AMENDED AND RESTATED DEVELOPMENTAL CONSULTING AGREEMENT

Development Agreement

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ALPHATEC HOLDINGS, INC. | Alphatec Spine, Inc | Stout Medical Group LP | Stout Medical Group, Inc

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Title: AMENDED AND RESTATED DEVELOPMENTAL CONSULTING AGREEMENT
Governing Law: New York Date: 5/5/2009
Industry: Medical Equipment and Supplies Law Firm: Oppenheimer Wolff Sector: Healthcare

Exhibit 10.3

AMENDED AND RESTATED DEVELOPMENTAL CONSULTING AGREEMENT

This Amended and Restated Developmental Consulting Agreement (the “Agreement”) is entered into as of March 31, 2009 (the “Amendment Date”), by and among Alphatec Spine, Inc., a Delaware corporation with a principal place of business at 2051 Palomar Airport Road, Suite 100, Carlsbad, California 92011 (the “Company”), Stout Medical Group LP, a limited partnership company organized under the laws of the state of Delaware, and having a place of business at 410 East Walnut Street, Suite #8, Perkasie, Pennsylvania 18944 (“Service Provider”) and for purposes of Sections 3.2, 3.3, 11.14 and Article 7 hereof only Alphatec Holdings, Inc., a Delaware corporation with a principal place of business at 2051 Palomar Airport Road, Suite 100, Carlsbad, California 92008 (“Holdings”). Company and Service Provider are each hereafter referred to individually as a “Party” and together as the “Parties”.

WHEREAS, Reference is made to that certain Developmental Consulting Agreement dated March 3, 2008 (the “Effective Date”) between the parties to this Amendment (the “Original Agreement”); and

WHEREAS, The Parties desire to amend and restate the Agreement as set forth herein.

Now, therefore, in consideration of the mutual promises set forth herein and for other good and valuable consideration, the receipt and sufficiency of which is acknowledged by the Parties hereto, the Parties hereto agree that the Original Agreement is hereby amended and restated in its entirety as follows:

1. DEFINITIONS

Whenever used in the Agreement with an initial capital letter, the terms defined in this Article 1 shall have the meanings specified.

1.1 “Affiliate” shall mean any company, corporation, partnership, limited liability company, trust, or other business entity that directly or indirectly controls, is controlled by, or is under common control with a designated person or entity, and for such purpose “control” shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of the entity, whether through the ownership of voting securities, by contract or otherwise.

1.2 “Common Stock” shall mean the common stock of Holdings, and any securities into which such common stock may hereafter be reclassified, converted or exchanged.

1.3 “Company Indemnitees” and “Service Provider Indemnitees” (each individually an “Indemnitee”) shall have the meaning given in Article 8.

1.4 “Confidential Information” shall mean with respect to a Party (the “Receiving Party”), all information which is disclosed by the other Party (the “Disclosing Party”) to the Receiving Party hereunder or to any of its employees, consultants, Affiliates, licensees or sublicensees, except to the extent that the Receiving Party can demonstrate by written record or other suitable physical evidence

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

that such information, (a) as of the date of disclosure is demonstrably known to the Receiving Party or its Affiliates other than by virtue of a prior confidential disclosure to such Party or its Affiliates; (b) as of the date of disclosure is in, or subsequently enters, the public domain, through no fault or omission of the Receiving Party; (c) is obtained from a Third Party having a lawful right to make such disclosure free from any obligation of confidentiality to the Disclosing Party; or (d) is independently developed by or for the Receiving Party without reference to or reliance upon any Confidential Information of the Disclosing Party. Any information in relation to the subject matter of this Agreement disclosed by a Party under that certain Mutual Confidentiality Agreement between the parties dated the 2nd day of July, 2007 shall, subject to the foregoing exceptions, be considered Confidential Information for purpose of this Agreement.

1.5 “FDA” shall mean the United States Food and Drug Administration and any successor agency or authority thereto.

1.6 “Guarantee and Agreement” shall mean the guarantee and agreement of Holdings set forth in Section 11.14 hereof.

1.7 “In-Field Products” shall have the meaning given in Section 5.3.

1.8 “Joint Inventions” shall have the meaning given in Section 5.3.

1.9 “License Agreement” shall mean that certain Amended and Restated License Agreement as of even date herewith between the Parties relating to Company’s license of Technology in the Licensed Field from the Service Provider.

1.10 “Licensed Field” shall mean: (i) [***]; or (ii) [***].

1.11 “Licensed Product” shall mean any product sold by Company, its Affiliates or Sublicensees that embodies or uses any aspect of the Licensed Patent Rights and/or the Licensed Technology (as such terms are defined in the License Agreement).

1.12 “Net Sales” shall mean the gross amount invoiced by or otherwise payable to the Company, any of its Affiliates or any Sublicensee on account of sales or other transfers of an In-Field Products anywhere in the Territory during a designated period less to the extent otherwise then or previously included in amounts invoiced for such In-Field Products and in respect of which no previous deduction was taken):

1.12.1

trade, cash and quantity discounts or rebates actually allowed or taken on In-Field Products, including discounts or rebates to governmental or managed care organizations;

1.12.2

credits or allowances actually given or made for rejection of, and for uncollectible amounts (except to the extent later collected) on, or return of previously sold In-Field Products;

1.12.3

any charges for insurance, freight, and other transportation costs directly related to the delivery of In-Field Products to the extent included in the gross invoiced sales price;

1.12.4

any tax, tariff, duty or governmental charge levied on the sales, transfer, transportation or delivery of an In-Field Products (including any tax such as a value added or similar tax or government charge), other than franchise or income tax of any kind whatsoever; and

1.12.5

any import or export duties or their equivalent borne.

“Net Sales” shall not include amounts invoiced by or otherwise payable to the Company, any of its Affiliates and/or any Sublicensees for In-Field Products sold or otherwise transferred to the Company or any of its Affiliates and/or its Sublicensees, unless the In-Field Products is consumed by the invoiced entity.

1.13 “Restricted Stock Agreement” shall have the meaning set forth in Section 3.2 hereof.

1.14 “Services” shall have the meaning set forth in Section 2.1 hereof.

1.15 “Shares” shall have the meaning set forth in Paragraph. 3.4.1(a) hereof.

1.16 “Statement of Work” shall have the meaning set forth in Section 2.1 hereof.

1.17 “Sublicensee” shall mean any Third Party to whom Company grants a sublicense of some or all of the rights granted to Company under this Agreement.

1.18 “Technology” shall mean all of the following intangible legal rights, whether or not filed, perfected, registered or recorded, applicable to the Licensed Field: (i) inventions, patents, patent disclosures, patent rights, including any and all continuations, continuations-in-part, divisionals, reissues, reexaminations, utility models, industrial designs and design patents or any extensions thereof, (ii) rights associated with works of authorship, including without limitation, copyrights, copyright applications and copyright registrations and (iii) any and all proprietary ideas, inventions, discoveries, Confidential Information, data, results, formulae, designs, specifications, methods, processes, techniques, ideas, know-how, technical information (including, without limitation, structural and functional information), process information, pre-clinical information, clinical information, and any and all proprietary control and manufacturing data and materials, whether or not patentable.

1.19 “Term” shall have the meaning given in Section 9.1.

1.20 “Territory” shall mean all countries and jurisdictions of the world.

1.21 “Third Party” shall mean any person or entity other than Company, Service Provider and their respective Affiliates.

1.22 “Triggering Event” shall mean (i) the filing of a 510(k) application with the FDA (as defined below) with respect to a Licensed Product, or (ii) the initiation of an Investigational Device Exemption with the FDA with respect to a Licensed Product.

2. PROFESSIONAL SERVICES

2.1 Statement of Work . The Company hereby engages the Service Provider to provide professional services (the “Services”) set forth on Schedule A attached hereto (the “Statement of Work”), and the Service Provider hereby accepts such engagement. The Service Provider agrees to perform for the Company the Services, and to provide to the Company the work product set forth in Schedule A attached hereto. Schedule A may only be amended by mutual written agreement of the Parties.

2.2 Location and Access . Except as otherwise stated in the Statement of Work, the Service Provider shall perform the Services at the Service Provider’s premises or such other premises that the Company and the Service Provider may agree in writing.

2.3 Records and Reports . The Service Provider shall keep accurate written records of its activities under this Agreement and shall make such records available to the Company upon request. Unless otherwise stated in the Statement of Work, the Service Provider shall provide the Company with periodic written reports on such activities. The Service Provider shall also provide the Company with such other reports that the Company may periodically request during the term of this Agreement.

3. PAYMENTS

3.1 Cash Remuneration To the Service Provider . The Company shall pay the Service Provider two-hundred forty thousand dollars ($240,000) in cash in twelve (12) monthly payments of twenty thousand dollars ($20,000) each (with the first such first retainer payment due July 30, 2009, and each subsequent retainer payment due thirty (30) days thereafter) (the “Cash Retainer”); provided however, that in the event that a Triggering Event occurs prior to the date that all such monthly payments shall have been made, all then unpaid amounts of the Cash Retainer shall become due and payable when scheduled or if earlier within thirty (30) days of the occurence of the Triggering Event.

3.2 Issuance of Restricted Common Stock to the Service Provider . The Service Provider and the Company agree and acknowledge that prior to the Effective Date, the Company issued to the Service Provider a stock certificate representing 101,944 shares of restricted Common Stock, represented by stock certificate number ATEC-00585, dated April 15, 2008 (the “Restricted Common Stock”). The Restricted Common Stock shall be subject to an Amended and Restated Restricted Stock Agreement between the parties dated on or about the date hereof (the “Amended and Restated Restricted Stock Agreement”).

3.3 Matters Related to the Issuance of Common Stock .

3.3.1

Representations, Warranties and Certain Covenants of the Company. The Company represents, warrants and covenants that:

(a) Assuming the covenant of Service Provider contained in Subsection 3.3.2 of this Agreement is complied with, the issuance to Service Provider of each share of Common Stock (all shares so issued the “Shares”) will be in compliance with all applicable federal and state securities laws in connection with the offer, issuance and sale of the securities.

(b) The execution, delivery and performance of this Agreement by Holdings, the issuance and sale of the Shares and the consummation by Holdings of the other transactions by it contemplated hereby do not and will not on the date of the issuance and sale of the Shares (i) conflict with or violate any provision of Holdings’ or any of its subsidiaries certificates or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any lien or encumbrance upon any of the properties or assets of Holdings or any of its subsidiaries, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument or other understanding to which Holdings or any of its subsidiaries is a party or by which any property or asset of Holdings or any such subsidiary is bound or affected, in each case with respect to this Subsection (ii), to a degree that would have a material adverse effect on the assets or results of operations of Holdings or its subsidiaries when considered as a whole (a “Material Adverse Effect”), or (iii) conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which Holdings or any such subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of Holdings or any such subsidiary is bound or affected, in each case with respect to this Subsection (iii), to a degree that would have a Material Adverse Effect.

(c) Prior to the issuance of the Shares, Holdings shall obtain all consents, approvals, orders, authorizations or registrations, qualifications, designations, declarations, and make all filings or registrations with any court or other federal, state, local or other governmental authority or other person that is required in order to issue the Shares.

(d) The Shares, when issued in accordance herewith, will be (i) duly authorized, (ii) duly and validly issued, (iii) fully paid and nonassessable, and (iv) free and clear of all liens imposed by Holdings, other than restrictions on transfer provided for herein.

(e) At all times prior to the second anniversary of the issuance of the Shares during which there are Shares outstanding which have not been previously (i) sold or transferred to or through a broker or dealer or underwriter in a public distribution, or (ii) sold or transferred in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended (the “Securities Act”), in the case of either Subsection (i) or Subsection (ii) in such a manner that, upon the consummation of such sale or transfer, all transfer restrictions and restrictive legends with respect to such Shares are removed upon the consummation of such sale or transfer, Holdings shall use its commercially reasonable efforts to: (1) comply with the requirements of Rule 144(c) under the Securities Act with respect to current public information about Holdings, and (2) furnish to the Service Provider such non-publicly available reports and documents of Holdings as Service Provider may reasonably request to avail itself of Rule 144 of the Securities Act, or any similar rule or regulation of the United States Securities Exchange Commission allowing Service Provider to sell the Shares without registration.

3.3.2

Representations and Warranties of the Service Provider . The Service Provider represents and warrants that (i) it is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D of the Securities Act; (ii) it is acquiring the Shares for investment for the Service Provider’s own account and not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, without prejudice, however, to Service Provider’s right to at all times to sell or otherwise dispose of any or all of the Shares so issued in compliance with applicable federal and state securities laws and (iii) it does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or to any third person, with respect to any of such Shares.

3.3.3

Restrictions on the Shares . Service Provider understands and agrees that the Shares may not be sold, transferred, or otherwise disposed of without registration under the Securities Act or an exemption therefrom, and that in the absence of an effective registration statement covering the Shares or any available exemption from registration under the Securities Act, the Shares must be held indefinitely. The Service Provider agrees and acknowledges that the following legend will be placed on the back of any certificate evidencing the Shares:

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT, OR THE CORPORATION RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE CORPORATION, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.

THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO RESTRICTIONS SET FORTH IN A RESTRICTED STOCK AGREEMENT WITH THIS CORPORATION, A COPY OF WHICH AGREEMENT IS AVAILABLE FOR INSPECTION AT THE OFFICES OF THE CORPORATION OR WILL BE MADE AVAILABLE UPON REQUEST.”

3.3.4

Limitation on the Number of Shares Issued . Notwithstanding anything to the contrary in this Agreement, in no event shall the aggregate number of Shares issued pursuant to this Agreement be greater than nine and nine-tenths percent (9.9%) of the number of shares of Common Stock outstanding on the Effective Date. In the event that an issuance of Shares pursuant to this Agreement would cause an aggregate issuance of Shares that is more than nine and nine-tenths percent (9.9%) of the number of shares of Common Stock outstanding on the Effective Date, the Company shall make a cash payment to the Service Provider equal to the difference between cash value of the Shares that were scheduled to be issued pursuant to this Agreement, and the value of the Shares that were actually issued after giving effect to the limitation set forth in this Section 3.3.4.

3.4 Service Provider Expenses . Company will also pay all out-of-pocket costs incurred by the Service Provider in connection with the provision of the Services, including costs of any materials utilized, [***]. Company and Service Provider shall equally split any travel costs incurred by Service Provider in connection with any development meetings that occur in the Carlsbad, CA area; provided that prior to such meeting the Company and Service Provider shall mutually agree on which representatives of the Service Provider shall attend such meetings. Company shall reimburse the Service Provider for all travel costs incurred at the request of the Company, provided that such travel is requested by the Company. The foregoing sentence shall specifically exclude all development meetings in the Carlsbad, CA area. All reimbursement described in this Section 3.4 will be invoiced monthly by the Service Provider and invoices and are payable net 45 days.

3.5 Payments to the Company . The Service Provider shall refund to Company four-hundred thousand dollars ($400,000) (the “Company Refund”) that had been paid to the Service Provider pursuant to the Original Agreement, with the such Company Refund being due and payable on April 15, 2009.

4. PROTECTED INFORMATION

4.1 Confidential Information . Each Party recognizes that the other Party’s Confidential Information constitutes highly valuable and proprietary confidential information. Each Party agrees that during the Term and for five (5) years thereafter, it will keep confidential, and will cause its employees, consultants, Affiliates and sublicensees to keep confidential, all Confidential Information of the other Party. Neither Party nor any of their respective employees, consultants, Affiliates or sublicensees shall use Confidential Information of the other Party for any purpose whatsoever other than exercising any rights granted to it or reserved by it hereunder. Without limiting the foregoing, each Party may disclose information to the extent such disclosure is reasonably necessary to (a) file, prosecute or defend litigation in accordance with the provisions of this Agreement or (b) comply with applicable laws, regulations (including those of the United States Securities Exchange Commission) or court orders; provided, however, that if a Party is required to make any such disclosure of the other Party’s Confidential Information in connection with any of the foregoing, it will give reasonable advance notice to the other Party of such disclosure requirement and will use reasonable efforts to cooperate with such other Party in efforts to secure confidential treatment of such information required to be disclosed. Each Party agrees that any Confidential Information disclosed by a Party under that certain Mutual Confidentiality Agreement between the Parties dated the 2nd day of July 2007 shall be protected by the obligations set forth therein through the date hereof and from and after the date hereof shall be protected by the obligations as to Confidential Information set forth herein so as to be continuously protected.

4.2 Limited Disclosure and Use . Each Party agrees that any disclosure of the other Party’s Confidential Information to any officer, employee, consultant or agent of the other Party or any of its Affiliates or Sublicensees shall be made only if and to the extent necessary to carry out its rights and responsibilities under this Agreement, shall be limited to the maximum extent possible consistent with such rights and responsibilities and shall only be made to the extent any such persons are bound by written confidentiality obligations to maintain the confidentiality thereof and not to use such Confidential Information except as expressly permitted by this Agreement. Each Party further agrees not to disclose or transfer the other Party’s Confidential Information to any Third Parties under any circumstance without the prior written approval from the other Party (such approval not to be unreasonably withheld), except as otherwise required by law, and except as otherwise expressly permitted by this Agreement. Each Party shall take such action, and shall cause its Affiliates or Sublicensees to take such action, to preserve the confidentiality of each other’s Confidential Information as it would customarily take to preserve the confidentiality of its own Confidential Information, using, in all such circumstances, not less than reasonable care. Each Party, upon the request of the other Party, will return all the Confidential Information disclosed or transferred to it by the other Party pursuant to this Agreement, including all copies and extracts of documents and all manifestations in whatever form, within sixty (60) days of such request or, if earlier, the termination or expiration of this Agreement; provided however, that a Party may retain (i) any Confidential Information of the other Party relating to any license which expressly survives such termination, and (ii) one (1) copy of all other Confidential Information in inactive archives in legal counsel’s files solely for the purpose of establishing the contents thereof.

4.3 Publicity . Neither Party may publicly disclose the existence or terms or any other matter of fact regarding this Agreement without the prior written consent of the other Party, which consent shall not be unreasonably withheld or delayed; provided, however, that either Party may make such a disclosure (i) to the extent required by law or by the requirements of any nationally recognized securities exchange, quotation system or over-the-counter market on which such Party has its securities listed or traded, or (ii) with respect to Company, to any prospective Sublicensees, or to investors, prospective investors, lenders and other potential financing sources, who are obligated to keep such information confidential. The Parties, upon the execution of this Agreement, will mutually agree to a press release with respect to this transaction for publication. Once such press release or any other written statement is approved for disclosure by both Parties, neither Party may make subsequent public disclosure of the contents of such statement without the further approval of the other Party.

4.4 Use of Name . Neither Party shall employ or use the name of the other Party in any promotional materials or advertising without the prior express written permission of the other Party.

5. OWNERSHIP OF IDEAS, COPYRIGHTS AND PATENTS

5.1 Company Inventions . All Technology, whether patentable, copyrightable or not, which is solely conceived, reduced to practice or developed by the Company, its employees, agents (it being agreed to by the Parties that the Service Provider shall not be deemed to be an agent of the Company with respect to this Section 5.1) or its Affiliates (the “Company Inventions”) is the sole and exclusive property of the Company, and the Service Provider shall not exploit any of the Company Inventions.

5.2 Service Provider Inventions . All Technology, whether patentable, copyrightable or not, which is solely conceived, reduced to practice or developed by the Service Provider, its Affiliates or any of their employees, agents (it being agreed to by the Parties that the Company shall not be deemed to be an agent of the Company or any if its Affiliates with respect to this Section 5.2) is the sole and exclusive property of the Service Provider. With respect to Technology described in the preceding sentence which is developed in the course of performance of the Services (the “Service Provider Inventions”), the Service Provider hereby grants to the Company, subject to the terms and conditions of this Agreement, an exclusive (even as to Service Provider and its Affiliates), worldwide, license, including the right to grant sublicenses, under such Service Provider Inventions: (a) to conduct research and development in support of the licensed uses describe in clause (b) of this Section, and (b) to make, hav

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