Exhibit 10.3

FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT, SECURITY AND GUARANTY AGREEMENT

THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT, SECURITY AND GUARANTY
AGREEMENT (this “Agreement”) is made as of this 17 day of March, 2014, by and
among ALPHATEC HOLDINGS, INC., a Delaware corporation (“Alphatec Holdings”),
ALPHATEC SPINE, INC., a California corporation (“Alphatec Spine”), ALPHATEC
INTERNATIONAL LLC, a Delaware limited liability company (“Alphatec
International”), and ALPHATEC PACIFIC, INC. (also known as Kabushiki-Kaisha
Alphatec Pacific), a Japanese company (“Alphatec Pacific” and together with
Alphatec Holdings, Alphatec Spine, and Alphatec International, each being
referred to herein individually as a “Borrower”, and collectively as
“Borrowers”), and MIDCAP FUNDING IV, LLC, a Delaware limited liability company,
(as Agent for Lenders, “Agent”, and individually, as a Lender), and the other
financial institutions or other entities from time to time parties to the Credit
Agreement referenced below, each as a Lender.

RECITALS

A. Agent, Lenders, and Borrowers have entered into that certain Amended and
Restated Credit, Security and Guaranty Agreement, dated as of August 30, 2013
(the “Original Credit Agreement” and as the same is amended hereby and as it may
be further amended, modified, supplemented and restated from time to time, the
“Credit Agreement”), pursuant to which the Lenders have agreed to make certain
advances of money and to extend certain financial accommodations to Borrowers
and certain of its Affiliates in the amounts and manner set forth in the Credit
Agreement.

B. Borrowers have requested that Agent and Lenders agree to amend the Original
Credit Agreement in order to, among other things (i) permit Borrowers to enter
into the Deerfield Facility Agreement (as defined below) and to incur certain
Debt and grant certain Liens pursuant to the terms thereof, (ii) expressly
permit the merger, consolidation, wind up or liquidation of Surgiview S.A.S.,
(iii) permit Borrowers and their Subsidiaries to make certain payments related
to the Orthotec Litigation (as defined below), (iv) amend certain conditions
with respect to the drawing of second tranche of the Term Loan, (v) add certain
financial covenants and (vi) amend certain provisions thereof in order to
accommodate the foregoing.

C. Agent and Lenders are willing to agree to Borrowers’ request for such
amendments subject to and in accordance with the terms and conditions set forth
in this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing, the terms and conditions set
forth in this Agreement, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Agent, Lenders and Borrowers
hereby agree as follows:

1. Recitals. This Agreement shall constitute a Financing Document and the
Recitals and each reference to the Credit Agreement, unless otherwise expressly
noted, will be deemed to reference the Credit Agreement as amended hereby. The
Recitals set forth above shall be construed as part of this Agreement as if set
forth fully in the body of this Agreement and capitalized terms used but not
otherwise defined herein shall have the meanings ascribed to them in the Credit
Agreement (including those capitalize terms used in the Recitals hereto).

2. Amendment to Original Credit Agreement. Subject to the terms and conditions
of this Amendment, including, without limitation, the conditions to
effectiveness set forth in Section 5 below, the Original Credit Agreement is
hereby amended as follows:

 

Portions of this Exhibit were omitted, as indicated by [***], and have been
filed separately with the Secretary of the Commission pursuant to the
Registrant’s application requesting confidential treatment under Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

(a) Section 1.1 of the Original Credit Agreement is hereby amended by adding the
following definitions in their respective alphabetic order:

“Deerfield” means, collectively, Deerfield Private Design Fund II, L.P.,
Deerfield Private Design International II, L.P., Deerfield Special Situations
Fund, L.P., and Deerfield Special Situations International Master Fund, L.P.,
and their permitted successors and assigns as “Lenders” under the Deerfield
Facility Agreement.

“Deerfield Debt” means Debt incurred pursuant to and in accordance with the
terms of the Deerfield Facility Agreement in a principal amount not to exceed
$50,000,000; provided that no more than $15,000,000 of such Debt may be used for
purposes other than for making payments related to the Orthotec Matter
(including the Orthotec Litigation).

“Deerfield Facility Agreement” means: (a) that certain Facility Agreement, dated
as of March 17, 2014, among Alphatec Holdings and Deerfield, without giving
effect to any amendment, supplement, restatement or other modification thereto
other than those made in accordance with the terms of this Agreement; and
(b) the ancillary agreements and documents, other than any warrants issued in
connection therewith, entered into by Borrowers and Deerfield in connection
therewith, in each case, true and complete copies of which have been provided to
Agent.

“Deerfield Intercreditor Agreement” means that certain Intercreditor Agreement
between Agent and Deerfield, as the same may be amended, supplemented, restated
or otherwise modified from time to time in accordance with the terms thereof,
pursuant to which the Deerfield Debt and the Liens securing the Deerfield Debt
granted by any Borrower to Deerfield are subordinated to the Obligations and the
Liens created under the Security Documents.

“First Amendment Effective Date” means the effective date of that certain First
Amendment to Amended and Restated Credit, Security and Guaranty Agreement, dated
as of March 17, 2104, among Borrowers, Agent and Lenders.

“First Amendment Fee Letter” means that certain fee letter, dated as of the
First Amendment Effective Date, from Agent to Alphatec Holdings and agreed and
accepted by Borrowers.

Orthotec Litigation” means litigation matters in connection with, arising from,
or related to Orthotec, LLC for which the Borrowers or their Subsidiaries face
potential exposure (monetary or otherwise).

“Orthotec Litigation Settlement” has the meaning set forth in Section 5.16(b).

“Orthotec Resolution” means such time as the Agent determines, based on
information reasonably satisfactory to it, that the Credit Parties are not
directly subject to liability associated with, related to or arising from the

 

2

--------------------------------------------------------------------------------

Orthotec Matter or the Orthotec Litigation (including, potential direct
liability arising by virtue of liability to which a Subsidiary is subject) that
would reasonably be expected to exceed the sum of (i) $[***] (less any
previously made Litigation Payments) plus (ii) cash contributions from one or
more shareholders of Alphatec Holdings to the Credit Parties solely for payment
of the Orthotec Settlement Payments plus (iii) insurance proceeds actually
received in respect of the Orthotec Litigation. Any such determination shall be
made in the Agent’s reasonable discretion in consultation with and upon the
reasonable advice of its outside counsel as it deems necessary or advisable.

“Orthotec Settlement Payments” means, collectively, all amounts paid or
transferred (including cash, cash equivalents, assets and/or services) on or
after the First Amendment Effective Date by or on behalf of Credit Parties
and/or their respective Subsidiaries in connection with any Orthotec Matter
(including the Orthotec Litigation).

“Settlement Deposit Account” that certain deposit account established by and in
the sole name of Alpha Holdings and subject to the first priority Lien in favor
of Deerfield to hold funds from a draw by Alphatec Holdings of all or any
portion of the undrawn amount available under the Facility Agreement pending the
need and requisite authority to use any such funds in accordance with the
Facility Agreement to make a settlement payment(s) (or satisfy a judgment(s))
relating to the Orthotec Matter (including the Orthotec Litigation) for which
Alphatec Holdings or its subsidiaries currently or may hereafter face potential
liability (“Settlement Funds”); provided, that (i) there shall be no funds other
than Settlement Funds on deposit in such account and (ii) once withdrawn by
Alphatec Holdings, no funds may be re-deposited therein.

“Surgiview” means Surgiview S.A.S.

(b) The defined term “Fee Letter” in Section 1.1 of the Original Credit
Agreement is hereby amended by replacing the clause “including the Amended and
Restated Fee Letter, dated as of the date hereof, each between Agent and
Borrowers” with the clause “including the Amended and Restated Fee Letter, dated
as of August 30, 2013, and the First Amendment Fee Letter, each between Agent
and Borrowers.”

(c) The defined term “Material Adverse Effect” in Section 1.1 of the Original
Credit Agreement is hereby amended by adding the following sentence to the end
of such definition:

“Notwithstanding the foregoing, so long as the total aggregate exposure
(including cash, cash equivalents, assets and/or services) of the Credit Parties
under the Orthotec Matter (including the Orthotec Litigation and whether by
settlement, judgment or otherwise) does not exceed the amount of the Deerfield
Debt available to pay such settlement or judgment amounts, neither the Orthotec
Matter (including the Orthotec Litigation) nor the resolution of all or any
portion thereof shall be deemed to constitute a Material Adverse Effect.”

(d) The defined term “Permitted Liens” in Section 1.1 of the Original Credit

 

Portions of this page were omitted, as indicated by [***], and have been filed
separately with the Secretary of the Commission pursuant to the Registrant’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.

 

3

--------------------------------------------------------------------------------

Agreement is hereby amended by deleting the word “and” immediately preceding the
clause (k) thereof and the period at the end of clause (k) and adding a new
clause (l) as follows:

“and (l) Liens and encumbrances securing the Deerfield Debt that, in each case,
are subordinated to the Liens created under the Security Documents pursuant to
the Deerfield Intercreditor Agreement.”

(e) The defined term “Subordination Agreement” in Section 1.1 of the Original
Credit Agreement is hereby amended by adding the following parenthetical
statement after the word “agreement” in the first line thereof: “(including,
without limitation, the Deerfield Intercreditor Agreement)”.

(f) The defined term “Subordinated Debt” in Section 1.1 of the Original Credit
Agreement is hereby amended by adding the following parenthetical statement
after the word “Debt” in the first line thereof: “(including, without
limitation, the Deerfield Debt)”.

(g) Section 2.11(i) of the Original Credit Agreement is hereby amended and
restated in its entirety to read as follows:

“(i) Borrowers shall maintain in one or more Deposit Accounts, each of which
shall be held in the name of a Borrower in a bank or financial institution
located in the United States and subject to Deposit Account Control Agreement
(i) at all times prior to December 31, 2013, at least [***] percent ([***]%) of
the cash held by Holdings and its Subsidiaries, (ii) at all times during the
period commencing on December 31, 2013 and ending on the First Amendment
Effective Date, at least [***] percent ([***]%) of the cash held by Holdings and
its Subsidiaries, (iii) at all times during the period commencing on the first
day following the First Amendment Effective Date and ending on June 30, 2014, at
least [***] percent ([***]%) of the cash held by Holdings and its Subsidiaries,
(iv) at all times during the period commencing on July 1, 2014 and ending on
December 31, 2014, at least [***] percent ([***]%) of the cash held by Holdings
and its Subsidiaries, and (v) at all times thereafter, at least [***] percent
([***]%) of the cash held by Holdings and its Subsidiaries.”

(h) The second sentence of Section 3.4 of the Original Credit Agreement is
hereby amended and restated in its entirety to read as follows:

“All issued and outstanding equity securities of each of the Credit Parties are
duly authorized and validly issued, fully paid, nonassessable, free and clear of
all Liens other than (a) those in favor of Agent for the benefit of Agent and
Lenders and (b) Liens permitted pursuant to clause (l) of the definition of
Permitted Liens, and such equity securities were issued in compliance with all
applicable Laws.”

(i) Clause (iii) of Section 3.6 of the Original Credit Agreement is hereby
amended and restated in its entirety to read as follows:

“(iii) the Orthotec Matter (which, for avoidance of doubt, includes the Orthotec
Litigation),”

(j) Section 3.19 of the Original Credit Agreement is hereby amended by adding
the

 

Portions of this page were omitted, as indicated by [***], and have been filed
separately with the Secretary of the Commission pursuant to the Registrant’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.

 

4

--------------------------------------------------------------------------------

parenthetical statement “(except for Liens granted pursuant to the Deerfield
Facility Agreement)” after the word “Liens” in the fourth sentence thereof.

(k) Section 5.4 of the Original Credit Agreement is hereby amended and restated
in its entirety to read as follows:

“Section 5.4 Restrictive Agreements. No Borrower will, or will permit any
Subsidiary to, directly or indirectly (a) enter into or assume any agreement
prohibiting the creation or assumption of any Lien upon its properties or
assets, whether now owned or hereafter acquired (except as provided by the
Financing Documents and the Deerfield Facility Agreement), or (b) create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind (except as provided by the Financing
Documents and the Deerfield Facility Agreement) on the ability of any Subsidiary
to: (i) pay or make Restricted Distributions to any Borrower or any Subsidiary;
(ii) pay any Debt owed to any Borrower or any Subsidiary; (iii) make loans or
advances to any Borrower or any Subsidiary; or (iv) transfer any of its property
or assets to any Borrower or any Subsidiary.

(l) The Original Credit Agreement is hereby amended by adding the following
Section 5.16 at the end of Article 5:

“Section 5.16 Surgiview Dissolution; Orthotec Litigation.

(a) Surgiview Dissolution. Notwithstanding anything to the contrary in this
Article 5 or otherwise in this Agreement or the other Financing Documents,
Borrowers shall be permitted to (i) dissolve, liquidate or wind up Surgiview
(including through any voluntary or involuntary insolvency proceeding that would
otherwise give rise to an Event of Default pursuant only to Section 10.1(e) or
10.1(f)) or to consolidate Surgiview with or merge Surgiview into a Credit Party
and (ii) terminate the Secured Permitted Intercompany Loan to Surgiview in
connection with any action taken pursuant to clause (i), in each case, solely to
the extent permitted by applicable Law.

(b) Orthotec Litigation. Notwithstanding anything to the contrary in this
Article 5 or otherwise in this Agreement or the other Financing Documents, but
subject to Section 5.16(c) below, Agent and Lenders agree that Credit Parties
may make (or may contribute cash to Surgiview in order for it to make) one or
more Orthotec Settlement Payments in an aggregate amount not to exceed the
aggregate amount drawn by Alphatec Holdings under the Deerfield Facility
Agreement for purposes of making Orthotec Settlement Payments and, so long as
the total aggregate exposure (including cash, cash equivalents, assets and/or
services) of the Credit Parties under the Orthotec Matter (including the
Orthotec Litigation and whether by settlement, judgment or otherwise) does not
exceed the amount of the Deerfield Debt available to pay such settlement or
judgment amounts, any such settlement, judgment or order otherwise entered or
rendered in connection therewith shall not constitute a Default or Event of
Default; provided that:

(i) prior to entering into any settlement agreement or other settlement
arrangement with respect to the Orthotec Matter (including the Orthotec
Litigation, an “Orthotec Litigation Settlement”), Borrowers shall have delivered
to Agent (x) the execution versions of the settlement agreement and all
agreements, certificates, instruments and other documents related thereto,
(y) projections demonstrating pro forma compliance with the financial covenants
in Article 6 for the 12 month period immediately following such Orthotec
Litigation Settlement and after giving effect thereto, and (z) such other
information as Agent may reasonably request regarding the Orthotec Litigation
Settlement;

 

5

--------------------------------------------------------------------------------

(ii) no Event of Default shall have occurred and be continuing at the time such
Orthotec Settlement Payment is made; and

(iii) the Orthotec Resolution shall have occurred.

(c) Initial Orthotec Settlement Payment. Notwithstanding anything to the
contrary in this Article 5 or otherwise in this Agreement or the other Financing
Documents, Borrowers shall be permitted to make initial Orthotec Settlement
Payments in an aggregate amount not to exceed [***] dollars ($[***]) prior to
the satisfaction of the conditions set forth in Section 5.16(b) (including the
initial advance under the Deerfield Facility Agreement); provided, however, at
the time of each such initial payment, no Event of Default shall have occurred
and be continuing or would result therefrom, excluding for the purposes of this
proviso, any Event of Default that would otherwise not occur had the conditions
of Section 5.16(b) been satisfied.

(m) Section 6.1 of the Original Credit Agreement is hereby amended by

(i) replacing, in its entirety the defined term “Defined Period” with the
following definition:

“Defined Period” means, for purposes of calculating the Fixed Charge Coverage
Ratio, the Senior Leverage Ratio and the Total Leverage Ratio for any given
calendar month, the twelve (12) month period immediately preceding any such
calendar month.

(ii) adding the following definitions in their respective alphabetic order:

“Total Debt” means an amount equal to the sum of (a) Senior Debt plus (b) the
total outstanding balance of Deerfield Debt.

“Total Leverage Ratio” means, for any Defined Period, the ratio of (a) Total
Debt to (b) EBITDA.

(n) Article 6 of the Original Credit Agreement is hereby amended by adding a new
section 6.5 at the end thereof as follows:

Section 6.5 Total Leverage Ratio. Borrowers will not permit the Total Leverage
Ratio for any Defined Period, as tested monthly, to be greater than [***] to
[***].

(o) Schedule 2.1 of the Original Credit Agreement is hereby deleted in its
entirety and replaced with the new Schedule 2.1 attached hereto as Exhibit A.

(p) Schedule 5.14 of the Original Credit Agreement is hereby deleted in its
entirety and replaced with the new Schedule 5.14 attached hereto as Exhibit B.

(q) Schedule 9.1 of the Original Credit Agreement is hereby deleted in its
entirety and replaced with the new Schedule 9.1 attached hereto as Exhibit C.

(r) Exhibit B of the Original Credit Agreement is hereby deleted in its entirety
and replaced with the new Compliance Certificate attached hereto as Exhibit D.

 

Portions of this page were omitted, as indicated by [***], and have been filed
separately with the Secretary of the Commission pursuant to the Registrant’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.

 

6

--------------------------------------------------------------------------------

3. Representations and Warranties; Reaffirmation of Security Interest; Updated
Schedules. Each Borrower hereby (a) confirms that all of the representations and
warranties set forth in the Credit Agreement are true and correct in all
material respects with respect to such Borrower as of the date hereof except to
the extent that any such representation or warranty relates to a specific date
in which case such representation or warranty shall be true and correct as of
such earlier date, and (b) covenants to perform its respective obligations under
the Credit Agreement. Each Borrower further represents and warrants that the
organizational documents of such Borrower delivered to Agent on or prior to
August 30, 2013 in connection with the Credit Agreement remain true, accurate
and complete and have not been amended, supplemented or restated and are, and
continue to be, in full force and effect. Each Borrower confirms and agrees that
all security interests and Liens granted to Agent continue in full force and
effect, and all Collateral remains free and clear of any Liens, other than those
granted to Agent and Permitted Liens. Nothing herein is intended to impair or
limit the validity, priority or extent of Agent’s security interests in and
Liens on the Collateral. Each Borrower acknowledges and agrees that the Credit
Agreement, the other Financing Documents and this Agreement constitute the
legal, valid and binding obligation of each Borrower, and are enforceable
against each Borrower in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency or other similar laws relating
to the enforcement of creditors’ rights generally and by general equitable
principles.

4. Costs and Fees. Borrowers shall be responsible for the payment of all
reasonable and documented out-of-pocket costs and fees of Agent’s counsel
incurred in connection with the preparation of this Agreement and any related
documents. If Agent or any Lender uses in-house counsel for any of these
purposes, Borrowers further agree that the Obligations include reasonable
charges for such work commensurate with the fees that would otherwise be charged
by outside legal counsel selected by Agent or such Lender for the work
performed. In no event shall the amounts payable by Borrowers under this
Section 4 for the fees of Agent’s outside counsel (and expressly excluding
reasonable and documented out-of-pocket costs), for the period commencing on
March 1, 2014 through the date of this Agreement, exceed $[***] in the aggregate
without the consent of Alphatec Holdings.

5. Conditions to Effectiveness. This Agreement shall become effective as of the
date on which each of the following conditions has been satisfied:

(a) Borrowers shall have delivered to Agent this Agreement, the First Amendment
Fee Letter, and the Deerfield Intercreditor Agreement, each duly executed by an
authorized officer of each Borrower;

(b) all representations and warranties of Borrowers contained herein shall be
true and correct in all material respects as of the date hereof (and such
parties’ delivery of their respective signatures hereto shall be deemed to be
its certification thereof);

(c) after giving effect to the agreements set forth herein, no Default or Event
of Default shall exist under any of the Financing Documents;

(d) Borrower shall have delivered such other documents, information,
certificates, records, permits, and filings as the Agent may reasonably request;
and

(e) Agent shall have received from Borrowers all of the fees owing pursuant to
this Agreement and other documents and agreements executed in connection
herewith, including without limitation, Agent’s reasonable out-of-pocket legal
fees and expenses pursuant to Section 4 (Costs and Fees) of this Agreement.

 

Portions of this page were omitted, as indicated by [***], and have been filed
separately with the Secretary of the Commission pursuant to the Registrant’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.

 

7

--------------------------------------------------------------------------------

6. Release. In consideration of the agreements of Agent and Required Lenders
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, each Borrower, voluntarily,
knowingly, unconditionally and irrevocably, with specific and express intent,
for and on behalf of itself and all of its respective parents, subsidiaries,
affiliates, members, managers, predecessors, successors, and assigns, and each
of their respective current and former directors, officers, shareholders,
agents, and employees, and each of their respective predecessors, successors,
heirs, and assigns (individually and collectively, the “Releasing Parties”) does
hereby fully and completely release, acquit and forever discharge each of Agent,
Lenders, and each their respective parents, subsidiaries, affiliates, members,
managers, shareholders, directors, officers and employees, and each of their
respective predecessors, successors, heirs, and assigns (individually and
collectively, the “Released Parties”), of and from any and all actions, causes
of action, suits, debts, disputes, damages, claims, obligations, liabilities,
costs, expenses and demands of any kind whatsoever, at law or in equity, whether
matured or unmatured, liquidated or unliquidated, vested or contingent, choate
or inchoate, known or unknown that the Releasing Parties (or any of them) has
against the Released Parties or any of them (whether directly or indirectly).
Each Borrower acknowledges that the foregoing release is a material inducement
to Agent’s and Required Lender’s decision to enter into this Agreement and agree
to the modifications contemplated hereunder, and has been relied upon by Agent
and Required Lenders in connection therewith.

7. No Waiver or Novation. The execution, delivery and effectiveness of this
Agreement shall not, except as expressly provided in this Agreement, operate as
a waiver of any right, power or remedy of Agent, nor constitute a waiver of any
provision of the Credit Agreement, the Financing Documents or any other
documents, instruments and agreements executed or delivered in connection with
any of the foregoing. Nothing herein is intended or shall be construed as a
waiver of any existing Defaults or Events of Default under the Credit Agreement
or other Financing Documents or any of Agent’s rights and remedies in respect of
such Defaults or Events of Default. This Agreement (together with any other
document executed in connection herewith) is not intended to be, nor shall it be
construed as, a novation of the Credit Agreement.

8. Affirmation. Except as specifically amended pursuant to the terms hereof,
each Borrower hereby acknowledges and agrees that the Credit Agreement and all
other Financing Documents (and all covenants, terms, conditions and agreements
therein) shall remain in full force and effect, and are hereby ratified and
confirmed in all respects by Borrowers. Each Borrower covenants and agrees to
comply with all of the terms, covenants and conditions of the Credit Agreement
and the Financing Documents, notwithstanding any prior course of conduct,
waivers, releases or other actions or inactions on Agent’s or any Lender’s part
which might otherwise constitute or be construed as a waiver of or amendment to
such terms, covenants and conditions.

9. Confidentiality. No Borrower will disclose the contents of this Agreement,
the Credit Agreement or any of the other Financing Documents to any third party
(including, without limitation, any financial institution or intermediary)
without Agent’s prior written consent, other than to Borrowers’ officers and
advisors on a need-to-know basis or as otherwise may be required by Law,
including to any court or regulatory agency having jurisdiction over such
Borrower. Each Borrower agrees to inform all such persons who receive
information concerning this Agreement, the Credit Agreement and the other
Financing Documents that such information is confidential and may not be
disclosed to any other person except as may be required by Law, including to any
court or regulatory agency having jurisdiction over such Borrower.

10. Miscellaneous.

(a) Reference to the Effect on the Credit Agreement. Upon the effectiveness of
this Agreement, each reference in the Credit Agreement to “this Agreement,”
“hereunder,” “hereof,” “herein,”

 

8

--------------------------------------------------------------------------------

or words of similar import shall mean and be a reference to the Credit
Agreement, as amended by this Agreement. Except as specifically amended above,
the Credit Agreement, and all other Financing Documents (and all covenants,
terms, conditions and agreements therein), shall remain in full force and
effect, and are hereby ratified and confirmed in all respects by Borrowers.

(b) Incorporation of Credit Agreement Provisions. The provisions contained in
Section 11.6 (Indemnification), Section 12.8 (Governing Law; Submission to
Jurisdiction) and Section 12.9 (Waiver of Jury Trial) of the Credit Agreement
are incorporated herein by reference to the same extent as if reproduced herein
in their entirety.

(c) Headings. Section headings in this Agreement are included for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose.

(d) Counterparts. This Agreement may be signed in any number of counterparts,
each of which shall be deemed an original and all of which when taken together
shall constitute one and the same instrument. Delivery of an executed
counterpart of this Agreement by facsimile or by electronic mail delivery of an
electronic version (e.g., .pdf or .tif file) of an executed signature page shall
be effective as delivery of an original executed counterpart hereof and shall
bind the parties hereto.

(e) Entire Agreement. This Agreement constitutes the entire agreement and
understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof.

(f) Severability. In case any provision of or obligation under this Agreement
shall be invalid, illegal or unenforceable in any applicable jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.

(g) Successors/Assigns. This Agreement shall bind, and the rights hereunder
shall inure to, the respective successors and assigns of the parties hereto,
subject to the provisions of the Credit Agreement and the other Financing
Documents.

[SIGNATURES APPEAR ON FOLLOWING PAGES]

 

9

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, intending to be legally bound, and intending that this
document constitute an agreement executed under seal, the undersigned have
executed this Agreement under seal as of the day and year first hereinabove set
forth.

 

AGENT:

   

MIDCAP FUNDING IV, LLC,

as Agent

    By:  

/s/ Brett Robinson

  (SEAL)     Name:   Brett Robinson       Title:   Managing Director   LENDER:  
 

MIDCAP FUNDING IV, LLC,

as a Lender

   

By:

 

/s/ Brett Robinson

  (SEAL)    

Name:

  Brett Robinson       Title:   Managing Director  

[Signatures Continue on Following Page]

--------------------------------------------------------------------------------

BORROWERS:     ALPHATEC HOLDINGS, INC.,     a Delaware corporation     By:   

/s/ Michael O’Neill

  (SEAL)     Name: Michael O’Neill       Title: VP and CFO       ALPHATEC SPINE,
INC.,       a California corporation       By:   

/s/ Michael O’Neill

  (SEAL)     Name: Michael O’Neill       Title: VP and CFO       ALPHATEC
INTERNATIONAL LLC,     a Delaware limited liability company       By:   

/s/ Michael O’Neill

  (SEAL)     Name: Michael O’Neill      

Title: CFO Alphatec Holdings,General Partner of Alphatec Holdings International
CV, Sole Manager of Alphatec International LLC

    ALPHATEC PACIFIC, INC.       a Japanese company       By:   

/s/ Ebun Garner

  (SEAL)     Name: Ebun Garner       Title: Director  

--------------------------------------------------------------------------------

EXHIBIT A

SCHEDULE 2.1 - AMORTIZATION

Commencing on (i) the first day of the first calendar month following the
advance of the initial tranche of the Term Loan made on the Closing Date and
continuing on the first day of each calendar month (each, a “Payment Date”)
thereafter, Borrowers shall pay to Agent as a principal payment under the first
tranche of the Term Loan, an amount equal to the Tranche 1 Amortization Payment
(defined below) as an amortization payment in respect of such advance under the
Term Loan, plus (ii) the first day of the calendar month following the sixth
(6th) month anniversary of the advance of the second tranche of the Term Loan
made pursuant to Section 2.1(a)(i) and continuing on each Payment Date
thereafter, Borrowers shall pay to Agent as a principal payment under the second
tranche of the Term Loan, an amount equal to the Tranche 2 Amortization Payment
(defined below) as an amortization payment in respect of such advance under the
Term Loan.

The term “Tranche 1 Amortization Payment” means, (i) for each Payment Date prior
to the Termination Date, an amount equal to $[***] and (ii) for the Termination
Date an amount equal to the entire remaining outstanding principal balance under
the Term Loans.

The term “Tranche 2 Amortization Payment” means, (i) for each Payment Date
following the sixth (6th) month anniversary of the advance of the second tranche
of the Term Loan made pursuant to Section 2.1(a)(i), but prior to the
Termination Date, a straight-line amortization payment equal to $[***] divided
by the number of Payment Dates between such sixth (6th) month anniversary and
the Commitment Expiry Date and (ii) for the Termination Date an amount equal to
the entire remaining outstanding principal balance under the Term Loans (without
duplication of amounts paid pursuant to clause (ii) of the definition of Tranche
1 Amortization Payment).

Notwithstanding anything to the contrary contained in the foregoing, the entire
remaining outstanding principal balance under the Term Loan shall mature and be
due and payable upon the Termination Date.

 

Portions of this page were omitted, as indicated by [***], and have been filed
separately with the Secretary of the Commission pursuant to the Registrant’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

EXHIBIT B

SCHEDULE 5.14 – DEPOSIT AND SECURITIES ACCOUNTS

 

Owner

  Bank   Branch   Bank address   Account Number   Type of Account   Currency
[***]   [***]   [***]   [***]   [***]   [***]   [***]

Portions of this page were omitted, as indicated by [***], and have been filed
separately with the Secretary of the Commission pursuant to the Registrant’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.

--------------------------------------------------------------------------------

EXHIBIT C

Schedule 9.1 – Collateral

The Collateral consists of all of Borrowers’ assets, including without
limitation, all of Borrowers’ right, title and interest in and to the following,
whether now owned or hereafter created, acquired or arising:

 

  (a) all goods, Accounts (including health-care insurance receivables),
Equipment, Inventory, contract rights or rights to payment of money, leases,
license agreements, franchise agreements, General Intangibles, commercial tort
claims, documents, instruments (including any promissory notes), chattel paper
(whether tangible or electronic), cash, deposit accounts (other than the
Settlement Deposit Account), intellectual property, securities accounts,
fixtures, letter of credit rights (whether or not the letter of credit is
evidenced by a writing), securities, and all other investment property,
supporting obligations, and financial assets, whether now owned or hereafter
acquired, wherever located;

 

  (b) all of Borrowers’ books and records relating to any of the foregoing;

 

  (c) all of Borrowers’ Promissory Notes; and

 

  (d) any and all claims, rights and interests in any of the above and all
substitutions for, additions, attachments, accessories, accessions and
improvements to and replacements, products, proceeds and insurance proceeds of
any or all of the foregoing;

Notwithstanding the foregoing, the Collateral: (x) expressly excludes the
Settlement Deposit Account; and (y) with respect to Equity Interests (as defined
in the Pledge Agreement), expressly includes only those Equity Interests pledged
pursuant to the Pledge Agreement.

 

--------------------------------------------------------------------------------

EXHIBIT D

COMPLIANCE CERTIFICATE

This Compliance Certificate is given by                                     , a
Responsible Officer of Alphatec Holdings, Inc., a Delaware corporation (the
“Borrower Representative”), pursuant to that certain Amended and Restated
Credit, Security and Guaranty Agreement, dated as of August 30, 2013, by and
among the Borrower Representative and each of its Subsidiaries party thereto as
“Borrowers”, and any additional Borrower that may hereafter be added thereto
(collectively, “Borrowers”), MidCap Financial, LLC, individually as a Lender and
as Agent, and the financial institutions or other entities from time to time
parties hereto, each as a Lender (as such agreement may have been amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”). Capitalized terms used herein without definition shall have the
meanings set forth in the Credit Agreement.

The undersigned Responsible Officer hereby certifies to Agent and Lenders that:

(a) the financial statements delivered with this certificate in accordance with
Section 4.1 of the Credit Agreement fairly present in all material respects the
results of operations and financial condition of Borrowers and their
Consolidated Subsidiaries as of the dates and the accounting period covered by
such financial statements;

(b) I have reviewed the terms of the Credit Agreement and have made, or caused
to be made under my supervision, a review in reasonable detail of the
transactions and conditions of Borrowers and their Consolidated Subsidiaries
during the accounting period covered by such financial statements, and such
review has not disclosed the existence during or at the end of such accounting
period, and I have no knowledge of the existence as of the date hereof, of any
condition or event that constitutes a Default or an Event of Default, except as
set forth in Schedule 1 hereto, which includes a description of the nature and
period of existence of such Default or an Event of Default and what action
Borrowers have taken, are undertaking and propose to take with respect thereto;

(c) except as noted on Schedule 2 attached hereto, Schedule 9.2 to the Credit
Agreement contains a complete and accurate list of all business locations of
Borrowers and Guarantors and all names under which Borrowers or Guarantors
currently conduct business, and Schedule 2 specifically notes any changes in the
names under which Borrowers or Guarantors conduct business;

(d) except as noted on Schedule 3 attached hereto, the undersigned has no
knowledge of (i) any federal or state tax liens having been filed against the
Borrowers, Guarantors or any Collateral, or (ii) any failure of the Borrowers or
Guarantors to make required payments of withholding or other tax obligations of
the Borrowers or Guarantors during the accounting period to which the attached
statements pertain or any subsequent period;

(e) except as noted on Schedule 4 attached hereto, Schedule 5.14 to the Credit
Agreement contains a complete and accurate statement of all Deposit Accounts and
Security Accounts maintained by Borrowers or Guarantors;

(f) except as noted on Schedule 5 attached hereto or Schedule 3.6 to the Credit
Agreement, the undersigned has no knowledge of any current, pending or
threatened: (i) litigation against the Borrowers or Guarantors, (ii) inquiries,
investigations or proceedings concerning the business affairs, practices,
licensing or reimbursement entitlements of Borrowers or Guarantors, or
(iii) default by Borrowers or Guarantors under any Material Contract to which
either of them is a party, provided,

--------------------------------------------------------------------------------

however, that the information required pursuant to this clause (f) shall be
deemed to have been delivered if the Credit Parties deliver to the Agent that
certain litigation letter or disclosure statement delivered to Holdings’
independent public accountants on a quarterly basis at substantially the same
time such letter or disclosure statement is delivered to Holdings’ independent
public accountants;

(g) [except as noted on Schedule 6 attached hereto, no Borrower or Guarantor has
acquired, by purchase, by the approval or granting of any application for
registration (whether or not such application was previously disclosed to Agent
by Borrowers) or otherwise, any Intellectual Property that is registered with
any United States or foreign Governmental Authority, or has filed with any such
United States or foreign Governmental Authority, any new application for the
registration of any Intellectual Property, or acquired rights under a license as
a licensee with respect to any such registered Intellectual Property (or any
such application for the registration of Intellectual Property) owned by another
Person, that has not previously been reported to Agent on Schedule 3.19 to the
Credit Agreement or any Schedule 6 to any previous Compliance Certificate
delivered by the Company to Agent;] [To be included in the Compliance
Certificate provided at the end of each Fiscal Quarter only]

(h) except as noted on Schedule 7 attached hereto and except in the ordinary
course of business, no Borrower or Guarantor has acquired, by purchase or
otherwise, any Chattel Paper, Letter of Credit Rights, Instruments, Documents or
Investment Property that has not previously been reported to Agent on any
Schedule 7 to any previous Compliance Certificate delivered by Borrower
Representative to Agent;

(i) [except as noted on Schedule 8 attached hereto, no Borrower or Guarantor is
aware of any commercial tort claim that has not previously been reported to
Agent on any Schedule 8 to any previous Compliance Certificate delivered by
Borrower Representative to Agent; and] [To be included in the Compliance
Certificate provided at the end of each Fiscal Quarter only]

(j) Borrowers and Guarantors are in compliance with the covenants contained in
Article 6 of the Credit Agreement, and in any Guarantee constituting a part of
the Financing Documents, as demonstrated by the calculation of such covenants as
set forth in the attached Worksheets [See attached worksheets], and such
calculations and the certifications contained therein are true, correct and
complete;

(k) Borrowers are in compliance with Section 2.11(i) of the Credit Agreement;
and

(l) [pursuant to the documents and information attached hereto as Schedule 9,
]the Orthotec Resolution [has / has not] occurred. [To be included in the
Compliance Certificate provided at the time of the advance of the second tranche
of the Term Loan only]

The foregoing certifications and computations are made as of             ,
201     (end of month) and as of             , 201    .

 

Sincerely,

 

ALPHATEC HOLDINGS, INC.,

as Borrower Representative

 

By:  

 

Name:   Title:  

 

--------------------------------------------------------------------------------

Worksheet for Calculation of EBITDA

 

EBITDA for the applicable Defined Period is calculated as follows:    Net income
(or loss) for the Defined Period of Borrowers and their Consolidated
Subsidiaries, but excluding: (a) the income (or loss) of any Person (other than
Subsidiaries of Borrowers) in which Borrowers or any of their Subsidiaries has
an ownership interest unless received by Borrower or their Subsidiary in a cash
distribution; and (b) the income (or loss) of any Person accrued prior to the
date it became a Subsidiary of Borrowers or is merged into or consolidated with
Borrowers    $               

 

Plus:    Any provision for (or minus any benefit from) income and franchise
taxes deducted in the determination of net income for the Defined Period

   $               

 

Plus:    Interest expense, net of interest income, deducted in the determination
of net income for the Defined Period

   $               

 

Plus:    Stock-based compensation expense

   $               

 

Plus:    Amortization and depreciation deducted in the determination of net
income for the Defined Period (including impairment charges to goodwill and
write downs of intangible assets)

   $               

 

Plus:    Non-recurring expenses approved by Agent (including transaction
expenses and restructuring charges related to acquisitions)

   $               

 

EBITDA for the Defined Period:    $               

 

Worksheet for Calculation of Fixed Charges

 

Fixed Charges for the applicable Defined Period is calculated as follows:   
$               

 

Interest expense ($        ), net of interest income ($        ), interest paid
in kind ($        ) and amortization of capitalized fees and expenses incurred
to consummate the transactions contemplated by the Financing Documents and
included in interest expense ($        ), included in the determination of net
income of Borrowers and their Consolidated Subsidiaries for the Defined Period
(“Total Interest Expense”)    $               

 

Plus:    Any provision for (or minus any benefit from) income or franchise taxes
included in the determination of net income for the Defined Period *

   $               

 

Plus:    Payments of principal and interest for the Defined Period with respect
to all Debt (including the portion of scheduled payments under capital leases
allocable to principal and excluding scheduled repayments of Revolving Loans and
other Debt subject to reborrowing to the extent not accompanied by a concurrent
and permanent reduction of the Revolving Loan Commitment (or equivalent loan
commitment))

   $               

 

--------------------------------------------------------------------------------

Plus:         Permitted Distributions

   $               

 

Fixed Charges for the applicable Defined Period:    $               

 

Worksheet for Calculation of Operating Cash Flow Operating Cash Flow for the
applicable Defined Period is calculated as follows:    EBITDA for the Defined
Period (calculated pursuant to the EBITDA Worksheet)    $               

 

Minus:      Unfinanced capital expenditures for the Defined Period

   $               

 

Minus:      To the extent not already reflected in the calculation of EBITDA,
other capitalized costs, defined as the gross amount paid in cash and
capitalized during the Defined Period, as long term assets, other than amounts
capitalized during the Defined Period as capital expenditures for property,
plant and equipment or similar fixed asset accounts

   $               

 

Operating Cash Flow for the Defined Period:    $               

 

Covenant Compliance: Fixed Charge Coverage Ratio for the Defined Period    [***]
Minimum Fixed Charge Coverage Ratio for the Defined Period    [***]

 

[***]

In Compliance    Yes / No Senior Leverage Ratio for the Defined Period    [***]
Maximum Senior Leverage Ratio for the Defined Period    [***]

 

[***]

In Compliance    Yes / No

Total Leverage Ratio for the Defined Period

   [***]

Maximum Total Leverage Ratio for the Defined Period

   [***]

In Compliance

   Yes / No

Portions of this page were omitted, as indicated by [***], and have been filed
separately with the Secretary of the Commission pursuant to the Registrant’s
application requesting confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.