Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers.
Departure of Chief Financial Officer and Appointment of Interim Principal Accounting
Officer
On October 5, 2016, Michael ONeill departed from his position as Alphatec Holdings, Inc.s (the
Company) and Alphatec Spine Inc.s (Spine) Chief Financial Officer and Treasurer.
In connection with
Mr. ONeills departure, effective as of October 5, 2016, Dennis Nelson, the Companys Vice President, Finance and Corporate Controller, will serve as the interim principal financial and accounting officer for filings under
the Securities Act of 1933 and the Securities Exchange Act of 1934, while the Company executes its search for a Chief Financial Officer.
Mr. Nelson, age 43, has served as the Companys Vice President, Finance and Corporate Controller since March 2011. From February
2009 to March 2011, Mr. Nelson was the Chief Financial Officer, Treasurer and Secretary of Phoenix Footwear Group, Inc. From June 2008 until February 2009, Mr. Nelson served as the Controller of Phoenix Footwear. Prior to Phoenix Footwear,
Mr. Nelson was the Director of Finance for TaylorMade-adidas Golf Company from February 2000 to June 2008.
Mr. Nelson currently
has an employment agreement with the Company, which was entered into on March 1, 2011. The employment agreement has the following principal terms: Mr. Nelson receives a base salary of $250,000 and he is eligible to receive an incentive
bonus each fiscal year in an amount equal to 35% of his annual base salary for such year, with the payment of such bonus based on Mr. Nelsons achievement of performance objectives established by the Companys Board of Directors (the
Board) each fiscal year. The employment agreement also provides for certain severance arrangements for Mr. Nelson. In the event that Mr. Nelsons employment is terminated by the Company without cause, the Company is
required to pay Mr. Nelson (i) all accrued but unpaid compensation; (ii) severance payments based on his annual base salary for a period of six months; and (iii) payment of, or reimbursement for, the continuation of his health
and dental insurance coverage pursuant to COBRA for a six-month period following such termination date. The Company and Mr. Nelson expect to enter into a retention agreement pursuant to which Mr. Nelson will receive a cash bonus of
$150,000 if he remains employed by the Company on April 1, 2017, or if he is terminated by the Company without cause prior to such date.
There are no family relationships between Mr. Nelson and any director or executive officer of the Company, and he has no direct or
indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
In connection with
Mr. ONeills resignation and in consideration for his prior service to the Company and Spine, the Company, Spine and Mr. ONeill expect to enter into a separation agreement, dated as of October 5, 2016 (the
Separation Agreement). Pursuant to the terms of the Separation Agreement, Mr. ONeill is entitled to receive cash severance payments of 12 months of his annual base salary prior to his departure, which amounts to $335,000. The
foregoing amount will be less applicable withholding amounts and payable bi-weekly over a period of one year in accordance with the Companys payroll practices. In addition, the Company will pay the cost of COBRA insurance coverage for
Mr. ONeill and his eligible family members for a period of 12 months, including a gross up of taxes for such payments. The Separation Agreement contains a release by Mr. ONeill of any claims in favor of the Company. The
Separation Agreement also contains certain restrictive covenants and confidentiality provisions, including non-solicitation and non-disparagement obligations continuing for 12 months.
The foregoing description of the Separation Agreement does not purport to be complete and is qualified in its entirety by reference to the
full text of such agreement, a copy of which will be filed with the Companys Annual Report on Form 10-K for the period ending December 31, 2016.
Adoption of the Alphatec Holdings, Inc. 2016 Employment Inducement Award Plan
.
On October 4, 2016, the Board approved the Alphatec Holdings, Inc. 2016 Employment Inducement Award Plan (the Inducement
Plan). The terms of the Inducement Plan are substantially similar to the terms of the Companys 2016 Equity Incentive Plan with two principal exceptions: (1) incentive stock options may not be granted under the Inducement Plan; and
(2) the annual compensation paid by the Company to specified executives will be deductible only to the extent that it does not exceed $1,000,000, as the conditions of Section 162(m) of the Internal Revenue Code will not be met. The
Inducement Plan was adopted by the Board without stockholder approval pursuant to Rule 5635(c)(4) of the NASDAQ Listing Rules.
The Board
has initially reserved 350,000 shares of the Companys common stock for issuance pursuant to awards granted under
the Inducement Plan. In accordance with Rule 5635(c)(4) of the NASDAQ Listing Rules, awards under the Inducement Plan may only be made to an employee who has not previously been an employee or
member of the board of directors of the Company or any parent or subsidiary, or following a bona fide period of non-employment by the Company or a parent or subsidiary, if he or she is granted such award in connection with his or her commencement of
employment with the Company or a subsidiary and such grant is an inducement material to his or her entering into employment with the Company or such subsidiary.
A complete copy of the Inducement Plan and the forms of award agreements to be used thereunder are filed herewith as Exhibits 10.1, 10.2, 10.3
and 10.4 and incorporated herein by reference. The above summary of the Inducement Plan does not purport to be complete and is qualified in its entirety by reference to such exhibits.