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    Exhibit 10.40    
    


 
 

PROMISSORY NOTE    
    


May 19, 2006

(Date) 


        FOR
VALUE RECEIVED, Alphatec Spine, Inc. a corporation located at the address stated below ("Maker") promises, jointly and severally if more than one, to pay to the order of
General Electric Capital Corporation or any subsequent holder hereof (each, a "Payee") at its office located at 83 Wooster Heights Road, Danbury, CT 06810 or at such other place as Payee or the holder
hereof may designate, the principal sum of Two Million Two Hundred Eighty Nine Thousand Five Hundred Sixteen and 13/100 Dollars ($2,289,516.13), with interest on the unpaid principal balance, from the
date hereof through and including the dates of payment, at a fixed interest rate of Eleven and Twenty Three Hundredths percent (11.23%) per annum, to be paid in lawful money of the United States, in
Thirty Six (36) consecutive monthly installments of principal and interest as follows: 



	Periodic

Installment
 
	 	Amount

	Thirty Five (35)	 	$	75,205.44






each ("Periodic Installment") and a final installment which shall be in the amount of the total outstanding principal and interest. The first Periodic
Installment shall be due and payable on June 1, 2006 and the following Periodic Installments and the final
installment shall be due and payable on the same day of each succeeding month (each, a "Payment Date"). Such installments have been calculated on the basis of a 360 day year of twelve
30-day months. Each payment may, at the option of the Payee, be calculated and applied on an assumption that such payment would be made on its due date. 



        The
acceptance by Payee of any payment which is less than payment in full of all amounts due and owing at such time shall not constitute a waiver of Payee's right to receive payment in
full at such time or at any prior or subsequent time. 


        The
Maker hereby expressly authorizes the Payee to insert the date value is actually given in the blank space on the face hereof and on all related documents pertaining hereto. 


        This
Note may be secured by a security agreement, chattel mortgage, pledge agreement or like instrument (each of which is hereinafter called a "Security Agreement"). 



        Time
is of the essence hereof. If any installment or any other sum due under this Note or any Security Agreement is not received within ten (10) days after its due date, the Maker
agrees to pay, in addition to the amount of each such installment or other sum, a late payment charge of five percent (5%) of the amount of said installment or other sum, but not exceeding any lawful
maximum. If (i) Maker fails to make payment of any amount due hereunder within ten (10) days after the same becomes due and payable; or (ii) Maker is in default under, or fails to
perform under any term or condition contained in any Security Agreement, then the entire principal sum remaining unpaid, together with all accrued interest thereon and any other sum payable under this
Note or any Security Agreement, at the election of Payee, shall immediately become due and payable, with interest thereon at the lesser of eighteen percent (18%) per annum or the highest rate not
prohibited by applicable law from the date of such accelerated maturity until paid (both before and after any judgment). 


        Notwithstanding
anything to the contrary contained herein or in the Security Agreement, Maker may not prepay in full or in part any indebtedness hereunder without the express written
consent of Payee in its sole discretion. 


        It
is the intention of the parties hereto to comply with the applicable usury laws; accordingly, it is agreed that, notwithstanding any provision to the contrary in this Note or any
Security Agreement, in no event shall this Note or any Security Agreement require the payment or permit the collection of interest in excess of the maximum amount permitted by applicable law. If any
such excess interest is contracted for, charged or received under this Note or any Security Agreement, or if all of the principal balance shall be prepaid, so that under any of such circumstances the
amount of interest contracted for, charged or received under this Note or any Security Agreement on the principal balance shall exceed the maximum amount of interest permitted by applicable law, then
in such event (a) the provisions of this paragraph shall govern and control, (b) neither Maker nor any other person or entity now or hereafter liable for the payment hereof shall be
obligated to pay the amount of such interest to the extent that it is in excess of the maximum amount of interest permitted by applicable law, (c) any such excess which may have been collected
shall be either applied as a credit against the then unpaid principal balance or refunded to Maker, at the option of the Payee, and (d) the effective rate of interest shall be automatically
reduced to the maximum lawful contract rate allowed under applicable law as now or hereafter construed by the courts having jurisdiction thereof. It is further agreed that without limitation of the
foregoing, all calculations of the rate of interest contracted for, charged or received under this Note or any Security Agreement which are made for the purpose of determining whether such rate
exceeds the maximum lawful contract rate, shall be made, to the extent permitted by applicable law, by amortizing, prorating, allocating and spreading in equal parts during the period of the full
stated term of the indebtedness evidenced hereby, all interest at any time contracted for, charged or received from Maker or otherwise by Payee in connection with such indebtedness; provided, however,
that if any applicable state law is amended or the law of the United States of America preempts any applicable state law, so that it becomes lawful for the Payee to receive a greater interest per
annum rate than is presently allowed, the Maker agrees that, on the effective date of such 








amendment
or preemption, as the case may be, the lawful maximum hereunder shall be increased to the maximum interest per annum rate allowed by the amended state law or the law of the United States of
America. 


        The
Maker and all sureties, endorsers, guarantors or any others (each such person, other than the Maker, an "Obligor") who may at any time become liable for the payment hereof jointly
and severally consent hereby to any and all extensions of time, renewals, waivers or modifications of, and all substitutions or releases of, security or of any party primarily or secondarily liable on
this Note or any Security Agreement or any term and provision of either, which may be made, granted or consented to by Payee, and agree that suit may be brought and maintained against any one or more
of them, at the election of Payee without joinder of any other as a party thereto, and that Payee shall not be required first to foreclose, proceed against, or exhaust any security hereof in order to
enforce payment of this Note. The Maker and each Obligor hereby waives presentment, demand for payment, notice of nonpayment, protest, notice of protest, notice of dishonor, and all other notices in
connection herewith, as well as filing of suit (if permitted by law) and diligence in collecting this Note or enforcing any of the security hereof, and agrees to pay (if permitted by law) all expenses
incurred in collection, including Payee's actual attorneys' fees. Maker and each Obligor agrees that fees not in excess of twenty percent (20%) of the amount then due shall be deemed reasonable. 


        THE
MAKER HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS NOTE, ANY OF THE RELATED
DOCUMENTS, ANY DEALINGS BETWEEN MAKER AND PAYEE RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN MAKER AND
PAYEE. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.) THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS NOTE, ANY RELATED DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED TRANSACTION. IN THE EVENT OF
LITIGATION, THIS NOTE MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. 



        This
Note and other Debt Documents constitute the entire agreement of the Maker and Payee with respect to the subject matter hereof and supercedes all prior understandings, agreements
and representations, express or implied. 


        No
variation or modification of this Note, or any waiver of any of its provisions or conditions, shall be valid unless in writing and signed by an authorized representative of Maker and
Payee. Any such waiver, consent, modification or change shall be effective only in the specific instance and for the specific purpose given. 



        Any
provision in this Note or any of the other Debt Documents which is in conflict with any statute, law or applicable rule shall be deemed omitted, modified or altered to conform
thereto. 



	 	 	Alphatec Spine, Inc.
	

/s/ Steven M. Yasbek
	
 	

By:	
 	

/s/ Ebun Garner

	(Witness)	 	 	 	 
	

Steven M. Yasbek
	
 	

Name:	
 	

Ebun Garner

	(Print name)	 	 	 	 
	

	
 	

Title:	
 	

VP, Legal Affairs

	(Address)	 	 	 	 
	

 	
 	

Federal Tax ID #: 33-0412288
	

 	
 	

Address: 2051 Palomar Airport Road, Carlsbad, CA 92011









 
 

COLLATERAL SCHEDULE NO. 001    
    


        THIS COLLATERAL SCHEDULE NO. 001 is annexed to and made a part of that certain Master Security Agreement dated as of
May 19, 2006 between General Electric Capital Corporation, together with its successors and assigns, if any, as Secured Party and Alphatec Spine, Inc. as Debtor and describes collateral
in which Debtor has granted Secured Party a security interest in connection with the Indebtedness (as defined in the Security Agreement) including without limitation that certain Promissory Note dated
May 19, 2006 in the original principal amount of $2,289,516.13. 



	Quantity	 	Manufacturer	 	Serial Number	 	Year/Model and Type of Equipment
	
	 	
	 	
	 	






SEE EXHIBIT A ATTACHED HERETO AND MADE A PART HEREOF  


and
including all additions, attachments, accessories and accessions thereto, and any and all substitutions, replacements or exchanges therefor, and all insurance and/or other proceeds thereof. 



	SECURED PARTY:	 	DEBTOR:
	
General Electric Capital Corporation	
 	

Alphatec Spine, Inc.
	

By:	

/s/ John Edel
	
 	

By:	

/s/ Ebun Garner

	Name:	John Edel
	 	Name:	Ebun Garner

	Title:	SVP
	 	Title:	VP, Legal Affairs

	Date:	5/19/06
	 	Date:	5/19/06










 
 

ANNEX A
  TO
  COLLATERAL SCHEDULE NO. 001
  TO MASTER SECURITY AGREEMENT
  DATED AS OF MAY 19, 2006
  
    CERTIFICATE OF DELIVERY/INSTALLATION    
    


To:
General Electric Capital Corporation (together with its successors and assigns, if any, "Secured Party") 



        Pursuant
to the provisions of the above Collateral Schedule to the above Master Security Agreement and the related Promissory Note (collectively, the  "Loan"), the undersigned ("Debtor") hereby certifies and warrants that (a) all Equipment listed below
has been delivered and installed (if applicable); (b) the Debtor has inspected the Equipment, and all such testing as it deems necessary has been performed by Debtor, Supplier or the
manufacturer; (c) Debtor has found all such Equipment to be satisfactory and meets all applicable specifications and is fully operational for its intended use; and (d) the Equipment was
first delivered to Debtor on May 19, 2006 and copies of the Bill(s) of Lading or other documentation acceptable to Secured Party which show the date of delivery are attached hereto. 



	Number

of Units	 	Manufacturer	 	Serial Numbers	 	Model and Type of Equipment
	
	 	
	 	
	 	






SEE EXHIBIT A ATTACHED HERETO AND MADE A PART HEREOF 



	 
	 	 
	 	 

	 	 	Alphatec Spine, Inc.
	

 	
 	

By:	
 	

/s/ Ebun Garner
	 	 	 	 	

	

 	
 	

Name:	
 	

Ebun Garner
	 	 	 	 	

	

 	
 	

Title:	
 	

VP, Legal Affairs
	 	 	 	 	

	

 	
 	

Date:	
 	

5/19/06














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Exhibit 10.40


PROMISSORY NOTE

COLLATERAL SCHEDULE NO. 001

ANNEX A TO COLLATERAL SCHEDULE NO. 001 TO MASTER SECURITY AGREEMENT DATED AS OF MAY 19, 2006 CERTIFICATE OF DELIVERY/INSTALLATION