SUBORDINATED LOAN AND SECURITY AGREEMENT
THIS AGREEMENT (the "Agreement"), dated as of August __, 1997, is entered
into by and between Bone, Muscle and Joint, Inc. a Delaware corporation, with
its chief executive office, and principal place of business located at 0000
Xxxxx Xxxxxxx Xxxxxxx, Xxxxx 000-X, Xxxx Xxxxx, Xxxxxxx 00000 (the "Borrowers')
and Galtney Corporate Services, Inc., a Texas corporation, with its principal
place of business located at 000 Xxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000-0000
(the "Lender" or sometimes, "Galtney"). In consideration of the mutual
agreements contained herein, the parties hereto agree as follows:
RECITALS
WHEREAS, Borrower has requested Lender to make available to Borrower a loan
in the aggregate principal amount of ONE MILLION FIVE HUNDRED THOUSAND and
00/100 DOLLARS ($1,500,000) in each (as the same may from time to time be
amended, modified, supplemented or revised, the "Loan"), which would be
evidenced by a Subordinated Promissory Note executed by Borrower substantially
in the form of Exhibit A hereto (as the same may from time to time be amended,
modified, supplemented or restated the "Note").
WHEREAS, Lender is willing to make the Loan on the terms and conditions set
forth in this Agreement, and
WHEREAS, the Secured Obligations hereunder shall be expressly subordinated,
to the extent and in the manner set forth in the Subordination Agreement.
WHEREAS, Lender and Borrower agree any Loan hereunder shall be subordinate
to Senior Debt (as defined herein) to the extent set forth in the Subordination
Agreement (as defined herein).
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, Borrower and Lender hereby agree as follows:
SECTION 1. DEFINITIONS
Unless otherwise defined herein, the following capitalized terms shall have
the following meanings (such meanings being equally applicable to both the
singular and plural form of the terms defined):
1.1. "Account" means any "account," as such term is defined in Section
9.106 of the UCC, now owned or hereafter acquired by Borrower or in which
Borrower now holds or hereafter acquires any interest and, in any event, shall
include, without limitation, all accounts receivable, book debts and other forms
of obligations (other than forms of obligations evidenced by Chattel Paper,
Documents or Instruments) now owned or hereafter received or acquired by or
belonging or owing to Borrower (including, without limitation, under any trade
name, style or division thereof) whether arising out of goods sold or services
rendered by Borrower or from any other transaction, whether or not the same
involves the sale of goods or services by Borrower (including, without
limitation, any such obligation which may be characterized as an account or
contract right under
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the UCC) and all of Borrower's rights in, to and under all purchase orders or
receipts now owned or hereafter acquired by it for goods or services, and all of
Borrowers rights to any goods represented by any of the foregoing (including,
without limitation, unpaid seller's rights of rescission, replevin, reclamation
and stoppage in transit and rights to returned, reclaimed or repossessed goods),
and all monies due or to become due to Borrower under all purchase orders and
contracts for the sale of goods or the performance of services or both by
Borrower (whether or not yet earned by performance on the part of Borrower or in
connection with any other transaction), now in existence or hereafter occurring,
including, without limitation, the right to receive the proceeds of said
purchase orders and contracts, and all collateral security and guarantees of any
kind given by any Person with respect to any of the foregoing.
1.2. "Account Debtor" means any "account debtor," as such term is defined
in Section 9.105(a)(1) of the UCC.
1.3. "Chattel Paper" means any "chattel paper," as such term is defined in
Section 9.105(a)(2) of the UCC, now owned or hereafter acquired by Borrower or
in which Borrower now holds or hereafter acquires any interest.
1.4. "Closing Date" means the date of funding of the Loan.
1.5. "Collateral" shall have the meaning assigned to such term in Section 3
of this Agreement.
1.6. "Contracts" means all contracts, undertakings, franchise agreements or
other agreements (other than rights evidenced by Chattel Paper, Documents or
Instruments) in or under which Borrower may now or hereafter have any right,
title or interest, including, without limitation, with respect to an Account,
any agreement relating to the terms of payment or the terms of performance
thereof.
1.7. "Copyrights" means all of the following now owned or hereafter
acquired by Borrower or in which Borrower now holds or hereafter acquires any
interest: (i) all copyrights, whether registered or unregistered, held pursuant
to the laws of the United States, any State thereof or of any other country;
(ii) registrations, applications and recordings in the United States Copyright
Office or in any similar office or agency of the United States, any state
thereof or any other country; (iii) any continuations, renewals or extensions
thereof; and (iv) any registrations to be issued in any pending applications.
1.8. "Copyright License" means any written agreement granting any right to
use any Copyright or Copyright registration now owned or hereafter acquired by
Borrower or in which Borrower now holds or hereafter acquires any interest
1.9. "Documents" means any "documents," as such term is defined in Section
9.105(a)(6) of the UCC, now owned or hereafter acquired by Borrower or in which
Borrower now holds or hereafter acquires any interest.
1.10. "Equipment" means any "equipment," as such term is defined in Section
9.109(2) of the UCC, now or hereafter owned or acquired by Borrower or in which
Borrower now holds or hereafter acquires any interest and any and all additions,
substitutions and replacements of any of the foregoing, wherever located,
together with all attachments, components, parts, equipment and accessories
installed thereon or affixed thereto.
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1.11. "Excluded Agreements" means (i) any warrant agreement executed
hereunder, and any other warrants (including without limitation, the Warrant
Agreement dated as of even date herewith) to acquire, or agreements governing
the rights of the holders of, any equity security of Borrower, and (ii) any
stock of the Borrower issued or purchased pursuant to the Warrant Agreement.
1.12. "Facility Fee" means one (1%) percent of the principal amount of the
Loan due at the Closing Date.
1.13. "Fixtures" means any "fixtures," as such term is defined in Section
9.313(a)(1) of the UCC, now or hereafter owned or acquired by Borrower or in
which Borrower now holds or hereafter acquires any interest and, now or
hereafter attached or affixed to or constituting a part of, or located in or
upon, real property wherever located, together with all right, title and
interest of Borrower in and to all extensions, improvements, betterments,
renewals, substitutes, and replacements of, and all additions and appurtenances
to any of the foregoing property, and all conversions of the security
constituted thereby, immediately upon any acquisition or release thereof or any
such conversion, as the case may be.
1.14. "General Intangibles" means any "general intangibles," as such term
is defined in Section 9.106 of the UCC, now owned or hereafter acquired by
Borrower or in which Borrower now holds or hereafter acquires any interest and,
in any event, shall include, without limitation, all right, title and interest
which Borrower may now or hereafter have in or under any contract, all customer
lists, Copyrights, Trademarks, Patents, rights to Intellectual Property,
interests in partnerships, joint ventures and other business associations,
Licenses, permits, trade secrets, proprietary or confidential information,
inventions (whether or not patented or patentable), technical information,
procedures, designs, knowledge, know-how, software, data bases, data, skill,
expertise, recipes, experience, processes, models, drawings, materials and
records, goodwill (including, without limitation, the goodwill associated with
any Trademark, Trademark registration or Trademark licensed under any Trademark
License), claims in or under insurance policies, including unearned premiums,
uncertificated securities, cash and other forms of money or currency, deposit
accounts (including as defined in Section 9.105(a)(5) of the UCC), rights to
xxx for past, present and future infringement of Copyrights, Trademarks and
Patents, rights to receive tax refunds and other payments and rights of
indemnification.
1.15. "Instruments" means any "instrument," as such term is defined in
Section 9.105(a)(9) of the UCC, now owned or hereafter acquired by Borrower or
in which Borrower now holds or hereafter acquires any interest.
1.16. "Intellectual Property" means all Copyrights, Trademarks, Patents,
trade secrets, source codes, customer lists, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
skill, expertise, experience, processes, models, drawings, materials and
records.
1.17. "Inventory" means any "inventory," as such term is defined in Section
9.109(4) of the UCC, wherever located, now or hereafter owned or acquired by
Borrower or in which Borrower now holds or hereafter acquires any interest, and,
in any event, shall include, without limitation, all inventory, goods and other
personal property which are held by or on behalf of Borrower for sale or lease
or are furnished or are to be furnished under a contract of service or which
constitute raw materials, work in process or materials used or consumed or to be
used
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or consumed in Borrower's business, or the processing, packaging, promotion,
delivery or shipping of the same, and all furnished goods whether or not such
inventory is listed on any schedules, assignments or reports furnished to Lender
from time to time and whether or not the same is in transit or in the
constructive, actual or exclusive occupancy or possession of Borrower or is held
by Borrower or by others for Borrower's account, including, without limitation,
all goods covered by purchase orders and contracts with suppliers and all goods
billed and held by suppliers and all inventory which may be located on premises
of Borrower or of any carriers, forwarding agents, truckers, warehousemen,
vendors, selling agents or other persons.
1.18. "License" means any Copyright License, Patent License, Trademark
License or other license of rights or interests now held or hereafter acquired
by Borrower or in which Borrower now holds or hereafter acquires any interest
and any renewals or extensions thereof.
1.19. "Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment for security, security interest, encumbrance, xxxx, xxxx or charge of
any kind, whether voluntarily incurred or arising by operation of law or
otherwise, against any property, any conditional sale or other tide retention
agreement, any lease in the nature of a security interest, and the filing of any
financing statement (other than a precautionary financing statement with respect
to a lease that is not in the nature of a security interest) under the UCC or
comparable law of any jurisdiction.
1.20. "Loan Documents" shall mean and include this Agreement, the Note, and
any other documents executed in connection with the Secured Obligations or the
transactions contemplated hereby, as the same may from time to time be amended,
modified, supplemented or restated, provided, that the Loan Documents shall not
include any of the Excluded Agreements.
1.21. "Material Adverse Effect" means a material adverse effect upon: (i)
the business, operations, properties, assets or conditions (financial or
otherwise) of Borrower; or (ii) the ability of Borrower to perform, or of Lender
to enforce, the Secured Obligations.
1.22. "Maturity Date" means December 31, 2000.
1.23. "Maximum Rate" means, at any time, the maximum rate of interest under
applicable law that the Lender may charge the Borrower. The Maximum Rate shall
be calculated in a manner that takes into account any and all fees, payments,
and other charges in respect of the Loan Documents and the Excluded Agreements
that constitute interest under applicable law. Each change in any interest
provided for herein based upon the Maximum Rate resulting from a change in the
Maximum Rate shall take effect without notice to the Borrower at the time of
such change in the Maximum Rate. For purposes of determining the Maximum
Rate under Texas law, the applicable rate ceiling shall be the indicated rate
ceiling described in, and computed in accordance with, Article 5069-1.04,
Vernon's Texas Civil Statutes.
1.24. "Patent License" means any written agreement granting any right with
respect to any invention on which a Patent is in existence now owned or
hereafter acquired by Borrower or in which Borrower now holds or hereafter
acquires any interest.
1.25. "Patents" means all of the following now owned or hereafter acquired
by Borrower or in which Borrower now holds or hereafter acquires any interest:
(a) letters patent of, or rights corresponding thereto in, the United States or
any other county, all registrations and recordings thereof, and all applications
for letters patent of, or rights corresponding thereto in, the United
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States or any other country, including, without limitation, registrations,
recordings and applications in the United States Patent and Trademark Office or
in any similar office or agency of the United States, any State thereof or any
other country; (b) all reissues, continuations, continuations-in-part or
extensions thereof; (c) all xxxxx patents, divisionals, and patents of addition;
and (d) all patents to issue in any such applications.
1.26. "Permitted Liens" means any and all of the following: (i) pari passau
liens in favor of Lender and Comdisco, Inc., a Delaware corporation
("Comdisco"), (ii) liens related to, or arising in connection with, Senior Debt,
or (iii) liens permitted under the Senior Loan Agreement.
1.27. "Proceeds" means "proceeds," as such term is defined in Section
9.306(a) of the UCC and, in any event, shall include, without limitation, (a)
any and all Accounts, Chattel Paper, Instruments, cash or other forms of money
or currency or other proceeds payable to Borrower from time to time in respect
of the Collateral, (b) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to Borrower from time to time with respect to any
of the Collateral, (c) any and all payments (in any form whatsoever) made or due
and payable to Borrower from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any governmental authority (or any Person acting under color of
governmental authority), (d) any claim of Borrower against third parties (i) for
past, present or future infringement of any Copyright, Patent or Patent License
or (ii) for past, present or future infringement or dilution of any Trademark or
Trademark License or for injury to the goodwill associated with any Trademark,
Trademark registration or Trademark licensed under any Trademark License and (e)
any and all other amounts from time to time paid or payable under or in
connection with any of the Collateral.
1.28. "Receivables" shall mean and include all of the Borrowers accounts,
instruments, documents, chattel paper and general intangibles whether secured or
unsecured, whether now existing or hereafter created or arising, and whether or
not specifically sold or assigned to Lender hereunder.
1.29. "Secured Obligations" shall mean and include all principal, interest,
fees, costs, or other liabilities or obligations for monetary amounts owed by
Borrower to Lender, whether due or to become due, matured or unmatured,
liquidated or unliquidated, contingent or non-contingent, and all covenants and
duties regarding such amounts, of any kind of nature, present or future, arising
under this Agreement, the Note, or any of the other Loan Documents, whether or
not evidenced by any Note, this Agreement or other instrument, as the same may
from time to time be amended, modified, supplemented or restated, provided, that
the Secured Obligations shall not include any indebtedness or obligations of
Borrower arising under or in connection with the Excluded Agreements.
1.30. "Senior Creditor" means a bank, insurance company, pension fund, or
other institutional lender to be determined, or a syndication of such
institutional lenders that provides Senior Debt financing to Borrower; provided,
that Senior Creditor shall not include Comdisco or any officer, director,
shareholder, venture capital investor, or insider of Borrower or Comdisco, or
any affiliate of the foregoing persons, except upon the express written consent
of Lender.
1.31. "Senior Debt" means any and all indebtedness and obligations for
borrowed money (including, without limitation, principal, premium (if any),
interest, fees charges, expenses, costs, professional fees and expenses, and
reimbursement obligations) at any time owing by Borrower to Senior Creditor
under the Senior Loan Documents, including, but not limited to such amounts
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as may accrue or be incurred before or after default or workout or the
commencement of any liquidation, dissolution, bankruptcy, receivership or
reorganization by or against Borrower.
1.32. "Senior Loan Documents" means the loan agreement between Borrower and
Senior Creditor and any other agreement, security agreement, document,
promissory note, UCC financing statement, or instrument executed by Borrower in
favor of Senior Creditor pursuant to or in connection with the Senior Debt or
the loan agreement, as the same may from time to time be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.33. "Subordination Agreement" means the Subordination Agreement dated as
of August 1, 1997, as amended by the First Amendment to Subordination Agreement
dated as of even date herewith, entered into between Borrower, Comdisco and
Lender for the benefit of Senior Creditor.
1.34. "Trademark License" means any written agreement granting any right to
use any Trademark or Trademark registration now owned or hereafter acquired by
Borrower or in which Borrower now holds or hereafter acquires any interest.
1.35. "Trademarks" means any of the following now owned or hereafter
acquired by Borrower or in which Borrower now holds or hereafter acquires any
interest: (a) any and all trademarks, tradenames, corporate names, business
names, trade styles, service marks, logos, other source or business identifiers,
prints and labels on which any of the foregoing have appeared or appear, designs
and general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and any applications in
connection therewith, including, without limitation, registrations, recordings
and applications in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof and (b) any reissues, extensions or
renewals thereof.
1.36. "UCC" shall mean the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of Texas. Unless otherwise defined
herein, terms that are defined in the UCC and used herein shall have the
meanings given to them in the UCC.
1.37. "Warrant Agreement" shall mean the Warrant Agreement dated as of even
date herewith entered into in connection with the Loan, pursuant to which
Borrower granted Lender the right to purchase that number of shares of Series E
Convertible Preferred Stock of Borrower as more particularly set forth therein.
SECTION 2. THE LOAN
2.1. Borrower shall pay interest on the Loan to Lender on the first day of
each month commencing with the first full month occurring after the date hereof,
until the earlier to occur of December 31, 1997 or consummation of the IPO, at a
rate equal to the lesser of (i) 14% per annum of the outstanding principal of
the Loan and (ii) the Maximum Rate; provided, however, that if the IPO shall not
have occurred on or prior to December 31, 1997, Borrower shall pay interest as
hereinafter provided. The outstanding principal amount of the Loan, together
with interest thereon pre-computed at the rate of the lesser of (i) 14% per
annum and (ii) the Maximum Rate shall be due and payable on the date which is
the earlier to occur of consummation of the IPO or the Maturity Date; provided,
however, that if the IPO is not consummated on or prior to December 31, 1997,
then the Loan shall be repaid commencing January 1, 1998 in 36 monthly
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installments of principal and interest, with interest accruing on the unpaid
principal amount of the Loan at rate equal to the lesser of (i) 15% and (ii) the
Maximum Rate. If any payment under the Note shall be payable on a day other than
a business day, then such payment shall be due and payable on the next
succeeding business day.
2.2. Borrower shall have the option to prepay the Loan, without penalty
or premium, in whole or in part, as of any Payment Date after the Closing Date
by paying to Lender such principal amount being prepaid together with all
accrued and unpaid interest with respect to such principal amount, as of the
date of such prepayment.
2.3. (a) Borrower shall within 45 days of the effective date of its Initial
Public Offering prepay the Loan, in whole, as of the next Payment Date by paying
to Lender such principal amount being prepaid together with all accrued and
unpaid interest with respect to such principal amount, as of the date of such
prepayment.
(b) If (i) an Event of Default of the type specified in Section 8.1 hereof
has occurred, or (ii) the IPO is not consummated on or prior to December 31,
1997 and at any time thereafter Borrower shall issue or sell any shares of its
preferred stock in connection with an equity financing (such transaction being,
an "Equity Financing"), then at any time and from time to time after or
simultaneously with the consummation of such Equity Financing Lender, upon not
less than 30 days prior written notice to Borrower (the first business day
following such 30-day period being the "Conversion Date"), shall have the right
to convert all (and only all) of the outstanding amount owing under the Loan
into that number of shares of such preferred stock sold or to be sold in such
Equity Financing equal to the quotient of (A) the sum of (i) the aggregate
principal amount of the Loan on the Conversion Date and (ii) the aggregate
accrued and unpaid interest with respect thereto as of the Conversion Date, and
(iii) any and all outstanding fees and expenses in connection with the Note,
divided by (B) the price per share paid by purchasers in such Equity Financing.
Notwithstanding anything contained herein to the contrary, the provisions of
this paragraph (b) shall not be applicable to any transaction in connection with
the issuance of "Excluded Securities" (as such term is defined in the Amended
and Restated Certificate of Incorporation of Borrower). Nothing contained herein
shall be construed to prevent or compel Lender to exercise its rights under the
Warrant Agreement.
(c) Upon exercise of any conversion by Lenders pursuant to paragraph (b)
hereof, Borrower shall promptly issue to Lender such certificates as shall be
necessary to evidence shares of preferred stock issuable upon exercise of such
conversion and Lender shall return the Note, together with a satisfactory note
power executed in blank.
2.4. (a) No provision of this Agreement or any other Loan Document shall
require the payment or the collection of interest in excess of the maximum
amount permitted by applicable law. If any excess of interest in such respect is
hereby provided for, or shall be adjudicated to be so provided, in any Loan
Document or Excluded Agreement or otherwise in connection with this loan
transaction, the provisions of this Section shall govern and prevail and neither
the Borrower nor the sureties, guarantors, successors, or assigns of the
Borrower shall be obligated to pay the excess amount of such interest or any
other excess sum paid for the use, forbearance, or detention of sums loaned
pursuant hereto. In the event the Lender ever receives, collects, or applies as
interest any such sum, such amount which would be in excess of the maximum
amount permitted by applicable law shall be applied as a payment and reduction
of the principal of the indebtedness evidenced by the Note; and, if the
principal of the Note has been paid in full, any remaining excess shall
forthwith be paid to the Borrower. In determining whether
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or not the interest paid or payable exceeds the Maximum Rate, the Borrower and
the Lender shall, to the extent permitted by applicable law, (a) characterize
any non-principal payment as an expense, fee or premium rather than as interest,
(b) exclude voluntary prepayments and the effects thereof, and (c) amortize,
prorate, allocate, and spread in equal or unequal parts the total amount of
interest throughout the entire contemplated term of the indebtedness evidenced
by the Note so that interest for the entire term does not exceed the Maximum
Rate.
(b) In the event any interest is not paid when due hereunder, delinquent
interest shall be added to principal and shall bear interest on interest,
compounded at the rate set forth in Section 2.1, not to exceed the Maximum Rate.
(c) Upon and during the continuation of an Event of Default hereunder, all
Secured Obligations, including principal, interest, compounded interest, and
professional fees, shall bear interest at a rate per annum equal to the lesser
of (i) the rate set forth in Section 2.1 plus two percent (2%) per annum and
(ii) the Maximum Rate ("Default Rate").
SECTION 3. SECURITY INTEREST
As security for the prompt and complete payment in full when due (whether
at stated payment dates or otherwise) of all the Secured Obligations and in
order to induce Lender to make the Loan upon the terms and subject to the
conditions of the Note, Borrower hereby assigns, conveys, mortgages, pledges,
hypothecates and transfers to Lender for security purposes only, and hereby
grants to Lender a second priority security interest in, pari passu with the
security interest in favor of Comdisco, all of Borrower's right, title and
interest in, to and under each of the following (all of which being hereinafter
collectively called the "Collateral"):
(a) All Receivables;
(b) All Equipment;
(c) All Fixtures;
(d) All General Intangibles;
(e) All Inventory;
(f) All other goods and personal property of Borrower whether tangible or
intangible and whether now or hereafter owned or existing, leased,
consigned by or to, or acquired by, Borrower and wherever located; and
(g) To the extent not otherwise included, all Proceeds of each of the
foregoing and all accessions to, substitutions and replacements for,
and rents, profits and products of each of the foregoing.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BORROWER
The Borrower represents, warrants and agrees that;
4.1. Borrower owns all right title and interest in and to the Collateral,
free of all liens, security interests, encumbrances and claims whatsoever,
except for Permitted Liens.
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4.2. Borrower has the full power and authority to, and does hereby grant
and convey to the Lender, a perfected second priority security interest (pari
passu with the security interest in favor of Comdisco) in the Collateral as
security for the Secured Obligations, free of all liens, security interests,
encumbrances and claims, other than Permitted Liens, and shall execute such
Uniform Commercial Code financing statements in connection herewith as the
Lender may reasonably request. Except as set forth herein, no other lien,
security interest, adverse claim or encumbrance has been created by Borrower or
is known by Borrower to exist with respect to any Collateral.
4.3. Borrower is a corporation duly organized, legally existing and in good
standing under the laws of the State of Delaware, and is duly qualified as a
foreign corporation in all jurisdictions in which the nature of its business or
location of its properties require such qualifications and where the failure to
be qualified would have a Material Adverse Effect.
4.4. Borrower's execution, delivery and performance of the Note, this
Agreement, the execution and delivery of all financing statements, all other
Loan Documents required to be delivered or executed in connection herewith, and
the Excluded Agreements have been duly authorized by all necessary corporate
action of Borrower, the individual or individuals executing the Loan Documents
and the Excluded Agreements were duly authorized to do so; and the Loan
Documents and the Excluded Agreements constitute legal, valid and binding
obligations of the Borrower, enforceable in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, reorganization or other
similar laws generally affecting the enforcement of the rights of creditors.
4.5. This Agreement, the other Loan Documents and the Excluded Agreements
do not violate any provisions of Borrower's Certificate of Incorporation, bylaws
or any contract, agreement, law, regulation, order, injunction, judgment, decree
or writ to which the Borrower is subject, or result in the creation or
imposition of any lien, security interest or other encumbrance upon the
Collateral, other than those created by this Agreement and Permitted Liens.
4.6. The execution, delivery and performance of this Agreement, the other
Loan Documents and the Excluded Agreements do not require the consent or
approval of any other person or entity including, without limitation, any
regulatory authority or governmental body of the United States or any state
thereof or any political subdivision of the United States or any state thereof
except for those already obtained.
4.7. No event which has had or could reasonably be expected to have a
Material Adverse Effect has occurred and is continuing.
4.8. No fact or condition exists that would (or would, with the passage of
time, the giving of notice, or both) constitute a default under the Loan
Agreement between Borrower and Senior Creditor.
4.9. Borrower has filed or has obtained extensions for the filing of all
tax returns, federal, state and local, which it is required to file and has duly
paid or fully reserved for all taxes or installments thereof (including any
interest or penalties) as and when due, which have or may become due pursuant to
such returns or pursuant to any assessment received by Borrower for the three
(3) years preceding the Closing Date, if any (including any taxes being
contested in good faith and by appropriate proceedings).
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SECTION 5. INSURANCE
5.1. So long as there are any Secured Obligations outstanding, Borrower
shall cause to be carried and maintained adequate public liability and
professional liability insurance with responsible companies reasonably
satisfactory to Lender in such amounts and against such risks as is customarily
maintained by similar businesses and by owners of similar property in the same
general area.
5.2. THE BORROWER SHALL INDEMNIFY THE LENDER AND EACH AFFILIATE THEREOF AND
THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, AND AGENTS FROM, AND
HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS,
DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING
ATTORNEYS' FEES) TO WHICH ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR
INDIRECTLY ARISE FROM OR RELATE TO THE DISPOSITION OR UTILIZATION OF THE
COLLATERAL, OTHER THAN CLAIMS ARISING OUT OF OR CAUSED BY LENDER'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT LIMITING ANY PROVISION OF THIS
AGREEMENT OR OF ANY OTHER LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE
PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED UNDER THIS SECTION SHALL BE
INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND ALL, SUCH LOSSES,
LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND
EXPENSES (INCLUDING ATTORNEYS' FEES) RELATING TO THE DISPOSITION OR UTILIZATION
OF THE COLLATERAL ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY
NEGLIGENCE OF SUCH PERSON BUT NOT AGAINST LOSSES, LIABILITIES, CLAIMS, DAMAGES,
PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS OR EXPENSES ARISING OUT OF SUCH
PERSON'S ACTS OF GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
SECTION 6. COVENANTS OF BORROWER
Borrower covenants and agrees as follows at all times while any of the
Secured Obligations remain outstanding:
6.1. Borrower shall furnish to Lender the financial statements listed
hereinafter, each prepared in accordance with generally accepted accounting
principles consistently applied (the "Financial Statements"):
(a) as soon as practicable (and in any event within thirty (30) days)
after the end of each month, unaudited interim financial statements as of
the end of such month (prepared on a consolidated and consolidating basis,
if applicable), including balance sheet and related statements of income
and cash flows accompanied by a report detailing any material contingencies
(including the commencement of any material litigation by or against
Borrower) or any other occurrence that could reasonably be expected to have
a Material Adverse Effect, all certified by Borrower's Chief Executive
Officer or Chief Financial Officer to be true and correct;
(b) as soon as practicable (and in any event within ninety (90) days)
after the end of each fiscal year, unqualified audited financial statements
as of the end of such year (prepared on a consolidated and consolidating
basis, if applicable), including balance sheet and related statements of
income and cash flows, and setting forth in comparative form the
corresponding figures for the preceding fiscal year, certified by a firm of
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independent certified public accountants selected by Borrower and
reasonably acceptable to Lender, accompanied by any management report from
such accountants;
(c) promptly after the sending or filing thereof, as the case may be,
copies of any proxy statements, financial statements or reports which
Borrower has made available to its shareholders and copies of any regular,
periodic and special reports or registration statements which Borrower
files with the Securities and Exchange Commission or any governmental
authority which may be substituted therefor, or any national securities
exchange; and
(d) promptly, any additional information, financial or otherwise
(including, but not limited, to tax returns and names of principal
creditors) as Lender reasonably believes necessary to evaluate Borrower's
continuing ability to meet its financial obligations.
6.2. Borrower shall permit any authorized representative of Lender and its
attorneys and accountants on reasonable prior notice to inspect, examine and
make copies and abstracts of the books of account and records of Borrower,
including bank statements, at reasonable times during normal business hours. In
addition, such representative of Lender and its attorneys and accountants shall
have the right to meet with management and officers of the Company to discuss
such books of account and records.
6.3. Borrower will from time to time execute, deliver and file, alone or
with Lender, any financing statements, security agreements or other documents;
procure any instruments or documents as may be requested by Lender; and take all
further action that may be necessary or desirable, or that Lender may request,
to confirm, perfect, preserve and protect the security interests intended to be
granted hereby, and in addition, and for such purposes only, Borrower hereby
authorizes Lender to execute and deliver on behalf of Borrower and to file such
financing statements, security agreement and other documents without the
signature of Borrower either in Lender's name or in the name of Borrower as
agent and attorney-in-fact for Borrower. The parties agree that a carbon,
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement and may be filed in any appropriate office in lieu thereof.
6.4. Borrower shall protect and defend Borrower's title as well as the
interest of the Lender against all persons claiming any interest adverse to
Borrower or Lender and shall at all times keep the Collateral free and clear
from any legal process, liens or encumbrances whatsoever (except any placed
thereon by Lender and any Permitted Lien) and shall give Lender immediate
written notice thereof.
6.5. Borrower shall continue to collect its Accounts in the ordinary course
of business.
6.6. Borrower shall maintain and protect its properties, assets and
facilities, including without limitation, its Equipment and Fixtures, in good
order and working repair and condition (taking into consideration ordinary wear
and tear) and from time to time make or cause to be made all necessary and
proper repairs, renewals and replacements thereto and shall competently manage
and care for its property in accordance with past practices.
6.7. Borrower shall not merge with and into any other entity; or sell or
convey all or substantially all of its assets or stock to any other person or
entity without notifying Lender a minimum of thirty (30) days prior to the
closing date and requesting Lender's consent to the assignment of all of
Borrower's Secured Obligations hereunder to the successor entity in form
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and substance satisfactory to Lender. In the event Lender does not consent to
such assignment the parties agree Borrower shall prepay the loan in accordance
with Section 2.2 hereof.
6.8. Borrower shall not, without the prior written consent of Lender, such
consent not to be unreasonably withheld, declare or pay any cash dividend or
make a distribution on any class of stock, other than pursuant to employee
repurchase plans upon an employee's death or termination of employment or
transfer, sell, lease, lend or in any other manner convey any equitable,
beneficial or legal interest in any material portion of the assets of Borrower
(except inventory sold in the normal course of business).
6.9. Upon the reasonable request of Lender, Borrower shall, during normal
business hours, make the Inventory and Equipment available to Lender for
inspection at the place where it is normally located and shall make Borrower's
log and maintenance records pertaining to the Inventory and Equipment available
to Lender for inspection. Borrower shall take all action necessary to maintain
such logs and maintenance records in a current and accurate fashion.
6.10. Borrower covenants and agrees to pay when due, all taxes, fees or
other charges of any nature whatsoever (together with any related interest or
penalties) now or hereafter imposed or assessed against Borrower, Lender or the
Collateral or upon Borrower's ownership, possession, use, operation or
disposition thereof or upon Borrower's rents, receipts or earnings arising
therefrom. Borrower shall file or request any extension on or before the due
date therefor all personal property tax returns in respect of the Collateral.
Notwithstanding the foregoing, Borrower may contest, in good faith and by
appropriate proceedings, taxes for which Borrower maintains adequate reserves
therefor.
6.11. Borrower shall not relocate any item of the Collateral unless such
relocation shall be within the continental United States and Borrower shall
first (a) cause to be filed and/or delivered to the Lender all Uniform
Commercial Code financing statements, certificates or other documents or
instruments necessary to continue in effect the perfected security interest of
the Lender in the Collateral, and (b) have given the Lender no less than ten
(10) days prior written notice of such relocation.
SECTION 7. CONDITIONS PRECEDENT TO LOAN
The obligation of Lender to fund the Loan on the Closing Date shall be
subject to Borrower's request, and Lender's satisfactory completion of its due
diligence and approval process, and satisfaction by Borrower or waiver by
Lender, in Lender's sole discretion, of the following conditions:
7.1. The Closing Date shall occur on or before December 31, 1997.
7.2. Borrower shall have achieved seventy-five (75%) percent or more of its
cumulative revenue and cumulative income projections dated July 25, 1997 in the
prior six (6) months.
7.3. Document Delivery. Borrower, on or prior to the Closing Date, shall
have delivered to Lender the following:
(a) executed originals of the Note, and all other Loan Documents, and
the Warrant Agreement, including any documents reasonably required by
Lender to effectuate the liens of Lender, with respect to all Collateral;
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(b) certified copy of resolutions of Borrower's board of directors
evidencing approval of the borrowing and other transactions evidenced by
the Loan Documents and the Warrant Agreement;
(c) certified copies of the Certificate of Incorporation and the
Bylaws, as amended through the Closing Date, of Borrower;
(d) certificate of good standing for Borrower from its state of
incorporation and similar certificates from all other jurisdictions in
which it does business and where the failure to be qualified would have a
Material Adverse Effect;
(e) payment of the Facility Fee;
(f) Borrower's written instructions to Lender regarding the manner of
disbursement of the Loan, which must be reasonably satisfactory to Lender;
and
(g) such other documents as Lender may reasonably request.
7.4. Perfection of Security Interests. Borrower shall have taken or caused
to be taken such actions requested by Lender to grant Lender a second priority
perfected security interest in the Collateral, subject only to Permitted Liens.
Such actions shall include, without limitation, the delivery to Lender of all
appropriate financing statements, executed by Borrower, as to the Collateral
granted by Borrower for all jurisdictions as may be necessary or desirable to
perfect the security interest of Lender in such Collateral
7.5. Absence of Events of Defaults. As of the Closing Date, no fact or
condition exists that would (or would, with the passage of time, the giving of
notice, or both) constitute an Event of Default under this Agreement or any of
the Loan Documents and no fact or condition exists that would (or would, with
the passage of time, the giving of notice, or both) constitute a default under
the Senior Loan Documents between Borrower and Senior Creditor.
7.6. Material Adverse Effect. As of the Closing Date, no event which has
had or could reasonably be expected to have a Material Adverse Effect has
occurred and is continuing.
SECTION 8. DEFAULT
The occurrence of any one or more of the following events (herein called
"Events of Default") shall constitute a default hereunder and under the Note and
other Loan Documents:
8.1. Borrower defaults in the payment of any principal, interest or other
Secured Obligation involving the payment of money under this Agreement, the Note
or any of the other Loan Documents, and such default continues for more than
five (5) days after the due date thereof; or
8.2. Borrower defaults in the performance of any other covenant or
Secured Obligation of Borrower hereunder or under the Note or any of the other
Loan Documents, and such default continues for more than twenty (20) days after
Lender has given notice of such default to Borrower.
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8.3. Any representation or warranty when made herein by Borrower shall
prove to have been false or misleading in any material respect, which default
shall have continued unremedied for a period of ten (10) days after written
notice from Lender; or
8.4. Borrower shall make an assignment for the benefit of creditors, or
shall admit in writing its inability to pay its debts as they become due, or
shall file a voluntary petition in bankruptcy, or shall file any petition or
answer seeking for itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future statute, law or regulation pertinent to such circumstances, or shall seek
or consent to or acquiesce in the appointment of any trustee, receiver, or
liquidator of Borrower or of all or any substantial part (33-1/3% or more) of
the properties of Borrower; or Borrower or its directors or majority
shareholders shall take any action initiating the dissolution or liquidation of
Borrower; or
8.5. Sixty (60) days shall have expired after the commencement of an action
by or against Borrower seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future statute, law or regulation, without such action being dismissed or all
orders or proceedings thereunder affecting the operations or the business of
Borrower being stayed; or a stay of any such order or proceedings shall
thereafter be set aside and the action setting it aside shall not be timely
appealed; or Borrower shall file any answer admitting or not contesting the
material allegations of a petition filed against Borrower in any such
proceedings; or the court in which such proceedings are pending shall enter a
decree or order granting the relief sought in any such proceedings; or
8.6. Sixty (60) days shall have expired after the appointment, without the
consent or acquiescence of Borrower, of any trustee, receiver or liquidator of
Borrower or of all or any substantial part of the properties of Borrower without
such appointment being vacated; or
8.7. The default by Borrower under any Loan Documents, any other promissory
note or agreement evidencing indebtedness for borrowed money; or
8.8. If any obligation of Borrower (other than the Secured Obligations)
involving an amount in excess of $100,000.00 is not paid when due or within any
applicable grace period, or such obligation becomes or is declared to be due and
payable prior to the expressed maturity thereof, or there shall have occurred an
event which, with the giving of notice of lapse of time, or both, would cause
any such obligation to become, or allow any such obligation to be declared to
be, due and payable or the entry of any judgment against Borrower involving an
award in excess of $100,000.00 that would have a Material Adverse Effect, that
has not been bonded or stayed on appeal within thirty (30) days; or
8.9. The occurrence of any material default under the Senior Loan
Documents; or
8.10. The occurrence of any material default under the Excluded Agreements.
SECTION 9. REMEDIES
Upon the occurrence of any one or more Events of Default, Lender, at its
option, may declare the Note and all of the other Secured Obligations to be
accelerated and immediately due and payable (provided, that upon the occurrence
of an Event of Default of the type described in Subsections 8.4 or 8.5, the Note
and all of the other Secured Obligations shall automatically be accelerated and
made due and payable without any further act), whereupon the unpaid principal
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of and accrued interest on such Note and all other outstanding Secured
Obligations shall become immediately due and payable, and shall thereafter bear
interest at the Default Rate set forth in, and calculated according to, Section
2.4(c) of this Agreement. Subject to the terms of the Subordination Agreement,
Lender may exercise all rights and remedies with respect to the Collateral under
the Loan Documents or otherwise available to it under applicable law, including
the right to release, hold or otherwise dispose of all or any part of the
Collateral and the right to occupy, utilize, process and commingle the
Collateral.
Upon the happening and during the continuance of any Event of Default,
Lender may then, or at any time thereafter and from time to time, apply,
collect, sell in one or more sales, lease or otherwise dispose of, any or all of
the Collateral, in its then condition or following any commercially reasonable
preparation or processing, in such order as Lender may elect, and any such sale
may be made either at public or private sale at its place of business or
elsewhere. Borrower agrees that any such public or private sale may occur upon
five (5) calendar days' prior written notice to Borrower. Lender may require
Borrower to assemble the Collateral and make it available to Lender at a place
designated by Lender which is reasonably convenient to Lender and Borrower. The
proceeds of any sale, disposition or other realization upon all or any part of
the Collateral shall be distributed by Lender in the following order of
priorities:
First, to Lender in an amount sufficient to pay in full Lender's costs and
professionals' and advisors' fees and expenses;
Second, to Lender in an amount equal to the then unpaid amount of the
Secured Obligations in such order and priority as Lender may choose in its sole
discretion; and
Finally, upon payment in full of all of the Secured Obligations, to
Borrower or its representatives or as a court of competent jurisdiction may
direct.
Lender shall be deemed to have acted reasonably in the custody,
preservation and disposition of any of the Collateral if it complies with the
obligations of a secured party under Section 9.207 of the UCC.
Lender's rights and remedies hereunder are subject to the terms of the
Subordinated Agreement.
SECTION 10. MISCELLANEOUS
10.1. Continuation of Security Interest. This is a continuing Agreement and
the grant of a security interest hereunder shall remain in full force and effect
and all the rights, powers and remedies of Lender hereunder shall continue to
exist until the Secured Obligations are paid in full as the same become due and
payable at which time Lender has executed a written termination statement (which
Lender shall execute within a reasonable time after full payment of the Secured
Obligations hereunder), reassigning to Borrower, without recourse, the
Collateral and all rights conveyed hereby and returning possession of the
Collateral to Borrower. The rights, powers and remedies of Lender hereunder
shall be in addition to all rights, powers and remedies given by statute or rule
of law and are cumulative. The exercise of any one or more of the rights, powers
and remedies provided herein shall not be construed as a waiver of or election
of remedies with respect to any other rights, powers and remedies of Lender.
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10.2. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under such law, such provision shall be ineffective only to the extent
and duration of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
10.3. Notice. Except as otherwise provided herein, all notices and service
of process required, contemplated, or permitted hereunder or with respect to the
subject matter hereof shall be in writing, and shall be deemed to have been
validly served, given or delivered upon the earlier of: (i) the first business
day after transmission by facsimile or hand delivery or deposit with an
overnight express service or overnight mail delivery service; or (ii) the third
calendar day after deposit in the United States mails, with proper first class
postage prepaid, and shall be addressed to the party to be notified as follows:
(a) If to Lender:
GALTNEY CORPORATE SERVICES, INC.
Attention: Xxxxx Xxxxxxx
000 Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Facsimile: (000) 000-0000
With a copy to:
Galtney Corporate Services, Inc.
Attention: Xxxx Xxxxxxx
000 Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Facsimile: (000) 000-0000
(b) If to Borrower:
BONE, MUSCLE AND JOINT, INC.
Attention: Xxxxx X. Xxxxx
0000 Xxxxx Xxxxxxx Xxxxxxx, Xxxxx 000-X
Xxxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
Phone: (000) 000-0000
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Phone: (000) 000-0000
Facsimile: (000) 000-0000
or to such other address as each party may designate for itself by like notice.
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10.4. Entire Agreement; Amendment. THIS AGREEMENT, THE NOTE, AND THE OTHER
LOAN DOCUMENTS REFERRED TO HEREIN AND THE EXCLUDED AGREEMENTS EMBODY THE FINAL,
ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR
COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR
ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR
VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR
DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE
PARTIES HERETO. The provisions of this Agreement and the other Loan Documents to
which the Borrower is a party may be amended or waived only by an instrument in
writing signed by the parties hereto.
10.5. Headings. The various headings in this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement or any provisions hereof.
10.6. No Waiver. The powers conferred upon Lender by this Agreement are
solely to protect its interest in the Collateral and shall not impose any duty
upon Lender to exercise any such powers. No omission, or delay, by Lender at any
time to enforce any right or remedy reserved to it, or to require performance of
any of the terms, covenants or provisions hereof by Borrower at any time
designated, shall be a waiver of any such right or remedy to which Lender is
entitled, nor shall it in any way affect the right of Lender to enforce such
provisions thereafter.
10.7. Survival. All agreements, representations and warranties contained in
this Agreement, the Note, the other Loan Documents and the Excluded Agreements
or in any document delivered pursuant hereto or thereto shall be for the benefit
of Lender and shall survive the execution and delivery of this Agreement and the
expiration or other termination of this Agreement.
10.8. Successor and Assigns. The provisions of this Agreement, the other
Loan Documents and the Excluded Agreements shall inure to the benefit of and be
binding on Borrower and its permitted assigns (if any). Borrower shall not
assign its obligations under this Agreement, the Note, any of the other Loan
Documents or the Excluded Agreements, without Lender's express written consent,
and any such attempted assignment shall be void and of no effect. Lender may
assign, transfer, or endorse its rights hereunder and under the other Loan
Documents or Excluded Agreements without prior notice to Borrower, and all of
such rights shall inure to the benefit of Lender's successors and assigns.
10.9. Further Indemnification. Borrower agrees to pay, and to save Lender
harmless from, any and all liabilities with respect to, or resulting from any
delay in paying, any and all excise, sales or other similar taxes which may be
payable or determined to be payable with respect to any of the Collateral or in
connection with any of the transactions contemplated by this Agreement other
than any income taxes of Lender.
10.10. Governing Law. This Agreement, the Note, the other Loan Documents
and the Excluded Agreements have been negotiated and delivered to Lender in the
State of Texas. Payment to Lender by Borrower of the Secured Obligations is due
in the State of Texas. This Agreement, the Note, the other Loan Documents and
the Excluded Agreements shall be governed by, and construed and enforced in
accordance with, the laws of the State of Texas, excluding conflict of laws
principles that would cause the application of laws of any other jurisdiction.
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10.11. CONSENT TO JURISDICTION AND VENUE. ALL JUDICIAL PROCEEDINGS ARISING
IN OR UNDER OR RELATED TO THIS AGREEMENT, THE NOTE, ANY OF THE OTHER LOAN
DOCUMENTS OR EXCLUDED AGREEMENTS MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION LOCATED IN THE STATE OF TEXAS. BY EXECUTION AND DELIVERY
OF THIS AGREEMENT, EACH PARTY HERETO GENERALLY AND UNCONDITIONALLY: (A) CONSENTS
TO PERSONAL JURISDICTION IN XXXXXX COUNTY, STATE OF TEXAS; (B) WAIVES ANY
OBJECTION AS TO JURISDICTION OR VENUE IN XXXXXX COUNTY, STATE OF TEXAS; (C)
AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE IN THE
AFORESAID COURTS; AND (D) IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, THE NOTE, THE OTHER LOAN
DOCUMENTS OR EXCLUDED AGREEMENTS. SERVICE OF PROCESS ON ANY PARTY HERETO IN ANY
ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE EFFECTIVE IF GIVEN
IN ACCORDANCE WITH THE REQUIREMENTS FOR NOTICE SET FORTH IN SUBSECTION 10.3,
ABOVE AND SHALL BE DEEMED EFFECTIVE AND RECEIVED AS SET FORTH IN SUBSECTION
10.3, ABOVE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF EITHER PARTY TO BRING
PROCEEDINGS IN THE COURTS OF ANY OTHER JURISDICTION.
10.12. Mutual Waiver Of Jury Trial. Because disputes arising in connection
with complex financial transactions are most quickly and economically resolved
by an experienced and expert person and the parties wish applicable state and
federal laws to apply (rather than arbitration rules), the parties desire that
their disputes be resolved by a judge applying such applicable laws. EACH OF
BORROWER AND LENDER SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY
OF ANY CAUSE OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR
ANY OTHER CLAIM (COLLECTIVELY, "CLAIMS") ASSERTED BY BORROWER AGAINST LENDER OR
ITS ASSIGNEE AND/OR BY LENDER OR ITS ASSIGNEE AGAINST BORROWER. This waiver
extends to all such Claims, including, without limitation, Claims which involve
persons or entities other than Borrower and Lender; Claims which arise out of or
are in any way connected to the relationship between Borrower and Lender; and
any Claims for damages, breach of contract arising out of this Agreement, any
other Loan Document or any of the Excluded Agreements, specific performance, or
any equitable or legal relief of any kind.
10.13. Confidentiality. Lender acknowledges that certain items of
Collateral, including, but not limited to trade secrets, source codes, customer
lists and certain other items of Intellectual Property, and any Financial
Statements provided pursuant to Section 6 hereof or the information provided to
it by Borrower, constitute proprietary and confidential information of the
Borrower (the "Confidential Information"). Accordingly, Lender agrees that any
Confidential Information it may obtain in the course of acquiring, perfecting or
foreclosing on the Collateral or otherwise provided under this Agreement,
provided such Confidential Information is marked as confidential by Borrower at
the time of disclosure, shall be received in the strictest confidence and will
not be disclosed to any other person or entity in any manner whatsoever, in
whole or in part, without the prior written consent of the Borrower, unless and
until Lender has acquired indefeasible title thereto.
10.14. Counterparts. This Agreement and any amendments, waivers, consents
or supplements hereto may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so
delivered shall be deemed an original, but all of which counterparts shall
constitute but one and the same instrument.
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10.15. Non-Application of Chapter 15 of Texas Credit Code. The provisions
of Chapter 15 of the Texas Credit Code (Vernon's Texas Civil Statutes, Article
5069-15) are specifically declared by the parties hereto not to be applicable to
this Agreement or any of the other Loan Documents or to the transactions
contemplated hereby.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Borrower and the Lender have duly executed and
delivered this Agreement as of the day and year first above written.
BORROWER: BONE, MUSCLE & JOINT, INC.
Signature: /s/ Xxxxx X. Xxxxx
---------------------------
Print Name:
---------------------------
Title: ---------------------------
LENDER: XXXXXXX CORPORATE SERVICES, INC.
Signature: /s/ Xxx X. Xxxxx
---------------------------
Print Name: Xxx X. Xxxxx
---------------------------
Title: Senior Vice President & Treasurer
---------------------------
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