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Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential
treatment under Rule 406 of the Securities Act. Asterisks denote omissions.


Exhibit 10.31  


 
 

ALPHATEC SPINE, INC. SALES AGENCY AGREEMENT    
    


        This Sales Agency Agreement (the "Agreement") is between Alphatec Spine, Inc., a California corporation (the "Company") and Keystone Surgical, LLC
(hereinafter referred to as "Sales Agent") is made as of the 1st day of October, 2005 (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 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. 


2.    SALES AGENTS' 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; 


        2.5.    To
promote the Products in strict adherence to 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"); 


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



        2.7.    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; 







 



        2.8.    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; 


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


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


        2.11.    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. 


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.    Reasonably
assist Sales Agent with 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. 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 anytime to reject any order in whole or in part. If the Company reasonably rejects any sales order generated by Sales Agent, then Sales
Agent 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 put on credit hold until released by the Company. 


        4.3.    The
Company will invoice the customer for the purchased Products. Sales Agent will not invoice customers for the Product unless expressly requested to do so by the
Company in writing. Payments against invoices 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 


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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. 


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 made in accordance with this Agreement. For
purposes of this Agreement, the terms "Net Sales" shall mean, for any period, the gross amount properly invoiced by Sales Agent from the sale to customers 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) freight, postage, shipping, and related insurance expenses; (iii) customs or excise duties or other duties directly imposed and related to the sales making up the gross
invoice amount; (iv) 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; (v) sales and other taxes and duties directly related to the
sale of Products, to the extent that such items are included in the gross invoice price (but not including taxes assessed against the income derived from such sale); and (vi) any such invoiced
amounts 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. For purposes of determining Net Sales, the Product shall be deemed to be sold when properly invoiced, and a "sale" shall not include transfers or dispositions for charitable, promotional,
pre-clinical, clinical, regulatory, or governmental purposes. 


        5.2.    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. 



        5.3.    The
Sales Agent agrees that all invoices for payment shall include a listing of all lot numbers of the Products that were sold in connection with such invoice. 


        5.4.    The
Company will make payment of commissions earned by Sales Agent in accordance with the Company's applicable policies and procedures. Commissions will be released to
the Sales Agent on the 30th 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 90 days will be deducted from the Sales Agent's outstanding commission or invoiced to Sales
Agent pursuant to Section 5.6. Upon collection of past due accounts commissions will be re-posted to the commission. 


        5.5.    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 30 days of the receipt of the detailed statement.
Once per calendar year, on 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. 


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        5.6.    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 30 days of
receipt of said invoice. 


        5.7.    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.    For
each calendar year, during the term of this Agreement, including extensions, the Company will 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.    If
new product lines are added to the Product list an additional quota will be established for such new Product and such quota shall be set forth on  Exhibit D. 


7.    SAMPLES, PROMOTIONAL MATERIALS AND INSTRUMENTS    



        7.1.    From
time to time the Company may 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. 


        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. 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. If the damaged Consigned Inventory cannot be repaired, then the Company
shall invoice Sales Agent for 100% of the list price of such Consigned Inventory. If any Consigned Inventory is lost, missing or stolen, then the Company shall invoice Sales Agent for 100% of the list
price of such Consigned Inventory 


        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 


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as
the disposition thereof. Sales Agent will supply the Company with a copy of each agreement where Consignment Inventory is stocked by a hospital, on Sales Agent's premises or other mutually
acceptable place during normal business hours following ten days' prior written notice to Sales Agent. 


        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. 


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. 


        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. 


        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 includes, without limitation, any customer having sales, service, marketing or technical service requirements beyond the facilities and abilities of Sales Agent, or any
customer that indicated to the Company an unwillingness to use the services of the Sales Agent. The Company reserves the right to deal directly with such house accounts for sale of the Products, which
may include delivery of the Products within the Territory, 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. 



        8.4.    The
Company reserves the right to negotiate and establish clinical investigators and/or clinical centers to conduct clinical evaluations of the Products within the
Territory. The Company may find it necessary to implement certain remuneration programs to the clinical investigators/clinical centers as compensation for sales of the Products, which may include
delivery of the Products within the Territory. The Company shall pay such commissions to Sales Agent as are agreed upon between the Company and the Sales Agent for services, if any, rendered by Sales
Agent at the request of the Company in connection with sales of Products obtained from these clinical investigators/clinical centers located within the Territory. If no services are rendered by Sales
Agent, then no commission shall be 


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payable
to Sales Agent and such sales shall not be credited to the Sales Agent for purposes of determining the achievement of sales quotas. 


        8.5.    The
Company reserves the right to work with any surgeon or medical center in the design and development of new products. The Company may find it necessary to provide
special remuneration programs to the surgeon inventors/medical centers as compensation for their assistance and expertise in new product development. The Company reserves the right to deal directly
with such surgeon inventors/medical centers for the sale of Products. The Company shall pay to Sales Agent such commissions as are agreed upon between the Company and the Sales Agent for services, if
any, rendered by Sales Agent at the request of the Company in connection with sales of the Products to such surgeons/inventors/medical centers located within the Territory. If no services are rendered
by Sales Agent, then no commission shall be payable to Sales Agent and such sales shall not be credited to the Sales Agent for purposes of determining the achievement of sales quotas. 


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    


        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. 


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    


        12.1.    Sales
Agent shall indemnify, defend and hold harmless the Company, and its officers, directors, employees 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) the sale or other distribution of Products by Sales Agent or use by any purchasers, including any improper sales by Sales Agent to customers located outside of the Territory,
(ii) 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 


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Food
and Drug Administration (the "FDA"), (iii) the manufacture, use or sale of any product which is not supplied by Company and which is sold or combined with a Product, (iv) Sales
Agent's breach of the terms of this Agreement or (v) the negligence, recklessness, gross negligence, or willful misconduct of Sales Agent or any Sales Agent Indemnitee (as defined below). 


        12.2.    Company
shall indemnify and hold harmless Sales Agent and its officers, directors, employees 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. 



        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. 


13.    CONFLICTS OF INTEREST    



        During
the term of this Agreement Sales Agent covenants that neither it nor any Sales Agent Indemnitee will engage directly or indirectly in any activity which materially conflicts with
Sales Agent's faithful performance of the services covenants, commitments and obligations undertaken to be performed pursuant to this Agreement. [* * *] 


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 business, including, but not
limited to the internal organization of the Company; 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 (the "Confidential Information"). 


        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
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. 


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        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. 


        14.5.    The
obligations set forth in this Section 14 shall survive 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 second anniversary of the Effective Date. Upon the written agreement of the
parties, this agreement may be extended for additional two-year terms. 


        15.2.    This
Agreement may be terminated by the Company as follows: (i) at any time upon 60 days' written notice from the Company to the Sales Agent;
(ii) at any time during the term of this Agreement if Sales Agent fails to meet its sales quotas; (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; (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 15-day cure period if Sales Agent fails to cure any breach of a covenant,
commitment or obligation under this Agreement within 15 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 15-day cure period if Sales Agent fails to cure any breach of a
covenant, commitment or obligation under this Agreement within 15 days after receipt of written notice from the Company of such breach. 



        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 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 


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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. 


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. 


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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.    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. 


        19.4.    Any
notice required, permitted or contemplated by this Agreement must be in writing, sent by facsimile, 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 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

Carlsbad, CA 92008

Attention: Bill Pastor, Vice President Sales and Physician Services

Phone: (760) 431-9286

Facsimile: (760) 431-1624
	

If to Sales Agent:	
 	

Keystone Surgical, LLC

110 Aspen Lane

San Antonio, TX 78232

Facsimile:
                                         
                   





        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, Section 14, Section 15.4, Section 16, Section 17, Section 18, Section 19.4, Section 19.7, Section 19.10,
Section 19.11 and Section 19.12. 


        19.11.    In
the event of the consummation of a Change of Control of the Company during the term of this Agreement: (i) the Company shall assign this agreement to the
acquiring party; (ii) the Company shall require that the acquiring party assume the rights and obligations of this Agreement for a term of the longer of: (a) the time period from the
date of the closing of the Change of Control until the second anniversary of the Effective Date, and (b) the time period from the date of the closing of the Change of Control until the first
anniversary of the date of the closing of such Change of Control; and (iii) Section 15.1 and subsection Section 15.2(i)-(iii) (inclusive) shall be of no force and effect.
If such Change of Control occurs at least 12 months following the Effective Date, than the acquiring party may, within 30 days of the Change of Control, terminate this Agreement upon
paying to the Sales Agent, within such 30 day period, the sum of the commissions paid to the Sales Agent for the 12-month period, represented by the four most recently completed
quarters, prior to the date of the consummation of the Change of Control. For the purposes of this Agreement, a "Change of Control" of the Company shall mean a sale of the Company, whether by merger,
consolidation or other transaction or series of related transactions, in which, in each case, the holders of the Company's voting securities outstanding immediately prior to the consummation of the
transaction or the series of related transactions own securities with less than a majority of the voting power of the Company or a successor immediately after the transaction or such series of related
transactions, or by sale of all or substantially all of the Company's assets. 


        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 and the venue of any action brought shall be in San Diego County, 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. 


[SIGNATURE
PAGE FOLLOWS] 


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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/  RONALD G. HISCOCK      
	
 	

 
	Name:	 	Ronald G. Hiscock	 	 
	Title:	 	President and Chief Operating Officer	 	 
	
KEYSTONE SURGICAL, LLC	
 	

 
	

By:	
 	

/s/  PATRICK KOUCERICK      
	
 	

 
	Name (please print):	 	 
	Title:	 	 	 	 




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EXHIBIT A    
    
    PRODUCTS    
    



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EXHIBIT B    
    
    LIST OF SALES AGENT'S TERRITORY    
    


        [***] 


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EXHIBIT C    
    
    COMMISSION RATE    
    


        [***] 


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EXHIBIT D    
    
    SALES QUOTAS    
    



 2005  




        [***] 



 2006  




        [***] 



 2007  




        [***] 


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QuickLinks


ALPHATEC SPINE, INC. SALES AGENCY AGREEMENT


EXHIBIT A PRODUCTS

EXHIBIT B LIST OF SALES AGENT'S TERRITORY

EXHIBIT C COMMISSION RATE

EXHIBIT D SALES QUOTAS