8-K
false 0001350653 0001350653 2020-12-16 2020-12-16

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): December 16, 2020

 

 

ALPHATEC HOLDINGS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

Delaware   000-52024   20-2463898

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

IdentificationNo.)

 

5818 El Camino Real
Carlsbad, California 92008
(Address of Registrant’s Principal Executive Offices and Zip Code)

(760) 431-9286

(Registrant’s Telephone Number, Including Area Code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common stock, par value $0.0001   ATEC   The NASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


ITEM 1.01

Entry into a Material Definitive Agreement.

Tender Offer Agreement

On December 16, 2020, Alphatec Holdings, Inc. (“Alphatec”), entered into a Tender Offer Agreement (the “Tender Offer Agreement”) with EOS imaging S.A., a société anonyme organized and existing under the laws of France (“EOS”), pursuant to which Alphatec or one of its affiliates will commence a public tender offer (the “Offer”) to purchase all of the issued and outstanding ordinary shares, nominal value €0.01 per share (collectively, the “EOS Shares”), and outstanding convertible bonds (“OCEANEs”), of EOS. The Offer will consist of a cash tender offer price of €2.45 (or approximately $2.99) per EOS Share and €7.01 (or approximately $8.55) per OCEANE, respectively (the “Offer Consideration”), for a total purchase price of up to approximately $116.9 million. The Offer will need to be filed with and cleared by the Autorité des marches financiers (the “AMF”), which filing is expected to occur in February 2021, prior to the commencement of the Offer. EOS is a leader in outcome-improving orthopedic medical imaging and software solutions that inform the entire surgical process. As previously reported, Alphatec had entered into a Tender Offer Agreement with EOS on February 28, 2020 (the “Prior Tender Offer Agreement”), which Prior Tender Offer Agreement was terminated by Alphatec on April 24, 2020 in response to the then-expected ongoing market effects of the COVID-19 pandemic.

Certain shareholders of EOS, which currently control approximately 23% of the outstanding EOS Shares, collectively, have entered into Tender Commitments with Alphatec pursuant to which they have agreed, among other things, to tender their respective EOS Shares into the Offer, subject to certain conditions. These Tender Commitments will terminate if (i) the Tender Offer Agreement is terminated, (ii) the Offer is withdrawn by Alphatec pursuant to applicable French laws and regulations, or (iii) the Offer is not declared successful by the AMF as a result of certain conditions failing to be met or waived.

The obligation of Alphatec or its affiliates to file the Offer are subject to: (a) a fairness opinion, stating that the financial terms and conditions of the Offer are fair, having been delivered to EOS’ board of directors; (b) EOS’ board of directors having issued a reasoned opinion and recommended that EOS’ securityholders tender the EOS Shares and OCEANEs into the Offer; (c) no competing tender offer for the EOS Shares or OCEANEs which is reasonably expected to be financed and filed with the AMF having been publicly announced; (d) the accuracy of the representations and warranties of EOS contained in the Tender Offer Agreement (subject to certain materiality standards); (e) the French Foreign Investment Condition (as defined in the Tender Offer Agreement) having been satisfied; and (f) there not having been a material breach by EOS of its obligations under the Tender Offer Agreement.

Subject to clearance by the AMF, the Offer will be open for tender during an initial acceptance period of 25 Euronext Paris trading days. The obligation of Alphatec or its affiliates to purchase EOS Shares and OCEANEs validly tendered and not properly withdrawn pursuant to the Offer is subject to the satisfaction or waiver of the condition that a number of EOS Shares and OCEANE have been validly tendered that would allow Alphatec to acquire at least two-thirds of the share capital and voting rights of EOS on a fully diluted basis at the end of the acceptance period of the Offer. The settlement and delivery of the EOS Shares and OCEANEs tendered into the Offer (the “Offer Closing”) will occur shortly after the end of the initial acceptance period of the Offer.

If Alphatec and/or its affiliates own 90% or more of EOS’ share capital and voting rights following the Offer Closing, Alphatec shall implement a mandatory squeeze out on any remaining non-tendered EOS Shares pursuant to applicable French laws and regulations (the “Squeeze-Out”). A squeeze-out of the OCEANEs may also be implemented if Alphatec and/or its affiliates own 90% or more of EOS Shares on an as-converted basis.

The Tender Offer Agreement includes customary representations, warranties and covenants of Alphatec and EOS. Until the earlier of the termination of the Tender Offer Agreement and the date on which Alphatec can appoint a majority of the members of the EOS board, EOS has agreed to operate its and its subsidiaries’ businesses in the ordinary course consistent with past practice and has agreed to certain other operating covenants, each as set forth more fully in the Tender Offer Agreement.

Under the Tender Offer Agreement, EOS has agreed: (i) not to directly or indirectly solicit, initiate or encourage or take any actions to facilitate any Takeover Proposal (as defined in the Tender Offer Agreement) and accordingly to immediately cease and cause to be terminated all discussions or negotiations with any person or entity conducted heretofore with respect to any proposal that constitutes or would reasonably be expected to lead to a Takeover Proposal; (ii) to notify Alphatec of the receipt by EOS of any Takeover Proposal; (iii) to provide information on a reasonable and regular basis in respect of the status of any such Takeover Proposal; and (iv) not to accept, approve, recommend or enter into any agreement in respect of any such Takeover Proposal.


The Tender Offer Agreement contains certain termination rights at the option of both Alphatec and EOS and certain automatic termination provisions, including, with respect to termination at the option of Alphatec, if the applicable closing conditions have not been satisfied or waived by Alphatec by April 30, 2021, or at any time if Alphatec pays EOS a reverse break-up fee as described below, among other bases for termination. Under the terms and conditions set forth in the Tender Offer Agreement, EOS shall pay a break-up fee of €2.5 million to Alphatec and Alphatec shall pay a reverse break-up to EOS of €2.5 million upon the occurrence of certain events, including, with respect to EOS’ break-up fee, if EOS’ board of directors fails to issue its reasoned opinion upon receipt of the fairness opinion or decides to amend its recommendation on the Offer.

Private Placement and Securities Purchase Agreement

On December 16, 2020, Alphatec entered into a securities purchase agreement (the “Purchase Agreement”) with certain institutional and accredited investors, including Squadron Capital LLC (“Squadron Capital” and collectively, the “Purchasers”), providing for the sale by Alphatec of 12,421,242 shares of ATEC Common Stock (the “Private Placement Shares”) at a purchase price of $11.11 per share (the “Private Placement Purchase Price”), in a private placement (the “Private Placement”).

The aggregate gross proceeds for the Private Placement will be approximately $138 million. Alphatec intends to use the net proceeds from the Private Placement to fund the Offer Consideration and for general corporate and working capital purposes. The Private Placement is expected to close within five business days prior to the filing of the Offer to AMF (the “Private Placement Closing”), subject to the satisfaction of customary closing conditions. As noted above, the filing of the Offer is expected to occur in February 2021.

Pursuant to the terms of the Purchase Agreement, from the Private Placement Closing until the Offer Closing, Alphatec is prohibited from issuing, or entering into any agreement to issue, or announcing the issuance or proposed issuance of, any shares of ATEC Common Stock or ATEC Common Stock equivalents, subject to certain permitted exceptions.

If the Tender Offer Agreement is terminated or the Offer Closing has not occurred by July 31, 2021, then Alphatec shall repurchase the Private Placement Shares from the Purchasers for an amount per share equal to the Private Placement Purchase Price plus interest on the Private Placement Purchase Price at a rate of nine percent (9%) per year computed from the date of the Private Placement Closing to the date of such repurchase.

The Private Placement is exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D of the Securities Act and in reliance on similar exemptions under applicable state laws. Each Purchaser represented that it is an accredited investor within the meaning of Rule 501(a) of Regulation D, and was acquiring the securities for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof. The securities were offered without any general solicitation by Alphatec or its representatives.

The securities sold and issued in the Private Placement will not be registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission (the “SEC”) or an applicable exemption from the registration requirements.

Debt Exchange Agreement

On December 16, 2020, Alphatec and Squadron Capital entered into a debt exchange agreement (the “Debt Exchange Agreement”), pursuant to which Squadron Medical Finance Solutions LLC (“Squadron Medical,” and collectively with Squadron Capital, “Squadron”) will exchange (the “Debt Exchange”) $30 million of Alphatec’s outstanding debt obligations pursuant to the Credit, Security and Guaranty Agreement, dated as of November 6, 2018 (as amended, the “Credit Agreement”), by and among Alphatec and its wholly-owned subsidiaries Alphatec Spine, Inc. and SafeOp Surgical, Inc. (collectively, the “Borrowers”), and Squadron Medical for the issuance of 2,700,270 shares of ATEC Common Stock (the “Debt Exchange Shares”) to Squadron Capital, based on a price of $11.11 per share. The Debt Exchange Shares will be issued in reliance upon an exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D of the Securities Act and in reliance on similar exemptions under applicable state laws. Squadron represented that it is an accredited investor within the meaning of Rule 501(a) of Regulation D, and was acquiring the securities for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof. The securities were offered without any general solicitation by Alphatec or its representatives.


Registration Rights Agreement

In connection with the Private Placement and the Debt Exchange Agreement, Alphatec entered into a registration rights agreement (the “Registration Rights Agreement”) with the Purchasers (including Squadron Capital), to be effective as of the Private Placement Closing. Pursuant to the Registration Rights Agreement, Alphatec agreed to prepare and file a registration statement (the “Resale Registration Statement”) with the SEC within 30 days after the Private Placement Closing (subject to certain exceptions) for purposes of registering the resale of the Private Placement Shares. Alphatec also agreed to use its reasonable best efforts to cause this registration statement to be declared effective by the SEC within 30 days after the filing of such Resale Registration Statement (60 days in the event the registration statement is reviewed by the SEC). If Alphatec fails to meet the specified filing deadlines or keep the Resale Registration Statement effective, subject to certain permitted exceptions, Alphatec will be required to pay liquidated damages to the Purchasers. Alphatec also agreed, among other things, to indemnify the selling holders under the registration statements from certain liabilities and to pay all fees and expenses incident to Alphatec’s performance of or compliance with the Registration Rights Agreement.

Credit Agreement Amendment

On December 16, 2020, the Borrowers entered into a Third Amendment to Credit, Security and Guaranty Agreement (the “Third Amendment”) and Third Amended and Restated Term Note (the “Note”) with Squadron Medical to, among other things, (i) incorporate the Debt Exchange, (ii) expand the availability of additional term loans thereunder by $15,000,000 for a total available principal amount of $40,000,000, and (iii) extend the maturity of the term loans thereunder to June 30, 2026. The term loans will bear interest at the one month London Interbank Offered Rate (“LIBOR”) + 8% per annum (subject to a 9% floor and 12% ceiling). In addition to paying interest on outstanding principal on the term loans, the Borrowers will pay a commitment fee at a rate of 1.0% per annum to Squadron Medical in respect of the unutilized term loans. Interest-only payments are due monthly until December 2023, and joined by $1 million monthly principal payments beginning December 2023. Any remaining principal amounts of the term loans will be due on June 30, 2026.

The foregoing descriptions of the Tender Offer Agreement, Tender Commitments, Registration Rights Agreement, Purchase Agreement, Debt Exchange Agreement, Third Amendment and Note are only summaries of certain material provisions thereof, do not purport to be complete, and are qualified in their entirety by reference to the full text of the such agreements, which are attached hereto as Exhibit 2.1, 2.2, 4.1, 10.1, 10.2, 10.3 and 10.4, respectively, and are incorporated herein by reference.

The Tender Offer Agreement has been included to provide investors with information regarding its terms. It is not intended to provide any other factual information about Alphatec or EOS. The representations, warranties and covenants contained in the Tender Offer Agreement were made only for purposes of the Tender Offer Agreement as of the specific dates therein, are solely for the benefit of the parties to the Tender Offer Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Tender Offer Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the parties thereto or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of representations and warranties may change after the date of the Tender Offer Agreement, which subsequent information may or may not be fully reflected in Alphatec’s or EOS’ public disclosures.

 

ITEM 2.03

Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth in Item 1.01 above under the headings “Debt Exchange Agreement” and “Credit Agreement Amendment” is incorporated by reference into this Item 2.03.

 

ITEM 3.02

Unregistered Sales of Equity Securities.

The information set forth in Item 1.01 above under the headings “Private Placement and Securities Purchase Agreement” and “Debt Exchange Agreement” regarding the Private Placement, the issuance of the Private Placement Shares, the Debt Exchange and the issuance of the Debt Exchange Shares is incorporated by reference into this Item 3.02.


ITEM 7.01

Regulation FD Disclosure.

On December 16, 2020, Alphatec issued a press release announcing the execution of the Tender Offer Agreement and the transactions contemplated thereby, the Private Placement, the Debt Exchange and the Credit Agreement Amendment. A copy of the press release is attached as Exhibit 99.1 hereto and is incorporated herein by reference.

As discussed in the press release, Alphatec will host a conference call with accompanying slides to discuss the Offer on December 17, 2020. A copy of the slide presentation is filed as Exhibit 99.2 hereto and incorporated herein by reference.

The information furnished under this Item 7.01 of this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and it shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or under the Exchange Act, whether made before or after the date hereof, except as expressly set forth by specific reference in such filing to this Item 7.01 of this Current Report on Form 8-K.

 

ITEM 9.01

Financial Statements and Exhibits.

(d) Exhibits

The following exhibits are filed as part of this report:

 

Exhibit
    No.    
  

Description

  2.1*    Tender Offer Agreement, dated as of December 16, 2020, by and between Alphatec Holdings, Inc. and EOS Imaging S.A.
  2.2    Forms of Tender Commitment, by and between Alphatec Holdings, Inc. and certain investors of EOS imaging S.A.
  4.1    Registration Rights Agreement, dated as of December 16, 2020, between Alphatec Holdings, Inc. and each purchaser named in the signature pages thereto
10.1    Securities Purchase Agreement, dated as of December 16, 2020, between Alphatec Holdings, Inc. and each purchaser named in the signature pages thereto
10.2    Debt Exchange Agreement dated as of December 16, 2020 between Alphatec Holdings, Inc. and Squadron Capital LLC
10.3    Third Amendment to Credit, Security and Guaranty Agreement dated as of December 16, 2020, among Alphatec Holdings, Inc., Alphatec Spine, Inc. SafeOp Surgical, Inc. and Squadron Medical Finance Solutions LLC
10.4    Third Amended and Restated Term Note issued by Alphatec Holdings, Inc., Alphatec Spine, Inc., SafeOp Surgical, Inc. in favor of Squadron Medical Finance Solutions LLC
99.1    Press Release of Alphatec Holdings, Inc., dated December 16, 2020
99.2    Slide Presentation, dated December 17, 2020
 104    Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

*

Certain schedules referenced in the Tender Offer Agreement have been omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished supplementally to the Securities and Exchange Commission upon request.

Forward-Looking Statements

Alphatec cautions you that statements included in this Current Report on Form 8-K that are not a description of historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainty. Such statements are based on management’s current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Forward looking statements include Alphatec’s plans to commence to commence the Offer, the timing and likelihood of the Offer Closing occurring, the expected Offer Consideration to be paid in connection with the Offer, and expectations on the completion, timing and size of the Private Placement and the anticipated use of proceeds therefrom.

The important factors that could cause actual operating results to differ significantly from those expressed or implied by such forward-looking statements include, but are not limited to: uncertainties as to the timing of the Offer and the Offer Closing; uncertainties as to the percentage of EOS’ securityholders tendering their shares in the Offer; the possibility that competing offers will be made and accepted; risks related to the AMF’s review of the Offer; Alphatec’s and EOS’ ability to satisfy the


conditions to Offer Closing for the proposed transaction on the anticipated timeline or at all; the satisfaction of conditions, including applicable regulatory clearances; the occurrence of any event, change or other circumstance that could give rise to the termination of the Tender Offer Agreement; the effect of the announcement of the Offer and related transactions on the ability of the parties to retain and hire key personnel, maintain relationships with their customers and suppliers, and maintain their operating results and business generally; the inability to reach the required threshold to complete the Squeeze-Out resulting in EOS Shares continuing to be traded on Euronext and related regulatory requirements in connection therewith; the inability of the Company to secure the financing contemplated to be obtained on the expected terms or timing, or at all, whether as a result of failure to meet certain conditions or otherwise; risks related to potential litigation in connection with the Offer or the Offer Closing that may result in significant costs of defense, indemnification and liability; risks and uncertainties associated with market conditions and the satisfaction of customary closing conditions related to the Private Placement; the risk that the businesses will not be integrated successfully; unexpected variations in market growth and demand for the combined company’s products and technologies; and the risk that benefits and synergies from the acquisition may not be fully realized or may take longer to realize than expected; the impact of the COVID-19 pandemic on the Company’s and EOS’s business and the economy; and other risks detailed in Alphatec’s public periodic filings with the U.S. Securities and Exchange Commission. The words “believe,” “will,” “should,” “expect,” “intend,” “estimate,” “look forward,” and “anticipate,” variations of such words and similar expressions identify forward-looking statements, but their absence does not mean that a statement is not a forward-looking statement. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, and Alphatec undertakes no obligation to revise or update this report to reflect events or circumstances after the date hereof. All forward-looking statements are qualified in their entirety by this cautionary statement.

Certain Legal Matters

This communication is not intended to, and does not, constitute, represent or form part of any offer, invitation or solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities whether pursuant to this Current Report on Form 8-K, the attached press release or otherwise.

The distribution of this communication in jurisdictions outside the United States or France may be restricted by law or regulation and therefore any person who comes into possession of this communication should inform themselves about, and comply with, such restrictions. Any failure to comply with such restrictions may constitute a violation of the securities laws or regulations of any such relevant jurisdiction.

EOS is incorporated in France and listed on Euronext and any offer for its securities will be subject to French disclosure and procedural requirements, which differ from those that are applicable to offers conducted solely in the United States, including with respect to withdrawal rights, offer timetable, settlement procedures and timing of payments. The transactions described above will be structured to comply with French and U.S. securities laws and regulations applicable to transactions of this type.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    ALPHATEC HOLDINGS, INC.
Date: December 17, 2020     By:  

/s/ Jeffrey G. Black

    Name:   Jeffrey G. Black
    Title:   Chief Financial Officer
EX-2.1

Exhibit 2.1

 

 

 

TENDER OFFER AGREEMENT

BY AND BETWEEN

ALPHATEC HOLDINGS, INC.

AND

EOS IMAGING S.A.

DATED AS OF DECEMBER 16, 2020

 

 

 

 


This Tender Offer Agreement (this “Agreement”) is entered into as of December 16, 2020, by and between Alphatec Holdings, Inc., a corporation organized and existing under the laws of Delaware, represented by Mr. Patrick S. Miles, duly empowered for the purpose hereof (the “Purchaser”) and EOS Imaging S.A., a société anonyme organized and existing under the laws of France, with a share capital of EUR 266,569.46 divided into 26,656,946 ordinary shares with a nominal value of €0.01 each, whose registered office is at 10, rue Mercoeur, 75011 Paris, France, and registered with Paris Trade and Companies Register under No. 349 694 893, represented by Mr. Michael Lobinsky, duly empowered for the purpose hereof (the “Company”). The Purchaser and the Company are each sometimes referred to individually as a “Party” and collectively as the “Parties”.

RECITALS

 

(A)

WHEREAS, the Purchaser is a Delaware corporation, a medical technology company focused on the design, development, and advancement of technology for better surgical treatment of spinal disorders. The Company is a global medical device company incorporated in France that develops and markets advanced imaging and imaged-based solutions for diagnosing, treating and monitoring the most common musculoskeletal pathologies.

 

(B)

WHEREAS, the ordinary shares of the Company are currently admitted to trading on Euronext Paris.

 

(C)

WHEREAS, the Purchaser is willing and has authorization to acquire in consideration for cash through the filing by the Purchaser or any of its Affiliates of a public tender offer in France (offre publique dachat), (i) all the Company Shares (including any Company Shares issuable upon conversion or exchange of the Company OCEANEs and Company Shares issuable upon the exercise of any Stock Options or Warrants) and (ii) the Company OCEANEs (and together with the Company Shares, the “Company Securities”), subject to and in accordance with certain terms and conditions which are set forth in this Agreement (together with any subsequent offer of the Purchaser or an Affiliate of the Purchaser filed with the AMF, the “Offer”).

 

(D)

WHEREAS, on the date hereof, the Company’s board of directors (the “Company Board”) (i) has unanimously welcomed (accueilli favorablement) the Offer (the “Initial Company Board Recommendation”) and approved this Agreement, (ii) decided, in compliance with Article 261-1, I, 2° and 5° of the Règlement général de l’AMF (the “AMF General Regulation”), to appoint Accuracy as independent expert (the “Independent Expert”) to produce a report (the “Expert’s Report”) regarding the terms of the Offer, including an opinion that the Offer is fair to the Company’s shareholders and to the holders of OCEANEs from a financial point of view (a “Fairness Opinion”), (iii) decided that, upon receipt of the Fairness Opinion and subject to the findings and conclusions thereof and on the basis of the draft offer document (projet de note d’information) provided by the Purchaser in accordance with article 3.1.2, it would decide (α) to issue its reasoned opinion determining that the Offer is in the best interests of the Company, its employees and shareholders and (b) make a recommendation to all holders

 

1


  of Company Securities to tender such Company Securities into the Offer ((α) and (b) being together referred to as the “Company Board Reasoned Opinion”), and (iv) decided to authorize its Chief Executive Officer (directeur général) to enter into this Agreement on behalf of the Company.

 

(E)

WHEREAS, on the date hereof, immediately preceding the execution of this Agreement, as an inducement and condition to the Purchaser’s willingness to enter into this Agreement, the Purchaser has received commitments from certain shareholders of the Company to tender their Company Securities into the Offer, which represent approximately 23 percent of the Company’s issued share capital (the “Tender Commitments”).

 

(F)

WHEREAS, the Purchaser and the Company wish to make certain agreements in connection with the Offer and to set forth certain conditions to the Offer.

NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements set forth herein, intending to be legally bound hereby, the Parties agree as follows:

 

1.

DEFINITIONS

 

1.1

Certain Defined Terms

Unless otherwise expressly provided in this Agreement, capitalized terms used in this Agreement shall have the following meanings:

Adverse Recommendation Change” shall have the meaning set forth in Article 4.1.6(ii)(b) hereof;

Affiliate” shall mean, in relation to any Person, any other Person who/which, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person. The term “control” as used in this definition (including its correlative meanings “controlled by” and “under common control with”) shall have the meaning ascribed to it in Article L. 233-3 of the French Commercial Code;

Agreement” shall have the meaning set forth in the first paragraph of this Agreement;

AMF” shall mean the Autorité des marchés financiers;

AMF General Regulation” shall have the meaning set forth in forth in Recital (D);

Applicable Law” shall mean, with respect to any Person or any property or asset, all laws, statutes, ordinances, codes, rules, regulations or Orders applicable to or binding on such Person (or its properties or assets) or to such property or asset from time to time;

Authority shall mean any competent government, governmental, administrative, supervisory, regulatory, judicial, disciplinary, enforcement or tax raising body, authority, agency, commission, board, organization, court or tribunal of any jurisdiction, whether international (including any public international organization), supranational, European Union, national, federal, state or regional or local and any subdivision, department or branch of any of the foregoing.

 

2


Audited Financial Statements” shall have the meaning set forth in Article 4.1.7(viii);

Break-Fee Law Suit” has the meaning set forth in Article 4.5.

Break-Up Fee” shall have the meaning set forth in Article 4.3 hereof;

Company” shall have the meaning set forth in the first paragraph of this Agreement;

Company Board” shall have the meaning set forth in Recital (D);

Company Board Reasoned Opinion” shall have the meaning set forth in Recital (D);

Company Offer Documents” shall have the meaning set forth in Article 4.2.2 hereof;

Company’s Shares”, “Company Shares” or “Shares” shall mean all outstanding ordinary shares issued by the Company, including, for the avoidance of doubt, (i) the Treasury Shares existing at the date hereof, (ii) any additional Company ordinary shares issued before the close of the Offer (as reopened, as the case may be) upon conversion or exchange of any OCEANEs or following the exercise of Stock Options or Warrants, as well as (iii) any Free Shares to the extent vested (acquises) and not subject to transfer restrictions (période de conservation) before the close of the Offer (as reopened, as the case may be) pursuant to the terms thereof;

Company’s OCEANEs”, “Company OCEANEs” or “OCEANEs” shall mean the 4,344,651 bonds issued on May 31, 2018 and due on May 31, 2023, issued at a nominal value per bond of €6.80 for an aggregate principal amount of €29,543,626.80, bearing interest at an annual rate of 6%, which are convertible into new Company Shares or exchangeable for existing Company Shares;

Company Securities” shall mean have the meaning set forth in Recital (C);

Confidentiality Agreement” shall mean the confidentiality agreement dated September 16, 2019 between the Company and the Purchaser;

Expert’s Report” shall have the meaning set forth in Recital (D);

Fairness Opinion” shall have the meaning set forth in Recital (D);

Favorable Report” shall have the meaning set forth in Article 4.2.1(i);

Free Shares” shall mean all the outstanding free shares (actions gratuites) granted by the Company to the current or former employees, directors or other officers of the Group Companies as set forth in Annex 2;

 

3


French Foreign Investment Condition” shall have the meaning set forth in Article 2.1 hereof;

Group Companies” shall mean the Company and the entities that the Company controls directly or indirectly. The term “control” as used in this definition (including its correlative meanings “controlled by” and “under common control with”) shall have the meaning ascribed to it in Article L. 233-3 of the French Commercial Code;

Independent Expert” shall have the meaning set forth in Recital (D);

Initial Company Board Recommendation” shall have the meaning set forth in Recital (D);

Locked Free Shares” shall mean any Free Shares which are still subject to a minimum holding period requirement (en période de conservation) on the date hereof.

Offer” shall have the meaning set forth in Recital (C);

Offer Consideration” shall have the meaning set forth in Article 3.2.1(ii);

Order” shall mean any judgment, injunction, order, award, ruling, writ, decree or other restriction of any Authority having competent jurisdiction;

Party(ies)” shall have the meaning set forth in the first paragraph of this Agreement;

Person” shall mean an individual, corporation, partnership, joint venture, association, limited liability company, Authority, unincorporated organization or other entity;

Purchaser” shall have the meaning set forth in the first paragraph of this Agreement;

Purchaser Material Adverse Effect” shall have the meaning set forth in Article 3.2.3(iv);

Purchaser Offer Documents” shall have the meaning set forth in Article 3.2.1 hereof;

Representatives” shall mean such Party’s Affiliates and the agents, directors, officers, advisors (including, without limitation, financial, legal and accounting advisors) and representatives of such Party and its Affiliates;

Response Period shall have the meaning set forth in Article 4.1.6(ii) hereof;

Reverse Break-Up Fee” shall have the meaning set forth in Article 3.2.2 hereof;

Reverse Break-Up Fee Trigger Event” shall have the meaning set forth in Article 3.2.2 hereof;

Securities Act” shall have the meaning set forth in Article 4.1.7(xvi) hereof;

 

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Stock Options” shall mean all the existing options to purchase or to subscribe for Shares (options d’acquisition ou de soucription d’actions) granted by the Company to current or former employees, directors or other officers of the Group Companies as set forth in Annex 2;

Superior Proposal” shall mean a Takeover Proposal that (i) is a tender offer (offre publique d’acquisition) to acquire 100% of the Company Shares, for a price per Company Share at least equal to (a) in the case of a cash tender offer, 102% of the Offer Consideration or (b) in the case of a tender offer involving exchange of securities, a price which represents an amélioration significative of the offer terms pursuant to Article 232-7 of the AMF General Regulation, and that (ii) the Company Board has determined in its good faith judgment is reasonably likely to be consummated in accordance with its terms, taking into account all legal, financial and regulatory aspects of the proposal and the Person making the proposal, and if consummated, would result in a transaction more favorable to the Company and its shareholders than the transaction contemplated by the Purchaser (after taking into account any revisions to the terms of the transaction contemplated by this Agreement in response to the proposal made by the Person making the proposal and the time likely to be required to consummate such proposal);

Takeover Proposal” shall mean any inquiry, proposal or offer from any Person (other than the Purchaser) relating to, or that could reasonably be expected to lead to any direct or indirect acquisition, in one transaction or a series of transactions, including, any merger, consolidation, tender offer, exchange offer, stock acquisition, asset acquisition, binding share exchange, business combination, recapitalization, liquidation, dissolution, joint venture or similar transaction, of (A) assets or businesses that constitute or represent 15% or more of the total revenue, operating income, EBITDA or assets of the Group Companies for the fiscal year ended December 31, 2019, or (B) 15% or more of the outstanding shares of any class of capital stock of, or other equity or voting interests in, the Company or any class of capital stock of, or other equity or voting interests in, any of the Group Companies directly or indirectly holding, individually or taken together, the assets or businesses referred to in (A) above, in each case other than the Offer;

Tender Commitments” has the meaning set forth in Recital (E);

Trading Day” shall mean a full trading day on Euronext Paris;

Treasury Shares” shall mean Company Shares held, from time to time, by the Company or any member of the Company’s group;

Unfavorable Report Notice” has the meaning set forth in Article 4.2.1(ii);

Voluntary Minimum Acceptance Threshold” has the meaning set forth in Article 6.1;

Warrants” means:

 

  (i)

the 40.000 share subscription warrants (bons de souscription d’action) subscribed on March 14, 2013 by Eric Beard, each allowing for the subscription of one Company Share at a unitary price of €4.24, expiring on December 31, 2023;

 

5


  (ii)

the 60.000 share subscription warrants (bons de souscription d’action) subscribed on March 31, 2015 by IPF Partners, each allowing for the subscription of one Company Share at a unitary price of €4.71, expiring on May 31, 2021;

 

  (iii)

the 60.000 share subscription warrants (bons de souscription d’action) subscribed on March 31, 2015 by IPF Partners, each allowing for the subscription of one Company Share at a unitary price of €4.71, expiring on May 31, 2021;

 

  (iv)

the 40.000 share subscription warrants (bons de souscription d’action) subscribed on February 3, 2016 by Paula Ness Speers, each allowing for the subscription of one Company Share at a unitary price of €3.42, expiring on January 25, 2026; and

 

  (v)

the 150.000 share subscription warrants (bons de souscription d’action) subscribed on February 3, 2016 by Gérard Hascoët, each allowing for the subscription of one Company Share at a unitary price of €3.42, expiring on January 25, 2026.

Waiver Date” has the meaning set forth in Article 4.5.

 

1.2

Construction

For the purposes of this Agreement: (i) words (including capitalized terms defined herein) in the singular shall be held to include the plural and vice versa as the context requires; (ii) the terms “hereof”, “herein”, and “herewith” and words of similar import shall, unless otherwise expressly stated, be construed to refer to this Agreement as a whole (including any Annex hereto) and not to any particular provision of this Agreement, and Article, Section and Annex references are to the Articles, Sections and Annexes to this Agreement unless otherwise expressly specified; (iii) the word “including” and words of similar import when used in this Agreement shall mean “including without limitation” unless otherwise expressly specified; (iv) the word “or” shall not be exclusive; and (v) all references to any period of days shall be deemed to be to the relevant number of calendar days unless otherwise expressly specified.

 

2.

CONDITIONS PRECEDENT

 

2.1

Conditions to certain obligations of the Purchaser

The obligations of the Purchaser under Article 3.2 shall be subject to the satisfaction (or waiver by the Purchaser in writing) of the following conditions:

 

  (i)

the Fairness Opinion, stating that the financial terms and conditions of the Offer are fair, shall have been delivered to the Company Board;

 

  (ii)

the Company Board shall have, after reviewing such Fairness Opinion and on the basis of the draft offer document (projet de note d’information) prepared by the Purchaser: (a) issued the Company Board Reasoned Opinion, (b) recommended the Company’s securities holders to tender their Company Securities into the Offer; and (c) if requested by the Purchaser, authorized the Chief Executive Officer (directeur général) of the Company to tender the Treasury Shares into the Offer in accordance with Article 4.2.3;

 

6


  (iii)

no competing tender offer for the Company Securities which is reasonably expected to be financed and filed with the AMF shall have been publicly announced;

 

  (iv)

the representation and warranties of the Company under Article 4.1.7 are accurate as of the date hereof and shall be accurate in all material respects as of the date of the filing of the Offer;

 

  (v)

the French Minister of Economy either (x) shall have confirmed in writing that the transaction contemplated by this Agreement does not fall within the scope of articles L. 151-3, R. 151-1 et seq of the French Monetary and Financial Code or (y) shall have authorized the transaction contemplated by this Agreement in accordance with articles L. 151-3, R. 151-1 et seq of the French Monetary and Financial Code (the “French Foreign Investment Condition”); and

 

  (vi)

there shall not have been a material breach by the Company of its obligations under this Agreement.

 

3.

UNDERTAKINGS OF THE PURCHASER RELATING TO THE OFFER

 

3.1

Non-Conditional Purchaser Undertakings

 

  3.1.1.

Provision of information

The Purchaser shall furnish to the Company all information concerning the Purchaser requested by the Company that is required by French laws or regulations to be included in the Company Offer Documents.

 

  3.1.2.

Preparation of Purchaser Offer Documents

Provided that it receives the cooperation and assistance of the Company in accordance with Articles 4.1.3 and 5 (to the extent related thereto), the Purchaser shall prepare the Purchaser Offer Documents in compliance with Applicable Law (including the AMF General Regulation) and prior to the filing of any Purchaser Offer Documents with the AMF, or responding to any material comments of the AMF, the Purchaser shall provide the Company with a reasonable opportunity, in light of the relevant deadlines, to comment on the Purchaser Offer Documents or on the responses to the material comments of the AMF and the Purchaser shall consider any reasonable comments made by the Company.

Without prejudice to the foregoing, the Purchaser shall provide the Company with the (x) draft offer document (projet de note d’information) relating to the Offer, including the duly completed section regarding the “assessment of the Offer Consideration” (éléments d’appréciation du prix d’offre) therein, and (y) the valuation report from the presenting bank (établissement présentateur) in relation to the Offer Consideration, no later than 20 Trading Days after the date hereof.

 

7


  3.1.3.

French Foreign Investment Condition

Subject to receiving the necessary cooperation and assistance of the Company as well as the information reasonably necessary for the Purchaser for such purpose, the Purchaser shall, at its own cost, make its best efforts to procure that the French Foreign Investment Condition is satisfied as soon as practicable and shall file its request for the French Foreign Investment Condition with the French Ministry of Economy within twelve (12) Trading Days from the date hereof, provided that if such French Foreign Investment Condition is subject to conditions or to undertakings required to be given by the Purchaser, such conditions are acceptable to the Purchaser acting reasonably and in good faith.

The Purchaser shall, prior to such filing with the French Ministry of Economy, provide the Company with a reasonable opportunity, in light of the relevant deadlines, to comment on such authorization request (subject to any limitations imposed by relevant Laws or considerations of commercial sensitivity), and keep regularly informed the Company of its communications with the French Ministry of Economy (subject to any restrictions imposed by the French Ministry of Economy).

The Purchaser shall provide the Company with copies of all such communications, without delay, to the extent only doing so would not entail the disclosure of Purchaser’s commercially sensitive information or breach relevant Laws or restrictions imposed by the French Ministry of Economy.

 

3.2

Conditional Purchaser Undertakings

The obligations of the Purchaser under this Article 3.2 shall be subject to the satisfaction (or waiver by the Purchaser in writing) of the conditions set forth in Article 2.1.

 

  3.2.1.

Filing of the Offer

The Purchaser shall, or shall cause an Affiliate of the Purchaser to, instruct a presenting bank (établissement présentateur) to file the Offer with the AMF as promptly as practicable or no later than 5 Trading Days following the issuance of the Company Board Reasoned Opinion provided that, on such date the conditions precedent set forth in Article 2.1 shall have been satisfied (or waived by the Purchaser in writing), and that the Purchaser shall in no event be required to file the Offer earlier than 60 calendar days after the date hereof.

 

  (i)

Offer Documents

In accordance with applicable provisions of the AMF General Regulation, the Purchaser will, or will cause an Affiliate of the Purchaser to, (i) file with the AMF (a) a draft offer document (projet de note d’information) relating to the Offer, and (b) a document presenting the Purchaser’s legal, financial and accounting characteristics (document “autres informations”), and (ii) disseminate draft standardized regulatory press releases (communiqués de presse normés) relating to them (such documents, together with any supplements or amendments thereto, being the “Purchaser Offer Documents”).

 

8


The Purchaser will have the right to amend the terms of the Purchaser Offer Documents after they are filed with the AMF to the extent required to reflect comments from the AMF or as it determines to be appropriate; provided that the Purchaser will consult with the Company with respect to any such amendments and will consider in good faith any reasonable comments of the Company thereon.

 

  (ii)

Terms and conditions of the Offer

The consideration proposed in the Offer to the holders of Company Securities (the “Offer Consideration”) shall be as follows:

 

  (a)

Consideration for the Company Shares

The holders of Company Shares may elect to tender their Company Shares pursuant to the Offer for EUR 2.45 per Company Share.

 

  (b)

Consideration for the Company OCEANEs

The holders of Company OCEANEs may elect to tender their Company Shares pursuant to the Offer for (i) EUR 7.01 per Company OCEANE with coupon due May 31, 2021 attached and (ii) EUR 6.81 per Company OCEANE with coupon due May 31, 2021 detached.

The other key terms and conditions of the Offer are set forth in Annex 1 (any or all of which such conditions may be waived by the Purchaser, subject to Applicable Law).

 

  3.2.2.

Reverse Break-Up Fee payable by the Purchaser

The Purchaser shall pay to the Company a break fee equal to 2% of the maximum Offer Consideration i.e. EUR 2,000,000 (the “Reverse Break-Up Fee”) if it does not file the Offer with the AMF within 15 Trading Days of the deadline prescribed by the first paragraph of Article 3.2.1 (provided for the avoidance of doubt that the conditions precedent set forth in Article 2.1 were satisfied and that the Company was in a position to file its draft response document simultaneously with the filing of the Offer in accordance with Article 4.2.2) (the “Reverse Break-Up Fee Trigger Event”).

The payment of the Reverse Break-Up Fee shall occur within five (5) calendar days of the date on which the Reverse Break-Up Trigger Event shall have occurred.

The Purchaser acknowledges that the agreement contained in this Article 3.2.2 is an integral part of the Offer and that, without these agreements, the Company would not have entered into this Agreement.

 

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The payment of any amounts due pursuant to this Article 3.2.2 shall constitute the sole and exclusive remedy of the Company in case of a Reverse Break-Up Fee Trigger Event.

 

  3.2.3.

Representations of the Purchaser

The Purchaser represents and warrants to the Company that, on the date hereof and on the date of the filing of the Offer:

 

  (i)

the Purchaser is validly organized and existing under the laws of the State of Delaware;

 

  (ii)

the Purchaser’s authorized signatory has the requisite capacity, power and authority to enter into this Agreement on behalf of the Purchaser, and this Agreement has been duly and properly approved by the relevant governance body of the Purchaser in accordance with the Purchaser’s certificate of incorporation or other organizational documents;

 

  (iii)

neither the Purchaser nor its subsidiaries have taken any step nor legal proceedings for its or their winding-up, liquidation, bankruptcy, or dissolution under Applicable Law in any relevant jurisdiction;

 

  (iv)

none of the execution, delivery or performance of this Agreement by the Purchaser, the consummation by the Purchaser of the transactions contemplated herein or compliance by the Purchaser with any of the provisions hereof will conflict with or result in any breach of any provision of the certificate of incorporation or other organizational documents of the Purchaser; (ii) violate any law applicable to the Purchaser or any of its properties or assets; or (iii) result in a violation or breach of, or constitute a default or give rise to any right of termination, cancellation, vesting, payment, acceleration, change of control right, suspension or revocation under any of the provisions of any material bond, security interest, indenture, contract or other instrument or obligation to which the Purchaser or any its subsidiaries is a party, or by which any of them may be bound, except in the case of clauses (ii) and (iii) for violations, breaches, defaults, terminations, cancellations, vestings, payments, accelerations, change of control rights, suspensions or revocations which would not, individually or in the aggregate, (x) have a material adverse effect on the Purchaser and/or its subsidiaries (taken as a whole), (y) impair the ability of the Purchaser to perform in any material respects its obligations under this Agreement, or (z) prevent or materially delay the consummation of the transactions contemplated hereby (clauses (x), (y) and (z), collectively, a “Purchaser Material Adverse Effect”);

 

  (v)

no consent, approval or authorization of any Authority or other Person is required to be obtained or made in connection with the consummation of the transactions contemplated by this Agreement, except for applicable consents, approvals or authorizations that have been obtained by the Purchaser on or prior to the date hereof, as otherwise set forth in this Agreement, or where the failure to obtain any such consents, approvals or authorizations, in each case, would not, individually or in the aggregate, have a Purchaser Material Adverse Effect;

 

10


  (vi)

the Purchaser has the appropriate financing from its available cash for the purposes of the Offer.

 

4.

UNDERTAKINGS OF THE COMPANY RELATING TO THE OFFER

 

4.1

Non-Conditional Company Undertakings

 

  4.1.1.

Consultation of the Company’s social and economic committee

In compliance with article L. 2312-47 of the French Labor Code, no later than two Trading Days after the announcement of the Offer, the Company shall initiate and conduct the consultation of its social and economic committee in respect of the Offer in accordance with Article L. 2312-42 et seq. of the French Labor Code. The Company shall use its best efforts to obtain the opinion of the social and economic committee as swiftly as possible after execution of this Agreement and in any event (unless otherwise agreed with the Purchaser) no later than the one month consultation period provided for by the French Labor Code, as applicable. The Company shall not make any commitments or statements to the social and economic committee regarding the Purchaser’s intents regarding the Group Companies without the Purchaser’s prior written consent.

The Purchaser shall provide all reasonable information, cooperation and assistance as requested by the Company in connection with the social and economic committee’s consultation process.

The Company shall keep the Purchaser informed regarding the social and economic committee process on a regular basis and at any time upon request and shall notify the Purchaser in writing no later than five (5) Trading Days following the delivery of the opinion of the relevant social and economic committee or expiration of the one month consultation period provided for by the French Labor Code, as applicable.

 

  4.1.2.

Cooperation with the Independent Expert and the Purchaser

The Company will, and will cause its Affiliates to, fully cooperate with the Independent Expert, in order to allow him to establish the Expert’s Report containing a Fairness Opinion. The Company shall in particular undertake its best efforts to cause the Independent Expert to deliver its Experts Report containing a Fairness Opinion no later than 20 Trading Days after the date on which the Company receives the draft offer document (projet de note d’information) relating to the Offer and the valuation report from the presenting bank pursuant to Article 3.1.2. In the event the Company is informed by the Independent Expert that its report will not support the Offer, the Company will immediately inform the Purchaser thereof and comply with Article 4.2.1(ii) below.

In addition, the Company shall furnish as soon as reasonably practicable to the Purchaser all information concerning the Company, its Affiliates and their businesses requested by the Purchaser in connection with the preparation of the Purchaser Offer Documents or its correspondence with the Independent Expert and the AMF in respect of the Offer (subject to any restriction (if any) imposed by the Independent Expert and the AMF).

 

11


In connection with the Offer, the Purchaser and the Company shall cooperate with each other to fulfil all applicable requirements of the AMF or any other Authority and to respond to comments from the AMF or any other competent Authority.

Compliance by the Company with this Article 4.1.2 is a key term of this Agreement without which the Purchaser would not have entered into this Agreement. Any material failure by the Company to comply with this Article 4.1.2 may materially jeopardize the success of the Offer and the Purchaser shall incur no liability of any kind in the event it considers that it is not in a position to complete the transactions contemplated herein as a result of such failure by the Company.

 

  4.1.3.

Management of Company until consummation of the Offer

The Company undertakes that, from the date hereof until the date of appointment to the Company Board of the Purchaser’s designees in accordance with Article 4.2.4, the Group Companies shall conduct their business in the ordinary course and in accordance with past practices (except to the extent contemplated by this Agreement)

In addition, and without limiting the generality of the foregoing, during the period from the date hereof until the date of appointment to the Company Board of the Purchaser’s designees in accordance with Article 4.2.4, the Company shall not, without the written prior consent of the Purchaser and except as set forth in Schedule 4.1.3 hereto:

 

  (a)

declare, authorize, make, issue or pay any dividend (in cash or in kind) or other distribution of a similar nature in respect of any of its share capital or other equity or voting interests;

 

  (b)

purchase, redeem or cancel any Company Securities or Warrants, save for the Company Securities or Warrants to be purchased, redeemed or cancelled in accordance with the terms of the OCEANEs, Free Shares, Stock Options or Warrants;

 

  (c)

amend the Company’s by-laws dated July 2, 2020 or the by-laws of any other Group Company, save for any share capital increase resulting from the vesting, exercise or conversion of Free Shares, OCEANEs, Stock Options or Warrants, in accordance with their terms;

 

  (d)

adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, business combination, restructuring, recapitalization or other reorganization with respect to the Group Companies;

 

  (e)

issue, sell, pledge, dispose of, grant, transfer, encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer or encumbrance of, any share capital or other equity or voting interests of a Group Company, securities convertible or exchangeable into or exercisable for any share capital or other equity or voting

 

12


  interests of a Group Company or any options, free shares, warrants or other rights of any kind to acquire any share capital or other equity or voting interests of a Group Company, save for the Company Securities to be subscribed or purchased upon exercise, conversion or exchange of the OCEANEs, Stock Options or Warrants as described in Annex 2;

 

  (f)

split, combine or reclassify any of the share capital or other equity or voting interests of the Company;

 

  (g)

acquire, sell or dispose of any asset, share, undertaking (fonds de commerce) to or from a third-party (excluding any Group Company) for a price greater than EUR 150,000;

 

  (h)

enter into a material joint venture or material partnership or similar material third-party business enterprise;

 

  (i)

enter into, amend or terminate any agreement that would be deemed a related-party transaction (convention réglementée) under Article L. 225-38 of the French Commercial Code or more generally any agreement with (i) a shareholder of the Company owning more than 5% of the Company Shares or any Affiliates of such shareholder, (ii) a director of the Company or (iii) an executive officer of the Company;

 

  (j)

incur, assume, endorse, guarantee or otherwise become liable for or modify the terms of any indebtedness for borrowed money, other than in respect of previously budgeted borrowings to support asset financing and capital expenditures that had been previously disclosed to Purchaser;

 

  (k)

make, commit to make or authorize any capital expenditure, other than capital expenditures and research and development expenditures in the amounts set forth in the Company’s existing capital budget that has been previously disclosed to Purchaser;

 

  (l)

sell, lease, license, lease back or otherwise subject to any lien or otherwise dispose of or abandon any of its permits, licenses or intellectual property rights;

 

  (m)

make any material changes with respect to accounting policies or procedures, except as required by changes in GAAP/IFRS or by the AMF;

 

  (n)

release, assign, compromise, pay, discharge, waive, settle, agree to settle, or satisfy any litigation requiring payment by the Company in excess of EUR 100,000;

 

  (o)

make, change or revoke any tax election, change any tax accounting method, settle or compromise any tax liability or proceeding or amend any tax return, except (A) as required by Applicable Law or by a change in accounting standards, (B) as do not result in an increase in tax or a decrease of after tax income and (C) if conducted in the ordinary course of business;

 

13


  (p)

except as required by Applicable Law: (A) pay or agree to pay any bonus, severance or termination payments or payments or benefits to any director, officer or other employee of the Group Companies (other than pursuant to existing employment agreements and in the ordinary course of business consistent with past practice); (B) pay or agree to pay any transaction, exit or retention bonus in connection with the transactions contemplated herein, (C) materially increase or agree to increase the compensation (including wages, salaries, bonuses or benefits), make or agree to make any new equity awards, to any director, officer or other employee of the Group Companies or amend the plans governing the Stock Options or the Free Shares; or (D) hire or terminate the employment or office (other than for cause) of any officer or employee whose annual base salary exceeds EUR 100,000;

 

  (q)

adopt any measure that modifies the substance (modifiant sa consistence) of the Group Companies;

 

  (r)

adopt or amend any benefit plan or enter into, adopt, extend, renew or amend any collective bargaining agreement or other contract with any labor organization, social and economic committee, union or association, except as required by Applicable Law;

 

  (s)

take any action that would require the approval of the Company Board in accordance with Applicable Law or the internal rules thereof (règlement intérieur), except if the Company is required to take such relevant action by Applicable Law;

 

  (t)

more generally, take or agree to take any action likely to delay or frustrate the Offer; or

 

  (u)

agree, authorize or commit to do any of the foregoing, or authorize, recommend, propose or announce an intention to do any of the foregoing.

 

  4.1.4.

Change of control; Treatment of Stock Options, Free Shares and Warrants

 

  4.1.4.1

Change of control

As soon as reasonably practicable, and in any event from the date of the filing of the Offer, the Company shall use its commercially reasonable efforts to obtain consents by third parties under change of control clauses in the contracts entered into by Group Companies where it is necessary to avoid disruption or prejudice to the business of the Group Companies as a result of the change of control of the Group Companies in connection with the Offer.

The Group Companies shall not make any payments or contractual commitments to any third party whose consent is required under change of control clauses in the contracts entered into by them without the Purchaser’s prior consultation.

 

  4.1.4.2

Treatment of Stock Options, Free Shares and Warrants

 

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No later than on the day of opening of the initial Offer acceptance period, the Company Board shall make its best efforts to notify:

 

  (i)

the holders of the Stock Options and Warrants in accordance with their respective terms that the Offer constitutes a liquidity event resulting in their Stock Options and Warrants (a) becoming immediately exercisable (to the extent not already exercisable) and (b) lapsing upon settlement and delivery of the Offer if not exercised prior to the end of the initial Offer acceptance period, it being noted that such provisions shall not apply to Warrants held by IPF Partners or affiliated funds.

 

  (ii)

the holders of Locked Free Shares of the release of the holding period applicable to their Locked Free Shares in accordance with the terms and conditions of such Locked Free Shares so as to allow them to tender their Company Shares into the Offer.

The Company shall make its best efforts to obtain, before the filing of the Offer, commitments from E. Beard, P. Speers and G. Hascoët whereby they state that (i) they do not request that the Offer targets their Warrants, (ii) they will not tender their Warrants into the Offer (without prejudice to their right to exercise the Warrants and tender any Company Shares into the Offer) and (iii) they acknowledge that such Warrants will become void if the Offer is successful in accordance with the terms and conditions of the Warrants.

 

  4.1.5.

Preparation of documents

The Company shall prepare the Company Offer Documents in compliance with Applicable Law and prior to the filing of any Company Offer Documents with the AMF, or responding to any material comments of the AMF, the Company shall provide the Purchaser with a reasonable opportunity, in light of the relevant deadlines, to comment on the Company Offer Documents or on the responses to the material comments of AMF and the Company shall take into account any reasonable comments made by the Purchaser.

 

  4.1.6.

Non solicitation

 

  (i)

Up until the settlement of the Offer, the Company shall work in good faith and expeditiously towards the successful completion of the Offer and, during the term of this Agreement it shall, and shall cause its Representatives:

 

  (a)

not to, directly or indirectly, (a) solicit, initiate or encourage or take any actions to facilitate any Takeover Proposal or any inquiries reasonably likely to result in the making of any Takeover Proposal, or (b) enter into, continue or otherwise participate in any discussions or negotiations with a third party regarding, or furnish to any third party any information, or take any other action to facilitate any inquiries with respect to, or otherwise cooperate in any way with, any Takeover Proposal;

 

15


  (b)

to immediately cease and cause to be terminated all discussions or negotiations with any Person conducted heretofore with respect to any proposal that constitutes or would reasonably be expected to lead to a Takeover Proposal, and cause all materials and written information communicated by the Company or its advisors and agents to such Person to be returned to the Company or destroyed;

 

  (c)

to notify the Purchaser of the receipt by it, from the date of execution hereof, of each and any Takeover Proposal or of any contact reasonably likely to lead to a Takeover Proposal including the full details thereof (and any subsequent amendment thereof) and the identity of the Persons involved, promptly and in any event within 24 hours of such receipt or contact;

 

  (d)

to keep the Purchaser reasonably and regularly informed of the status of any such Takeover Proposal or contact, including the material details thereof; and

 

  (e)

not to accept, approve, recommend or enter into any agreement, in respect of a Takeover Proposal (and shall not make any public communication about such Takeover Proposal without submitting it to the Purchaser for review with reasonable advance notice).

 

  (ii)

Notwithstanding any of the above, if (x) a Takeover Proposal is made by any Person (other than the Purchaser and/or any of its Affiliates), including by way of a tender offer filed with the AMF, (y) such Takeover Proposal constitutes a Superior Proposal and (z) such Takeover Proposal was not solicited by or on behalf of the Company and did not otherwise result from a breach of its obligations under Article 4.1.6:

 

  (a)

the Company and its Representatives shall have the right to negotiate with and provide information to the Person having made such Takeover Proposal (provided that all information which is provided to such Person shall simultaneously be provided to the Purchaser if not provided previously); and

 

  (b)

the Company Board shall be entitled, after complying with its obligations set forth in the below, to (i) withdraw or modify the Initial Company Board Recommendation or the Company Board Reasoned Opinion (as applicable), (ii) and/or approve, recommend or remain neutral (by failing to recommend against the Takeover Proposal upon request of the Purchaser) with respect to such a Takeover Proposal (constituting a Superior Proposal) and/or (ii) terminate this Agreement pursuant to Article 6.1(ii) in order to enter into an agreement providing for the consummation of such Takeover Proposal (each of the actions set forth in (i) or (ii) of this paragraph (b), an “Adverse Recommendation Change”). Unless such Superior Proposal is in the form of a tender offer actually filed with the AMF, the Company shall send a written notice to the Purchaser prior to the Company Board making an Adverse Recommendation Change, and the Purchaser shall have the right,

 

16


  but not the obligation, during 10 Trading Days from the date of receipt of the Company’s notice (the “Response Period”), to offer to amend the terms of the Offer and in such case the Company shall, and shall cause its advisors to, negotiate in good faith with the Purchaser to make such adjustments to the terms and conditions of the Offer as would enable the Company to proceed with the Offer as amended, rather than the Superior Proposal; if the Purchaser submits a proposal to amend the terms of its Offer, including an increase in, or modification of, the Offer Consideration, the Company Board shall review and determine whether the Takeover Proposal to which the Purchaser is responding would be a Superior Proposal when assessed against the Offer as it is proposed by the Purchaser to be amended; if the Company Board does not so determine, the Company Board will promptly reaffirm its Initial Company Board Recommendation or Company Board Reasoned Opinion (as applicable); but if the Company Board does so determine, or the Purchaser fails to submit a proposal to amend the terms of its Offer within the Response Period, the Company may make its Adverse Recommendation Change, in which case this Agreement shall terminate pursuant to Article 6.1(ii); provided that such termination shall only be effective if such Superior Proposal is cleared (déclarée conforme) by the AMF.

 

  4.1.7.

Representations and warranties of the Company

The Company represents and warrants to the Purchaser that, on the date hereof and on the date of the filing of the Offer, except as set forth in Schedule 4.1.7 hereto:

 

  (i)

the Company is validly organized and existing under the laws of France;

 

  (ii)

the Company’s authorized signatory has the requisite capacity, power and authority to enter into this Agreement on behalf of the Company, and this Agreement has been duly and properly approved by the Company Board in accordance with the Company’s articles of association;

 

  (iii)

no step has been taken or legal proceedings started against any Group Company for its winding-up, liquidation, bankruptcy, or dissolution under Applicable Law in any relevant jurisdiction, nor is any Group Company insolvent;

 

  (iv)

none of the execution, delivery or performance of this Agreement by the Company, the consummation by the Company of the transactions contemplated herein or compliance by the Company with any of the provisions hereof will (i) conflict with or result in any breach of any provision of the articles of association or other organizational documents of the Company; (ii) violate any law applicable to the Company or any of its properties or assets; or (iii) result in a violation or breach of, or constitute a default or give rise to any right of termination, cancellation, vesting, payment, acceleration, change of control right, suspension or revocation under any of the provisions of any material bond, security interest, indenture, contract or other instrument or obligation to which a

 

17


  Group Company is a party, or by which any of them may be bound, except in the case of clauses (ii) and (iii) for violations, breaches, defaults, terminations, cancellations, vestings, payments, accelerations, change of control rights, suspensions or revocations which would not, individually or in the aggregate, (x) have a material adverse effect on the Group Companies (taken as a whole), (y) impair the ability of the Company to perform in any material respects its obligations under this Agreement, or (z) prevent or materially delay the consummation of the transactions contemplated hereby;

 

  (v)

no consent, approval or authorization of any Authority or other Person is required to be obtained or made in connection with the consummation of the transactions contemplated by this Agreement, except for applicable consents, approvals or authorizations that have been obtained by the Company on or prior to the date hereof, as otherwise set forth in this Agreement or where the failure to obtain such consents, approvals or authorizations would be immaterial;

 

  (vi)

the share capital of the Company is composed of 26,656,946 Shares, of which 61,423 Shares are Treasury Shares and 110.500 Shares are Locked Free Shares. Except as set forth above and except with respect to (a) the Stock Options which give the right to acquire, or subscribe for, a maximum of 1,376,182 Company Shares, (b) the Warrants which give the right to subscribe for a maximum of 350,000 Company Shares, the details of which are set out in Annex 2, there are no (w) authorized, issued or outstanding shares of the Company; (x) securities of the Company convertible into, exercisable or exchangeable for shares of the Company or any other obligation of the Company; (y) warrants, calls, options, unvested free shares or other rights to acquire or subscribe shares of the Company; or (z) outstanding obligations of the Company repurchase, redeem or otherwise acquire any such securities or to issue, deliver or sell, or cause to be issued, delivered or sold, any such securities. All the Company Securities have been validly issued and are fully paid; and all of the Stock Options, Free Shares and Warrants have been duly and validly granted or issued. The rights of the respective holders of the OCEANE, Stock Options, Free Shares and Warrants have been respected in all respects since their issuance and the contractual documents governing them have been complied with. The Stock Options and Warrants that are not exercised prior to the end of the initial Offer acceptance period will automatically lapse upon settlement and delivery of the Offer (except Warrants held by IPF Partners or affiliated funds);

 

  (vii)

the Company is the sole legal owner of the whole issued and outstanding share capital of each of the Group Companies (other than the Company) and all such shares are validly issued, fully paid up and free from encumbrances. No right has been granted to any person to require any of the Group Companies (other than the Company) to issue, sell, transfer or convert any securities (whether debt or equity);

 

18


  (viii)

the audited consolidated balance sheet of the Company and its subsidiaries for the fiscal years ended as of December 31, 2018 and December 31, 2019 and each related audited consolidated statements of income, retained earnings, stockholders’ equity and cash flow of the Company and its subsidiaries together with all related notes and schedules thereto (collectively, the “Audited Financial Statements”), as well as the summary consolidated financial statements of the Company and its subsidiaries for the first half of 2020 as contained in the half-year financial report published by the Company on September 25, 2020, (i) were prepared in accordance with the books of account and other financial records of the Company and its subsidiaries, (ii) present fairly in all material respects the consolidated financial condition, results of operations, assets and liabilities and cash flows of the Company and each of its subsidiaries as of the dates thereof or for the periods covered thereby, and (iii) have been prepared in accordance with IFRS, for the Audited Financial Statements, and with the international financial reporting standard IAS 34 “Interim Financial Reporting”, for the HY2020 summary half-year financial statements, as these standards were respectively applied on a basis consistent with the past periods;

 

  (ix)

the consolidated net debt of the Company as at November 30, 2020 is equal to EUR 20,727,937 and the Group Companies have sufficient cash to support their standard operations in the ordinary course of business (consistent with past practice) and pay their debts falling due up to December 31, 2021 excluding any fees and costs incurred in relation to the transactions contemplated herein, as well as any sums due for the redemption of the Company OCEANEs (as the case may be);

 

  (x)

over the last three (3) years, no Group Company has received any written material complaint, allegation, assertion or claim regarding the accounting or auditing practices of any Group Company, or its internal controls, including any written material complaint, allegation, assertion or claim that a Group Company has engaged in questionable accounting or auditing practices, except as specifically disclosed in the minutes of the shareholders’ meeting of the Company that are publicly available on the Company’s website;

 

  (xi)

except as specifically disclosed in the 2019 financial annual report that is available on the Company’s website, there are no agreements, arrangements or transactions to which the Company, on the one hand, and officer or director of the Company or any of its shareholders holding more than 5% of the Company’s share capital (or their Affiliates), on the other hand, is a party;

 

  (xii)

except as specifically disclosed in the minutes of the shareholders’ meeting of the Company that are available on the Company’s website, that are no material fact or circumstance (including any suit, action or proceeding pending or, to the Company’s best knowledge, threatened against any Group Company) that, individually or in aggregate is adversely affecting (or reasonably likely to adversely affect) the affairs of the Company’s group as a whole which has not been disclosed publicly and which, if disclosed, might have a noticeable (sensible) influence on the traded market price of the Company Shares;

 

19


  (xiii)

the Company has disclosed to the Purchaser, and provided the Purchaser with access to, any contract entered into by any Group Company that (i) represented a substantial portion of the Company’s revenue for any of the last two (2) years, (ii) relates to intellectual property licensed by the Company that the Company uses in any of its products, (iii) includes a change of control provision capable of being triggered by the transactions contemplated hereby or (iv) restricts the ability of any Group Company to carry on business in any part of the world;

 

  (xiv)

each Group Company has at all times conducted its business in accordance with Applicable Law (including, for the avoidance of doubt, any anti-corruption laws, anti-money laundering laws, or global trade laws or regulations and all laws relating to competition and anti-trust) in all material respects;

 

  (xv)

the Company has made public through the channels prescribed by Applicable Law and regulations all information that has to be made available to the market or holders of the Company Securities under Applicable Law (other than the information relating to the transactions contemplated by this Agreement) and such information complies in all material respects with such Applicable Law; and

 

  (xvi)

on the date hereof, the Company is a foreign private issuer within the meaning of Rule 405 under the Securities Act of 1933, as amended (the “Securities Act”), and U.S. holders (as defined in Rule 800 of the Securities Act) of the Company hold no more than 10% of the Company Shares, as calculated in accordance with Rule 802 under the Securities Act.

 

4.2

Conditional Company Undertakings

 

  4.2.1.

Independent Expert – Company Board Reasoned Opinion

 

  (i)

As soon as possible and in any event within five (5) Trading Days after having completed its social and economic committee consultation in accordance with Article 4.1.1 and received the (x) Expert’s Report that includes a Fairness Opinion (a “Favorable Report”), and (y) draft offer document (projet de note d’information), the Company Board shall issue the Company Board Reasoned Opinion, provided, however, that the Parties may agree a different date for the issuance of the Company Board Reasoned Opinion including in view of aligning it with the date of filing of the Offer and the draft response document relating to the Offer.

 

  (ii)

In the event that the Company is informed by the Independent Expert that it will issue an Expert’s Report which is not a Favorable Report, the Company shall immediately inform the Purchaser thereof (the “Unfavorable Report Notice”), and the Parties shall negotiate in good faith towards making such commercially reasonable amendments to the terms of the Offer as would permit a Favorable Report to be issued, subject to approval of the board of directors of the Purchaser and the Company Board and provided that the Purchaser shall in no case be obligated to increase the Offer Consideration/improve the economic terms of the Offer. If such negotiations are unsuccessful and the Company Board Reasoned Opinion is not issued within fifteen (15) Trading Days as from the Unfavorable Report Notice (excluded), then the Purchaser shall have the right to terminate this Agreement.

 

20


  4.2.2.

Filing of the Company Offer Documents

In accordance with applicable provisions of the AMF General Regulation, the Company will (i) file with the AMF, (a) simultaneously with the filing of the Offer, a draft response document relating to the Offer (projet de note en réponse), and (b) no later than the Trading Day preceding the opening of the Offer, a document presenting the Company’s legal, financial and accounting characteristics (document “autres informations”), and (ii) disseminate draft standardized press releases (communiqués de presse normés) relating to them (such documents, together with any supplements or amendments thereto, being the “Company Offer Documents”). The Company Offer Documents shall include the Fairness Opinion and the Company Board Reasoned Opinion.

The Company undertakes to:

 

  (i)

prepare the Company Offer Documents in compliance with Applicable Law;

 

  (ii)

amend and complete the Company Offer Documents in accordance with such reasonable requests from the AMF as are consistent with usual practice; and

 

  (iii)

prior to (x) filing any Company Offer Document or any amendment thereto with the AMF or (y) responding to any material comments of the AMF on a Company Offer Document, provide the Purchaser with a reasonable opportunity to comment on such Company Offer Document or any amendment thereto or such response to the comments of the AMF and consider in good faith any reasonable comments made by the Purchaser.

 

  4.2.3.

Treasury Shares

The Company undertakes, if required by the Purchaser, to tender and to cause the relevant Group Company to tender into the Offer, all of the Treasury Shares it or such Group Company holds and will come to hold from the date hereof to the closing of the initial Offer acceptance period (or the closing of the re-opened acceptance period).

 

  4.2.4.

Governance Upon Success of the Offer

Upon settlement (règlement-livraison) of the Company Shares tendered into the initial Offer acceptance period, the Purchaser shall be entitled to designate a majority of the directors on the Company Board and the Company shall, at such time, procure the Purchaser’s designees to be so elected or appointed to the Company Board and shall take all actions requested by the Purchaser that are necessary to effect any such election or appointment. In connection with the foregoing, the Company shall (i) promptly obtain the one-by-one resignations of the incumbent directors designated by the Purchaser, and (ii) promptly upon each of such resignations, obtain the cooptation of the Purchaser’s designees.

 

21


The Company will proceed to the payment of the compensation to the chief executive officer, as determined in accordance with Schedule 4.1.3. Upon settlement of the Offer, the Purchaser will vote positively on any resolution complying with applicable laws that will have to be approved by the Company’s shareholders at the next shareholder’s annual general meeting of the Company in order to effect such payment to the chief executive officer.

 

4.3

Break-Up Fee payable by the Company

The Company shall pay to the Purchaser a break fee (the “Break-Up Fee”), in order to compensate the Purchaser for its costs and its management time, if:

 

  (i)

the Company Board either does not, after having received a Favorable Report, make the Company Board Reasoned Opinion on or prior to 60 Trading Days after the date hereof, or, if earlier, within five (5) Trading Days of the delivery of a Favorable Report provided that the consultation process of the social and economic committee of the Company has been completed in accordance with Article 4.1.1, and subject to having received the draft offer document (projet de note d’information) and the valuation report in accordance with Article 3.1.2, or withdraws or modifies the Company Board Reasoned Opinion;

 

  (ii)

an Adverse Recommendation Change occurs;

 

  (iii)

the Offer is withdrawn pursuant to Article 232-11 of the AMF General Regulation, except in the case of withdrawal of the Offer by the Purchaser following the filing of a competing offer provided that the Company Board had continued to support the Offer after the filing of such competing offer and where the Company is not in breach of its non-solicitation obligations under Article 4.1.6 of this Agreement.

The amount of the Break-Up Fee shall be equal to 2% of the maximum Offer Consideration i.e. EUR 2,000,000.

The payment of such Break-Up Fee shall occur within five (5) calendar days of the date on which the event having triggered it shall have occurred (or, if earlier, upon termination of this Agreement).

The Company acknowledges that the agreements contained in this Article 4.3 are an integral part of the Offer and that, without these agreements, the Purchaser would not have entered into this Agreement.

Without limiting the generality of the foregoing, in the event of a breach (or deemed breach) by the Company of Article 4.1.6, the Purchaser may seek any and all other remedies available at law to which the Purchaser is entitled.

 

22


4.4

Information

During the period commencing on the date hereof and continuing until the earlier of the termination of this Agreement and the settlement of the Offer, the Company shall, subject to any restrictions imposed by Applicable Law, (i) afford the Purchaser and its accountants, counsel and other representatives, reasonable access to the Group Companies’ personnel, properties, books, contracts and records, and all other information concerning the business, properties and personnel of the Group Companies as the Purchaser may reasonably request; and (ii) to the extent permitted by Applicable Law, notify the Purchaser of any event or circumstance that has or may reasonably be expected to have a material adverse effect on the business, assets, properties, results of operations or financial condition of the Group Companies, or the ability of the Purchaser and its Affiliates to continue operating the business of the Group Companies after the settlement of the Offer in substantially the same manner as it was operated immediately prior to the date of this Agreement.

 

4.5

Waivers by the Company

Effective on the earlier of the (x) date of the filing of the Offer, (y) the date on which an Adverse Recommendation Change occurs and (z) the date on which a third party files a tender offer for the Company securities with the AMF before the Purchaser has filed the Offer (such earlier date being referred to as the “Waiver Date”), the Company undertakes to:

 

  (i)

abandon any legal action or proceedings in progress against the Purchaser (désistement d’instance et d’action) and in particular its action before the Commercial Court of Paris initiated on 9 September 2020 and registered under the number RG 2020040906 (the “Break-Fee Law Suit”); and

 

  (ii)

definitively and irrevocably waive all assertions, grievances, claims, proceedings, demands and legal actions against the Purchaser, including any of its Affiliates, of any nature whatsoever, related to the tender offer agreement entered into by the parties on 28 February 2020.

Without prejudice to the foregoing, the Parties acknowledge that a hearing in respect of the Break-Fee Law Suit is scheduled on 17 February 2021. If the Waiver Date occurs prior to 17 February 2021, the Company shall file submissions at the hearing scheduled on 17 February 2021 which shall be in accordance with paragraphs (i) and (ii) above. If the Waiver Date does not occur prior to 17 February 2021 and this Agreement is still in force, the Parties shall request a postponement of the hearing to the latest outside date possible and the Company shall file submissions at the earliest available hearing after the Waiver Date which shall be in accordance with paragraphs (i) and (ii) above.

In case of failure by the Company to comply with the provisions set forth in the present Article, the Purchaser may disclose this Agreement to the Commercial Court of Paris to request enforcement.

 

23


5.

COOPERATION BETWEEN THE PARTIES

The Parties undertake to cooperate for the purpose of completing the Offer and the acquisition of the Company by the Purchaser or an Affiliate of the Purchaser described in this Agreement and have agreed, based on the circumstances existing at the date hereof. In particular, the Purchaser and the Company shall cooperate with each other to fulfill all applicable requirements of the AMF and Euronext Paris to respond to comments from any of the foregoing, to make such amendments and supplements to filings as may be required.

For the purposes of completing the Offer, the Parties also undertake to cooperate and promptly inform each other with respect to issuing all notifications, making any requests and obtaining all necessary approvals and authorizations under all laws and regulations of any relevant jurisdictions. Without limiting the foregoing, each of the Purchaser and the Company shall use its reasonable efforts to, (i) obtain, as soon as practicable after the date of this Agreement, all necessary no-action letters, approvals and authorizations from Authorities; and (ii) take all reasonable steps as may be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by, any Authority; provided that the Company shall take any such action pursuant to this Article 5 as may be reasonably requested by the Purchaser, but only so long as such action is not effective until, or is conditioned upon, the purchase of Company Securities in the Offer. In particular, the Company shall assist the Purchaser to obtain the French Foreign Investment Condition and shall to provide at the reasonable request of the Purchaser all information and information required for the preparation of the filings with the French Ministry of Economy and responses to questions raised by the French Ministry of Economy.

Each Party shall promptly notify the other Party (i) if and to the extent it becomes aware that any information supplied by it or included in filings with the AMF in respect of the Offer or shall have become false or misleading in any material respect and (ii) upon the receipt of any comments from the AMF or any request from the AMF for amendments or supplements to filings, in each case, in respect of the Offer.

To the extent permitted by Applicable Law, the Company shall give the Purchaser the opportunity to consult with the Company with respect to any litigation commenced prior to, on or after the signing of this Agreement, against the Company or any of its officers or directors by any holder of Company Securities, Stock Options or Warrants relating to this Agreement, the Offer or otherwise, and shall not settle or offer to settle any such litigation without the prior written consent of the Purchaser (which shall not be unreasonably withheld or delayed).

 

6.

TERMINATION

 

6.1

Automatic Termination

This Agreement shall terminate automatically (de plein droit) on July 31, 2021 or upon the occurrence of any of the following:

 

  (i)

the Offer lapses, is declared non-compliant (non-conforme) by the AMF or is not successful, as a consequence of the failure to satisfy one of the conditions thereto;

 

24


  (ii)

in the event of an Adverse Recommendation Change as contemplated by Article 4.1.6(ii);

 

  (iii)

the Purchaser does not reach and does not waive the threshold of two thirds of the share capital and voting rights of the Company on a fully diluted basis upon publication of the results of the Offer in accordance to Article 231-9, II of the AMF General Regulation (the “Voluntary Minimum Acceptance Threshold”), it being understood that such threshold shall be calculated by dividing (a) the sum of all (x) the Company Shares tendered during the initial Offer acceptance period, (y) the Company Shares issuable upon conversion or exchange of the OCEANEs tendered into the Offer, and (z) the Treasury Shares (numerator), by (b) the sum of the number of all Company Shares in issue upon the closing of the initial Offer acceptance period and the number of all Company Shares issuable upon conversion or exchange of the OCEANEs and Stock Options (but only those Stock Options which are in-the-money) (denominator);

 

  (iv)

an authority of competent jurisdiction enacts, issues, promulgates, enforces or enters any Applicable Law or Order which (i) has the effect of making the sale and purchase of Company Securities pursuant to the Offer, illegal or otherwise prohibiting, restraining or preventing consummation of the sale and purchase of the Company Securities pursuant to the Offer, and (ii) is final, binding and non-appealable; or

 

  (v)

the Offer is withdrawn by the Purchaser pursuant to Article 232-11 of the AMF General Regulation.

 

6.2

Termination at option of Purchaser

This Agreement shall terminate, at the option of the Purchaser, if:

 

  (i)

any of the conditions precedent set forth in Article 2.1 is not satisfied or waived in writing by the Purchaser on or prior to April 30, 2021 (unless the failure to satisfy such conditions precedent was caused by a failure by the Purchaser to perform any obligation hereunder);

 

  (ii)

the Company has not complied with its obligations under Article 4.1.5 (in all material respects) or Article 4.1.6;

 

  (iii)

a third party files a tender offer for the Company before the Purchaser has filed the Offer and it has been declared compliant by the AMF (irrespective of whether any challenge is or may be made to such compliance decision);

 

  (iv)

the Company Board fails to issue by the date provided therefor in Article 4.2.1 its Company Board Reasoned Opinion and/or in the event of an Adverse Recommendation Change;

 

  (v)

the Company has implemented measures to modify its substance, within the meaning of Article 232-11 of the AMF General Regulation;

 

25


  (vi)

the representations and warranties under Article 4.1.7 are not accurate in all material respects as of the date hereof or the date of filing of the Offer; or

 

  (vii)

the Purchaser pays the Reverse Break-Up Fee.

 

6.3

Termination at option of the Company

This Agreement shall terminate, at the option of the Company if:

 

   

the Purchaser fails, other than because of a failure of the Company to provide information requested in good faith by the Purchaser, to file the Offer within twenty (20) Trading Days following the date of the satisfaction or the waiver by the Purchaser in writing of the conditions precedent set forth in Article 2.1 ; or

 

   

the representations and warranties under Article 3.2.3 are not accurate in all material respects as of the date hereof or the date of filing of the Offer, except for any breach of such representations and warranties which would not reasonably be expected to result in a Purchaser Material Adverse Effect.

 

6.4

Effect of Termination

Any termination of this Agreement (including any termination of this Agreement in accordance with either of Articles 6.1, 6.2 and 6.3) shall be without prejudice to the provisions of the Confidentiality Agreement and the provisions of Articles 3.2.2 or 4.3 (to the extent that a Reverse Break-Up Fee Trigger Event or an event triggering the payment of a Break-Up Fee has occurred on the same day as, or before, such termination), 6, 8 and 9 of the Agreement, which shall remain in force in accordance with their terms.

 

7.

COMMUNICATION

 

7.1

Press Releases

The Parties hereby agree that, promptly following execution of this Agreement, they will publish separate press releases, substantially in the form attached hereto as Annex 3.

 

7.2

Joint Analysts and Media Presentation; Road Shows

At the request of the Purchaser or of the Company, executives from the Company or from the Purchaser will make reasonable efforts to participate in media presentations and road shows sponsored by the other Party to explain the Offer and its rationale.

 

7.3

Other Communications

Except as may otherwise be required by Applicable Law or expressly provided for in this Agreement, the Parties hereby agree that they will, to the extent reasonably possible, consult with each other before making, and give each other a reasonable opportunity to review and comment upon, any press release or other public statements with respect to this Agreement or the Offer.

 

26


8.

NOTICES

All notices or communications made pursuant to this Agreement must be addressed by registered letter or overnight courier, return receipt requested, and shall be deemed effective upon receipt, unless they are preceded by email transmission, in which case they shall be deemed effective upon acknowledgment by the recipient of such email transmission. Said notices shall be sent to each Party address referred to above, and, as the case may be, to the following individuals and their corresponding email addresses, unless notified otherwise as indicated above:

 

   

To the Purchaser:

Alphatec Holdings, Inc.

5818 El Camino Real

Carlsbad, California 92008

United States of America

Phone: (760) 431-9286

Email: pmiles@atecspine.com

Attention: Patrick S. Miles

with a copy to (which shall not constitute notice to the Purchaser):

Latham & Watkins LLP

45 rue Saint-Dominique

75007 Paris, France

Phone: +33.1.40.62.20.79

Email: alexander.crosthwaite@lw.com

Attention: Alexander Crosthwaite

 

   

To the Company:

EOS Imaging S.A.

10 rue Mercoeur 75011 Paris, France

Phone: +1 651 271 6200 / +33.1.55.25.61.24

Email: mlobinsky@eos-imaging.com / vworrall@eos-imaging.com

Attention: Mike Lobinsky / Valérie Worrall

with a copy to (which shall not constitute notice to the Company):

Gide Loyrette Nouel

15 rue de Laborde

75008 Paris, France

Phone: 33.1.40.75.29.47 / +33.1.40.75.22.28

Email: anne.tolila@gide.com / charles.dereals@gide.com

Attention: Maître Anne Tolila / Maître Charles de Reals

 

27


9.

MISCELLANEOUS

 

9.1

Variation

No variation of this Agreement shall be effective unless in writing and executed by or on behalf of each of the Parties.

 

9.2

Fees and Expenses

Without prejudice to the payment of the Break-Up Fee and the Reverse Break-Up Fee (if due), all costs and expenses incurred in connection with this Agreement and the consummation of the transactions contemplated herein shall be paid by the Party incurring such expenses.

 

9.3

Entire Agreement; No Third Party Beneficiaries

This Agreement and the Annexes hereto (and any other agreements entered into on or subsequent to the date hereof) constitute the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the Parties with respect to the subject matter hereof, except as regards the Confidentiality Agreement. This Agreement is not intended to, and does not confer upon any Person other than the Parties hereto any rights or remedies hereunder.

 

9.4

Binding Effect; Assignment

This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors, heirs, permitted assigns and legal representatives. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the Parties hereto (whether by operation of law or otherwise) without the prior written consent of the other Party. Notwithstanding the foregoing, the Purchaser shall have the right to have one of its Affiliates succeed to and be substituted for all or part of its rights and obligations under this Agreement and become the Purchaser under this Agreement provided that the Purchaser guarantees and remains jointly liable for the substituted Affiliate’s performance of any and all obligations of the Purchaser under this Agreement.

 

9.5

Severability

If any provision of this Agreement is held to be invalid or unenforceable for any reason, such provision shall be ineffective to the extent of such invalidity or unenforceability; provided, however, that the remaining provisions shall continue in full force without being impaired or invalidated in any way. The Parties agree to replace any invalid or unenforceable provision with a valid provision which most closely approximates the intent and economic effect of the invalid or unenforceable provision.

 

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9.6

Specific Performance

The Parties hereto agree that irreparable damages would occur in the event that any provision of this Agreement was not performed in accordance with the terms hereof and that the Parties shall be entitled to specific performance (exécution forcée) of the terms hereof in accordance with Articles 1221 and 1222 of the French Civil Code, without prejudice to the other remedies provided for in Article 1217 of the French Civil Code.

 

9.7

Further Assurances

Without affecting in any way the terms of this Agreement, the Purchaser and the Company shall promptly execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, any other assurances or documents reasonably requested by the Purchaser and/or the Company, as the case may be, and necessary for the Purchaser and/or the Company, as the case may be, to give effect to this Agreement.

 

9.8

Governing Law and Jurisdiction

This Agreement shall be exclusively governed by and construed in accordance with the substantive laws of France, without regard to the principles of conflicts of laws thereof.

Any dispute, controversy or claim arising out of or relating to this Agreement or the breach, termination or validity thereof shall be submitted to the exclusive jurisdiction of the Tribunal de Commerce de Paris.

 

29


Alphatec Holdings, Inc.
By:  

/s/ Patrick S. Miles

Name: Patrick S. Miles
Title: Chairman and Chief Executive Officer
EOS Imaging S.A.
By:  

/s/ Mike Lobinsky

Name: Mike Lobinsky
Title: Directeur général

 

30


LIST OF ANNEXES

Annex 1: Key terms and conditions of the Offer

Annex 2: Details of Outstanding Stock Options, Free Shares and Warrants

Annex 3: Draft press releases to be published upon execution of the Agreement

 

31


ANNEX 1

KEY TERMS AND CONDITIONS OF THE OFFER

 

Identity of Purchaser:    Alphatec Holdings, Inc. or any other entity directly or indirectly Alphatec Holdings, Inc.
Nature of the Offer:    A public tender offer in consideration for cash (offre publique d’achat)
Offer Conditions:   

•  Minimum Tender Condition:

   The Purchaser will not be required to consummate the Offer if the Voluntary Minimum Acceptance Threshold is not reached.
Competing Offer; Material Change to Company’s Substance:    In accordance with Article 232-11 of the AMF General Regulation, Purchaser may withdraw its Offer (i) within five Trading Days following the publication by the AMF of the offer timetable of a competing offer; or (ii) with prior authorization from the AMF, if the Offer becomes without purpose (devient sans objet) or if the Company adopts measures which result in a modification of its substance during the Offer or in the event of a positive outcome for the Offer.
Offer Consideration Adjustment:    If the Company completes any direct or indirect acquisition of treasury shares between the date of the filing of the Offer and the settlement date of the Offer, or decides to carry out a distribution of dividends or interim dividends, share premia or reserves, or reimbursement or amortization of all or part of its share capital, and such payment, reimbursement or amortization occurs before the settlement of the Offer or has a reference date that is prior to the date of the settlement of the Offer (a “Distribution”), the Offer Consideration shall be reduced by the net amount per share of the Distribution or Distributions.
Stock Options; Free Shares    As per Annex 2
Warrants (BSA)    Warrants will be excluded from the Offer.
Mandatory Squeeze Out:    The Purchaser has the intention to implement a mandatory squeeze-out for the Company Shares and/or the Company OCEANEs if the conditions set out in Articles 237-1 et seq. of the AMF General Regulation are met at closing of the Offer.

 

32

EX-2.2

Exhibit 2.2

 

 

 

TENDER COMMITMENT

BY AND BETWEEN

ALPHATEC HOLDINGS, INC.

AND

🌑 ]

DATED AS OF DECEMBER 16, 2020

 

 

 


This TENDER COMMITMENT (this “Agreement”) is entered into as of December 16, 2020, by and between Alphatec Holdings, Inc., a corporation organized and existing under the laws of Delaware, represented by Patrick S. Miles, duly empowered for the purpose hereof (“Bidder”), and [  ] (“Shareholder”). Bidder and Shareholder are each sometimes referred to individually as a “Party” and collectively as the “Parties”.

RECITALS

WHEREAS, Shareholder is a shareholder of EOS Imaging S.A., a société anonyme organized and existing under the laws of France, with a share capital of EUR 266,569.46 divided into 26,656,946 ordinary shares with a nominal value of EUR 0.01 each, whose registered office is at 10, rue Mercoeur, 75011 Paris, France, and registered with Paris Trade and Companies Register under No. 349 694 893 (the ”Company”);

WHEREAS, the ordinary shares of the Company are currently admitted to trading on the regulated market Euronext Paris under the ISIN code FR0011191766 (the “Company Shares”);

WHEREAS, on the date hereof, Bidder and the Company intend to enter into a tender offer agreement (the “Tender Offer Agreement”) pursuant to which Bidder undertakes, subject to the satisfaction of the conditions and on the terms set forth therein, to file with the Autorité des marchés financiers (the “AMF”) a public tender offer (offre publique d’achat) (together with any subsequent offer by Bidder, the “Offer”) to acquire in cash (i) all the Company Shares and (ii) all the Company OCEANE;

WHEREAS, Shareholder currently holds, [ ● ] Company Shares representing [approximately] [ ● ]% of the share capital [and voting rights] of the Company[, and was awarded, on January 30, 2019 a total of 250,000 stock options, which, once vested, would entitle Shareholder to subscribe for 250,000 new Company Shares at a price of EUR 2.68 per Company Share (the “Stock Options”)]1;

WHEREAS, Shareholder does not currently hold any Company OCEANE;

WHEREAS, Shareholder is fully supportive of the Offer, believes that it will create value for the Company and serve the best interests of the Company and its stakeholders, and wishes to support the Offer and tender all of its Company Shares in the Offer, on the terms and subject to the conditions set forth herein;

NOW, THEREFORE, in consideration of the foregoing, the Parties agree as follows:

 

1 

Note to Form: Bracketed language will be tailored (or omitted) from this form depending on the particular Shareholder.

 

1


ARTICLE I

DEFINITIONS

1.1 Certain Defined Terms. Unless otherwise expressly provided in this Agreement, capitalized terms used in this Agreement shall have the following meanings:

Additional Tendered OCEANE” shall have the meaning set forth in Section 2.1;

Additional Tendered Securities” shall mean the Additional Tendered Shares and the Additional Tendered OCEANE;

Additional Tendered Shares” shall have the meaning set forth in Section 2.1;

Affiliate” shall mean, with reference to a specified Person, a Person that, directly or indirectly, controls, is controlled by, or is under common control with, the specified Person. The term “control” as used in this definition (including its correlative meanings “controlled by” and “under common control with”) shall have the meaning ascribed thereto in Article L. 233-3 of the French Commercial Code;

Agreement” shall have the meaning set forth in the first paragraph of this Agreement;

AMF” shall have the meaning set forth in the Recitals of this Agreement;

AMF General Regulation” shall mean the General Regulation (Réglement général) of the AMF;

Authority shall mean any competent government, governmental, administrative, supervisory, regulatory, judicial, disciplinary, enforcement or tax raising body, authority, agency, commission, board, organization, court or tribunal of any jurisdiction, whether international (including any public international organization), supranational, European Union, national, federal, state or regional or local and any subdivision, department or branch of any of the foregoing;

Bidder” shall have the meaning set forth in the first paragraph of this Agreement;

[“Chinese Regulatory Authorities” means the National Development and Reform Commission, Ministry of Commerce, State Administration of Foreign Exchange in China and their respective local branches in Shanghai Municipality;]2

[“Chinese Regulatory Clearance” shall mean approval, permit or consent of, or filing with, the competent Chinese Regulatory Authorities of this Agreement and the transaction contemplated hereunder;]3

 

2 

Note to Form: Bracketed text will be included (or omitted) from this form depending on the particular Shareholder.

3 

Note to Form: Bracketed text will be included (or omitted) from this form depending on the particular Shareholder.

 

2


Committed Shareholders means [ ● ] and Shareholder and any other holders of Company Securities who enter into a tender commitment agreement with Bidder in respect of the Offer on the date hereof or at any time prior to the filing of the Offer;

Company” shall have the meaning set forth in the Recitals to this Agreement;

Company OCEANEs” shall mean the 4,344,651 bonds issued by the Company on May 31, 2018 at a nominal value per bond of EUR 6.80, for an aggregate principal amount of EUR 29,543,626.80, which (x) bear interest at an annual rate of 6%, (y) will be due on May 31, 2023 and (z) are convertible into new Company Shares or exchangeable for existing Company Shares;

Company Securities” shall mean the Company Shares and the Company OCEANEs;

Company Shares” shall have the meaning set forth in the Recitals to this Agreement;

Encumbrances” shall mean any security interests, liens, pledges, claims, options, charges, proxies, voting trusts or agreements, understandings or arrangement, rights of first refusal, co-sale rights, or any other encumbrances of any kind or nature;

Offer” shall have the meaning set forth in the Recitals to this Agreement;

Offer Price” shall mean the price to be paid by Bidder to holders of Company Securities tendering into the Offer, which price shall be equal to:

 

  (i)

EUR 2.45 for each Company Share tendered;

 

  (ii)

EUR 7.01 for each Company OCEANE tendered with coupon due May 31, 2021 attached and EUR 6.81 for each Company OCEANE tendered with coupon due May 31, 2021 detached.

Order” shall mean any judgment, injunction, order, award, ruling, writ, decree or other restriction of any Authority having competent jurisdiction;

Party” shall have the meaning set forth in the first paragraph of this Agreement;

Person” shall mean an individual, a corporation, a partnership, a limited liability company or partnership, a trust, an unincorporated organization, a government or any department or agency thereof, or any other juridical entity;

Shareholder” shall have the meaning set forth in the first paragraph of this Agreement;

 

3


[”Stock Options” shall have the meaning set forth in the Recitals to this Agreement;]4

Takeover Proposal” shall mean any inquiry, proposal or offer from any Person (other than Bidder) relating to, or that could reasonably be expected to lead to any direct or indirect acquisition, in one transaction or a series of transactions, including, any merger, consolidation, tender offer, exchange offer, stock acquisition, asset acquisition, binding share exchange, business combination, recapitalization, liquidation, dissolution, joint venture or similar transaction, of (A) assets or businesses that constitute or represent 15% or more of the total revenue, operating income, EBITDA or assets of the Company and its Affiliates, taken as a whole, for the fiscal year ended December 31, 2019, or (B) 15% or more of the outstanding shares of any class of capital stock of, or other equity or voting interests in, the Company or any class of capital stock of, or other equity or voting interests in, any of the Company’s Affiliates directly or indirectly holding, individually or taken together, the assets or businesses referred to in (A) above, in each case other than the Offer;

Tender Offer Agreement” shall have the meaning set forth in the Recitals of this Agreement;

Tendered Shares” shall mean (i) the [ ● ] Company Shares which Shareholder holds on the date hereof and (ii) any other Company Shares attributable to or derived from such Company Shares;

Third Party” shall mean a Person who is not an Affiliate of Bidder;

Third Party Offer” shall have the meaning set forth in Section 2.3; and

Transfer” shall mean, with respect to any Company Securities, (i) when used as a verb, to sell, hypothecate, give, bequeath, transfer, exchange, assign, pledge or in any other way whatsoever encumber or dispose of such Company Securities or any participation or interest therein (including by way of securities lending, equity swap or other derivative transactions), whether directly or indirectly (including by way of the Transfer of such Company Securities to any subsidiary of any Person that is subsequently transferred in whole or in part to any other Person), or to enter into any contract, option, or other arrangement, commitment or understanding to do any of the foregoing actions, and (ii) when used as a noun, any indirect or direct sale, hypothecation, gift, bequest, transfer, exchange, assignment, pledge or any other encumbrance or disposal whatsoever of such Company Securities or any participation or interest therein or any contract, option, or other arrangement, commitment or understanding to effect any of the foregoing.

1.2 Construction. For the purposes of this Agreement: (i) words (including capitalized terms defined herein) in the singular shall be held to include the plural and vice versa as the context requires; (ii) the terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise expressly stated, be construed to refer to this Agreement as a whole (including any Annex hereto) and not

 

4 

Note to Form: Bracketed language will be included (or omitted) from this form depending on the particular Shareholder.

 

4


to any particular provision of this Agreement, and Article, Section, and Annex references are to the Articles, Sections and Annexes of or to this Agreement unless otherwise expressly specified; (iii) the word “including” and words of similar import when used in this Agreement shall mean “including without limitation” unless otherwise expressly specified; (iv) the word “or” shall not be exclusive; and (v) all references to any period of days shall be deemed to be to the relevant number of calendar days unless otherwise expressly specified.

ARTICLE II

COMMITMENT TO TENDER

2.1 Additional Tendered Shares. To the extent Shareholder comes to hold Company Shares other than the Tendered Shares (“Additional Tendered Shares”)[, including (but not limited to) any Company Shares that Shareholder may come to hold as a result of his exercising the Stock Options,]5 or Company OCEANE (“Additional Tendered OCEANE”) at any time between the date hereof and the closing date (date de clôture) of the Offer (including the closing date of the reopened Offer if applicable), it shall within two (2) trading days of acquiring such Additional Tendered Securities, notify Bidder of such acquisition. [Shareholder undertakes not to exercise any Stock Options after the Closing Date of the Offer, except if the AMF does not declare the Offer successful.]6

2.2 Agreement to Tender. Subject to and in consideration of Bidder making the Offer at the Offer Price, Shareholder hereby undertakes, subject to the provisions of Section 2.3 below, that:

(a) being the beneficial and registered holder of the Tendered Shares and having all power and authority to, and, until the Tendered Shares are transferred to Bidder, continuing to have all relevant power and authority to, accept the Offer in respect of the Tendered Shares, it shall, within five (5) trading days of the opening of the Offer (ouverture de loffre), tender all of the Tendered Shares into the Offer by giving irrevocable instructions to the institution holding its securities account to tender the Tendered Shares into the Offer immediately, and shall complete, execute and deliver all other documents and take any other action which Bidder may reasonably require to complete the transfer of the Tendered Shares to Bidder (which tender into the Offer shall be promptly confirmed in writing to Bidder);

(b) to the extent it comes to hold Additional Tendered Shares at any time between the date hereof and the closing date (date de clôture) of the Offer (including the closing date of the reopened Offer if applicable), it shall, within five (5) trading days of the later of (x) the opening of the Offer and (y) the acquisition of such Additional Tendered Shares, and in any event prior to the closing of the Offer, tender all of the Additional Tendered Shares into the Offer by giving irrevocable instructions to the institution holding its securities account to tender the Additional Tendered Shares into the Offer, and shall complete, execute and deliver all other documents and take any other action which Bidder may reasonably require to complete the transfer of the Additional Tendered Shares to Bidder (which tender into the Offer shall be promptly confirmed in writing to Bidder);

 

5 

Note to Form: Bracketed language will be tailored (or omitted) from this form depending on the particular Shareholder.

6 

Note to Form: Bracketed language will be tailored (or omitted) from this form depending on the particular Shareholder.

 

5


(c) to the extent it comes to hold Additional Tendered OCEANE at any time between the date hereof and the closing date of the Offer (including the closing date of the reopened Offer if applicable), it shall, within five (5) trading days of the later of (x) the opening of the Offer and (y) the acquisition of such Additional Tendered OCEANE, and in any event prior to the closing of the Offer, tender all of the Additional Tendered OCEANE into the Offer for Company OCEANE by giving irrevocable instructions to the institution holding its securities account to tender the Additional Tendered OCEANE into the Offer for the Company OCEANE immediately, and shall promptly complete, execute and deliver all other documents and take any other action which Bidder may reasonably require to complete the transfer of the Additional Tendered OCEANE to Bidder (which tender into the Offer for the Company OCEANE shall be promptly confirmed in writing to Bidder);

(d) it shall not, prior to the closing or lapsing of the Offer or the withdrawal of the Offer (whichever is the earlier), cause or permit any Transfer (save to Bidder or any of its Affiliates), or in any way whatsoever discuss, negotiate or make any offer regarding any Transfer of any of the Tendered Shares or Additional Tendered Securities, or accept any offer in respect of, all or any of the Tendered Shares or Additional Tendered Securities or enter into any agreement or arrangement with any other person, whether conditionally or unconditionally, to do all or any of the acts referred to in this paragraph;

(e) the Tendered Shares and, as the case may be, the Additional Tendered Securities shall be acquired pursuant to the Offer free from all Encumbrances and together with all rights attached thereto including all rights to dividends or other distributions hereafter declared, paid or made; and without limiting the foregoing Shareholder shall not deposit, or permit the deposit of, any Tendered Shares or Additional Tendered Securities in a voting trust, grant any proxy or power of attorney in respect of the Tendered Shares, or enter into any voting agreement or similar arrangement or commitment with respect to any of the Tendered Shares or Additional Tendered Securities; and

(f) it shall not (in its capacity as a shareholder of the Company or otherwise), prior to the closing or lapsing of the Offer or the withdrawal of the Offer (whichever is the earlier), whether directly or indirectly, alone or in concert with any third party, (i) take any step to frustrate, impede, prevent or delay the Offer becoming successful, or (ii) solicit, encourage, enter into, continue, or otherwise participate in any way whatsoever in any discussions or negotiations regarding a Takeover Proposal; and it shall immediately inform Bidder of any approach by a third party which may reasonably lead to a Takeover Proposal.

2.3 Third Party Offer. The undertakings of Shareholder pursuant to Section 2.2 above shall be void in the event that, other than as a result of a breach of Section 2.2(f) above, a Third Party files a competing public offer at a price higher than the Offer (offre concurrente), and such competing offer (the “Third Party Offer”) is declared compliant (conforme) by the AMF; provided, however, that all of

 

6


the undertakings of Shareholder under Section 2.2 above will immediately apply with full force, mutatis mutandis, in the event that Bidder or any Affiliate of Bidder makes an offer (surenchère) at a price higher by at least 2% or representing a significant improvement (amélioration significative) compared to the Third Party Offer and such offer of Bidder or any Affiliate of Bidder is declared compliant (conforme) by the AMF, in which case Shareholder shall comply with Section 2.2, and tender the Tendered Shares and any Additional Tendered Securities to such offer by Bidder or the applicable Affiliate of Bidder, as if the undertakings of Shareholder had never been void.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER

Shareholder represents and warrants to Bidder as of the date hereof and as of the initial date of settlement of the Offer, as follows:

3.1 Organization. 7 Shareholder [Version #1: is a [ 🌑 ] duly organized and validly existing under the laws of [ 🌑 ]][Version #2: has full legal capacity and is not subject to any restriction of rights].

3.2 Authorization. Shareholder has all necessary power and authority to make and execute this Agreement and to perform its obligations under this Agreement. Shareholder has full authority to execute and deliver this Agreement and to consummate the transactions contemplated herein.

3.3 Binding Agreement. This Agreement has been duly executed and delivered by Shareholder and, assuming due and valid authorization, execution and delivery thereof by Bidder, this Agreement is a valid and binding obligation of Shareholder enforceable against Shareholder in accordance with its terms, except as limited by applicable bankruptcy, insolvency and other similar laws of general application affecting enforcement of creditors’ rights generally.

3.4 Consents and Approvals; No Violations. None of the execution, delivery or performance of this Agreement by Shareholder, the consummation by Shareholder of the transactions contemplated herein or compliance by Shareholder with any of the provisions hereof will (i) require any filing with, or permit, authorization, consent or approval of any Authority or other Person [(other than the Chinese Regulatory Clearance)]8; (ii) require any consent, approval or notice under, or result in a violation or breach of, or constitute (with or without due notice or the passage of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration) under, any of the terms, conditions or provisions of any agreement to which Shareholder is a party; (iii) violate any law or regulation applicable to Shareholder or the Company or any of their respective properties or assets; or (iv) create any Encumbrance upon any of the Tendered Shares.

 

7 

Note to Form: Section 3.1 will be tailored from this form depending on the particular Shareholder.

8 

Note to Form: Bracketed language will be included (or omitted) from this form depending on the particular Shareholder.

 

7


3.5 Ownership of Tendered Shares. Shareholder is the sole record and beneficial owner of and has full title (pleine propriété) to the Tendered Shares, with the full legal right, authority and power to sell and transfer any such Tendered Shares to Bidder in accordance with the terms of this Agreement. All of the Tendered Shares are duly and validly authorized, issued, fully paid for and non-assessable and were acquired by Shareholder in accordance with applicable laws and regulations. The Tendered Shares are, and at all times up to the settlement and delivery of the Offer, the Tendered Shares will be, owned by Shareholder, free and clear of any rights of Encumbrances. Shareholder has, and at all times up to the settlement and delivery of the Offer, will have, the full power to vote or direct the voting of the Tendered Shares. Shareholder does not own on the date hereof any Additional Tendered Securities or other securities or rights [(other than the Stock Options)]9 of any nature convertible into, or exchangeable or exercisable for, shares of capital stock of the Company. Shareholder is not a party to, and the Tendered Shares are not subject to or bound in any manner by, any contract or agreement of any nature relating to the Tendered Shares, including any voting agreement, option agreement, purchase agreement, shareholders’ agreement, partnership agreement, voting trust or power of attorney.

3.6 Litigation. There is no suit, action, proceeding or arbitration pending against or threatened against or affecting Shareholder or any of his Affiliates by any third Person nor is there any Order outstanding against Shareholder or any of his Affiliates that (i) relates in any way to Shareholder’s ownership of the Tendered Shares, (ii) seeks to restrain or enjoin the consummation of any of the transactions contemplated by this Agreement or (iii) could reasonably be expected to negatively impair the ability of Shareholder to consummate any of the transactions contemplated by this Agreement.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BIDDER

Bidder represents and warrants to Shareholder as of the date hereof and as of the initial date of settlement of the Offer, as follows:

4.1 Organization. Bidder is a corporation duly organized and validly existing under the laws of the State of Delaware.

4.2 Authorization. Bidder has all necessary corporate power and authority to make and execute this Agreement, to perform its obligations under this Agreement and to consummate the transactions contemplated herein. Bidder’s authorized signatory has full authority to execute and deliver this Agreement.

4.3 Binding Agreement. This Agreement has been duly executed and delivered by Bidder and, assuming due and valid authorization, execution and delivery thereof by Shareholder, this Agreement is a valid and binding obligation of Bidder enforceable against Bidder in accordance with its terms, except as limited by applicable bankruptcy, insolvency and other similar laws of general application affecting enforcement of creditors’ rights generally.

 

9 

Note to Form: Bracketed language will be included (or omitted) from this form depending on the particular Shareholder.

 

8


ARTICLE V

CERTAIN COVENANTS

5.1 Resignation of Shareholder from the Board of Directors of the Company.10 [Version #1: Promptly after the initial settlement and delivery of the Offer (but not earlier, unless agreed by Bidder), and in any event immediately upon receipt of a notification from Bidder to this effect after the initial settlement and delivery of the Offer, Shareholder shall cause Antoine Vidal to resign from his position as member of the Board of Directors of the Company and, if requested, cause Antoine Vidal to vote for the cooptation of the replacements indicated by Bidder.]

[Version #2: If requested by the Bidder after the initial settlement and delivery of the Offer, Shareholder shall resign from his/her position as member of the Board of Directors of the Company and, if requested, vote for the cooptation of the replacements indicated by Bidder.]

5.2 Most Favored Committed Shareholder. In the event that the tender commitment agreement entered with a Committed Shareholder other than Shareholder provides for a higher Offer Price, then Bidder shall promptly notify Shareholder and allow Shareholder to benefit from the same Offer Price.

5.3 Committed Shareholders. Promptly following the conclusion of a tender commitment agreement in respect of the Offer by a Committed Shareholder whose name is not explicitly listed in the definition of “Committed Shareholder”, Bidder shall communicate the identity of such Committed Shareholder to Shareholder.

5.4 [Pure Nominative Form. For so long as this Agreement is in force, Shareholder undertakes to hold the Tendered Shares and, applicable, Additional Tendered Shares, in pure nominative form (au nominatif pur) except for any inscription to indirect nominative (au nominatif administré) or bearer form (au porteur) that is required for purposes of tendering the Tendered Shares into the Offer in accordance with ARTICLE II.]11

[5.5 Chinese Regulatory Clearance. Shareholder shall be responsible to register and/or file this Agreement and the transaction contemplated hereunder with any of the relevant Chinese Regulatory Authorities as so required by the applicable laws and regulations, and obtain the Chinese Regulatory Clearance in a timely manner. The Bidder shall use its best efforts to cooperate with Shareholder in all respects and promptly supply documents and information as reasonably required by the Shareholder in applying and obtaining Chinese Regulatory Clearance.]12

ARTICLE VI

MISCELLANEOUS

6.1 Termination. Either Party shall be entitled to terminate this Agreement if (i) the Company and Bidder announce that they have terminated the Tender Offer Agreement, (ii) the Offer is withdrawn by Bidder pursuant to Article 232-11 of the AMF General Regulation or (iii) the Offer is not declared successful by the AMF as a result of the conditions thereto failing to be met or waived. Any termination of this Agreement shall be without prejudice to the provisions of Section 2.3 and this ARTICLE VI which shall remain in force in accordance with their terms.

 

10 

Note to Form: Section 5.1 will be tailored (or omitted) from this form depending on the particular Shareholder.

11 

Note to Form: Section 5.4 will be included (or omitted) from this form depending on the particular Shareholder.

12 

Note to Form: Section 5.5 will be included (or omitted) from this form depending on the particular Shareholder.

 

9


6.2 Fees and Expenses; Taxes. All costs, expenses and taxes incurred in connection with this Agreement and the consummation of the transactions contemplated herein shall be paid by the Party incurring such costs, expenses or taxes.

6.3 Consent to References. Shareholder agrees that Bidder and the Company shall be entitled to include in filings under the AMF General Regulation and any other rules and regulations of any competent Authorities (including US securities laws), information to the effect that Shareholder has agreed to tender the Tendered Shares and, as the case may be, Additional Tendered Securities, to Bidder and this Agreement.

6.4 Notices. All notices or communications made pursuant to this Agreement must be addressed by registered letter or overnight courier, return receipt requested, and shall be deemed effective upon receipt, unless they are preceded by email transmission, in which case they shall be deemed effective upon acknowledgment by the recipient of such email transmission. Said notices shall be sent to each Party address referred to above, and, as the case may be, to the following individuals and their corresponding email addresses, unless notified otherwise as indicated above:

 

  (i)

if to Bidder, to:

Alphatec Holdings, Inc.

5818 El Camino Real

Carlsbad, California 92008

Phone: (760) 431-9286

Email: pmiles@atecspine.com

Attention: Patrick S. Miles

With a copy to (which shall not constitute notice to Bidder):

Latham & Watkins LLP

45 rue Saint-Dominique

75007 Paris, France

Phone: +33.1.40.62.20.79

Email: alexander.crosthwaite@lw.com

Attention: Alexander Crosthwaite

 

  (ii)

if to Shareholder, to:

[  ]

[Address]

Phone: [ ● ]

Email: [ ● ]

Attention: [ ● ]

 

10


6.5 No Third Party Beneficiaries. This Agreement is not intended to, and does not, confer upon any Person other than the Parties hereto any rights or remedies hereunder.

6.6 Specific Performance. The Parties hereto agree that irreparable damages would occur in the event that any provision of this Agreement was not performed in accordance with the terms hereof and that the Parties shall be entitled to specific performance (exécution forcée) of the terms hereof in accordance with Articles 1221 and 1222 of the French Civil Code, without prejudice to the other remedies provided for in Article 1217 of the French Civil Code.

6.7 Binding Effect; Assignment. This Agreement is entered into intuitu personae; and accordingly neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the Parties hereto (whether by operation of law or otherwise) without the prior written consent of the other Party. Notwithstanding the foregoing, Bidder shall have the right to have one of its Affiliates succeed to and be substituted for all or part of its rights and obligations under this Agreement and become the “Bidder” under this Agreement, including any Affiliate that files a tender offer for the Company at a price at least equal to the Offer Price. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors, heirs, permitted assigns and legal representatives.

6.8 Compliance. Each Party represents that, to its knowledge, it has conducted its business in all material respects in accordance with applicable anti-corruption and trade sanction laws and regulations.

6.9 Governing Law. This Agreement shall be exclusively governed by and construed in accordance with the substantive laws of France, without regard to the principles of conflicts of laws thereof.

6.10 Jurisdiction. Any dispute, controversy or claim arising out of or relating to this Agreement or the breach, termination or validity thereof shall be submitted to the exclusive jurisdiction of the Paris Commercial Court.

 

11


IN WITNESS WHEREOF this Agreement has been duly executed by each of the Parties hereto as of the date first written above.

 

Alphatec Holdings, Inc.
By:  

                          

Name:   Patrick S. Miles
Title:   Chairman and Chief Executive Officer


[ ● ]  
By:  

                          

Name:
Title:
EX-4.1

Exhibit 4.1

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this “Agreement”) is made and entered into as of December 16, 2020, between Alphatec Holdings, Inc., a Delaware corporation (the “Company”), and each of the several purchasers signatory hereto (each such purchaser, a “Purchaser” and, collectively, the “Purchasers”).

This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date hereof, between the Company and each Purchaser (the “Purchase Agreement”).

The Company and each Purchaser hereby agrees as follows:

1. Definitions.

Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:

Advice” shall have the meaning set forth in Section 8(c).

Agreement” shall have the meaning set forth in the preamble.

Allowed Delay” shall have the meaning set forth in Section 4(m)

Commission” means the United States Securities and Exchange Commission.

Company” shall have the meaning set forth in the preamble.

Common Stock” means the common stock of the Company, par value $0.0001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

Debt Exchange Agreement” means that certain Debt Exchange Agreement, dated as of the date hereof, between the Company and the Lead Purchaser.

Effectiveness Date” means, with respect to the Initial Registration Statement required to be filed hereunder, the 30th calendar day following the Filing Date (or, in the event of a “full review” by the Commission, the 60h calendar day following the Filing Date and with respect to any additional Registration Statements which may be required pursuant to Section 2(c) or Section 4(c), the 75th calendar day following the date on which an additional Registration Statement is required to be filed hereunder (or, in the event of a “full review” by the Commission, the 110th calendar day following the date such additional Registration


Statement is required to be filed hereunder); provided, however, that in the event the Company is notified by the Commission that one or more of the above Registration Statements will not be reviewed or is no longer subject to further review and comment, the Effectiveness Date as to such Registration Statement shall be the second (2nd) Trading Day following the date on which the Company is so notified if such date precedes the dates otherwise required above, provided, further, if such Effectiveness Date falls on a day that is not a Trading Day, then the Effectiveness Date shall be the next succeeding Trading Day.

Effectiveness Period” shall have the meaning set forth in Section 2(a).

Event” shall have the meaning set forth in Section 2(d).

Event Date” shall have the meaning set forth in Section 2(d).

Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

Filing Date” means, with respect to the Initial Registration Statement required hereunder, the 30th calendar day following the following the Closing Date and, with respect to any additional Registration Statements which may be required pursuant to Section 2(c) or Section 4(c), the earliest practical date on which the Company is permitted by SEC Guidance to file such additional Registration Statement related to the Registrable Securities; provided, however, that if the Filing Date falls on a day that is not a Trading Day, then the Filing Date shall be extended to the next succeeding Trading Day, provided further, that if the Company determines that the acquisition of EOS pursuant to the Tender Offer Agreement constitutes a “significant acquisition” under Rule 3-05 of Regulation S-X, then “Filing Date” means the date on which the Company has filed with the Commission historical financial statements of EOS and pro forma financial statements related to the acquisition of EOS pursuant to the Tender Offer Agreement that comply in all material respects with Rule 3-05 and Article 11 of Regulation S-X and Item 9.01 of Form 8-K, if the rules and regulations of the Commission would require the filing of such financial statements with the Commission prior to or with the Initial Registration Statement or any additional Registration Statements that may be required pursuant to Section 2(c) or Section 4(c).

FINRA” means the Financial Industry Regulatory Authority.

Holder” or “Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities.

Holder Underwritten Offering” shall have the meaning set forth in Section 4(e).

Indemnified Party” shall have the meaning set forth in Section 7(c).

 

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Indemnifying Party” shall have the meaning set forth in Section 7(c).

Initial Registration Statement” means the initial Registration Statement filed or to be filed pursuant to this Agreement.

Lead Purchaser” shall mean Squadron Capital LLC.

Losses” shall have the meaning set forth in Section 7(a).

Offer Consummation” means the publication of the results of the Offer (as reopened, as the case may be), provided that the voluntary minimum acceptance threshold of two thirds of the share capital and voting rights on a fully diluted basis of EOS has been reached or waived upon such publication, in accordance with the relevant provisions of the Tender Offer Agreement.

Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.

Prospectus” means (i) the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such prospectus, and (ii) any “free writing prospectus” as defined in Rule 405 under the Securities Act.

Purchase Agreement” shall have the meaning set forth in the Recitals.

Purchaser(s)” shall have the meaning set forth in the preamble.

Registrable Securities” means, as of any date of determination, (a) the Shares and (b) any securities issued or then issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing; provided, however, that any such Registrable Securities shall cease to be Registrable Securities (and the Company shall not be required to maintain the effectiveness of any, or file another, Registration Statement hereunder with respect thereto) with respect to a particular Holder upon the first to occur of: (x) a Registration Statement with respect to the sale of such Registrable Securities is

 

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declared effective by the Commission under the Securities Act and all such Registrable Securities have been disposed of by the Holder in accordance with such effective Registration Statement, (y) such Registrable Securities have been previously sold in accordance with Rule 144, or (z) such securities become eligible for resale without volume or manner-of-sale restrictions and without current public information pursuant to Rule 144.

Registration Statement” means any registration statement required to be filed hereunder pursuant to Section 2(a) and any additional registration statements contemplated by Section 2(c) or Section 4(c), including (in each case) the Prospectus, amendments and supplements to any such registration statement or Prospectus, any free-writing prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in any such registration statement.

Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

SEC Guidance” means (i) any publicly-available written or oral guidance of the Commission staff, or any comments, requirements or requests of the Commission staff and (ii) the Securities Act.

Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

Selling Stockholder Questionnaire” shall have the meaning set forth in Section 4(a).

Shares” means the shares of Common Stock issued or issuable to the Purchasers pursuant to the Purchase Agreement and to the Lead Purchaser pursuant to the Debt Exchange Agreement.

Subscription Amount” means, as to each Purchaser, the aggregate amount to be paid for the Common Stock purchased under the Purchase Agreement.

 

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Trading Day” means a day on which the principal Trading Market is open for trading.

Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, The Nasdaq Global Market, the Nasdaq Global Select Market, and the New York Stock Exchange (or any successors to any of the foregoing).

Transfer Agent” means Computershare, Inc. the current transfer agent of the Company, with a mailing address of 480 Washington Avenue, Jersey City, New Jersey 07310, and any successor transfer agent of the Company.

Underwritten Offering” means a registration in which securities of the Company are sold to an underwriter or underwriters on a firm commitment basis for reoffering to the public

2. Shelf Registration.

(a) On or prior to each Filing Date, the Company shall prepare and file with the Commission a Registration Statement covering the resale of all of the Registrable Securities that are not then registered on an effective Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415. Any Registration Statement filed hereunder shall be on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate form in accordance herewith, subject to the provisions of Section 2(e)), provided, however, that no Holder shall be required to be named as an “underwriter” without such Holder’s express prior written consent. If pursuant to SEC Guidance, such alternative appropriate form requires Holder to be named as an “underwriter,” and Holder chooses not to give consent to be so named, the Company’s obligations under this subsection register on another appropriate form shall be waived. Subject to the terms of this Agreement, the Company shall use its commercially reasonable efforts to cause a Registration Statement filed under this Agreement (including, without limitation, under Section 4(c)) to be declared effective under the Securities Act as promptly as reasonably practicable after the filing thereof, but in any event no later than the applicable Effectiveness Date, and shall use its commercially reasonable efforts to keep such Registration Statement continuously effective under the Securities Act until the date that all Registrable Securities shall cease to be Registrable Securities as provided herein (the “Effectiveness Period”). The Company shall telephonically request effectiveness of a Registration Statement as of 5:00 p.m. Eastern Time on a Trading Day. The Company shall immediately notify the Holders via facsimile or by e-mail of the effectiveness of a Registration Statement on the same Trading Day that the Company telephonically confirms effectiveness with the Commission, which shall be the date requested for

 

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effectiveness of such Registration Statement. The Company shall, by 9:30 a.m. Eastern Time on the Trading Day after the effective date of such Registration Statement, file a final Prospectus with the Commission as required by Rule 424. Failure to so notify the Holder within one (1) Trading Day of such notification of effectiveness or failure to file a final Prospectus as foresaid shall be deemed an Event under Section 2(d).

(b) Notwithstanding the registration obligations set forth in Section 2(a), if all of the Registrable Securities cannot, be registered for resale as a secondary offering on a single Registration Statement, the Company agrees to promptly inform each of the Holders thereof and use its commercially reasonable efforts (i) to file additional Registration Statements as may be available pursuant to SEC Guidance successively trying to register on each such Registration Statement the maximum number of remaining Registrable Securities permitted to be registered pursuant to SEC Guidance for resale, until all of the Registrable Securities have been registered for resale, on Form S-3 or such other form available to register for resale the Registrable Securities as a secondary offering, subject to the provisions of Section 2(e); with respect to filing on Form S-3 or other appropriate form, and subject to the provisions of Section 2(d) with respect to the payment of liquidated damages, and (ii) to have each such additional Registration Statement declared effective by the Commission as soon as practicable; provided, however, that prior to and following the filing of any such additional Registration Statements, the Company shall be obligated to use its commercially reasonable efforts to advocate with the Commission for the registration of all of the Registrable Securities in accordance with the SEC Guidance.

(c) Notwithstanding any other provision of this Agreement and subject to the payment of liquidated damages pursuant to Section 2(d), if the Commission or any SEC Guidance sets forth a limitation on the number of Registrable Securities permitted to be registered on a particular Registration Statement as a secondary offering (and notwithstanding that the Company used its commercially reasonable efforts to advocate with the Commission for the registration of all or a greater portion of Registrable Securities), unless otherwise directed in writing by a Holder as to its Registrable Securities, the number of Registrable Securities to be registered on such Registration Statement will be reduced as follows:

 

  i.

First, the Company shall reduce or eliminate any securities to be included other than Registrable Securities; and

 

  ii.

Second, the Company shall reduce Registrable Securities (applied, in the case that some Registrable Securities may be registered, to the Holders on a pro rata basis based on the total number of unregistered Registrable Securities held by such Holders).

 

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In the event of a cutback hereunder, the Company shall give the Holder at least five (5) Trading Days prior written notice along with the calculations as to such Holder’s allotment.

(d) If: (i) the Initial Registration Statement is not filed on or prior to its Filing Date or if the Company files the Initial Registration Statement without affording the Holders the opportunity to review and comment on the same as required by Section 4(a) herein; or (ii) the Company fails to file with the Commission a request for acceleration of a Registration Statement in accordance with Rule 461 promulgated by the Commission pursuant to the Securities Act, within five Trading Days of the date that the Company is notified (orally or in writing, whichever is earlier) by the Commission that such Registration Statement will not be “reviewed” or will not be subject to further review; or (iii) a Registration Statement registering for resale all of the Registrable Securities is not declared effective by the Commission by the Effectiveness Date of the Initial Registration Statement (provided, however, that if all Registrable Securities cannot be included in the Initial Registration Statement under conditions contemplated in Section 2(c), the liquidated damages provided for in this Section 2(d) shall not begin to accrue until the Effectiveness Date of any additional Registration Statement required to be filed hereunder, including pursuant to Section 2(b) or Section 4(c)); or (iv) after the effective date of a Registration Statement, such Registration Statement ceases for any reason (other than due to the inaccuracy of any information regarding the Holders or in the event of an Allowed Delay) to remain continuously effective as to all Registrable Securities included in such Registration Statement, or the Holders are otherwise not permitted to utilize the Prospectus therein to resell such Registrable Securities, for more than ten (10) consecutive calendar days or more than an aggregate of twenty (20) calendar days (which need not be consecutive calendar days) during any 12-month period (any such failure or breach being referred to as an “Event”, and for purposes of clauses (i) and (iii), the date on which such Event occurs, and for purpose of clause (ii) the date on which such five (5) Trading Day period is exceeded, and for purpose of clause (iv) the date on which such tenth (10th) or twentieth (20th) calendar day period, as applicable, is exceeded being referred to as “Event Date”), then, in addition to any other rights the Holders may have hereunder or under applicable law, on each such Event Date and on each monthly anniversary of each such Event Date (if the applicable Event shall not have been cured by such date) until the applicable Event is cured, the Company shall pay to each Holder an amount in cash, as partial liquidated damages and not as a penalty, equal to the product of 1.5% multiplied by the aggregate Subscription Amount paid by such Holder pursuant to the Purchase Agreement with respect to any Shares then held by, or issuable to, such Holder that are Registrable Securities. The parties agree that the maximum aggregate liquidated damages payable to a Holder under this Agreement shall be 12% of the aggregate Subscription Amount paid by such Holder pursuant to the Purchase Agreement. If the Company fails to pay any partial liquidated damages pursuant to this Section 2(d) in full within seven days after the date payable, the Company will pay interest thereon at a rate of 15% per annum (or such lesser maximum amount that is permitted to be paid by

 

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applicable law) to the Holder, accruing daily from the date such partial liquidated damages are due until and through the date such amounts, plus all such interest thereon, are paid in full. The partial liquidated damages pursuant to the terms hereof shall apply on a daily pro rata basis for any portion of a month prior to the cure of an Event.

(e) If Form S-3 is not available for the registration of the resale of Registrable Securities hereunder, the Company shall (i) register the resale of the Registrable Securities on another appropriate form and (ii) undertake to register the Registrable Securities on Form S-3 as soon as such form is available, provided that the Company shall maintain the effectiveness of the Registration Statement then in effect until such time as a Registration Statement on Form S-3 covering the Registrable Securities has been declared effective by the Commission.

(f) Notwithstanding anything to the contrary contained herein, in no event shall the Company be permitted to name any Holder or affiliate of a Holder as any underwriter without the prior written consent of such Holder.

3. Underwritten Offering of Lead Purchaser.

(a) One Underwritten Offering for the Lead Purchaser may be initiated by the Lead Purchaser, upon notice to the Company; provided that (i) such Underwritten Offering is for at least Twenty-five Million Dollars ($25,000,000) of Registrable Securities owned by the Lead Purchaser; (ii) at least 90 days has elapsed since the closing of the last Underwritten Offering by the Company. Notwithstanding the foregoing, the Lead Purchaser shall not initiate an Underwritten Offering prior to the one-year anniversary of the Offer Consummation; and (iii) the managing underwriter or underwriters shall be chosen by mutual agreement by the Company and the Lead Purchaser.

(b) Upon any such request for an Underwritten Offering pursuant to Section 3(a), the Company shall enter into an underwriting agreement with such underwriters for such offering, such agreement to be reasonably satisfactory in substance and form to the Company, the Lead Purchaser and the underwriters, and to contain such representations and warranties by the Company and such other terms as are generally prevailing in agreements of that type, including indemnities no less favorable to the recipient thereof than those provided in Section 8. The Lead Purchaser shall reasonably cooperate with the Company in the negotiation of such underwriting agreement and shall give consideration to the reasonable suggestions of the Company regarding the form thereof. The Lead Purchaser shall be a party to such underwriting agreement, which underwriting agreement shall (x) contain such representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of the Lead Purchaser as are customarily made by issuers to selling stockholders in secondary underwritten public offerings and (y) provide that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement also shall be conditions precedent

 

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to the obligations of the Lead Purchaser. The Lead Purchaser shall not be required to make any representations or warranties to or agreements with the Company or the underwriters in connection with such underwriting agreement other than representations, warranties or agreements regarding the Lead Purchaser, the Lead Purchaser’s title to the Registrable Securities, the Lead Purchaser’s authority to sell the Registrable Securities, the Lead Purchaser’s intended method of distribution, absence of liens with respect to the Registrable Securities, enforceability of the applicable underwriting agreement as against the Lead Purchaser, receipt of all consents and approvals with respect to the entry into such underwriting agreement and the sale of such Registrable Securities and any other representations required to be made by the Lead Purchaser under applicable law, rule or regulation, and the aggregate amount of the liability of the Lead Purchaser in connection with such underwriting agreement shall not exceed the Lead Purchaser’s gross proceeds from such Underwritten Offering (less underwriting discounts and commissions).

(c) Subject to the provisions of this Section 3, no Person may participate in any Underwritten Offering hereunder unless such Person (i) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Lead Purchaser and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.

(d) In the case of an Underwritten Offering pursuant to this Section 3, the price, underwriting discount and other financial terms for the Registrable Securities shall be determined by the Lead Purchaser. In addition, in the case of any Underwritten Offering, each of the applicable Holders may withdraw their request to participate in the registration pursuant to this Section 3 after being advised of such price, discount and other terms and shall not be required to enter into any agreements or documentation that would require otherwise.

(e) With respect to any Underwritten Offering of Registrable Securities by the Lead Purchaser (a “Holder Underwritten Offering”), the Company and the Lead Purchaser agree not to effect (other than pursuant to the registration applicable to such Holder Underwritten Offering or pursuant to a Special Registration) any public sale or distribution, or to file any registration statement (other than pursuant to the registration applicable to such Holder Underwritten Offering or pursuant to a Special Registration) covering any of equity securities of the Company or any securities convertible into or exchangeable or exercisable for such securities, during the period not to exceed ten (10) days prior and sixty (60) days following the effective date of such offering or such longer period up to ninety (90) days as may be requested by the managing underwriter for such Holder Underwritten Offering, subject to such exceptions as may be agreed to by the managing underwriters. “Special Registration” means the registration of (i) equity securities and/or options or other rights in respect thereof solely registered on Form S-4 or Form S-8 (or successor form) or (ii) shares of equity securities and/or options or other rights in respect thereof to be offered to directors, employees, consultants, customers, lenders or vendors of the Company or its Subsidiaries or in connection with dividend reinvestment plans.

 

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(f) If the managing underwriter or underwriters of a proposed Underwritten Offering of the Registrable Securities pursuant to this Section 3 advise the Lead Purchaser and the Company that, in its or their opinion, the number of securities requested to be included in such Underwritten Offering exceeds the number which can be sold in such offering without being likely to have a significant adverse effect on the price, timing or distribution of the securities offered or the market for the securities offered, the securities to be included in such Underwritten Offering (i) first, shall be allocated to the Lead Purchaser, (ii) second, and only if all the securities referred to in clause (i) have been included in such Underwritten Offering, the number of securities that the Company proposes to include in such Underwritten Offering that, in the opinion of the managing underwriter or underwriters, can be sold without having such adverse effect, and (iii) third, and only if all the securities referred to in clause (ii) have been included in such Underwritten Offering, any other securities eligible for inclusion in such Underwritten Offering that, in the opinion of the managing underwriter or underwriters, can be sold without having such adverse effect.

(g) Notwithstanding anything else in this Agreement to the contrary, including Section 5, the each of the Company and Lead Purchaser shall bear its own expenses in connection with an Underwritten Offering, and the Lead Purchaser shall bear all underwriting discounts and commissions relating to the sale of any Registrable Securities sold by the Lead Purchaser in an Underwritten Offering.

4. Registration Procedures.

In connection with the Company’s registration obligations hereunder, the Company shall:

(a) Not less than five (5) Trading Days prior to the filing of each Registration Statement and not less than one (1) Trading Day prior to the filing of any related Prospectus or any amendment or supplement thereto (including any document that would be incorporated or deemed to be incorporated therein by reference, but not including (x) any Exchange Act filing or (y) any supplement or post-effective amendment to a registration statement that is not related to such Holder’s Registrable Securities), the Company shall (i) furnish to each Holder copies of all such documents proposed to be filed, which documents (other than those incorporated or deemed to be incorporated by reference) will be subject to the review of such Holders, and (ii) cause its officers and directors, counsel and independent registered public accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of respective counsel to each Holder, to conduct a reasonable investigation within the meaning of the Securities Act. Notwithstanding the above, the Company shall not be obligated to provide the Holders advance copies of any universal shelf registration statement registering

 

10


securities in addition to those required hereunder, or any Prospectus prepared thereto. The Company shall not file a Registration Statement or any such Prospectus or any amendments or supplements thereto to which the Holders of a majority of the Registrable Securities shall reasonably object in good faith, provided that, the Company is notified of such objection in writing no later than five (5) Trading Days after the Holders have been so furnished copies of a Registration Statement or one (1) Trading Day after the Holders have been so furnished copies of any related Prospectus or amendments or supplements thereto.

(b) (i) Prepare and file with the Commission such amendments, including post-effective amendments, to a Registration Statement and the Prospectus used in connection therewith (subject to any requirement that a post-effective amendment be declared effective by the Commission) as may be necessary to keep a Registration Statement continuously effective as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the Commission such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities subject to any SEC Guidance that sets forth a limitation on the number of Registrable Securities permitted to be registered on a particular Registration Statement, (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and, as so supplemented or amended, to be filed pursuant to Rule 424, (iii) respond as promptly as reasonably possible to any comments received from the Commission with respect to a Registration Statement or any amendment thereto and provide as promptly as reasonably possible to the Holders true and complete copies of all correspondence from and to the Commission relating to a Registration Statement (provided that, the Company shall excise any information contained therein which would constitute material non-public information regarding the Company or any of its Subsidiaries), and (iv) comply in all material respects with the applicable provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by a Registration Statement during the applicable period in accordance (subject to the terms of this Agreement) with the intended methods of disposition by the Holders thereof set forth in such Registration Statement as so amended or in such Prospectus as so supplemented.

(c) If during the Effectiveness Period, the number of Registrable Securities at any time exceeds 100% of the number of shares of Common Stock then registered in a Registration Statement, then the Company shall file as soon as reasonably practicable, but in any case prior to the applicable Filing Date, an additional Registration Statement covering the resale by the Holders of not less than the number of such Registrable Securities.

(d) Notify the Holders of Registrable Securities to be sold (which notice shall, pursuant to clauses (iii) through (vi) hereof, be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made) as promptly as reasonably possible (and, in the case of (i)(A) below, not less than one

 

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(1) Trading Day prior to such filing) and (if requested by any such Person) confirm such notice in writing no later than one (1) Trading Day following the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to a Registration Statement is proposed to be filed (but not including (x) any Exchange Act filing or (y) any supplement or post-effective amendment to a registration statement that is not related to such Holder’s Registrable Securities), (B) when the Commission notifies the Company whether there will be a “review” of such Registration Statement and whenever the Commission comments in writing on such Registration Statement, and (C) with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to a Registration Statement or Prospectus or for additional information, (iii) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose, (v) of the occurrence of any event or passage of time that makes the financial statements included in a Registration Statement ineligible for inclusion therein or any statement made in a Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to a Registration Statement, Prospectus or other documents so that, in the case of a Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and (vi) of the occurrence or existence of any pending corporate development with respect to the Company that the Company believes may be material and that, in the determination of the Company, makes it not in the best interest of the Company to allow continued availability of a Registration Statement or Prospectus, provided, however, in no event shall any such notice contain any information which would constitute material, non-public information regarding the Company or any of its Subsidiaries.

(e) Use its commercially reasonable efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order stopping or suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.

(f) Furnish to each Holder, without charge, at least one conformed copy of each such Registration Statement and each amendment thereto, including financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference to the extent requested by such Person, and all

 

12


exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the Commission; provided, that any such item which is available on the EDGAR system (or successor thereto) need not be furnished in physical form.

(g) Subject to the terms of this Agreement, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto, except after the giving of any notice pursuant to Section 4(d).

(h) Prior to any resale of Registrable Securities by a Holder, use its commercially reasonable efforts to register or qualify or cooperate with the selling Holders in connection with the registration or qualification (or exemption from the registration or qualification) of such Registrable Securities for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within the United States as any Holder reasonably requests in writing, to keep each registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by each Registration Statement; provided, that, the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in any such jurisdiction.

(i) If requested by a Holder, cooperate with such Holder to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free, to the extent permitted by the Purchase Agreement, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holder may request.

(j) Upon the occurrence of any event contemplated by Section 4(d), as promptly as reasonably possible under the circumstances taking into account the Company’s good faith assessment of any adverse consequences to the Company and its stockholders of the premature disclosure of such event, prepare a supplement or amendment, including a post-effective amendment, to a Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither a Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the Holders in accordance with clauses (iii) through (vi) of Section 4(d) above to suspend the use of any Prospectus until the requisite changes to such Prospectus have been made, then the Holders shall suspend use of such Prospectus.

 

13


The Company will use its commercially reasonable efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company shall be entitled to exercise its right under this Section 4(j) to suspend the availability of a Registration Statement and Prospectus, subject to the payment of partial liquidated damages otherwise required pursuant to Section 2(d), for a period not to exceed 60 calendar days (which need not be consecutive days) in any 12-month period.

(k) Otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission under the Securities Act and the Exchange Act, including, without limitation, Rule 172 under the Securities Act, file any final Prospectus, including any supplement or amendment thereof, with the Commission pursuant to Rule 424 under the Securities Act, promptly inform the Holders in writing if, at any time during the Effectiveness Period, the Company does not satisfy the conditions specified in Rule 172 and, as a result thereof, the Holders are required to deliver a Prospectus in connection with any disposition of Registrable Securities and take such other actions as may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder.

(l) The Company shall use its commercially reasonable efforts to maintain eligibility for use of Form S-3 (or any successor form thereto) for the registration of the resale of Registrable Securities.

(m) The Company shall promptly notify the Holders, at any time prior to the end of the Effectiveness Period, upon discovery that, or upon the happening of any event as a result of which, the Prospectus includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing (provided that such notice shall not, without the prior written consent of a Holder, disclose to such Holder any material nonpublic information regarding the Company), and promptly prepare, file with the Commission and furnish to such holder a supplement to or an amendment of such Prospectus as may be necessary so that such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing.

(n) Notwithstanding anything to the contrary contained herein, the Company may, upon written notice to any Holder of Registrable Securities included in a Registration Statement, suspend the use of any Registration Statement, including any Prospectus that forms a part of a Registration Statement, if the Company (i) determines that it would be required to make disclosure of material nonpublic information in the Registration Statement concerning the Company, the disclosure of which at the time is not, in the good faith opinion of the Company, in the best interests of the Company or (ii) the Company determines in good faith it must amend or supplement the Registration Statement or the related Prospectus so

 

14


that such Registration Statement or Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the case of the Prospectus in light of the circumstances under which they were made, not misleading; provided, however, in no event shall Holders of Registrable Securities be suspended from selling Registrable Securities pursuant to the Registration Statement for a period that exceeds ninety (90) total calendar days in any 360-day period (any such suspension contemplated by this Section 4(n), an “Allowed Delay”); provided, further, that the Company shall promptly (x) notify each Holder in writing of the commencement of an Allowed Delay, but shall not (without the prior written consent of a Holder) disclose to such Holder any material nonpublic information giving rise to an Allowed Delay, (y) advise the Holders in writing to cease all sales under such Registration Statement until the end of the Allowed Delay and (z) use commercially reasonable efforts to terminate an Allowed Delay as promptly as practicable. Upon disclosure of such information or the termination of the condition described above, the Company shall provide prompt notice to Holders whose Registrable Securities are included in the Registration Statement, and shall promptly terminate any suspension of sales it has put into effect and shall take such other reasonable actions to permit registered sales of Registrable Securities as contemplated hereby.

4. Obligations of the Holders.

(a) Each Holder agrees to furnish to the Company a completed questionnaire in the form attached to this Agreement as Annex A (a “Selling Stockholder Questionnaire”) on a date that is not less than four (4) Trading Days prior to the Filing Date or by the end of the fourth (4th) Trading Day following the date on which such Holder receives draft materials in accordance with Section 4(a). Each Holder also agrees to furnish in writing to the Company such other information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably required to effect the registration of such Registrable Securities, and shall execute such documents, in connection with such registration as the Company may reasonably request. It is agreed and understood that it shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of a particular Holder that (i) such Holder furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the effectiveness of the registration of such Registrable Securities, and (ii) the Holder execute such documents in connection with such registration as the Company may reasonably request, including, without limitation, a waiver of its registration rights hereunder to the extent a Holder elects not to have any of its Registrable Securities included in a Registration Statement.

 

15


(b) The Company may require each selling Holder to furnish to the Company a certified statement as to the number of shares of Common Stock beneficially owned by such Holder and, if required by the Commission, the natural persons thereof that have voting and dispositive control over the shares. During any periods that the Company is unable to meet its obligations hereunder with respect to the registration of the Registrable Securities solely because any Holder fails to furnish such information within three (3) Trading Days of the Company’s request, any liquidated damages that are accruing at such time as to such Holder only shall be tolled and any Event that may otherwise occur solely because of such delay shall be suspended as to such Holder only, until such information is delivered to the Company.

(c) Each Holder, by its acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of a Registration Statement hereunder, unless such Holder has notified the Company in writing of its election to exclude all of its Registrable Securities from such Registration Statement.

(d) Each Holder agrees that, upon receipt of any notice from the Company of either (i) the commencement of an Allowed Delay or (ii) the happening of an event pursuant to Section 4(m) hereof, such Holder will immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement covering such Registrable Securities, until the Holder is advised by the Company that such dispositions may again be made.

(e) Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it or an exemption therefrom in connection with sales of Registrable Securities pursuant to any Registration Statement.

5. Registration Expenses. All fees and expenses incident to the performance of or compliance with, this Agreement by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses of the Company’s counsel and independent registered public accountants) (A) with respect to filings made with the Commission, (B) with respect to filings required to be made with any Trading Market on which the Common Stock is then listed for trading, and (C) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in writing (including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or exemptions of the Registrable Securities), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement. In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all

 

16


salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder. In no event shall the Company be responsible for any broker or similar commissions of any Holder or, except to the extent provided for in the Transaction Documents, any legal fees or other costs of the Holders.

6. Indemnification.

(a) Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors, members, partners, trustees, agents, brokers (including brokers who offer and sell Registrable Securities as principal as a result of a pledge or any failure to perform under a margin call of Common Stock), investment advisors and employees (and any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, members, stockholders, partners, trustees, agents and employees (and any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating to (1) any untrue or alleged untrue statement of a material fact contained in a Registration Statement, any Prospectus or any form of prospectus, free writing prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading or (2) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with the performance of its obligations under this Agreement, except to the extent, but only to the extent, that (i) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement, such Prospectus or in any amendment or supplement thereto or (ii) in the case of an occurrence of an event of the type specified in Section 4(d)(iii)-(vi), the use by such Holder of an outdated, defective or otherwise unavailable Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated, defective or otherwise unavailable for use by such Holder and prior to the receipt by such Holder of the Advice contemplated in Section 8(c). The Company shall

 

17


notify the Holders promptly of the institution, threat or assertion of any Proceeding arising from or in connection with the transactions contemplated by this Agreement of which the Company is aware. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified person and shall survive the transfer of any Registrable Securities by any of the Holders in accordance with Section 8(g).

(b) Indemnification by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, to the extent arising out of or based solely upon: any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading (i) to the extent, but only to the extent, that such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company expressly for inclusion in such Registration Statement or such Prospectus or (ii) to the extent, but only to the extent, that such information relates to such Holder’s information provided in the Selling Stockholder Questionnaire or the proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement, such Prospectus or in any amendment or supplement thereto. In no event shall the liability of a selling Holder be greater in amount than the dollar amount of the proceeds (net of all expenses paid by such Holder in connection with any claim relating to this Section 7 and the amount of any damages such Holder has otherwise been required to pay by reason of such untrue statement or omission) received by such Holder upon the sale of the Registrable Securities included in the Registration Statement giving rise to such indemnification obligation.

(c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that, the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have materially and adversely prejudiced the Indemnifying Party.

 

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An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses, (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding, or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and counsel to the Indemnified Party shall reasonably believe that a material conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of no more than one separate counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.

Subject to the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section 7(c)) shall be paid to the Indemnified Party, as incurred, within ten Trading Days of written notice thereof to the Indemnifying Party; provided, that, the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) not to be entitled to indemnification hereunder.

(d) Contribution. If the indemnification under Section 7(a) or 7(b) is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless for any Losses, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference

 

19


to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in this Agreement, any reasonable attorneys’ or other fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section 7 was available to such party in accordance with its terms.

The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 7(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. In no event shall the contribution obligation of a Holder of Registrable Securities be greater in amount than the dollar amount of the proceeds (net of all expenses paid by such Holder in connection with any claim relating to this Section 7 and the amount of any damages such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission) received by it upon the sale of the Registrable Securities giving rise to such contribution obligation.

The indemnity and contribution agreements contained in this Section 7 are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.

7. Miscellaneous.

(a) Remedies. In the event of a breach by the Company or by a Holder of any of their respective obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, shall be entitled to specific performance of its rights under this Agreement. Each of the Company and each Holder agrees that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall not assert or shall waive the defense that a remedy at law would be adequate.

(b) No Piggyback on Registrations; Prohibition on Filing Other Registration Statements. Until all Registrable Securities are registered pursuant to a Registration Statement that is declared effective by the Commission, neither the Company nor any of its security holders (other than the Holders in such capacity pursuant hereto) may include securities of the Company in any Registration Statements other than the Registrable Securities. The Company shall not file any other registration statements, other than on

 

20


Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their equivalents, until all Registrable Securities are registered pursuant to a Registration Statement that is declared effective by the Commission, provided that this Section 8(b) shall not prohibit the Company from filing supplements or amendments to registration statements filed prior to the date of this Agreement.

(c) Discontinued Disposition. By its acquisition of Registrable Securities, each Holder agrees that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 4(d)(iii) through (vi), such Holder will forthwith discontinue disposition of such Registrable Securities under a Registration Statement until it is advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus (as it may have been supplemented or amended) may be resumed. The Company will use its commercially reasonable efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company agrees and acknowledges that any periods during which the Holder is required to discontinue the disposition of the Registrable Securities hereunder shall be subject to the provisions of Section 2(d).

(d) Piggy-Back Registrations. If, at any time during the Effectiveness Period, there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 or one universal shelf registration statement on Form S-3 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the Company’s stock option or other employee benefit plans, then the Company shall deliver to each Holder a written notice of such determination and, if within fifteen (15) days after the date of the delivery of such notice, any such Holder shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such Holder requests to be registered; provided, however, that the Company shall not be required to provide notice or otherwise register any Registrable Securities pursuant to this Section 8(d) that are eligible for resale pursuant to Rule 144 (without volume restrictions or current public information requirements) promulgated by the Commission pursuant to the Securities Act or that are the subject of a then effective Registration Statement that is available for resales or other dispositions by such Holder. Notwithstanding the foregoing, (i) if such registration involves an underwritten public offering, such Holder must sell such Registrable Securities that such Holder requests to be registered to, if applicable, the underwriter(s) at the same price and subject to the same underwriting discounts and commissions that apply to the other securities sold in such offering (it being acknowledged that the Company shall be responsible for other expenses as set forth in Section 6) and subject to such Holder entering into customary underwriting documentation for selling stockholders in an underwritten public offering, and (ii) if, at any time after giving written notice of its intention to register any Registrable Securities pursuant to this Section 8(d) and prior to the effective date of

 

21


the registration statement filed in connection with such registration, the Company shall determine for any reason not to cause such registration statement to become effective under the Securities Act, the Company shall deliver written notice to such Holder and, thereupon, shall be relieved of its obligation to register any Registrable Securities in connection with such registration.

(e) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and the Holders of at least a majority of the then outstanding Registrable Securities, provided that, if any amendment, modification or waiver disproportionately and adversely impacts a Holder (or group of Holders), the consent of such disproportionately impacted Holder (or group of Holders) shall be required. If a Registration Statement does not register all of the Registrable Securities pursuant to a waiver or amendment done in compliance with the previous sentence, then the number of Registrable Securities to be registered for each Holder shall be reduced pro rata among all Holders and each Holder shall have the right to designate which of its Registrable Securities shall be omitted from such Registration Statement. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of a Holder or some Holders and that does not directly or indirectly affect the rights of other Holders may be given only by such Holder or Holders of all of the Registrable Securities to which such waiver or consent relates; provided, however, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the first sentence of this Section 8(e). No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration also is offered to all of the parties to this Agreement.

(f) Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be delivered as set forth in the Purchase Agreement.

(g) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder. The Company may not assign (except by merger) its rights or obligations hereunder without the prior written consent of all of the Holders of the then outstanding Registrable Securities. Each Holder may assign their respective rights hereunder in the manner and to the Persons as permitted under Section 5.7 of the Purchase Agreement.

(h) No Inconsistent Agreements. Neither the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the Company or any of its Subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of impairing the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. Except as set forth on Schedule 7(h), neither the Company nor any of its Subsidiaries has previously entered into any agreement granting any registration rights with respect to any of its securities to any Person that have not been satisfied in full.

 

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(i) Execution and Counterparts. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

(j) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be determined in accordance with the provisions of the Purchase Agreement.

(k) Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any other remedies provided by law.

(l) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

(m) Headings. The headings in this Agreement are for convenience only, do not constitute a part of the Agreement and shall not be deemed to limit or affect any of the provisions hereof.

(n) Independent Nature of Holders’ Obligations and Rights. The obligations of each Holder hereunder are several and not joint with the obligations of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of the obligations of any other Holder hereunder. Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Holders are in any way acting in concert or as a group or entity with respect to such obligations or the transactions contemplated by this Agreement or any other matters, and the Company acknowledges that the Holders are not acting in concert or as a group, and the Company shall not assert any such claim, with respect to such obligations or transactions. Each Holder shall be entitled to protect and enforce its rights, including

 

23


without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Holder to be joined as an additional party in any Proceeding for such purpose. The use of a single agreement with respect to the obligations of the Company contained was solely in the control of the Company, not the action or decision of any Holder, and was done solely for the convenience of the Company and not because it was required or requested to do so by any Holder. It is expressly understood and agreed that each provision contained in this Agreement is between the Company and a Holder, solely, and not between the Company and the Holders collectively and not between and among Holders.

********************

(Signature Pages Follow)

 

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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.

 

COMPANY:
ALPHATEC HOLDINGS, INC.
By:  

/s/ Jeffrey Black

  Name:   Jeffrey Black
  Title:   Chief Financial Officer

[SIGNATURE PAGE OF HOLDERS FOLLOWS]


[SIGNATURE PAGE OF HOLDERS TO ATEC RRA]

Name of Holder:   Squadron Capital LLC  

Signature of Authorized Signatory of Holder:   /s/ David R. Pelizzon  

Name of Authorized Signatory:   David R. Pelizzon  

Title of Authorized Signatory:   President  

[SIGNATURE PAGES CONTINUE]


[SIGNATURE PAGE OF HOLDERS TO ATEC RRA]

Name of Holder:   Avidity Master Fund LP  

Signature of Authorized Signatory of Holder:   /s/ Michael Gregory  

Name of Authorized Signatory:   Michael Gregory  

Title of Authorized Signatory:   Director  

[SIGNATURE PAGES CONTINUE]


[SIGNATURE PAGE OF HOLDERS TO ATEC RRA]

Name of Holder:   Avidity Capital Fund II LP  

Signature of Authorized Signatory of Holder:   /s/ Michael Gregory  

Name of Authorized Signatory:   Michael Gregory  

Title of Authorized Signatory:   Director  

[SIGNATURE PAGES CONTINUE]

 


[SIGNATURE PAGE OF HOLDERS TO ATEC RRA]

Name of Holder:   First Light Fund, LP  

Signature of Authorized Signatory of Holder:   /s/ Matthew P. Arens  

Name of Authorized Signatory:   Matthew P. Arens  

Title of Authorized Signatory:   Managing Member of the GP  

[SIGNATURE PAGES CONTINUE]

 


[SIGNATURE PAGE OF HOLDERS TO ATEC RRA]

Name of Holder:   Perceptive Life Sciences Master Fund, Ltd.  

Signature of Authorized Signatory of Holder:   /s/ James Mannix  

Name of Authorized Signatory:   James Mannix  

Title of Authorized Signatory:   COO  

 


Annex A

ALPHATEC HOLDINGS, INC.

Selling Stockholder Notice and Questionnaire

The undersigned beneficial owner of common stock (the “Registrable Securities”) of Alphatec Holdings, Inc., a Delaware corporation (the “Company”), understands that the Company has filed or intends to file with the Securities and Exchange Commission (the “Commission”) a registration statement (the “Registration Statement”) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), of the Registrable Securities, in accordance with the terms of the Registration Rights Agreement (the “Registration Rights Agreement”) to which this document is annexed. A copy of the Registration Rights Agreement is available from the Company upon request at the address set forth below. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.

Certain legal consequences arise from being named as a selling stockholder in the Registration Statement and the related prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling stockholder in the Registration Statement and the related prospectus.

NOTICE

The undersigned beneficial owner (the “Selling Stockholder”) of Registrable Securities hereby elects to include the Registrable Securities owned by it in the Registration Statement.

 

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The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate:

QUESTIONNAIRE

 

1.

Name.

 

  (a)

Full Legal Name of Selling Stockholder

 

                                                                                                                                                                                                                         

 

  (b)

Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities are held:

 

                                                                                                                                                                                                                         

 

  (c)

Full Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered by this Questionnaire):

 

                                                                                                                                                                                                                         

 

2.

Address for Notices to Selling Stockholder:

 

 

 

 

  Telephone:

 

 

Fax:

 

Contact Person:

 

 

3.

Broker-Dealer Status:

 

  (a)

Are you a broker-dealer?

Yes    ☐             No    ☐

 

  (b)

If “yes” to Section 3(a), did you receive your Registrable Securities as compensation for investment banking services to the Company?

Yes    ☐             No    ☐

 

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Note: If “no” to Section 3(b), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

 

  (c)

Are you an affiliate of a broker-dealer?

Yes    ☐             No    ☐

 

  (d)

If you are an affiliate of a broker-dealer, do you certify that you purchased the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities?

Yes    ☐             No    ☐

Note: If “no” to Section 3(d), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

 

4.

Beneficial Ownership of Securities of the Company Owned by the Selling Stockholder.

Except as set forth below in this Item 4, the undersigned is not the beneficial or registered owner of any securities of the Company other than the securities issuable pursuant to the Purchase Agreement.

 

  (a)

Type and amount of other securities beneficially owned by the Selling Stockholder:

 

                                                                                                                                                                                                                         

                                                                                                                                                                                                                         

 

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5.

Relationships with the Company:

Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.

State any exceptions here:

 

                                                                                                                                                                                                                         

                                                                                                                                                                                                                         

The undersigned agrees to promptly notify the Company of any material inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time while the Registration Statement remains effective; provided, that the undersigned shall not be required to notify the Company of any changes to the number of securities held or owned by the undersigned or its affiliates.

By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 5 and the inclusion of such information in the Registration Statement and the related prospectus and any amendments or supplements thereto. The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration Statement and the related prospectus and any amendments or supplements thereto.

IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.

 

Date:                                                                                                            Beneficial Owner:

 

   
    By:  

 

 

      Name:
      Title:

 

34

EX-10.1

Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement”) is dated as of December 16, 2020, between Alphatec Holdings, Inc., a Delaware corporation (the “Company”), and each purchaser identified on Exhibit A hereto (each purchaser, including its respective successors and assigns, a “Purchaser” and collectively, the “Purchasers”).

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and/or Rule 506 of Regulation D promulgated thereunder, the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:

ARTICLE I.

DEFINITIONS

1.1 Definitions. In addition to the terms defined elsewhere in this Agreement the following terms have the meanings set forth in this Section 1.1:

Acquisition Termination Event” means the earlier of (a) July 31, 2021, if the Offer Consummation has not occurred by such date, (b) the date that the Tender Offer Agreement is terminated in accordance with its terms, or (c) the date on which the Company determines in its reasonable judgment that the Offer Consummation will not occur under the Tender Offer Agreement subject to the Lead Purchaser’s reasonable concurrence of such determination.

Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

Antitrust Law” means the HSR Act, the Federal Trade Commission Act, as amended, the Sherman Act, as amended, the Clayton Act, as amended, and any applicable foreign or multinational antitrust laws and all other applicable laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or lessening of competition through merger or acquisition.

Board of Directors” means the board of directors of the Company.

Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.


Closing” means the closing of the purchase and sale of the Securities pursuant to Section 2.1.

Closing Date” means the Trading Day specified by the Company by written notice to the Purchasers at least five (5) Business Days prior to such Closing Date and occurring (a) within five (5) Business Days of the date on which the presenting bank acting on behalf of the Company pursuant to the Tender Offer Agreement files the Offer with the Autorité des marchés financiers (French Stock Exchange authority or “AMF”), (b) after which all of the Transaction Documents have been executed and delivered by the applicable parties thereto, (c) all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s obligations to deliver the Securities, in each case, have been satisfied or waived.

Commission” means the United States Securities and Exchange Commission.

Common Stock” means the common stock of the Company, par value $0.0001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

Company Counsel” means Latham & Watkins LLP, with offices located at 12670 High Bluff Drive, San Diego, California 92310.

Debt Exchange Agreement” means the debt exchange agreement between the Company and an Affiliate of Lead Purchaser pursuant to which the Company is issuing Common Stock to Lead Purchaser in exchange for $30,000,000 of indebtedness due such Affiliate of Lead Purchaser.

Disclosure Schedules” shall have the meaning ascribed to such term in Section 3.1.

Effective Date” means the earliest of the date that (a) the initial Registration Statement has been declared effective by the Commission, (b) all of the Shares have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without the requirement for the Company to be in compliance with the current public information required under Rule 144 and without volume or manner-of-sale restrictions, (c) following the one-year anniversary of the Closing Date provided that no holder of Shares is an Affiliate of the Company, (d) all of the Shares may be sold pursuant to an exemption from registration under Section 4(a)(1) of the Securities Act without volume or manner-of-sale restrictions and Company Counsel has delivered to such holders a standing written unqualified opinion that resales may then be made by such holders of the Shares pursuant to such exemption which opinion shall be in form and substance reasonably acceptable to such holders or (e) such date as agreed to in writing by the Company and the Lead Purchaser.

 

2


EOS” means EOS imaging S.A., a société anonyme organized and existing under the laws of France.

Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

Exempt Issuance” means the issuance of (a) Shares hereunder; (b) shares of Common Stock or Common Stock Equivalents to employees, officers, directors, agents or consultants of the Company pursuant to any stock, option or similar plan (or, with respect to consultants or agents, pursuant to a written compensation agreement), in each case duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose for services rendered to the Company (including, but not limited to, such pre-existing plans established by the Board of Directors pursuant to distributor incentive plans, management objective and strategic incentive plans, surgeon development agreements, and/or licensing agreements), or the filing of a Registration Statement on Form S-8 with respect thereto, (c) Common Stock or Common Stock Equivalents upon the conversion or exercise of, or as a dividend on, any securities of the Company outstanding or issuable on the date hereof, (d) securities pursuant to mergers, acquisitions, joint ventures, strategic alliance, commercial or other collaborative transactions or the acquisition or license of the business, property, technology or other assets of another individual or entity or the assumption of an employee benefit plan in connection with a merger or acquisition approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person (or to the equity holders of a Person) which is, itself or through its Subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, (e) the issuance of any Common Stock or Common Stock Equivalents in connection with a transaction described or as otherwise disclosed in the Disclosure Schedule, (f) Common Stock or Common Stock Equivalents in connection with any stock split, stock dividend, reclassification or reorganization or similar event with respect to the Shares, (g) Common Stock or Common Stock Equivalents to lenders or financial institutions in connection with bona fide debt or credit arrangements, (h) Common Stock issued pursuant to any preemptive right in effect on the date hereof and set forth on Schedule 1.1 or (i) Common Stock issued pursuant to the Debt Exchange Agreement.

FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.

FDA” shall have the meaning ascribed to such term in Section 3.1(hh).

GAAP” shall have the meaning ascribed to such term in Section 3.1(h).

 

3


Health Care Laws” means, collectively, the federal Anti-Kickback Statute (42 U.S.C. Section 1320a-7b(b)), the Civil Monetary Penalties Law (42 U.S.C. Section 1320a-7a(a)), the civil False Claims Act (31 U.S.C. Section 3729 et seq.), the criminal false statements law (42 U.S.C. Section 1320a-7b(a)), the Physician Payments Sunshine Act (42 U.S.C. Section 1320-7h), the health care fraud criminal provisions under Health Insurance Portability and Accountability Act of 1996 (as amended by the Health Information Technology for Economic and Clinical Health Act, and regulations promulgated thereunder), including 18 U.S.C. Sections 286, 287, 1347 and 1349, the exclusion laws (42 U.S.C. Section 1320a-7), the Federal Food, Drug, and Cosmetic Act (21 U.S.C. Section 301 et seq.), the Public Health Service Act (42 U.S.C. Section 201 et seq.), Medicare (Title XVIII of the Social Security Act) and Medicaid (Title XIX of the Social Security Act), each as amended from time to time, the regulations promulgated pursuant to such laws, and any other state, federal or foreign law, accreditation standards, regulation, memorandum, opinion letter, or other issuance which imposes requirements on the manufacturing, development, testing, labeling, advertising, marketing or distribution of drugs, biologics and medical devices (including diagnostic products), kickbacks, patient or program charges, recordkeeping, claims process, documentation requirements, medical necessity, referrals, the hiring of employees or acquisition of services or supplies from those who have been excluded from government health care programs, quality, safety, privacy, security, licensure, accreditation or any other aspect of providing health care, medical devices or diagnostics products or services.

HSR Act” means the Hart-Scott- Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

Intellectual Property” shall have the meaning ascribed to such term in Section 3.1(p).

Lead Purchaser” shall mean Squadron Capital LLC.

Liens” means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).

Nasdaq” means the Nasdaq Stock Market LLC.

Offer” means the public tender offer contemplated by the Tender Offer Agreement.

Offer Consummation” means the publication of the results of the Offer (as reopened, as the case may be), provided that the voluntary minimum acceptance threshold of two thirds of the share capital and voting rights on a fully diluted basis of EOS has been reached or waived upon such publication, in accordance with the relevant provisions of the Tender Offer Agreement.

 

4


Per Share Purchase Price” equals $11.11, subject to adjustment for reverse and forward stock splits, stock dividends, distributions, recapitalizations, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

Placement Agents” means Cowen and Company, LLC.

Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.

Purchaser Party” shall have the meaning ascribed to such term in Section 4.7.

Registration Rights Agreement” means the Registration Rights Agreement, dated the date hereof, among the Company and the Purchasers, in the form of Exhibit B attached hereto.

Registration Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale by the Purchasers of the Shares.

Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e).

Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).

Securities” or “Shares” means the shares of Common Stock issued or issuable to the Purchasers pursuant to this Agreement.

Securities Act” shall have the meaning ascribed to such term in the Recitals.

Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock).

Subscription Amount” means, as to each Purchaser, the aggregate amount to be paid for Shares purchased hereunder as specified next to such Purchaser’s name on Exhibit A hereto, in United States dollars and in immediately available funds.

 

5


Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a) and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.

Tender Offer Agreement” means that certain Tender Offer Agreement, dated as of December 16, 2020, by and between the Company and EOS.

Trading Day” means a day on which the principal Trading Market is open for trading.

Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange (or any successors to any of the foregoing).

Transaction Documents” means this Agreement, the Registration Rights Agreement, Tender Offer Agreement, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.

Transfer Agent” means Computershare, Inc., the current transfer agent of the Company, with a mailing address of 480 Washington Avenue, Jersey City, New Jersey 07310, and any successor transfer agent of the Company.

ARTICLE II. PURCHASE AND SALE

2.1 Closing. The Company shall provide written notice to the Purchasers specifying the Closing Date at least five (5) Business Days prior to such Closing Date. On the Closing Date, upon the terms and subject to the conditions set forth herein, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase, the number of Shares set forth opposite of each such Purchaser’s name on Exhibit A hereto at the Per Share Purchase Price. Each Purchaser shall deliver to the Company, via wire transfer, immediately available funds equal to its Subscription Amount as set forth on Exhibit A hereto, and the Company shall deliver to each Purchaser its respective Shares, and the Company and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur remotely via exchange of documents and signatures.

2.2 Deliveries.

(a) On or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:

(i) this Agreement duly executed by the Company;

(ii) a certificate of the Chief Executive Officer or Chief Financial Officer of the Company certifying the closing conditions set forth in Section 2.3(b) have been satisfied;

 

6


(iii) a certificate, executed on behalf of the Company by its Secretary, dated as of the Closing Date, certifying the resolutions adopted by the Board of Directors of the Company approving the transactions contemplated by this Agreement and the other Transaction Documents and the issuance of the Shares, certifying the current versions of the Certificate of Incorporation and Bylaws of the Company and certifying as to the signatures and authority of persons signing the Transaction Documents and related documents on behalf of the Company;

(iv) a legal opinion of Company Counsel, in form reasonably satisfactory to the Purchasers addressed to the Purchasers;

(v) a copy of the irrevocable instructions to the Transfer Agent instructing the Transfer Agent to deliver, on an expedited basis, a certificate or in book entry form, at the Purchaser’s election (unless a Purchaser indicates otherwise, Shares shall be delivered in book entry form), evidencing such number of Shares set forth next to such Purchaser’s name on Exhibit A hereto, registered in the name of such Purchaser;

(vi) the Company shall have provided each Purchaser with the Company’s wire instructions, on Company letterhead and executed by the Chief Executive Officer or Chief Financial Officer; and

(vii) the Registration Rights Agreement duly executed by the Company.

(b) On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:

(i) this Agreement duly executed by such Purchaser;

(ii) such Purchaser’s Subscription Amount by wire transfer to the account specified in writing by the Company; and

(iii) the Registration Rights Agreement duly executed by such Purchaser.

2.3 Closing Conditions.

(a) The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:

(i) the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse Effect, in all respects) on the Closing Date of the representations and warranties of the Purchasers contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);

 

7


(ii) all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been performed in all material respects;

(iii) no stop order or suspension of trading shall have been imposed by Nasdaq, the SEC or any other governmental or regulatory body with respect to public trading in the Common Stock;

(iv) the delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement; and

(v) any waiting period under the HSR Act applicable to the transactions contemplated by this Agreement shall have expired or shall have been terminated, and with respect to the filing of a Notification and Report Form pursuant to the HSR Act, the competent merger-control authorities have granted (or are deemed to have granted, e.g. by expiry of waiting periods) their consent, approval, clearance, confirmation or license under the applicable merger-control laws or have declined jurisdiction.

(b) The respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being met:

(i) the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse Effect, in all respects) as of the date of this Agreement of the representations and warranties of the Company contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);

(ii) all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed in all material respects;

(iii) no stop order or suspension of trading shall have been imposed by Nasdaq, the SEC or any other governmental or regulatory body with respect to public trading in the Common Stock;

(iv) the Company shall have filed with Nasdaq a Supplemental Listing Application for the listing of the Shares, and Nasdaq shall have raised no objection to the consummation of the transactions contemplated by the Transaction Documents;

(v) the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;

(vi) no Acquisition Termination Event has occurred or is reasonably likely to occur; and

 

8


(vii) any waiting period under the HSR Act applicable to the transactions contemplated by this Agreement shall have expired or shall have been terminated, and with respect to the filing of a Notification and Report Form pursuant to the HSR Act, the competent merger-control authorities have granted (or are deemed to have granted, e.g. by expiry of waiting periods) their consent, approval, clearance, confirmation or license under the applicable merger-control laws or have declined jurisdiction.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company. Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules or (ii) in the Company’s SEC Reports (excluding any disclosures set forth under the headings “Risk Factors,” or disclosure of risks set forth in any “forward-looking statements” disclaimer, or disclosures in any other statements that are similarly cautionary or predictive in nature; it being understood that any factual information contained within such headings, disclosure or statements shall not be excluded), the Company hereby makes the following representations and warranties to each Purchaser as of the date of this Agreement:

(a) Subsidiaries. The Subsidiaries set forth on Schedule 3.1(a) are the only subsidiaries of the Company. The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.

(b) Organization and Qualification. The Company and each of its Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

 

9


(c) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of each of this Agreement and the other Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection herewith or therewith other than in connection with the Required Approvals. This Agreement and each other Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

(d) No Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby do not and will not: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, (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 upon any of the properties or assets of the Company or any Subsidiary, 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 (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, 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 the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as would not have or reasonably be expected to result in a Material Adverse Effect.

 

10


(e) Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filings required pursuant to Section 4.4 of this Agreement, (ii) the filing with the Commission pursuant to the Registration Rights Agreement, (iii) the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Securities and the listing of the Shares for trading thereon in the time and manner required thereby, and (iv) the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws, (collectively, the “Required Approvals”).

(f) Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents and the issuance of the Securities are not subject to any preemptive or other rights of any other Person that has not been waived prior to the date of this Agreement.

(g) Capitalization. The Company’s disclosure of its issued and outstanding capital stock in its most recent SEC Report containing such disclosure was accurate in all material respects as of the date indicated in such SEC Report. Other than set forth in its SEC Reports, the Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plans, pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act and pursuant to the Debt Exchange Agreement. Except as set forth on Schedule 3.1(g), no Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as a result of the purchase and sale of the Securities, the Debt Exchange Agreement and except as set forth on Schedule 3.1(g), there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire any shares of Common Stock or the capital stock of any Subsidiary, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents or capital stock of any Subsidiary. The issuance and sale of the Securities will not obligate the Company or any Subsidiary to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. There are no outstanding securities or instruments of the Company or any Subsidiary that contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to redeem a security of the Company or such Subsidiary, other than as provided in Section 4.13 hereof. The Company does not have any stock appreciation rights or “phantom stock” plans or any similar plan or agreement. All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance

 

11


with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any stockholder, the Board of Directors or other Person is required for the issuance and sale of the Securities. There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.

(h) SEC Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company has never been an issuer subject to Rule 144(i) under the Securities Act. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regualtions of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in conformity with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”) except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and present fairly in all material respects the consolidated financial position of the Company and its subsidiaries as of the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

(i) Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof or in Schedule 3.1(i): (i) there has been no event, occurrence or development that has had or that would reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock,

 

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(v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans and (vi) the Company has not made any change or amendment to the Company’s Restated Certificate of Incorporation or Amended and Restated Bylaws, or material change to any material contract or arrangement by which the Company is bound or to which any of its assets or properties is subject. Except for the issuance of the Securities contemplated by this Agreement or as set forth on Schedule 3.1(i), no event, liability, fact, circumstance, occurrence or development has occurred or exists, or is reasonably expected to occur or exist, with respect to the Company or its Subsidiaries or their respective businesses, properties, operations, assets or financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least one (1) Trading Day prior to the date that this representation is made.

(j) Litigation. Except as disclosed in the SEC Reports, there are no Proceedings pending or, to the knowledge of the Company threatened or imminent to which the Company or any Subsidiary is or may reasonably be expected to become a party or to which any property of the Company or any Subsidiary is or may reasonably be expected to become the subject (including but not limited to any Proceeding that adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities). Neither the Company nor any Subsidiary, nor any director or officer thereof (in his or her capacity as such), is or has been the subject of any Proceeding involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowedge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company (in his or her capacity as such). The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.

(k) Labor Relations. No labor dispute with the employees of the Company or any Subsidiary exists or, to the knowledge of the Company, is threatened or imminent, and the Company is not aware of any existing or imminent labor disturbance by the employees of any of its or its Subsidiaries’ principal suppliers, contractors or customers, that would reasonably be expected to result in a Material Adverse Effect.

(l) Compliance. Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree, or order of any court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety, data privacy and employment and labor matters, except in each case as would not have or reasonably be expected to result in a Material Adverse Effect.

 

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(m) Environmental Laws. Except as disclosed in the SEC Reports, the Company and the Subsidiaries (i) are in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals would not, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect. There are no costs or liabilities associated with Environmental Laws (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties) which would, singly or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(n) Regulatory Permits. The Company and each of its Subsidiaries (A) is in compliance, in all material respects, with any and all applicable foreign, federal, state and local laws, rules, regulations, treaties, statutes and codes promulgated by any and all governmental authorities (including pursuant to the Occupational Health and Safety Act) relating to the protection of human health and safety in the workplace (“Occupational Laws”); (B) has received all material permits, licenses or other approvals required of it under applicable Occupational Laws to conduct its business as currently conducted; and (C) is in compliance, in all material respects, with all terms and conditions of such permit, license or approval. No action, proceeding, revocation proceeding, writ, injunction or claim is pending or, to the Company’s knowledge, threatened or imminent against the Company or any of its Subsidiaries relating to Occupational Laws.

(o) Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP and the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.

 

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(p) Intellectual Property. The Company and each Subsidiary owns, possesses, or can acquire on reasonable terms, all Intellectual Property necessary for the conduct of the Company’s and its Subsidiaries’ business as now conducted or as described in the SEC Reports to be conducted, except as such failure to own, possess, or acquire such rights would not reasonably be expected to have a Material Adverse Effect. Furthermore, (A) to the knowledge of the Company, there is no infringement, misappropriation or violation by third parties of any such Intellectual Property in a manner that, or the effect of which, is material to the Company; (B) except as disclosed in the SEC Reports, there is no pending or, to the knowledge of the Company, threatened or imminent, action, suit, proceeding or claim by others challenging the Company’s or any of its Subsidiaries’ rights in or to any such Intellectual Property; (C) neither the Intellectual Property owned by the Company and its Subsidiaries, nor the Intellectual Property licensed to the Company and its Subsidiaries, has been adjudged invalid or unenforceable, in whole or in part, and, except as disclosed in the SEC Reports, there is no pending or, to the knowledge of the Company, threatened or imminent, action, suit, proceeding or claim by others challenging the validity or scope of any such Intellectual Property; (D) except as disclosed in the SEC Reports, there is no pending or, to the knowledge of the Company, threatened or imminent, action, suit, proceeding or claim by others that the Company or any of its Subsidiaries infringes, misappropriates or otherwise violates any Intellectual Property or other proprietary rights of others and neither the Company nor any of its Subsidiaries has received any written notice of such claim; and (E) to the Company’s knowledge, no employee of the Company or any of its Subsidiaries is in or has ever been in violation of any term of any employment contract, patent disclosure agreement, invention assignment agreement, non-competition agreement, non-solicitation agreement, nondisclosure agreement or any restrictive covenant to or with a former employer where the basis of such violation relates to such employee’s employment with the Company or any of its Subsidiaries or actions undertaken by the employee while employed with the Company or any of its Subsidiaries, except as such violation would not reasonably be expected to have a Material Adverse Effect. “Intellectual Property” shall mean all patents, patent applications, trade and service marks, trade and service mark registrations, trade names, copyrights, licenses, inventions, trade secrets, domain names, technology, know-how and other intellectual property.

(q) Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including, but not limited to, directors and officers insurance coverage. Neither the Company nor any Subsidiary has been notified in writing that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.

(r) Transactions With Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of the Company or any Subsidiary and, none of the employees of the Company or any Subsidiary is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, providing for the borrowing of money from or lending of money to or otherwise requiring

 

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payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member or partner, in each case in excess of $120,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company.

(s) Sarbanes-Oxley; Internal Accounting Controls. The Company is in compliance with all applicable provisions of the Sarbanes-Oxley Act and the rules and regulations of the Commission thereunder. The Company maintains disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 under the Exchange Act) and such controls and procedures are effective in ensuring that material information relating to the Company, including its Subsidiaries, is made known to the principal executive officer and the principal financial officer. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences; and (v) the interactive data in eXtensible Business Reporting Language included or incorporated by reference in the Registration Statement fairly presents the required information in all material respects. Except as disclosed in the SEC Reports, since the end of the Company’s most recent audited fiscal year, there has been (i) no material weakness in the Company’s internal control over financial reporting (whether or not remediated) and (ii) no change in the Company’s internal control over financial reporting that has materially adversely affected, or is reasonably likely to materially adversely affect, the Company’s internal control over financial reporting

(t) Certain Fees. Other than the fees payable to the Placement Agent and to the financial advisor to the Lead Purchaser, no brokerage or finder’s fees or commissions are or will be payable by the Company or any Subsidiary to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.

(u) Private Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as contemplated hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.

 

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(v) Investment Company. The Company is not, and immediately after receipt of payment for the Securities, will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.

(w) Registration Rights. Other than each of the Purchasers or as set forth in the SEC Reports, no Person has any right to cause the Company or any Subsidiary to effect the registration under the Securities Act of any securities of the Company or any Subsidiary.

(x) Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all listing and maintenance requirements of any Trading Market on which the Common Stock is listed. The Common Stock is currently eligible for electronic transfer through the Depository Trust Company or another established clearing corporation and the Company is current in payment of the fees to the Depository Trust Company (or such other established clearing corporation) in connection with such electronic transfer.

(y) Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation as a result of the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities.

(z) Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information that it believes constitutes or might constitute material, non-public information. The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company and its Subsidiaries, their respective businesses and the transactions contemplated hereby, when taken together with the SEC Reports and the Disclosure Schedules to this Agreement, is true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.

 

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(aa) No Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.

(bb) Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know of no basis for any such claim.

(cc) No General Solicitation. Neither the Company nor any Person acting on behalf of the Company has offered or sold any of the Securities by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the Purchasers and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.

(dd) Foreign Corrupt Practices. None of the Company, any Subsidiary or any of their respective offices, directors, supervisors, managers or employees or, to the knowledge of the Company or any Subsidiary, any agent or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person acting on its behalf of which the Company is aware) which is in violation of law or (iv) violated any provision of FCPA, the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions signed December 17, 1997 and the U.K. Bribery Act 2010.

(ee) Accountants. Mayer Hoffman McCann P.C., who has certified certain financial statements of the Company and the Subsidiaries and delivered its report with respect to the audited consolidated financial statements and schedules filed with the Commission as part of the SEC Reports, is an independent registered public accounting firm with respect to the Company within the meaning of the Securities Act and the applicable rules and regulations thereunder adopted by the Commission and the Public Company Accounting Oversight Board (United States).

 

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(ff) Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities. The Company further represents to each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

(gg) Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Placement Agent in connection with the placement of the Securities or to the financial advisor to the Lead Purchaser.

(hh) FDA. The Company and the Subsidiaries possess, or qualify for applicable exemptions to, such valid and current registrations, listings, approvals, exemptions, clearances, licenses, certificates, authorizations or permits and supplements or amendments thereto issued or required by the appropriate state, federal or foreign regulatory agencies or bodies necessary to conduct their business (collectively, “Permits”), including, without limitation, all such Permits required by the United States Food and Drug Administration (the “FDA”), the United States Department of Health and Human Services, the United States Centers for Medicare & Medicaid Service, the European Medicines Agency, Health Canada or any other state, federal or foreign agencies or bodies engaged in the regulation of medical devices (including diagnostic products), drugs, biologics or biohazardous materials. All of the material Permits are valid and in full force and effect, the Company and its Subsidiaries are in material compliance with the terms and conditions of all such Permits, and no event has occurred which allows, or after notice or lapse of time would allow, revocation or termination thereof, or results in any other material impairment of the rights of the holder of any material Permit. The Company and the Subsidiaries have not received any written notice of proceedings relating to the revocation or modification of, or non-compliance with, any Permits, the lack of which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company and the Subsidiaries are, and since October 1, 2017, have been in material compliance with all applicable regulatory post-market reporting obligations under any Health Care Laws,

 

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including, without limitation, the FDA’s adverse event reporting requirements at 21 CFR Parts 310, 314, 600, and 803, and, to the extent applicable, the respective counterparts thereof promulgated by governmental authorities in countries outside the United States. Except as disclosed in SEC Reports, neither the Company nor any of its Subsidiaries has had any product, clinical laboratory or manufacturing site (whether Company-owned or that of a third party manufacturer for the Company’s products) subject to a governmental authority (including FDA) shutdown or import or export prohibition, or received any FDA Form 483 or other governmental authority notice of inspectional observations, “warning letters,” “untitled letters,” requests to make changes to the Company’s or its Subsidiaries’ products, processes or operations, or similar correspondence or notice from the FDA or other governmental authority alleging or asserting material noncompliance with any applicable Health Care Laws. To the Company’s knowledge, neither the FDA nor any other governmental authority is considering such action.

(ii) Form S-3 Eligibility. The Company is eligible to register the resale of the Securities for resale by the Purchasers on Form S-3 promulgated under the Securities Act.

(jj) Stock Option Plans. Each stock option granted by the Company under the Company’s stock option plan was granted (i) in accordance with the terms of the Company’s stock option plan and (ii) with an exercise price at least equal to the fair market value of the Common Stock on the date such stock option would be considered granted under GAAP and applicable law. No stock option granted under the Company’s stock option plan has been backdated. The Company has not granted, and there is no and has been no Company policy or practice to grant, stock options prior to, or otherwise coordinate the grant of stock options with, the release or other public announcement of material information regarding the Company or its Subsidiaries or their financial results or prospects.

(kk) Office of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company’s knowledge, any director, officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).

(ll) Money Laundering. The operations of the Company and the Subsidiaries are and have been conducted at all times, and their respective officers, directors, supervisors, managers and employees are, in compliance with all applicable financial recordkeeping and reporting requirements, including those of the Bank Secrecy Act, as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), Title 18 U.S. code section 1956 and 1957 and the Financial Action Task Force on Money Laundering, and the applicable anti-money laundering statutes of jurisdictions where the Company and each of its Subsidiaries conduct business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Anti-Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its Subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the best knowledge of the Company, threatened.

 

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(mm) No Disqualification Events. With respect to the Securities to be offered and sold hereunder in reliance on Rule 506 under the Securities Act, none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person” and, together, “Issuer Covered Persons”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations under Rule 506(e), and has furnished to the Purchasers a copy of any disclosures provided thereunder.

(nn) Other Covered Persons. Other than the Placement Agent and the financial advisor to the Lead Purchaser, the Company is not aware of any person (other than any Issuer Covered Person) that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with the sale of any Securities.

(oo) Tender Offer Agreement. None of the Company’s representations and warranties and, to the Company’s knowledge, none of the representations and warranties of EOS contained in the Tender Offer Agreement are untrue in any material respect.

(pp) Waiver of Lock-Up Agreement. The Company has received a waiver to its existing lock-up agreement with respect to the transactions contemplated by this Agreement and the Debt Exchange Agreement.

3.2 Representations and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein, in which case they shall be accurate as of such date):

(a) Organization; Authority. Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company, trust or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate, partnership, limited liability company, trust or similar action, as applicable, on the part of such Purchaser. Each Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof,

 

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will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

(b) Own Account. Such Purchaser understands that the Securities are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law (this representation and warranty not limiting such Purchaser’s right to sell the Securities pursuant to the Registration Statement or otherwise in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.

(c) Purchaser Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act.

(d) Experience of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment. Such Purchaser and its advisors, if any, have been furnished with all materials relating to the business, financial condition and results of operations of the Company, and materials relating to the offer and sale of the Securities, that have been requested by such Purchaser or its advisors, if any. Such Purchaser acknowledges and understands that its investment in the Securities involves a significant degree of risk.

(e) General Solicitation. Such Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

 

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(f) Access to Information. Such Purchaser acknowledges that it has had the opportunity to review the Transaction Documents (including all exhibits and schedules thereto) and the SEC Reports and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Such Purchaser acknowledges and agrees that neither the Placement Agent nor any Affiliate of the Placement Agent has provided such Purchaser with any information or advice with respect to the Securities nor is such information or advice necessary or desired. Neither the Placement Agent nor any Affiliate has made or makes any representation as to the Company or the quality of the Securities and the Placement Agent and any Affiliate may have acquired non-public information with respect to the Company which is not material to the Company or the transaction contemplated hereby. In connection with the issuance of the Securities to such Purchaser, neither the Placement Agent nor any of its Affiliates has acted as a financial advisor or fiduciary to such Purchaser.

(g) No “Bad Actor” Disqualification. Such Purchaser has not taken any of the actions set forth in, and is not subject to, the disqualification provisions of Rule 506(d)(1) of the Securities Act.

(h) No Intent to Effect a Change of Control. Such Purchaser has no present intent to effect a “change of control” of the Company as such term is understood under the rules promulgated pursuant to Section 13(d) of the Exchange Act.

(i) Residency; Non-U.S. Persons. Such Purchaser’s office in which its investment decision with respect to the Securities was made is located at the address immediately below such Purchaser’s name on its signature page hereto. If Purchaser is not a United States person, the Purchaser hereby represents that the Purchaser has satisfied the laws of the Purchaser’s jurisdiction in connection with any invitation to subscribe for the Securities or any use of the Transaction Documents, including (i) the legal requirements within the Purchaser’s jurisdiction for the purchase of the Securities, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale or transfer of the Securities. The Purchaser’s subscription and payment for, and the Purchaser’s continued beneficial ownership of, the Securities will not violate any applicable securities or other laws of the Purchaser’s jurisdiction.

(j) No Conflicts. The execution, delivery and performance by such Purchaser of the Transaction Documents and the consummation by such Purchaser of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of such Purchaser or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such Purchaser is a party, or (iii) result in a violation of any law,

 

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rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to such Purchaser, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Purchaser to perform its obligations hereunder.

(k) Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement. Other than to other Persons party to this Agreement or to such Purchaser’s representatives, including, without limitation, its officers, directors, partners, legal and other advisors, agents and Affiliates bound by a duty of confidentiality to such Purchaser, such Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding the foregoing, for the avoidance of doubt, nothing contained herein shall constitute a representation or warranty against, or a prohibition of, any actions with respect to the borrowing of, arrangement to borrow, identification of the availability of, and/or securing of, securities of the Company in order for such Purchaser (or its broker or other financial representative) to effect Short Sales or similar transactions in the future.

The Company acknowledges and agrees that the representations contained in this Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transactions contemplated hereby.

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

4.1 Transfer Restrictions.

(a) The Securities may only be disposed of in compliance with state and federal securities laws, provided that in no event shall the Securities be transferred prior to the Offer Consummation, other than pursuant to a repurchase by the Company in accordance with Section 4.13 below. In connection with any transfer of Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a

 

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Purchaser, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act. As a condition of transfer other than pursuant to an effective registration statement or Rule 144, any such transferee shall agree in writing to be bound by the terms of this Agreement and the Registration Rights Agreement and shall have the rights and obligations of a Purchaser under this Agreement and the Registration Rights Agreement.

(b) The Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the following form:

THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

(c) Certificates evidencing the Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof), (i) while a registration statement (including the Registration Statement) covering the resale of such security is effective under the Securities Act, (ii) following any sale of such Shares pursuant to Rule 144, (iii) if such Shares are eligible for sale under Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Shares without volume or manner-of-sale restrictions, or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission). The Company shall cause its counsel to issue a legal opinion to the Transfer Agent promptly after the Effective Date if required by the Transfer Agent to effect the removal of the legend hereunder. The Company agrees that following the Effective Date or at such time as such legend is no longer required under this Section 4.1(c), it will, no later than the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined below) following the delivery by a Purchaser to the Company or the Transfer Agent of a certificate representing Shares, as the case may be, issued with a restrictive legend, deliver or cause to be delivered to such Purchaser a certificate representing such shares that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4.1. Certificates for Securities subject to legend removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by crediting the account of the Purchaser’s prime broker with the Depository Trust Company System as directed by such Purchaser. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of a certificate representing Shares, issued with a restrictive legend.

 

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(d) Each Purchaser, severally and not jointly with the other Purchasers, agrees with the Company that such Purchaser will sell any Securities pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Securities are sold pursuant to a Registration Statement, they will be sold in compliance with the plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend from certificates representing Securities as set forth in this Section 4.1 is predicated upon the Company’s reliance upon this understanding.

4.2 Furnishing of Information; Public Information. Until no Purchaser owns Securities, the Company covenants to maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act.

4.3 Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.

4.4 Securities Laws Disclosure; Publicity. The Company shall (a) no later than 5:30 p.m. (New York City time) on the Trading Day immediately following the date hereof, issue a press release disclosing the material terms of the transactions contemplated hereby, and (b) file a Current Report on Form 8-K, including the Transaction Documents as exhibits thereto, with the Commission within the time required by the Exchange Act. From and after the issuance of such press release, the Company represents to the Purchasers that it shall have publicly disclosed all material, non-public information delivered to any of the Purchasers by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon the issuance of such press release, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, agents, employees or Affiliates on the one hand, and any of the Purchasers or any of their Affiliates on the other hand, shall terminate. Prior to issuing any other press releases with respect to the transactions contemplated hereby, the Company shall provide the Lead Purchaser with a copy of such press release for its review and comment and the Company shall not issue any such press release nor otherwise make any such public statement without the prior consent of the Lead Purchaser, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the Company shall promptly provide the Lead Purchaser with prior notice of

 

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such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except: (a) as required by federal securities law in connection with (i) any registration statement contemplated by the Registration Rights Agreement and (ii) the filing of final Transaction Documents with the Commission and (b) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this clause (b).

4.5 Stockholder Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that any Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchasers.

4.6 Use of Proceeds. The Company shall use the net proceeds from the sale of the Securities hereunder for the transactions contemplated by the Tender Offer Agreement and working capital purposes and shall not use such proceeds: (a) for the satisfaction of any portion of the Company’s debt (other than payment of trade payables in the ordinary course of the Company’s business and prior practices), (b) for the redemption of any Common Stock or Common Stock Equivalents, except as otherwise provided in Section 4.13 hereof, (c) for the settlement of any outstanding litigation or (d) in violation of FCPA or OFAC regulations. The net cash proceeds to be received by the Company pursuant to the terms hereof and the cash currently reflected on the Company’s most recent balance sheet, are sufficient to satisfy the cash component of the total consideration required to be paid by the Company to the stockholders of EOS pursuant to the terms of the Tender Offer Agreement.

4.7 Indemnification of Purchasers. Subject to the provisions of this Section 4.7, the Company will indemnify and hold each Purchaser and its directors, officers, shareholders, members, partners, trustees, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners, trustees, employees or agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents. If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the

 

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Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel to the Purchaser Party, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to (A) any conduct by such Purchaser Party which has been finally judicially determined to constitute fraud, gross negligence or willful misconduct or (B) such Purchaser Party’s breach of a representation, warranty, covenant or agreement made by or to be performed on the part of such Purchaser Party under the Transaction Documents. The indemnification required by this Section 4.7 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to any cause of action or similar right of any Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law.

4.8 Listing of Common Stock. The Company shall, if applicable: (i) in the time and manner required by the principal Trading Market, prepare and file with such Trading Market an additional shares listing application covering the Shares, (ii) provide to the Purchasers evidence of such additional shares listing application and (iii) maintain the listing or quotation of such Common Stock on such Trading Market or another Trading Market. The Company agrees to maintain the eligibility of the Common Stock for electronic transfer through the Depository Trust Company or another established clearing corporation, including, without limitation, by timely payment of fees to the Depository Trust Company or such other established clearing corporation in connection with such electronic transfer.

4.9 Subsequent Equity Sales. From the date hereof until the earlier of (i) the Offer Consummation or (ii) the Acquisition Termination Event, neither the Company nor any Subsidiary shall issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock Equivalents or file with the SEC a registration statement under the 1933 Act relating to any shares of Common Stock or Common Stock Equivalents, except pursuant to the terms of agreements to which the Company is currently a party or as described in Schedule 4.9. Notwithstanding the foregoing, this Section 4.9 shall not apply in respect of an Exempt Issuance.

4.10 Equal Treatment of Purchasers. No consideration (including any modification of any Transaction Document) shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction Documents. For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise.

 

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4.11 Certain Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither it, nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including Short Sales, of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4. Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to the initial press release as described in Section 4.4, such Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information included in the Transaction Documents and the Disclosure Schedules. Notwithstanding the foregoing, and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in any securities of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4 and (iii) no Purchaser shall have any duty of confidentiality or duty not to trade in the securities of the Company to the Company or its Subsidiaries after the issuance of the initial press release as described in Section 4.4. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.

4.12 Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request of any Purchaser.

4.13 Acquisition Termination Repurchase. Within five Business Days following an Acquisition Termination Event, the Company shall give notice (the “Acquisition Termination Repurchase Notice”) to the Purchasers that an Acquisition Termination Event has occurred, and the Company shall repurchase the Shares from each Purchaser in whole (but not in part) unconditionally and without defense or right of set off of any kind, at the Per Share Purchase Price (but in no event shall the total amount received for such Shares be less than the Subscription

 

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Amount) on the Acquisition Termination Repurchase Date (as defined below) plus any accrued and unpaid interest as set forth below. On the Acquisition Termination Repurchase Date, the Company shall deliver to each Purchaser, via wire transfer instructions provided by such Purchaser, immediately available funds equal to the applicable aggregate Per Share Purchase Price as set forth opposite such Purchaser’s name on Exhibit A hereto, plus interest on the Per Share Purchase Price at the rate per annum of 9% (computed on the basis of a 365 day year for the actual number of days elapsed) for such Purchaser’s Shares from the Closing Date to the date such funds are received by Purchasers, and the Purchasers shall deliver to the Company or its Transfer Agent (a) any physical certificates representing the Shares, if applicable, properly endorsed for transfer to the Company, or (b) with respect to any Shares held in book-entry form, duly executed instructions for transfer of such Shares to the Company, and in each case such further documentation as may be reasonably requested by the Transfer Agent to effect the repurchase of such Shares by the Company. Upon the payment of the aggregate Per Share Purchase Price by the Company to the Purchasers, the Company shall become the legal and beneficial owner of the Shares being repurchased and all rights and interests therein or relating thereto, and the Company shall have the right to retain and transfer to its own name, or retire, the number of Shares being repurchased by the Company. For purposes of this Agreement, “Acquisition Termination Repurchase Date” means the date specified by the Company in the Acquisition Termination Repurchase Notice that is not less than three Business Days following the delivery of the Acquisition Termination Repurchase Notice.

4.14 HSR Act. In connection with the transactions contemplated by this Agreement, Lead Purchaser and the Company shall, or shall cause their respective Affiliates to, comply promptly but in no event later than ten (10) Business Days after the date hereof with all applicable notification and reporting requirements of the HSR Act. To the extent permitted by applicable law, such parties shall request early termination of any such filings and shall work together and shall furnish to one another such necessary information and reasonable assistance as the other may require in connection with its preparation of any filing or submission under the HSR Act or other Antitrust Law. Such parties shall keep one another promptly apprised of the status of, promptly provide each other with copies of, and give each other reasonable advance notice of, and the opportunity to comment on (which comments shall be considered in good faith), all communications with, proposed filings with or submissions to, and all inquiries or requests for additional information from, the Antitrust Division of the United States Department of Justice, the United States Federal Trade Commission or any other governmental authority that enforces Antitrust Laws, and shall comply promptly with any such reasonable inquiry or request. The Company and Lead Purchaser shall use their reasonable best efforts to (a) obtain the termination or expiration of all waiting periods under the HSR Act and (b) obtain all clearances, consents, authorizations, approvals, actions, or non-actions required under the HSR Act or other Antitrust Law to consummate the transactions contemplated hereby, in each case, in connection with the transactions contemplated by this Agreement. Lead Purchaser shall pay all filing fees associated with filings it makes pursuant to the HSR Act.

 

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ARTICLE V.

MISCELLANEOUS

5.1 Termination. This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing has not been consummated on or before July 31, 2021; provided, that such termination will not affect the right of any party to sue for any breach by any other party (or parties).

5.2 Fees and Expenses. The Company shall pay (i) the fees and expenses of counsel for the Lead Purchaser up to a maximum of $100,000 and (ii) the fees of the Lead Purchaser’s financial advisor in an amount equal to 3% of Lead Purchaser’s investment hereunder, not to exceed $3,000,000. Except as otherwise expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement and in connection with any Acquisition Termination Repurchase set forth in Section 4.13 hereof. The Company shall pay all Transfer Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company and any exercise notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers and in connection with any Acquisition Termination Repurchase set forth in Section 4.13 hereof.

5.3 Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

5.4 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile or email attachment at the facsimile number or email address as set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile or email address at the facsimile number or email address as set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.

5.5 Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and Purchasers holding at least a majority in interest of the Shares then outstanding or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought, provided that if any amendment, modification or waiver disproportionately and

 

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adversely impacts a Purchaser (or group of Purchasers), the consent of such disproportionately impacted Purchaser (or group of Purchasers) shall also be required. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right. Any proposed amendment or waiver that disproportionately, materially and adversely affects the rights and obligations of any Purchaser relative to the comparable rights and obligations of the other Purchasers shall require the prior written consent of such adversely affected Purchaser. Any amendment effected in accordance with accordance with this Section 5.5 shall be binding upon each Purchaser and holder of Securities and the Company.

5.6 Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

5.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of Purchasers holding at least a majority in interest of the Shares then outstanding (other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”

5.8 No Third-Party Beneficiaries. The Placement Agent shall be the third party beneficiary of the representations and warranties of the Company in Section 3.1 and the representations and warranties of the Purchasers in Section 3.2. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.7 and this Section 5.8.

5.9 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, trustees, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any Proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such Proceeding is improper or is an inconvenient venue for such Proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified

 

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mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.    If any party hereto shall commence an Proceeding to enforce any provisions of the Transaction Documents other than Section 4.13 hereof, then, in addition to the obligations of the Company under Section 4.7, the prevailing party in such Proceeding shall be reimbursed by the non-prevailing party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Proceeding.

5.10 Survival. The representations, warranties, covenants and agreements contained herein shall survive the Closing and the delivery of the Securities for the applicable statute of limitations.

5.11 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signatures complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

5.12 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

5.13 Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.

5.14 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any Proceeding for specific performance of any such obligation the defense that a remedy at law would be adequate.

 

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5.15 Payment Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

5.16 Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Purchaser shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any Proceeding for such purpose. Each Purchaser has been represented by its own separate legal counsel in its review and negotiation of the Transaction Documents. For reasons of administrative convenience only, each Purchaser and its respective counsel may choose to communicate with the Company through the legal counsel of the Placement Agent. The legal counsel of the Placement Agent does not represent any of the Purchasers and only represents the Placement Agent. The Company has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by any of the Purchasers. It is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction Document is between the Company and a Purchaser, solely, and not between the Company and the Purchasers collectively and not between and among the Purchasers.

5.17 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

5.18 Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

 

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5.19 Further Assurances. The parties shall execute and deliver all such further instruments and documents and take all such other actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.

5.20 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

(Signature Pages Follow)

 

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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

COMPANY:      Address for Notice:
ALPHATEC HOLDINGS, INC.      Alphatec Holdings, Inc.
     Attn: General Counsel
     5818 El Camino Real
     Carlsbad, CA 92008
By:  

/s/ Jeffrey Black

     Fax: (760) 431-9083
  Name: Jeffrey Black     
  Title: Chief Financial Officer     

 

With a copy to (which shall not constitute notice):

Latham & Watkins LLP

Attn: Matthew Bush

12670 High Bluff Drive

San Diego, CA 92130

Fax: (858) 523-5450

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]


[PURCHASER SIGNATURE PAGES TO ATEC SECURITIES PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

Name of Purchaser:   Squadron Capital LLC  

Signature of Authorized Signatory of Purchaser:  /s/ David R. Pelizzon  

Name of Authorized Signatory:   David R. Pelizzon  

Title of Authorized Signatory:   President  

Email Address of Authorized Signatory:                                              

Facsimile Number of Authorized Signatory:                                             

Address for Notice to Purchaser:

Address for Delivery of Securities to Purchaser (if not same as address for notice):

Subscription Amount:   $89,999,999.10  

Shares:   8,100,810  

EIN Number:

[SIGNATURE PAGES CONTINUE]


[PURCHASER SIGNATURE PAGES TO ATEC SECURITIES PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

Name of Purchaser:   Avidity Master Fund LP  

Signature of Authorized Signatory of Purchaser:  /s/ Michael Gregory  

Name of Authorized Signatory:   Michael Gregory  

Title of Authorized Signatory:   Director  

Email Address of Authorized Signatory:                                              

Facsimile Number of Authorized Signatory:                                             

Address for Notice to Purchaser:

Address for Delivery of Securities to Purchaser (if not same as address for notice):

Subscription Amount:   $18,178,004.24  

Shares:   1,636,184  

EIN Number:

[SIGNATURE PAGES CONTINUE]


[PURCHASER SIGNATURE PAGES TO ATEC SECURITIES PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

Name of Purchaser:   Avidity Capital Fund II LP  

Signature of Authorized Signatory of Purchaser:  /s/ Michael Gregory  

Name of Authorized Signatory:   Michael Gregory  

Title of Authorized Signatory:   Director  

Email Address of Authorized Signatory:                                              

Facsimile Number of Authorized Signatory:                                             

Address for Notice to Purchaser:

Address for Delivery of Securities to Purchaser (if not same as address for notice):

Subscription Amount:   $1,821,995.56  

Shares:   163,996  

EIN Number:

[SIGNATURE PAGES CONTINUE]


[PURCHASER SIGNATURE PAGES TO ATEC SECURITIES PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

Name of Purchaser:   First Light Focus Fund, LP  

Signature of Authorized Signatory of Purchaser:  /s/ Matthew P. Arens  

Name of Authorized Signatory:   Matthew P. Arens  

Title of Authorized Signatory:   Managing Member of the GP  

Email Address of Authorized Signatory:                                              

Facsimile Number of Authorized Signatory:                                             

Address for Notice to Purchaser:

Address for Delivery of Securities to Purchaser (if not same as address for notice):

Subscription Amount:   $7,999,999.92  

Shares:   720,072  

EIN Number:

[SIGNATURE PAGES CONTINUE]


[PURCHASER SIGNATURE PAGES TO ATEC SECURITIES PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

Name of Purchaser:   Perceptive Life Sciences Master Fund, Ltd.  

Signature of Authorized Signatory of Purchaser:  /s/ James Mannix  

Name of Authorized Signatory:   James Mannix  

Title of Authorized Signatory:   COO  

Email Address of Authorized Signatory:                                              

Facsimile Number of Authorized Signatory:                                             

Address for Notice to Purchaser:

Address for Delivery of Securities to Purchaser (if not same as address for notice):

Subscription Amount:   $19,999,999.80  

Shares:   1,800,180  

EIN Number:


EXHIBIT A

SCHEDULE OF PURCHASERS

 

Purchaser Name

   Number of Shares to Be
Purchased
     Aggregate Purchase Price of
Securities
 

Squadron Capital LLC

     8,100,810        89,999,999.10  

Avidity Master Fund LP

     1,636,184        18,178,004.24  

Avidity Capital Fund II LP

     163,996        1,821,995.56  

First Light Focus Fund, LP

     720,072        7,999,999.92  

Perceptive Life Sciences Master Fund, Ltd.

     1,800,180        19,999,999.80  
  

 

 

    

 

 

 

TOTAL

     12,421,242        137,999,998.62  
  

 

 

    

 

 

 
EX-10.2

Exhibit 10.2

DEBT EXCHANGE AGREEMENT

This Debt Exchange Agreement (this “Agreement”) is dated as of December 16, 2020, between Alphatec Holdings, Inc., a Delaware corporation (the “Company”), and Squadron Capital LLC, a Delaware limited liability company (“Lead Purchaser”).

WHEREAS, the Company, certain of its subsidiaries, and Squadron Medical Finance Solutions LLC, as lender and an affiliate of Lead Purchaser, have entered into that certain Third Amendment, dated on or about the date hereof (the “Third Amendment”), to that certain Credit, Security and Guaranty Agreement, dated as of November 6, 2018 by and among the Company, certain of its subsidiaries and Lead Purchaser (as amended, the “Existing Credit Agreement”), pursuant to which, among other things, the Company and Lead Purchaser desire to exchange $30,000,000 of the Existing Term Loan (as defined in the Existing Credit Agreement) for shares of common stock of the Company, par value $0.0001 per share (“Common Stock”);

WHEREAS, the Company, Lead Purchaser and certain other purchasers (the “SPA Purchasers”) have entered into that certain Securities Purchase Agreement, dated on or about the date hereof (as the same may be amended from time to time, the “Securities Purchase Agreement”), pursuant to which the Company will sell and issue to the SPA Purchasers shares of Common Stock;

WHEREAS, in connection with the Securities Purchase Agreement and this Agreement, the Company, Lead Purchaser and the SPA Purchasers have entered into that certain Registration Rights Agreement, dated on or about the date hereof (as the same may be amended from time to time, the “Registration Rights Agreement,”), pursuant to which the Company will agree to provide certain registration rights in respect of the shares of Common Stock of the Company sold hereunder and thereunder; and

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and/or Rule 506 of Regulation D promulgated thereunder, the Company desires to issue to Lead Purchaser a number of shares of its Common Stock, and, in exchange, Lead Purchaser desires to transfer to the Company $30,000,000 of outstanding debt obligations under the Existing Term Loan, as more fully described in this Agreement.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:

ARTICLE I.

DEFINITIONS

1.1 Definitions. In addition to the terms defined elsewhere in this Agreement the following terms have the meanings set forth in this Section 1.1:

Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.


Board of Directors” means the board of directors of the Company.

Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

Closing” means the closing of the Debt Exchange pursuant to Section 2.1.

Closing Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) Lead Purchaser’s obligations and (ii) the Company’s obligations to deliver the Shares, in each case, have been satisfied or waived, with such date to be agreed to by the Company and Lead Purchaser but (i) in no event earlier than the second business day after the date hereof and (ii) in no event later than the fifth business day after the date hereof.

Commission” means the United States Securities and Exchange Commission.

Common Stock” shall have the meaning ascribed to such term in the Recitals.

Company Counsel” means Latham & Watkins LLP, with offices located at 12670 High Bluff Drive, San Diego, California 92310.

Debt Exchange” shall have the meaning ascribed to such term in Section 2.1.

Disclosure Schedules” shall have the meaning ascribed to such term in the Securities Purchase Agreement.

Effective Date” means the earliest of the date that (a) the initial Registration Statement has been declared effective by the Commission, (b) all of the Shares have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without the requirement for the Company to be in compliance with the current public information required under Rule 144 and without volume or manner-of-sale restrictions, (c) following the one-year anniversary of the Closing Date provided that no holder of Shares is an Affiliate of the Company, (d) all of the Shares may be sold pursuant to an exemption from registration under Section 4(a)(1) of the Securities Act without volume or manner-of-sale restrictions and Company Counsel has delivered to such holders a standing written unqualified opinion that resales may then be made by such holders of the Shares pursuant to such exemption which opinion shall be in form and substance reasonably acceptable to such holders or (e) such date as agreed to in writing by the Company and the Lead Purchaser.

Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

Lead Purchaser Party” shall have the meaning ascribed to such term in Section 4.3.

 

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Nasdaq” means the Nasdaq Stock Market LLC.

Per Share Purchase Price” equals $11.11.

Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.

Registration Rights Agreement” shall have the meaning ascribed to such term in the Recitals.

Registration Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale by the Lead Purchaser of the Shares.

Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

SEC Reports” shall have the meaning ascribed to such term in the Securities Purchaser Agreement.

Securities Act” shall have the meaning ascribed to such term in the Recitals.

Securities Purchase Agreement” shall have the meaning ascribed to such term in the Recitals.

Shares” shall have the meaning ascribed to such term in the Recitals.

Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock).

SPA Purchasers” shall have the meaning ascribed to such term in the Recitals.

Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a) and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.

Trading Day” means a day on which the principal Trading Market is open for trading.

 

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Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange (or any successors to any of the foregoing).

Transaction Documents” means this Agreement, the Third Amendment, the Registration Rights Agreement, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.

Transfer Agent” means Computershare, Inc., the current transfer agent of the Company, with a mailing address of 480 Washington Avenue, Jersey City, New Jersey 07310, and any successor transfer agent of the Company.

ARTICLE II. DEBT EXCHANGE

2.1 Debt Exchange. On the Closing Date, upon the terms and subject to the conditions set forth herein, (a) the Company shall issue to Lead Purchaser 2,700,270 shares of Common Stock (the “Shares”), and Lead Purchaser shall accept such Shares, and, in exchange (b) Lead Purchaser shall transfer to the Company the principal amount of $30,000,000 of outstanding debt obligations under the Existing Term Loan, and the Company shall accept and retire such outstanding debt obligations (collectively, the “Debt Exchange”). The number of Shares to be received by Lead Purchaser was determined by dividing $30,000,000 by the Per Share Purchase Price and rounding down to the nearest whole share. The Company shall deliver the Shares to Lead Purchaser, and the Company and Lead Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur remotely via exchange of documents and signatures.

2.2 Deliveries.

(a) On or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:

(i) this Agreement duly executed by the Company;

(ii) a copy of the irrevocable instructions to the Transfer Agent instructing the Transfer Agent to deliver, on an expedited basis, a certificate or in book entry form, at Lead Purchaser’s election (unless Lead Purchaser indicates otherwise, Shares shall be delivered in book entry form), evidencing the Shares, with 50% of the Shares registered in the name of Lead Purchaser and 50% of the Shares registered in the name of Tawani Holdings LLC, so long as Tawani Holdings LLC makes customary representations and warranties to the Company prior to the Closing Date with respect to such issuance;

(iii) the Third Amendment and the Third Amended and Restated Term Note (as defined in the Third Amendment), each duly executed by the Company; and the Registration Rights Agreement duly executed by the Company.

 

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(b) On or prior to the Closing Date, Lead Purchaser shall deliver or cause to be delivered to the Company the following:

(i) this Agreement duly executed by Lead Purchaser;

(ii) the Third Amendment and the Third Amended and Restated Term Note (as defined in the Third Amendment), each duly executed by Lead Purchaser; and

(iii) the Registration Rights Agreement duly executed by Lead Purchaser.

2.3 Closing Conditions.

(a) The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:

(i) the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse Effect, in all respects) on the Closing Date of the representations and warranties of Lead Purchaser contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);

(ii) all obligations, covenants and agreements of Lead Purchaser required to be performed at or prior to the Closing Date shall have been performed in all material respects;

(iii) no stop order or suspension of trading shall have been imposed by Nasdaq, the SEC or any other governmental or regulatory body with respect to public trading in the Common Stock; and

(iv) the delivery by Lead Purchaser of the items set forth in Section 2.2(b) of this Agreement.

(b) The respective obligations of Lead Purchaser hereunder in connection with the Closing are subject to the following conditions being met:

(i) the accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse Effect, in all respects) as of the date of this Agreement of the representations and warranties of the Company contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);

(ii) all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed in all material respects;

(iii) no stop order or suspension of trading shall have been imposed by Nasdaq, the SEC or any other governmental or regulatory body with respect to public trading in the Common Stock;

 

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(iv) the Company shall have filed with Nasdaq a Supplemental Listing Application for the listing of the Shares, and Nasdaq shall have raised no objection to the consummation of the transactions contemplated by the Transaction Documents; and

(v) the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company. Except as set forth in the Disclosure Schedules, the Company hereby confirms that the representations and warranties contained in Section 3.1 of the Securities Purchase Agreement are true and correct as of the date hereof as though made pursuant to this Agreement.

3.2 Representations and Warranties of Lead Purchaser. Lead Purchaser hereby confirms that the representations and warranties contained in Section 3.2 of the Securities Purchase Agreement as they relate severally to Lead Purchaser and not to any other purchaser thereunder are true and correct as of the date hereof as though made by Lead Purchaser pursuant to this Agreement.

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

4.1 Transfer Restrictions.

(a) The Shares may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Shares other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of Lead Purchaser, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Shares under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and the Registration Rights Agreement and shall have the rights and obligations of Lead Purchaser under this Agreement and the Registration Rights Agreement.

(b) Lead Purchaser agrees to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Shares in the following form:

THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN

 

6


EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

(c) Certificates evidencing the Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof), (i) while a registration statement (including the Registration Statement) covering the resale of such security is effective under the Securities Act, (ii) following any sale of such Shares pursuant to Rule 144, (iii) if such Shares are eligible for sale under Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Shares without volume or manner-of-sale restrictions, or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission). The Company shall cause its counsel to issue a legal opinion to the Transfer Agent promptly after the Effective Date if required by the Transfer Agent to effect the removal of the legend hereunder. The Company agrees that following the Effective Date or at such time as such legend is no longer required under this Section 4.1(c), it will, no later than the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined below) following the delivery by Lead Purchaser to the Company or the Transfer Agent of a certificate representing Shares, as the case may be, issued with a restrictive legend, deliver or cause to be delivered to Lead Purchaser a certificate representing such shares that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4.1. Certificates for Shares subject to legend removal hereunder shall be transmitted by the Transfer Agent to Lead Purchaser by crediting the account of Lead Purchaser’s prime broker with the Depository Trust Company System as directed by Lead Purchaser. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of a certificate representing Shares, issued with a restrictive legend.

(d) Lead Purchaser agrees with the Company that Lead Purchaser will sell any Shares pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Shares are sold pursuant to a Registration Statement, they will be sold in compliance with the plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend from certificates representing Shares as set forth in this Section 4.1 is predicated upon the Company’s reliance upon this understanding.

4.2 Furnishing of Information; Public Information. Until Lead Purchaser owns no Shares, the Company covenants to maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act.

 

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4.3 Indemnification of Lead Purchaser. Subject to the provisions of this Section 4.3, the Company will indemnify and hold Lead Purchaser and its directors, officers, shareholders, members, partners, trustees, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls Lead Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners, trustees, employees or agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Lead Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Lead Purchaser Party may suffer or incur as a result of or relating to any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents. If any action shall be brought against any Lead Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Lead Purchaser Party. Any Lead Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Lead Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel to the Lead Purchaser Party, a material conflict on any material issue between the position of the Company and the position of such Lead Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Lead Purchaser Party under this Agreement (y) for any settlement by a Lead Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to (A) any conduct by such Lead Purchaser Party which has been finally judicially determined to constitute fraud, gross negligence or willful misconduct or (B) such Lead Purchaser Party’s breach of a representation, warranty, covenant or agreement made by or to be performed on the part of such Lead Purchaser Party under the Transaction Documents. The indemnification required by this Section 4.3 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to any cause of action or similar right of any Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law.

4.4 Listing of Common Stock. The Company shall, if applicable: (i) in the time and manner required by the principal Trading Market, prepare and file with such Trading Market an additional shares listing application covering the Shares, (ii) provide to the Lead Purchaser evidence of such additional shares listing application and (iii) maintain the listing or quotation of such Common Stock on such Trading Market or another Trading Market. The Company agrees to maintain the eligibility of the Common Stock for electronic transfer through the Depository Trust Company or another established clearing corporation, including, without limitation, by timely payment of fees to the Depository Trust Company or such other established clearing corporation in connection with such electronic transfer.

 

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4.5 Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Shares as required under Regulation D and to provide a copy thereof, promptly upon request of Lead Purchaser. The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Shares for, sale to Lead Purchaser at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request of Lead Purchaser.

ARTICLE V.

MISCELLANEOUS

5.1 Termination. This Agreement may be terminated by Lead Purchaser by written notice to the Company, if the Closing has not been consummated on or before January 15, 2021; provided, that such termination will not affect the right of any party to sue for any breach by any other party (or parties).

5.2 Fees and Expenses. Except as otherwise expressly set forth in the Transaction Documents and the Securities Purchase Agreement to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company and any exercise notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection with the delivery of any Shares to Lead Purchaser.

5.3 Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

5.4 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile or email attachment at the facsimile number or email address as set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile or email address at the facsimile number or email address as set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.

 

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5.5 Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and Lead Purchaser, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right. Any amendment effected in accordance with accordance with this Section 5.5 shall be binding upon Lead Purchaser and the Company.

5.6 Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

5.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of Lead Purchaser (other than by merger). Lead Purchaser may assign any or all of its rights under this Agreement to any Person to whom Lead Purchaser assigns or transfers any Shares, provided that such transferee agrees in writing to be bound, with respect to the transferred Shares, by the provisions of the Transaction Documents that apply to “Lead Purchaser.”

5.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

5.9 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, trustees, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any Proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such Proceeding is improper or is an inconvenient venue for such Proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.    If any party hereto shall commence an Proceeding to enforce any provisions of the Transaction Documents hereof, then, in addition to the obligations of the Company under Section 4.3, the prevailing party in such Proceeding shall be reimbursed by the non-prevailing party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Proceeding.

 

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5.10 Survival. The representations, warranties, covenants and agreements contained herein shall survive the Closing and the delivery of the Shares for the applicable statute of limitations.

5.11 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signatures complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

5.12 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

5.13 Replacement of Shares. If any certificate or instrument evidencing any Shares is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Shares.

5.14 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of Lead Purchaser and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any Proceeding for specific performance of any such obligation the defense that a remedy at law would be adequate.

5.15 Payment Set Aside. To the extent that the Company makes a payment or payments to Lead Purchaser pursuant to any Transaction Document or Lead Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential,

 

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set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

5.16 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

5.17 Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

5.18 Further Assurances. The parties shall execute and deliver all such further instruments and documents and take all such other actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.

5.19 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

(Signature Pages Follow)

 

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IN WITNESS WHEREOF, the parties hereto have caused this Debt Exchange Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

COMPANY:     Address for Notice:
ALPHATEC HOLDINGS, INC.     Alphatec Holdings, Inc.
      Attn: General Counsel
      5818 El Camino Real
      Carlsbad, CA 92008
By:  

/s/ Jeffrey Black

    Fax: (760) 431-9083
  Name: Jeffrey Black    
  Title: Chief Financial Officer    

 

With a copy to (which shall not constitute notice):

Latham & Watkins LLP

Attn: Matthew Bush

12670 High Bluff Drive

San Diego, CA 92130

Fax: (858) 523-5450

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR LEAD PURCHASER FOLLOWS]


LEAD PURCHASER:     Address for Notice:
SQUADRON CAPITAL LLC     Squadron Capital LLC
      Attn: David R. Pelizzon
      18 Hartford Avenue
      Granby, CT 06035
By:  

/s/ David R. Pelizzon

   
  Name: David R. Pelizzon    
  Title: President    

 

With a copy to (which shall not constitute notice):

Reed Smith LLP

Attn: Joel Schaider

10 South Wacker Drive, 40th Floor

Chicago, IL 60606

Fax: (312) 207-1000

EX-10.3

Exhibit 10.3

Execution Version

THIRD AMENDMENT TO

CREDIT, SECURITY AND GUARANTY AGREEMENT

This THIRD AMENDMENT TO CREDIT, SECURITY AND GUARANTY AGREEMENT (this “Amendment”) is entered into as of December 16, 2020, by and among ALPHATEC HOLDINGS, INC., a Delaware corporation, ALPHATEC SPINE, INC., a California corporation and SAFEOP SURGICAL, INC., a Delaware corporation (each individually as a “Borrower” and collectively, as “Borrowers”) and SQUADRON MEDICAL FINANCE SOLUTIONS LLC, a Delaware limited liability company as lender (“Lender”).

RECITALS:

A. Lender made loans and certain other financial accommodations to Borrowers as evidenced by that certain Credit, Security and Guaranty Agreement dated as of November 6, 2018 by and among Borrowers and Lender (as amended or modified to date, the “Existing Credit, Security and Guaranty Agreement”).

B. Borrowers and Lender desire to exchange $30,000,000 of the Existing Term Loan (as defined in the Existing Credit, Security and Guaranty Agreement) for shares of common stock of Alphatec Holdings, Inc., pursuant to the terms of a certain debt exchange agreement dated as of the date hereof between Alphatec Holdings, Inc. and Squadron Capital LLC (“Debt Exchange Agreement”); and

C. Borrowers and Lender hereby agree to amend the Existing Credit, Security and Guaranty Agreement to reflect the Existing Term Loan as adjusted for the aforementioned debt exchange and to make such other changes as described in this Amendment.

NOW, THEREFORE, in consideration of the foregoing Recitals, which are hereby incorporated into this Amendment and made a part hereof, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Incorporation of Recitals. Borrowers and Lender hereby agree that all of the Recitals in this Amendment are hereby incorporated into and made a part hereof.

2. Capitalized Terms. Except as otherwise defined in this Amendment, each capitalized term used herein shall have the same meaning as that assigned to it in the Existing Credit, Security and Guaranty Agreement, and such definitions shall be incorporated herein by reference, as if fully set forth herein.

3. Amendments to Existing Credit, Security and Guaranty Agreement.

A. Section 1.1 of the Existing Credit, Security and Guaranty Agreement is hereby amended by adding the following definitions in the appropriate alphabetical location:

Debt Exchange Agreement” means that certain Debt Exchange Agreement dated as of the Third Amendment Effective Date between Alphatec Holdings, Inc. and Squadron Capital LLC.

EOS imaging S.A. Transaction” means the acquisition of EOS imaging S.A. by means a of a public tender offer pursuant to the terms of that certain Tender Offer Agreement, dated as of December 16, 2020, by and between Alphatec Holdings, Inc. and EOS imaging S.A., a société anonyme organized and existing under the laws of France.


Third Amendment Effective Date” means December 16, 2020.

B. Clause (l) of the definition of “Permitted Investments” in Section 1.1 of the Existing Credit, Security and Guaranty Agreement is hereby amended and restated as follows:

(l) the EOS imaging S.A. Transaction.

C. The definition of “Termination Date” in Section 1.1 of the Existing Credit, Security and Guaranty Agreement is hereby amended and restated as follows:

Termination Date” means the earlier to occur of (a) June 30, 2026, (b) any date on which Lender accelerates the maturity of the Term Loan pursuant to Section 10.2, or (c) the termination date stated in any notice of termination of this Agreement provided by Borrowers in accordance with Section 2.8.

D. Section 2.1(a) of the Existing Credit, Security and Guaranty Agreement is hereby amended and restated as follows:

(a) Term Loan Amount.

(i) Borrowers and Lender acknowledge that Lender has made a term loan to Borrowers in the aggregate original principal amount equal to $45,000,000 (“Existing Term Loan”).

(ii) On the terms and conditions set forth herein, Lender agrees to make to Borrowers an additional term loan in the aggregate principal amount equal to $40,000,000 (“Additional Term Loan” and together with the Existing Term Loan, the “Term Loan”). Each drawing by Borrowers under the Additional Term Loan shall be subject to the following conditions:

(A) no Default or Event of Default shall occur or be continuing before and after giving effect to such drawing by Borrowers under the Additional Term Loan;

(B) proceeds of all drawings by Borrowers under the Additional Term Loan shall be used for working capital and general corporate purposes of the Borrowers;

(C) Borrowers shall give Lender a written notice specifying the amount Borrowers desire to draw under the Additional Term Loan not less than fifteen (15) days before each drawing;

(D) there shall be no more than two drawings in any calendar month;

(E) drawings of the Additional Term Loan which are prepaid, whether by mandatory or optional prepayments, may be reborrowed;

 

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(F) each drawing by Borrowers under the Additional Term Loan shall be in a minimum amount of $1,000,000 and incremental amounts in integral multiples of $100,000; and

(G) no drawing by Borrowers under the Additional Term Loan shall be made following the Termination Date.

E. Section 2.1(b)(i) of the Existing Credit, Security and Guaranty Agreement is hereby amended and restated as follows:

(i) There shall become due and payable, and Borrowers shall repay the Existing Term Loan through scheduled payments beginning on December 31, 2023 and continuing on the last Business Day of each month thereafter, in monthly principal payments of $1,000,000. Notwithstanding the foregoing, the outstanding principal amount of the Term Loan shall become immediately due and payable in full on the Termination Date.

F. Section 2.1(b) of the Existing Credit, Security and Guaranty Agreement is hereby amended to add the following new subsection (iv) as follows:

(iv) Notwithstanding anything in this Agreement to the contrary, the Debt Exchange Agreement amends this Agreement by reducing the Existing Term Loan in the principal amount of the Existing Term Loan by $30,000,000 in exchange for 2,700,270 shares of common stock of Alphatec Holdings, Inc. with no other fees or other amounts payable other than as provided in the Debt Exchange Agreement. For purposes of this Section 2.1(b)(iv) only, “Existing Term Loan” shall mean $65,000,000.

G. Section 2.1(d)(i) of the Existing Credit, Security and Guaranty Agreement is hereby amended and restated as follows:

(i) Except as provided in subsection (ii) below, the Term Loan shall accrue interest at the LIBOR Rate plus the Applicable Margin; provided, however, that in no event shall interest accrue at a rate lower than 9% per annum or greater than 12% per annum.

H. Section 2.1(e) of the Existing Credit, Security and Guaranty Agreement is hereby amended to add the following sentence at the end of subparagraph (ii) thereof:

For purposes of this Section 2.1(e) only, (i) “Initial Term Loan” shall mean $35,000,000, (ii) “Existing Term Loan” shall mean $65,000,000 and (iii) “Additional Term Loan” shall mean $35,000,000.

I. Section 2.2 of the Existing Credit, Security and Guaranty Agreement is hereby amended to add the following new subsection (f) as follows:

(f) Undrawn Fee. For the period from and including the Third Amendment Effective Date to the Termination Date, Borrowers shall pay to Lender an unused fee equal to 1% per annum (compounded on the basis of a year of 360 days and the actual number of days elapsed) times the daily undrawn portion of the Additional Term Loan. Such undrawn fee shall be payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year (commencing on the first such date occurring after the date hereof) and on the Termination Date.

 

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J. Section 2.3 of the Existing Credit, Security and Guaranty Agreement is hereby amended and restated as follows:

Section 2.3 Term Note. The Term Loan made by Lender shall be evidenced by a third amended and restated promissory note in the form attached hereto as Exhibit A executed by Borrowers on a joint and several basis (as amended and restated, “Term Note”) in an original principal amount equal to Eighty Five Million Dollars ($85,000,000).

K. Schedule 2.1 of the Existing Credit, Security and Guaranty Agreement is hereby replaced in its entirety with Schedule 2.1 attached hereto.

L. Exhibit A of the Existing Credit, Security and Guaranty Agreement is hereby replaced in its entirety with Exhibit A attached hereto.

4. Representations, Warranties and Covenants. Each Borrower hereby represents, warrants and covenants to Lender as follows:

A. no Unmatured Default or Event of Default has occurred and is continuing under the Existing Credit, Security and Guaranty Agreement or any other Loan Document;

B. the representations and warranties of Borrowers in the Existing Credit, Security and Guaranty Agreement and each other Loan Document are true and correct in all material respects as of the date hereof as though each of said representations and warranties was made on the date hereof (except, in each case for representations and warranties which by their terms are expressly applicable to an earlier date, in which case, such representations and warranties shall be true and correct in all material respects as of such earlier date); and

C. this Amendment has been duly authorized, executed and delivered on behalf of Borrowers and this Amendment constitutes the legal, valid and binding obligation of Borrowers, enforceable in accordance with its terms except as enforceability may be limited by applicable bankruptcy, insolvency or laws affecting creditor’s rights generally and by general principles of equity.

5. Conditions Precedent. The obligation of Lender to enter into this Amendment is subject to the following conditions precedent:

A. Borrowers shall have entered into or caused to be entered into, executed and delivered to Lender:

 

  (i)

a fully executed signature page to this Amendment,

 

  (ii)

a fully executed Debt Exchange Agreement;

 

  (iii)

the Third Amended and Restated Term Note in the form attached hereto as Exhibit A; and

 

  (iv)

such consents and approvals acceptable to Lender.

 

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B. Lender shall have received a certificate from the Secretary of each Borrower (i) attesting to the resolutions of the Board of Directors authorizing its execution, delivery and performance of this Amendment, (ii) authorizing specific officers of Borrower to execute this Amendment, and (iii) attesting to the incumbency and signature of specific officers of Borrower.

C. Borrowers shall reimburse all reasonable and documented fees and expenses of Lender’s counsel in connection with this Amendment.

7. Waiver of Claims. As of the date hereof, each Borrower hereby acknowledges, agrees and affirms that it currently possesses no claims, defenses, offsets, recoupment or counterclaims of any kind or nature against or with respect to the enforcement of the Existing Credit, Security and Guaranty Agreement or any other Loan Document or any amendments thereto (collectively, the “Claims”), nor does any Borrower have knowledge of any facts that would or might give rise to any Claims. If facts now exist which would or could give rise to any Claim against or with respect to the enforcement of the Existing Credit, Security and Guaranty Agreement or any other Loan Document, as amended hereby, each Borrower hereby unconditionally, irrevocably and unequivocally waives to the extent permitted by applicable law and fully releases any and all such Claims as if such Claims were the subject of a lawsuit (other than the defense of payment in full), adjudicated to final judgment from which no appeal could be taken and therein dismissed with prejudice.

8. Ratification of Existing Credit, Security and Guaranty Agreement and the other Loan Documents. From and after the date hereof, the Existing Credit, Security and Guaranty Agreement and the other Loan Documents shall be deemed to be amended and modified as provided herein and in the Debt Exchange Agreement, and, except as so amended and modified, the Existing Credit, Security and Guaranty Agreement and the other Loan Documents shall continue in full force and effect and the Existing Credit, Security and Guaranty Agreement and the applicable provisions of this Amendment and the Debt Exchange Agreement shall be read, taken and construed as one and the same instrument. Each Borrower hereby remakes, ratifies and reaffirms all of its Obligations under the terms of the Existing Credit, Security and Guaranty Agreement and the other Loan Documents and any other document to which it is a party evidencing, creating or securing the Term Loan, as of the date hereof after giving effect to the amendments contained herein including, without limitation, the granting of a security interest thereunder. On and after the date hereof, the term “Credit, Security and Guaranty Agreement” used in any document evidencing the Term Loan shall mean the Existing Credit, Security and Guaranty Agreement as amended pursuant to this Amendment and the Debt Exchange Agreement. Except as expressly set forth in this Amendment, nothing in this Amendment shall constitute a waiver or relinquishment of (a) any Default or Event of Default under any of the Loan Documents, (b) any of the agreements, terms or conditions contained in any of the Loan Documents, (c) any rights or remedies of Lender with respect to the Loan Documents, or (d) the rights of Lender to collect the full amounts owing to them under the Loan Documents.

9. Consents. Each Borrower hereby represents that this Amendment does not violate any material provision of any instrument, document, contract or agreement to which such party is a party, or each Borrower hereby represents that it has obtained all requisite consents under those third party instruments prior to entering into this Amendment.

10. Further Assurances. The parties hereto, shall, at any time and from time to time, following the execution of this Amendment, execute and deliver all such further instruments and take all such further action as may be reasonably necessary or appropriate in order to carry out the provisions of this Amendment.

 

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11. Counterparts. This Amendment may be executed in any number of counterparts, and by the different parties hereto and thereto on the same or separate counterparts, each of which, when so executed and delivered, shall be deemed to be an original; all the counterparts for this Amendment shall together constitute one and the same agreement. Delivery of a counterpart to this Amendment by facsimile or electronic transmission shall constitute delivery of an original counterpart hereto.

12. Representation by Counsel. Each Borrower hereby represents that it has been represented by competent counsel of its choice in the negotiation and execution of this Amendment; that it has read and fully understands the terms hereof, that such party and its counsel have been afforded an opportunity to review, negotiate and modify the terms of this Amendment, and that it intends to be bound hereby.

13. No Third Party Beneficiaries. The terms and provisions of this Amendment shall be for the sole benefit of the parties hereto and their respective successors and assigns; no other person, firm, entity or corporation shall have any right, benefit or interest under this Amendment.

14. Governing Law and Submission to Jurisdiction. The provision of Section 11.8 of the Existing Credit, Security and Guaranty Agreement is hereby incorporated herein by reference.

15. WAIVER OF JURY TRIAL. EACH BORROWER AND LENDER HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE FINANCING DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH BORROWER AND LENDER ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN ENTERING INTO THIS AMENDMENT AND THE OTHER FINANCING DOCUMENTS, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH BORROWER AND LENDER WARRANTS AND REPRESENTS THAT IT HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment to Credit, Security and Guaranty Agreement dated as of the date first written above.

 

ALPHATEC HOLDINGS, INC.,
a Delaware corporation
By:   /s/ Jeffrey Black
  Jeffrey Black
  Chief Financial Officer
ALPHATEC SPINE, INC.
a California corporation
By:   /s/ Jeffrey Black
  Jeffrey Black
  Chief Financial Officer
SAFEOP SURGICAL, INC.
a Delaware corporation
By:   /s/ Jeffrey Black
  Jeffrey Black
  Chief Financial Officer

Third Amendment to

Credit, Security and Guaranty Agreement


LENDER:
SQUADRON MEDICAL FINANCE SOLUTIONS, LLC
By:   /s/ David Pelizzon
  David Pelizzon
  President

Third Amendment to

Credit, Security and Guaranty Agreement


Exhibit A

Form of Third Amended and Restated Term Note

 

$85,000,000    December __, 2020

FOR VALUE RECEIVED, the undersigned (individually, a “Borrower” and, collectively, the “Borrowers”), jointly and severally promise to pay to the order of Squadron Medical Finance Solutions LLC, a Delaware limited liability company (hereinafter, with any subsequent holders, the “Lender”), 18 Hartford Avenue, Granby, CT 06035, the principal sum of EIGHTY FIVE MILLION DOLLARS ($85,000,000), made by the Lender to or for the account of the Borrowers pursuant to the Credit, Security and Guaranty Agreement dated as of November 6, 2018 (as amended, modified, supplemented or restated and in effect from time to time, the “Credit Agreement”) by and among the Borrowers, the other Credit Parties from time to time party thereto, and the Lender, with interest at the rate and payable in the manner stated therein.

This is a promissory note (“Term Note”) to which reference is made in Section 2.3 of the Credit Agreement and is subject to all terms and provisions thereof. The principal of, and interest on, this Term Note shall be payable at the times, in the manner, and in the amounts as provided in the Credit Agreement and shall be subject to prepayment and acceleration as provided therein. Capitalized terms used herein and not defined herein shall have the meanings assigned to such terms in the Credit Agreement.

The Lender’s books and records concerning the Term Loan, the accrual of interest thereon, and the repayment of such Term Loan, shall be prima facie evidence of the indebtedness to the Lender hereunder.

No delay or omission by the Lender in exercising or enforcing any of the Lender’s powers, rights, privileges, remedies, or discretions hereunder shall operate as a waiver thereof on that occasion nor on any other occasion. No waiver of any Event of Default shall operate as a waiver of any other Event of Default.

This Term Note shall be binding upon each Borrower, and each endorser and guarantor hereof, and upon their respective successors, assigns, and representatives, and shall inure to the benefit of the Lender and its successors, endorsees, and assigns.

This Term Note amends and restates that certain Amended and Restated Term Note dated as of May 30, 2020 made by Borrowers in favor of Lender in the original principal amount of $100,000,000 (the “Existing Term Note”) and constitutes a replacement and substitute for the Existing Term Note. To the extent that the principal balance of this Term Note includes the indebtedness hitherto evidenced by the Existing Term Note, the indebtedness evidenced by the Existing Term Note is a continuing indebtedness and nothing herein shall be deemed to constitute a payment, settlement or novation of the Existing Term Note or a release of any collateral heretofore pledged to secure payment and performance of the Existing Term Note, all such collateral hereby expressly pledged to secure the payment and performance of the obligations hereunder as if fully set forth herein.

THIS TERM NOTE AND ALL MATTERS RELATING HERETO OR ARISING HEREFROM (WHETHER SOUNDING IN CONTRACT LAW, TORT LAW OR OTHERWISE), SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.


EACH BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW YORK COUNTY, STATE OF NEW YORK AND IRREVOCABLY AGREES THAT, SUBJECT TO LENDER’S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH COURTS. EACH BORROWER EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON SUCH BORROWER BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO SUCH BORROWER AT THE ADDRESS SET FORTH IN THE CREDIT AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.

EACH BORROWER, AND LENDER BY ITS ACCEPTANCE HEREOF, HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS TERM NOTE OR THE TRANSACTIONS CONTEMPLATED THEREBY AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH BORROWER AND LENDER ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN ISSUING AND ACCEPTING THIS TERM NOTE, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH BORROWER AND LENDER WARRANTS AND REPRESENTS THAT IT HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

[SIGNATURE PAGE FOLLOWS]

 

- 2 -


IN WITNESS WHEREOF, the Borrowers have caused this Term Note to be duly executed as of the date set forth above.

 

ALPHATEC HOLDINGS, INC.
By:               
Name: Jeffrey Black
Title: Chief Financial Officer
ALPHATEC SPINE, INC.
By:               
Name: Jeffrey Black
Title: Chief Financial Officer
SAFEOP SURGICAL, INC.
By:                   
Name: Jeffrey Black
Title: Chief Financial Officer


Schedule 2.1

AMORTIZATION OF EXISTING TERM LOAN

 

Payment Date

  

Amount

December 31, 2023 through June 30, 2026

   $1,000,000

June 30, 2026

   Outstanding balance of all principal and interest

Notice of Exercise – Warrant – Alphatec Holdings, Inc.

EX-10.4

Exhibit 10.4

Third Amended and Restated Term Note

 

$85,000,000    December 16, 2020

FOR VALUE RECEIVED, the undersigned (individually, a “Borrower” and, collectively, the “Borrowers”), jointly and severally promise to pay to the order of Squadron Medical Finance Solutions LLC, a Delaware limited liability company (hereinafter, with any subsequent holders, the “Lender”), 18 Hartford Avenue, Granby, CT 06035, the principal sum of EIGHTY FIVE MILLION DOLLARS ($85,000,000), made by the Lender to or for the account of the Borrowers pursuant to the Credit, Security and Guaranty Agreement dated as of November 6, 2018 (as amended, modified, supplemented or restated and in effect from time to time, the “Credit Agreement”) by and among the Borrowers, the other Credit Parties from time to time party thereto, and the Lender, with interest at the rate and payable in the manner stated therein.

This is a promissory note (“Term Note”) to which reference is made in Section 2.3 of the Credit Agreement and is subject to all terms and provisions thereof. The principal of, and interest on, this Term Note shall be payable at the times, in the manner, and in the amounts as provided in the Credit Agreement and shall be subject to prepayment and acceleration as provided therein. Capitalized terms used herein and not defined herein shall have the meanings assigned to such terms in the Credit Agreement.

The Lender’s books and records concerning the Term Loan, the accrual of interest thereon, and the repayment of such Term Loan, shall be prima facie evidence of the indebtedness to the Lender hereunder.

No delay or omission by the Lender in exercising or enforcing any of the Lender’s powers, rights, privileges, remedies, or discretions hereunder shall operate as a waiver thereof on that occasion nor on any other occasion. No waiver of any Event of Default shall operate as a waiver of any other Event of Default.

This Term Note shall be binding upon each Borrower, and each endorser and guarantor hereof, and upon their respective successors, assigns, and representatives, and shall inure to the benefit of the Lender and its successors, endorsees, and assigns.

This Term Note amends and restates that certain Amended and Restated Term Note dated as of May 30, 2020 made by Borrowers in favor of Lender in the original principal amount of $100,000,000 (the “Existing Term Note”) and constitutes a replacement and substitute for the Existing Term Note. To the extent that the principal balance of this Term Note includes the indebtedness hitherto evidenced by the Existing Term Note, the indebtedness evidenced by the Existing Term Note is a continuing indebtedness and nothing herein shall be deemed to constitute a payment, settlement or novation of the Existing Term Note or a release of any collateral heretofore pledged to secure payment and performance of the Existing Term Note, all such collateral hereby expressly pledged to secure the payment and performance of the obligations hereunder as if fully set forth herein.

THIS TERM NOTE AND ALL MATTERS RELATING HERETO OR ARISING HEREFROM (WHETHER SOUNDING IN CONTRACT LAW, TORT LAW OR OTHERWISE), SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

EACH BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW YORK COUNTY, STATE OF NEW YORK AND IRREVOCABLY AGREES THAT, SUBJECT TO LENDER’S ELECTION, ALL ACTIONS OR


PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH COURTS. EACH BORROWER EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON SUCH BORROWER BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO SUCH BORROWER AT THE ADDRESS SET FORTH IN THE CREDIT AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.

EACH BORROWER, AND LENDER BY ITS ACCEPTANCE HEREOF, HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS TERM NOTE OR THE TRANSACTIONS CONTEMPLATED THEREBY AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH BORROWER AND LENDER ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN ISSUING AND ACCEPTING THIS TERM NOTE, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH BORROWER AND LENDER WARRANTS AND REPRESENTS THAT IT HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

[SIGNATURE PAGE FOLLOWS]

 

- 2 -


IN WITNESS WHEREOF, the Borrowers have caused this Term Note to be duly executed as of the date set forth above.

 

ALPHATEC HOLDINGS, INC.
By:   /s/ Jeffrey Black
Name: Jeffrey Black
Title: Chief Financial Officer
ALPHATEC SPINE, INC.
By:   /s/ Jeffrey Black
Name: Jeffrey Black
Title: Chief Financial Officer
SAFEOP SURGICAL, INC.
By:   /s/ Jeffrey Black
Name: Jeffrey Black
Title: Chief Financial Officer
EX-99.1

Exhibit 99.1

 

LOGO

ATEC Continues to Advance Clinical Prowess

with Renewed Agreement to Acquire EOS Imaging

 

   

Improves clinical performance in spine by adding unprecedented information to the AlphaInformatiX Platform

 

   

Accelerates revenue growth through immediate access to EOS’ prestigious 380-unit installed base, which overlaps minimally with ATEC’s client base

 

   

Facilitates future global expansion via EOS’ established infrastructure

 

   

Leverages the portfolio adoption driven by SafeOp with significant incremental opportunities to monetize clinical information

 

   

Hosting webcast for investors December 17 at 6:00 A.M. PT

CARLSBAD, Calif., December 16, 2020 – Alphatec Holdings, Inc. (“ATEC” or the “Company”) (Nasdaq: ATEC), a medical device company dedicated to revolutionizing the approach to spine surgery, announced today that it has entered into an agreement to acquire EOS imaging, SA, for a purchase price of $79.7 million, plus the retirement debt of $37.2 million, in an all-cash transaction.

“SafeOp has substantiated the value of clinically actionable information by accelerating product adoption across our portfolio,” said Pat Miles, Chairman and Chief Executive Officer. “Our original investment thesis for EOS as a solution to better inform surgery never changed. With this transaction, we take another major step toward distinguishing ATEC clinical performance with improved information from diagnosis through follow-up.”

EOS imaging is globally recognized for its rapid, low dose, biplanar full-body imaging and 3D modeling capabilities. EOS technology informs the entire surgical process by capturing a calibrated, full-body image in a standing (weight-bearing) position, enabling precise measurement of anatomical angles and dimensions. The resulting imaging drives a more accurate understanding of patient alignment during diagnosis, characterizes bone quality, elevates the likelihood of surgical goal fulfillment by integrating a fully informed plan into surgery, and supports a post-operative assessment against the original surgical plan.

Growth through the monetization of improved outcomes

Uniting ATEC’s AlphaInformatiX platform with EOS’ technology will create a platform distinctively equipped to address the requirements of spine surgery.

 

   

Reduces cost to serve with precise pre-surgical planning that significantly improves inventory efficiency;

 

   

Facilitates patient-specific implants and expands optionality with distinctive bone quality measurements that can improve treatment effectiveness;

 


LOGO

 

   

Informs the restoration of alignment with a scientific, objective, data-driven approach to meet a crucial, unmet need in spine that is most correlated with long-term successful outcomes;1

 

   

Expands ATEC’s academic reach through EOS’ wealth of installations in research institutions and influence shaped by over 500 peer-reviewed scientific articles and endorsement by thought leaders worldwide;

 

   

Provides immediate access to EOS’ 380-unit installed base and expedites ATEC’s future ability to enter and penetrate key international markets.

“EOS is a game-changing technology that has unquestionably improved the treatment of children, adolescents and adults with spinal deformity,” commented Dr. Chris Shaffrey of Duke Spine Center in North Carolina.

“ATEC Spine and EOS both believe in the power of information to improve surgical outcomes,” said Mike Lobinsky, Chief Executive Officer of EOS imaging. “We are pleased to revisit this transaction and eager to combine the strengths and know-how of our organizations. I am confident that we will quickly create a highly differentiated, end-to-end informational offering that will accelerate growth in the U.S. and pave the way for the future global growth of our combined entity.”

Transaction Terms

Once closed, the transaction is expected to immediately expand ATEC’s revenue base through the addition of EOS’s revenue run rate and the monetization of information through incremental pull-through and cross-selling opportunities. The Company expects the acquisition to be accretive to revenue, revenue growth, adjusted EBITDA and free cash flow in the first full year of operations following the transaction close.

The Boards of Directors of both ATEC and EOS have approved the execution of a tender offer agreement (the “Tender Offer Agreement”), through which ATEC will launch a cash tender offer for all of the issued and outstanding shares and convertible notes of EOS imaging for a total purchase price of $116.9 million (the “Offer”).

Under the terms of the Offer, EOS’ shareholders would receive EUR €2.45 (or approximately USD $2.99) per EOS share, representing a premium of 41% to the closing price of EOS shares on December 16, 2020.

 

1 

Yeh, Kuang-Ting MD, PhD; Lee, Ru-Ping RN, PhD; Chen, Ing-Ho MD; Yu, Tzai-Chiu MD; Liu, Kuan-Lin MD, PhD; Peng, Cheng-Huan MD, Wang, Jen-Hung MD; Wu, Wen-Tien MD, PhD. October 2018. Correlation of Functional Outcomes and Sagittal Alignment After Long Instrumented Fusion for Degenerative Thoracolumbar Spinal Disease. Spine: Volume 43, Issue 19.


LOGO

 

Holders of approximately 23% of EOS’ outstanding common shares have entered into agreements to tender into the Offer for cash, representing approximately EUR €15.1 million (or approximately USD $18.4 million) of the total purchase price.

The Offer will also target all outstanding EOS convertible notes (“EOS OCEANE”, or the “Notes”). The holders of the Notes would receive either EUR €7.01 (or approximately USD $8.55) per EOS OCEANE (including interest due through May 31, 2021).

The Company expects to file the Offer with the French Financial Markets Authority (Autorité des marches financiers) (“AMF”) in February 2021. The transaction is expected to close in the second quarter of 2021, subject to customary closing conditions, including obtaining French regulatory clearance regarding foreign investments and a favorable opinion of the EOS board of directors based on the fairness opinion issued by the independent expert appointed by EOS.

Financing Matters

In connection with the proposed combination, ATEC has arranged a strategic financing with over $178 million in financing commitments, including a definitive securities purchase agreement to raise $138 million in a private placement of common stock at a price of $11.11 per share. The private placement is being led by Squadron Capital LLC and supported by a group of new and existing investors in ATEC, including Perceptive Advisors, Avidity Partners and First Light Asset Management. The private placement is expected to close within five business days prior to the filing of the Offer with the AMF, which is expected to occur in February 2021, subject to the satisfaction of customary closing conditions.

ATEC also entered into a debt exchange agreement and an amendment to its existing credit agreement with Squadron, which provide for a reduction to $45 million of the existing $75 million of outstanding term debt by a conversion of $30 million of debt into shares of ATEC common stock at a price of $11.11 per share, and an increase of $15 million in the amount of available revolving financing to $40 million. Under the terms of the amended credit agreement, the maturity date on the entire term loan was extended to June 2026, and the minimum and maximum interest rates were reduced by 1% per annum from the levels in the existing credit agreement. The other material terms of the amended credit agreement remain the same as the existing term loan.

Additional details regarding the Tender Offer Agreement and financing commitments can be found in ATEC’s Current Report on Form 8-K to be filed with the SEC.

Advisors

Cowen is acting as financial and capital markets advisor to ATEC and Latham & Watkins LLP is serving as legal counsel for the acquisition transaction and private placement. Piper Sandler is acting as financial advisor to EOS imaging and Gide Loyrette Nouel is serving as legal counsel. Stifel is acting as financial advisor to Squadron and Reed Smith LLP is serving as legal counsel.

Webcast

The Company will host a webcast on December 17, 2020, at 6:00A.M. PT to discuss this transaction. The webcast can be accessed at https://edge.media-server.com/mmc/p/mij52bgk. An audio version of the webcast will also be available domestically at (877) 556-5251 and internationally at (720) 545-0036. The conference ID number is 6397277.


LOGO

 

An archived edition of the webcast and the presentation materials will be available in the Investor Relations section of ATEC’s corporate website at www.atecspine.com. In addition, an audio replay of the webcast will be available until December 24, 2020. The replay dial-in numbers are (877) 556-5251 for domestic callers and (720) 545-0036 for international callers. Please use the replay conference ID number 6397277.

About EOS imaging

Based in Paris, EOS imaging developed and commercialized imaging systems (EOS and EOSedge systems) that provide a full-body evaluation of the patient in a standing position, resulting in a comprehensive understanding of how the patient is compensating in the hips, knees and ankles to maintain an upright posture. The measurements factor into a holistic approach to the development of customized surgical plans, which can then be integrated seamlessly into the operating room.

Utilizing advanced predictive analytics, EOS technology is uniquely capable of correlating preoperative and postoperative imaging to assure, from the operating room, the achievement of alignment, the most prognostic factor of long-term successful surgical outcomes. Compared to the conventional spine-imaging modalities, X-Ray and CT, the EOS systems significantly reduce radiation doses and exam times, producing unstitched, full-body, biplanar, high-quality images at lower cost.

Key Features of the EOS imaging Portfolio

 

   

Standing full-body assessment. Head to toe biplanar exams in the weight-bearing position for accurate assessment of factors causing pain and disability to better guide treatment and surgical decisions. Surgical planning from a standing position enables alignment parameters that more closely match functional posture.

 

   

High image quality. EOSedge is the first X-ray system with high-resolution photon-counting detector that delivers outstanding-quality images, reinforcing diagnostic capabilities while addressing a broad range of imaging and orthopedic surgery challenges.

 

   

Reduced radiation exposure. Driven by the ALADA2 principle, the EOS or EOSedge exam delivers a minimal dose of radiation to reduce the long term impact of repeated imaging. With the introduction of the proprietary EOSedge Flex DoseTM feature, the dose automatically adjusts along the patient body to further optimize the radiation as well as delivering homogeneous image quality by avoiding over/under exposure in the thinner/larger parts of the body.

 

 

2 

As low as diagnostically acceptable


LOGO

 

   

Precise 3D measurements. Patient-specific measurements, dimensions and angles to make informed clinical decisions at all stages of care.

 

   

EOSapps and EOSlink for surgical planning and OR integration. Pre-operative planning software to anticipate surgical results and select components for spine surgery; pairs with surgical technologies for precise execution with EOSlink.

EOS’ installed base of over 380 imaging systems encompasses 20 of the top 25 U.S. hospitals3. EOS has imaging systems installed in more than 40 countries generating more than 1 million patient exams annually. Listed on the Euronext Paris Exchange, the company has corporate locations in the U.S., France, Canada, Germany and Singapore, and engages more than 175 employees. For additional information, please visit www.EOS-imaging.com.

About Squadron Capital LLC and Squadron Medical Finance Solutions, LLC

Squadron Capital seeks to acquire and invest in operating companies located both in the US and abroad. Squadron’s mission is long-term investment (multi-generational) and assistance to the portfolio companies’ leadership teams in the execution of their business plans. Squadron Medical Finance Solutions, a subsidiary of Squadron Capital, assists orthopedic OEMs in achieving their business objectives by offering financing of surgical instruments and implant sets, or by providing debt financing to support the broader capital requirements of growing companies. Squadron Capital is a strategic investor in a broad range of companies in the orthopedic space, both public and private.

About Alphatec Holdings, Inc.

Alphatec Holdings, Inc. (ATEC), through its wholly-owned subsidiaries, Alphatec Spine, Inc. and SafeOp Surgical, Inc., is a medical device company dedicated to revolutionizing the approach to spine surgery through clinical distinction. ATEC architects and commercializes approach-based technology that integrates seamlessly with the SafeOp Neural InformatiX System to provide real-time, objective nerve information that can enhance the safety and reproducibility of spine surgery. Additional information can be found at www.atecspine.com.

Forward Looking Statements

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of1995 that involve risks and uncertainty. Such statements are based on management’s current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The Company cautions investors that there can be no assurance that actual results or business conditions will not differ materially from those projected or suggested in such forward-looking statements. Forward-looking statements include statements about the timing of the anticipated acquisition, plans to commence the Offer, when and whether the anticipated acquisition ultimately will close, the expected

 

3 

US News & World Report Best Orthopedic Hospitals list (2019-2020)


LOGO

 

consideration to be paid in connection with the Offer, the potential benefits and synergies of the anticipated acquisition, including the expected impact on future financial and operating results, post-acquisition plans and intentions, and expectations on the completion, timing and size of the private placement and the debt exchange, and the anticipated use of proceeds therefrom. The forward-looking statements contained herein are based on the current expectations and assumptions of the Company and not on historical facts. The important factors that could cause actual operating results to differ significantly from those expressed or implied by such forward-looking statements include, but are not limited to: uncertainties as to the timing of the Offer and the closing of the acquisition; uncertainties as to the percentage of EOS securityholders tendering their shares in the Offer; the possibility that competing offers will be made and accepted; risks related to French regulatory review of the Offer; the Company’s and EOS’ ability to satisfy the conditions to the closing of the Offer on the anticipated timeline or at all; the satisfaction of conditions to closing the Offer and completing the acquisition, including applicable regulatory clearances; the occurrence of any event, change or other circumstance that could give rise to the termination of the Tender Offer Agreement; the effect of the announcement of the Offer and related transactions on the ability of the parties to retain and hire key personnel, maintain relationships with their customers and suppliers, and maintain their operating results and business generally; the inability to reach the required threshold in the Offer which would result in EOS shares continuing to be traded on Euronext and related regulatory requirements in connection therewith; the inability of the Company to secure the financing contemplated to be obtained on the expected terms or timing, or at all, whether as a result of failure to meet certain conditions or otherwise; risks related to potential litigation in connection with the Offer or the closing that may result in significant costs of defense, risks and uncertainties associated with market conditions and the satisfaction of customary closing conditions related to the financing; indemnification and liability; the risk that the businesses will not be integrated successfully; unexpected variations in market growth and demand for the combined company’s products and technologies; the risk that benefits and synergies from the acquisition may not be fully realized or may take longer to realize than expected; and the impact of the COVID-19 pandemic on the Company’s and EOS’ business and the economy. The words “believe,” “will,” “should,” “expect,” “intend,” “estimate,” “look forward,” and “anticipate,” variations of such words and similar expressions identify forward-looking statements, but their absence does not mean that a statement is not a forward-looking statement. A further list and description of these and other factors, risks and uncertainties can be found in the Company’s most recent annual report, and any subsequent quarterly and current reports, filed with the Securities and Exchange Commission. ATEC disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, unless required by law.

Certain Legal Matters

This press release is not intended to, and does not, constitute, represent or form part of any offer, invitation or solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities whether pursuant to this press release or otherwise.

The distribution of this presentation in jurisdictions outside the United States or France may be restricted by law or regulation and therefore any person who comes into possession of this presentation should inform themselves about, and comply with, such restrictions. Any failure to comply with such restrictions may constitute a violation of the securities laws or regulations of any such relevant jurisdiction.


LOGO

 

EOS is incorporated in France and listed on Euronext and any offer for its securities will be subject to French disclosure and procedural requirements, which differ from those that are applicable to offers conducted solely in the United States, including with respect to withdrawal rights, offer timetable, settlement procedures and timing of payments. The transactions described in this presentation will be structured to comply with French and U.S. securities laws and regulations applicable to transactions of this type.

Investor/Media Contact:

Tina Jacobsen

Investor Relations

(760) 494-6790

InvestorRelations@atecspine.com

Company Contact:

Jeff Black

Chief Financial Officer

Alphatec Holdings, Inc.

InvestorRelations@atecspine.com

EX-99.2

Slide 1

INFORMING BETTER SPINE SURGERY Pat Miles, Chairman and CEO Enhancing ATEC Clinical Performance with the Acquisition of EOS imaging Exhibit 99.2


Slide 2

This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of1995 that involve risks  and uncertainty. Such statements are based on management's current expectations and are subject to a number of risks and uncertainties that could  cause actual results to differ materially from those described in the forward-looking statements. Alphatec Holdings, Inc. (the Company” or “ATEC”)  cautions investors that there can be no assurance that actual results or business conditions will not differ materially from those projected or suggested  in such forward-looking statements. Forward-looking statements include statements about the timing of the anticipated acquisition, when and whether the anticipated acquisition ultimately will close, the potential benefits and synergies of the anticipated acquisition, including the expected impact on future financial and operating results, post-acquisition plans and intentions, and plans to obtain financing and the uses therefrom. The forward-looking statements contained herein are based on the current expectations and assumptions of the Company and not on historical facts.  The important factors that could cause actual operating results to differ significantly from  those expressed or implied by such forward-looking statements include, but are not limited to: uncertainties as to the timing of the proposed tender offer (the “Offer”) and the closing of the acquisition; uncertainties as to the percentage of EOS Imaging Inc. (“EOS”) security holders tendering their shares in the Offer; the possibility that competing offers will be made and accepted; risks related to French regulatory review of the Offer; the satisfaction of conditions to closing the Offer and completing the acquisition; the occurrence of any event, change or other circumstance that could give rise to the termination of the Tender Offer Agreement; the effect of the announcement of the Offer and related transactions on the ability of the parties to retain and hire key personnel, maintain relationships with their customers and suppliers, and maintain their operating results and business generally; the inability to reach a 90% threshold in the Offer which would result in EOS continuing to be traded on Euronext and related regulatory requirements in connection therewith; the inability of the Company to secure the financing contemplated to be obtained on the expected terms or timing, or at all, whether as a result of failure to meet certain conditions or otherwise; risks related to potential litigation in connection with the Offer or the closing that may result in significant costs of defense, indemnification and liability; the risk that the businesses will not be integrated successfully; unexpected variations in market growth and demand for the combined company’s products and technologies; the risk that benefits and synergies from the acquisition may not be fully realized or may take longer to realize than expected; and the impact of the COVID-19 pandemic on the Company’s and EOS’ business and the economy. The words “believe,” “will,” “should,” “expect,” “intend,” “estimate,” “look forward” and “anticipate,” variations of such words and  similar expressions identify forward-looking statements, but their absence does not mean that a statement is not a forward-looking statement. A  further list and description of these and other factors, risks and uncertainties can be found in the Company's most recent annual report, and any  subsequent quarterly and current reports, filed with the Securities and Exchange Commission. ATEC disclaims any intention or obligation to update or  revise any forward-looking statements, whether as a result of new information, future events, or otherwise, unless required by law. Certain Legal Matters This presentation is not intended to, and does not, constitute, represent or form part of any offer, invitation or solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities whether pursuant to this press release or otherwise. The distribution of this presentation in jurisdictions outside the United States or France may be restricted by law or regulation and therefore any person who comes into possession of this presentation should inform themselves about, and comply with, such restrictions. Any failure to comply with such restrictions may constitute a violation of the securities laws or regulations of any such relevant jurisdiction. EOS is incorporated in France and listed on Euronext and any offer for its securities will be subject to French disclosure and procedural requirements, which differ from those that are applicable to offers conducted solely in the United States, including with respect to withdrawal rights, offer timetable, settlement procedures and timing of payments. The transactions described in this presentation will be structured to comply with French and U.S. securities laws and regulations applicable to transactions of this type. FORWARD LOOKING STATEMENTS


Slide 3

L R Our core competence is delivering clinically valuable information. EOS’ imaging technology expands on that prowess. WHAT DISTINGUISHES ATEC? u The success of our surgeon customers depends on clinical performance. Our sole focus is on equipping them with technology that improves outcomes.


Slide 4

>80% the “currency” of spine surgery Delivering procedural requirements that improve surgical outcomes HOW INDUSTRY MAKES DECISIONS. HOW SURGEONS SERVE PATIENTS. * Management estimate unique, integrated technologies that drive adoption, loyalty, and predictability  L R NEUROMONITORING PATIENT POSITIONING CUSTOMIZED ACCESS IMPLANT DELIVERY of procedural revenue * <20% of procedural revenue WE INVEST WHERE OTHERS WON’T *


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EARLY STAGE INVESTMENT: Cervical, biologics +21% PHASE 1 INVESTMENT: Information, lateral, posterior fixation +149% +72% PHASE 2 INVESTMENT: ALIF, PLIF, TLIF $40M Growth Q3 2017 vs Q3 2020 THOSE INVESTMENTS ARE DRIVING GROWTH  Q3 2020  U.S. Sales


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SafeOp founded our conduit for delivering unprecedented information into the O.R. L R WITH EOS, WE CAN BETTER INFORM THE CLINICAL EXPERIENCE FROM END TO END SURGEONS YEARN FOR INFORMATION THAT DRIVES BETTER OUTCOMES EMG ACTIVITY EMG ACTIVITY


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CORE TENETS OF SPINE SURGERY Alignment is most correlated to long-term successful outcomes* Surgeons require an imaging platform capable of addressing all three DECOMPRESSION ADDRESS SPINE’S UNMET NEED WITH ALIGNMENT VERIFICATION INFORMATION OUR OPPORTUNITY: ALIGNMENT X *Yeh, Kuang-Ting MD, PhD; Lee, Ru-Ping RN, PhD; Chen, Ing-Ho MD; Yu, Tzai-Chiu MD; Liu, Kuan-Lin MD, PhD; Peng, Cheng-Huan MD, Wang, Jen-Hung MD; Wu, Wen-Tien MD, PhD. October 2018. Correlation of Functional Outcomes and Sagittal Alignment After Long Instrumented Fusion for Degenerative Thoracolumbar Spinal Disease. Spine: Volume 43, Issue 19. STABILIZATION


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EOS IMAGING TECHNOLOGY RAPID, CALIBRATED, STANDING FULL-BODY SCAN BIPLANAR SPINE IMAGING & ANATOMICAL MODELING Academic influence units installed globally 380 Customized care Technological foundation Advances our Core Information-Based Competency


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STRATEGIC RATIONALE Clinical distinction AlphaInformatiX (AIX) platform World-class advanced imaging knowhow + = 1 2 3 Improved long-term surgical outcomes through alignment restoration & verification Patient-specific treatments via bone quality measurement Inventory savings through pre-case planning Accelerates growth by MONETIZING IMPROVED OUTCOMES


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HOW WE MONETIZE INFORMATION AVERAGE PRODUCT CATEGORIES/ CASE 2017 1.8 2020 AlphaInformatiX Lateral TLIF PLIF ALIF ATEC Blended Cervical 1.8 CATALYST FOR CONVOYED SALES AlphaInformatiX (SafeOp) has driven adoption across our portfolio *Q3 2020 *


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SURGICAL CASE PLANNING EOS reduces the cost to serve & drives incremental pull-through EOS EXPANDS THE OPPORTUNITY OPERATIONS Pre-surgical implant planning - sends only required inventory into surgery $ ALIGNMENT Predictive analytics & rod bending technologies BONE DENSITY Customized implants specific to patient’s bone quality $ $


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Precise pre-case planning = less inventory required to support surgeries INFORMATION IMPROVES EFFICIENCY Patient-specific surgical planning will enable refined implant & instrument configurations $$$$ INVENTORY $$ INVENTORY


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Bone quality measurement = expanded stabilization optionality PATIENT-SPECIFIC IMPLANTS NORMAL SUSPECT OSTEOPENIA SUSPECT OSTEOPOROSIS INCREASED OPTIONALITY: OSSEOSCREWTM & INVICTUSTM POLYSCREW PREVIOUS SOLE MODALITY FOR POSTERIOR FIXATION Level-specific bone quality information Permits utilization of patient-specific techniques and tools


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Surgical plans that inform & integrate into the O.R. ALIGNMENT RESTORATION Scientific, objective, data-driven approach to restore alignment, the greatest correlative to long-term successful outcomes* Pre-operative surgical plans open door to leverage in-house rod-bending expertise *Yeh, Kuang-Ting MD, PhD; Lee, Ru-Ping RN, PhD; Chen, Ing-Ho MD; Yu, Tzai-Chiu MD; Liu, Kuan-Lin MD, PhD; Peng, Cheng-Huan MD, Wang, Jen-Hung MD; Wu, Wen-Tien MD, PhD. October 2018. Correlation of Functional Outcomes and Sagittal Alignment After Long Instrumented Fusion for Degenerative Thoracolumbar Spinal Disease. Spine: Volume 43, Issue 19.


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BETTER INFORMED FROM END TO END PRE-OP PLANNING SURGERY POST-OP ASSESSMENT FOLLOW-UP FULL-BODY BIPLANAR IMAGES DIAGNOSIS More accurate understanding of patient alignment Elevates likelihood of surgical goal fulfillment by integrating fully informed plans into surgery Correlates post-operative image against original surgical plan Rapid, calibrated, low-dose image capture of patient in standing (weight-bearing) position Reconciles pre-operative plan to intraoperative achievement Consistent, calibrated images allow application of predictive analytics


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TOP U.S. HOSPITAL PENETRATION Expands ATEC’s reach into academic institutions 90% of the top 10* 80% of the top 25* * US News & World Report Best Orthopedic Hospitals list (2019-2020) 5 2 2 15 1 3 2 15 6 1 6 1 6 3 1 1 1 1 11 1 3 5 3 1 1 6 2 7 1 11 1 * US News & World Report Best Orthopedic Hospitals list (2019-2020) 4 3 2 2 1 1 1 1 1 1 1 3


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PRESTIGIOUS OUS FOOTPRINT 40% of installed base N America 44% 16% A foundation to support future global expansion of installed base EMEA of installed base AsiaPac


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INFORMING BETTER SPINE SURGERY Financial Impact – Jeff Black, EVP & CFO


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P&L IMPACT Expected to be accretive to adjusted EBITDA and free cash flow following the first full year of operations FURTHER DETAIL WHEN TRANSACTION CLOSES (EXPECTED ~Q2 2021) REVENUE ADJUSTED EBITDA/ FCF Expands revenue base and accelerates growth LTM revenue ~$28M* Includes annual recurring maintenance revenue stream ~$15M* Doubled global installed base to 380+ in <4 years *From Oct 1, 2019 to Sept 30, 2020.


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PRO FORMA REVENUE PROFILE ATEC STAND-ALONE FY2019 ATEC + EOS PRO FORMA FY2019 $113M * *For illustrative purposes only.  ^ This is not intended to be guidance.  | 2019 Pro Forma = $22.1M EOS imaging (Rx = 1.1) + $113.4M for ATEC.    20E First Call Consensus = $28.4M (Rx = 1.22) for EOS imaging + $144.7M for ATEC.  | 21E First Call Consensus = $43.6M for EOS imaging (Rx = 1.22) + $178.7 for ATEC. $136M $173M * ATEC + EOS FY2020E CONSENSUS ^ ATEC + EOS FY2021E CONSENSUS ^ $222M +27% +28%


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Immediate capital access to fund purchase & runway for combined business FINANCING 1 Credit available upon ATEC request $30M credit-to-equity conversion reduces existing debt, post-deal, from $75M to $45M Reduces annualized cash interest by ~$3.5M Extends debt maturity from May ‘25 → June ’26 No maintenance covenants or pre-payment penalties PIPE gross proceeds Fully committed Priced at $11.11 / share $138M NEW COMMITMENT $123M Q3 2020 CASH BALANCE Pro forma to include October financing + $40M ADDITIONAL CREDIT +


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COMPARISON TO PREVIOUS OFFER 22 ORIGINAL OFFER (Feb 2020) UPDATED OFFER (Dec 2020) CHANGE Enterprise value (€EUR) €110.8M €86.8M (22%) Exchange rate 1.10 1.22 +11% Enterprise value ($US) $121.9M $105.9M (13%) Pro forma dilution ~44% ~19% Offer EOS EV/ LTM Revenues 5.5x 1 3.6x 2 TRANSACTION METRICS ~35% Reduction in Offer EV/LTM Revenues ~2.3x Reduction in level of implied dilution 1. 2019 EOS imaging LTM Revenues January 1, 2019 – December 31, 2019  = 20.1M EOS imaging (Rx = 1.1)     2. 2020 EOS imaging LTM Revenues October 1, 2019 – September 30, 2020 =  $28.4M (Rx = 1.22)   


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DEAL TERMS $116.9M PURCHASE PRICE, INCLUDING RETIREMENT OF DEBT $106M enterprise value (including assumption of cash) €2.45 (~$2.99) / share cash, or $79.7M  ~€7.01 (~$8.55) per convertible bond, or $37.2M ATEC TO FILE PUBLIC TENDER OFFER FOR EOS SHARES Filing & clearance by French regulatory authority (AMF) required prior to launching offer Expected filing tender mid-February; expect to have tender declared effective mid-March Expected closing Q2 2021 ~20% OF OUTSTANDING EOS SHARES COMMITTED ECONOMICS STRUCTURE SECURED COMMITMENTS


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INFORMING BETTER SPINE SURGERY Pat Miles


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ACCELERATES REVENUE GROWTH & REDUCES COST TO SERVE Monetizes information by creating more pull-through opportunities Provides immediate access to U.S. installed base with minimal overlap Facilitates global expansion via established infrastructure Improves inventory efficiency IMPROVED DEAL ECONOMICS 2.75x reduction in level of implied dilution Better positioned from valuation and balance sheet perspective Expands on the information-based core competency established with SafeOp Distinguishes ATEC clinical performance from diagnosis through follow up ADVANCES ALPHAINFORMATIX PLATFORM


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With SafeOp, we created value through actionable information. EOS WILL FURTHER ADVANCE ATEC CLINICAL PROWESS


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INFORMING BETTER SPINE SURGERY Upgrading the ATEC Clinical Experience with the Acquisition of EOS imaging