Exhibit 10.2

 

Execution Version

 

FIRST AMENDMENT TO

CREDIT, SECURITY AND GUARANTY AGREEMENT

 

This FIRST AMENDMENT TO CREDIT, SECURITY AND GUARANTY AGREEMENT (this
“Amendment”) is entered into as of March 27, 2019, by and among ALPHATEC
HOLDINGS, INC., a Delaware corporation, ALPHATEC SPINE, INC., a California
corporation and SAFEOP SURGICAL, INC., a Delaware corporation (each individually
as a “Borrower” and collectively, as “Borrowers”) and SQUADRON MEDICAL FINANCE
SOLUTIONS LLC, a Delaware limited liability company as lender (“Lender”).

 

RECITALS:

 

A.Lender made loans and certain other financial accommodations to Borrowers as
evidenced by that certain Credit, Security and Guaranty Agreement dated as of
November 6, 2018 by and among Borrowers and Lender (the “Existing Credit,
Security and Guaranty Agreement”).

 

B.Borrowers and Lender hereby agree to amend the Existing Credit, Security and
Guaranty Agreement as described in this Amendment.

 

NOW, THEREFORE, in consideration of the foregoing Recitals, which are hereby
incorporated into this Amendment and made a part hereof, and for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

1.Incorporation of Recitals.  Borrowers and Lender hereby agree that all of the
Recitals in this Amendment are hereby incorporated into and made a part hereof.

 

2.Capitalized Terms.  Except as otherwise defined in this Amendment, each
capitalized term used herein shall have the same meaning as that assigned to it
in the Existing Credit, Security and Guaranty Agreement, and such definitions
shall be incorporated herein by reference, as if fully set forth herein.

 

3.Amendments to Existing Credit, Security and Guaranty Agreement.  

 

A.Section 1.1 of the Existing Credit, Security and Guaranty Agreement is hereby
amended by adding the following definitions, or amending and restating existing
definitions, in alphabetical order:

 

“Additional Term Loan” has the meaning set forth in Section 2.1(a)(ii).

 

“Initial Term Loan” has the meaning set forth in Section 2.1(a)(i).

 

“Term Loan” has the meaning set forth in Section 2.1(a)(ii).

 

“Warrants” means (i) the warrants granted to Lender (including any designee of
Lender) in connection with the Initial Term Loan on the Closing Date to purchase
845,000 shares of common stock of Holdings at $3.15 per share and (ii) the
warrants to be granted to Lender (including any designee of Lender) on the date
of the initial drawing by Borrowers under the Additional Term Loan

 

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to purchase 4,838,710 shares of common stock of Holdings at $2.17 per share,
such Warrant shall be substantially in the form of Exhibit B.

 

B.Section 2.1(a) of the Existing Credit, Security and Guaranty Agreement is
hereby deleted in its entirety and the following substituted therefor:

 

 

(a)

Term Loan Amount.  

 

(i)Borrowers and Lender acknowledge that Lender made a term loan to Borrowers in
the aggregate original principal amount equal to $35,000,000 on November 6, 2018
(“Initial Term Loan”).

 

(ii)On the terms and conditions set forth herein, Lender agrees to make to
Borrowers an additional term loan in the aggregate principal amount equal to
$30,000,000 (“Additional Term Loan” and together with the Initial Term Loan, the
“Term Loan”).  Each drawing by Borrowers under the Additional Term Loan shall be
subject to the following conditions:

 

(A)no Default or Event of Default shall occur or be continuing before and after
giving effect to such drawing by Borrowers under the Additional Term Loan;

 

(B)proceeds of each drawing by Borrowers under the Additional Term Loan shall be
used for working capital and general corporate purposes of the Borrowers;

 

(C)Borrowers shall give Lender a written notice specifying the amount Borrowers
desire to draw under the Additional Term Loan not less than fifteen (15) days
before each drawing;

 

(D)each drawing by Borrowers under the Additional Term Loan shall be in a
minimum amount of $5,000,000 and incremental amounts in integral multiples of
$100,000;

 

(E)no drawing by Borrowers under the Additional Term Loan shall be made
following December 31, 2020; and

 

(F)in the event Borrowers have not completed an initial drawing under the
Additional Term Loan on or before June 30, 2019, Lender shall be entitled to
receive a fee in the amount of $300,000 due and payable on June 30, 2019 which
fee shall be fully earned when paid and shall not be refundable for any reason
whatsoever.

 

C.Section 2.1(b)(i) of the Existing Credit, Security and Guaranty Agreement is
hereby deleted in its entirety and the following substituted therefor:

 

(i)There shall become due and payable, and Borrowers shall repay the Term Loan
through, scheduled payments beginning on June 30, 2021 and continuing on the
last Business Day of each month thereafter, in monthly principal payments of
$640,393.  Notwithstanding the foregoing, the outstanding

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principal amount of the Term Loan shall become immediately due and payable in
full on the Termination Date.

 

D.Section 2.1(e) of the Existing Credit, Security and Guaranty Agreement is
hereby deleted in its entirety and the following substituted therefor:

 

(e)Warrants.

 

(i)Initial Term Loan.  The Borrowers and the Lender hereby acknowledge and agree
that, for United States income tax purposes, for an aggregate purchase price of
$35,000,000, (i) the Lender shall make the Initial Term Loan to the Borrowers
and (ii) the Borrowers shall sell to, and the Lender (including any designee of
Lender) shall purchase from the Borrowers, the Warrants.  Furthermore, the
Borrowers and the Lender hereby acknowledge and agree that (i) the issue price
(within the meaning of Section 1273(b) of the Internal Revenue Code) of the
Initial Term Loan is determined pursuant to Section 1272-1275 of the Code and
the Treasury Regulations thereunder and (ii) for United States federal income
tax purposes, the issue price of the Warrants within the meaning of Section
1273(b) of the Internal Revenue Code, which issue price was determined pursuant
to Section 1.1273-2(h)(1) of the Treasury Regulations, is equal to $2.00.  The
parties hereto agree to report all income tax matters with respect to the
Warrants consistent with the provisions of this Section 2.1(e)(i) unless
otherwise required due to a change in applicable Law.

 

(ii)Additional Term Loan.  The Borrowers and the Lender hereby acknowledge and
agree that, for United States income tax purposes, for an aggregate purchase
price of $30,000,000, (i) the Lender shall make the Additional Term Loan to the
Borrowers and (ii) subject to the Borrowers making an initial drawing under the
Additional Term Loan, the Borrowers shall sell to, and the Lender (including any
designee of Lender) shall purchase from the Borrowers, the
Warrants.  Furthermore, the Borrowers and the Lender hereby acknowledge and
agree that (i) the issue price (within the meaning of Section 1273(b) of the
Internal Revenue Code) of the Additional Term Loan is determined pursuant to
Section 1272-1275 of the Code and the Treasury Regulations thereunder and (ii)
for United States federal income tax purposes, the issue price of the Warrants
within the meaning of Section 1273(b) of the Internal Revenue Code, which issue
price was determined pursuant to Section 1.1273-2(h)(1) of the Treasury
Regulations, is equal to $1.98.  The parties hereto agree to report all income
tax matters with respect to the Warrants consistent with the provisions of this
Section 2.1(e)(ii) unless otherwise required due to a change in applicable Law.

 

E.Section 2.3 of the Existing Credit, Security and Guaranty Agreement is hereby
deleted in its entirety and the following substituted therefor:

 

Section 2.3Term Note.The Term Loan made by Lender shall be evidenced by an
amended and restated promissory note in the form attached hereto as Exhibit A
executed by Borrowers on a joint and several basis (“Term Note”) in an original
principal amount equal to Sixty Five Million Dollars ($65,000,000).

 

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F.Schedule 2.1 of the Existing Credit, Security and Guaranty Agreement is hereby
replaced in its entirety with Schedule 2.1 attached hereto.

 

G.Exhibit A of the Existing Credit, Security and Guaranty Agreement is hereby
replaced in its entirety with Exhibit A attached hereto.

 

H.Exhibit B of the Existing Credit, Security and Guaranty Agreement is hereby
redesignated as Exhibit C.

 

I.The Existing Credit, Security and Guaranty Agreement is hereby amended to
insert Exhibit B attached hereto.

 

J.Exhibit C of the Existing Credit, Security and Guaranty Agreement is hereby
redesignated as Exhibit D.

 

 

4.Representations, Warranties and Covenants.  Each Borrower hereby represents,
warrants and covenants to Lender as follows:

 

A.no Unmatured Default or Event of Default has occurred and is continuing under
the Existing Credit, Security and Guaranty Agreement or any other Loan Document;

 

B.the representations and warranties of Borrowers in the Existing Credit,
Security and Guaranty Agreement and each other Loan Document are true and
correct in all material respects as of the date hereof as though each of said
representations and warranties was made on the date hereof (except, in each case
for representations and warranties which by their terms are expressly applicable
to an earlier date, in which case, such representations and warranties shall be
true and correct in all material respects as of such earlier date); and

 

C.this Amendment has been duly authorized, executed and delivered on behalf of
Borrowers and this Amendment constitutes the legal, valid and binding obligation
of Borrowers, enforceable in accordance with its terms except as enforceability
may be limited by applicable bankruptcy, insolvency or laws affecting creditor's
rights generally and by general principles of equity.

 

5.Conditions Precedent.  The obligation of Lender to enter into this Amendment
is subject to the following conditions precedent:

 

A.Borrowers shall have entered into, executed and delivered to Lender:

 

(i)a fully executed original of this Amendment,

 

 

(ii)

the Amended and Restated Term Note in the form attached hereto as Exhibit A; and

 

 

(iii)

such consents and approvals acceptable to Lender.

 

B.Lender shall have received a certificate from the Secretary of each Borrower
(i) attesting to the resolutions of the Board of Directors authorizing its
execution, delivery and performance of this Amendment, (ii) authorizing specific
officers of Borrower to execute this Amendment, and (iii) attesting to the
incumbency and signature of specific officers of Borrower.

 

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C.Borrowers shall pay to Lender for its account (and not on behalf of any loan
participant) a closing fee in the amount of $300,000 which fee shall be fully
earned when paid and shall not be refundable for any reason whatsoever.

 

7.Waiver of Claims.  Each Borrower hereby acknowledges, agrees and affirms that
it currently possesses no claims, defenses, offsets, recoupment or counterclaims
of any kind or nature against or with respect to the enforcement of the Existing
Credit, Security and Guaranty Agreement or any other Loan Document or any
amendments thereto (collectively, the “Claims”), nor does any Borrower now have
knowledge of any facts that would or might give rise to any Claims.  If facts
now exist which would or could give rise to any Claim against or with respect to
the enforcement of the Existing Credit, Security and Guaranty Agreement or any
other Loan Document, as amended hereby, each Borrower hereby unconditionally,
irrevocably and unequivocally waives to the extent permitted by applicable law
and fully releases any and all such Claims as if such Claims were the subject of
a lawsuit (other than the defense of payment in full), adjudicated to final
judgment from which no appeal could be taken and therein dismissed with
prejudice.

 

8.Ratification of Existing Credit, Security and Guaranty Agreement and the other
Loan Documents.  From and after the date hereof, the Existing Credit, Security
and Guaranty Agreement and the other Loan Documents shall be deemed to be
amended and modified as provided herein, and, except as so amended and modified,
the Existing Credit, Security and Guaranty Agreement and the other Loan
Documents shall continue in full force and effect and the Existing Credit,
Security and Guaranty Agreement and the applicable provisions of this Amendment
shall be read, taken and construed as one and the same instrument.  Each
Borrower hereby remakes, ratifies and reaffirms all of its Obligations under the
terms of the Existing Credit, Security and Guaranty Agreement and the other Loan
Documents and any other document to which it is a party evidencing, creating or
securing the Term Loan, as of the date hereof after giving effect to the
amendments contained herein including, without limitation, the granting of a
security interest thereunder.  On and after the date hereof, the term “Credit,
Security and Guaranty Agreement” used in any document evidencing the Term Loan
shall mean the Existing Credit, Security and Guaranty Agreement as amended
hereby.  Except as expressly set forth in this Amendment, nothing in this
Amendment shall constitute a waiver or relinquishment of (a) any Default or
Event of Default under any of the Loan Documents, (b) any of the agreements,
terms or conditions contained in any of the Loan Documents, (c) any rights or
remedies of Lender with respect to the Loan Documents, or (d) the rights of
Lender to collect the full amounts owing to them under the Loan Documents.

 

9.Consents.  Each Borrower hereby represents that this Amendment does not
violate any provision of any instrument, document, contract or agreement to
which such party is a party, or each Borrower hereby represents that it has
obtained all requisite consents under those third party instruments prior to
entering into this Amendment.

 

10.Further Assurances.  The parties hereto, shall, at any time and from time to
time, following the execution of this Amendment, execute and deliver all such
further instruments and take all such further action as may be reasonably
necessary or appropriate in order to carry out the provisions of this Amendment.

 

11.Counterparts.  This Amendment may be executed in any number of counterparts,
and by the different parties hereto and thereto on the same or separate
counterparts, each of which, when so executed and delivered, shall be deemed to
be an original; all the counterparts for this Amendment shall together
constitute one and the same agreement.  Delivery of a counterpart to this
Amendment by facsimile or electronic transmission shall constitute delivery of
an original counterpart hereto.

 

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12.Representation by Counsel.  Each Borrower hereby represents that it has been
represented by competent counsel of its choice in the negotiation and execution
of this Amendment; that it has read and fully understands the terms hereof, that
such party and its counsel have been afforded an opportunity to review,
negotiate and modify the terms of this Amendment, and that it intends to be
bound hereby.

 

13.No Third Party Beneficiaries.  The terms and provisions of this Amendment
shall be for the sole benefit of the parties hereto and their respective
successors and assigns; no other person, firm, entity or corporation shall have
any right, benefit or interest under this Amendment.

 

14.Governing Law and Submission to Jurisdiction.  The provision of Section 11.8
of the Existing Credit, Security and Guaranty Agreement is hereby incorporated
herein by reference.

 

15.WAIVER OF JURY TRIAL.  EACH BORROWER AND LENDER HEREBY IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THE FINANCING DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY
AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY. EACH BORROWER AND LENDER ACKNOWLEDGES THAT THIS WAIVER IS A
MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED
ON THE WAIVER IN ENTERING INTO THIS AMENDMENT AND THE OTHER FINANCING DOCUMENTS,
AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE
DEALINGS.  EACH BORROWER AND LENDER WARRANTS AND REPRESENTS THAT IT HAS HAD THE
OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

 

THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.

 

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IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to
Credit, Security and Guaranty Agreement dated as of the date first written
above.

 

ALPHATEC HOLDINGS, INC.,

a Delaware corporation

 

 

By:

_/s/ Jeffrey G. Black__________________

 

Jeffrey Black

 

Chief Financial Officer

 

ALPHATEC SPINE, INC.

a California corporation

By:  __/s/ Jeffrey G. Black________________

 

Jeffrey Black

 

Chief Financial Officer

 

SAFEOP SURGICAL, INC.

a Delaware corporation

By:  __/s/ Jeffrey G. Black_______________

 

Jeffrey Black

 

Chief Financial Officer

 

 

First Amendment to

Credit, Security and Guaranty Agreement

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LENDER:

SQUADRON MEDICAL FINANCE SOLUTIONS, LLC

By:  __/s/ David Pelizzon_______________________

David Pelizzon

President

 

First Amendment to

Credit, Security and Guaranty Agreement

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Execution Version

Exhibit A

Form of Amended and Restated Term Note

 

$65,000,000March 27, 2019

FOR VALUE RECEIVED, the undersigned (individually, a “Borrower” and,
collectively, the “Borrowers”), jointly and severally promise to pay to the
order of Squadron Medical Finance Solutions LLC, a Delaware limited liability
company (hereinafter, with any subsequent holders, the “Lender”), 18 Hartford
Avenue, Granby, CT 06035, the principal sum of SIXTY-FIVE MILLION DOLLARS
($65,000,000), made by the Lender to or for the account of the Borrowers
pursuant to the Credit, Security and Guaranty Agreement dated as of November 6,
2018 (as amended, modified, supplemented or restated and in effect from time to
time, the “Credit Agreement”) by and among the Borrowers, the other Credit
Parties from time to time party thereto, and the Lender, with interest at the
rate and payable in the manner stated therein.

This is a promissory note (“Term Note”) to which reference is made in Section
2.3 of the Credit Agreement and is subject to all terms and provisions thereof.
The principal of, and interest on, this Term Note shall be payable at the times,
in the manner, and in the amounts as provided in the Credit Agreement and shall
be subject to prepayment and acceleration as provided therein. Capitalized terms
used herein and not defined herein shall have the meanings assigned to such
terms in the Credit Agreement.

The Lender’s books and records concerning the Term Loan, the accrual of interest
thereon, and the repayment of such Term Loan, shall be prima facie evidence of
the indebtedness to the Lender hereunder.

No delay or omission by the Lender in exercising or enforcing any of the
Lender’s powers, rights, privileges, remedies, or discretions hereunder shall
operate as a waiver thereof on that occasion nor on any other occasion. No
waiver of any Event of Default shall operate as a waiver of any other Event of
Default.

This Term Note shall be binding upon each Borrower, and each endorser and
guarantor hereof, and upon their respective successors, assigns, and
representatives, and shall inure to the benefit of the Lender and its
successors, endorsees, and assigns.

This Term Note amends and restates that certain Term Note dated as of November
6, 2018 made by Borrowers in favor of Lender in the original principal amount of
$35,000,000 (the “Existing Term Note”) and constitutes a replacement and
substitute for the Existing Term Note.  To the extent that the principal balance
of this Term Note includes the indebtedness hitherto evidenced by the Existing
Term Note, the indebtedness evidenced by the Existing Term Note is a continuing
indebtedness and nothing herein shall be deemed to constitute a payment,
settlement or novation of the Existing Term Note or a release of any collateral
heretofore pledged to secure payment and performance of the Existing Term Note,
all such collateral hereby expressly

 

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pledged to secure the payment and performance of the obligations hereunder as if
fully set forth herein.

THIS TERM NOTE AND ALL MATTERS RELATING HERETO OR ARISING HEREFROM (WHETHER
SOUNDING IN CONTRACT LAW, TORT LAW OR OTHERWISE), SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

EACH BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED WITHIN THE COUNTY OF NEW YORK COUNTY, STATE OF NEW YORK AND IRREVOCABLY
AGREES THAT, SUBJECT TO LENDER’S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING
OUT OF OR RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH COURTS. EACH
BORROWER EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. EACH BORROWER HEREBY
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE
OF PROCESS MAY BE MADE UPON SUCH BORROWER BY CERTIFIED OR REGISTERED MAIL,
RETURN RECEIPT REQUESTED, ADDRESSED TO SUCH BORROWER AT THE ADDRESS SET FORTH IN
THE CREDIT AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER
THE SAME HAS BEEN POSTED.

EACH BORROWER, AND LENDER BY ITS ACCEPTANCE HEREOF, HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS TERM NOTE OR THE TRANSACTIONS CONTEMPLATED THEREBY AND
AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY. EACH BORROWER AND LENDER ACKNOWLEDGES THAT THIS WAIVER IS A
MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED
ON THE WAIVER IN ISSUING AND ACCEPTING THIS TERM NOTE, AND THAT EACH WILL
CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH BORROWER
AND LENDER WARRANTS AND REPRESENTS THAT IT HAS HAD THE OPPORTUNITY OF REVIEWING
THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS.

[SIGNATURE PAGE FOLLOWS]

 

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US_ACTIVE-145810304.2-329607-00023

 

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Execution Version

IN WITNESS WHEREOF, the Borrowers have caused this Term Note to be duly executed
as of the date set forth above.

 

 

ALPHATEC HOLDINGS, INC.

 

 

By: _________________________________

Name: Jeffrey Black

Title: Chief Financial Officer

 

 

ALPHATEC SPINE, INC.

 

 

By: _________________________________

Name: Jeffrey Black

Title: Chief Financial Officer

 

 

SAFEOP SURGICAL, INC.

 

 

By: _________________________________

Name: Jeffrey Black

Title: Chief Financial Officer

 

 

 

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Execution Version

Exhibit B

Form of Warrant

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

COMMON STOCK PURCHASE WARRANT

ALPHATEC HOLDINGS, inc.

Warrant Shares: ________Issue Date:  ____________, 2019

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value
received, __________________________________ or its assigns (the “Holder”) is
entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after ____________, 2019
(the “Initial Exercise Date”) and on or prior to the close of business on the
seven-year anniversary of the Initial Exercise Date (the “Termination Date”) but
not thereafter, to subscribe for and purchase  from Alphatec Holdings, Inc., a
Delaware corporation (the “Company”), ______________ shares (as subject to
adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price
of one share of Common Stock under this Warrant shall be equal to the Exercise
Price, as defined in Section 2(b).

Section 1.Definitions. Capitalized terms used and not otherwise defined herein
shall have the meanings set forth in that certain Registration Rights Agreement
(the “Registration Rights Agreement”), dated as of November 6, 2018, among the
Company and the purchasers signatory thereto.

As used in this Warrant, the following terms have the respective meaning set
forth below:

“Common Stock Deemed Outstanding” means, at any given time, the sum of (a) the
number of shares of Common Stock actually outstanding at such time, plus (b) the
number of shares of Common Stock issuable upon exercise of Options actually
outstanding at such time,

US_ACTIVE-145810304.2-329607-00023

 

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plus (c) the number of shares of Common Stock issuable upon conversion or
exchange of Convertible Securities actually outstanding at such time (treating
as actually outstanding any Convertible Securities issuable upon exercise of
Options actually outstanding at such time), in each case, regardless of whether
the Options or Convertible Securities are actually exercisable at such time;
provided, that Common Stock Deemed Outstanding at any given time shall not
include shares owned or held by or for the account of the Company or any of its
wholly-owned subsidiaries.

“Convertible Securities” means any securities (directly or indirectly)
convertible into or exchangeable for Common Stock, but excluding Options.

“Excluded Issuances” means any issuance or sale (or deemed issuance or sale in
accordance with Section 3(e)) by the Company after the Initial Exercise Date of:
(a) shares of Common Stock issued upon the exercise of this Warrant and warrants
to purchase shares of Common Stock issued prior to the Initial Exercise Date;
(b) up to an aggregate of 9,233,333 shares of Common Stock issued directly or
upon the exercise of Options to directors, officers, employees, or consultants
of the Company in connection with their service as directors of the Company,
their employment by the Company or their retention as consultants by the
Company, in each case authorized by the Board and issued pursuant to the
Company’s 2016 Equity Incentive Plan and 2016 Employment Inducement Award Plan
(including all such shares of Common Stock and Options outstanding prior to the
Initial Exercise Date); (c) shares of Common Stock issued upon the conversion or
exercise of Options (other than Options covered by clause (b) above) or
Convertible Securities issued prior to the Initial Exercise Date, provided that
such securities are not amended after the date hereof to increase the number of
shares of Common Stock issuable thereunder or to lower the exercise or
conversion price thereof; (d) shares of Common Stock, Options or Convertible
Securities issued (i) to persons in connection with a joint venture, strategic
alliance or other commercial relationship with such person (including persons
that are customers, suppliers and strategic partners of the Company) relating to
the operation of the Company’s business and not for the primary purpose of
raising equity capital and approved by the Board, (ii) in connection with a
transaction in which the Company, directly or indirectly, acquires another
business or its tangible or intangible assets, or (iii) to lenders as equity
kickers in connection with debt financings of the Company, in each case where
such transactions have been approved by the Board; (e) shares of Common Stock in
an offering for cash for the account of the Company that is underwritten on a
firm commitment basis and is registered with the Securities and Exchange
Commission under the Securities Act of 1933, as amended; or (f) shares of Common
Stock, Options or Convertible Securities issued to the lessor or vendor in any
office lease or equipment lease or similar equipment financing transaction in
which the Company obtains the use of such office space or equipment for its
business.

“Options” means any warrants or other rights or options to subscribe for or
purchase Common Stock or Convertible Securities.

Section 2.Exercise.

(a)Exercise of Warrant. Exercise of the purchase rights represented by this
Warrant may be made, in whole or in part, at any time or times on or after the
Initial

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Exercise Date and on or before the Termination Date by delivery to the Company
(or such other office or agency that the Company may designate by notice in
writing to the registered Holder at the address of the Holder appearing on the
books of the Company), as applicable, of a duly executed facsimile copy or PDF
copy submitted by electronic (or e-mail attachment) of the Notice of Exercise in
the form annexed hereto as Exhibit A. Within the earlier of (i) three (3)
Trading Days and (ii) the number of Trading Days comprising the Standard
Settlement Period (as defined in Section 2(d)(i) herein) following the date of
exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for
the shares specified in the applicable Notice of Exercise by wire transfer or
cashier’s check drawn on a United States bank unless the cashless exercise
procedure specified in Section 2(c) below is specified in the applicable Notice
of Exercise. No ink-original Notice of Exercise shall be required, nor shall any
medallion guarantee (or other type of guarantee or notarization) of any Notice
of Exercise form be required. Notwithstanding anything herein to the contrary,
the Holder shall not be required to physically surrender this Warrant to the
Company until the Holder has purchased all of the Warrant Shares available
hereunder and the Warrant has been exercised in full, in which case, the Holder
shall surrender this Warrant to the Company for cancellation within three (3)
Trading Days of the date the final Notice of Exercise is delivered to the
Company. Partial exercises of this Warrant resulting in purchases of a portion
of the total number of Warrant Shares available hereunder shall have the effect
of lowering the outstanding number of Warrant Shares purchasable hereunder in an
amount equal to the applicable number of Warrant Shares purchased. The Holder
and the Company shall maintain records showing the number of Warrant Shares
purchased and the date of such purchases. The Company shall deliver any
objection to any Notice of Exercise within one (1) Business Day of receipt of
such notice. The Holder and any assignee, by acceptance of this Warrant,
acknowledge and agree that, by reason of the provisions of this paragraph,
following the purchase of a portion of the Warrant Shares hereunder, the number
of Warrant Shares available for purchase hereunder at any given time may be less
than the amount stated on the face hereof.

(b)Exercise Price. The exercise price per share of the Common Stock under this
Warrant shall be $2.17, subject to adjustment hereunder (the “Exercise Price”).

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(c)Cashless Exercise. This Warrant may also be exercised, in whole or in part,
by means of a “cashless exercise” in which the Holder shall be entitled to
receive a number of Warrant Shares equal to the quotient obtained by dividing
[(A-B) (X)] by (A), where:

(A) = as applicable: (i) the VWAP on the Trading Day immediately preceding the
date of the applicable Notice of Exercise if such Notice of Exercise is (1) both
executed and delivered pursuant to Section 2(a) hereof on a day that is not a
Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof
on a Trading Day prior to the opening of “regular trading hours” (as defined in
Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws)
on such Trading Day, (ii) at the option of the Holder, (y) the VWAP on the
Trading Day immediately preceding the date the applicable Notice of Exercise is
delivered or (z) the Bid Price of the Common Stock on the principal Trading
Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of
the applicable Notice of Exercise if such Notice of Exercise is executed during
“regular trading hours” on a Trading Day and is delivered within two (2) hours
thereafter pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the
applicable Notice of Exercise if the date of such Notice of Exercise is a
Trading Day and such Notice of Exercise is both executed and delivered pursuant
to Section 2(a) hereof after the close of “regular trading hours” on such
Trading Day;

(B) = the Exercise Price of this Warrant, as adjusted hereunder; and

(X) = the number of Warrant Shares that would be issuable upon exercise of this
Warrant in accordance with the terms of this Warrant if such exercise were by
means of a cash exercise rather than a cashless exercise.

If Warrant Shares are issued in such a cashless exercise, the parties
acknowledge and agree that in accordance with Section 3(a)(9) of the Securities
Act, the Warrant Shares shall take on the characteristics of the Warrants being
exercised, and the holding period of the Warrant Shares being issued may be
tacked on to the holding period of this Warrant. The Company agrees not to take
any position contrary to this Section 2(c).

“Bid Price” means, for any date, the price determined by the first of the
following clauses that applies: (a) if the Common Stock is then listed or quoted
on a Trading Market, the bid price of the Common Stock for the time in question
(or the nearest preceding date) on the Trading Market on which the Common Stock
is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day
from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if

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OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as
applicable, (c) if the Common Stock is not then listed or quoted for trading on
OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink
Sheets” published by OTC Markets Group, Inc. (or a similar organization or
agency succeeding to its functions of reporting prices), the most recent bid
price per share of the Common Stock so reported, or (d) in all other cases, the
fair market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the Holders of all Warrants issued pursuant
to the Credit Agreement and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.

“VWAP” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the Common Stock for
such date (or the nearest preceding date) on the Trading Market on which the
Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a
Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date)
on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or
quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then
reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar
organization or agency succeeding to its functions of reporting prices), the
most recent bid price per share of the Common Stock so reported, or (d) in all
other cases, the fair market value of a share of Common Stock as determined by
an independent appraiser selected in good faith by the Holders of all Warrants
issued pursuant to the Credit Agreement and reasonably acceptable to the
Company, the fees and expenses of which shall be paid by the Company.

Notwithstanding anything herein to the contrary, on the Termination Date, this
Warrant shall be automatically exercised via cashless exercise pursuant to this
Section 2(c).

(d)Mechanics of Exercise.

(i)Delivery of Warrant Shares Upon Exercise. Warrant Shares purchased hereunder
shall be transmitted by the Transfer Agent to the Holder by crediting the
account of the Holder’s or its designee’s balance account with The Depository
Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if
the Company is then a participant in such system and either (A) there is an
effective registration statement permitting the issuance of the Warrant Shares
to or resale of the Warrant Shares by the Holder or (B) the Warrant Shares are
eligible for resale by the Holder without volume or manner-of-sale limitations
pursuant to Rule

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144, and otherwise by physical delivery of a certificate, registered in the
Company’s share register in the name of the Holder or its designee, for the
number of Warrant Shares to which the Holder is entitled pursuant to such
exercise to the address specified by the Holder in the Notice of Exercise by the
date that is the earlier of (i) three (3) Trading Days and (ii) the number of
Trading Days comprising the Standard Settlement Period after the delivery to the
Company of the Notice of Exercise (such date, the “Warrant Share Delivery
Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for
all corporate purposes to have become the holder of record of the Warrant Shares
with respect to which this Warrant has been exercised, irrespective of the date
of delivery of the Warrant Shares, provided that payment of the aggregate
Exercise Price (other than in the case of a cashless exercise) is received
within the earlier of (i) three (3) Trading Days and (ii) the number of Trading
Days comprising the Standard Settlement Period following delivery of the Notice
of Exercise. If the Company fails for any reason to deliver to the Holder the
Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery
Date, the Company shall pay to the Holder, in cash, as liquidated damages and
not as a penalty, for each $1,000 of Warrant Shares subject to such exercise
(based on the VWAP of the Common Stock on the date of the applicable Notice of
Exercise), $5 per Trading Day (increasing to $10 per Trading Day on the fifth
(5th) Trading Day after such liquidated damages begin to accrue) for each
Trading Day after such Warrant Share Delivery Date (subject to receipt of the
aggregate Exercise Price for the applicable exercise (other than in the case of
a cashless exercise)) until such Warrant Shares are delivered or Holder rescinds
such exercise. The Company agrees to maintain a transfer agent that is a
participant in the FAST program so long as this Warrant remains outstanding and
exercisable. As used herein, “Standard Settlement Period” means the standard
settlement period, expressed in a number of Trading Days, on the Company’s
primary Trading Market with respect to the Common Stock as in effect on the date
of delivery of the Notice of Exercise.

(ii)Delivery of New Warrants Upon Exercise. If this Warrant shall have been
exercised in part, the Company shall, at the request of a Holder and upon
surrender of this Warrant certificate, at the time of delivery of the Warrant
Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder
to purchase the unpurchased Warrant Shares called for by this Warrant, which new
Warrant shall in all other respects be identical with this Warrant.

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(iii)Rescission Rights. If the Company fails to cause the Transfer Agent to
transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the
Warrant Share Delivery Date (subject to receipt of the aggregate Exercise Price
for the applicable exercise (other than in the case of a cashless exercise)),
then the Holder will have the right to rescind such exercise.

(iv)Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon
Exercise. In addition to any other rights available to the Holder, if the
Company fails to cause the Transfer Agent to transmit to the Holder the Warrant
Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an
exercise on or before the Warrant Share Delivery Date (subject to receipt of the
aggregate Exercise Price for the applicable exercise (other than in the case of
a cashless exercise)), and if after such date the Holder is required by its
broker to purchase (in an open market transaction or otherwise) or the Holder’s
brokerage firm otherwise purchases, shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Warrant Shares which the Holder
anticipated receiving upon such exercise (a “Buy-In”), then the Company shall
(A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s
total purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the
number of Warrant Shares that the Company was required to deliver to the Holder
in connection with the exercise at issue times (2) the price at which the sell
order giving rise to such purchase obligation was executed, and (B) at the
option of the Holder, either reinstate the portion of the Warrant and equivalent
number of Warrant Shares for which such exercise was not honored (in which case
such exercise shall be deemed rescinded) or deliver to the Holder the number of
shares of Common Stock that would have been issued had the Company timely
complied with its exercise and delivery obligations hereunder. For example, if
the Holder purchases Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted exercise of shares of Common Stock
with an aggregate sale price giving rise to such purchase obligation of $10,000,
under clause (A) of the immediately preceding sentence the Company shall be
required to pay the Holder $1,000. The Holder shall provide the Company written
notice indicating the amounts payable to the Holder in respect of the Buy-In
and, upon request of the Company, evidence of the amount of such loss. Nothing
herein shall limit a Holder’s right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or

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injunctive relief with respect to the Company’s failure to timely deliver shares
of Common Stock upon exercise of the Warrant as required pursuant to the terms
hereof.

(v)No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. As to any
fraction of a share which the Holder would otherwise be entitled to purchase
upon such exercise, the Company shall, at its election, either pay a cash
adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next whole share.

(vi)Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made
without charge to the Holder for any issue or transfer tax or other incidental
expense in respect of the issuance of such Warrant Shares, all of which taxes
and expenses shall be paid by the Company, and such Warrant Shares shall be
issued in the name of the Holder or in such name or names as may be directed by
the Holder; provided, however, that in the event that Warrant Shares are to be
issued in a name other than the name of the Holder, this Warrant when
surrendered for exercise shall be accompanied by the Assignment Form, in the
form attached hereto as Exhibit B, duly executed by the Holder and the Company
may require, as a condition thereto, the payment of a sum sufficient to
reimburse it for any transfer tax incidental thereto. The Company shall pay all
Transfer Agent fees required for same-day processing of any Notice of Exercise
and all fees to the Depository Trust Company (or another established clearing
corporation performing similar functions) required for same-day electronic
delivery of the Warrant Shares.

(vii)Closing of Books. The Company will not close its stockholder books or
records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.

(e)Holder’s Exercise Limitations. Unless a Holder has made an election on its
signature page hereto, to have this Section 2(e) not apply to him/her/it, the
Company shall not effect any exercise of this Warrant, and a Holder shall not
have the right to exercise any portion of this Warrant, pursuant to Section 2 or
otherwise, to the extent that after giving effect to such issuance after
exercise as set forth on the applicable Notice of Exercise, the Holder (together
with the Holder’s Affiliates, and any other Persons acting as a group together
with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution

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Parties”)), would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below). For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by the Holder and its
Affiliates and Attribution Parties shall include the number of shares of Common
Stock issuable upon exercise of this Warrant with respect to which such
determination is being made, but shall exclude the number of shares of Common
Stock which would be issuable upon (i) exercise of the remaining, nonexercised
portion of this Warrant beneficially owned by the Holder or any of its
Affiliates or Attribution Parties and (ii) exercise or conversion of the
unexercised or nonconverted portion of any other securities of the Company
(including, without limitation, any other any securities of the Company or the
subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, right,
option, warrant or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock  subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by the Holder or
any of its Affiliates or Attribution Parties. Except as set forth in the
preceding sentence, for purposes of this Section 2(e), beneficial ownership
shall be calculated in accordance with Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder, it being acknowledged by the
Holder that the Company is not representing to the Holder that such calculation
is in compliance with Section 13(d) of the Exchange Act and the Holder is solely
responsible for any schedules required to be filed in accordance therewith. To
the extent that the limitation contained in this Section 2(e) applies, the
determination of whether this Warrant is exercisable (in relation to other
securities owned by the Holder together with any Affiliates and Attribution
Parties) and of which portion of this Warrant is exercisable shall be in the
sole discretion of the Holder, and the submission of a Notice of Exercise shall
be deemed to be the Holder’s determination of whether this Warrant is
exercisable (in relation to other securities owned by the Holder together with
any Affiliates and Attribution Parties) and of which portion of this Warrant is
exercisable, in each case subject to the Beneficial Ownership Limitation, and
the Company shall have no obligation to verify or confirm the accuracy of such
determination. In addition, a determination as to any group status as
contemplated above shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder. For purposes
of this Section 2(e), in determining the

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number of outstanding shares of Common Stock, a Holder may rely on the number of
outstanding shares of Common Stock as reflected in (A) the Company’s most recent
periodic or annual report filed with the Commission, as the case may be, (B) a
more recent public announcement by the Company or (C) a more recent written
notice by the Company or the Transfer Agent setting forth the number of shares
of Common Stock outstanding. Upon the written or oral request of a Holder, the
Company shall within two Trading Days confirm orally and in writing to the
Holder the number of shares of Common Stock then outstanding. In any case, the
number of outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company, including
this Warrant, by the Holder or its Affiliates or Attribution Parties since the
date as of which such number of outstanding shares of Common Stock was reported.
The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of
the Common Stock outstanding immediately after giving effect to the issuance of
shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon
notice to the Company, may increase or decrease the Beneficial Ownership
Limitation provisions of this Section 2(e), provided that the Beneficial
Ownership Limitation in no event exceeds 9.99% of the number of shares of the
Common Stock outstanding immediately after giving effect to the issuance of
shares of Common Stock upon exercise of this Warrant held by the Holder and the
provisions of this Section 2(e) shall continue to apply. Any increase in the
Beneficial Ownership Limitation will not be effective until the 61st day after
such notice is delivered to the Company. The provisions of this paragraph shall
be construed and implemented in a manner otherwise than in strict conformity
with the terms of this Section 2(e) to correct this paragraph (or any portion
hereof) which may be defective or inconsistent with the intended Beneficial
Ownership Limitation herein contained or to make changes or supplements
necessary or desirable to properly give effect to such limitation. The
limitations contained in this paragraph shall apply to a successor holder of
this Warrant.

Section 3.Certain Adjustments.

(a)Stock Dividends and Splits. If the Company, at any time or from time to time
while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes
a distribution or distributions on shares of its Common Stock or any other
equity or equity equivalent securities payable in shares of Common Stock (which,
for avoidance of doubt, shall not include any shares of Common Stock issued by
the Company upon exercise of this Warrant), (ii) subdivides outstanding shares
of Common Stock into a larger number of

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shares, (iii) combines (including by way of reverse stock split) outstanding
shares of Common Stock into a smaller number of shares, or (iv) issues by
reclassification of shares of the Common Stock any shares of capital stock of
the Company, then in each case the Exercise Price in effect immediately prior to
such dividend distribution, subdivision, combination or reclassification shall
be multiplied by a fraction of which the numerator shall be the number of shares
of Common Stock (excluding treasury shares, if any) outstanding immediately
before such event and of which the denominator shall be the number of shares of
Common Stock outstanding immediately after such event, and the number of shares
issuable upon exercise of this Warrant shall be proportionately adjusted such
that the aggregate Exercise Price of this Warrant shall remain unchanged. Any
adjustment made pursuant to this Section 3(a) shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or reclassification.

(b)Subsequent Rights Offerings. In addition to any adjustments pursuant to
Section 3(a) above, if at any time the Company grants, issues or sells any
Common Stock, Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of any
class of shares of Common Stock (the “Purchase Rights”), then the Holder shall
be entitled to acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which the Holder could have acquired if the Holder had
held the number of shares of Common Stock acquirable upon complete exercise of
this Warrant (without regard to any limitations on exercise hereof, including
without limitation, the Beneficial Ownership Limitation) immediately before the
date on which a record is taken for the grant, issuance or sale of such Purchase
Rights, or, if no such record is taken, the date as of which the record holders
of shares of Common Stock are to be determined for the grant, issue or sale of
such Purchase Rights (provided, however, to the extent that the Holder’s right
to participate in any such Purchase Right would result in the Holder exceeding
the Beneficial Ownership Limitation, then the Holder shall not be entitled to
participate in such Purchase Right to such extent (or beneficial ownership of
such shares of Common Stock as a result of such Purchase Right to such extent)
and such Purchase Right to such extent shall be held in abeyance for the Holder
until such time, if ever, as its right thereto would not result in the Holder
exceeding the Beneficial Ownership Limitation).

(c)Pro Rata Distributions. During such time as this Warrant is outstanding, if
the Company shall declare or make any dividend or other distribution (other than
cash dividends) of its assets (or rights to acquire its assets) to holders of
shares of Common Stock, by way of return of capital or otherwise (including,
without limitation, any distribution of stock or other securities, property or
options by way of a dividend, spin off, reclassification, corporate
rearrangement, scheme of arrangement or other similar transaction)

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other than a dividend or other distribution described in Section 3(a) above (a
“Distribution”), at any time after the issuance of this Warrant, then, in each
such case, the Holder shall be entitled to participate in such Distribution to
the same extent that the Holder would have participated therein if the Holder
had held the number of shares of Common Stock acquirable upon complete exercise
of this Warrant (without regard to any limitations on exercise hereof, including
without limitation, the Beneficial Ownership Limitation) immediately before the
date of which a record is taken for such Distribution, or, if no such record is
taken, the date as of which the record holders of shares of Common Stock are to
be determined for the participation in such Distribution (provided, however, to
the extent that the Holder’s right to participate in any such Distribution would
result in the Holder exceeding the Beneficial Ownership Limitation, then the
Holder shall not be entitled to participate in such Distribution to such extent
(or in the beneficial ownership of any shares of Common Stock as a result of
such Distribution to such extent) and the portion of such Distribution shall be
held in abeyance for the benefit of the Holder until such time, if ever, as its
right thereto would not result in the Holder exceeding the Beneficial Ownership
Limitation). To the extent that this Warrant has not been partially or
completely exercised at the time of such Distribution, such portion of the
Distribution shall be held in abeyance for the benefit of the Holder until the
Holder has exercised this Warrant.

(d)Fundamental Transaction. If, at any time while this Warrant is outstanding,
(i) the Company, directly or indirectly, in one or more related transactions
effects any merger or consolidation of the Company with or into another Person,
(ii) the Company, directly or indirectly, effects any sale, lease, exclusive
license, assignment, transfer, conveyance or other disposition of all or
substantially all of its assets in one or a series of related transactions,
(iii) any, direct or indirect, purchase offer, tender offer or exchange offer
(whether by the Company or another Person) is completed pursuant to which
holders of Common Stock are permitted to sell, tender or exchange their shares
for other securities, cash or property and has been accepted by the holders of
50% or more of the outstanding Common Stock, (iv) the Company, directly or
indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property (other than as a result of a
stock split, combination or reclassification of shares of Common Stock covered
by Section 3(a) above), or (v) the Company, directly or indirectly, in one or
more related transactions consummates a stock or share purchase agreement or
other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person or
group of Persons whereby such other Person or group acquires more than 50% of
the outstanding shares of Common Stock (not including any shares of Common Stock
held by the other Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock or share
purchase agreement or other business

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combination) (each a “Fundamental Transaction”), then, upon any subsequent
exercise of this Warrant, the Holder shall have the right to receive, for each
Warrant Share that would have been issuable upon such exercise immediately prior
to the occurrence of such Fundamental Transaction, at the option of the Holder
(without regard to any limitation in Section 2(e) on the exercise of this
Warrant), the number of shares of Common Stock of the successor or acquiring
corporation or of the Company, if it is the surviving corporation, and any
additional consideration (the “Alternate Consideration”) receivable as a result
of such Fundamental Transaction by a holder of the number of shares of Common
Stock for which this Warrant is exercisable immediately prior to such
Fundamental Transaction (without regard to any limitation in Section 2(e) on the
exercise of this Warrant). For purposes of any such exercise, the determination
of the Exercise Price shall be appropriately adjusted to apply to such Alternate
Consideration based on the amount of Alternate Consideration issuable in respect
of one share of Common Stock in such Fundamental Transaction, and the Company
shall apportion the Exercise Price among the Alternate Consideration in a
reasonable manner reflecting the relative value of any different components of
the Alternate Consideration. If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental
Transaction. The Company shall cause any successor entity in a Fundamental
Transaction in which the Company is not the survivor (the “Successor Entity”) to
assume in writing all of the obligations of the Company under this Warrant and
the Registration Rights Agreement in accordance with the provisions of this
Section 3(e) pursuant to written agreements in form and substance reasonably
satisfactory to the Holder and approved by the Holder (without unreasonable
delay) prior to such Fundamental Transaction and shall, at the option of the
Holder, deliver to the Holder in exchange for this Warrant a security of the
Successor Entity evidenced by a written instrument substantially similar in form
and substance to this Warrant which is exercisable for a corresponding number of
shares of capital stock of such Successor Entity (or its parent entity)
equivalent to the shares of Common Stock acquirable and receivable upon exercise
of this Warrant (without regard to any limitations on the exercise of this
Warrant) prior to such Fundamental Transaction, and with an exercise price which
applies the exercise price hereunder to such shares of capital stock (but taking
into account the relative value of the shares of Common Stock pursuant to such
Fundamental Transaction and the value of such shares of capital stock, such
number of shares of capital stock and such exercise price being for the purpose
of protecting the economic value of this Warrant immediately prior to the
consummation of such Fundamental Transaction), and which is reasonably
satisfactory in form and substance to the Holder. Upon the occurrence of any
such Fundamental Transaction, the Successor Entity shall succeed to, and be
substituted for (so that from and after the date of such Fundamental
Transaction, the provisions of this Warrant and the Registration Rights

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Agreement referring to the “Company” shall refer instead to the Successor
Entity), and may exercise every right and power of the Company and shall assume
all of the obligations of the Company under this Warrant and the Registration
Rights Agreement with the same effect as if such Successor Entity had been named
as the Company herein.

(e)Adjustment to Exercise Price Upon Issuance of Common Stock. Except as
provided in Section 3(g) and except in the case of an event described in either
Section 3(a), Section 3(b) or Section 3(c), if the Company shall, at any time or
from time to time after the Initial Exercise Date, issue or sell, or in
accordance with Section 3(h) is deemed to have issued or sold, any shares of
Common Stock without consideration or for consideration per share less than the
Exercise Price in effect immediately prior to such issuance or sale (or deemed
issuance or sale), then immediately upon such issuance or sale (or deemed
issuance or sale), the Exercise Price in effect immediately prior to such
issuance or sale (or deemed issuance or sale) shall be reduced (and in no event
increased) to an Exercise Price equal to the quotient obtained by dividing:

(i)the sum of (A) the product obtained by multiplying the Common Stock Deemed
Outstanding immediately prior to such issuance or sale (or deemed issuance or
sale) by the Exercise Price then in effect plus (B) the aggregate consideration,
if any, received by the Company upon such issuance or sale (or deemed issuance
or sale); by

(ii)the sum of (A) the Common Stock Deemed Outstanding immediately prior to such
issuance or sale (or deemed issuance or sale) plus (B) the aggregate number of
shares of Common Stock issued or sold (or deemed issued or sold) by the Company
in such issuance or sale (or deemed issuance or sale).

(f)Adjustment to Number of Warrant Shares Upon Adjustment to Exercise Price.
Upon any and each adjustment of the Exercise Price as provided in Section 3(e),
the number of Warrant Shares issuable upon the exercise of this Warrant
immediately prior to any such adjustment shall be increased to a number of
Warrant Shares equal to the quotient obtained by dividing:

(i)the product of (A) the Exercise Price in effect immediately prior to any such
adjustment multiplied by (B) the number of Warrant Shares issuable upon exercise
of this Warrant immediately prior to any such adjustment; by

(ii)the Exercise Price resulting from such adjustment.

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(g)Exceptions To Adjustment Upon Issuance of Common Stock. Anything herein to
the contrary notwithstanding, there shall be no adjustment to the Exercise Price
or the number of Warrant Shares issuable upon exercise of this Warrant with
respect to any Excluded Issuance.

(h)Effect of Certain Events on Adjustment to Exercise Price. For purposes of
determining the adjusted Exercise Price under Section 3(e) hereof, the following
shall be applicable:

(i)Issuance of Options. If the Company shall, at any time or from time to time
after the Initial Exercise Date, in any manner grant or sell (whether directly
or by assumption in a merger or otherwise) any Options, whether or not such
Options or the right to convert or exchange any Convertible Securities issuable
upon the exercise of such Options are immediately exercisable, and the price per
share (determined as provided in this paragraph and in Section 3(h)(v) ) for
which Common Stock is issuable upon the exercise of such Options or upon the
conversion or exchange of Convertible Securities issuable upon the exercise of
such Options is less than the Exercise Price in effect immediately prior to the
time of the granting or sale of such Options, then the total maximum number of
shares of Common Stock issuable upon the exercise of such Options or upon
conversion or exchange of the total maximum amount of Convertible Securities
issuable upon the exercise of such Options shall be deemed to have been issued
as of the date of granting or sale of such Options (and thereafter shall be
deemed to be outstanding for purposes of adjusting the Exercise Price under
Section 3(e)), at a price per share equal to the quotient obtained by dividing
(A) the sum (which sum shall constitute the applicable consideration received
for purposes of Section 3(e)) of (x) the total amount, if any, received or
receivable by the Company as consideration for the granting or sale of all such
Options, plus (y) the minimum aggregate amount of additional consideration
payable to the Company upon the exercise of all such Options, plus (z), in the
case of such Options which relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable to the Company
upon the issuance or sale of all such Convertible Securities and the conversion
or exchange of all such Convertible Securities, by (B) the total maximum number
of shares of Common Stock issuable upon the exercise of all such Options or upon
the conversion or exchange of all Convertible Securities issuable upon the
exercise of all such Options. Except as otherwise provided in Section 3(h)(iii),
no further adjustment of the Exercise Price shall be made upon the actual
issuance of Common Stock or of Convertible Securities upon exercise of

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such Options or upon the actual issuance of Common Stock upon conversion or
exchange of Convertible Securities issuable upon exercise of such Options.

(ii)Issuance of Convertible Securities. If the Company shall, at any time or
from time to time after the Initial Exercise Date, in any manner grant or sell
(whether directly or by assumption in a merger or otherwise) any Convertible
Securities, whether or not the right to convert or exchange any such Convertible
Securities is immediately exercisable, and the price per share (determined as
provided in this paragraph and in Section 3(h)(v) ) for which Common Stock is
issuable upon the conversion or exchange of such Convertible Securities is less
than the Exercise Price in effect immediately prior to the time of the granting
or sale of such Convertible Securities, then the total maximum number of shares
of Common Stock issuable upon conversion or exchange of the total maximum amount
of such Convertible Securities shall be deemed to have been issued as of the
date of granting or sale of such Convertible Securities (and thereafter shall be
deemed to be outstanding for purposes of adjusting the Exercise Price pursuant
to Section 3(e)), at a price per share equal to the quotient obtained by
dividing (A) the sum (which sum shall constitute the applicable consideration
received for purposes of Section 3(e)) of (x) the total amount, if any, received
or receivable by the Company as consideration for the granting or sale of such
Convertible Securities, plus (y) the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the conversion or exchange of
all such Convertible Securities, by (B) the total maximum number of shares of
Common Stock issuable upon the conversion or exchange of all such Convertible
Securities. Except as otherwise provided in Section 3(h)(iii), no further
adjustment of the Exercise Price shall be made upon the actual issuance of
Common Stock upon conversion or exchange of such Convertible Securities or the
issue or sale of Convertible Securities upon exercise of any Options to purchase
any such Convertible Securities for which adjustments of the Exercise Price have
been made pursuant to the other provisions of this Section 3(h).

(iii)Change in Terms of Options or Convertible Securities. Upon any change in
any of (A) the total amount received or receivable by the Company as
consideration for the granting or sale of any Options or Convertible Securities
referred to in Section 3(h)(i) or Section 3(h)(ii) hereof, (B) the minimum
aggregate amount of additional consideration, if any, payable to the Company
upon the exercise of any Options or

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upon the issuance, conversion or exchange of any Convertible Securities referred
to in Section 3(h)(i) or Section 3(h)(ii) hereof, (C) the rate at which
Convertible Securities referred to in Section 3(h)(i) or Section 3(h)(ii) hereof
are convertible into or exchangeable for Common Stock, or (D) the maximum number
of shares of Common Stock issuable in connection with any Options referred to in
Section 3(h)(i) hereof or any Convertible Securities referred to in Section
3(h)(ii) hereof (in each case, other than in connection with an Excluded
Issuance), then (whether or not the original issuance or sale of such Options or
Convertible Securities resulted in an adjustment to the Exercise Price pursuant
to this Section 3) the Exercise Price in effect at the time of such change shall
be adjusted or readjusted, as applicable, to the Exercise Price which would have
been in effect at such time pursuant to the provisions of this Section 3 had
such Options or Convertible Securities still outstanding provided for such
changed consideration, conversion rate or maximum number of shares, as the case
may be, at the time initially granted, issued or sold, but only if as a result
of such adjustment or readjustment the Exercise Price then in effect is reduced,
and the number of Warrant Shares issuable upon the exercise of this Warrant
immediately prior to any such adjustment or readjustment shall be
correspondingly adjusted or readjusted pursuant to the provisions of Section
3(e).

(iv)Treatment of Expired or Terminated Options or Convertible Securities. Upon
the expiration or termination of any unexercised Option (or portion thereof) or
any unconverted or unexchanged Convertible Security (or portion thereof) for
which any adjustment (either upon its original issuance or upon a revision of
its terms) was made pursuant to this Section 3 (including without limitation
upon the redemption or purchase for consideration of all or any portion of such
Option or Convertible Security by the Company), the Exercise Price then in
effect hereunder shall forthwith be changed pursuant to the provisions of this
Section 3 to the Exercise Price which would have been in effect at the time of
such expiration or termination had such unexercised Option (or portion thereof)
or unconverted or unexchanged Convertible Security (or portion thereof), to the
extent outstanding immediately prior to such expiration or termination, never
been issued.

(v)Calculation of Consideration Received. If the Company shall, at any time or
from time to time after the Initial Exercise Date, issue or sell, or is deemed
to have issued or sold in accordance with Section 3(h), any shares of Common
Stock, Options or Convertible Securities: (A) for cash,

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the consideration received therefor shall be deemed to be the net amount
received by the Company therefor; (B) for consideration other than cash, the
amount of the consideration other than cash received by the Company shall be the
fair value of such consideration, except where such consideration consists of
marketable securities, in which case the amount of consideration received by the
Company shall be the market price (as reflected on any securities exchange,
quotation system or association or similar pricing system covering such
security) for such securities as of the end of business on the date of receipt
of such securities; (C) for no specifically allocated consideration in
connection with an issuance or sale of other securities of the Company, together
comprising one integrated transaction, the amount of the consideration therefor
shall be deemed to be the fair value of such portion of the aggregate
consideration received by the Company in such transaction as is attributable to
such shares of Common Stock, Options or Convertible Securities, as the case may
be, issued in such transaction; or (D) to the owners of the non-surviving entity
in connection with any merger in which the Company is the surviving corporation,
the amount of consideration therefor shall be deemed to be the fair value of
such portion of the net assets and business of the non-surviving entity as is
attributable to such shares of Common Stock, Options or Convertible Securities,
as the case may be, issued to such owners. The net amount of any cash
consideration and the fair value of any consideration other than cash or
marketable securities shall be determined in good faith jointly by the Board and
the Holder.

(vi)Record Date. For purposes of any adjustment to the Exercise Price or the
number of Warrant Shares in accordance with this Section 3, in case the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them (A) to receive a dividend or other distribution payable in Common
Stock, Options or Convertible Securities or (B) to subscribe for or purchase
Common Stock, Options or Convertible Securities, then such record date shall be
deemed to be the date of the issue or sale of the shares of Common Stock deemed
to have been issued or sold upon the declaration of such dividend or the making
of such other distribution or the date of the granting of such right of
subscription or purchase, as the case may be; provided, that if before the
distribution to its holders of Common Stock the Company legally abandons its
plan to pay or deliver such dividend, distribution, subscription or purchase
rights, then thereafter no adjustment shall be required by the taking of such

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record and any such adjustment previously made in respect thereof shall be
rescinded and annulled.

(vii)Treasury Shares. The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held by or for the account of the
Company or any of its wholly-owned subsidiaries, and the disposition of any such
shares (other than the cancellation or retirement thereof or the transfer of
such shares among the Company and its wholly-owned subsidiaries) shall be
considered an issue or sale of Common Stock for the purpose of this Section 3.

Whenever following the Initial Exercise Date, the Company shall issue or sell,
or in accordance with Section 3(h) is deemed to have issued or sold, any shares
of Common Stock, the Company shall prepare a certificate signed by an executive
officer setting forth, in reasonable detail, the number of shares issued or
sold, or deemed issued or sold, the amount and the form of the consideration
received by the Company and the method of computation of such amount and shall
cause copies of such certificate to be mailed to the Holder at the address
specified in Section 5 hereof or at such other address as may be provided to the
Company in writing by the Holder.

(i)Calculations. All calculations under this Section 3 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. For purposes
of this Section 3, the number of shares of Common Stock deemed to be issued and
outstanding as of a given date shall be the sum of the number of shares of
Common Stock (excluding treasury shares, if any) issued and outstanding.

(j)Notice to Holder.

(i)Adjustment to Exercise Price. Whenever the Exercise Price is adjusted
pursuant to any provision of this Section 3, the Company shall promptly deliver
to the Holder by facsimile or email a notice setting forth the Exercise Price
after such adjustment and any resulting adjustment to the number of Warrant
Shares and setting forth a brief statement of the facts requiring such
adjustment.

(ii)Notice to Allow Exercise by Holder. If (A) the Company shall declare a
dividend (or any other distribution in whatever form) on the Common Stock, (B)
the Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock, (C) the Company shall authorize the granting to
all holders of the Common Stock rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights, (D) the approval of
any stockholders of the Company shall be required in connection

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with any reclassification of the Common Stock, any consolidation or merger to
which the Company is a party, any sale or transfer of all or substantially all
of the assets of the Company, or any compulsory share exchange whereby the
Common Stock is converted into other securities, cash or property, or (E) the
Company shall authorize the voluntary or involuntary dissolution, liquidation or
winding up of the affairs of the Company, then, in each case, the Company shall
cause to be delivered by facsimile or email to the Holder at its last facsimile
number or email address as it shall appear upon the Warrant Register of the
Company, at least 10 calendar days prior to the applicable record or effective
date hereinafter specified, a notice stating (x) the date on which a record is
to be taken for the purpose of such dividend, distribution, redemption, rights
or warrants, or if a record is not to be taken, the date as of which the holders
of the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer or share exchange
is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange; provided that the failure to deliver such notice or any defect
therein or in the delivery thereof shall not affect the validity of the
corporate action required to be specified in such notice. To the extent that any
notice provided in this Warrant constitutes, or contains, material, non-public
information regarding the Company or any of the subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K. The Holder shall remain entitled to exercise this Warrant during
the period commencing on the date of such notice to the effective date of the
event triggering such notice except as may otherwise be expressly set forth
herein.

(k)NASDAQ.  The Company shall not be obligated to issue any shares of Common
Stock upon exercise of this Warrant, and the Holder of this Warrant shall not
have the right to receive upon exercise of this Warrant any shares of Common
Stock, if the issuance of such shares of Common Stock (taken together with any
prior issuance of such shares upon the exercise of this Warrant) would exceed
the aggregate number of shares of Common Stock which the Company may issue
without breaching the Company’s obligations under the rules or regulations of
the Nasdaq Capital Market (the “Exchange Cap”), except that such limitation
shall not apply in the event that the Company (A) obtains the approval of its
stockholders as required by the

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applicable rules of the Nasdaq Capital Market for issuances of Common Stock in
excess of such amount or (B) obtains a written opinion from outside counsel to
the Company that such approval is not required, which opinion shall be
reasonably satisfactory to the Holder. Until such approval or written opinion is
obtained, the  Holder shall not be issued in the aggregate, upon exercise of
Warrants, shares of Common Stock in an amount greater than the Exchange Cap. In
the event that the Holder shall sell or otherwise transfer any of such Holder's
Warrants, the restrictions of the prior sentence shall apply to such
transferee.  

Section 4.Transfer of Warrant.

(a)Transferability. Subject to compliance with any applicable securities laws
and the conditions set forth in Section 4(d) hereof, this Warrant and all rights
hereunder (including, without limitation, any registration rights) are
transferable, in whole or in part, upon surrender of this Warrant at the
principal office of the Company or its designated agent, together with a written
assignment of this Warrant substantially in the form attached hereto duly
executed by the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees, as applicable, and
in the denomination or denominations specified in such instrument of assignment,
and shall issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be cancelled.
Notwithstanding anything herein to the contrary, the Holder shall not be
required to physically surrender this Warrant to the Company unless the Holder
has assigned this Warrant in full, in which case, the Holder shall surrender
this Warrant to the Company within three (3) Trading Days of the date the Holder
delivers an assignment form to the Company assigning this Warrant in full. The
Warrant, if properly assigned in accordance herewith, may be exercised by a new
holder for the purchase of Warrant Shares without having a new Warrant issued.

(b)New Warrants. This Warrant may be divided or combined with other Warrants
upon presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued, signed by the Holder or its agent or attorney. Subject to
compliance with Section 4(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice. All Warrants issued on transfers or exchanges shall
be dated the Issue Date and shall be identical with this Warrant except as to
the number of Warrant Shares issuable pursuant thereto.

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(c)Warrant Register. The Company shall register this Warrant, upon records to be
maintained by the Company for that purpose (the “Warrant Register”), in the name
of the record Holder hereof from time to time. The Company may deem and treat
the registered Holder of this Warrant as the absolute owner hereof for the
purpose of any exercise hereof or any distribution to the Holder, and for all
other purposes, absent actual notice to the contrary.

(d)Transfer Restrictions.

(i)The Warrants and Warrant Shares may only be disposed of in compliance with
state and federal securities laws. In connection with any transfer of the
Warrants and Warrnt Shares other than pursuant to an effective registration
statement or Rule 144, to the Company or to an Affiliate of the Holder or in
connection with a pledge, the Company may require the transferor thereof to
provide to the Company an opinion of counsel selected by the transferor and
reasonably acceptable to the Company, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Warrants or Warrant
Shares under the Securities Act. As a condition of transfer, any such transferee
shall agree in writing to be bound by the terms of this Warrant and the
Registration Rights Agreement and shall have the rights and obligations of a
Holder under this Warrant and the Registration Rights Agreement.

(ii)The Holder agrees to the imprinting, so long as is required by this Section
4(d), of a legend on any of the Warrant and the Warrant Shares in the following
form:

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE
SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

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The Company acknowledges and agrees that a Holder may from time to time pledge
pursuant to a bona fide margin agreement with a registered broker-dealer or
grant a security interest in some or all of the Warrants or Warrant Shares to a
financial institution that is an “accredited investor” as defined in Rule 501(a)
under the Securities Act and who agrees to be bound by the provisions of this
Warrant and the Registration Rights Agreement and, if required under the terms
of such arrangement, such Holder may transfer pledged or secured Warrants or
Warrant Shares to the pledgees or secured parties. Such a pledge or transfer
would not be subject to approval of the Company and no legal opinion of legal
counsel of the pledgee, secured party or pledgor shall be required in connection
therewith. Further, no notice shall be required of such pledge. At the
appropriate Holder’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Warrants or Warrant
Shares may reasonably request in connection with a pledge or transfer of the
Warrants or Warrant Shares, including, if the Warranr Shares are subject to
registration pursuant to the Registration Rights Agreement, the preparation and
filing of any required prospectus supplement under Rule 424(b)(3) under the
Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of Selling Stockholders (as defined in the
Registration Rights Agreement) thereunder.

(iii)Certificates evidencing the Warrant Shares shall not contain any legend
(including the legend set forth in Section 4(d)(ii) hereof), (A) while a
registration statement (including the Registration Statement) covering the
resale of such security is effective under the Securities Act, (B) following any
sale of such Warrant Shares pursuant to Rule 144, (C) if such Warrant Shares are
eligible for sale under Rule 144, without the requirement for the Company to be
in compliance with the current public information required under Rule 144 as to
such Warrant Shares and without volume or manner-of-sale restrictions, or (D) if
such legend is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the staff of
the Commission). The Company shall cause its counsel to issue a legal opinion to
the Transfer Agent promptly after the Effective Date if required by the Transfer
Agent to effect the removal of the legend hereunder. If all or any portion of
this Warrant is exercised at a time when there is an effective registration
statement to cover the resale of the Warrant Shares, or if such Warrant Shares
may be sold under Rule 144 and the Company is then in compliance with the
current public information required under Rule 144, or if the Warrant Shares may
be sold under Rule 144 without the requirement for the Company to be in
compliance with the current public information required under Rule 144 as to
such Warrant Shares or if such legend is not otherwise required under applicable
requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the staff of the Commission) then such Warrant Shares
shall be issued free of all legends. The

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Company agrees that following the Effective Date or at such time as such legend
is no longer required under this Section 4(d)(iii), it will, no later than the
earlier of (1) three (3) Trading Days and (2) the number of Trading Days
comprising the Standard Settlement Period (as defined below) following the
delivery by a Holder to the Company or the Transfer Agent of a certificate
representing Warrant Shares, as the case may be, issued with a restrictive
legend (such third Trading Day, the “Legend Removal Date”), deliver or cause to
be delivered to such Holder a certificate representing such shares that is free
from all restrictive and other legends. The Company may not make any notation on
its records or give instructions to the Transfer Agent that enlarge the
restrictions on transfer set forth in this Section 4. Certificates for
Securities subject to legend removal hereunder shall be transmitted by the
Transfer Agent to the Purchaser by crediting the account of the Holder’s prime
broker with the Depository Trust Company System as directed by such Holder.
“Effective Date” means the earliest of the date that (A) the Initial
Registration Statement has been declared effective by the Commission, (B) all of
the Warrant Shares have been sold pursuant to Rule 144 or may be sold pursuant
to Rule 144 without the requirement for the Company to be in compliance with the
current public information required under Rule 144 and without volume
or manner-of-sale restrictions, (C) following the one-year anniversary of the
Initial Issuance Date provided that a holder of Warrant Shares is not an
Affiliate of the Company, or (D) all of the Warrant Shares may be sold pursuant
to an exemption from registration under Section 4(a)(1) of the Securities Act
without volume or manner-of-sale restrictions and Company counsel has delivered
to such holders a standing written unqualified opinion that resales may then be
made by such holders of the Warrant Shares pursuant to such exemption which
opinion shall be in form and substance reasonably acceptable to such Holders.

(iv)In addition to such Holder’s other available remedies, the Company shall pay
to the Holder, in cash, (i) as partial liquidated damages and not as a penalty,
for each $1,000 of Warrant Shares (based on the VWAP of the Common Stock on the
date such Warrant Shares are submitted to the Transfer Agent) delivered for
removal of the restrictive legend and subject to Section 4(d)(ii), $5 per
Trading Day (increasing to $10 per Trading Day five (5) Trading Days after such
damages have begun to accrue) for each Trading Day after the Legend Removal Date
until such certificate is delivered without a legend and (ii) if the Company
fails to (A) issue and deliver (or cause to be delivered) to a Holder by the
Legend Removal Date a

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certificate representing the Warrant Shares so delivered to the Company by such
Holder that is free from all restrictive and other legends and (B) if after the
Legend Removal Date such Holder purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by such
Holder of all or any portion of the number of shares of Common Stock, or a sale
of a number of shares of Common Stock equal to all or any portion of the number
of shares of Common Stock that such Purchaser anticipated receiving from the
Company without any restrictive legend, then, an amount equal to the excess of
such Holder’s total purchase price (including brokerage commissions and other
reasonable, out-of-pocket expenses, if any) for the shares of Common Stock so
purchased (including brokerage commissions and other reasonable, out-of-pocket
expenses, if any) (the “Buy-In Price”) over the product of (1) such number of
Warrant Shares that the Company was required to deliver to such Holder by the
Legend Removal Date multiplied by (2) the lowest closing sale price of the
Common Stock on any Trading Day during the period commencing on the date of the
delivery by such Holder to the Company of the applicable Warrant Shares (as the
case may be) and ending on the date of such delivery and payment under this
clause (ii), at which point the Company’s obligation to deliver such certificate
shall terminate and such Warrant Shares shall be cancelled.

(e)The Holder agrees with the Company that such Purchaser will sell any Warrant
Shares  pursuant to either the registration requirements of the Securities Act,
including any applicable prospectus delivery requirements, or an exemption
therefrom, and that if Warrant Shares are sold pursuant to a Registration
Statement, they will be sold in compliance with the plan of distribution set
forth therein, and acknowledges that the removal of the restrictive legend from
certificates representing Warrant Shares as set forth in this Section 4(d) is
predicated upon the Company’s reliance upon this understanding.

(f)Representation by the Holder. The Holder, by the acceptance hereof,
represents and warrants that it is acquiring this Warrant and, upon any exercise
hereof, will acquire the Warrant Shares issuable upon such exercise, for its own
account and not with a view to or for distributing or reselling such Warrant
Shares or any part thereof in violation of the Securities Act or any applicable
state securities law, except pursuant to sales registered or exempted under the
Securities Act.

Section 5.Miscellaneous.

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(a)No Rights as Stockholder Until Exercise. This Warrant does not entitle the
Holder to any voting rights, dividends or other rights as a stockholder of the
Company prior to the exercise hereof as set forth in Section 2(d)(i), except as
expressly set forth in Section 3.

(b)Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that
upon receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant or any stock certificate
relating to the Warrant Shares, and in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to it (which, in the case of the
Warrant, shall not include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated, the Company
will make and deliver a new Warrant or stock certificate of like tenor and dated
as of such cancellation, in lieu of such Warrant or stock certificate.

(c)Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall not be a Business Day, then, such action may be taken or such right may be
exercised on the next succeeding Business Day.  “Business Day” means any day
except any Saturday, any Sunday, any day which is a federal legal holiday in the
United States or any day on which banking institutions in the State of New York
are authorized or required by law or other governmental action to close.

(d)Authorized Shares.

(i)The Company covenants that, during the period the Warrant is outstanding, it
will reserve from its authorized and unissued Common Stock a sufficient number
of shares to provide for the issuance of the Warrant Shares upon the exercise of
any purchase rights under this Warrant. The Company further covenants that its
issuance of this Warrant shall constitute full authority to its officers who are
charged with the duty of issuing the necessary Warrant Shares upon the exercise
of the purchase rights under this Warrant. The Company will take all such
reasonable action as may be necessary to assure that such Warrant Shares may be
issued as provided herein without violation of any applicable law or regulation,
or of any requirements of the Trading Market upon which the Common Stock may be
listed. The Company covenants that all Warrant Shares which may be issued upon
the exercise of the purchase rights represented by this Warrant will, upon
exercise of the purchase rights represented by this Warrant and payment for such
Warrant Shares in accordance herewith, be duly authorized, validly issued, fully
paid and nonassessable and free from all taxes, liens and charges created by the
Company in respect of the

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issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).

(ii)Except and to the extent as waived or consented to by the Holder, the
Company shall not by any action, including, without limitation, amending its
certificate of incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of Holder as set forth in this
Warrant against impairment. Without limiting the generality of the foregoing,
the Company will (i) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value, (ii) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant and (iii) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof, as may be,
necessary to enable the Company to perform its obligations under this Warrant.

(iii)Before taking any action which would result in an adjustment in the number
of Warrant Shares for which this Warrant is exercisable or in the Exercise
Price, the Company shall obtain all such authorizations or exemptions thereof,
or consents thereto, as may be necessary from any public regulatory body or
bodies having jurisdiction thereof.

(e)Jurisdiction. All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be determined in accordance
with the provisions of the Credit Agreement.

(f)Restrictions. The Holder acknowledges that the Warrant Shares acquired upon
the exercise of this Warrant, if not registered and the Holder does not utilize
cashless exercise, will have restrictions upon resale imposed by state and
federal securities laws.

(g)Nonwaiver and Expenses. No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of
such right or otherwise prejudice the Holder’s rights, powers or remedies.
Without limiting any other provision of this Warrant, if the Company willfully
and knowingly fails to comply with any provision of this Warrant, which results
in any material damages to the Holder, the

27

 

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Company shall pay to the Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys’ fees,
including those of appellate proceedings, incurred by the Holder in collecting
any amounts due pursuant hereto or in otherwise enforcing any of its rights,
powers or remedies hereunder.

(h)Notices. Any notice, request or other document required or permitted to be
given or delivered to the Holder by the Company shall be delivered in accordance
with the notice provisions of the Credit Agreement and Registration Rights
Agreement.

(i)Limitation of Liability. No provision hereof, in the absence of any
affirmative action by the Holder to exercise this Warrant to purchase Warrant
Shares, and no enumeration herein of the rights or privileges of the Holder,
shall give rise to any liability of the Holder for the purchase price of any
Common Stock or as a stockholder of the Company, whether such liability is
asserted by the Company or by creditors of the Company.

(j)Remedies. The Holder, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Warrant. The Company agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Warrant and hereby agrees to waive and
not to assert the defense in any action for specific performance that a remedy
at law would be adequate.

(k)Successors and Assigns. Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit of
and be binding upon the successors and permitted assigns of the Company and the
successors and permitted assigns of Holder. The provisions of this Warrant are
intended to be for the benefit of any Holder from time to time of this Warrant
and shall be enforceable by the Holder or holder of Warrant Shares.

(l)Amendment. This Warrant may be modified or amended or the provisions hereof
waived with the written consent of the Company and the Holder.

(m)Severability. Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Warrant shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Warrant.

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(n)Headings. The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

********************

 

 

(Signature Page Follows)

 

29

 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized as of the date first above indicated.

 

ALPHATEC HOLDINGS, INC.

 

 

By:__________________________________________

Name:

Title:

 

 

 

 

[SIGNATURE PAGE TO WARRANT]

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EXHIBIT A

 

NOTICE OF EXERCISE

 

To:aLPHATEC HOLDINGS, INC.

 

(1)The undersigned hereby elects to purchase ________ Warrant Shares of the
Company pursuant to the terms of the attached Warrant (only if exercised in
full), and tenders herewith payment of the exercise price in full, together with
all applicable transfer taxes, if any.

(2)Payment shall take the form of (check applicable box):

[ ] in lawful money of the United States; or

[ ] if permitted the cancellation of such number of Warrant Shares as is
necessary, in accordance with the formula set forth in subsection 2(c), to
exercise this Warrant with respect to the maximum number of Warrant Shares
purchasable pursuant to the cashless exercise procedure set forth in subsection
2(c).

(3)Please issue said Warrant Shares in the name of the undersigned or in such
other name as is specified below:

_______________________________

 

 

The Warrant Shares shall be delivered to the following DWAC Account Number:

 

_______________________________

 

_______________________________

 

_______________________________

 

(4)Accredited Investor. The undersigned is an “accredited investor” as defined
in Regulation D promulgated under the Securities Act of 1933, as amended. If the
undersigned exercises this Warrant other than by cashless exercise, the
undersigned hereby agrees to complete an “accredited investor” questionnaire for
the benefit of the Company substantially in the form provided to the Company in
connection with the issuance of the Warrant.

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity:
________________________________________________________________________

Signature of Authorized Signatory of Investing Entity:
_________________________________________________

Name of Authorized Signatory:
___________________________________________________________________

Title of Authorized Signatory:
____________________________________________________________________

Date:
________________________________________________________________________________________

 

 

 

Notice of Exercise – Warrant – Alphatec Holdings, Inc.

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Execution Version

EXHIBIT B

 

ASSIGNMENT FORM

(To assign the foregoing Warrant, execute this form and supply required
information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are
hereby assigned to

Name:

 

 

(Please Print)

Address:

 

 

Phone Number:

Email Address:

(Please Print)

______________________________________

______________________________________

Dated: _______________ __, ______

 

Holder’s Signature:

 

Holder’s Address:

 

 

 

 

Signature Page Alphatec Holdings, Inc. Warrant

 

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Execution Version

Schedule 2.1

 

AMORTIZATION

 

Payment DateAmount

 

June 30, 2021 through October 31, 2023$640,393

 

November 6, 2023Outstanding balance of all principal and interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

US_ACTIVE-145810304.2-329607-00023