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 May 31, 2020, or at any time if Alphatec pays EOS
a reverse break-up fee as described below, among other basses 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 (up to 3.5 million in certain circumstances) 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.
Commitment Letter
In connection with entry into the Tender Offer Agreement, Alphatec entered into a commitment letter, dated February 28, 2020 (the Commitment
Letter), with Perceptive Credit Holdings III, LP (together with its affiliates, Perceptive), pursuant to which, subject to the terms and conditions set forth therein, Perceptive has committed to provide $130 million in secured
debt financing, up to $60 million of which (the Refinancing Portion) will be made available to retire Alphatecs existing credit facilities with MidCap Funding IV, LLC and Squadron Medical Finance Solutions, LLC (the
Refinancing). The remaining commitment by Perceptive to provide an additional $70 million (which may be increased to up to $100 million at the request of Alphatec if agreed by Perceptive in its sole discretion) in secured debt
financing (the Tender Offer Portion) will be made available to fund the Cash Offer portion of the Offer Consideration, provided that Alphatec may elect not to incur all or a portion of such Tender Offer Portion to the extent it is
unnecessary to fund such Cash Offer amount. In the event that Alphatec elects not to incur the Tender Offer Portion of Perceptives commitment, Perceptive will make available up to $15 million in secured debt financing (the
Supplemental Portion), in addition to the Refinancing Portion, to be used for Alphatecs and its subsidiaries general corporate and working capital needs. The funding of each of the debt facilities provided for in the
Commitment Letter is subject to the satisfaction of customary conditions for facilities of such type that are set forth therein, including entry into definitive documentation reflecting the terms of the Commitment Letter and no material adverse
effect with respect to EOS.
Under the terms of the Commitment Letter, Alphatec has agreed to issue certain warrants to Perceptive representing the right
to acquire ATEC Common Stock in connection with the incurrence of the Refinancing Portion (the Refinancing Warrants), the incurrence and use of the Tender Offer Portion to consummate the Offer (the Tender Offer Warrants) and
the incurrence of the Supplemental Portion (the Supplemental Warrants and, together with the Refinancing Warrants and Tender Offer Warrants, the Warrants), as applicable. The price per share for 50% of the Refinancing
Warrants shall be the lower of (x) the 5-day volume weighted average price of the ATEC Common Stock (5-day VWAP) immediately prior to the date of the
Commitment Letter and (y) the 5-day VWAP immediately prior to the closing date of the Refinancing Portion, subject to a floor of $4.60 per share (the Base Refinancing Warrant Price). The price
per share for the remaining 50% of the Refinancing Warrants shall be equal to the Base Refinancing Warrant Price plus an additional 12.5% premium. The price per share for 50% of the Tender Offer Warrants shall be the lower of (x) the 5-day VWAP immediately prior to the date of the Commitment Letter or (y) the 5-day VWAP immediately prior to the date such Tender Offer Warrants are issued, subject to a
floor of $4.60 per share (the Base Tender Offer Warrant Price). The price per share for the remaining 50% of the Tender Offer Warrants shall be equal to the Base Tender Offer Warrant Price plus an additional 12.5% premium. The price per
share for 50% of the Supplemental Warrants shall be the lower of (x) the 5-day VWAP immediately prior to the date of the Commitment Letter or (y) the 5-day
VWAP immediately prior to the date the Supplemental Portion is incurred, subject to a floor of $4.60 per share (the Base Supplemental Warrant Price). The price per share for the remaining 50% of the Supplemental Warrants shall be equal
to the Base Supplemental Warrant Price plus an additional 12.5% premium. The Refinancing Warrants, Tender Offer Warrants and Supplemental Warrants will be exercisable into a number of shares of ATEC Common Stock representing 18.5% of the aggregate
principal amount borrowed in respect of the Refinancing Portion, 9% of the aggregate principal amount borrowed in respect of the Tender Offer Portion and used to consummate the Tender Offer and 9% of the aggregate principal amount borrowed in
respect of the Supplemental Portion, respectively, in each case calculated using the Base Refinancing Warrant Price, Base Tender Offer Warrant Price or Base Supplemental Warrant Price, as applicable.
The foregoing descriptions of the Tender Offer Agreement, Tender Commitments and Commitment Letter 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 and 2.3, 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