PRIVATE LABEL SUPPLY AGREEMENT

Exhibit 10.20

CONFIDENTIAL TREATMENT REQUESTED

PRIVATE LABEL SUPPLY AGREEMENT

THIS PRIVATE LABEL SUPPLY AGREEMENT (“ Agreement ”) is entered into as of July 1, 2006 (the “ Effective Date ”), by and between IsoTis OrthoBiologics, Inc., a Washington corporation (“ Supplier ”) and Alphatec Spine, Inc., a California corporation (“ Distributor ”).

R E C I T A L S

WHEREAS, Supplier is engaged in the business of bone regeneration technologies including the development, production and distribution of proprietary natural and synthetic bone graft substitutes.

WHEREAS, Distributor is engaged in the business of designing, manufacturing and selling products and instruments to treat diseases and injuries to the human skeletal system.

WHEREAS, Distributor desires to acquire and distribute Supplier’s DynaGraft ^® II Demineralized Bone Matrix Putty and Gel (each a “ DBM ” and collectively the “ DBMs ”) under the Distributor’s own respective brand names, and Supplier is willing to supply such DBMs to Distributor, in accordance with the terms and conditions set forth in this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:

(a) General . During the term of this Agreement, Supplier shall produce, package and supply the DBMs to Distributor, and Distributor shall acquire the DBMs from Supplier, pursuant to the terms and provisions set forth herein. Under this Agreement, Distributor engages Supplier as a technology and value added tissue-processing provider. The buying and selling of human tissue is generally prohibited by law, and any fees associated with providing human tissue for implantation are the reasonable payment for removal, processing, disposal, preservation, quality control, packaging and storage of such tissue plus the application of technologies and operating costs associated with providing such technologies, to which human tissue has been added, for implantation and other surgical uses.

(b) Specifications . The DBMs shall be final packaged by Supplier and sterile when delivered. Supplier shall produce the DBMs to the specifications relating to the manufacture and quality of the DBMs set forth on Schedule 1 , as the same may be modified from time to time, (the “ Specifications ”).

(c) Packing and Brand Names . The DBMs shall be finally packaged by Supplier using the trade names and artwork specified on Schedule 2 , as the name may be modified from time to time (the “ Private Label Brands ”). Supplier’s name shall not appear on labels unless required by law and, if required by law, shall be included only to the extent (including size and location) specifically required. Any changes to Supplier’s existing packaging or labeling, including any artwork changes, will be paid for by Distributor. Distributor shall pay to Supplier the non-refundable sum of $[***] for packaging, labeling, labeling content and artwork concurrently with the execution of this Agreement (the “ Initial Packaging Fee ”). Notwithstanding the foregoing sentence, the Initial Packaging Fee shall be refundable in the event that Distributor terminates this Agreement during the first twelve (12) months following the Effective Date due to Supplier’s breach of this Agreement. In the event Distributor makes additional changes to packaging, labeling, labeling content or artwork after purchase by Supplier that result in obsolescence or in the event of termination of this Agreement for any reason by Distributor, Distributor shall pay Supplier 100% of the actual cost of these components remaining in stock.

(d) Shelf Life . DBMs shall have a minimum of seventy percent (70%) remaining shelf-life at time of delivery to Distributor.

(e) Obsolescence . If Supplier plans to discontinue any DBM, Supplier shall provide Distributor written notice at least 180 days in advance of the effect of such change (unless impractical for regulatory reasons, in which case such notice shall be provided immediately after the need to discontinue the DBM is determined by Supplier).

(f) Changes to DBM for Regulatory Reasons . Supplier shall have the right to modify the DBM as necessary to comply with changes in applicable law or regulatory approvals. If Supplier is required to materially modify any DBM or its Specifications, Supplier shall provide Distributor written notice at least thirty (30) days in advance of the effect of such change (unless impractical for regulatory reasons, in which case such notice shall be provided immediately after the need to materially modify the DBM or its Specifications is determined by Supplier). In the event that Supplier makes a change to the DBM in accordance with this Section 1(f), Supplier shall provide Distributor with information on the changes, and corresponding updated guidelines and instructions for use. In addition, in the event of a recall, Supplier shall provide replacement DBM and Samples for Distributor’s current stock, and Distributor shall return all old stock to Supplier at Supplier’s expense.

(g) Changes to DBM for Other Reasons by Supplier . If Supplier desires to modify any DBM or its Specifications for reasons other than to comply with law or regulatory approvals, Supplier shall provide Distributor written notice at least thirty (30) days in advance of the desired effect of such change and shall not implement such change unless Distributor approves of such change, such approval not to be unreasonably withheld or delayed. Approval shall be deemed given if Distributor does not respond within fifteen (15) days after notice from Supplier. In the event that Supplier makes a change to the DBM in accordance with this Section 1(g), Supplier shall provide Distributor with information on the changes, and corresponding updated guidelines and instructions for use. If such change renders Distributor’s stock of DBM unsaleable, as determined by Supplier in its sole discretion, Supplier shall, at Supplier’s expense, provide Distributor with replacement DBM and Samples sufficient to replace such stock.

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(h) Changes to DBM for Other Reasons by Distributor . If Distributor desires changes to be made to the DBM or its Specifications, Distributor shall provide Supplier with written notice at least sixty (60) days in advance of the desired effect of such change. Within thirty (30) days after such notice, Supplier will approve or disapprove such change (such approval not to be unreasonably withheld or delayed) and estimate the cost and lead times required to make such change. Supplier shall provide Distributor with written notice of its approval or disapproval, the cost to implement such change, any resulting change in the Distribution Fees (defined below) for such DBM and the time reasonably necessary to implement such change. If such change is approved by Supplier, Distributor shall have ten (10) days to determine whether or not it desires to proceed with such change at Distributor’s sole cost and expense. If Distributor elects to proceed with such approved change, Supplier shall promptly implement such approved change and the Distribution Fees shall be modified accordingly.

(i) Samples . Supplier shall make available for acquisition by Distributor a reasonable number of samples of non-implantable DBM, produced from bovine or human bone (at Supplier’s sole discretion) for use only for demonstration and training purposes (“ Samples ”).

(j) Inspection . Distributor shall have the right, on written notice given not less than fifteen (15) days in advance, during Supplier’s regular business hours, to inspect Supplier’s production facilities relating to the performance of Supplier’s duties hereunder.

(a) Distribution Fees . Distributor shall acquire the DBMs for the amount set forth on Schedule 3 , which represent Supplier’s list price for the respective DBMs discounted by [***]%) for each DBM unit delivered to Distributor (the “ Distribution Fee ”) as may be amended from time to time. The Distribution Fees may be increased annually by Supplier with sixty (60) days advance notice in writing provided that such change to the Distribution Fee is the result of Supplier increasing its list price for the respective DBM.

(b) Sample Fees . Distributor shall acquire Samples at the amounts for such Samples set forth on Schedule 3 , as may be amended from time to time (the “ Sample Fees ”). The Sample Fees may be increased by not more than [***]%) annually by Supplier with sixty (60) days advance notice in writing.

(c) Minimum Acquisition Commitment .

(i) Distributor agrees to acquire and pay for the following minimum quantities of DBM(s) in any mix, including Samples (the “ Minimum Acquisition Commitment ”):

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(ii) In the event Distributor fails to acquire the Minimum Acquisition Commitment specified above in any Calendar Year, Supplier may (but shall not be obligated to) notify Distributor in writing of the amount of any shortfall between the Minimum Acquisition Commitment for such Calendar Year and the amount of DBM actually acquired in such Calendar Year (the “ Shortfall Amount ”) and request Distributor to order and pay within forty-five (45) days of the date of the notice the amount of DBM that is at least equal to the Shortfall Amount. Following such payment, the Supplier shall deliver to Distributor, at times and in any mix (including Samples) requested by Distributor, DBM and Samples with an aggregate value equal to such Shortfall Amount payment. If Distributor does not pay the Shortfall Amount within such forty-five-day period, Supplier shall have the right to terminate this Agreement for cause at any time effective upon written notice to Distributor.

(iii) Without limiting the requirements of Sections 2(c)(i) and (ii) above, Distributor shall purchase not less than $[***] worth of DBMs each calendar month throughout Calendar Year 2006, $[***] worth of DBMs each calendar month throughout Calendar Year 2007, and $[***] worth of DBMs each calendar month throughout Calendar Year 2008 and during any extension of the Term of this Agreement.

(d) Forecast and Orders .

(i) Rolling Forecast . Prior to the first day of each calendar month during the Term, Distributor will provide Supplier with a three (3) month rolling forecast, by calendar month, of its anticipated quantities needed of the DBMs and Samples. The forecast will supersede, if applicable, forecasts provided by Distributor for months previously included in the forecasts. The parties anticipate the first delivery of DBMs and Samples to occur within ninety (90) days from Distributor’s date of delivery of camera ready artwork for labeling and packaging.

(ii) Commitment and Acquisition Order . The forecast for the first calendar month in each forecast shall be a binding commitment on Distributor to acquire that quantity of DBMs and Samples (the “ Commitment ”). The forecast will be accompanied by an acquisition order for the Commitment. Each acquisition order shall be in writing and set forth the names and quantities of each of the DBMs and Samples to be acquired, the delivery dates, shipping instructions and fees, delivery addresses and address to which the invoices should be sent. No other terms or any pre-printed terms or conditions of any acquisition order shall apply. The terms and conditions of this Agreement shall govern all matters between the parties. Distributor will give Supplier an acquisition order no less than thirty (30) days prior to the date on which the delivery is requested.

(iii) Initial Acquisition Order and Forecast . The initial acquisition order shall be $[***], and shall be submitted to Supplier along with the estimated mix of DBMs and Samples and the first rolling forecast concurrently upon the signing of this

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Agreement. Distributor shall order a minimum of $[***] of DBMs and/or Samples prior to the end of Calendar Year 2006. The initial acquisition order shall be confirmed by Distributor not later than thirty (30) days after the Effective Date. The parties anticipate the first delivery of DBMs and Samples to occur within ninety (90) days from Distributor’s date of delivery of camera ready artwork for labeling and packaging.

(iv) Variances in Orders . In any forecast, the quantities for the first and second month will not be ten percent (10%) more or less than the forecast for that month provided in the immediately previous forecast. If the variance is more than ten percent (10%) then Supplier is not obligated to supply Distributor with the amount of DBMs or Samples in excess of the forecast provided in the immediately prior forecast for the month when the forecast becomes a Commitment. Notwithstanding the foregoing, during the first twelve (12) months after the Effective Date, the Commitment will not be less than eighty percent (80%) of the immediately previous forecast for that month but may be up to twenty percent (20%) more than the forecast for the prior month. After that period, the Commitment will not be less than ninety percent (90%) of the immediately previous forecast for that month but may be up to ten percent (10%) more than the forecast for the prior month.

(v) Variances due to Supply . Due to variances in sizes of donor lots of demineralized bone powder (“ Donor Lots ”), in filling any order for Distributor, including the Commitment, Supplier has the right to deliver to Distributor a quantity of DBM or Samples that is larger or smaller than the Commitment. Regardless of the size of an Order, all DBMs representing a single Donor Lot shall be shipped together. Distributor will pay for the DBMs and Samples actually delivered. The amount of DBMs and Samples actually delivered to Distributor will not affect the forecast or Commitment requirements if the difference is not more than ten percent (10%). In the event that shipping DBM of a single Donor Lot results in a shipment in excess of ten percent (10%) of the Commitment, such excess shall be applied to the Commitment of the subsequent month.

(e) Payment Terms . All amounts are payable only in U.S. Dollars. Except as otherwise set forth under this Agreement, payments shall be due to Supplier not later than thirty (30) days from the date of invoice. Invoices shall be issued no sooner than the date of DBM delivery. Distributor shall have no right of deduction or offset. The Distribution Fees and Sample Fees do not include shipping, handling, insurance, taxes or duties, all of which shall be the sole obligation of Distributor.

(a) Preparation for Shipment . All DBMs and Samples shall be handled, packaged, and shipped as required by applicable laws, rules, and regulations. They shall be suitably packed for shipment in containers adequate to insure safe arrival of the DBMs and Samples at Distributor’s designated delivery destination, marked for shipment to the address specified in Distributor’s acquisition order or such other address as Distributor may specify in writing. Supplier shall mark all containers with necessary shipping and handling information, acquisition order numbers and date of shipment. An itemized packing list shall accompany each shipment.

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(b) Shipping Terms . All DBMs and Samples will be shipped either FOB Origin, Freight Prepaid & Charged or FOB Origin, Freight Collect (at Supplier’s sole discretion).

(c) Inspection and Returns for Damage or Defect . Distributor will inspect each shipment of DBMs and Samples for obvious damage when Distributor receives the shipment. If Distributor finds an obviously damaged or defective DBM or Sample, it will provide written notice to Supplier, describe the damage or defect and request a return authorization form. The notice and request for return must be provided within thirty (30) days following receipt of the shipment (the day of receipt will be counted as one of the days) or the DBMs and Samples will be deemed accepted by Distributor. If there is no notice or request for return by Distributor during the thirty-day period, or the damage or defect is due to the act or omission of Distributor, then Supplier will have no obligation to replace the DBMs and Samples and Distributor will pay for the DBM and Samples. Supplier will pay for the shipment and insurance for the authorized return of DBMs and Samples. The only remedy available to Distributor for an obviously damaged or defective DBM or Sample is to receive a replacement. Distributor will not receive any refunds of amounts paid or credits toward future payments to Supplier.

(a) Warranty Terms . Supplier shall warrant the DBMs pursuant to the form of Limited Warranty generally provided in connection with the distribution of the DBMs by Supplier in effect at the time of delivery of such DBMs. A copy of the Limited Warranty in effect as of the Effective Date is attached as Schedule 4. Supplier shall have the right to make revisions to the Limited Warranty from time to time, provided that any such revision is applicable to other private label distributors of DBMs for use in the same Field. The revised Limited Warranty will apply only to DBMs shipped to Distributor after the change.

(b) Warranty From Distributor to End-Users . Distributor shall not pass through Supplier’s Limited Warranty to End-Users of the DBMs. Distributor shall be free to establish the terms of any warranty it wishes to extend to its End-User customers. Supplier’s Limited Warranty hereunder shall not be construed to give a right of action based on such warranty to End-User customers of Distributor.

(c) Limitations . The Limited Warranty will be void and Supplier will not have any obligation to honor the Limited Warranty, or have liability for any breach of Warranty to Distributor, if DBMs are used for any use outside the Field, as defined below, or if Distributor: (a) alters, changes or damages the DBMs or any component of the DBMs; (b) distributes, advertises or promotes the DBMs for uses outside the Field; (c) uses Marketing Materials, as defined below, not approved by Supplier as provided in Section 6(b), (d) misrepresents the nature of the DBMs, their intended uses or scope of the Field, components, or makes any statement, representation or warranty to any person or entity regarding the DBMs that breaches this Agreement; or (e) distributes a DBM for which it has actual knowledge of defect or damage.

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(d) Destruction of DBMs In Breach of Warranty . All DBMs in breach of the Limited Warranty, shall be, at Supplier’s option and after a reasonable opportunity for Supplier to inspect such DBMs, destroyed or returned to Supplier at Supplier’s expense.

(e) Disclaimer . EXCEPT FOR THE EXPRESS WARRANTIES CONTAINED IN THIS SECTION 4 AND SECTION 9, SUPPLIER MAKES NO OTHER WARRANTIES OR REPRESENTATIONS WITH RESPECT TO THE DBMS, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. ALL SUCH OTHER WARRANTIES ARE HEREBY DISCLAIMED.

(f) No Limitation on Indemnity . The provisions of this Section 4 are not intended to, and shall not, limit the obligations of the parties under Section 8.

(a) Marketing Approval . Supplier shall be solely responsible for maintaining regulatory approval for DBMs in the U.S. Supplier will supply proof of such market approval for the U.S. to Distributor. Distributor shall be solely responsible for setting reimbursement fees with health regulatory authorities, and for billing and for collecting fees associated with distribution of the Private Label Branded DBMs. Supplier agrees to supply to Distributor all reasonable information and documentation necessary to obtain such reimbursement approval. All costs for obtaining the reimbursement approvals are the Distributor’s financial responsibility.

(a) Marketing Rights . Distributor shall have the right to distribute the DBMs under its respective private label, either directly or, subject to the provisions of Section 6(d), through independent representatives, distributors or sub-distributors, anywhere in the United States of America (the “Territory”), to hospitals, surgery centers or clinics at which surgery using the DBMs is conducted, or to any licensed surgeons or other licensed healthcare professionals who perform such surgery (“ End Users ”). Distributor shall distribute the DBMs to its End Users at prices and on terms Distributor determines in the exercise of its sole discretion. The DBMs shall be sold strictly for use in surgical applications involving the human spine as approved by the U.S. Food and Drug Administration (“ FDA ”) or other applicable regulatory authorities (the “ Field ”). The DBMs shall not be sold for use outside of the Field. Distributor acknowledges that the FDA or other applicable regulatory authorities may narrow the Field at any time. Distributor shall not sell any Samples.

(b) Promotion and Marketing . Distributor will market, promote, advertise and distribute the DBMs in the Field with the goal of maximizing distribution of the DBMs. All marketing, advertising, promotion and education documentation (including training materials) used by Distributor (“ Marketing Materials ”) shall be technically accurate and shall comply with the requirements of this Agreement. Before Distributor uses any Marketing Materials, Distributor shall give copies to Supplier (at least ten (10) business days before anticipated use) for the approval of Supplier solely for technical accuracy of the Marketing