Exhibit 10.18

ALPHATEC SPINE, INC. SALES AGENCY AGREEMENT

This Sales Agency Agreement (the “Agreement”) is between Alphatec Spine, Inc., a
California corporation (the “Company”) and SS Fusion Medical, Inc. (Employer
Identification Number # [***]) (hereinafter referred to as “Sales Agent”) is
made as of January 2, 2008 (the “Effective Date”).

WHEREAS Sales Agent has established and maintained a business office staffed
with professional sales personnel in the Territory (as hereinafter defined); and

WHEREAS the Company wishes to retain Sales Agent to sell its Products (as
hereinafter defined) and Sales Agent wishes to act as the Company’s exclusive
Sales Agent within the Territory.

NOW THEREFORE, in consideration of the mutual covenants and provisions herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which is acknowledged by the parties hereto the parties agree as
follows:

 

1. APPOINTMENT OF SALES AGENT

Subject to the provisions of the Agreement, the Company hereby appoints Sales
Agent and Sales Agent hereby accepts appointment as the Sales Agent for the
products described in Exhibit A (hereinafter the “Products”) with exclusive
responsibility for the geographical areas listed on Exhibit B (hereinafter the
“Territory”). Sales Agent shall have the right to solicit orders for Products
only from persons and entities having their places of business within the
Territory that agree to use the Products so ordered within the Territory. Sales
agent shall be the exclusive agent for the Company for sale of Products in the
Territory for the term of this Agreement. Except as specifically provided herein
to the contrary, any sale of Products in the Territory shall be credited as
sales made by Sales Agent and Sales Agent shall be entitled to the commission
provided herein.

 

2. SALES AGENT’S OBLIGATIONS

In addition to any and all covenants, duties and obligations of Sales Agent set
forth elsewhere in this Agreement, Sales Agent agrees:

2.1. To use its best efforts to promote the sale of the Products throughout the
Territory;

2.2. To use its best efforts to meet the sales quotas set forth on Exhibit D;

2.3. To bear all costs and liabilities relating to the conduct of its business,
including but not limited to the cost and expense of providing and maintaining
its place of business, the wages of its employees, the payment of commissions or
other compensation to its agents or independent contractors, and its expenses
incurred for or in connection with its performance under or breach of this
Agreement;

2.4. To refrain from making any representations or warranties in respect of the
Products, except: (i) those representations and warranties authorized in writing
by the Company, in the form of brochures, memorandums, press releases,
advertisements, specification sheets, or correspondences, and (ii) verbal
technical assistance that Sales Agent received from the Company which was
subsequently confirmed in writing by Sales Agent;

 

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2.5. To promote the Products in strict adherence to (i) regulatory and
professional requirements, and all applicable laws, rules, guidelines and
regulations including, but not limited to, the Federal Food, Drug and Cosmetic
Act of 1938, as amended, and the regulations promulgated thereunder (the “Act”);
and (ii) those portions of the Company’s Code of Conduct that address
interactions with healthcare professionals (available at http://atec.client.
shareholder.com/documentdisplay.cfm?DocumentID=900) (the “Code of Conduct”), and
to make such certifications in writing that may be reasonably requested by the
Company as evidence of such compliance;

2.6. That it has read and understands the Code of Conduct; and that it
acknowledges that any violation of the Code of Conduct by it or any of its
officers, employees or agents shall constitute a material breach of this
Agreement;

2.7. To render reasonable assistance to the Company, at the Company’s request,
in the defense of any and all Liabilities (as defined below);

2.8. To refrain from disparaging the Company and its subsidiaries or its
Products, or from otherwise injuring the reputation and good standing of the
Company and its subsidiaries;

2.9. To not, directly or indirectly, solicit any sale of the Products or
establish any branch or distribution depot for the sale of the Products outside
the Territory without the prior written approval of the Company;

2.10. Take full responsibility for the actions of any Sales Agent Indemnitee (as
defined below);

2.11. To assist the Company, on request, in ascertaining the credit standing of
and in collecting receivables from any customer;

2.12. To attend, at its own expense, all sales meetings, training sessions,
seminars, trade shows and the like for which the Company reasonably requests
attendance by Sales Agent;

2.13. To immediately notify the Company prior to any physician, hospital or any
other health care supplier or provider who is in a position to refer or
recommend patients to the Company (a “Health Care Provider”) acquiring an equity
interest in the Sales Agent, and upon such instance to provide in writing a
listing, by percentage of equity interest owned, of all Health Care Providers
that have an equity interest in the Sales Agent at the time of each disclosure.
A breach of this Section 2.13 shall constitute a material breach of this
Agreement;

2.14. To deliver all Products using documented procedures for handling, storage,
packing, preservation, and delivery of such Products;

 

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2.15. To promptly notify the Company in writing of the following: (i) any
serious regulatory action relating to the Products; (ii) any material complaints
regarding the Products or the related instrumentation; or (iii) any adverse
incidents that may be subject to FDA’s (as hereinafter defined) Medical Device
Reporting regulation; and

2.16. To comply with recalls or general corrective actions initiated by the
Company.

 

3. ALPHATEC’S DUTIES AND OBLIGATIONS

In order to assist Sales Agent in fostering the promotion and sale of the
Company’s Products, the Company agrees:

3.1. To reasonably assist Sales Agent with, and provide to Sales Agent
reasonable quantities of, advertising material, sales promotion aids, displays,
catalogues, literature and convention assistance;

3.2. To provide Sales Agent with new Product information and reasonably assist
Sales Agent in promotional activities;

3.3. To provide Sales Agent with reasonable technical assistance, through sales
seminars, meetings and training programs; and

3.4. To use commercially reasonable efforts to make Products available to the
Sales Agent to be used by customers.

 

4. QUOTATIONS, ORDERS AND PAYMENT BY CUSTOMERS

4.1. Sales Agent will make quotations in respect to the sales of the Products
only in accordance with the Company’s then current policies and procedures and
on prices established by the Company and the Company’s terms and conditions of
sale, including the terms of payment specified by the Company. The Sales Agent
will assist the Company in obtaining the appropriate documentation needed for
customers (credit reports, sales tax exemptions, etc.).

4.2. Sales orders generated by Sales Agent will be submitted directly to the
Company by the customer and such sales orders shall be paid by Company if Sales
Agent makes a sale and even if the Company unilaterally decides to reject the
customer; provided that if the rejection of the customer occurs in accordance
with this Agreement, the Company shall not be obligated to pay the Sales Agent
for such sale. If Sales Agent receives any order for Products, it will promptly
forward it to the Company. The Company will establish and promulgate the
criteria for sales orders to be generated by Sales Agent and Sales Agent will
use its best efforts to secure sales orders that meet the Company’s criteria.
The Company will have the right at any time to reject any order in whole or in
part for good cause. Good cause shall include the following: (i) the sales order
fails to meet the Company’s criteria, (ii) the customer fails to meet the
Company’s credit criteria, (iii) lack of Product availability due to no fault of
the Company, or (iv) poor payment history by the customer. If the Company
rejects a sales order generated by Sales Agent without good cause, then Company
shall pay to Sales Agent full commission on such order. If the Company
reasonably rejects any sales order generated by Sales Agent, then Sales Agent

 

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shall be notified and given the opportunity to inform its customer or potential
customer of said rejection in an attempt to preserve Sales Agent’s business
goodwill. On request of the Company, Sales Agent will not supply Product to
customers placed on credit hold until released by the Company.

4.3. The Company will bill the customer for the purchased Products. Sales Agent
will not bill customers for the Product unless expressly requested to do so by
the Company in writing. Payments against purchase orders are to be made directly
to the Company, without intervention by Sales Agent unless expressly requested
in writing by the Company in each instance. If Sales Agent receives any payment
from a customer, then Sales Agent will immediately forward the entire amount of
such payment to the Company.

4.4. The Company will have the right, in its sole discretion, to issue credits,
make discounts and allowances, and/or accept returns of the Products. Sales
Agent in an effort to be competitive with the orthopedic market or to develop
new customers will have the right to request the Company to issue credits, make
discounts and allowances and/or accept returns of the Products. The Company
shall use its sole discretion in determining whether to grant Sales Agent’s
request. In the event that the Company issue credits, make discounts and
allowances and/or accept returns of the Products, the Company shall be entitled
to unilaterally reduce the commission rate paid to the Sales Agent with respect
to all sales of Products that are subject to a credit, discount, allowance or
return. The Company shall indicate such reduction in commission rate by sending
written or electronic notice of such reduction to the Sales Agent. All
reductions shall be effective as of the date that such notice of commission
reduction was delivered to the Sales Agent.

 

5. COMMISSIONS

5.1. Except as set forth in this Agreement, during the term of this Agreement
the Company will pay to Sales Agent a commission at the rate specified in
Exhibit C on the Company’s Net Sales (as defined below) of Products in the
Territory that were generated by the Sales Agent in accordance with this
Agreement. For purposes of this Agreement, the terms “Net Sales” shall mean, for
any period, the gross amount properly set forth on a purchase order received by
the Company from the customer in connection with such customer’s purchase of
Product, less deductions for: (i) normal and customary quantity and/or cash
discounts, including, without limitation, those granted on account of price
adjustments, rebates actually allowed and taken, administrative or other fees or
reimbursements or similar payments to buying groups, pharmacy benefit management
organizations, health care insurance carriers or other institutions, fees paid
to other distributors and chargebacks; (ii) customs or excise duties or other
duties directly imposed and related to the sales making up the gross purchase
order amount; (iii) any rebates or similar payments made with respect to sales
paid for by any governmental or regulatory authority such as, by way of
illustration and not in limitation of the parties’ rights hereunder, Federal or
state Medicaid, Medicare or similar state program or equivalent foreign
governmental program; (iv) sales and other taxes and duties directly related to
the sale of Products, to the extent that such items are included in the gross
purchase order price (but not including taxes assessed against the income
derived from such sale); and (v) any such amounts included in the purchase order
that are not collected by the Company which are over 90 days past due and are
recorded on the books of the Company as bad debt in accordance with generally
accepted accounting principles; provided, if the amount due from such purchase
order is subsequently paid,

 

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then Sales Agent shall be paid commission on the amount ultimately received by
the Company (less any expenses incurred by the Company in collecting such
amount). For purposes of determining commissions, the Product shall be deemed to
be sold when a properly executed purchase order is received by the Company from
the customer in connection with such sale, and a “sale” shall not include
transfers or dispositions for charitable, promotional, pre-clinical, clinical,
regulatory, or governmental purposes.

5.2. All commission amounts payable to the Sales Agent shall be subject to the
Company’s then-current Distribution Shipping Policy, which policy shall set
forth that certain shipping charges that are not paid by customer shall reduce
the commissions paid to the Sales Agent.

5.3. If new product lines are added to the Product list the commission rate
related to such new Product shall be set forth on Exhibit C attached hereto. The
parties agree and acknowledge that the Company shall have sole decision-making
authority in connection with establishing commission rates for product lines
added to the Product list after the Effective Date.

5.4. The Sales Agent agrees to promptly submit an invoice to the Company in
connection with each sale and that all such invoices for payment shall include a
listing of all lot numbers of the Products that were sold in connection with
such invoice.

5.5. Commissions will be released to the Sales Agent on the twenty-fifth
(25th) day after the close of the month in which the applicable sales are made,
or in the event that such day is not a business day, on the next business day.
Any commissions paid on outstanding accounts receivable at the close of the
month that exceed the payment terms of net ninety (90) days will be deducted
from the Sales Agent’s outstanding commission or invoiced to Sales Agent
pursuant to Section 5.7. Upon collection of past due accounts commissions will
be re-posted to the Sales Agent.

5.6. The Company will keep and maintain accurate, complete and current books and
records relating to commissions earned by Sales Agent. Upon payment of
commission to Sales Agent by the Company, the Company shall provide Sales Agent
with a detailed breakdown of the customer sales used to calculate the commission
as well as any credit, discount, allowance or set-off taken by the Company or
applied against Sales Agent commission. Any discrepancies must be reported to
the Company within thirty (30) days of the receipt of the detailed statement.
Once per calendar year, upon written request from Sales Agent, the Company will
permit an independent certified public accountant designated by and at the
expense of Sales Agent to audit the Company’s books and records pertaining to
commissions earned by Sales Agent, such audit to be conducted on the Company’s
premises during normal business hours.

5.7. In the event that the Company has previously paid Sales Agent commissions
on sales to a customer whose account is subsequently entitled to a credit, for
returns or otherwise, and sufficient commission is not available to deduct the
credit within the period, the Company will submit an invoice and a written
explanation containing the reasons why the Company is entitled to reimbursement
by Sales Agent of any portion or all of the commission previously paid to Sales
Agent. Sales Agent agrees to pay all properly invoiced amounts within thirty
(30) days of receipt of said invoice.

 

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5.8. The Company will have no liability whatsoever to Sales Agent for commission
payments for the Company’s rejection of all or part of any order.

 

6. SALES OBJECTIVE

6.1. The Company and Sales Agent will mutually establish sales objectives for
Products to be sold by the Sales Agent within the Territory as measured in
dollar volume. Such sales quotas shall be set forth on Exhibit D attached
hereto.

6.2. The Company and Sales Agent may add new product lines to the Product list.
If new product lines are added to the Product list the Company and Sales Agent
shall establish an additional quota for such new Product and such quota shall be
set forth on Exhibit D.

 

7. CONSIGNED INVENTORY AND SAMPLES; LOANER INVENTORY

7.1. From time to time the Company shall deliver to Sales Agent such items as
samples, models, literature, promotional materials (the “Samples”) for use in
promoting and selling the Products. Except for items actually purchased by Sales
Agent or delivered by Sales Agent as unrestricted no-charge samples according to
the Company’s specific instructions, the Company will retain all right, title
and interest in and to the Samples and Sales Agent will hold them in a fiduciary
capacity and only use such Samples as permitted in this Agreement. Upon the
termination or expiration of this Agreement or upon the request of the Company,
the Sales Agent shall return all Samples to the Company. If any Samples are
lost, missing, stolen, or cannot be repaired, then the Company shall invoice
Sales Agent for [***] with respect to such Sample, and the Sales Agent agrees to
pay such amount.

7.2. Sales Agent will prepare and maintain accurate, complete and current books
and records pertaining to the Samples that are owned by the Company, including
but not limited to type and quantity of each item and disposition thereof.

7.3. The Company shall establish for Sales Agent a Products inventory account.
Except for the Products actually purchased by Sales Agent, the Company will
retain all right, title and interest in and to such Products and related
instrumentation (the “Consigned Inventory”). Sales Agent will hold said Products
and related instrumentation in a fiduciary capacity under a separate account
titled “Consigned Inventory”.

7.4. The Company may request a physical inventory of its property held as
Consigned Inventory by Sales Agent. The Company, at its expense, may review
books and records of Sales Agent as they relate to Consigned Inventory as well
as to physically audit the Consigned Inventory, and Sales Agent agrees to
cooperate with such review.

7.5. The level of Consigned Inventory for Sales Agent shall be established upon
mutual agreement between the Company and Sales Agent.

7.6. The level of total Consigned Inventory for Sales Agent will be reviewed
each quarter. Except to the extent that such Consigned Inventory has been
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with Section 7.7, if any Consigned Inventory is returned damaged, then the
Company, to the extent possible, will repair or refurbish the Consigned
Inventory and invoice Sales Agent for the cost of said repairs and handling.
Except to the extent that such Consigned Inventory has been consigned to a
hospital in accordance with Section 7.7, if any Consigned Inventory is lost,
missing, stolen, or cannot be repaired, then the Company shall invoice Sales
Agent for [***] of such Consigned Inventory, less the amount of any commissions
that would be paid for the Net Sale of such product.

7.7. Sales Agent will prepare and maintain complete and accurate books and
records pertaining to all Consigned Inventory, including but not limited to the
type and quantity of each Product as well as the disposition thereof. Sales
Agent will promptly supply the Company with a copy of each agreement, the form
of which is attached hereto as Exhibit E, where Consignment Inventory is held by
a hospital or other mutually acceptable third party following the Company’s
request for such documentation.

7.8. Upon the termination or expiration of this Agreement, or upon the request
of the Company, the Sales Agent shall immediately, and at its own expense,
return all Consignment Inventory in its possession or control to the Company.

7.9. All Inventory not deemed by the Company in its sole discretion to be
Consigned Inventory shall be deemed to be loaner inventory and shall be subject
to the Company’s then-current Loaner Inventory Policy.

 

8. SALES ACTIVITY BY ALPHATEC

8.1. The Company reserves the right, at any time and from time to time,
throughout the term of this Agreement, to use its employees to engage in
selling, promoting and/or other related activities concerning the Products in
the Territory in the event that the Company reasonably determines that the Sales
Agent is not actively pursuing sales activities in the Territory
(notwithstanding the fact that Sales Agent may be achieving its sales quotas).
Any such sales by the Company’s employees will not be credited to Sales Agent’s
account for purposes of determining the achievement of sales quotas and
calculating commissions. Prior to the commencement of any sales activity related
to Products in the Territory by the Company’s employees, the Company shall
notify the Sales Agent of its intention to begin such activities and allow [***]
for the Sales Agent to begin sales activities. If the Sales Agent begins sales
activities following receipt of such notice the Company shall not be entitled to
commence any sales activities related to the Products in the region that was the
subject of such notice.

8.2. The Company reserves the right to sell the Products within the Territory to
any person or entity offering to purchase and resell the Products as private
label products so long as such person or entity is not at such time a company or
person to whom Sales Agent is actually selling the Products. In the event that
private labeling occurs, if any, within the Territory, the Company may, but is
not obligated to, modify Sales Agent’s sales quotas to reflect the competitive
impact of private labeling.

8.3. The Company also reserves the right to sell the Products within the
Territory to any Company-designated national, regional, or government person or
entity, and Sales Agent shall service such account within the Territory in
return for the applicable commission set forth in Exhibit C. If Sales Agent
declines to service any such account, the Company shall service such account
itself and at its own expense, and Sales Agent shall receive no commission with
respect to such account and such sales shall not be credited to the Sales Agent
for purposes of determining the achievement of sales quotas.

 

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8.4. The parties agree and acknowledge that under certain circumstances, the
Company may find it necessary to establish certain customers as house accounts.
Justification for designation of a customer as a house account shall solely
consist of a written notice from a customer or Healthcare Provider that
indicates an unwillingness to use the services of the Sales Agent. The Company
reserves the right to service such house accounts as the Company sees fit in
connection with the sale of the Products, and in such instances no commission
shall be paid on sales to house accounts and such sales shall not be credited to
the Sales Agent for purposes of determining the achievement of sales quotas. The
Company shall pay Sales Agent such commissions as are agreed upon between the
Company and the Sales Agent for the services, if any, rendered by Sales Agent at
the request of the Company in connection with sales of the Products to such
house accounts that are delivered within the Territory.

 

9. RELATIONSHIP OF PARTIES

Sales Agent is an independent contractor having only such authority to act for
the Company as is expressly set forth in this Agreement. Sales Agent is not
authorized to enter into any commitment or contract of any kind on behalf of the
Company. The Company will not incur any liability whatsoever to any third party
by reason of Sales Agent having exceeded its authority under the appointment
granted by the Company herein or by reason of any misrepresentation by Sales
Agent of its relationship to the Company or of the Company’s products,
warranties, policies, practices or procedures. Nothing contained in this
Agreement is intended to be construed as creating or implying a relationship of
principal and agent or employer and employee between the Company and Sales Agent
or between the Company and Sales Agent’s employees or agents, or a joint venture
or partnership between the Company and Sales Agent.

 

10. COMPLIANCE WITH LAWS AND REGULATIONS; NO CONFLICTS; DUE AUTHORIZATION

10.1 Nothing in this Agreement shall require either party to take any action
which would violate any governmental regulation or law to which either of them
is subject. Sales Agent shall, at its sole cost and expense, obtain in the
Territory such governmental approvals, licenses or permits as may be necessary
to effectuate the purposes of this Agreement, and shall comply with all federal,
state and local laws, regulations and rulings of governmental bodies having
jurisdiction over Sales Agent’s business, in respect of the sale of the
Products, including, without limitation, the Act.

10.2 The Sales Agent certifies that during the term of this Agreement that
(i) neither it nor any Sales Agent Indemnitees nor any immediate member of any
Sales Agent Indemnitee shall have any financial relationship with any Healthcare
Provider in any business or venture related to the provision of healthcare
products or services. For purpose of this certification, “financial
relationship” includes, but is not limited to, any cash or other benefit granted
to any Health Care Provider including, but not limited to, an ownership interest
in the Sales Agent, gifts that are not in compliance with the Code of Conduct,
fee-sharing, loans or advances of any kind.

 

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10.3 The Sales Agent hereby represents and warrants to the Company that neither
the execution of this Agreement by the Sales Agent nor the performance of this
Agreement by the Sales Agent or any Sales Agent Indemnitee (as defined below)
will (i) violate any order, judgment or injunction applicable to the Sales Agent
or any Sales Agent Indemnitee, or (ii) conflict with or breach any agreement to
which the Sales Agent or any Sales Agent Indemnitee are a party or by which the
Sales Agent or any Sales Agent Indemnitee are bound.

10.4 Each party represents and warrants to the other party: (i) that such party
is duly organized and validly existing under the laws of the state of its
organization and has full corporate power and authority to enter into this
Agreement and to carry out the provisions hereof; (ii) such party is duly
authorized to execute and deliver this Agreement and to perform its obligations
hereunder; (iii) the person executing this Agreement on such party’s behalf has
been duly authorized to do so by all requisite corporate action; and (iv) this
Agreement is a legal and valid obligation binding upon the parties and
enforceable in accordance with its terms.

 

11. REPORTS

Sales Agent may be requested from time to time to submit to the Company written
reports of Sales Agent’s activities performed under this Agreement. Such reports
will include a listing, by name and location, of customers contacted by Sales
Agent, major opportunities being pursued, inquiries and/or problems reported by
customers, physicians and/or users of the Products, Sales Agent’s
recommendations respecting actions to be taken by the Company to secure sales,
and any other pertinent matters requested by the Company to be included in such
reports, for the relevant period to which the report applies.

 

12. INDEMNIFICATION AND INSURANCE

12.1. Sales Agent shall indemnify, defend and hold harmless the Company, and its
officers, directors, employees, affiliates and agents (the “Company
Indemnitees”) from all claims, damages, losses, costs and expenses (including
reasonable attorneys’ fees) (the “Liabilities”) which any Company Indemnitee may
incur to the extent that such Liabilities arise out of or result from: (i) any
representation or warranty given by Sales Agent with respect to the Products
(other than the labeling of the Products as approved by the United States Food
and Drug Administration (the “FDA”) or otherwise provided by the Company, either
verbally or in writing, (ii) the manufacture, use or sale of any product which
is not supplied by Company and which is sold or combined with a Product,
(iii) the breach of any representation, warranty, or covenant of the Sales Agent
contained in this Agreement; or (iv) the negligence, recklessness, gross
negligence, or willful misconduct of Sales Agent or any Sales Agent Indemnitee.

12.2. Company shall indemnify and hold harmless Sales Agent and its officers,
directors, employees, affiliates and agents (the “Sales Agent Indemnitees”) from
all Liabilities which any Sales Agent Indemnitee may incur by reason of any
Products sold or furnished by Company which result in injury, illness or death
to the extent that such Liabilities arise out of or result from the failure of
the Products to meet the Product warranty set forth in Section 17 or the
recklessness, gross negligence, or willful misconduct of any Company Indemnitee.

 

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12.3. The party seeking indemnification hereunder (the “Indemnified Party”)
shall: (i) give the other party (the “Indemnifying Party”) notice of the
relevant claim, (ii) cooperate with the Indemnifying Party, at the Indemnifying
Party’s expense, in the defense of such claim and (iii) give the Indemnifying
Party the right to control the defense and settlement of any such claim, except
that the Indemnifying Party shall not enter into any settlement that affects the
Indemnified Party’s rights or interest without the Indemnified Party’s prior
written approval. The Indemnified Party shall have no authority to settle any
claim on behalf of the Indemnifying Party.

12.4. During the term of this Agreement Sales Agent agrees to maintain such
insurance as will fully cover any loss, theft or damage of the Consigned
Inventory. Upon the request of the Company the Sales Agent shall provide the
Company with certificates of insurance demonstrating that Sales Agent has the
insurance described above.

 

13. CONFLICTS OF INTEREST

[***], Sales Agent covenants that neither it nor any Sales Agent Indemnitee will
engage directly or indirectly in any activity that materially conflicts with
Sales Agent’s faithful performance of the services, covenants, commitments and
obligations undertaken to be performed pursuant to this Agreement. [***]. The
Sales Agent agrees and acknowledges that the restrictions set forth in this
Section 13 apply to the activities of the Sales Agent both inside and outside of
the Territory. The Parties agree and acknowledge that with respect to any
Product that is not a Product as of the date of this Agreement, the restrictions
set forth in this Section 13 shall become applicable on the [***] after the
Company’s first commercial sale of such Product in the United States, either
within the Territory or outside of the Territory. The Sales Agent shall be
entitled to[***]; provided that (1) the Sales Agent obtains written approval
from an officer of the Company prior to engaging in such activities; and (2) the
Sales Agent continues to satisfy its obligations under this Agreement, including
without limitation Section 2. Sales Agent agrees and acknowledges the [***], and
that without limiting any other rights the Company has at either law or equity,
upon the Sales Agent’s breach of this Section 13, the Company shall be entitled
to [***]. The Company acknowledges that [***]. The Company does not intend for
the provisions of this Section to [***] from pursuing [***].

 

14. CONFIDENTIAL INFORMATION

14.1. Sales Agent acknowledges that it will have access to certain Confidential
Information (as defined below) relating to the Company or its affiliates (the
“Company Group”). For purposes of this Agreement, “Confidential Information”
shall mean confidential and proprietary information of the Company Group,
whether in written, oral, electronic or other form, including but not limited to
the internal organization of the Company Group, the names and responsibilities
of its management, supervisory and technical employees, operating plans,
Inventions (as defined below), research and development activities, plans for
acquisitions and mergers, manufacturing and/or sales activities, technical
information concerning Products and related instrumentation, trade secrets,
specifications, procedures, techniques, ideas, methods, Patents (as defined
below) and the names of customers and suppliers. Confidential Information also
includes the terms and existence of this Agreement, including but not limited to
the exhibits attached hereto, and all disclosures made during the negotiations
of this Agreement in its entirety.

 

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14.2. Sales Agent covenants that it will hold all Confidential Information
confidential and shall only use such Confidential Information to satisfy its
obligations under this Agreement. During the term of this Agreement Sales Agent
will be permitted, however, to disclose such part of the Confidential
Information to those of its employees and/or agents as is necessary to be known
by them to assist or enable Sales Agent to perform its services and obligations
under this Agreement, provided that such employee or agent has entered into a
written agreement of confidentiality, the terms of which are no less rigorous
than the terms set forth in this Section 14.

14.3. The restrictions on use and disclosure of Confidential Information set
forth in this Section 14 shall not apply: (i) to the extent that the
Confidential Information is in the public domain without fault on the part of
Sales Agent or any third party not bound by an obligation of confidentiality; or
(ii) disclosures that are mandated by court of competent jurisdiction, provided
that Sales Agent notifies the Company prior to such disclosure and takes
reasonable actions to limit the disclosure of such Confidential Information.

14.4. Upon the Company’s written demand or upon expiration or termination of
this Agreement, Sales Agent, at its own cost and expense, will promptly return
all Confidential Information to the Company to the extent held or controlled by
Sales Agent in written, graphic or other tangible form, and all copies,
summaries, notes and other write-ups thereof made by Sales Agent, or its
employees and agents. The terms of this Section 14 shall survive indefinitely
the termination or expiration of this Agreement.

 

15. TERM AND TERMINATION

15.1. This Agreement will become effective on the Effective Date and will
continue until the [***] anniversary of the Effective Date. Upon the written
agreement of the parties, this agreement may be extended for additional
[***]-year terms.

15.2. This Agreement may be terminated by the Company giving written notice of
termination to Sales Agent as follows: (i) at any time upon thirty (30) days
written notice from the Company to the Sales Agent describing any material
breach of this Agreement by Sales Agent and Sales Agent fails to cure such
breach within such thirty (30) day period; (ii) at any time during the term of
this Agreement if Sales Agent fails to meet its sales quotas for[***]; (iii) at
any time if Sales Agent engages in behavior that, in the Company’s reasonable
determination, is materially detrimental to the Company or its business
reputation, including without limitation, a determination in the Company’s sole
reasonable discretion that Health Care Providers have acquired too large of a
percentage of the Sales Agent’s equity securities; (iv) at any time if Sales
Agent becomes insolvent or bankrupt, or files a voluntary petition in
bankruptcy, or has filed for an involuntary petition in bankruptcy; or (v) at
any time following the end of a thirty (30) day cure period if Sales Agent fails
to cure any breach of a covenant, commitment or obligation under this Agreement
within thirty (30) days after receipt of written notice from the Company of such
breach.

15.3. This Agreement may be terminated by Sales Agent as follows: (i) at any
time if the Company becomes insolvent or bankrupt, or files a voluntary petition
in bankruptcy, or has filed for an involuntary petition in bankruptcy; or
(ii) at any time following the end of a thirty (30) day cure period if the
Company fails to cure any breach of a covenant, commitment or obligation under
this Agreement within thirty (30) days after receipt of written notice from the
Company of such breach.

 

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15.4. Following the termination or expiration of this Agreement: (i) Sales Agent
shall discontinue all promotion and distribution of the Products in the
Territory; (ii) Sales Agent will not be entitled to any commissions on sales of
the Products that are invoiced in the Territory after the effective date of
expiration or termination of this Agreement; (iii) the Company and Sales Agent
will undertake to reconcile all matters pertaining to commission and other
amounts, if any, owed by either party to the other up to the effective date of
expiration or termination, as promptly as practicable thereafter, and will
settle accounts between them (including without limitation the return of all
Consigned Inventory in accordance with this Agreement) in good faith not later
than 60 days after the effective date of expiration or termination of this
Agreement.

 

16. INTELLECTUAL PROPERTY

16.1. Except as granted in this Agreement, Sales Agent has no rights in or to
the Company’s trademarks, or any other trademarks, trade names or copyrights
owned or used by Company (the “Trademarks”) and Sales Agent agrees that it shall
not in any way infringe upon, harm, contest or otherwise impair the rights of
Company to the Trademarks. All material containing Trademarks, including all
Samples, shall be used solely in connection with promoting the sale of Products,
and distinguishing and identifying them. Sales Agent may not use any Trademarks
in its corporate title or the corporate title of any entity it controls. If it
becomes necessary, because of conflicts with trademarks or trade names used by
third parties, to develop non-conflicting marks and names for certain parts of
the Territory, Sales Agent shall so inform Company, and such new marks and names
shall be developed by Company, and shall belong to Company, subject to Sales
Agent’s license to use them pursuant to the terms of this Section 16. The
Company, on behalf of itself and its subsidiaries, hereby grants to Sales Agent
a non-exclusive, non-transferable limited license to use the Trademarks solely
in connection with its promotion, marketing and sales of the Products in the
Territory pursuant to the terms of this Agreement. Sales Agent shall have no
further rights or interest in any such Trademarks.

16.2. Sales Agent acknowledges and agrees that any patent on the Products
acquired by the Company or any of its subsidiaries and any patent applications
on the Products filed by the Company or any of its subsidiaries (the “Patents”)
are the sole and exclusive property of the Company and that throughout the term
of this Agreement and following its termination or expiration, Sales Agent will
not do anything inconsistent with such ownership, will not directly or
indirectly challenge the title of the Company or any of its subsidiaries to the
same and will not attack the validity of such Patents.

16.3. Sales Agent agrees to promptly notify the Company of any unauthorized use
of the Trademarks or infringement of the Patents by others as it comes to Sales
Agent’s attention.

16.4. Sales Agent shall submit to the Company all inventions, discoveries and
ideas concerning any modifications and improvements relating to the Products and
related instrumentation (the “Inventions”). Further, all such Inventions are,
and shall remain, the sole property of the Company. Sales Agent hereby assigns
to the Company all of its rights, title and interest to Inventions, and shall
take such actions as is necessary to vest such rights and interests in the
Company and shall require its employees and agents to take similar actions to
vest ownership of such Inventions in the Company.

 

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17. LIMITED WARRANTY

The Company warrants that, under normal use and service and when used in
accordance with specifications supplied by Company, the Products will be of
merchantable quality. If any Products do not comply with such warranty, Company
will, at its option and expense, correct, repair, or replace any defective
Products provided, that, in all such cases that sufficient evidence is produced
by Sales Agent to establish that the Products are defective. THE COMPANY MAKES
NO OTHER WARRANTIES, EXPRESSED OR IMPLIED, WITH RESPECT TO THE PRODUCTS AND ALL
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE ARE
EXPRESSLY AND SPECIFICALLY EXCLUDED AND DISCLAIMED.

 

18. LIMITATION OF LIABILITY

THE COMPANY’S LIABILITY UNDER THE WARRANTY SET FORTH IN SECTION 17 OR OTHERWISE
WITH RESPECT TO THE PRODUCTS OR THEIR USE (INCLUDING LIABILITY FOR CONTRACT,
NEGLIGENCE OR OTHERWISE IN TORT) IS LIMITED EXCLUSIVELY TO THE REMEDY PROVIDED
IN SECTION 12, AND NO OTHER RIGHT OR REMEDY WILL BE AVAILABLE TO ANY PERSON. IN
NO EVENT WILL THE COMPANY BE LIABLE TO THE SALES AGENT OR ANY OTHER PERSON OR
ENTITY FOR ANY SPECIAL, INDIRECT, EXEMPLARY, PUNITIVE, INCIDENTAL OR
CONSEQUENTIAL DAMAGES TO PERSON OR PROPERTY OR LOSS OF PROFITS OF ANY PERSON
RESULTING FROM ANY CAUSE WHATSOEVER, EVEN IF COMPANY HAS BEEN ADVISED, KNEW OR
SHOULD HAVE KNOWN OF THE POSSIBILITY OF SUCH DAMAGES OR LOSS OF PROFITS. SOME
STATES AND JURISDICTIONS OUTSIDE OF THE UNITED STATES DO NOT ALLOW A LIMITATION
OR EXCLUSION OF IMPLIED WARRANTIES, OR LIABILITY FOR INCIDENTAL OR CONSEQUENTIAL
DAMAGES, SO THE ABOVE LIMITATION OR EXCLUSION MAY NOT APPLY. SALES AGENT
ACKNOWLEDGES THAT THE ALLOCATION OF RISKS AND BENEFITS UNDER THIS AGREEMENT IS
BASED ON, AND THE AMOUNTS PAID UNDER THIS AGREEMENT WOULD BE GREATER IN THE
ABSENCE OF, THE LIMITATIONS DESCRIBED ABOVE.

 

19. MISCELLANEOUS PROVISIONS

19.1 This Agreement contains the entire agreement and understanding between the
parties respecting the subject matter hereof, and supersedes all prior and
collateral agreements and understandings, regardless of form or nature between
the parties respecting that subject matter.

19.2 Other than as explicitly set forth in this Agreement, no extension,
modification or supplement to this Agreement will be effective unless made in
writing and signed by a duly authorized officer of each party.

19.3 This Agreement will be binding upon Sales Agent, the Company and their
respective successors and permitted assigns.

 

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19.4 Any notice required, permitted or contemplated by this Agreement must be in
writing, sent by facsimile, electronic mail or nationally recognized overnight
carrier, addressed to the other party as set forth below, or to such other
address as may from time to time be substituted therefore by notice, or
delivered in person to such other party. Except as otherwise provided in this
Agreement, notices sent by facsimile or electronic mail will be effective on the
date that written confirmation of the transmission of the facsimile is received
by the sender and notices sent by overnight carrier shall be effective on the
business day following written confirmation of delivery of the notice to such
carrier. For purposes of notices, the addresses of the parties will be:

 

If to the Company:    Alphatec Spine, Inc.    2051 Palomar Airport Road, Ste 100
   Carlsbad, CA 92011    Attention: Vice President, Sales    Phone: 760-431-9286
   Facsimile: 760-431-9083 If to Sales Agent:    SS Fusion Medical, Inc.    309
North Sea Lake Lane    Ponte Vedra Beach, FL 32082    Attn: Greg Smith    Phone:
904 509-6030    Facsmile: 904 273-9133

19.5 Except as provided for within this Agreement, no delay or failure by either
party to enforce or take advantage of any provision of this Agreement for
non-performance or breach of any obligation hereunder by the other party, or to
exercise any right hereunder, will constitute a waiver of the right of such
party subsequently to enforce or take advantage of such provision or any other
provisions hereof (unless performance has been resumed or the breach has been
cured by the other party) or to exercise such right or any other right
hereunder, unless such waiver is in writing signed by a duly authorized officer
of the party against whom the waiver is claimed to apply, or unless the
respective period for enforcement, taking advantage or exercise, as the case may
be, has expired by the express terms of this Agreement.

19.6 This Agreement may not be assigned by Sales Agent except with the written
consent of the Company and any assignment that occurs without proper consent
shall be deemed to be null and void. For the purposes of this Section 19.6, a
merger of the Sales Agent with or into another entity, the sale of more than
fifty percent (50%) of the Sales Agent’s equity securities in one or a series of
transactions, or the sale of substantially all of the Sales Agent’s assets shall
be deemed to be an assignment. The Company may assign this Agreement by giving
written notification to the Sales Agent.

19.7 The parties agree that the breach of this Agreement may cause irreparable
harm to a party. Therefore, in addition to the other remedies specified herein,
either party may enforce its rights hereunder by all available equitable
remedies, including, without limitation, the right to obtain an injunction or
specific performance.

 

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19.8 The Company shall not be responsible for any failure or delay in
performance of its obligations under this Agreement because of circumstances
beyond its reasonable control, including, without limitation, acts of God,
fires, floods, wars, civil disturbances, sabotage, accidents, labor disputes
(whether or not the employees’ demands are reasonable and within the Company’s
power to satisfy), governmental actions or inability to obtain labor, material,
equipment or transportation, nor shall any such failure or delay give the Sales
Agent any right to terminate this Agreement. If any delivery or shipment of
Products is delayed because of any such circumstance, it shall be made as soon
as possible.

19.9 This Agreement may be executed in multiple counterparts, each of which will
constitute an original, but all of which together will constitute one and the
same Agreement.

19.10 Notwithstanding the expiration or termination of this Agreement for any
reason, rights and obligations which by the nature should survive will remain in
full force and effect. In particular the following sections shall survive the
expiration or termination of this Agreement: Section 2.3, Section 2.4,
Section 2.6, Section 2.7, Section 7.8, Section 12.1, Section 12.2, Section 12.3,
Section 14, Section 15.4, Section 16, Section 17, Section 18, Section 19.4,
Section 19.7, Section 19.10, Section 19.12 and Section 19.13.

19.11 In the event of: (i) the sale of all or substantially all of the assets of
the Company to a buyer (the “Asset Buyer”); (ii) the merger, consolidation or
other business transaction in which the Company is not the surviving entity (the
“Surviving Entity”); (iii) any joint venture partnership or similar arrangement
in which the business of the Company is assumed by a third party (“Joint
Venture”); or (iv) the sale of a controlling interest of the stock of the
Company to a buyer of the stock (“Stock Buyer”), then the Company shall cause,
as a part of such transaction, for the Asset Buyer, Surviving Entity, Joint
Venture or Stock Buyer, as the case may be, to assume the terms of this
Agreement effective as of the date of the sale, merger or other transaction (the
“Transaction”) including without limitation the obligation to pay Sales Agent
the commission herein in accordance with this Agreement. If such Asset Buyer,
Surviving Entity, Joint Venture, or Stock Buyer does not assume this Agreement,
then [***].

19.12 The validity, construction and enforcement of this Agreement and all
matters related thereto or in connection therewith all be governed by the laws
of the State of California.

19.13 If any provision of this Agreement is rendered or declared unlawful by
reason of any existing or subsequently enacted law or by decree or order of a
court of last resort, the remaining provisions of this Agreement will continue
in full force and effect.

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.

 

ALPHATEC SPINE, INC. By:   /s/ Dirk Kuyper Name: Dirk Kuyper Title: President
and Chief Executive Officer SS FUSION MEDICAL, INC. By:   /s/ Greg Smith Name:
Greg Smith Title: President

 

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EXHIBIT A

PRODUCTS

The Company’s [***] as of the Effective Date

The Company’s [***] as of the Effective Date

 

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EXHIBIT B

LIST OF SALES AGENT’S TERRITORY

As of the Effective Date, the Sales Agent’s Territory shall be as follows:

 

(1) The following counties in the state of [***].

 

(2) The following counties in the state of [***].

 

(3) The following [***].

[***]

The Sales Agent shall [***] for (i) any counties in[***]; provided that
(a) Sales Agent continues to satisfy all of its obligations under this
Agreement, including without limitation Sections 2 and 13, (b) within fifteen
(15) days following receipt of notification from the Company setting forth Sales
Agent’s [***] with respect to a county, Sales Agent accepts the Company’s offer
to begin sales activities in such county; and (c) within five days of receipt of
the commission rates and sales quotas for the county that is the subject of the
[***] Sales Agent agrees in writing to such commission rates and sales quotas.
In the event that Sales Agent (i) declines such [***], (ii) does not respond in
the methods described above in the allocated time periods, or (iii) does not
agree to the commission rate or sales quota presented by the Company with
respect to such county, such [***] shall expire and shall be of no further force
and effect with respect to such county and the Company shall be entitled to
offer such county to another person; provided, that the [***]. The Company shall
be entitled to remove such added county from the Territory in the event that the
Sales Agent does not achieve the sales quota set forth for such county. The
Sales Agent acknowledges and agrees that [***]. The [***] shall apply only once
with respect to each eligible county.

The parties agree that [***].

 

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EXHIBIT C

COMMISSION RATE

1. In connection with the Company’s [***] as of the Effective Date that are a
[***], the commission rate on Net Sales for Products sold in the Territory shall
be [***].

2. In connection with the Company’s [***] as of the Effective Date that are
either (i) [***]; (ii) [***]; (iii) [***]; (iv) [***]; or (v) [***], the
commission rate on Net Sales for Products sold in the Territory shall be [***].

3. In connection with the Company’s [***] as of the Effective Date that are
either (i) [***]; (ii) [***], (iii) [***], or (iv) [***], the commission rate on
Net Sales for Products sold in the Territory shall be [***].

4. In connection with the Company’s [***] as of the Effective Date that are
either (i) [***], (ii) [***], or (iii) [***], the commission rate on Net Sales
for Products sold in the Territory shall be[***].

Commission Related to [***]:

For sales of any of the Company’s [***] to [***] the commission rate on Net
Sales shall be [***]. For sales of the Company’s [***] to [***], the commission
rate shall be[***].

Commission Override for[***]:

For the period beginning [***], the Sales Agent shall receive [***] commission
for all Net Sales resulting from orders placed by [***]. Sales Agent understands
and agrees that Net Sales from orders placed by [***].

For the period beginning [***], the Sales Agent shall receive [***] commission
for all Net Sales resulting from orders placed by [***]. Sales Agent understands
and agrees that Net Sales from orders placed by [***].

In the event of [***].

 

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EXHIBIT D

SALES QUOTAS

 

Territory Excluding

   [***] [***]   

 

[***] Quotas:

 

Q1

   $ [ ***]   $ [ ***]

Q2

   $ [ ***]   $ [ ***]

Q3

   $ [ ***]   $ [ ***]

Q4

   $ [ ***]   $ [ ***]

[***] Quotas:

 

Q1

   $ [ ***]   $ [ ***]

Q2

   $ [ ***]   $ [ ***]

Q3

   $ [ ***]   $ [ ***]

Q4

   $ [ ***]   $ [ ***]

[***] Quotas:

 

Q1

   $ [ ***]   $ [ ***]

Q2

   $ [ ***]   $ [ ***]

Q3

   $ [ ***]   $ [ ***]

Q4

   $ [ ***]   $ [ ***]

The Company shall be [***]. In the event [***].

 

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EXHIBIT E

FORM OF HOSPITAL CONSIGNMENT AGREEMENT

Alphatec Spine, Inc. Inventory Consignment Agreement

This Inventory Consignment Agreement (the “Agreement”) is between Alphatec
Spine, Inc., a California corporation (the “Company”) and the medical
institution listed on the signature page below (the “Institution”) is made as of
                         , 200     (the “Effective Date”).

WHEREAS the Company and the Institution have agreed to have certain of the
Company’s inventory (including all related instrumentation) (the “Consigned
Inventory”) stocked at the Institution pursuant to the terms of this Agreement.

NOW THEREFORE, in consideration of the mutual covenants and provisions herein
contained, the adequacy of which is hereby satisfied, the parties agree as
follows:

 

  1. Listed below is all of the Consignment Inventory:

 

Item Description

   Quantity

2. Institution will hold said Consigned Inventory in a fiduciary capacity under
a separate account titled “Consigned Inventory”.

3. Institution shall not use the Consigned Inventory for any other purpose other
than with the consent of the Company or its authorized employees or agents.

4. At any time during the term of this Agreement, the Company may request a
physical inventory of the Consigned Inventory by the Institution and the
Institution shall promptly respond to such request.

5. If any Consigned Inventory is returned damaged, then the Company, to the
extent possible, will repair or refurbish the Consigned Inventory and invoice
the Institution for the cost of said repairs and handling. If the damaged
Consigned Inventory cannot be repaired, then the Company shall invoice the
Institution for 100% of the list price of such Consigned Inventory. If any
Consigned

 

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Inventory is lost, missing or stolen, then the Company shall invoice the
Institution for 100% of the list price of such Consigned Inventory. In each of
the instances set forth in this Section 5, upon receipt of such invoice,
Institution shall promptly remit payment to the Company.

6. Either party may terminate this agreement at any time by providing written
notice to the other party; provided that Section 5 and Section 7 shall survive
the termination of this Agreement.

7. Upon the termination or expiration of this Agreement, the Institution shall
immediately, and at its own expense, return all Consignment Inventory in its
possession or control to the Company.

* * *

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.

 

COMPANY: ALPHATEC SPINE, INC. By:     Name: Title: INSTITUTION: (print name of
Institution) ________________ By:     Name (please print): Title:

 

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