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): August 16, 2016
 
SeaSpine Holdings Corporation
(Exact name of registrant as specified in its charter)
 
Delaware
001-36905
47-3251758
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(I.R.S. Employer
Identification No.)
 
5770 Armada Drive, Carlsbad, California
92008
(Address of principal executive offices)
(Zip Code)
 
(760) 727-8399
(Registrant’s telephone number, including area code)
 
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
 
 
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 (see General Instruction A.2. below):
 
 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))
 
 
 

 












Item 1.01.
Entry into a Material Definitive Agreement.

On August 17, 2016, SeaSpine Holdings Corporation (the “Company”) entered into an Asset Purchase Agreement with N.L.T Spine Ltd. (“NLT”), and NLT Spine, Inc., a wholly owned subsidiary of NLT, pursuant to which the Company has agreed to purchase certain of the assets (the “Purchased Assets”) of NLT’s medical device business (the “Medical Device Business”), including substantially all of NLT’s medical device intellectual property (the “Medical Device Intellectual Property”).
Upon the terms and subject to the conditions of the Asset Purchase Agreement, at the initial closing, NLT will convey substantially all of its non-intellectual property assets related to the Medical Device Business to the Company or its designee, the Company will enter into (i) an exclusive license agreement with NLT (the “License Agreement”), pursuant to which the Company will receive an exclusive, worldwide license to make, use, import, offer for sale, sell and otherwise commercially exploit NLT’s medical device products (the “Medical Device Products”), (ii) a transition services agreement with NLT (the “Transition Services Agreement), pursuant to which NLT will provide certain services in respect of the continued development of the Medical Device Intellectual Property and Medical Device Products and (iii) a non-competition and non-solicitation agreement with NLT (the “Non-Compete Agreement), pursuant to which NLT and its affiliates agree not to compete with the Company with respect to the Medical Device Business, subject to certain exceptions. As consideration for the Purchased Assets and NLT’s entry into the License Agreement, at the initial closing of the transaction, the Company will pay to NLT $1,000,000 in cash. In addition, after the initial closing the Company shall pay NLT as additional consideration, contingent asset purchase payments (the “Contingent Payments”) equal to declining (over time) percentages of the Company’s future net sales of certain of the Medical Device Products not to exceed $43,000,000 in the aggregate. In addition, the Company has the option, at any time following the initial closing, to terminate any future obligation to make Contingent Payments by making a one-time cash payment to NLT of $18,000,000.
The Asset Purchase Agreement also provides that, at or following the initial closing, upon the fulfillment of certain conditions, including (i) the clearance from the Food and Drug Administration of the PROW FUSION-L product family to be marketed in the United States and (ii) issuance by the Office of Chief Scientist of the Ministry of Economy of the State of Israel (the “OCS”) of written approval for the transfer of the Medical Device Intellectual Property outside the State of Israel to the Company within up to 18 months after the date thereof upon the repayment to OCS of amounts granted to or borrowed from OCS (plus accrued interest) (the “OCS Transfer Amount”) pursuant to OCS programs (the “OCS Conditional Approval”), the Company will issue to NLT $3,500,000 in shares of the Company’s common stock (the “Stock Consideration”). The Stock Consideration will be comprised of a number of shares (the “Shares”) of the Company’s common stock to be determined based on the volume weighted average closing price (“VWAP”) of the common stock during the twenty trading day period ending one trading day prior to the issuance date of the Stock Consideration, provided, however, that the minimum VWAP shall be $10.00 and the maximum VWAP shall be $17.00. If any sale of Shares results in aggregate net proceeds to NLT in excess of $3,500,000 (taking into account all sales of Shares), then NLT shall pay to the Company, in cash, an amount equal to one-half of the net proceeds received by NLT from such sale and each subsequent sale of Shares.
Following the initial closing and the issuance of the Shares, upon payment to the OCS of the OCS Transfer Amount and subject to other customary closing conditions, the Company and NLT shall complete a subsequent closing pursuant to which NLT will convey the Medical Device Intellectual Property to the Company and the License Agreement will terminate.
In addition, the Asset Purchase Agreement includes future contingent payments of up to $5,000,000 payable by the Company, at the Company’s option, in cash or in shares of common stock (the “Milestone Shares”) upon the achievement of four independent events related to the commercialization of the Medical Device Products.
The Asset Purchase Agreement provides that NLT will not lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any of the Shares (or any Milestone Shares) until ninety days after the applicable issuance date. The Asset Purchase Agreement also includes customary representations, warranties and covenants. Subject to certain exceptions and limitations, each of the Company and NLT has agreed to indemnify the other for breaches of representations, warranties and covenants and other specified matters.
The issuance of the Shares (and any Milestone Shares, if applicable) have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and the Shares (and any Milestone Shares, if applicable) may not be offered or sold in the United States absent registration under or exemption from the Securities Act and any applicable state securities laws. The Shares were issued in reliance upon an exemption from registration afforded by Regulation S promulgated under the Securities Act.
Pursuant to the Asset Purchase Agreement, the Company has agreed to register the Shares and Milestone Shares, if any, following such issuance to NLT. The Company is required to use commercially reasonable efforts to file a registration




statement with the Securities and Exchange Commission (the “SEC”) and to cause such registration statement to be declared effective by the SEC within 90 days after the issuance date of the Shares or Milestone Shares, as applicable, and to keep such registration statement effective until the earlier of (i) nine (9) months after the date that the registration statement becomes effective and (ii) the date that all of the Shares or Milestone Shares, as the case may be, have been sold.
The foregoing summary of the Asset Purchase Agreement (including the forms of ancillary agreements that are exhibits thereto) is subject to, and qualified in its entirety by reference to, the Asset Purchase Agreement (including the forms of ancillary agreements that are exhibits thereto), a copy of which will be filed in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”), with portions omitted and filed separately with the SEC pursuant to a request for confidential treatment.
 
Item 3.02      Unregistered Sales of Equity Securities.

The information contained in Item 1.01 is hereby incorporated by reference into this Item 3.02.

Item 5.02
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On August 16, 2016, the Board of Directors of SeaSpine Holdings Corporation (the “Company”) approved the adoption of an amendment (the “Plan Amendment”) to the Company’s Amended and Restated 2015 Incentive Award Plan (the “Plan”), which provides for the assumption of stock options in certain changes of control in which the consideration to the Company or the Company’s stockholders in such transaction consists of at least 20% in publicly-traded securities of the acquiror or its affiliate. If no such assumption occurs in connection with a change of control, awards issued under the Plan will be treated pursuant to the existing terms of the Plan.

The Plan Amendment also provides that, in the event of a participant’s involuntary termination following a change in control, the vesting and/or exercisability of all outstanding equity awards held by that participant will accelerate. In addition, in the event of a change in control, if a participant incurs an involuntary termination following a change in control, then outstanding options will remain exercisable for the full original term of such options. If a participant is a non-employee director, all of his or her equity awards will vest upon a change in control and outstanding options held by such non-employee director will remain exercisable for the full original term of such options.

The foregoing description of the Plan Amendment does not purport to be complete and is qualified in its entirety by reference to the complete text of the Plan Amendment, which is filed as Exhibit 10.1 to this Report and incorporated herein by reference.

Item 8.01      Other Events.

On August 18, 2016, the Company issued a press release announcing the signing of the Asset Purchase Agreement. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01      Financial Statements and Exhibits.

(d)
Exhibits
 
The list of exhibits called for by this Item is incorporated by reference to the Exhibit Index immediately following the signature page of this Report.






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.

 

 
SeaSpine Holdings Corporation
 
 
 
 
Date: August 18, 2016
/s/ Patrick Keran
 
Patrick Keran
 
Vice President, General Counsel
 
 






EXHIBIT INDEX

Exhibit
No.
 
Description
 
 
 
10.1
 
First Amendment to the SeaSpine Holdings Corporation Amended and Restated 2015 Incentive Award Plan, dated as of August 16, 2016
 
 
 
99.1
 
Press Release, dated August 18, 2016







Exhibit 10.1

FIRST AMENDMENT TO THE

SeaSpine Holdings Corporation

Amended and Restated 2015 Incentive Award Plan

This First Amendment (this “ Amendment ”) to the SeaSpine Holdings Corporation Amended and Restated 2015 Incentive Award Plan (as amended and/or restated to date, the “ Plan ”), dated as of August 16, 2016, is made and adopted by SeaSpine Holdings Corporation (the “ Company ”), a corporation organized under the laws of State of Delaware.

1.      The first sentence of Section 10.11 of the Plan is hereby amended to read as follows:
Notwithstanding anything to the contrary contained herein (other than Sections 12.2(d)(i), (iii) and (iv), which shall apply to the Adjusted Awards as set forth therein), each Adjusted Award shall be subject to terms and conditions consistent with the applicable terms and conditions set forth in the Integra Plan and the award agreement in effect for such Adjusted Award immediately prior to the Distribution, each as deemed modified in order to reflect (i) the adjustment of such Adjusted Award pursuant to Article III of the Employee Matters Agreement, (ii) that the Company is the issuer of the Common Stock subject to the Adjusted Award, and (iii) the Participant’s status as an employee, director or consultant of the Company or Integra, as applicable, following the Distribution.
2.      Section 12.2(d) of the Plan is hereby amended to read as follows:
(d)      Change in Control .  
(i) Notwithstanding anything to the contrary in Section 12.2(b) above, Section 8.4 of the Integra Plan, or any applicable Award Agreement, if a Change in Control occurs and at least twenty percent (20%) of the aggregate fair market value of the consideration payable to the stockholders of the Company or the Company pursuant to such Change in Control (as determined by the Administrator) is to be paid in the form of securities of the successor or survivor entity, or a parent or affiliate thereof, which securities are, at the time of such Change in Control, listed on any established securities exchange (such as the New York Stock Exchange, the NASDAQ Capital Market, the NASDAQ Global Market and the NASDAQ Global Select Market) (the Company or such person, the “ Publicly-Traded Successor Entity ”)), then all Options shall be continued, converted, assumed or replaced by such Publicly-Traded Successor Entity with a substantially similar Option covering the stock of the Publicly-Traded Successor Entity, with appropriate adjustments as to the number and kind of shares and prices of such Options.
(ii) Except as may otherwise be provided in any applicable Award Agreement or other written agreement entered into between the Company (or an Affiliate) and a Participant, if a Change in Control occurs and a Participant’s outstanding Awards are not continued, converted, assumed, or replaced by the surviving or successor entity in such Change in Control, then immediately prior to the Change in Control such outstanding Awards, to the extent not continued, converted, assumed, or replaced, shall become fully vested and, as applicable, exercisable, and all forfeiture, repurchase and other restrictions on such Awards shall lapse immediately prior to such transaction. Subject to Section 12.2(d)(i) above, upon, or in anticipation of, a Change in Control, the Administrator may cause any and all Awards outstanding hereunder to terminate at a specific time in the future, including but not limited to the date of such Change in Control, and shall give each Participant the right to exercise such Awards during a period of time as the Administrator, in its sole




and absolute discretion, shall determine. For the avoidance of doubt, if the value of an Award that is terminated in connection with this Section 12.2(d) is zero or negative at the time of such Change in Control, such Award shall be terminated upon the Change in Control without payment of consideration therefor.

(iii) If a Change in Control occurs with respect to which a Participant’s outstanding Awards are continued, converted, assumed or replaced by the surviving or successor entity in such Change in Control (including, without limitation, by a Publicly-Traded Successor Entity), (A) in the case of Participants other than Non-Employee Directors, if the Participant incurs a Qualifying Termination on or following the date of such Change in Control, then (1) each outstanding Award held by such Participant, other than any Award subject to performance-vesting, shall become fully vested (and, as applicable, exercisable) and all forfeiture restrictions thereon shall lapse upon such Qualifying Termination and (2) each outstanding Option held by such Participant may be exercised by the Participant (or the Participant’s legal guardian or legal representative) until the original outside expiration date of such Option, and (B) in the case of Participants who are Non-Employee Directors immediately prior to such Change in Control, then (1) each outstanding Award held by such Participant shall become fully vested (and, as applicable, exercisable) and all forfeiture restrictions thereon shall lapse upon such Change in Control, and (2) each outstanding Option held by such Participant may be exercised by the Participant (or the Participant’s legal guardian or legal representative) until the original outside expiration date of such Option.
            
(iv) Notwithstanding anything to the contrary contained in Section 10.11 hereof or Sections 8.4 and 8.5(a)(ii) of the Integra Plan, Adjusted Awards shall also be considered Awards for purposes of this Section 12.2(d) and shall be subject to the provisions hereof.

3.      This Amendment is effective as of August 16, 2016.
4.      This Amendment shall be and is hereby incorporated in and forms a part of the Plan. All other terms and provisions of the Plan shall remain unchanged except as specifically modified herein. The Plan, as amended by this Amendment, is hereby ratified and confirmed.
* * * * * * * *





I hereby certify that the foregoing Amendment was duly adopted by the Board of Directors of the Company on August 16, 2016.
SEASPINE HOLDINGS CORPORATION

By: _ /s/ Keith Valentine ________________
Name: Keith Valentine
Its: President and Chief Executive Officer





Exhibit 99.1


SeaSpine Signs Definitive Agreement to Acquire Expandable Interbody
Platform Technologies
•
First strategic acquisition as an independent, stand-alone company
•
Commercial launch of first NLT product expected first-half 2017

CARLSBAD, Calif. / August 18, 2016 - SeaSpine Holdings Corporation (NASDAQ: SPNE), a global medical technology company focused on surgical solutions for the treatment of spinal disorders, today announced that it is has entered into a definitive agreement to acquire substantially all of the assets of NLT Spine Ltd. (NLT), an Israel-based medical device company developing innovative spinal products for minimally invasive surgery (MIS).

NLT’s platforms include vertical, lordotic and footprint expanding interbody technologies for use in lumbar fusion procedures for the treatment of degenerative spinal conditions. By allowing surgeons to place smaller interbody implants that expand within the interbody space, these patented technologies are designed to enable smaller incisions and less nerve retraction, while achieving the same advantages of larger implants but with easier insertion and potentially less tissue disruption.

Acquisition terms include an upfront cash payment, issuance of common stock upon achievement of a near-term regulatory milestone, longer-term commercially-based milestone payments, as well as future revenue-based royalties.

“This transaction strengthens our future product offerings and broadens our growing portfolio of differentiated interbody solutions, one of the fastest growing market segments within spine, while demonstrating to distributors and the surgeon community our commitment to innovation, including through strategic acquisitions,” said Keith Valentine, President and Chief Executive Officer of SeaSpine. “The deal structure allows us to acquire differentiated assets with modest upfront investment, while deferring the majority of consideration to sales-based payments and commercially-based milestones. Equally important, it reflects the belief of NLT’s investors in both the potential of their technology and our ability to commercialize it successfully.”

“We’re pleased to add our line of products and technologies to SeaSpine’s comprehensive suite of offerings in the spine intervention market,” said NLT President and Chief Executive Officer, Didier Toubia. “We see SeaSpine as the ideal group to bring to market and drive adoption of our innovative interbody spine solutions, which we believe will benefit patients and our shareholders, now and in the longer-term.”

NLT’s broad intellectual property portfolio includes technologies that provide a robust pipeline of innovative MIS interbody solutions. NLT’s patent estate includes additional disruptive technologies with potential in other spinal applications. SeaSpine plans to further refine NLT’s existing products based on feedback from leading spine surgeons prior to full commercial launch and to evaluate NLT’s full intellectual property portfolio for additional product development opportunities.

Updated 2016 Financial Outlook
The transaction does not affect SeaSpine’s previously communicated 2016 revenue guidance. The Company expects to pay in 2016 up to $1.7 million for acquisition considerations, transaction costs and transition services fees.

About NLT
NLT was founded in 2006 by Dr. Tzony Siegal, a leading spine surgeon, to provide innovative spine surgery instrumentation and implants for treating degenerative spinal conditions through small surgical incisions. The




Company’s vision is to improve patient care and reduce total treatment costs by ultimately shifting from traditional open surgical routines to MIS, employing new methods and technologies to enhance usability and outcomes.

Funded by institutional investors, including Accelmed and Peregrine Ventures, as well as a leading global strategic investor, NLT’s product portfolio includes the FDA-cleared PROW FUSION, a segmented TLIF interbody fusion device that automatically turns into the disc space upon insertion to provide a larger footprint; the FDA-cleared PROW FUSION-V interbody fusion device that provides either vertical expansion or lordotic expansion; and the PROW FUSION-L lateral interbody fusion device that features an expanding anterior/posterior footprint.

Covington Associates LLC acted as exclusive financial advisor to NLT.

About SeaSpine
SeaSpine is a global medical technology company focused on the design, development and commercialization of surgical solutions for the treatment of patients suffering from spinal disorders. SeaSpine has a comprehensive portfolio of orthobiologics and spinal hardware solutions to meet the varying combinations of products that neurosurgeons and orthopedic spine surgeons need to perform fusion procedures on the lumbar, thoracic and cervical spine. SeaSpine’s orthobiologics products consist of a broad range of advanced and traditional bone graft substitutes that are designed to improve bone fusion rates following a wide range of orthopedic surgeries, including spine, hip, and extremities procedures. SeaSpine’s spinal hardware portfolio consists of an extensive line of products to facilitate spinal fusion in minimally invasive surgery (MIS), complex spine, deformity and degenerative procedures. Expertise in both orthobiologic sciences and spinal fusion hardware product development helps SeaSpine to offer its surgeon customers a complete solution to meet their fusion requirements. SeaSpine currently markets its products in the United States and in over 30 countries worldwide.

Forward-Looking Statements
SeaSpine cautions you that statements included in this news release that are not a description of historical facts are forward-looking statements that are based on the Company's current expectations and assumptions. Such forward-looking statements include, but are not limited to, statements relating to: the ability of NLT implants to achieve the advantages of larger implants without the insertion difficulty and corresponding disruption and trauma of larger one-piece implants; whether the transaction strengthens our future product offerings and/or broadens our portfolio; our plans to further refine NLT’s products based on feedback from leading spine surgeons prior to full commercial launch; and expected transaction-related costs and fees in 2016. Among the factors that could cause or contribute to material differences between our actual results and the expectations indicated by our forward-looking statements are risks and uncertainties that include, but are not limited to: the fact that certain NLT products have not been validated clinically and may require substantial additional development activities, which could introduce unexpected expense and delay and may require resubmitting one or more products to FDA for clearance, which clearance cannot be certain, whether on a timely basis or at all; our ability to integrate successfully NLT’s assets into our operations or incurring unexpected costs and disruptions to our business as a result of such integration; the potential that the time and expense associated with launching NLT products are greater, and expected revenue are less, than our current expectations, including as a result of surgeons’ willingness use NLT products, uncertainty resulting from healthcare reform, both in the U.S. and abroad, and increased pricing pressure from our competitors, hospitals and others; the uncertainty of outcomes in future studies of NLT products and the risk that NLT products may not demonstrate adequate safety or efficacy, independently or relative to competitive products, to support expected levels of demand or price; the risk of supply shortages, including as a result of potentially needing to qualify new third-party suppliers that currently supply NLT, as well as our dependence on a limited number of third-party suppliers for components and raw materials, or otherwise; our ability to obtain funding on a timely basis on acceptable terms, or at all, to execute our business strategy related to the NLT assets; the potential that, if transaction milestones are achieved, the associated cash payment required by us will materially and adversely affect our business or, if we elect to make such payments using our common stock, dilute our stockholders; the risk that NLT’s patent estate does not provide adequately prevent competitors from copying NLT products; the risk that we do not consummate the acquisition of NLT’s assets on a timely basis, or at all; and other risks and uncertainties more fully described in our news releases and periodic filings with the Securities and Exchange Commission. The Company's public filings with the Securities and Exchange Commission are available at www.sec.gov.





You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date when made. SeaSpine does not intend to revise or update any forward-looking statement set forth in this news release to reflect events or circumstances arising after the date hereof, except as may be required by law.
# # #

Investor Relations Contact
Lynn Pieper
(415) 309-5999
ir@seaspine.com