
The Secured Lender Claims shall be Allowed in full, without setoff, subordination, avoidance,
reduction, defense, recharacterization or counterclaim, in the amount of the Secured Lender
Claim Amount.
In the event there is no Third Party Purchaser, on the Effective Date holders of Secured Lender
Claims, in full satisfaction, settlement, compromise, release, and discharge of and in exchange
for the amount of the Secured Lender Claims shall receive 100% of the Reorganized Crdentia
Eguity.
In the event there is a Third Party Purchaser, on the Effective Date, holders of Secured Lender
Claims, in full satisfaction, settlement, compromise, release, and discharge of and in exchange
for the amount of the Secured Lender Claims shall receive the Sale Proceeds, less all
distributions made or to be made to all other Claimholders, up to the Secured Lender Claim
Amount.
Class 2 is impaired and, therefore, holders of Class 2 Claims are entitled to vote to accept or
reject this Plan.
2. Class 5: General Unsecured Claims
On or as soon as reasonably practicable after the Effective Date, each holder of an Allowed
General Unsecured Claim shall receive a Pro Rata share of the General Unsecured Claim
Consideration.
Class 5 is impaired and, therefore, holders of Class 5 Claims are entitled to vote to accept or
reject this Plan.
3. Class 7: Intercompany Claims
{BAY:Ol512598vl} PLAN-14
As of the Effective Date, all Intercompany Claims shall be cancelled and will not receive any
distribution from the Debtor or the Estate.
Class 7 Claims receive no distribution under this Plan and, therefore, holders of Class 7 Claims
are deemed to reject this Plan and are not entitled to vote to accept or reject this Plan.
D. Interests
1. Class 8: Interests in the Subsidiaries
Crdentia is the holder of 100% of the Interests in all the Subsidiaries, which constitute all the
Allowed Class 8 Interests. On the Effective Date, Reorganized Crdentia will hold 100% of the
Interests in the Subsidiaries.
Class 8 is unimpaired and, therefore, the holder of Class 8 Interests is not entitled to vote to
accept or reject this Plan.
2. Class 9: Interests in Crdentia
On the Effective Date, all Interests in Crdentia shall be canceled and each holder thereof shall
not be entitled to, and shall not receive or retain any property or interest in property on account
of, such Interests.
Class 9 Interests receive no distribution under this Plan and, therefore, holders of Class 9
Interests are deemed to reject this Plan and are not entitled to vote to accept or reject this Plan.
E. Allowed Claims; Deemed Allowed Claims
Notwithstanding any provision herein to the contrary, Reorganized Crdentia shall only make
distributions to holders of Allowed Claims. No holder of a Disputed Claim will receive any
distribution on account thereof until (and then only to the extent that) its Disputed Claim
becomes an Allowed Claim. Reorganized Crdentia may, in its discretion, withhold distributions
otherwise due hereunder to any Claimholder until such time as objections thereto may be filed.
Any holder of a Claim that becomes an Allowed Claim after the Effective Date will receive its
distribution in accordance with the terms and provisions of this Plan. The Claims of bona fide
holders of claims in Classes 2 and 8 are deemed Allowed Claims.
F. Reservation of Rights to Object to Claims
Unless a Claim is expressly described as an Allowed Claim pursuant to or under this Plan, or
otherwise becomes an Allowed Claim prior to or after the Effective Date, the Debtors and
Reorganized Crdentia reserve any and all objections to any and all Claims and motions or
requests for the payment of Claims, whether administrative expense, priority, secured, or
unsecured, including, without limitation, any and all objections to the validity or amount of any
and all alleged Claims and security interests, whether under the Bankruptcy Code, other
applicable law or contract. The Debtors' or Reorganized Crdentia's failure to object to any
Claim in the bankruptcy cases shall be without prejudice to Reorganized Crdentia' s rights to
{BAY:Ol512598vl} PLAN-15
contest or otherwise defend against such Claim in the Court when and if such Claim is sought to
be enforced by the holder of such Claim. The Debtors and Reorganized Debtors reserve the right
to utilize any Cause of Action against any claimholder as a setoff against such claimholder' s
Claim or Claims.
G. Objections to Claims
Unless otherwise provided in this Plan or by order of the Court, any objections to Claims will be
filed and served not later than 120 days after the Effective Date, provided that Reorganized
Crdentia may request (and the Court may grant) an extension of such deadline by filing a motion
with the Court, based upon a reasonable exercise of Reorganized Crdentia's business judgment.
A motion seeking to extend the deadline to object to any Claim shall not be deemed an
amendment to this Plan.
ARTICLE IV
ACCEPTANCE OR REJECTION OF TillS PLAN
A. Impaired Classes of Claims Entitled to Vote
Subject to Article III of this Plan, Claimholders in each Impaired Class of Claims as of the
Voting Record Date are entitled to vote as a Class to accept or reject this Plan.
B. Acceptance by an Impaired Class
In accordance with Bankruptcy Code section 1126( c) and except as provided in Bankruptcy
Code section 1126(c), an Impaired Class of Claims shall have accepted this Plan if this Plan is
accepted by the holders of at least two-thirds in dollar amount and more than one-half in number
of the Allowed Claims of such Class that have timely and properly voted to accept or reject this
Plan.
C. Presumed Acceptances by Unimpaired Classes
Classes 1, 3, 4 and 6 are Unimpaired by this Plan. Under Bankruptcy Code section 1126(f), such
Claimholders are conclusively presumed to accept this Plan, and the votes of such Claimholders
will not be solicited.
D. Classes Deemed to Reject Plan
Holders of Claims in Class 7 and Interests in Class 9 are not entitled to receive or retain any
property under this Plan. Under Bankruptcy Code section 1126(g), holders of Claims in Class 7
and Interests in Class 9 are deemed to reject this Plan, and the votes of such holders will not be
solicited.
E. Summary of Classes Voting on this Plan
As a result of the provisions of Articles II and III of this Plan, the votes of Claimholders in
Classes 2 and 5 will be solicited with respect to this Plan.
{BAY:01512598vl) PLAN-16
F. Confirmation Pursuant to Bankruptcy Code section 1129(b)
Because Class 9 is deemed to reject this Plan, and because other impaired Classes may reject this
Plan, the Debtors will seek Confirmation of this Plan from the Court under the procedures set
forth in section 1129(b) of the Bankruptcy Code. The Debtors reserve the right to alter, amend,
modify, revoke, or withdraw this Plan or any Plan Supplement or schedule as may be necessary
to satisfy the requirements of Bankruptcy Code section 1129(b ).
ARTICLEV
MEANS FOR IMPLEMENTATION OF THIS PLAN
A. Corporate Existence and Re-vesting of Assets
Crdentia will continue to exist after the Effective Date and be governed by the Restated Bylaws
and the Restated Certificate oflncorporation which will be filed as part of the Plan Supplement.
The Restated Certificate oflncorporation will, among other things, (A) authorize the
Reorganized CrdentiaEquity and (B) pursuant to section 1123(a)(6) of the Bankruptcy Code,
include a provision prohibiting the issuance of non-voting equity securities to the extent required
by section 1123(a)(6) of the Bankruptcy Code. Any modification to the Restated Certificate of
Incorporation as originally filed may be filed after the Confirmation Date and may become
effective on or prior to the Effective Date. After the Effective Date, the Reorganized Crdentia
may file an amended and restated certificate of incorporation (or other formation documents,
if applicable) with the Secretary of State in any appropriate jurisdiction.
As of the Effective Date, each of the Subsidiaries shall dissolve.
B. Board of Directors of Reorganized Crdentia.
On the Effective Date, the operation of Reorganized Crdentia shall be the responsibility of its
Board, subject to, and in accordance with, the Restated Certificate oflncorporation and the
Restated Bylaws. The Board shall initially be comprised of [__J members. The identities of the
initial Board members shall be disclosed in the Plan Supplements.
C. Officers of Reorganized Crdentia.
The individuals currently serving as the senior officers of Crdentia will continue to serve in the
same capacities with Reorganized Crdentia through and following the Effective Date subject
to any changes disclosed in the Plan Supplement. After the Effective Date, the selection and
removal of officers of Reorganized Crdentia shall be as provided in the respective Restated
Certificate of Incorporation and/or Restated Bylaws or other organizational documents of
Reorganized Crdentia. All employment and management agreements for officers and directors
of Reorganized Crdentia shall be disclosed in the Plan Supplements.
{BAY:Ol51259Svl} PLAN-17
D. Vesting of Assets
On the Effective Date, all assets held by the Debtors immediately before the Effective Date shall
vest in Reorganized Crdentia, free and clear of all liens, claims, encumbrances and other
interests.
E. Consolidation of Debtors' Estates for Plan Purposes:
I. Purpose and Limitation: Pursuant to sections 1123(b)(3) and (6) of the
Bankruptcy Code, this Plan treats the Debtors (pre-Effective Date) as comprising a single
Estate solely for purposes of voting on this Plan, confirmation of this Plan and making
distributions under this Plan in respect of Claims against and Interests in the Debtors
under this Plan. Such treatment shall not affect any Debtor's status as a separate legal
entity. The treatment of the Debtors' estates in this section V.E. serves only as a
mechanism to effect a fair distribution of value to the Debtors' constituencies.
2. Result of Consolidation: As a result of the foregoing limited consolidation of the
Debtors' estates: (a) all intercompany claims (including such Claims arising from the
rejection of any Executory Contract or Unexpired Lease) shall not be entitled to any
distributions under this Plan, (b) any obligation of any of the Debtors and all guarantees
thereof executed by any of the Debtors will be deemed to be an obligation of each of the
Debtors, and (c) any Claim filed or asserted against any of the Debtors will be deemed a
Claim against each of the Debtors. The consolidation of the Debtors' estates
contemplated by this section V.E. shall not, however, cause any Debtor to be liable for
any Claim or Interest for which it would not otherwise be liable absent the substantive
consolidation under this Plan.
3. Treatment of Guarantees and Multiple-Debtor Claims: On the Effective Date,
except as otherwise provided for in this Plan, all Claims based on guarantees of
collection, payment, or performance made by any Debtor concerning the obligations of
another Debtor shall be discharged, released, and without further force or effect.
Additionally, holders of Allowed Claims or Allowed Interests who assert identical
Claims against or Interests in multiple Debtors shall be entitled to a single satisfaction of
such Claims or Interests.
F. Cancellation of Existing Interests in Crdentia
On the Effective Date, (i) the Interests, including but not limited to, any outstanding common
stock and preferred stock, in Crdentia shall be cancelled by entry of the Confirmation Order, and
(ii) the obligations of, Claims against, and Interests in Crdentia arising under, evidenced by, or
relating to any shares of common stock or preferred stock, agreements, contracts, indentures,
certificates of designation, bylaws, certificates or articles of incorporations, or similar documents
governing the Interests in Crdentia shall be released and discharged.
G. Distribution to Holders of Claims and Interests
I. Distribution to Holders of Unclassified Claims and Class 1, 3, 4,5 and 6 Claims
{BAY:01512598vl} PLAN-18
Reorganized Crdentia shall pay all Unclassified Claims (as described in Article III. A.) and Class
1,3,4,5 and 6 Claims as specified in Plan ARTICLE ill.
2. Issuance of Reorganized Crdentia Equity
If there is no Third Party Purchaser, then on the Effective Date, the Reorganized Crdentia Equity
shall be issued and distributed to the holders of Class 2 Claims. If there is a Third Party
Purchaser, then on the Effective Date, the Reorganized Crdentia Equity shall be issued and
distributed to the Third Party Purchaser.
H. Execution of Documents and Corporate Action
Upon the occurrence of the Effective Date, all actions contemplated by this Plan shall be deemed
authorized and approved in all respects, including (i) adoption or assumption, as applicable, of
the agreements with existing management, (ii) selection of the directors and officers for
Reorganized Crdentia, (iii) the issuance and distribution of the Reorganized Crdentia Equity, (iv)
the adoption of the Restated Certificate oflncorporation and Restated Bylaws, and (v) all other
actions contemplated by this Plan (whether to occur before or on the Effective Date). All matters
provided for in this Plan involving the corporate structure of the Debtors or Reorganized
Crdentia, and any corporate action required by the Debtor or Reorganized Crdentia in connection
with this Plan, shall be deemed to have occurred and shall be in effect, without any requirement
of further action by the equity security holders, directors or officers of the Debtors or
Reorganized Crdentia. On or (as applicable) prior to the Effective Date, the appropriate officers
of the Debtors or Reorganized Crdentia, as applicable, shall be authorized and directed to issue,
execute and deliver the agreements, documents, securities, and instruments contemplated by this
Plan (or necessary or desirable to effect the transactions contemplated by this Plan) in the name
of and on behalf of Reorganized Crdentia and any and all other agreements, documents,
securities and instruments relating to the foregoing. The Debtors and Reorganized Crdentia are
authorized and directed to deliver all documents and perform all actions reasonably contemplated
with respect to implementation of this Plan. Rebecca Irish, the Chief Financial Officer of
Crdentia, is designated as the authorized representative of each Debtor (i) to execute on behalf of
each Debtor, in a representative capacity and not individually, any documents or instruments
after the Confirmation Date or the Effective Date that may be necessary to consummate this
Plan, and (ii) to undertake any other action on behalf of each Debtor to consummate this Plan.
I. Surrender oflnstruments
Each Claimholder holding a certificate or instrument evidencing a Claim against any ofthe
Debtors or property of the Estates and whose Claims are treated under this Plan shall surrender
such certificate or instrument to the Debtors or their designee (as applicable) on the Effective
Date as a prerequisite to receiving any distribution under this Plan, unless the non-availability of
such certificate or instrument is established to the satisfaction of the applicable party. If any
holder of an Allowed Claim evidenced by a certificate or instrument canceled pursuant to this
Plan fails to surrender such certificate or instrument, within one year after the Effective Date, its
Claim for a distribution under this Plan on account of such certificate or instrument shall be
discharged, and such holder shall be forever barred from asserting such Claim against the
Debtors, Reorganized Crdentia or their property. In such case, any property held on account of
{BAYo01512598vl} PLAN-19
such Claim shall be disposed of pursuant to the provisions relating to unclaimed distributions in
Article VI of this Plan.
J. Bankruptcy Code Section 1145 Determination
Confirmation of this Plan shall constitute a determination, in accordance with Bankruptcy Code
section 1145, that (except with respect to an entity that is an underwriter as defined in
Bankruptcy Code section 1145(b)) section 5 of the 1933 Act and any state or local law requiring
registration for the offer or sale of a security or registration or licensing of an issuer of,
underwriter of, broker or dealer in, a security do not apply to the offer, sale, or issuance of any
securities under this Plan.
K. Release of Liens
Except as otherwise provided in this Plan, the Confirmation Order or in any document,
instrument or other agreement created in connection with this Plan, on the Effective Date, all
mortgages, deeds of trust, Liens, Encumbrances, security interests, or other interests against the
property of the Estates shall be released.
L. Exemption from Certain Transfer Taxes
Pursuant to Bankruptcy Code section 1146(a), any transfers from the Debtors or Reorganized
Crdentia to any other Person or entity pursuant to this Plan in the United States shall not be
subject to any stamp tax or similar tax, including without limitation state and county transfer and
recordation taxes, and the Confirmation Order shall direct the appropriate state or local
governmental officials or agents to forgo the collection of any such tax or governmental
assessment and to accept for filing and recordation any of the foregoing instruments or other
documents without the payment of any such tax or governmental assessment.
M. Release of Trade Vendor Avoidance Actions
In accordance with Bankruptcy Code section 1123(b)(3), all Trade Vendor Avoidance
Actions and other similar claims arising under applicable state laws, including, without
limitation, fraudulent transfer claims, if any, and all other causes of action of a trustee and
debtors-in-possession under the Bankruptcy Code shall be released and extinguished upon the
consummation of this Plan.
N. Effectuating Documents; Further Transactions
The Debtors and the Reorganized Crdentia, subject to the terms and conditions of this Plan, shall
be authorized to execute, deliver, file, or record such contracts, instruments, releases, indentures,
and other agreements or documents, and take such actions as may be necessary or appropriate to
effectuate and further evidence the terms and conditions of this Plan. The DIP Lender and the
Secured Lender shall execute and deliver such documents as Reorganized Debtors shall
reasonably request to effectuate or further evidence the terms and conditions of this Plan.
{BAY:01512598vl} PLAN-20
ARTICLE VI
PROVISIONS GOVERNING DISTRIBUTIONS
A. Delivery of Undeliverable or Unclaimed Distributions
If the distribution to any holder of ao Allowed Claim is returned to Reorganized Crdentia as
undeliverable or is otherwise unclaimed, no further distributions shall be made to such holder
unless and until Reorgaoized Crdentia is notified in writing of such holder's then-current
address, at which time all missed distributions shall be made to such holder without interest.
Any holder of an Allowed Claim that does not assert a claim pursuant to this Plan for an
undeliverable or unclaimed distribution within 90 days after the Effective Date shall be deemed
to have forfeited its Claim for such undeliverable or unclaimed distribution and shall be forever
barred and enjoined from asserting any such claim for ao undeliverable or unclaimed distribution
against the Debtors, Reorganized Crdentia and their respective agents, attorneys, representatives,
employees or independent contractors, aod/or any of its and their property. In such case, any
Cash otherwise reserved for undeliverable or unclaimed distributions shall become the property
of the Estates free of any restrictions thereon aod notwithstanding any federal or state escheat
laws to the contrary aod shall be distributed in accordance with the terms of this Plan. Nothing
contained in this Plan shall require the Debtors or Reorganized Crdentia to attempt to locate any
holder of an Allowed Claim.
B. Prepayment
Except as otherwise provided in the Final DIP Order, this Plan or in the Confirmation Order, the
Debtors shall have the right to prepay, without penalty, all or any portion of an Allowed
Administrative Claim, Allowed Priority Tax Claim, Allowed Other Priority Claim, or Allowed
Other Secured Claim at any time.
C. Means of Cash Payment
Cash payments made pursuant to this Plan shall be in U.S. dollars and shall be made at the option
and in the sole discretion ofReorgaoized Crdentia by (i) checks drawn on, or (ii) wire traosfers
from a domestic bank.
D. Sources of Cash for Plan Distribution.
Except as otherwise provided in this Plan or Confirmation Order, all Cash required for payments
to be made hereunder shall be obtained from the Debtors' and Reorgaoized Crdentia's operations
aod Cash on hand.
E. Disbursement Agent.
Reorgaoized Crdentia, as Disbursement Agent, or such other Person designated by Reorgaoized
Crdentia as Disbursement Agent, shall make all distributions under this Plan. A Disbursement
Agent shall not be required to give any bond or surety or other security for the performance of its
duties unless otherwise ordered by the Bankruptcy Court.
{BAYo01512598vl} PLAN-21
F. Record Date for Distribution.
Distributions shall only be made to the record holders of Allowed Claims as of the Confirmation
Date. At the close of business on the Confirmation Date, all registers maintained by the Debtors
and Reorganized Crdentia, and each of their respective agents, successors and assigns, shall be
deemed closed for purposes of determining whether a holder of such a Claim is a record holder
entitled to distributions under this Plan. The Debtors and Reorganized Crdentia shall have no
obligation to recognize any Claim that is transferred after the Confirmation Date. Instead, they
shall be entitled to recognize only those record holders set forth in the registers as of the
Confirmation Date, irrespective of the number of distributions made under this Plan or the date
of such distributions. Furthermore, if a Claim is transferred twenty (20) or fewer calendar days
before the Confirmation Date, the Disbursement Agent shall make distributions to the transferee
only if the transfer form contains an unconditional and explicit certification and waiver of any
objection to the transfer by the transferor.
If any dispute arises as to the identity of a holder of an Allowed Claim that is entitled to receive a
distribution pursuant to this Plan, the Disbursement Agent may, in lieu of making such
distribution to such Person, make the distribution into an escrow account until the disposition
thereof is determined by Final Order or by written agreement among the interested parties to
such dispute.
G. Interest on Claims
Unless otherwise specifically provided for in this Plan or the Confirmation Order, or required by
applicable bankruptcy law, postpetition interest shall not accrue or be paid on any Claims other
than the DIP Loan Claim. Interest shall not accrue or be paid upon any Disputed Claim in
respect of the period from the Petition Date to the date a final distribution is made thereon if and
after such Disputed Claim becomes an Allowed Claim.
H. Withholding and Reporting Requirements
In accordance with Bankruptcy Code section 346 and in connection with this Plan and all
distributions hereunder, the Debtors and Reorganized Crdentia shall, to the extent applicable,
comply with all withholding and reporting requirements imposed by any federal, state,
provincial, local, or foreign taxing authority. The Debtors and Reorganized Crdentia shall be
authorized to take any and all actions necessary and appropriate to comply with such
requirements.
All distributions hereunder shall be subject to applicable legal withholding and reporting
requirements. As a condition of making any distribution under this Plan, Reorganized Crdentia
may require the holder of an Allowed Claim to provide such holder's taxpayer identification
number, and such other information, certification or forms as necessary to comply with
applicable tax reporting and withholding laws. Notwithstanding any other provision of this Plan,
each entity receiving a distribution pursuant to this Plan shall have sole and exclusive
responsibility for the satisfaction and payment of tax obligations on account of any such
distribution.
{BAY:01512598vl} PLAN-22
I. Setoffs
Except as otherwise provided by the terms of this Plan, Reorganized Crdentia may, but shall not
be required to, set off against any Claim and the payments or other distributions to be made
under this Plan on account of the Claim, claims of any nature whatsoever that the Debtors and
Reorganized Crdentia may have against the holder thereof, provided, that any such right of setoff
that is exercised shall be allocated, first, to the principal amount of the related Claim, and
thereafter to any interest portion thereof, but neither the failure to do so nor the allowance of any
Claim hereunder shall constitute a waiver or release by the Debtors or Reorganized Crdentia of
any such claim that the Debtors or Reorganized Crdentia may have against such holder.
J. Procedure for Treating and Resolving Disputed, Contingent, and/or
Unliquidated Claims
1. Prosecution of Objections
From the Confirmation Date through the Effective Date, only the Debtors may file objections,
settle, compromise, withdraw, or litigate to judgment objections to Claims. From and after the
Effective Date, Reorganized Crdentia may settle or compromise any Disputed Claim without
approval of the Court. Nothing contained herein, however, shall limit the right ofReorganized
Crdentia to object to Claims, if any, filed or amended after the Effective Date.
2. No Distributions Pending Allowance
Notwithstanding any other provision of this Plan, no payments or distributions shall be made
with respect to all or any portion of a Disputed Claim unless and until all objections to such
Disputed Claim have been settled or withdrawn or have been determined by Final Order, and the
Disputed Claim, or some portion thereof, has become an Allowed Claim.
K. De Minimis Distributions
Reorganized Crdentia and the Distbursement Agent shall have no obligation to make any
distribution, whether final or not, unless and until the total amount of such distribution to a
specific holder of an Allowed Claim is equal to or greater than $10.00.
L. Fractional Dollars
Any other provision of this Plan notwithstanding, Reorganized Crdentia and the Distbursement
Agent shall not be required to make distributions or payments of fractions of dollars. Whenever
any payment of a fraction of a dollar under this Plan would otherwise be called for, the actual
payment shall reflect a rounding of such fraction to the nearest whole dollar (up or down), with
half dollars being rounded down.
M. Allocation of Plan Distributions Between Principal and Interest
To the extent that any Allowed Claim entitled to a distribution under this Plan is composed of
indebtedness and accrued but unpaid interest thereon, such distribution shall be allocated, for all
income tax purposes, to the principal amount of the Claim first and then, to the extent the
{BAY:01512598vl} PLAN-23
consideration exceeds the principal amount of the claim, to the portion of such Claim
representing accrued but unpaid interest.
ARTICLEVIT
TREATMENT OF EXECUTORY CONTRACTS
AND UNEXPIRED LEASES
A. Assumption and Rejection of Executory Contracts and Unexpired Leases
1. Pursuant to Sections 365 and 1123 of the Bankruptcy Code, on the Effective Date,
the Reorganized Crdentia shall assume those each executory contract and unexpired lease to
which are set forth in the Schedule of Executory Contract or Unexpired Leases to be Assumed
filed as part of the Plan Supplement and as may be amended (the "Assumed Contract Schedule")
to which the Debtors were a party, unless such contract or lease (i) previously expired or
terminated pursuant to its own terms or by agreement of the parties thereto or (ii) is the subject of
a motion to reject filed by the Debtors on or before the Confirmation Date. The Confirmation
Order shall constitute an order of the Bankruptcy Court under sections 365 and 1123(b) of the
Bankruptcy Code approving the contract and lease assumptions or rejections described herein,
subject to the occurrence of the Effective Date. All executory contracts and unexpired leases that
are not specifically assumed by this Section DC. A. shall be deemed rejected as of the Effective
Date.
2. To the extent applicable, all executory contracts of the Debtors assumed by
Reorganized Crdentia pursuant to the Plan shall be deemed modified such that the transactions
contemplated by the Plan shall not be a "change of control," however such term may be defined
in the relevant executory contract, and any required consent under any such contract or lease
shall be deemed satisfied by the confirmation of the Plan, and all executory contracts assumed
pursuant to the Plan shall be assumed notwithstanding any provisions therein that purport to
modify any of the Debtor's rights thereunder as a result of the commencement of these
Bankruptcy Cases. Each executory contract assumed pursuant to the Plan (or pursuant to other
Bankruptcy Court order) shall remain in full force and effect and be fully enforceable by
Reorganized Crdentia in accordance with its terms, except as modified by the provisions of the
Plan, or any order of the Bankruptcy Court authorizing and providing for its assumption or
applicable law.
3. Any license granted to the Debtors by a governmental unit in effect immediately
prior to the Petition Date that is considered to be an executory contract and is not otherwise
terminated or rejected by the Debtors, such license shall be deemed to be assumed under the Plan
pursuant to section 365 of the Bankruptcy Code
4. Any monetary amounts required as cure payments on each executory contract and
unexpired lease to be assumed pursuant to the Plan, shall be satisfied pursuant to section
365(b)(1) of the Bankruptcy Code by payment of the Cure amount in Cash on the Effective Date
or as soon thereafter as practicable or upon such other terms and dates as the parties to such
executory contracts or unexpired leases otherwise may agree. If there is a dispute regarding (i)
the nature or amount of any Cure, (ii) the ability of the Reorganized Crdentia to provide
{BAY:01512598vl} PLAN-24
"adequate assurance of future performance" (within the meaning of section 365 of the
Bankruptcy Code) under the contract or lease to be assumed or (iii) any other matter pertaining
to assumption, Cure shall occur following the entry of a Final Order of the Bankruptcy Court
resolving the dispute.
B. Cure Procedures
1. Assumed Contract Schedule
The Assumed Contract Schedule, annexed to the Plan Supplement, as may be amended, contains
a list of the Assumed Executory Contracts and the associated Cure Amounts. The non-Debtor
parties to the Assumed Executory Contracts shall have until the Contract Objection Deadline to
object to (i) the Cure Amounts listed by the Debtors and propose alternative Cure Amounts,
and/or (ii) the proposed assumption of the Assumed Executory Contracts. Any Contract
Objection must be filed with the Court on or before the Contract Objection Deadline and will be
heard and determined by the Court. Any such Contract Objection not filed by the Contract
Objection Deadline shall be waived and forever barred. Unless the Assumed Contract Schedule
indicates differently, all Assumed Executory Contracts and Unexpired Leases shall be deemed to
have a Cure Amount equal to zero dollars.
2. Deemed Assumption Subject to Revocation
To the extent the Court has not determined by the Effective Date the amount of any Cure
Amount that is subject to a pending objection, the Executory Contract or Unexpired Lease
related to such Cure Amount shall, at the option of Reorganized Crdentia, be deemed assumed
by Reorganized Crdentia effective on the Effective Date; provided, however, Reorganized
Crdentia may revoke an assumption of any Executory Contract or Unexpired Lease within ten
(1 0) days after entry of an order by the Court adjudicating the objection to the Cure Amount
related to such Executory Contract and Unexpired Lease by filing a notice of such revocation
with the Court and serving a copy on the party(ies) whose Executory Contract or Unexpired
Lease is rejected. Any Executory Contract or Unexpired Lease identified in such revocation
notice shall be deemed rejected retroactively on the Effective Date. Any party whose Executory
Contract is rejected pursuant to a revocation notice may file a claim arising out of such rejection
within thirty (30) days after such revocation notice is filed with the Court, and any such rejection
claim not filed by that deadline shall be discharged and forever barred. Reorganized Crdentia
shall have the right to object to any such rejection claim.
3. Payment of Cure Amounts
Within ten (1 0) Business Days after the Effective Date, Reorganized Crdentia shall pay all Cure
Amounts that are not disputed by the Debtors or Reorganized Crdentia. Unless otherwise
ordered by the Court, Reorganized Crdentia shall pay all Cure Amounts that are disputed by the
Debtors or Reorganized Crdentia on the later of the date that is ten (1 0) Business Days after (i)
the Contract Objection Deadline, or (ii) the date of entry of a Final Order resolving the dispute or
approving an agreement between the parties concerning the Cure Amount.
{BAY:Ol512598vl) PLAN-25
C. Rejection Damages
For all Claims relating to the rejection of Executory Contracts and Unexpired Leases, Proofs of
Claim must be filed with the Court and served on the Debtors or Reorganized Crdentia on or
before the Rejection Claims Bar Date or such Claim shall be forever barred and shall not be
enforceable against the Debtors, Reorganized Crdentia or their successors.
Each Allowed Claim arising from the rejection of an Executory Contract shall be treated as an
Allowed General Unsecured Claim. The Court shall determine the amount, if any, of the Claim
of any entity seeking damages by reason of the rejection of any Executory Contract or Unexpired
Lease.
ARTICLE VITI
CONDITIONS PRECEDENT TO CONFIRMATION
AND CONSUMMATION OF TIDS PLAN
A. Conditions Precedent to Confirmation
The following are conditions precedent to Confirmation of the Plan:
1. The Court shall have entered an order approving the Disclosure Statement as
containing adequate information within the meaning of section 1125 of the
Bankruptcy Code;
2. The Plan satisfies each of the requirements of section 1129 of Bankruptcy Code
as applicable;
3. The proposed Confirmation Order shall be m all respects acceptable to the
Debtors and the Secured Lender; and
4. The Confirmation Order shall be entered no later than 24, 2010.Conditions to
Effective Date
B. Conditions Precedent to Effective Date
The following are conditions precedent to the occurrence of the Effective Date, each of which
must be satisfied or waived in accordance with Article VIII hereof:
1. The Confirmation Order shall have been entered on the docket in the Bankruptcy
Cases.
2. The effectiveness of the Confirmation Order shall not have been stayed and any
motion for reconsideration or rehearing shall have been denied or overruled by a
Court of competent jurisdiction.
3. All actions, documents, and agreements necessary to implement this Plan shall
have been effected or executed.
{BAY:0!512598vl) PLAN-26
4. The DIP Loan Claims shall have been paid in accordance with the terms of the
Final DIP Order and Article III of this Plan.
C. Waiver of Conditions
Each of the conditions to the Effective Date, set forth above may be waived in whole or in part
by the Debtors without any other notice to parties-in-interest or the Court, provided, however,
that the Debtors have received the prior written consent of the Secured Lender and the DIP
Lender, which consent may be withheld in their sole discretion. The failure to satisfy or waive
any condition to the Effective Date may be asserted by the Debtors regardless of the
circumstances giving rise to the failure of such condition to be satisfied. The failure of any party
to exercise any of its foregoing rights shall not be deemed a waiver of any of its other rights, and
each such right shall be deemed an ongoing right that may be asserted at any time.
ARTICLE IX
ALLOWANCE AND PAYMENT OF CERTAIN ADMINISTRATIVE CLAIMS
A. Professional Fee Claims
1. Final Fee Applications
All final requests for payment of Professional Fee Claims (the "Final Fee Applications") must be
Filed no later than sixty days after the Effective Date. Objections, if any, to Final Fee
Applications of such Professionals must be Filed and served on Reorganized Crdentia, the
requesting Professional and the Office of the United States Trustee no later than thirty days from
the date on which each such Final Fee Application is served and filed. After notice and a hearing
in accordance with the procedures established by the Bankruptcy Code and prior orders of the
Court, the allowed amounts of such Professional Fee Claims shall be determined by the Court.
Reorganized Debtors shall be responsible for payment of any Final Fee Applications approved
by the Court. Reorganized Crdentia shall be responsible for payment of any accrued, but unpaid
professional fees, subject to approval of Final Fee Applications, as applicable, reflected in the
budget attached to the Final DIP Order.
2. Employment of Professionals after the Effective Date
From and after the Effective Date, any requirement that Professionals comply with Bankruptcy
Code sections 327 through 331 or any order previously entered by the Court in seeking retention
or compensation for services rendered or expenses incurred after such date will terminate.
ARTICLE X
EFFECTS OF CONFIRMATION
A. Binding Effect
This Plan shall be binding upon and inure to the benefit of the Debtors, Reorganized Crdentia, all
present and former holders of Claims and Interests, whether or not such holders will receive or
{BAY:01512598vl} PLAN-27
retain any property or interest in property under this Plan, and their respective successors and
assigns, including, but not limited to, the Debtors and Reorganized Crdentia, and all other parties
in interest in the Bankruptcy Cases.
B. Discharge
(1) Except as otherwise provided in this Plan, the rights granted in this Plan
and the treatment of all Claims and Interests shall be in exchange for, and in complete
satisfaction, discharge, and release of, all Claims and Interests of any nature whatsoever against
the Debtors, Reorganized Crdentia and any of the Estates' property, whether such Claims or
Interests arose before or during the Bankruptcy Cases or in connection with implementation of
this Plan. Except as otherwise provided in this Plan, on the Effective Date, each of the Debtors
shall be discharged and released from any and all Claims and Interests, including demands and
liabilities that arose before the Effective Date, and all debts of the kind specified in Bankruptcy
Code sections 502(g), 502(h), or 502(i), regardless of whether (i) a proof of claim evidencing
such debt was filed or deemed filed under Bankruptcy Code section 501; (ii) a Claim based on
such debt is allowed under Bankruptcy Code section 502; or (iii) the holder of a Claim based on
such debt has accepted this Plan. Except as otherwise provided in this Plan, the Confirmation
Order shall be a judicial determination of discharge of all liabilities of the Debtors. Pursuant to
Bankruptcy Code section 524, the discharge granted under this section shall void any judgment
against any of the Debtors at any time obtained (to the extent it relates to a discharged Claim or
Interest), and operates as an injunction against the prosecution of any action against any of
Reorganized Crdentia or the Estates' property (to the extent it relates to a discharged Claim or
Interest).
(2) Notwithstanding any provisiOn in this Plan, nothing in this Plan
discharges, releases, precludes, or enjoins (i) any environmental liability to any governmental
unit that is not a Claim as such term is defined in section 101 of the Bankruptcy Code or (ii) any
environmental Claim of any governmental unit arising on or after the Effective Date. The
Debtors and Reorganized Debtors reserve the right to assert that any environmental liability is a
Claim that arose on or prior to the Effective Date and that such Claim has been discharged and/or
released under sections 524 and 1141 of the Bankruptcy Code. In addition, nothing in this Plan
discharges, releases, precludes, or enjoins any environmental liability to any governmental unit
that any entity would be subject to as the owner or operator of property after the Effective Date.
(3) Notwithstanding any provision in this Plan, the Confirmation Order and
any implementing Plan documents, including but not limited to notices of assumption and
assignment of Executory Contracts, any rights of way, pending applications for rights of way,
leases, licenses, authorizations, contracts, agreements or other interests of the federal government
shall be treated, determined and administered in the ordinary course of business as if the
Debtors' bankruptcy cases were never filed and the Debtors and the Reorganized Debtor shall
comply with all applicable non-bankruptcy law, federal regulations and statutes. Moreover,
without limiting the foregoing, nothing in this Plan, Confirmation Order or implementing Plan
documents shall be interpreted to set cure amounts for the cure claim of any governmental unit of
the federal government or to require any such governmental unit of the federal government to
novate or otherwise consent to the transfer of any federal government contract, agreement or
{BAY:Ol512598vl) PLAN-28
interest. The federal government's rights to offset or recoup any amounts due under, or relating
to, any contracts, agreements or other interests are expressly preserved.
C. Injunction
Except as otherwise provided in this Plan, the Confirmation Order shall provide, among other
things, that from and after the Effective Date all Persons who have held, hold or may hold
Claims against or Interests in the Debtors are permanently enjoined from taking any of the
following actions against the Estates, the Debtors, Reorganized Crdentia, holders of Reorganized
Crdentia Equity or any of their respective property on account of any such Claims or Interests:
(A) commencing or continuing, in any manner or in any place any action or other proceeding;
(B) enforcing, attaching, collecting, or recovering in any manner any judgment, award, decree, or
order; (C) creating, perfecting or enforcing any lien, lis pendens, or other encumbrance against
any of the assets of Reorganized Crdentia; (D) asserting a setoff or right of subrogation of any
kind against any debt, liability, or obligation due to the Debtors; and (E) commencing or
continuing, in any manner or in any place, any action that does not comply with or is inconsistent
with the provisions of this Plan provided, however, that nothing contained herein shall preclude
such Persons from exercising their rights pursuant to and consistent with the terms of this Plan or
the Confirmation Order.
D. Term of Bankruptcy Injunction or Stays
All injunctions or stays provided for in the Bankruptcy Cases under Bankruptcy Code section
105 or 362, or otherwise, and in existence on the Confirmation Date, shall remain in full force
and effect until the Effective Date. Upon the Effective Date, the injunction provided in Article
XC above shall apply.
E. Compromises and Settlements
Pursuant to Bankruptcy Rule 9019(a), the Debtors may compromise and settle various Claims (a)
against them and (b) that they have against other Persons. The Debtors expressly reserve the
right (with Court approval, following appropriate notice and opportunity for a hearing) to
compromise and settle Claims against them and claims that they may have against other Persons
up to and including the Effective Date. After the Effective Date, such right shall pass to
Reorganized Crdentia and shall be governed by the terms of this Plan.
F. Satisfaction of Subordination Rights
All Claims against the Debtors and all rights and claims between or among Claimholders relating
in any manner whatsoever to distributions on account of Claims against or Interests in the
Debtors, based upon any subordination rights, whether asserted or unasserted, legal or equitable,
shall be deemed satisfied by the distributions under this Plan to Claimholders or Interest Holders
having such subordination rights, and such subordination rights shall be deemed waived,
released, discharged, and terminated as of the Effective Date. Distributions to the various
Classes of Claims hereunder shall not be subject to levy, garnishment, attachment, or like legal
process by any Claimholder or Interest Holder by reason of any subordination rights or
otherwise, so that each Claimholder shall have and receive the benefit of the distributions in the
manner set forth in this Plan.
{BAY:Ol512598vl} PLAN-29
G. Release of Secured Lender and DIP Lender
EFFECTIVE ON THE EFFECTIVE DATE, THE DEBTORS AND REORGANIZED
CRDENTIA (IN THEIR OWN RIGHT AND ON BEHALF OF THEIR RESPECTIVE
ESTATES, REPRESENTATIVES, DIRECTORS, OFFICERS, EMPLOYEES,
INDEPENDENT CONTRACTORS, ATTORNEYS AND AGENTS, AND THEIR
SUCCESSORS AND ASSIGNS) (COLLECTIVELY, THE "RELEASING PARTIES")
HEREBY RELEASE, ACQUIT, FOREVER DISCHARGE, AND COVENANT NOT TO SUE
EACH AND EVERY PREPETITION SECURED LENDER AND DIP LENDER AND THEIR
REPRESENTATIVES, DIRECTORS, OFFICERS, EMPLOYEES, INDEPENDENT
CONTRACTORS, ATTORNEYS AND AGENTS, AND THEIR SUCCESSORS AND
ASSIGNS (THE "RELEASED PARTIES") FROM ANY AND ALL ACTS AND OMISSIONS
OF THE RELEASED PARTIES, AND FROM ANY AND ALL CLAIMS, CAUSES OF
ACTION, AVOIDANCE ACTIONS, COUNTERCLAIMS, DEMANDS, CONTROVERSIES,
COSTS, DEBTS, SUMS OF MONEY, ACCOUNTS, RECKONINGS, BONDS, BILLS,
DAMAGES, OBLIGATIONS, LIABILITIES, OBJECTIONS, LEGAL PROCEEDINGS,
EQUITABLE PROCEEDINGS, AND EXECUTIONS OF ANY NATURE, TYPE, OR
DESCRIPTION WHICH THE RELEASING PARTIES HAVE OR MAY COME TO HAVE
AGAINST THE RELEASED PARTIES THROUGH THE EFFECTIVE DATE, AT LAW OR
IN EQUITY, BY STATUTE OR COMMON LAW, IN CONTRACT, IN TORT, INCLUDING
BANKRUPTCY CODE CHAPTER 5 CAUSES OF ACTION, WHETHER THE LAW OF THE
UNITED STATES OR ANY OTHER COUNTRY, UNION, ORGANIZATION OF FOREIGN
COUNTRIES OR OTHERWISE, KNOWN OR UNKNOWN, SUSPECTED OR
UNSUSPECTED.
H. Exculpation and Limitation of Liability
Except as otherwise specifically provided in this Plan, the Debtors, Reorganized Crdentia, the
Secured Lender, the DIP Lender and any of such entities' respective present or former members,
officers, directors, employees, representatives, attorneys, financial or other professional advisors,
or other agents and any of such parties' successors and assigns, shall not have or incur any claim,
obligation, cause of action or liability to one another or to or from any Claimholder or Interest
Holder, or any other party in interest, or any of their respective agents, employees,
representatives, financial advisors, attorneys or Affiliates, or any of their successors or assigns,
for any act or omission originating or occurring on or after the Petition Date in connection with,
relating to, or arising out of the Debtors, the Bankruptcy Cases, negotiation and filing of this
Plan, filing the Bankruptcy Cases, the pursuit of Confirmation of this Plan, the consummation of
this Plan, the administration of this Plan or the property to be liquidated and/or distributed under
this Plan, except for their willful misconduct, gross negligence, or fraud as determined by a Final
Order of a court of competent jurisdiction, and in all respects shall be entitled to reasonably rely
upon the advice of counsel with respect to their duties and responsibilities under this Plan.
I. Indemnification Obligations.
Notwithstanding anything to the contrary herein, subject to the occurrence of the Effective Date,
the obligations of the Debtors as provided in the Debtors' certificate of incorporation and bylaws
as in effect through the Effective Date and under applicable law or other applicable agreements
{BAY:01512598vl} PLAN-30
as in effect through the Effective Date to indemnify, defend, reimburse, exculpate, advance fees
and expenses to, or limit the liability of, the current and former directors, officers and employees
of the Debtors (including in the case of officers and employees serving as directors, managers,
officers and employees of any Affiliate of the Debtors or as trustee (or similar position) of any
employee benefit plan or trust (or similar Person) of the Debtors, in such capacities) against any
damages, liabilities, obligations, claims or causes of action whether direct or derivative,
liquidated or unliquidated, fixed or contingent, disputed or undisputed, matured or unmatured,
known or unknown, foreseen or unforeseen, asserted or unasserted, shall survive confirmation of
this Plan, remain unaffected thereby after the Effective Date and not be discharged under section
1141 of the Bankruptcy Code or otherwise, irrespective of whether such indemnification,
defense, advancement, reimbursement, exculpation or limitation is owed in connection with an
event occurring before or after the Petition Date. Any Claim based on the Debtors' obligations
herein shall not be subject to any objection in either case by reason of section 502(e)(1 )(B) of
the Bankruptcy Code.
As of the Effective Date, the Restated Certificate oflncorporation and/or Restated Bylaws shall
provide for the indemnification, defense, reimbursement, exculpation and/or limitation of
liability of, and advancement offees and expenses to, directors and officers and employees of
Reorganized Crdentia (including in the case of officers and employees serving as directors,
managers, officers and employees of any Affiliate of Reorganized Crdentia or as trustee (or
similar position) of any employee benefit plan or trust (or similar Person) of Reorganized
Crdentia, in such capacities), who were directors, officers or employees of the Debtors at any
time prior to the Effective Date at least to the same extent as provided in the certificate of
incorporation and bylaws of the Debtors in effect on the Petition Date, against any damages,
liabilities, obligations, claims or causes of action whether direct or derivative, liquidated or
unliquidated, fixed or contingent, disputed or undisputed, matured or unmatured, known or
unknown, foreseen or unforeseen, asserted or unasserted, in connection with any event occurring
before the Petition Date.
The Debtors and Reorganized Crdentia shall indemnify and hold harmless the Secured Lender
and the DIP Lender and their respective advisors, officers, directors and employees and each of
their respective successors and assigns (collectively, the "Indemnified Persons"), to the full
extent lawful, from and against all losses, claims, damages, and liabilities incurred by them that
are related to or arise out of(a) the formulation, negotiation and pursuit of the confirmation or
consummation of this Plan or (b) the Indemnified Persons' consideration of other proposals for
the reorganization of the Debtor under chapter 11 of the Bankruptcy Code. Notwithstanding the
foregoing, neither the Debtors nor Reorganized Crdentia shall not be obligated to indemnify and
hold harmless any Person or entity for any claim, cause of action, liability, judgment, settlement,
cost or expense that results from such Person's fraud or willful misconduct as determined by a
Final Order.
ARTICLE XI
RETENTION OF JURISDICTION
Under Bankruptcy Code sections 105(a) and 1142, and notwithstanding entry of the
Confirmation Order, substantial consummation of this Plan and occurrence ofthe Effective Date,
{BAYo01512598vl} PLAN-31
the Court shall retain exclusive jurisdiction over all matters arising out of, and related to, the
Bankruptcy Cases and this Plan to the fullest extent permitted by law, including, among other
things, jurisdiction to:
(a) Allow, disallow, determine, liquidate, classify, estimate, or
establish the priority or secured or unsecured status of any Claim or Interest, including the
resolution of any request for payment of any Administrative Claim, the resolution of any
objections to the allowance or priority of Claims or Interests and the determination of requests
for the payment of claims entitled to priority under Bankruptcy Code section 507(a)(l ), including
compensation of any reimbursement of expenses of parties entitled thereto;
(b) Hear and determine all applications for compensation and
reimbursement of expenses of Professionals under this Plan or under Bankruptcy Code sections
330, 331, 503(b), 1103, and 1129(a)(4); provided, however, that from and after the Effective
Date, the payment of the fees and expenses of the retained Professionals of the Debtors shall be
made in the ordinary course of business and shall not be subject to the approval of the Court;
(c) Hear and determine all matters with respect to the assumption or
rejection of any Executory Contract or Unexpired Lease to which the Debtors are a party or with
respect to which the Debtors may be liable, and to hear, determine and, if necessary, liquidate
any Claims arising therefrom;
(d) Effectuate performance of and payments under the provisions of
this Plan;
(e) Hear and determine any and all adversary proceedings, motions,
applications and contested or litigated matters arising out of, under or related to the Bankruptcy
Cases, or this Plan;
(f) Enter such orders as may be necessary or appropriate to execute,
implement or consummate the provisions of this Plan and all contracts, instruments, releases and
other agreements or documents created in connection with this Plan, the Disclosure Statement, or
the Confirmation Order;
(g) Hear and determine disputes ansmg in connection with the
interpretation, implementation, consummation, or enforcement of this Plan, including disputes
arising under agreements, documents, or instruments executed in connection with this Plan;
(h) Consider any modifications of this Plan, cure any defect or
omission or reconcile any inconsistency in any order of the Court, including, without limitation,
the Confirmation Order;
(i) Issue injunctions, enter and implement other orders or take such
other actions as may be necessary or appropriate to restrain interference by any entity with
implementation, consummation, or enforcement of this Plan or the Confirmation Order;
{BAY:Ol512598vl} PLAN-32
G) Enter and implement such orders as may be necessary or
appropriate if the Confirmation Order is for any reason reversed, stayed, revoked, modified, or
vacated;
(k) Hear and determine any matters ansmg m connection with or
relating to this Plan, the Disclosure Statement, the Confirmation Order or any contract,
instrument, release, or other agreement or document created in connection with this Plan, the
Disclosure Statement, or the Confirmation Order;
(I) Enforce all orders, judgments, injunctions, releases, exculpations,
indemnifications, and rulings entered in connection with the Bankruptcy Cases;
(m) Except as otherwise limited herein, recover all assets of the
Debtors and property ofthe Estates, wherever located;
(n) Hear and determine matters concerning state, local, and federal
taxes in accordance with Bankruptcy Code sections 346, 505, and 1146;
( o) Hear and determine all disputes involving the existence, nature or
scope of the injunctions, indenmification, exculpation, and releases granted pursuant to this Plan;
(p) Hear and determine all matters related to (i) the property of the
Estates from and after the Confirmation Date, and (ii) the activities of the Debtors, including (A)
challenges to or approvals of the Debtors' activities, and (B) reporting by and accounting by the
Debtors;
( q) Hear and determine such other matters as may be provided in the
Confirmation Order or as may be authorized under, or not inconsistent with, provisions of the
Bankruptcy Code; and
(r) Enter a final decree closing the Bankruptcy Cases.
ARTICLEXll
MISCELLANEOUS PROVISIONS
A. Modifications and Amendments
The Debtors may alter, amend, or modify this Plan or any Exhibits thereto under Bankruptcy
Code section 1127(a) at any time prior to the Confirmation Date provided that the Debtors have
received the prior written consent of the DIP Lender and Secured Lender, which consent may be
withheld at their sole discretion. After the Confirmation Date and prior to substantial
consummation of this Plan as defined in Bankruptcy Code section 1101(2), the Debtors or
Reorganized Debtors, as applicable, may, under Bankruptcy Code section 1127(b), institute
proceedings in the Court to remedy any defect or omission or reconcile any inconsistencies in
this Plan, the Disclosure Statement, or the Confirmation Order, and such matters as may be
necessary to carry out the purpose and effect of this Plan so long as such proceedings do not
adversely affect the treatment of holders of Claims under this Plan; provided, however, that prior
{BAY:Ol512598vl} PLAN-33
notice of such proceedings shall be served in accordance with the Bankruptcy Rules or order of
the Court.
B. Severability of Plan Provisions
If, prior to Confirmation, any term or provision of this Plan is held by the Court to be invalid,
void, or unenforceable, then the Court, at the request of the Debtors, subject to the requirements
of sections 1127 and 1125 of the Bankruptcy Code, shall have the power to alter and interpret
such term or provision to make it valid or enforceable to the maximum extent practicable,
consistent with the original purpose of the term or provision held to be invalid, void, or
unenforceable, and such term or provision shall then be applicable as altered or interpreted.
Notwithstanding any such holding, alteration or interpretation, the remainder of the terms and
provisions of this Plan shall remain in full force and effect and shall in no way be affected,
impaired, or invalidated by such holding, alteration, or interpretation. The Confirmation Order
shall constitute a judicial determination and shall provide that each term and provision of this
Plan, as it may have been altered or interpreted in accordance with the foregoing, is valid and
enforceable pursuant to its terms.
C. Successors and Assigns
The rights, benefits and obligations of any Person named or referred to in this Plan shall be
binding on, and shall inure to the benefit of, any heir, executor, administrator, successor, or
assign of that Person.
D. Payment of Statutory Fees
All fees payable through the Effective Date pursuant to 28 U.S. C. 1930 shall be paid on the
Effective Date. The Debtors and Reorganized Debtors, as applicable, shall pay quarterly fees to
the Office of the United States Trustee until the Bankruptcy Cases are closed or converted and/or
the entry of a final decree. In addition, the Debtors and Reorganized Debtors, as applicable, shall
file any pre-confirmation monthly operating reports not filed as of the Confirmation hearing in
conformance with the U.S. Trustee guidelines. The Office of the United States Trustee shall not
be required to file a request for payment of its quarterly fees, which shall be deemed an Allowed
Administrative Claim against the Debtors and their Estates.
E. Revocation, Withdrawal, or Non-Consummation
The Debtors reserve the right to revoke or withdraw this Plan prior to the Confirmation Date and
to move the Court for the dismissal of the Bankruptcy Cases. If the Debtors revoke or withdraw
this Plan, or if Confirmation or consummation of this Plan does not occur then: (a) this Plan shall
be null and void in all respects; (b) any settlement or compromise embodied in this Plan
(including the fixing or limiting to an amount certain any Claim or Class of Claims), assumption
or rejection of Executory Contracts or leases effected by this Plan, and any document or
agreement executed pursuant to this Plan, shall be deemed null and void; (c) nothing contained in
this Plan, and no acts taken in preparation for consummation ofthis Plan, shall (i) constitute or
be deemed to constitute a waiver or release of any Claims by or against, or any interests in, the
Debtors or any other Person, (ii) prejudice in any manner the rights of the Debtors or any other
Person, or (iii) constitute an admission of any sort by the Debtors or any other Person; and (d)
{BAY:01512598vl} PLAN-34
the Court shall give effect to any agreed order or stipulation providing for the lifting of the
automatic stay in favor of the Secured Lender.
F. Service of Documents
Any notice, request, or demand required or permitted to be made or provided to or upon the
Debtors under this Plan shall be (a) in writing, (b) served on both the Debtors and the Secured
Lender by (i) certified mail, (ii) hand delivery, (iii) overnight delivery service, (iv) first class
mail or (v) electronic mail, (c) deemed to have been duly given or made when actually delivered
or, in the case of notice by electronic mail, when received and confirmed by corresponding
electronic mail, and (d) addressed as follows:
If to the Debtors:
Rebecca Irish
Chief Financial Officer
Crdentia Corp.
1964 Howell Branch Road, Ste. 206
Winter Park, Florida. 32792
Facsimile: 407.677.7757
With copies to:
Paul A. Rachmuth, Esq.
Gersten Savage LLP
600 Lexington Avenue, 9th Floor
New York, New York 10022
Facsimile: 212.980.5192
and
Jamie L. Edmonson, Esq
Bayard, P .A
222 Delaware Avenue, Suite 900
Wilmington, DE 19801
Facsimile: 302.658.6395
If to Secured Lender:
Com Vest Capital, LLC
525 Okeechobee Blvd., Suite 1050
West Palm Beach, Fl 33401
Facsimile: 561.727.1918
With copies to:
{BAY:01512598vl} PLAN-35
Thomas A Pitta, Esq.
Lowenstein Sandler PC
65 Livingston Avenue
Roseland, New Jersey 07068
Facsimile: 973.597.2549
G. Plan Supplement(s)
Except as otherwise provided herein, exhibits to this Plan not attached hereto shall be filed in one
or more Plan Supplements before five (5) days prior to the Voting Deadline. Any Plan
Supplement (and amendments thereto) filed by the Debtors shall be deemed an integral part of
this Plan and shall be incorporated by reference as if fully set forth herein. Substantially
contemporaneously with their filing, this Plan Supplements may be viewed at the office of the
clerk of the Court or its designee during normal business hours, by visiting the Court's website at
www.deb.uscourts.gov. Holders of Claims and/or Interests may obtain a copy of any Plan
Supplements upon written request to the Debtors. The documents contained in any Plan
Supplements shall be approved by the Court pursuant to the Confirmation Order.
H. Waiver of Stay
Notwithstanding Bankruptcy Rules 3002(e), 6004(h), and 6006(d), the Debtors shall be
authorized to consummate this Plan and the transactions and transfers contemplated thereby
immediately after entry of the Confirmation Order.
I. Inconsistency
In the event of any inconsistency among this Plan, the Disclosure Statement and any exhibit to
the Disclosure Statement, the provisions of this Plan shall govern.
[Remainder of page intentionally left blank. Signature page follows.]
{BAYo01512598vl} PLAN-36
Dated:

CRDENTIA CORP.
ATS UNIVERSAL, LLC
BAKER ANDERSON CHRISTIE, INC.,
CRDECORP.
GHS ACQUISITION CORPORATION
HEALTH INDUSTRY PROFESSIONALS, LLC
HIP HOLDING, INC.
MP HEALTH CORP.
NEW AGE STAFFING, INC.
NURSES NETWORK, INC.
By:
Name: ____________________ ___
Title:
{BAY:01512598vl) PLAN-37
EXHIBITB
i
!
PLAN SUPPORT AGREEMENT
This Plan Support Agreement (the "Agreement'') is made and executed as of March 17,
2010 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 ("ATS") (each of GHS, HIP, MP,
NAS, NNI, BAC, HIP LLC, and ATS, a "Subsidiary," and collectively, the "Subsidiaries"), and
Com Vest Capital, LLC, a Delaware limited liability company, as administrative agent and a
lender ("Agent") and each Lender (as defined herein) under the Credit Facility (as defined
herein) (each of Crdentia; its Subsidiaries, and together with the Agent and the Lenders are
referred herein individually as a "Party" and referred to herein collectively as the "Parties").
RECITALS
A. Crdentia itself and/or through one or more of its Subsidiaries (individually, a
"Debtor" and collectively, the "Debtors") provide healthcare staffing services in the United
States. Debtors offe;r travel nursing; per diem staffing; contractual clinical services that include
clinical management and staffing for healthcare facilities; and locum tenens, such as physician
staffmg services. Debtors also provide allied services, including diagnostic imaging, respiratory,
laboratory, therapies, and administrative modalities; and private duty home health care, which
provide nursing case management and staffing for skilled and nonskilled care in the home.
Plan Support Agreement (Com Vest)
B. Pursuant to that certain credit facility consisting of a Revolving Credit and Term
Loan Agreement and Term Note, Convertible Term Note, and a Revolving Credit Note, each
dated February 22, 2008 and the other agreements executed and delivered in connection
therewith (as modified, amended, or supplemented from time to time, the "Credit Facility"),
executed by Crdentia, the Agent, certain banks and other financial institutions (together with
their successors and assigns, "Lenders") and the Subsidiaries, as guarantors, the Debtors are
indebted to the Lenders in the outstanding principal amount of $16,429,792.53, plus accrued but
unpaid interest and fees and expenses (the "Indebtedness"). Repayment of the Indebtedness is
secured by, among other things, a first priority and paramount lien on and security interest in
substantially all of the Debtors' assets (the "Collateral").
C. The Parties have determined that it is in their respective commercially best
interests that the Debtors seek a transfer of the ownership interests of Crdentia, as reorganized,
(the "Assets") free and clear of claims, liens, encumbrances and interests pursuant to a plan of
reorganization (the "Plan") through Chapter 11 bankruptcy cases (the "Bankruptcy Cases"). The
Plan will provide for (i) the emergence of the Debtors from bankruptcy as "Reorganized
Crdentia" and the re-vesting of the Debtors' assets, including all avoidance actions under
Chapter 5 of the Bankruptcy Code, in Crdentia, free and clear of any liens,
encumbrances or other interests, including, without limitation, all preconfirmation liens, claims,
encumbrances and interests; and (ii) the resolution of all outStanding claims against and interests
in the Debtors. The Debtors anticipate being the sole proponents of the Plan within the meaning
of Bankruptcy Code section 1129. Copies of the proposed Plan and the proposed disclosure
statement ("Disclosure Statement") are attached hereto as Exhibit A-1 and Exhibit A-2,
respectively.
Plan Support Agreement (Com Vest) 2
D. Each of the Parties has been provided a copy of and has reviewed the Plan and
Disclosure Statement. The Parties desire to memorialize their respective undertakings in regard
to the Bankruptcy Cases and the Plan.
NOW, THEREFORE, in consideration of the foregoing, the Parties agree as follows:
1. So long as no Termination Event (defined below) has occurred, Agent and each
Lender signatory hereto agrees: (i) to vote its claims in the Bankruptcy Cases to accept the Plan
upon the Court's (as defined herein) approval of the Disclosure Statement pursuant-to section
1125 of the Bankruptcy Code; (ii) not to object to or otherwise commence any proceeding to
oppose confirmation of the Plan; (iii) not to support or vote to accept any other plan of
reorganization; (iv) to cooperate with the Debtors in connection with, and take any reasonable
actions requested by the Debtors to facilitate, the taking of any actions on their part in connection
with the Plan described in Section 2; (v) not to seek modification or termination of the automatic
stay; and (vi) concurrently with the transfer of the Assets in accordance with the Plan and receipt
of 100% of the equity interests in Reorganized Crdentia (the "Reorganized Crdentia Equitv") (plus
such additional amounts necessary to satisfY and repay in full any amounts outstanding, if any,
under the DIP Loan (as defined herein), authorize and, as requested by the Debtors, execute and
deliver to the Debtors a complete and unconditional release ofliens and deed of trust, together
with any appropriate Uniform Commercial Code termination statements, terminating all liens,
security interests and deeds of trust in favor of the Parties in respect of the Collateral. In
addition, each Lender signatory hereto agrees that, so long as no Termination Event has
occurred, it will not sell or transfer any claims held by it to any person or entity, unless such
person or entity executes and delivers a written instrument, in form and substance satisfactory to
Plan Support Agreement (Com Vest) 3
.i
'
I
I
I
the Debtors, pursuant to such person or entity agreeing to be subject to all of the terms and
provisions of this Agreement applicable to such Lender.
2. The Debtors covenant and agree that, in each case except as otherwise approved
by Agent and the Lenders and subject to the exercise by Debtors and their boards of directors.
general partners, or managers, as applicable, of their respective fiduciary duties (i) they will use
their commercially reasonable efforts to (x) promptly but no later than March 17, 2010 file the
Bankruptcy Cases in the United States Bankruptcy Court for the District of Delaware (the
"Comt") and (y) file and seek confirmation only of the Plan substantially in the form and content
of the Plan attached hereto as Exhibit A-1; (ii) they will use commercially reasonable efforts
promptly to prosecute confirmation of the Plan; (iii) they will not seek confirmation of and will
oppose any plan of reorganization other than the Plan; (iv) they will not seek to amend or modify
the Plan in any material respect without the prior written consent of the Lenders, and will oppose
any effort by any person to seek modification or amendment of the Plan in any such respect; and
(v) they will take all actions and file all motions and seek the entry of all appropriate orders that
in their reasonable judgment are incident to carrying out the purposes and intent of this
Agreement and the Plan.
3. Immediately prior to the filing of the Bankruptcy Cases, the Debtors and the
Lenders will agree upon terms of a debtor,-in-possession working capital line of credit or term
Joan in the sum of $900,000 (the "DIP Loan"), which credit facility will mature and become due
and payable no later than May 31, 2010 (the "Termination Date"). The DIP Loan shall have
usual and customary terms, conditions, defaults, and remedies. Repayment of the DIP Loan shall
be secured by a first lien on the Debtors' assets. The DIP Loan will mature and become
Plan Support Agreement (Com Vest) 4
immediately due and payable on the Termination Date. The Debtors will seek expeditious
approval of the DIP Loan by the Court.
4. The obligations of' the Parties as set forth in Section 1 above shall cease
immediately upon the occurrence of a Termination Event. A "Termination Event" shall occur if
any one or more of the following events shall have occurred:
(i) The Debtors shall have breached, or failed to diligently perform, any of
their obligations as set forth in Section 2 above;
(ii) the Court shall not confirm the Plan, and it shall not have been
implemented and consummated prior to or on May 31, 2010, including
wire transfer of the amounts, if any, necessary for repayment of the DIP
Loan in full;
(iii) the Plan shall be modified or amended in any material respect without
prior written consent of Lenders;
(iv) a trustee or examiner is appointed m the Bankruptcy Cases, the
Bankruptcy Cases are converted to a Chapter 7 Case or the Bankruptcy
Cases are dismissed;
(v) the Court shall have entered an order that the proceeds resulting from the
Court approved Bankruptcy Code section 363 sale process for the n;ansfer
of the Assets or the Collateral be paid to or reserved for potential payment
to any person other than Agent and Lenders (unless and until Agent and
Lenders have been indefeasibly paid in full);
(vi) the DIP Loan and any of the commitments made thereunder are
terminated; and
Plan Support Agreement (Com Vest) 5
(vii) an Event of Default shall occur under and as defined in the Interim Agreed
Order Authorizing Limited Use of Cash Collateral and Granting Adequate
Protection to Existing Lienholders or any final order authorizing use of
cash collateral order or the Financing Order (as such term is defined in the
Credit Facility).
5. This Agreement shall be governed by and construed in accordance with the laws
of the State of Delaware, without regard to its conflict oflaw provisions.
6. No modification or amendment to the terms of this Agreement shall be valid
unless such modification or amendment is in writing and has been signed by each of the Parties
hereto.
7. This Agreement may be executed by facsimile signature transmission or
electronic mail signature transmission if attached to such electronic mail message in a commonly
readable format, in two or more counterparts, any one of which need not contain the signature of
more than one Party, and all of which taken together shall constitute one and the same
Agreement.
8. This Agreement is intended to bind and inure to the benefit of the Parties and their
respective successors, assigns, heirs, executors, administrators, and representatives.
9. Notjling in this Agreement shall be construed to prohibit the Agent or the Lenders
from appearing as a party-in-interest in any matter to be adjudicated in the Bankruptcy Cases so
long as such appearance and the positions advocated in connection therewith are not materially
inconsistent with this Agreement and are not for the purpose of hindering or delaying (or
reasonably likely to hinder or delay) implementation of the transactions and other matters
contemplated by this Agreement. In no event shall any provision of this Agreement prohibit or
Plan Support Agreement (Com Vest) 6
prevent the Agent or any Lender from taking any action, or require it to take any action, or to
perform any obligation or refrain from exercising any right or remedy in respect of the DIP Loan
and no default of any of its obligations hereunder shall exist by virtue or any such action taken or
omitted in such capacity.
[Remainder of page intentionally left blank. Signature pages follow.]
Plan Support Agreement (Com Vest)
7
DATED as of the date first above stated.
I.
I
'
Plan Sll!q>ort Agn:cment (ComVe'1)
I
I
1
CRDENTIA, INC.,
Deblur and Debtor-in-Possession

CRDE CORP.,
Debtor and Debtor-in-Possession
GHS ACQUISITION CORPORATION,
Debtor and Debtor-in-Possession



NURSES NETwORKJNC.,,
Debtor and Debtor-in-Possession
By:

Title:
MP HEALTH CORP.
Plan Support Agreement (C,.mVcst)
HEALTH INDUSTRY PROFESSIONALS LLC
Debtor and Dcbtor-iJ\-l'ossession ,
ATS UJillVERSAL, LLC
Debtor and Debtor-in-Possession
Bil' HOLDlNG lNC.
Dcbtm and Debtor-in-Posse..,sion
By: ./(, tl. "


9
Plan Support Agroomeot (Com Vest)
COMVESl' CAPITALLLC
B y : ~ - - - - - - - - - -
Name:----------
Title:----------
10
Plan Support Agreement (Com Vest)
NEW AGE STAFFING, INC.
Debtor and Debtor-in-Possession
By: _________ _
Name:
Title: --------
"AGENT"
COMVEST CAPITAL LLC
10