Document:

ATEC-2014.03.31.EX-10.4

        

Exhibit 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the “Agreement”), made this 17th day February of 2014 (the "Effective Date"), is entered into among Michael Plunkett (“Executive”), Alphatec Spine, Inc., a California corporation (the “ASI”), and Alphatec Holdings, Inc., a Delaware corporation (“Parent”) (collectively, ASI and Parent shall be referred to as the "Company").
Commencement.  This Agreement, which shall govern Executive’s employment by the Company, shall become effective on the Effective Date and the parties to this Agreement agree and acknowledge that Executive's employment pursuant to the terms of this Agreement shall begin on January 1, 2014, (the "Commencement Date").
2.    At-Will Employment.  The parties to this Agreement agree and acknowledge that the Executive's employment pursuant to this Agreement shall be considered at-will.  Either party may terminate this Agreement at any time, with or without cause pursuant to the terms of this Agreement.  Similarly, the Company may change Executive’s position, responsibilities or compensation with or without cause or notice.
3.    Title; Capacity; Office.  The Company shall employ Executive, and Executive agrees to work for the Company initially as its Chief Operating Officer.  Executive shall perform the duties and responsibilities inherent in the position in which Executive serves and such other duties and responsibilities as the Chairman and Chief Executive Officer (or his or her designee(s)) shall from time to time reasonably assign to Executive.  Executive shall report to the Chairman and Chief Executive Officer (or his or her designee(s)).      
4.    Compensation and Benefits.  While employed by the Company, Executive shall be entitled to the following (it being agreed, for the avoidance of doubt, that, except as provided in Section 6.2, amounts payable on the happening of any specified event will not be payable if the Executive is not employed by the Company upon the happening of such event):
4.1    Salary.  Commencing on the Commencement Date, the Company shall pay Executive a salary at an annualized rate of $325,000 less applicable payroll withholdings, payable in accordance with the Company’s customary payroll practices. 
4.2    Performance Bonus.  If Executive remains employed through the last day of a fiscal year, Executive will be eligible to receive a discretionary cash performance bonus each fiscal year in an amount equal to 60% of the annual base salary for such fiscal year (the "Target Bonus Amount").  The payment of the Target Bonus Amount shall be subject to the Company's and Executive's achievement of goals to be established and presented to the Executive each fiscal year.
4.3    Fringe Benefits.  Executive shall be entitled to participate in all benefit programs that the Company establishes and makes available to its management employees.  

4.4    Reimbursement of Expenses.  Executive shall be entitled to prompt reimbursement for reasonable expenses incurred or paid by Executive in connection with, or related to the performance of, Executive's duties, responsibilities or services under this Agreement, upon presentation by Executive of documentation, expense statements, vouchers and/or such other supporting information as the Company may reasonably request.  Expenses that do not comply with applicable law will not be reimbursed under any circumstances.
4.5    Equity. Following the Effective Date, the Company will recommend to the board of directors of the Parent that Executive receive a grant of options to purchase 25,000 shares of the common stock of Parent (the “Options”).  If granted, the Options shall have an exercise price equal to the closing price of Parent's common stock on the trading day that such Options are issued.  The Options shall vest over a four-year period, with 25% of such options vesting on the anniversary of the grant date, and the remaining 75% vesting in 12 tranches each three months thereafter. The Options shall be subject, in all respects, to (i) the Alphatec Holdings, Inc. 2005 Employee, Director and Consultant Stock Plan (the “Plan”), and (ii) an Incentive Stock Option Agreement to be entered into by the Parent and the Executive.  Following the Effective Date, the Company will recommend to the board of directors of the Parent that Executive receive a grant of 75,000 shares of restricted common stock of the Parent (the “Restricted Stock”).  If granted, the Restricted Stock shall vest over a four-year period in for equal amounts beginning on the first anniversary after the date of issuance.  The Restricted Stock shall be subject, in all respects, to (i) the Alphatec Holdings, Inc. 2005 Employee, Director and Consultant Stock Plan (the “Plan”), and (ii) a Restricted Stock Agreement to be entered into by the Parent and the Executive.  In the event of termination of Executive’s employment due to death, any unvested Options or Restricted Stock granted under this Agreement shall become fully vested and not subject to forfeiture or repurchase.  
4.6    Vacation. The Executive may take up to twenty-three (23) days of paid vacation during each year at such times as shall be consistent with the Company’s vacation policies and with vacations scheduled for other executives and employees of the Company. 
5.    Termination of Employment.  The Executive’s employment can terminate at any time with or without cause or notice:
5.1    Termination by the Company for Cause.  If the Company terminates Executive’s employment for Cause, the Company shall have no obligation to Executive other than for payment of wages earned through the termination date.  For purposes of this Agreement, “Cause” means any one of the following: (i) Executive being convicted of a felony; (ii) Executive committing any act of fraud or dishonesty resulting or intended to result directly or indirectly in personal enrichment at the expense of the Company; (iii) failure or refusal by Executive to follow policies or directives reasonably established by the President and Chief Executive Officer or his or her designee(s) that goes uncorrected after notice has been provided to Executive; (iv) a material breach of this Agreement that goes uncorrected after notice has been provided to Executive; (v) any gross or willful misconduct, dishonesty, fraud or negligence by Executive in the performance of Executive's duties; (vi) egregious conduct by Executive that brings Company or any of its subsidiaries or affiliates into public disgrace or disrepute; or (vii) a material violation of the Company's Code of Conduct.

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5.2    Termination by the Company Without Cause.  In the event that Executive's employment is terminated without Cause, the Company shall continue for a period of nine months (the “Severance Period”), to pay to Executive the annual base salary then in effect.  During the Severance Period, if the Executive elects to have COBRA coverage and is eligible for such coverage, the Company shall make a monthly payment to the Executive equal to the monthly cost of COBRA coverage under the Company’s group health plan for the Executive and those family members that are entitled to such COBRA coverage, provided that the Execute certifies each month that no other insurance coverage exists.  The payment obligations set forth in this Section 5.2 shall be contingent upon the Executive first executing a release of claims (which shall contain post-employment covenants similar to those set forth in Section 6), the form of which is satisfactory to the Company, and the lapse of the applicable rescission period related thereto. 
6.    Additional Covenants of the Executive.  
6.1    Noncompetition; Nonsolicitation; Nondisparagement.

(a)    During Executive's employment with the Company, Executive shall not, directly or indirectly, render services of a business, professional or commercial nature to any other person or entity that competes with the Company’s business, whether for compensation or otherwise, or engage in any business activities competitive with the Company’s business, whether alone, as an Executive, as a partner, or as a shareholder (other than as the holder of not more than one percent of the combined voting power of the outstanding stock of a public company), officer or director of any corporation or other business entity, or as a trustee, fiduciary or in any other similar representative capacity of any other entity.  Notwithstanding the foregoing, the expenditure of reasonable amounts of time as a member of other companies’ Board of Directors shall not be deemed a breach of this if those activities do not materially interfere with the services required under this Agreement.

(b)    During Executive's employment with the Company, and for a period of one (1) year following the termination of the Executive's employment with the Company, the Executive shall not, without the prior written consent of the Company:
(i)    either individually or on behalf of or through any third party, directly or indirectly, solicit, entice or persuade or attempt to solicit, entice or persuade any employee, agent, consultant or contractor of the Company or any of its affiliates (the "Company Group") to leave the service of the Company Group for any reason; or
(ii)    either individually or on behalf of or through any third party, directly or indirectly, interfere with, or attempt to interfere with, the business relationship between the Company Group and any vendor, supplier, surgeon or hospital with which the Executive has interacted during the course of Executive’s employment with the Company.

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(c)    During Executive's employment with the Company and at all times thereafter, Executive shall not make any statements that are professionally or personally disparaging about, or adverse to, the interests of the Company or any of its divisions, affiliates, subsidiaries or other related entities, or their respective directors, officers, employees, agents, successors and assigns (collectively, “Company-Related Parties”), including, but not limited to, any statements that disparage any person, product, service, finances, financial condition, capability or any other aspect of the business of any Company-Related Party, and that Executive will not engage in any conduct which could reasonably be expected to harm professionally or personally the reputation of any Company-Related Party.
6.2    If any restriction set forth in this Section 6 is found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or in too broad a geographic area, it shall be interpreted to extend only over the maximum period of time, range of activities or geographic area as to which it may be enforceable.
6.3    The restrictions contained in this Section 6 are necessary for the protection of the confidential, nonpublic information relating to the Company and its operations, strategies, development plans, financial information and other proprietary corporate information, and are considered by Executive to be reasonable for such purpose.  Executive agrees that any breach of this Section 6 will cause the Company substantial and irrevocable damage and therefore, in the event of any such breach, in addition to such other remedies which may be available, the Company shall have the right to seek specific performance and injunctive relief.  
7.    Other Agreements.  Executive represents that Executive's performance of all the terms of this Agreement as an Executive of the Company does not and will not breach any (i) agreement to keep in confidence proprietary information, knowledge or data acquired by Executive in confidence or in trust prior to Executive's employment with the Company or (ii) agreement to refrain from competing, directly or indirectly, with the business of any previous employer or any other party.
8.    Notices.  All notices required or permitted under this Agreement shall be in writing and shall be deemed effective upon (a) a personal delivery, or (b) deposit in the United States Post Office, by registered or certified mail, postage prepaid.
9.    Entire Agreement.  This Agreement and the agreements related to the Options constitute the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral relating to the subject matter of this Agreement.
10.      Amendment.  This Agreement may be amended or modified only by a written instrument executed by both the Company and Executive.
11.      Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of both parties and their respective successors and assigns, including any corporation into which the Company may be merged or which may succeed to its assets or business, provided, however, that the obligations of Executive are personal and shall not be assigned by Executive.  The Company may assign this Agreement following the delivery of written notice to the Executive.

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12.      Miscellaneous.
12.1    No Waiver.  No delay or omission by the Company in exercising any right under this Agreement shall operate as a waiver of that or any other right.  A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar or waiver of any right on any other occasion.
12.2    Severability.  In case any provision of this Agreement shall be invalid, illegal or otherwise unenforceable, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby.
12.3    Governing Law.  This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of California.
12.4    Consent to Arbitration.  In the event of a dispute involving this Agreement, the Executive consents and agrees that all disputes shall be resolved in accordance with the terms and conditions of the Mutual Agreement to Arbitrate Claims between the Company and the Executive.
12.5    Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year set forth above.

/s/ Michael Plunkett                
Michael Plunkett                                       

ALPHATEC SPINE, INC.
By: /s/ Roy Burchill     
        Name: Roy Burchill 
        Title:  VP, Global Human Resources
    
ALPHATEC HOLDINGS, INC.
By: /s/ Roy Burchill     
        Name: Roy Burchill 
        Title: VP, Global Human Resources
        

6ATEC-2014.03.31.EX-10.5

Exhibit 10.5
Effective as of January 15, 2014 

Mr. Mitsuo Asai 

Dear Mr. Asai (hereinafter, "you" or "your"), 

I am very pleased to provide you with a summary of your revised terms of employment with Alphatec Holdings, Inc. and its subsidiaries, Alphatec Spine, Inc. and Alphatec Pacific, Inc. (collectively, "Alphatec"). 

		
	1.
	Position. 

Your position will be President, Alphatec Pacific, Inc., reporting to Patrick Ryan, President International and COO. As you progress with Alphatec, your position and assignments are, of course, subject to change. As an Alphatec employee, we expect that you will perform any and all duties and responsibilities normally associated with your position in a satisfactory manner and to the best of your abilities at all times. 

		
	2.
	Starting Date/Nature of Relationship. 

Upon accepting these revised terms of employment, and any conditions set forth herein are satisfied, your revised terms of employment with Alphatec will begin on January 15, 2014 (the "Commencement Date"). Thereafter, you will be expected to devote all of your working time to the performance of your duties at Alphatec throughout your employment. The term of your employment (the "Term") shall be for three years, which term shall begin on the Commencement Date. 

		
	3.
	Compensation, Benefits, Vacation, Bonus. 

Your initial base compensation shall be at a monthly rate of ¥2,676,583 (¥32,119,000 per year).  Included in the base compensation amount is a monthly base salary of ¥2,343,250 (¥28,119,000 per year) and a monthly housing allowance as described below.  If you remain employed through the last day of a fiscal year, you will be eligible to receive a discretionary cash performance bonus each fiscal year in an amount equal to 50% of the annual base salary for such 

fiscal year (the "Target Bonus Amount"). The payment of the Target Bonus Amount shall be subject to Alphatec's and your achievement of goals to be established and presented to you each fiscal year. 

You may take advantage of various benefits offered by Alphatec Pacific, Inc. You shall be entitled to 20 paid vacation days per calendar year. Alphatec shall provide a furnished corporate apartment in Tokyo, Japan for your use, and Alphatec shall pay (i) up to ¥333,333 monthly (¥4,000,000 per year) in rent and expenses related to such apartment, and (ii) all commissions, deposits and expenses incurred prior to the execution of the lease of such apartment. Alphatec shall provide you with a monthly travel allowance of ¥70,000 provided that (i) such amounts are used for travel between Tokyo, Japan and your home in Osaka, Japan; and (ii) Alphatec is not obligated to reimburse you in accordance with such allowance until you provide receipts to Alphatec that document the incurred travel expenses. Alphatec agrees to reimburse you for the annual premium associated with your purchase of a workmen's accident compensation insurance policy covering you. In the event that you become disabled during the Term through any illness, injury, accident or condition of either a physical or psychological nature, and, as a result, are unable to perform all of your duties and responsibilities hereunder for a period of 90 consecutive days, Alphatec shall continue to pay you your base salary then in effect for such 90-day period. You shall be entitled to fly business class on all employment-related trips between Japan and the United States. 

		
	4.
	Your Representations and Warranties to Alphatec. 

As a condition of your continued employment with Alphatec you hereby represent and warrant to Alphatec that (i) you are free to fully perform the duties of your position and that you are not subject to any employment, confidentiality, non-competition or other agreement that would restrict your employment by Alphatec, (ii) your signing this letter does not violate any order,
judgment or injunction applicable to you, or conflict with or breach any agreement to which you are a party or by which you are bound, (iii) you have disclosed to Alphatec any applicable agreements that address confidentiality or other post-employment obligations, (iv) you have not disclosed and will not disclose to Alphatec any proprietary, trade secret or confidential information belonging to another, (v) you have removed no documents or data from a prior employer or a third party, and you are in compliance and will remain in compliance with any obligations of confidentiality to a third party, and (vi) all facts you have presented or will present to Alphatec are accurate and true. This includes, but is not limited to, all oral and written statements you have made (including those pertaining to your education, training, qualifications, licensing and prior work experience) on any job application, resume or c.v., or in any interview or discussion with Alphatec. 

		
	5.
	Non-solicitation/Trade Secrets/Non disclosure. 

You hereby agree and acknowledge that based upon your position within Alphatec that you will have access to certain Trade Secrets (as defined below), which, if disclosed to a third party would cause Alphatec to suffer irreparable harm. In order to protect Alphatec from unauthorized use of such Trade Secrets following the termination of your employment, for a period of nine months following the termination your employment relationship for any reason, you will not (i) either individually or on behalf of or through any third party, directly or indirectly, solicit, entice or persuade or attempt to solicit, entice or persuade any employee, agent, consultant or contractor of Alphatec or any of its affiliates (the "Company Group") to leave the service of the Company Group for any reason; or (ii) either individually or on behalf of or through any third party, directly or indirectly, interfere with, or attempt to interfere with, the business relationship between the Company Group and any vendor, supplier, surgeon or hospital with which you have interacted during the course of your employment with Alphatec. 

You agree that all information and know-how, whether or not in writing, of a proprietary, private, secret or confidential nature concerning Alphatec's business or financial affairs (collectively, "Trade Secrets") is and shall be the exclusive property of Alphatec. By way of illustration, but not limitation, Trade Secrets include inventions, products, processes, methods, techniques, formulas, compositions, compounds, projects, developments, inventions, projections, sales programs and commission rates, development projects and programs, research data, clinical data, financial data, personnel data, computer programs, and vendor and supplier lists. You will not disclose any Trade Secrets to others outside Alphatec or use the same for any unauthorized purposes without written approval of Alphatec, either during or after your employment, unless and until such Trade Secrets have become public knowledge without fault by you or any third party that was not obligated to keep such Trade Secrets confidential. It is agreed and acknowledged by the parties that the terms of this letter shall be deemed to be a Trade Secret and you shall only disclose such terms to your spouse or advisor acting in a fiduciary capacity (i.e., attorney or accountant).
 
You agree that all files, letters, memoranda, reports, records, data, sketches, drawings, laboratory notebooks, program listings, or other written, photographic, or other tangible material containing Trade Secrets, whether created by you or others, which shall come into your custody or possession, shall be and are the exclusive property of Alphatec and shall solely be used by you in the performance of your duties for Alphatec.  You agree to immediately return to Alphatec all Trade Secrets and all materials containing Trade Secrets following the termination of your employment relationship. 

You agree that your obligation not to disclose or misuse Trade Secrets, also includes such similar types of information of subsidiaries, affiliates and joint ventures of Alphatec, customers of Alphatec or suppliers to Alphatec or other third parties who may have disclosed or entrusted such similar types of information to Alphatec or to you in the course of Alphatec’s business.
    
You recognize that a breach or threatened breach by you of any of the provisions contained in this Section 5 will cause Alphatec irreparable injury.  You therefore agree that Alphatec shall be 

entitled, in addition to any other right or remedy, to a temporary, preliminary and permanent injunction, without the necessity of proving the inadequacy of monetary damages or the posting of any bond or security, enjoining or restraining you from any such violation or threatened violations.

		
	6.
	Termination of Employment: Effect of Termination of Employment.

During the Term, this Agreement may be terminated as follows: (i) by either Alphatec or you without Cause (as defined below) upon ten days notice; or (ii) by Alphatec for Cause in accordance with the notice provisions set forth below.

Your employment may be terminated by Alphatec for Cause upon the occurrence of any of the following (each of which shall constitute “Cause”): (i) your being convicted of a crime involving dishonesty, fraud or theft; (ii) your committing any act of fraud or dishonesty resulting or intended to result directly or indirectly in personal enrichment at the expense of Alphatec; (iii) failure or refusal by you to follow policies or directives reasonably established by the Chairman & CEO of Alphatec, or his/her designee, that goes uncorrected for a period of 30 consecutive days after written notice has been provided to you; (iv) a material breach of this Agreement that goes uncorrected for a period of 30 consecutive days after written notice has been provided to you; (v) any gross or willful misconduct or gross negligence by you in the performance of your duties; (vi) a material violation of the Alphatec’s Code of Conduct; or (vii) your inability to perform your duties for 90 consecutive days due to a disability; or (viii) your death.

In the event that your employment is terminated for Cause or at your election, Alphatec shall have no further obligations under this Agreement other than to pay you the base salary and benefits, including payment for accrued but untaken vacation days, otherwise payable to you through the last day of your actual employment with Alphatec.

In the event that your employment is terminated by Alphatec without Cause, Alphatec shall continue to pay you the annual base salary then in effect for a period of 12 months from the last day of your actual employment with Alphatec.

In the event that your employment is terminated due to your inability to perform your duties for 90 consecutive days due to a disability, Alphatec shall have no further obligations under this Agreement other than to pay you the base salary and benefits, including payment for accrued but untaken vacation days, otherwise payable to you through the last day of your actual employment with Alphatec.  In the event that your employment is terminated due to your death, Alphatec shall continue to pay your estate the annual base salary then in effect for a period of six months from the last day of your actual employment with Alphatec. 

		
	7.
	Miscellaneous. 

This letter constitutes Alphatec's entire offer regarding the terms and conditions of your prospective employment with Alphatec. It supersedes any prior agreements, or other promises or statements (whether oral or written) regarding the terms of your employment, including that certain Employment Agreement between you and Alphatec dated January 14, 2008 and January 15, 2011. This letter shall be governed by and construed and enforced in accordance with the internal laws of the State of California. In the event of a dispute involving this Agreement, you consent and agree that all disputes shall be resolved in accordance with the terms and conditions of the Mutual Agreement to Arbitrate Claims between Alphatec and you. 

[Signature Page Follows] 

You may accept these revised terms of employment hereof by signing a copy of this letter. Your signature on the copy of this letter and your submission of a signed copy to me will evidence your agreement set forth herein.

We are pleased to extend the terms of your employment with Alphatec, and we look forward to your continued success. We are confident that you will continue to make an important contribution to our unique and exciting enterprise. 

Sincerely, 

/s/ Michael O'Neill, CFO, VP and Treasurer        12/20/2013
Michael O'Neill                        Date
Chief Financial Officer, Vice President and Treasurer

Read, Agreed and Acknowledged: 

/s/ Mitsuo Asai                    12/20/2013
Mitsuo Asai                         Date

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