ALPHATECSPINE, INC. ALPHATECHOLDINGS, INC.

Exhibit 10.9

ALPHATEC SPINE, INC.

ALPHATEC HOLDINGS, INC.

January 26, 2006

Scott V. Palka

                                Re:          Termination of Employment

Dear Scott:

                The purpose of this letter agreement (the “Agreement”) is to set forth the terms of your separation from Alphatec Spine, Inc. and Alphatec Holdings, Inc. (collectively, the “Company”).  Payment of the Separation Pay described below is contingent on your agreement to and compliance with the terms of this Agreement.  Neither this offer to you nor the Company’s entering into this Agreement shall constitute an admission by the Company and this letter shall be construed as an offer of compromise.

                1.             Separation of Employment.  Your employment with the Company will end on the earlier of the business day following the Company’s initial filing of a Registration Statement on Form S-1 in connection with the Company’s initial public offering of securities and February 17, 2006 (the “Severance Termination Date”).  If you do not agree to the terms of this Agreement, your employment with this Company shall terminate on January 27, 2006 (the “Non-Severance Termination Date”) and this Agreement shall be null and void.

                Regardless of whether you sign this Agreement, you will receive, on the applicable termination date, a check representing the payment to you of your accrued and unpaid salary through the Severance Termination Date or the Non-Severance Termination Date, as the case may be, as well as your accrued but untaken vacation.  You acknowledge that from and after the Non-Severance Termination Date, you shall have no authority to, and shall not, represent yourself as an employee of the Company, and you shall have no rights to any future payments from the Company.  In addition, by law, and regardless of whether you sign this Agreement, you will have the right to continue your medical insurance pursuant to the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) upon a qualifying event such as termination of employment.  You will receive your COBRA notice under separate cover.

                Regardless of whether you sign this Agreement, you will cease to participate in the Company’s employee equity ownership program.  This document shall serve as notice that the Company has exercised its right to repurchase all of the shares of restricted stock in the Company that you own for a total purchase price of $100.00.

                If you sign this Agreement and do not revoke it, you will continue your duties as the Company’s Chief Financial Officer from the date of this Agreement through the Severance

Termination Date (the “Transition Period”).  During the Transition Period, you shall be paid the salary you currently earn pursuant to the Employment Agreement by and among the Company and you, dated July 13^th 2005 (the “Employment Agreement”).  In the event that your duties are not reasonably performed during the Transition Period, the Company shall be entitled to terminate you without notice or cause.  Other than as expressly set forth in this Agreement, the Employment Agreement is terminated in all respects.  You agree to provide a supplemental release at the close of the Transition Period.  You will also receive payment for any accrued vacation on the last day of the Transition Period.

2.                                      Separation Pay.

                In exchange for the mutual promises set forth in this Agreement, and if you do not revoke this Agreement as you are entitled to do as set forth below, and even though the Company has no prior obligation to provide you with severance benefits, the Company will pay you a severance amount equal to (i) 52 weeks of pay (aggregate gross pay of $300,000) less applicable payroll tax withholdings and deductions, such amount to be payable weekly in accordance with the Company’s standard payroll procedures beginning on the Severance Termination Date (the “Severance Period”); and (ii) a lump-sum payment equal to the bonus you are entitled to pursuant to Section 4.2 of the Employment Agreement, such amount to be paid when all executives of the Company are paid 2005 performance bonuses (collectively, “Separation Pay”).  In addition, during the Severance Period you may continue to participate in all Company benefit plans and programs (provided that you make all required contributions), excluding the Company’s 401(k) program and the Company’s equity ownership program.

                You acknowledge and agree that the Separation Pay is not otherwise due or owing to you under any Company employment agreement (oral or written) or Company policy or practice.  You also agree that the Separation Pay to be provided to you us not intended to and does not constitute a severance plan and do not confer a benefit on anyone other than the parties.  You further acknowledge that except for the specific financial consideration set forth in this Agreement, you are not now and shall not in the future be entitled to any compensation from the Company including, without limitation, other wages, commissions, bonuses, vacation pay, holiday pay, paid time off or any other form of compensation or benefit.  You represent by signing this Agreement that you have received all payments to which you are legally entitled.

                3.             Equity.   You acknowledge that upon the consummation of the repurchase right set forth in Section 1 above, you will own no equity in the Company or any rights to acquire equity in the Company.

                4.             Confidentiality.  You expressly acknowledge and agree to the following:

                                                (i)            that you promptly will return to the Company all Company documents (and any copies thereof) and property, and that you shall abide by all provisions of the Employment Agreement governing confidentiality, proprietary information and the like,  the terms of which shall survive the signing of this Agreement. Further, you agree that

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                                                you will abide by any and all common law and/or statutory obligations relating to protection and non-disclosure of the Company’s trade secrets and/or confidential and proprietary documents and information;

                                                (ii)           that all information relating in any way to the negotiation of this Agreement, including the terms and amount of financial consideration provided for in this Agreement, shall be held confidential by you and shall not be publicized or disclosed to any person (other than an immediate family member, legal counsel or financial advisor, provided that any such individual to whom disclosure is made agrees to be bound by these confidentiality obligations), business entity or government agency (except as mandated by state or federal law), except that nothing in this paragraph shall prohibit you from participating in an investigation with a state or federal agency if requested by the agency to do so;

                                                (iii)          that you will not make any statements that are professionally or personally disparaging about, or adverse to, the interests of the Company (including its officers, directors, employees and consultants) including, but not limited to, any statements that disparage any person, product, service, finances, financial condition, capability or any other aspect of the business of the Company, and that you will not engage in any conduct which could reasonably be expected to harm professionally or personally the reputation of the Company (including its officers, directors, employees and consultants); likewise, the Company will not make any statements that are professionally or personally disparaging about you;

                                                                (iv)          that a breach of this Section shall constitute a material breach of this Agreement and, in addition to any other legal or equitable remedy available to the Company, shall entitle the Company to recover any monies paid to you under Section 2 of this Agreement.

                                                5.             Your Release of Claims.  You hereby agree and acknowledge that by signing

this Agreement and accepting the Separation Pay, and for other good and valuable consideration, you are waiving your right to assert any and all forms of legal claims against the Company¹/ of any kind whatsoever, whether known or unknown, arising from the beginning of time through the date you execute this Agreement (the “Execution Date”).  Except as set forth below, your waiver and release herein is intended to bar any form of legal claim, charge, complaint or any other form of action (jointly referred to as “Claims”) against the Company seeking any form of relief including, without limitation, equitable relief (whether declaratory, injunctive or otherwise), the recovery of any damages, or any other form of monetary recovery whatsoever (including, without limitation, back pay, front pay, compensatory damages, emotional distress

¹/ For purposes of this Agreement, the Company includes the Company and any of its divisions, affiliates (which means all persons and entities directly or indirectly controlling, controlled by or under common control with the Company), subsidiaries and all other related entities, and its and their directors, officers, employees, trustees, agents, successors and assigns.

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damages, punitive damages, attorneys fees and any other costs) against the Company, for any alleged action, inaction or circumstance existing or arising through the Execution Date.

                Without limiting the foregoing general waiver and release, you specifically waive and release the Company from any Claim arising from or related to your prior employment relationship with the Company or the termination thereof, including, without limitation:

**                                  Claims under any state or federal discrimination, fair employment practices or other employment related statute, regulation or executive order (as they may have been amended through the Execution Date) prohibiting discrimination or harassment based upon any protected status including, without limitation, race, national origin, age, gender, marital status, disability, veteran status or sexual orientation.  Without limitation, specifically included in this paragraph are any Claims arising under the Federal Age Discrimination in Employment Act, the Civil Rights Acts of 1866 and 1871, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Equal Pay Act, the Americans With Disabilities Act, the California Fair Employment and Housing Act, the California Labor Code and any similar California or other state statute.

**                                  Claims under any other state or federal employment related statute, regulation or executive order (as they may have been amended through the Execution Date) relating to wages, hours or any other terms and conditions of employment.

**                                  Claims under any state or federal common law theory including, without limitation, wrongful discharge, breach of express or implied contract, promissory estoppel, unjust enrichment, breach of a covenant of good faith and fair dealing, violation of public policy, defamation, interference with contractual relations, intentional or negligent infliction of emotional distress, invasion of privacy, misrepresentation, deceit, fraud or negligence.

**                                  Any other Claim arising under state or federal law.

In addition to the forgoing, you hereby agree that you waive all rights under section 1542 of the Civil Code of the State of California.  Section 1542 provides that:

A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.

                Pursuant to section 1542, you acknowledge that you may hereafter discover facts different from or in addition to facts which you now know or believe to be true with regard to the released claims, and further agree that this Agreement shall remain effective in all respects not withstanding such discovery of new or different facts, including any such facts

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which may give rise to currently unknown claims, including but not limited to any claims or rights which you may have under section 1542 of the California Civil Code.

Notwithstanding the foregoing, this section does not release the Company from any obligation expressly set forth in this Agreement.  You acknowledge and agree that, but for providing this waiver and release, you would not be receiving the economic benefits being provided to you under the terms of this Agreement.

It is the Company’s desire and intent to make certain that you fully understand the provisions and effects of this Agreement.  To that end, you have been encouraged and given the opportunity to consult with legal counsel for the purpose of reviewing the terms of this Agreement.  Also, because you are over the age of 40, and consistent with the provisions of the Age Discrimination in Employment Act (“ADEA”), which prohibits discrimination on the basis of age, the Company is providing you with twenty-one (21) days in which to consider and accept the terms of this Agreement by signing below and returning it to Ebun Garner at the Company.  In addition, you may rescind your assent to this Agreement if, within seven (7) days after you sign this Agreement, you deliver by hand or send by mail (certified, return receipt and postmarked within such 7 day period) a notice of rescission to Ebun Garner at the Company. The eighth day following your signing of this Agreement is the Effective Date.

Also, consistent with the provisions of the Federal Discrimination Laws, nothing in this release shall be deemed to prohibit you from challenging the validity of this release under the federal age or other discrimination laws (the “Federal Discrimination Laws”) or from filing a charge or complaint of employment-related discrimination with the Equal Employment Opportunity Commission (“EEOC”), or from participating in any investigation or proceeding conducted by the EEOC.  Further, nothing in this release or Agreement shall be deemed to limit the Company’s right to seek immediate dismissal of such charge or complaint on the basis that your signing of this Agreement constitutes a full release of any individual rights under the Federal Discrimination Laws, or to seek restitution to the extent permitted by law of the economic benefits provided to you under this Agreement in the event that you successfully challenge the validity of this release and prevail in any claim under the Federal Discrimination Laws.

                6 .            Entire Agreement/Modification/Waiver/Choice of Law/Enforceability.  You acknowledge and agree that, except as set forth herein, this Agreement supersedes any and all prior or contemporaneous oral and/or written agreements between you and the Company, and sets forth the entire agreement between you and the Company.  No variations or modifications hereof shall be deemed valid unless reduced to writing and signed by the parties hereto.  This Agreement shall be deemed to have been made in the State of California and shall be construed in accordance with the laws of California without giving effect to conflict of law principles.  Both parties hereby waive and renounce in advance any right to a trial by jury in connection with such legal action.  The provisions of this Agreement are severable, and if for any reason any part hereof shall be found to be unenforceable, the remaining provisions shall be enforced in full.

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By executing this Agreement, you are acknowledging that you have been afforded sufficient time to understand the terms and effects of this Agreement, that your agreements and obligations hereunder are made voluntarily, knowingly and without duress, and that neither the Company nor its agents or representatives have made any representations inconsistent with the provisions of this Agreement.  The parties agree that the last act necessary to render this Agreement effective is for the Company to sign the Agreement, and that the Agreement may be signed on one or more copies, each of which when signed will be deemed to be an original, and all of which together will constitute one and the same Agreement.

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                If the foregoing correctly sets forth our understanding, please sign, date and return the enclosed copy of this Agreement to Ebun Garner at the Company.

Confirmed, Agreed and Acknowledged:

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