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Exhibit
10.5
SETTLEMENT
AGREEMENT
AND MUTUAL GENERAL
RELEASE
This Settlement Agreement and
Mutual General Release (this “Agreement”) is entered
into by and among Ronald G. Hiscock (“Hiscock”),
Alphatec Holdings, Inc., a Delaware corporation
(“AHI”), and Alphatec Spine, Inc., a California
corporation (“ASI”). Collectively, AHI and ASI and
their respective subsidiaries and affiliates shall be referred to
herein as “Alphatec”, and collectively Hiscock and
Alphatec shall be referred to herein as the “Parties”
and individually as a “Party”.
1. This Agreement is entered
into with reference to the following facts:
a. Hiscock had an employment
agreement with Alphatec dated August 4, 2006, for a term of
three years, subject to renewal (the “Employment
Agreement”). Hiscock’s position as Chief Executive
Officer and President of Alphatec terminated effective as of
December 19, 2006 (the “Termination”).
b. In connection with his
employment, Hiscock was issued 436,919 shares of AHI common stock
(the “Restricted Shares”) and 7,261 shares of AHI New
Redeemable Preferred Stock (the “Restricted
Preferred”), which Restricted Shares and Restricted Preferred
were subject to repurchase by Alphatec under certain
circumstances.
c. As an investor, Hiscock
also paid $100,000.00 in exchange for 19,931 shares of AHI common
stock and 3,591 shares of New Preferred stock (together referred to
as the “Investment Shares”), which Investment Shares
are not sold, relinquished or cancelled by this Settlement
Agreement and Mutual Release. In addition, Hiscock and/or family
members own stock
in AHI purchased either as “family
and friends” stock and/or in the open market (the “Open
Market Shares”), which Open Market Shares are not sold,
relinquished or cancelled by this Settlement Agreement and Mutual
Release.
d. The Parties desire and
hereby agree to finally settle all potential claims regarding the
Termination, as well as all other matters except as noted herein,
in accordance with the terms, covenants and conditions hereinafter
set forth.
2. Consideration to
Hiscock .
a. AHI shall arrange for the
sale (the “Block Sale”), pursuant to Rule 144 under the
Securities Act of 1933, as amended, of such number (the
“Requisite Number”) of Restricted Shares as equals
(i) Six Hundred Eighty Thousand Dollars ($680,000.00) divided
by (ii) the per share purchase price (without regard to
brokerage fees and commissions) in the Block Sale, and Hiscock
shall retain the full amount of the proceeds of the Block
Sale.
b. In the event that, for any
reason, the Requisite Number of Restricted Shares is not sold in
the Block Sale, or the Block Sale does not occur, prior to
twenty-eight days after the Effective Date (defined in
Section 12(f) below), AHI shall repurchase from Hiscock (a
“Repurchase”), in cash by wire transfer of immediately
available funds, such number of Restricted Shares as equals
(i) Six Hundred Eighty Thousand Dollars ($680,000.00) (minus
the proceeds of the Block Sale, if any) divided by (ii) the
closing price of one share of AHI common stock (as quoted on
Nasdaq) on the date immediately prior to the date of the
Repurchase. In the event of a Repurchase in lieu of the Block Sale,
culminating in Hiscock receiving Six Hundred Eighty Thousand
Dollars ($680,000.00) in stock proceeds, AHI shall be under no
further obligation to arrange for the Block Sale. In all events,
whether by Block Sale, a Repurchase or any combination of the two,
Hiscock shall receive stock proceeds in the amount of Six Hundred
Eighty Thousand Dollars ($680,000) no
later than twenty-eight (28) days
after the Effective Date of this Agreement AND after Hiscock
delivers to Alphatec, care of its General Counsel, Ebun Garner,
stock certificates in negotiable form and all documentation
reasonably necessary to effectuate the Block Sale.
c. Any and all fees and
expenses incurred in connection with the Block Sale or a
Repurchase, including brokerage fees and commissions and the cost
of counsel to render a legal opinion with respect to the Block
Sale, shall be the obligation of and paid by AHI.
d. Hiscock shall cooperate
with the Block Sale. Without limiting the generality of the
foregoing, Hiscock shall deliver to Alphatec, care of its General
Counsel, Ebun Garner, all of the stock certificates for the
Restricted Shares, with stock powers executed in blank. If Hiscock
has lost any of his stock certificates for the Restricted Shares,
then Alphatec shall reasonably cooperate with Hiscock to assist him
in obtaining replacement certificates. Any and all
(i) Restricted Shares not included in the Block Sale or a
Repurchase and (ii) Restricted Preferred shall thereupon be
cancelled, and Hiscock shall have no further rights or interests
therein.
e. Upon the Effective Date,
AHI shall release the Investment Shares and the Open Market Shares
from any and all contractual restrictions imposed on those shares
by Alphatec pursuant to a Lock-Up Agreement or similar
agreement.
f. Hiscock expressly
acknowledges and agrees that he is not relying on any tax advice
from Alphatec with respect to the Block Sale, a Repurchase or any
combination thereof, or with respect to the transaction(s)
addressed in clauses a, b and c of this paragraph 2, and that he is
solely responsible for any and all tax liabilities with respect
thereto.
3. Mutual Release
.
a. In exchange for the
promises described above, including but not limited to the
transaction(s) addressed in clauses a, b and c of paragraph 2
above, and in consideration of all of the
terms and conditions of this Agreement,
the Parties hereto mutually hereby and forever release and
discharge each other and (as applicable) their successors,
subsidiaries, parents, predecessors, affiliates, divisions,
employees, owners, officers, directors, assigns, agents,
representatives, shareholders, insurers and attorneys, from any and
all causes of action, actions, judgments, liens, damages, losses,
claims, liabilities and demands whatsoever, whether known or
unknown, which they ever had, now have, or hereafter can, shall or
may have for, upon or by reason of any act, transaction, practice,
conduct, matter, cause, effect or thing of any kind whatsoever,
occurring prior to the date of execution of this Agreement,
including, but not limited to, the Termination, or any act,
transaction, practice or conduct or effect (a) which was
alleged or asserted, or which might have been alleged or asserted,
in the course of negotiating the terms of the Termination; or
(b) which arises out of, or relates in any manner to,
Hiscock’s employment with Alphatec, the Employment Agreement
or the Termination, including, but not limited to, any claims for:
breach of contract, fraud, negligence, conversion,
misappropriation, retaliation, emotional distress, breach of the
implied covenant of good faith and fair dealing, defamation,
discrimination or harassment under Title VII of the Civil Rights
Act of 1964, as amended, the Americans with Disabilities Act, as
amended, (the “ADA”), the Age Discrimination in
Employment Act of 1967, as amended (the “ADEA”), the
Older Workers Benefit Protection Act, as amended, (the
“OWBPA”), the Worker Adjustment and Retraining
Notification Act, the Federal and California Family Medical Leave
Acts, the California Fair Employment and Housing Act, as amended,
the California Constitution, the Employee Retirement Income
Securities Act, as amended, the Fair Labor Standards Act, as
amended, and any analogous California or laws or any other federal,
state or local statute, ordinance, or regulation, including the
California Labor Code, or any other claim, whether at common law or
statutory. It is expressly agreed and understood that this
Agreement is a general release as to all matters occurring or
arising before the Effective Date, including but not limited to
claims for any additional shares, commissions, stock, bonuses,
wages, severance or other benefits from Alphatec.
b. Notwithstanding anything
to the contrary in this paragraph 3 or in this Agreement, or which
could be construed to the contrary, Hiscock expressly does not
release any rights or causes of action, actions, judgments, liens,
damages, losses, claims, liabilities and demands whatsoever, that
he had or now has or hereafter can, shall or may have, whether
fixed or contingent, liquidated or unliquidated, or in the future
may have, which relate to: (1) all rights, entitlements,
privileges and benefits expressly created or preserved by this
Agreement, including but not limited to the Investment Shares and
the Open Market Shares, (2) all defense, indemnity,
contribution and hold harmless rights, entitlements, privileges and
benefits to which Hiscock is entitled under (a) common law,
(b) any Alphatec bylaws or other governing corporate
documents, or (c) any of Alphatec’s insurance or
indemnity policies including those covering present and former
employees, officers and/or directors, all including without
limitation, with respect to claims, actions or suits by others
against Hiscock in his former status as an employee, officer or
director of Alphatec.
4. Unknown Claims, Waiver
of California Civil Code § 1542 . The Parties
understand and expressly agree that this Agreement extends to all
claims of every nature and kind, known or unknown, suspected or
unsuspected, past, present, or future, arising from or attributable
to any conduct of the other party and (as applicable) their
successors, subsidiaries, parents, predecessors, affiliates, and
divisions, and (as applicable) their shareholders, owners,
employees, officers, directors, assigns, agents, representatives
and attorneys, whether set forth in any pleading or demand referred
to herein or not, including but not limited to any workers’
compensation claims, and that any and all rights granted to the
Parties under section 1542 of the California Civil Code
or any analogous state law or federal law or regulation, are hereby
expressly WAIVED. Said section 1542 of the California Civil
Code reads as follows:
A GENERAL RELEASE DOES NOT
EXTEND TO CLAIMS WHI
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