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Exhibit
10.1
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT
AGREEMENT is entered into on the 1st day of June, 2007, by and
between Alphatec Holdings, Inc. (the “Company”),
a Delaware corporation, and Dirk Kuyper (the
“Executive”) (hereinafter collectively referred to as
the “parties”).
WHEREAS , the Company
wishes to employ the Executive and the Executive wishes to be
employed by the Company upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE , in
consideration of the foregoing and the mutual promises contained
herein, the parties agree as follows:
1. Employment Term .
The Executive shall be employed by the Company for the period (the
“Employment Term”) beginning July 2, 2007 or such
earlier date as the parties may agree (the “Effective
Date”) and ending on July 1, 2011 unless the Company
agrees to extend the Employment Term beyond July 1, 2011 by
giving the Executive at least three months’ advance notice
thereof, or upon his termination of employment pursuant to
Section 10 of this Agreement.
2. Position and Duties
. The Executive will be employed as the President and Chief
Executive Officer of the Company or in such other position(s) as
may be mutually agreed upon by the parties, working principally
from the Company’s headquarters which currently are located
in Carlsbad, California. The Executive will perform the duties,
undertake the responsibilities and exercise the authority
customarily performed, undertaken and exercised by persons employed
in a similar executive capacity or as directed by the
Company’s Board of Directors (the “Board”). The
Executive shall report directly to the Board. In addition, it is
the Company’s intention that the Executive will be appointed
or elected to serve as a member of the Board of Directors of the
Company (the “Board”) throughout the Employment
Term.
3. Devotion of Full Time
and Attention . The Executive will devote his full working
time, attention and skill to the performance of his duties and
responsibilities as an executive employee of the Company and will
do so in a trustworthy and professional manner. He will use his
best efforts to promote the interests of the Company. The Executive
will not, without prior written approval of the Board, engage in
any other activities that would interfere with the performance of
his duties as an employee of the Company, are in violation of
written policies of the Company, are in violation of applicable
law, or would create an actual or perceived conflict of interest
with respect to the Executive’s obligations as an employee of
the Company.
4. Compensation .
During his employment, the Executive shall be paid the following as
compensation for his services:
A. Base Salary . The
Executive’s initial base salary will be $350,000 per annum
(such base salary, as it may be adjusted from time to time in
accordance with this Section, the “Base Salary”), from
which shall be deducted all required or authorized payroll
deductions, including state and federal withholdings. The Base
Salary will be payable in accordance with the Company’s
customary payroll practices applicable to its executives. The Base
Salary will be reviewed, and may be adjusted, at least annually in
a manner determined by the Board or, if the Board so directs, by
the Compensation Committee of the Board (the “Compensation
Committee”).
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B. Bonus . The
Executive will be eligible for an annual bonus for each fiscal year
of his employment. Such bonus shall be based on a target equal to
100 per cent of the Executive’s Base Salary (which shall
be pro rated for the fiscal year in which the Executive’s
employment begins) and shall be awarded based on a determination by
the Board of the Executive’s performance against criteria
mutually determined by the Board and the Executive at the beginning
of each fiscal year (or at the beginning of the Employment Term in
the case of the fiscal year in which the Executive’s
employment begins). Each bonus earned by the Executive will be paid
to the Executive on or before 2 1/2 months following the
end of the fiscal year in which the bonus was earned. If
the Board so directs, the determinations invested in it by this
paragraph B may be made by the Compensation Committee.
C. Equity Compensation
.
(i) Effective on July 2,
2007, the Company shall grant the Executive 690,000 shares of
restricted Company stock (the “Shares”) pursuant to the
Amended and Restated 2005 Employee, Director and Consultant Stock
Plan (“Stock Plan”). So long as the Executive continues
to be employed by the Company, 1/16 of all such Shares shall become
non-forfeitable and the restrictions thereon shall lapse (such
shares then being referred to as “vested”) on
October 2, 2007 and every three months until all such Shares
have vested. Upon termination of his employment the Executive shall
forfeit his interest in any Shares which have not vested. In
addition, in the event that there is a Change in Control (as
defined below) during the Executive’s Employment, any Shares
which have not previously vested shall become vested immediately
upon such Change in Control.
a. Change in Control .
For purposes of this Section, “Change in Control” means
the occurrence of any of the following events:
(x) the acquisition by an
individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”)) (a
“Person”) of beneficial ownership of any capital stock
of the Company if, after such acquisition, such Person beneficially
owns (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) in excess of 50% of either the then-outstanding
shares of common stock of the Company (the “Outstanding
Company Common Stock”) or the combined voting power of the
then-outstanding securities of the Company entitled to vote
generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that for
purposes of this subsection (A), the following acquisitions shall
not constitute a Change in Control: (1) any acquisition of
more than 50% of the Outstanding Company Common Stock directly from
the Company (excluding an acquisition pursuant to the exercise,
conversion or exchange of any security exercisable for, convertible
into or exchangeable for common stock or voting securities of the
Company, unless the Person exercising, converting or exchanging
such security acquired such security directly from the Company or
an underwriter or agent of the Company);
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(2) any acquisition of more
than 50% of the Outstanding Company Common Stock by the Company;
(3) any acquisition of more than 50% of the Outstanding
Company Common Stock by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company; or (4) any acquisition by any
Person who, prior to such acquisition, already owned more than 50%
of the Outstanding Company Common Stock or Outstanding Company
Voting Securities; or
(y) such time as the majority
of the members of the Board (or, if applicable, the board of
directors of a successor corporation to the Company) is replaced
during any 12-month period (commencing no earlier than the date of
this Agreement) by directors whose appointment or election is not
endorsed by a majority of the members of the Board prior to the
date of the appointment or election; or
(z) the consummation of a
merger, consolidation, reorganization, recapitalization or
statutory share exchange involving the Company or a sale or other
disposition of all or substantially all of the assets of the
Company in one or a series of transactions (a “Business
Combination”), unless, immediately following such Business
Combination, all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding Company
Common Stock and Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of the then-outstanding shares of common
stock and the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation in such
Business Combination (which shall include, without limitation, a
corporation which as a result of such transaction owns the Company
or substantially all of the Company’s assets either directly
or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, respectively.
(ii) The Executive will also
be eligible to be considered by the Compensation Committee for
grants or awards of stock options or other stock-based compensation
under the Stock Plan or similar plans as in effect from time to
time. All such grants or awards shall be governed by the relevant
plan documents and requirements and shall be evidenced by the
Company’s then-standard form of stock option, restricted
stock or other applicable agreement.
5. Benefits . The
Executive will be entitled to participate in all employee benefit
plans, practices and programs maintained by the Company and made
available to employees generally including, without limitation, all
pension, retirement, profit sharing, savings, health,
hospitalization, disability, dental, life or travel accident
insurance benefit plans, vacation and sick leave in accordance with
the terms of such plans, practices and programs as in effect from
time to time.
6. Expense
Reimbursement . The Company will pay the reasonable and
properly documented expenses incurred by the Executive in
furtherance of the Company’s business in accordance with
applicable Company policies and procedures.
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7. Vacation . The
Executive may take up to four (4) weeks 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.
8. Automobile
Allowance . The Executive shall be entitled to be reimbursed up
to $1,000 per month for expenses associated with his use of an
automobile for Company business upon submission of appropriate
documentation of such expenses.
9. Relocation Expenses
. The Executive has agreed to relocate his residence from
Pennsylvania to the Carlsbad, California area, which is where the
Company’s headquarters are located.
A. The Company will reimburse
the Executive for the reasonable Relocation Expenses (as defined
below) he incurs in selling his current home and in transporting
himself, his family, and their belongings to a residence near the
Company’s headquarters. The Company shall make such
reimbursement promptly upon presentation of reasonably detailed
documentation of the Executive’s Relocation Expenses. For
purposes hereof, “Relocation Expenses” shall mean the
following reasonable expenses incurred by the Executive related to
moving his and his family’s primary residence from
Pennsylvania to the Carlsbad, California area: (i) costs of
looking for a new primary residence, including house hunting trips;
(ii) attorneys’ fees, closing costs and brokers’
commissions (up to 6%) associated with the sale of the
Executive’s Pennsylvania residence,
(iii) attorneys’ fees and closing costs associated with
the purchase of the Executive’s new residence in the
Carlsbad, California area (but excluding mortgage loan fees and
points); (iv) up to four months’ temporary family
housing expenses; (v) relocation travel expenses;
(vi) costs for the physical movement of furniture, clothing,
household effects, vehicles and other items from the
Executive’s Pennsylvania home to the Carlsbad, California
area; and (vii) if the Executive is not able, despite his
reasonable best efforts, to sell his Pennsylvania home for $800,000
or more, the difference between $800,000 and the sales price he
obtains, provided that the amount payable by the Company pursuant
to this subparagraph (vii) shall be capped at $100,000. To the
extent any Relocation Expenses are deemed to be taxable
compensation to the Executive, the Company will make a “gross
up” payment to the Executive sufficient to pay all federal,
state and local income taxes imposed on the Executive in connection
with the Company’s reimbursement of Relocation Expenses and
the payment of such taxes, but in no event shall the total of all
amounts payable to the Executive pursuant to this paragraph A
exceed $270,000.
B. If the Executive is unable
to sell his Pennsylvania home within four months of the Effective
Date (or such longer period as the parties may mutually agree), in
lieu of receiving reimbursement of Relocation Expenses as provided
in paragraph A above, the Executive will receive a special bonus of
$150,000 to support his purchase of a residence in the Carlsbad,
California area plus up to $10,000 to reimburse his actual expenses
for the physical movement of furniture, clothing, household
effects, vehicles and other items from the Executive’s
Pennsylvania home to the Carlsbad, California area and the costs of
up to four months’ temporary housing for himself and his
family.
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10. Termination and
Compensation Upon Termination . The Executive’s
employment shall terminate, other than by expiration of the
Employment Term, as set forth in this Section.
A. Definitions
.
(i) Cause . For
purposes of this Agreement, “Cause” means:
(A) a finding by the Board
that the Executive failed to substantially perform his duties and
obligations to the Company (other than a failure resulting from the
Executive’s incapacity because of a Disability, as defined
below), including but not limited to one or more acts of gross
negligence;
(
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