UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed
by the Registrant [X]
Filed
by a Party other than the Registrant [ ]
Check
the appropriate box:
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Preliminary
Proxy Statement
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[ ]
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Confidential,
For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)
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[X]
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Definitive
Proxy Statement
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[ ]
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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Xtant
Medical HOLDINGS, INC.
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(Name
of Registrant as Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment
of Filing Fee (Check the appropriate box):
[X]
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No
fee required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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1)
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Title
of each class of securities to which transaction applies:
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Aggregate
number of securities to which transaction applies:
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Per
unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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4)
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Proposed
maximum aggregate value of transaction:
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5)
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Total
fee paid:
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[ ]
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Fee
paid previously with preliminary materials.
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[ ]
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Check
box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and
the date of its filing.
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1)
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Amount
Previously Paid:
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2)
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Form,
Schedule or Registration Statement No.:
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3)
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Filing
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Date
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NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JULY 27, 2021
To
Our Stockholders:
You
are invited to attend the Annual Meeting of Stockholders (“Annual Meeting”) of Xtant Medical Holdings, Inc. (the “Company”)
on July 27, 2021 at 8:00 a.m., Mountain Time, at our offices located at 664 Cruiser Lane, Belgrade, Montana 59714, for the following
purposes:
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1.
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To
elect the six nominees named in the accompanying proxy statement to serve as directors of
the Company until the next annual meeting of stockholders and until their respective successors
have been duly elected and qualified;
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2.
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To
ratify the appointment of Plante & Moran, PLLC (“Plante Moran”) as the Company’s
independent registered public accounting firm for the year ending December 31, 2021;
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3.
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To
approve, on an advisory basis, the compensation of the Company’s executive officers
named in the accompanying proxy statement; and
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4.
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To
transact such other business as may properly be brought before the Annual Meeting and any
adjournment or postponement thereof.
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Due
to the ongoing public health impact of the COVID-19 pandemic and to support the health and well-being of our directors, employees and
stockholders, please note the following:
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If
necessary, we may impose social distancing, non-stockholder attendance limitations and other
safety protocols in accordance with any then required federal, state and local guidance.
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We
will not be serving refreshments in connection with the annual meeting.
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We
do not intend to have a presentation concerning our 2020 results or 2021 outlook.
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We
expect that the official business meeting will last no more than 15-20 minutes.
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In
addition, as part of our precautions regarding COVID-19, we are planning for the possibility that the Annual Meeting may be held at a
different venue or solely by means of virtual communication. If we take this step, we will publicly announce the decision to do so in
advance, and details on how to participate will be posted on our website at https://www.xtantmedical.com/proxy and filed with
the Securities and Exchange Commission as additional proxy materials.
Stockholders
of record at the close of business on June 7, 2021 shall be entitled to notice of and to vote at the Annual Meeting and any adjournments
or postponements thereof. A stockholder list will be available at our corporate offices beginning July 16, 2021 during normal business
hours for examination by any stockholder registered on our stock ledger as of the record date for any purpose germane to the Annual Meeting.
Your
vote is important. Please submit a proxy as soon as possible so that your shares can be voted at the Annual Meeting.
By
Order of the Board of Directors
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Jeffrey
Peters
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Sean
E. Browne
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Chairman
of the Board
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President
and Chief Executive Officer
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Belgrade,
Montana
June
14, 2021
TABLE
OF CONTENTS
XTANT
MEDICAL HOLDINGS, INC.
664 Cruiser Lane
Belgrade, Montana 59714
(406) 388-0480
PROXY
STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 27, 2021
QUESTIONS
AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING
Q:
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Why
am I receiving these materials?
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A:
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We
are providing these proxy materials to you in connection with the solicitation of proxies
by the Board of Directors (the “Board”) for our Annual Meeting, which will take
place on July 27, 2021. As a stockholder of record, you are invited to attend the Annual
Meeting and are entitled and requested to vote on the items of business described in this
proxy statement. This proxy statement and accompanying proxy card (or voting instruction
card) are being sent on or about June 14, 2021 to all stockholders entitled to vote at the
Annual Meeting.
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Q:
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When
and where will the Annual Meeting be held?
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A:
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The
Annual Meeting will be held on July 27, 2021 at 8:00 a.m., Mountain Time, at our offices
located at 664 Cruiser Lane, Belgrade, Montana 59714. Due to the ongoing public health impact
of the COVID-19 pandemic and to support the health and well-being of our directors, employees
and stockholders, please note the following:
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If
necessary, we plan to impose social distancing, non-stockholder attendance limitations and
other safety protocols in accordance with any then required federal, state and local guidance.
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We
will not be serving refreshments in connection with the annual meeting.
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We
do not intend to have a presentation concerning our 2020 results or 2021 outlook.
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We
expect that the official business meeting will last no more than 15-20 minutes.
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In
addition, as part of our precautions regarding COVID-19, we are planning for the possibility that the Annual Meeting may be held at a
different venue or solely by means of virtual communication. If we take this step, we will publicly announce the decision to do so in
advance, and details on how to participate will be posted on our website at https://www.xtantmedical.com/proxy and filed with
the Securities and Exchange Commission (“SEC”) as additional proxy materials.
Q:
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How do I attend the Annual Meeting?
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A:
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Only
stockholders of record on the record date of June 7, 2021 (the “Record Date”)
are entitled to notice of, and to attend or vote at, the Annual Meeting. If you plan to attend
the meeting in person, please bring the following:
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Photo
identification; and
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Acceptable
proof of ownership if your shares are held in “street name.”
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Street
name means your shares are held of record by brokers, banks, or other institutions. See below for additional information.
Acceptable
proof of ownership is either (a) a letter from your broker confirming that you beneficially owned shares of our common stock on the
Record Date or (b) an account statement showing that you beneficially owned shares of our common stock on the Record Date. If your shares
are held in street name, you may attend the meeting with proof of ownership, but you may not vote your shares in person at the Annual
Meeting unless you have obtained a “legal proxy” or other evidence from your broker giving you the right to vote your shares
at the Annual Meeting.
Q:
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What
information is contained in this proxy statement?
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A:
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This
proxy statement contains information regarding our corporate governance practices, the Board,
our named executive officers, the compensation of our directors and named executive officers,
the director nominees for election and other proposals to be voted on at the Annual Meeting,
and certain other required information.
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Q:
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How
may I obtain the Company’s Annual Report on Form 10-K for the year ended December 31,
2020?
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A:
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We
have enclosed with this proxy statement a copy of our Annual Report on Form 10-K for the
fiscal year ended December 31, 2020. Our Annual Report on Form 10-K can also be accessed
through our website at www.xtantmedical.com (click “Investors” and “SEC
Filings”). We filed our Annual Report on Form 10-K for the fiscal year ended December
31, 2020 with the SEC on February 24, 2021. We sometimes refer to our Annual Report on Form
10-K for the fiscal year ended December 31, 2020 as our 2020 Annual Report.
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Q:
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What
items of business will be voted on at the Annual Meeting?
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A:
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The
items of business scheduled to be voted on at the Annual Meeting are:
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1.
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To
elect the six nominees named in this proxy statement to serve as directors of the Company
until the next annual meeting of stockholders and until their respective successors have
been duly elected and qualified;
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2.
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To
ratify the appointment of Plante Moran as the Company’s independent registered public
accounting firm for the year ending December 31, 2021;
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3.
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To
approve, on an advisory basis, the compensation of the Company’s executive officers
named in this proxy statement; and
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4.
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To
transact such other business as may properly be brought before the Annual Meeting and any
adjournment or postponement thereof.
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Q:
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How
many votes must the nominees for director have to be elected?
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A:
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In
order for a director to be elected at a meeting at which a quorum is present, the director
must receive the affirmative vote of a plurality of the shares voted. There is no cumulative
voting for our directors or otherwise.
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Q:
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What
are the voting requirements to approve the other proposals?
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A:
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As
noted above, with respect to Proposal One, the six director nominees receiving the highest
number of affirmative votes will be elected. The affirmative vote of the holders of a majority
in voting power of the shares of common stock present in person or by proxy and entitled
to vote on the proposal is required to approve Proposal Two and Proposal Three.
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Q:
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How
does the Board recommend that I vote?
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A:
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The
Board recommends that you vote your shares “FOR” all six of the director nominees,
“FOR” the ratification of the appointment of Plante Moran as our independent
registered public accounting firm, and “FOR” the approval, on an advisory basis,
of the compensation of the executive officers named in this proxy statement.
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If
you return a properly completed proxy card, or vote your shares by telephone or Internet, your shares of common stock will be voted on
your behalf as you direct. If not otherwise specified, the shares of common stock represented by the proxies will be voted in accordance
with the Board’s recommendations.
Q:
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What
shares may I vote?
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A:
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Each
share of our common stock issued and outstanding as of the close of business on the Record
Date is entitled to one vote on each of the matters to be voted upon at the Annual Meeting.
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You
may vote all shares owned by you as of the Record Date, including (a) shares held directly in your name as the stockholder of record
and (b) shares held for you as the beneficial owner through a broker, trustee, or other nominee. We had 86,707,286 shares of common stock
issued and outstanding on the Record Date.
Q:
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What
is the difference between being a stockholder of record and being the beneficial owner of
shares held in street name?
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A:
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A
stockholder of record owns shares that are registered in his or her own name. A beneficial
owner owns shares that are held in street name through a third party, such as a broker. As
summarized below, there are some distinctions between a stockholder of record and beneficial
owner.
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Stockholder
of Record
You
are the stockholder of record of any of your shares registered directly in your name with our transfer agent, EQ Shareowner Services.
With respect to such shares, these proxy materials are being sent to you by the Company. As the stockholder of record, you have the right
to grant your voting proxy directly to our designees, Sean E. Browne, the Company’s President and Chief Executive Officer, Greg
Jensen, the Company’s Vice President, Finance and Chief Financial Officer, and Jeffrey Peters, the Company’s Chairman of
the Board, or to any other person you wish to designate, or to vote in person at the Annual Meeting. We have enclosed a proxy card for
you to grant your voting proxy to Mr. Browne, Mr. Jensen and Mr. Peters.
Shares
Beneficially Held in Street Name
You
are the beneficial owner of any of your shares held in street name. With respect to such shares registered through a broker, these proxy
materials, together with a voting instruction card, are being forwarded to you by your broker. As the beneficial owner, you have the
right to direct your broker how to vote. You may use the voting instruction card provided by your broker for this purpose. Even if you
have directed your broker how to vote, you may also attend the Annual Meeting. However, you may not vote your shares in person at the
Annual Meeting unless you obtain a “legal proxy” or other evidence from your broker giving you the right to vote the shares
at the Annual Meeting.
Q:
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Who
is entitled to attend the Annual Meeting and what are the admission procedures?
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A:
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You
are entitled to attend the Annual Meeting only if you were a stockholder as of the close
of business on the Record Date or if you hold a valid proxy for the Annual Meeting. A list
of stockholders eligible to vote at the Annual Meeting will be available for inspection at
the Annual Meeting. If you are a beneficial holder, you will need to provide proof of beneficial
ownership as of the Record Date, such as a brokerage account statement showing that you owned
shares of the Company’s common stock as of the Record Date or the voting instruction
card provided by your broker. The Annual Meeting will begin promptly at 8:00 a.m., Mountain
Time. You should be prepared to present photo identification for admittance. Check-in will
begin one-half hour prior to the meeting. Please allow ample time for the admission procedures.
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Q:
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May
I vote my shares in person at the Annual Meeting?
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A:
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If
you were a stockholder of record on the Record Date, you may vote your shares in person at
the Annual Meeting or through a proxy. If you decide to vote your shares in person, you do
not need to present your share certificate(s) at the Annual Meeting; your name will be on
the list of stockholders eligible to vote. If you hold your shares beneficially in street
name, you may vote your shares in person at the Annual Meeting only if you obtain a legal
proxy or other evidence from your broker giving you the right to vote the shares. Even
if you plan to attend the Annual Meeting, we recommend that you also submit your proxy or
voting instructions as described below so that your vote will be counted if you later decide
not to attend the Annual Meeting.
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Q:
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How
can I vote my shares without attending the Annual Meeting?
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A:
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Whether
you hold shares directly as the stockholder of record or beneficially in street name, you
may direct how your shares are voted without attending the Annual Meeting. If you are a stockholder
of record, you may vote by submitting a proxy. If you hold shares beneficially in street
name, you may vote by submitting voting instructions to your broker. For directions on how
to vote, please refer to the instructions on your proxy card or, for shares held beneficially
in street name, the voting instruction card provided by your broker.
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Stockholders
of record may submit proxies by completing, signing, dating, and mailing their proxy cards to the address provided on the proxy card.
Stockholders who hold shares beneficially in street name may vote by completing, signing, and dating the voting instruction cards provided
and mailing them to the address provided on the voting instruction card. The proxy card and voting instruction card also include directions
as to how you may submit your vote through the Internet. The voting instruction card may also include directions for alternative methods
of submitting your vote. We encourage you to vote early. If you choose to vote by mail, please allow sufficient time for your proxy or
voting instruction card to reach our vote tabulator prior to the Annual Meeting.
Q:
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Who
will count the votes?
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A:
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Votes
at the Annual Meeting will be counted by an inspector of election, who will be appointed
by the Board.
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Q:
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What
is the effect of not voting?
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A:
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If
you are a stockholder of record and you do not cast your vote, no votes will be cast on your
behalf on any of the items of business at the Annual Meeting. If you are a stockholder of
record and you properly sign and return your proxy card, your shares will be voted as you
direct. If no instructions are indicated on such proxy card and you are a stockholder of
record, shares represented by the proxy will be voted in the manner recommended by the Board
on all matters presented in this proxy statement, namely “FOR” all six of the
director nominees, “FOR” the ratification of the appointment of Plante Moran
as our independent registered public accounting firm, and “FOR” the approval,
on an advisory basis, of the compensation of the executive officers named in this proxy statement.
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Generally,
broker non-votes occur when shares held by a broker in “street name” for a beneficial owner are not voted with respect to
a particular proposal because the broker (1) has not received voting instructions from the beneficial owner and (2) lacks discretionary
voting power to vote those shares.
A
broker is entitled to vote shares held for a beneficial owner on routine matters. The ratification of the appointment of Plante Moran
as our independent registered public accounting firm in Proposal Two is a routine matter; and, accordingly, a broker is entitled to vote
shares held for a beneficial owner on this proposal without instructions from such beneficial owner. On the other hand, absent instructions
from a beneficial owner, a broker is not entitled to vote shares held for such beneficial owner on non-routine matters. We believe, based
on the rules of the New York Stock Exchange (“NYSE”), that the election of directors in Proposal One and the advisory vote
on executive compensation in Proposal Three are non-routine matters; and, accordingly, brokers do not have authority to vote on such
matters absent instructions from beneficial owners. Whether a voting proposal is ultimately determined routine or non-routine is determined
by the NYSE. Accordingly, if beneficial owners desire not to have their shares voted by a broker in a certain manner, they should give
instructions to their brokers as to how to vote their shares.
Broker
non-votes count for purposes of determining whether a quorum is present.
Q:
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How
many votes are required for the approval of the proposals to be voted upon, and how will
abstentions and broker non-votes be treated?
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Proposal
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Votes
Required
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Effect
of Votes Withheld / Abstentions
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Effect
of Broker
Non-Votes
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Proposal
One: Election of Directors
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Plurality
of the votes cast. This means that the six nominees receiving the highest number of affirmative “FOR” votes will be elected
as directors.
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Votes
withheld will have no effect.
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Broker
non-votes will have no effect.
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Proposal
Two: Ratification of Appointment of Independent Registered Public Accounting Firm
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Affirmative
vote of the holders of a majority in voting power of the shares of common stock present in person or by proxy and entitled to vote
thereon.
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Abstentions
will have the effect of a vote against the proposal.
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We
do not expect any broker non-votes on this proposal.
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Proposal
Three: Advisory Vote on Executive Compensation
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Affirmative
vote of the holders of a majority in voting power of the shares of common stock present in person or by proxy and entitled to vote
thereon.
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Abstentions
will have the effect of a vote against the proposal.
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Broker
non-votes will have no effect.
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Q:
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Can I revoke my proxy or change my vote after I have voted?
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A:
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You
may revoke your proxy and change your vote by voting again or by attending the Annual Meeting
and voting in person. Only your latest dated proxy card received at or prior to the Annual
Meeting will be counted. However, your attendance at the Annual Meeting will not have the
effect of revoking your proxy unless you forward written notice to the Corporate Secretary
at Xtant Medical Holdings, Inc., 664 Cruiser Lane, Belgrade, Montana 59714, or you vote by
ballot at the Annual Meeting. If you are a beneficial owner, you will need to request a legal
proxy from your broker and bring it with you to vote at the Annual Meeting.
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Q:
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How
many votes are required to hold the Annual Meeting?
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A:
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The
presence, in person or by proxy, of the holders of one-third of the shares of our common
stock outstanding and entitled to vote on the Record Date is necessary to hold the Annual
Meeting and conduct business. This is called a quorum. Abstentions and broker non-votes will
be considered as present at the Annual Meeting for purposes of establishing a quorum.
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Q:
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Who
will bear the cost of soliciting votes for the Annual Meeting?
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A:
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The
Company is making this solicitation and will pay the entire cost of preparing, printing,
assembling, mailing, and distributing these proxy materials. In addition to the use of the
mails, proxies may be solicited by personal interview, telephone, electronic mail, and facsimile
by directors, officers, and regular employees of the Company. None of the Company’s
directors, officers, or employees will receive any additional compensation for soliciting
proxies on behalf of the Board. The Company may also make arrangements with brokerage firms
and other custodians, nominees, and fiduciaries for the forwarding of soliciting material
to the beneficial owners of common stock held of record by those owners. The Company will
reimburse those brokers, custodians, nominees, and fiduciaries for their reasonable out-of-pocket
expenses incurred in connection with that service.
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Q:
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Where
can I find the voting results of the Annual Meeting?
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A:
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We
intend to announce preliminary voting results at the Annual Meeting and will disclose final
voting results in a Current Report on Form 8-K that will be filed with the SEC not more than
four business days following the Annual Meeting.
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PROPOSAL
one—ELECTION OF DIRECTORS
Board
Size and Structure
Our
Second Amended and Restated Bylaws provide that the Board will consist of at least one member or such other number as may be determined
by the Board from time to time or by the stockholders at an annual meeting. The Board has fixed the number of directors at six, and we
currently have six directors serving on the Board. Each director holds office for a term of one year or until his successor is duly elected
and qualified, subject to his earlier death, resignation, disqualification, or removal.
Current
Directors and Nominees for Director
The
Board has nominated the following six individuals to serve as our directors until the next annual meeting of stockholders or until their
respective successors are elected and qualified. All of the nominees named below are current members of the Board.
The
names, ages, and positions of our nominees for director as of June 7, 2021 are as follows:
Name
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Age
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Position
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John
Bakewell(1)
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60
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Director
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Sean
E. Browne
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55
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Director
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Michael
Eggenberg(2)
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51
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Director
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Robert
McNamara(1)(2)
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64
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Director
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Jeffrey
Peters
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53
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Chairman
of the Board and Director
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Matthew
Rizzo(2)
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48
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Director
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(1)
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Member of the Audit Committee
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(2)
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Member of the Compensation Committee
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Each
director elected at the Annual Meeting will serve a one-year term until the Company’s next annual meeting and until his successor
is duly elected and qualified or until his earlier death, resignation, disqualification, or removal. Unless otherwise instructed, the
proxy-holders will vote the proxies received by them for the six nominees. If any nominee should become unavailable for election prior
to the Annual Meeting, an event that currently is not anticipated by the Board, the proxies will be voted in favor of the election of
a substitute nominee or nominees proposed by the Board. Each nominee has agreed to serve if elected, and the Board has no reason to believe
that any nominee will be unable to serve.
Board
Nomination Rights
Pursuant
to an Investor Rights Agreement, dated as of February 14, 2018 (“Investor Rights Agreement”), by and among the Company and
certain stockholders, including without limitation, OrbiMed Royalty Opportunities II, LP (“Royalty Opportunities”) and ROS
Acquisition Offshore LP (“ROS” and, together with Royalty Opportunities, the “Investors”), for so long as the
Ownership Threshold (as defined in the Investor Rights Agreement and below) is met, the Investors are entitled to nominate such individuals
to the Board constituting a majority of the directors. The Investors have nominated Michael Eggenberg, Matthew Rizzo, and Jeffrey Peters
to the Board.
Additional
Information About Director Nominees
The
Board believes that our current six directors collectively have the experience, qualifications, attributes, and skills to effectively
oversee the management of the Company, including a high degree of personal and professional integrity, an ability to exercise sound business
judgment on a broad range of issues, sufficient experience and background to have an appreciation of the issues facing the Company, a
willingness to devote the necessary time to Board duties, a commitment to representing the best interests of the Company and our stockholders,
and a dedication to enhancing stockholder value.
The
business experience of each nominee for director is summarized below.
John
Bakewell has served as a member of our Board since February 2018. Mr. Bakewell was initially elected to the Board in connection
with our restructuring in February 2018. Mr. Bakewell is an independent board member and consultant to the medical technology industry.
He also serves on the board of directors of Treace Medical Concepts, Inc. (TMCI) and Neuronetics, Inc. (STIM). Mr. Bakewell served as
the Chief Financial Officer of Exact Sciences Corporation, a molecular diagnostics company, from January 2016 to November 2016. Mr. Bakewell
previously served as the Chief Financial Officer of Lantheus Holdings, Inc., a diagnostic medical imaging company, from June 2014 to
December 2015, as the Chief Financial Officer of Interline Brands, Inc., a distributor and direct marketer of broad-line maintenance,
repair and operations products, from June 2013 to May 2014, and as the Executive Vice President and Chief Financial Officer of RegionalCare
Hospital Partners, an owner and operator of non-urban hospitals, from January 2010 to December 2011. In addition, Mr. Bakewell held the
position of Chief Financial Officer with Wright Medical Group, Inc., an orthopaedic company, from 2000 to 2009, with Altra Energy Technologies,
Inc. from 1998 to 2000, with Cyberonics, Inc. from 1993 to 1998 and with Zeos International, Ltd. from 1990 to 1993. Mr. Bakewell began
his career in the public accounting profession, serving seven years, collectively, with Ernst & Young and KPMG Peat Marwick. Mr.
Bakewell previously served on the board of directors of Entellus Medical, Inc., a public ENT-focused medical device company, until its
acquisition by Stryker Corp.; ev3 Inc., a public endovascular medical device company, until its acquisition by Covidien plc; Keystone
Dental, Inc., a private dental implant medical device company; and Corindus Vascular Robotics, Inc., a public cardiovascular robotics
medical technology company and now a Siemens Healthineers company. Mr. Bakewell holds a Bachelor of Arts in Accounting from the University
of Northern Iowa and is a certified public accountant (current status inactive). Mr. Bakewell’s extensive financial and managerial
experience as a senior executive of several publicly traded medical technology companies, as well as his experience serving on the board
of directors of other companies contributes valuable experience to our Board.
Sean
E. Browne was appointed our President and Chief Executive Officer in October 2019 and has served as a member of our Board since
October 2019. Prior to this, Mr. Browne served as Chief Revenue Officer of CCS Medical, Inc., a provider of home delivery medical supplies,
from September 2014 to June 2019. Prior to CCS Medical, Mr. Browne served as Chief Operating Officer of The Kini Group, an integrated
cloud-based software analytics and advisory firm, from March 2013 to August 2014. From November 2007 to March 2016, Mr. Browne served
as President and Chief Executive Officer and a director of Neuro Resource Group, a venture start-up medical device company that was sold
to a strategic buyer. In other roles, Mr. Browne served as President, Miltex Surgical Instrument Division for Integra LifeSciences Holdings
Corporation, a publicly held medical device company that acquired Miltex Holdings, Inc. Mr. Browne served as Vice President, Sales and
Marketing of Esurg.com, an e-commerce company serving physician and ambulatory surgery markets. Prior to Esurg.com, Mr. Browne served
as Senior Vice President, Health Systems Division of McKesson Corporation, a drug company, and prior to McKesson, served in various positions
with increasing responsibility at Baxter Healthcare. Mr. Browne holds a Masters of Business Administration from the Kellogg School of
Management at Northwestern University and a Bachelor of Science degree, with a major in Finance and minor in Statistics, from Boston
University. We believe that Mr. Browne’s day-to-day operations experience as a result of his role as our President and Chief Executive
Officer enable him to make valuable contributions to the Board of Directors. In addition, in his role as President and Chief Executive
Officer, Mr. Browne provides unique insight into our business strategies, opportunities and challenges, and serves as the unifying element
between the leadership and strategic direction provided by the Board of Directors and the implementation of our business strategies by
management.
Michael
Eggenberg has served as a member of our Board since February 2018. Mr. Eggenberg was initially elected to the Board in connection
with our restructuring in February 2018. Mr. Eggenberg is a designee of the Investors under the Investor Rights Agreement. Since December
2016, Mr. Eggenberg has been a Managing Director with OrbiMed Advisors LLC, a private equity and venture capital firm, focusing on healthcare
royalty and structured finance investments. From May 2005 to December 2016, Mr. Eggenberg was with Fortress Investment Group LLC, a global
investment manager, most recently as a Managing Director focused on special opportunities funds. Mr. Eggenberg previously held positions
at CIT Group Inc., Wells Fargo Bank, N.A. and Bank of America, formerly NationsBank. Mr. Eggenberg received his BS in Finance and General
Business from Drexel University. Mr. Eggenberg brings valuable experience in the life science industry and finance experience to the
Board.
Robert
McNamara has served as a member of our Board since February 2018 and Chairman of the Compensation Committee since February 2019.
He has over 25 years experience in the medical device industry. Mr. McNamara was initially elected to the Board in connection with our
restructuring in February 2018. He also serves as Audit Committee Chairman of Axonics, Inc.(AXNX). From January 2013 to July 2016, Mr.
McNamara served as Executive Vice President and from April 2012 to July 2016 as the Chief Financial Officer for LDR Holding Corporation,
a publicly held medical device (spinal implants) company acquired by Zimmer Biomet Holdings, Inc. In addition, Mr. McNamara has previously
served as the Senior Vice President and Chief Financial Officer for publicly traded medical device companies including Accuray Inc. (stereotactic
radiation surgery focused on treating cancer using AI robotics), Somnus Medical Technologies Inc. (RF energy focused on treating upper
airway breathing disorders) and Target Therapeutics, Inc., (minimally invasive catheters and devices for vascular diseases of the brain).
Mr. McNamara has been a member of the board of directors of Northstar Neurosciences Inc. and is the former Mayor of Menlo Park, California.
Mr. McNamara began his career in public accounting and is a certified public accountant (current status inactive). Mr. McNamara holds
a Bachelor of Science in Accounting from the University of San Francisco and a Masters of Business Administration in Finance from The
Wharton School at the University of Pennsylvania. Mr. McNamara brings valuable finance and accounting experience in the medical device
industry to the Board.
Jeffrey
Peters has served as Chairman of our Board and a member of our Board since February 2018. Mr. Peters was initially elected to
the Board in connection with our restructuring in February 2018. Mr. Peters has over 25 years of medical device experience. Mr. Peters
is a designee of the Investors under the Investor Rights Agreement. Since December 2017, Mr. Peters has served as the President and Chief
Executive Officer of Cardialen, Inc., a private medical device company developing low-energy therapy for cardiac arrhythmias. Mr. Peters
is also a Venture Partner for OrbiMed Advisors LLC, a private equity and venture capital firm, a position he has held since January 2018.
Mr. Peters served as Executive Chairman of Neurovasc Technologies, Inc. an interventional neuroradiology ischemic stroke technology company,
from December 2015 to May 2017, and served as Chief Executive Officer of Anulex Technologies Inc., a former privately held medical device
manufacturer, from April 2011 until May 2016. From 2013 to December 2017, Mr. Peters also served as an independent medical device consultant.
From 2001 to 2007, Mr. Peters served in various positions at ev3 Inc., an endovascular company now owned by Medtronic plc, and its predecessor
companies, including Chief Technology Officer, Vice President, Research and Development, Cardio Peripheral Division and Vice President,
Business Development. Mr. Peters’ financial roles include portfolio manager at Black River Asset Management LLC from 2007 to 2008,
an entrepreneur-in-residence at Foundation Medical Partners from 2009 to 2011, and an equity research analyst at Dain Rauscher Wessels
from 1997 to 2001. Mr. Peters currently serves as a member of the board of directors of Children’s Minnesota. Mr. Peters received
his BS in Mechanical Engineering and MBA from the University of Minnesota. Mr. Peters brings substantial medical device experience, including
having served in several executive roles with start-up and emerging medical device companies, and significant financial and operating
experience to the Board.
Matthew
Rizzo has served as a member of our Board since February 2018. Mr. Rizzo was initially elected to the Board in connection with
our restructuring in February 2018. Mr. Rizzo is a designee of the Investors under the Investor Rights Agreement. Since April 2010, Mr.
Rizzo has been a Partner with OrbiMed Advisors LLC, a private equity and venture capital firm, and is focused on healthcare royalty and
structured finance investments. From 2009 to 2010, Mr. Rizzo was a Senior Director in Business Development at Ikaria, a biotherapeutics
company. From 2006 to 2009, Mr. Rizzo was Vice President at Fortress Investment Group LLC, a global investment manager, focused on healthcare
investments in the Drawbridge Special Opportunities Funds. From 2001 to 2006, Mr. Rizzo was at GlaxoSmithKline, where he worked in business
and commercial analysis. Mr. Rizzo received his MBA from Duke University and his BS from University at Buffalo. Mr. Rizzo brings valuable
experience in the life science industry and finance experience to the Board.
Board
Recommendation
The
Board unanimously recommends that you vote “FOR” the election of John Bakewell, Sean E. Browne, Michael Eggenberg, Robert
McNamara, Jeffrey Peters, and Matthew Rizzo to serve as directors until the next annual meeting of stockholders and until their respective
successors are duly elected and qualified.
The
Board Recommends a Vote FOR the Election of All Six Nominees for Director
|
☑
|
GENERAL
INFORMATION ABOUT THE BOARD OF DIRECTORS
AND CORPORATE GOVERNANCE
Investor
Rights Agreement
We
are party to an Investor Rights Agreement with Royalty Opportunities and ROS, which are funds affiliated with OrbiMed Advisors LLC. Under
the Investor Rights Agreement, Royalty Opportunities and ROS are permitted to nominate a majority of the directors and designate the
chairperson of our Board of Directors at subsequent annual meetings, as long as they maintain an ownership threshold in our Company of
at least 40% of our then outstanding common stock (the “Ownership Threshold”). If Royalty Opportunities and ROS are unable
to maintain the Ownership Threshold, the Investor Rights Agreement contemplates a reduction of nomination rights commensurate with their
ownership interests. In addition, for so long as the Ownership Threshold is met, we must obtain the approval of a majority of our common
stock held by Royalty Opportunities and ROS to proceed with the following actions: (i) issue new securities; (ii) incur over $250,000
of debt in a fiscal year; (iii) sell or transfer over $250,000 of our assets or businesses or our subsidiaries in a fiscal year; (iv)
acquire over $250,000 of assets or properties in a fiscal year; (v) make capital expenditures over $125,000 individually, or $1,500,000
in the aggregate during a fiscal year; (vi) approve our annual budget; (vii) hire or terminate our chief executive officer; (viii) appoint
or remove the chairperson of our Board of Directors; and (ix) make loans to, investments in, or purchase, or permit any subsidiary to
purchase, any stock or other securities in another entity in excess of $250,000 in a fiscal year. As long as the Ownership Threshold
is met, we may not increase the size of our Board or Directors beyond seven directors without the approval of a majority of the directors
nominated by Royalty Opportunities and ROS.
The
Investor Rights Agreement grants Royalty Opportunities and ROS the right to purchase from us a pro rata amount of any new securities
that we may propose to issue and sell. The Investor Rights Agreement may be terminated (a) upon the mutual written agreement of all the
parties, (b) upon our written notice or the written notice of ROS or Royalty Opportunities if the ownership percentage of our then outstanding
common stock of ROS and Royalty Opportunities is less than 10%, or (c) upon written notice of ROS and Royalty Opportunities.
Controlled
Company Status
We
are a “controlled company” as defined in section 801(a) of the NYSE American Company Guide because more than 50% of the combined
voting power of all of our outstanding common stock is beneficially owned by funds affiliated with OrbiMed Advisors LLC. As such, we
are exempt from certain NYSE American rules requiring our Board of Directors to have a majority of independent members, a compensation
committee composed entirely of independent directors and a nominating committee composed entirely of independent directors.
Director
Independence
The
Board has affirmatively determined that John Bakewell and Robert McNamara are “independent directors,” as defined under the
independence standards of the NYSE American.
Board
Leadership Structure
Under
the terms of the Investor Rights Agreement, the Investors have the right to designate the Chairman of the Board and have so designated
Jeffrey Peters. Accordingly, Mr. Peters serves as Chairman of the Board. Sean E. Browne serves as our President and Chief Executive Officer.
We believe this leadership structure is in the best interests of the Company and our stockholders and strikes the appropriate balance
between the Chief Executive Officer’s responsibility for the strategic direction, day-to day-leadership, and performance of the
Company and the Chairman of the Board’s responsibility to guide the overall strategic direction of the Company, provide oversight
of our corporate governance and guidance to our Chief Executive Officer, and to set the agenda for and preside over Board meetings. We
recognize that different leadership structures may be appropriate for companies in different situations and believe that no one structure
is suitable for all companies. We believe that we are currently well-served by this leadership structure.
Board
Meetings
The
Board met 10 times during fiscal 2020. During fiscal 2020, each director attended at least 75% of the meetings of the Board and Board
committees on which the director served during the last fiscal year.
We
do not have a formal policy on Board member attendance at annual meetings of stockholders. All Board members serving at the time of the
Company’s 2020 annual meeting of stockholders attended the annual meeting either in person or by telephone.
Board
Committees
We
currently maintain two standing Board committees, an Audit Committee and a Compensation Committee. We are a controlled company and have
elected not to comply with the NYSE American corporate governance requirements, which require an independent nomination and governance
committee and an independent compensation committee. We currently do not maintain a nomination and governance committee. While we maintain
a Compensation Committee, it is not independent according to NYSE American corporate governance requirements.
The
table below summarizes the current membership of each of our two standing board committees as of June 7, 2021.
Director
|
|
Audit
Committee
|
|
Compensation
Committee
|
John Bakewell
|
|
Chair
|
|
|
Sean Browne
|
|
|
|
|
Michael Eggenberg
|
|
|
|
●
|
Robert McNamara
|
|
●
|
|
Chair
|
Jeffrey Peters
|
|
|
|
|
Matthew Rizzo
|
|
|
|
●
|
In
addition, the Board may establish other committees from time to time. During 2020, the Board maintained a Special Restructuring Committee,
comprised of Mr. Bakewell and Mr. McNamara, to negotiate the terms of the Company’s debt restructuring, as described in more detail
under “Transactions with Related Persons, Promoters, and Certain Control Persons—Related Party Transactions—Debt
Restructuring,” which committee has since disbanded.
Audit
Committee
The
organization and primary responsibilities of the Audit Committee are set forth in its charter, posted on our website at www.xtantmedical.com
(click “Investors” and “Corporate Governance”), and include various matters with respect to the oversight of
our accounting and financial reporting process and audits of our financial statements. The primary purposes of the Audit Committee include:
|
●
|
to
oversee the accounting and financial reporting processes of the Company and audits of the
financial statements of the Company;
|
|
|
|
|
●
|
to
provide assistance to the Board with respect to its oversight of the following:
|
|
○
|
integrity
of the Company’s financial statements and internal controls;
|
|
|
|
|
○
|
the
Company’s compliance with legal and regulatory requirements;
|
|
|
|
|
○
|
the
qualifications and independence of the Company’s independent registered public accounting
firm; and
|
|
|
|
|
○
|
the
performance of the Company’s internal audit function, if any, and independent registered
public accounting firm.
|
|
●
|
to
prepare the report required to be prepared by the Audit Committee pursuant to the rules of
the Securities and Exchange Commission.
|
The
Audit Committee currently consists of Mr. Bakewell (Chair) and Mr. McNamara. The Audit Committee met five times during fiscal 2020. Under
the NYSE American listing standards, all Audit Committee members must be independent directors and meet heightened independence requirements
under the federal securities laws. In addition, all Audit Committee members must be financially literate, and at least one member must
be financially sophisticated. Further, under SEC rules, the Board must determine whether at least one member of the Audit Committee is
an “audit committee financial expert,” as defined by the SEC’s rules. The Board has determined that both Mr. Bakewell
and Mr. McNamara are independent, financially literate, and sophisticated and qualify as “audit committee financial experts”
in accordance with the applicable rules and regulations of the SEC.
Compensation
Committee
The
organization and responsibilities of the Compensation Committee are set forth in its charter, which is posted on our website at www.xtantmedical.com
(click “Investors” and “Corporate Governance”). The primary purposes of the Compensation Committee include:
|
●
|
recommending
to the Board all compensation for the Company’s Chief Executive Officer and other executive
officers;
|
|
|
|
|
●
|
administering
the Company’s equity-based compensation plans;
|
|
|
|
|
●
|
reviewing,
assessing, and approving overall strategies for attracting, developing, retaining, and motivating
Company management and employees;
|
|
|
|
|
●
|
overseeing
the development and implementation of succession plans for the Chief Executive Officer and
other key executive officers and employees;
|
|
|
|
|
●
|
reviewing,
assessing, and approving overall compensation structure on an annual basis; and
|
|
|
|
|
●
|
recommending
and leading a process for the determination of non-employee director compensation.
|
The
Compensation Committee consists of Mr. McNamara (Chair), Mr. Eggenberg and Mr. Rizzo. The Compensation Committee met four times during
fiscal 2020.
As
described above, the Compensation Committee is responsible for recommending to the Board all compensation for the Company’s Chief
Executive Officer and other executive officers. Although the Compensation Committee may delegate any or all of its responsibilities to
a subcommittee of the Compensation Committee, it has not done so. The Company’s Chief Executive Officer provides his recommendations
to the Compensation Committee regarding compensation to be paid to the executive officers and bonus plan performance objectives and goals.
The Compensation Committee may engage and obtain advice and assistance from outside advisors as it deems necessary to carry out its duties.
Although it has engaged a compensation consultant in the past, it has not done so recently, although the Compensation Committee has recently
subscribed to and used proxy reporting data provided by Aon plc’s CG Pro database.
Director
Nomination Process
Since
we are not required under the NYSE rules to maintain a nominating committee and we do not have a nominating committee, the Board oversees
our director nomination process. In identifying and evaluating candidates for membership on the Board, the Board may take into account
all factors it considers appropriate, which may include strength of character, mature judgment, career specialization, relevant technical
skills, diversity (including, but not limited to, gender, race, ethnicity, age, experience, and skills), and the extent to which the
candidate would fill a present need on the Board. We do not have a formal diversity policy for directors. The Board identifies director
candidates based on input provided by a number of sources, including Board members, stockholders, management, and third parties. The
Board does not have a formal policy for the consideration of director candidates proposed by stockholders and does not distinguish between
nominees recommended by our stockholders and those recommended by other parties. Any stockholder recommendation must be sent to our Corporate
Secretary at Xtant Medical Holdings, Inc., 664 Cruiser Lane, Belgrade, Montana 59714, and must include certain information concerning
the nominee as specified in the Company’s Second Amended and Restated Bylaws.
Risk
Oversight
The
Board has overall responsibility for risk oversight with a focus on the most significant risks facing the Company. The Board relies upon
management to supervise day-to-day risk management.
Risk
is inherent in every business. We face a number of risks, including regulatory, compliance, legal, competitive, financial (accounting,
credit, interest rate, liquidity, and tax), operational, political, strategic, and reputational risks. Our management is responsible
for the day-to-day management of risks faced by us, while the Board, as a whole and through the Audit Committee, has responsibility for
the oversight of risk management. In its risk oversight role, the Board ensures that the risk management processes designed and implemented
by management are adequate and functioning as designed. The Board oversees risks through the establishment of policies and procedures
that are designed to guide daily operations in a manner consistent with applicable laws, regulations, and risks acceptable to the Company.
The Audit Committee’s role includes a particular focus on the qualitative aspects of financial reporting to stockholders, our processes
for the management of business and financial risks, and compliance with significant applicable legal, ethical, and regulatory requirements.
The Audit Committee, along with management, is also responsible for developing and participating in a process for the review of important
financial and operating topics that present potential significant risks to the Company. Management regularly discusses with the Board
the strategies and risks facing the Company. This current leadership structure, which includes separate Chairman and Chief Executive
Officer roles, is appropriate and in the best interests of the Company and its stockholders at this time for a number of reasons, including
(i) the extensive experience of the members of the Board and management, (ii) our status as a controlled company, and (iii) the appropriate
balance of risks relating to the concentration of authority through the oversight of our Chairman.
Code
of Ethics and Code of Conduct
We
have adopted a Code of Ethics for the CEO and Senior Financial Officers as well as a Code of Conduct that applies to all directors, officers,
and employees. Our corporate governance materials, including our Code of Ethics for the CEO and Senior Financial Officers and Code of
Conduct, are available on our website at www.xtantmedical.com (click “Investors” and “Corporate Governance”).
We intend to disclose on our corporate website any amendment to, or waiver from, a provision of our Code of Ethics for the CEO and Senior
Financial Officers that applies to directors and executive officers and that is required to be disclosed pursuant to the rules of the
SEC and the NYSE American.
Stockholder
Communications
The
Board does not have a formal process for stockholders to send communications to the Board and does not feel that such a process is necessary
at this time. If the Company receives stockholder communications that cannot be properly addressed by officers of the Company, the officers
bring the matter to the attention of the Board.
Director
Compensation
Director
Compensation Program
Our
director cash compensation consists of an annual cash retainer paid to each non-employee director and an additional annual cash retainer
paid to the Chairman of the Board, the Audit Committee Chair, and the Compensation Committee Chair and equity grants in the form of restricted
stock unit awards (“RSU”) every two years.
The
table below sets forth the current annual cash retainers for 2020:
Description
|
|
Annual Cash Retainer
|
|
Non-Employee Director
|
|
$
|
50,000
|
|
Chairman of the Board Premium
|
|
|
32,500
|
|
Audit Committee Chair Premium
|
|
|
32,500
|
|
Compensation Committee Chair Premium
|
|
|
32,500
|
|
The
equity compensation component is intended to match the dollar value of the annual cash retainers over a two-year period. On February
5, 2020, Messrs. McNamara, Bakewell and Peters each received an RSU award valued at $165,000 for 116,197 shares of our common stock and
Messrs. Eggenberg and Rizzo, the Investor Designees who are employees of OrbiMed, each received an RSU award valued at $100,001 for 70,423
shares of our common stock. All of these RSU awards vest in nearly equal installments on each of February 15, 2021 and February 15, 2022.
Director
Compensation Table for Fiscal 2020
The
table below describes the compensation earned by our directors during fiscal 2020, other than Sean E. Browne, our President and Chief
Executive Officer. Mr. Browne is not compensated separately for his service as a director, and his compensation is discussed under “Executive
Compensation.”
Name
|
|
Fees Earned
or Paid in
Cash
|
|
|
Stock
Awards(1)(2)
|
|
|
Option
Awards
|
|
|
All Other
Compensation
|
|
|
Total
|
|
John Bakewell
|
|
$
|
82,500
|
|
|
$
|
168,486
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
250,986
|
|
Michael Eggenberg
|
|
|
50,000
|
|
|
|
102,113
|
|
|
|
—
|
|
|
|
—
|
|
|
|
152,113
|
|
Robert McNamara
|
|
|
82,500
|
|
|
|
168,486
|
|
|
|
—
|
|
|
|
—
|
|
|
|
250,986
|
|
Jeffrey Peters
|
|
|
82,500
|
|
|
|
168,486
|
|
|
|
—
|
|
|
|
—
|
|
|
|
250,986
|
|
Matthew Rizzo
|
|
|
50,000
|
|
|
|
102,113
|
|
|
|
—
|
|
|
|
—
|
|
|
|
152,113
|
|
(1)
|
The
amount reported in the “Stock Awards” column represents the aggregate grant date
fair value for the RSU awards granted to our non-employee directors in 2020. The grant date
fair value for the RSU awards was determined based on the closing sale price of our common
stock on the grant date. The stock awards granted in 2020 cover two years of compensation;
therefore, the next stock award is anticipated to be granted in 2022.
|
(2)
|
As
of December 31, 2020, each non-employee director held the following number of unvested stock
awards (all of which are in the form of RSU awards): Mr. Bakewell (116,197); Mr. Eggenberg
(70,423); Mr. McNamara (116,197); Mr. Peters (116,197); and Mr. Rizzo (70,423).
|
PROPOSAL
two—RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Appointment
of Independent Registered Public Accounting Firm
We
are seeking stockholder ratification of the appointment of Plante Moran as our independent registered public accounting firm for the
fiscal year ending December 31, 2021 as a matter of good corporate governance. If the stockholders fail to ratify the appointment of
Plante Moran, the Audit Committee may reconsider its appointment. Even if the appointment is ratified, the Audit Committee, in its discretion,
may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee
feels that such a change would be in the best interests of the Company and our stockholders. We do not expect representatives from Plante
Moran to attend the Annual Meeting.
Audit
and Non-Audit Fees
Plante
Moran served as the independent registered public accounting firm to audit our books and accounts for the fiscal years ending December
31, 2020 and 2019.
The
table below presents the aggregate fees billed for professional services rendered by Plante Moran for the years ended December 31, 2020
and December 31, 2019.
|
|
2020
|
|
|
2019
|
|
Audit fees
|
|
$
|
262,116
|
|
|
$
|
297,300
|
|
Audit-related fees
|
|
|
—
|
|
|
|
20,000
|
|
Tax fees
|
|
|
—
|
|
|
|
—
|
|
All other fees
|
|
|
18,500
|
|
|
|
9,357
|
|
Total fees
|
|
$
|
280,616
|
|
|
$
|
326,657
|
|
In
the above table, “audit fees” are fees billed for services provided related to the audit of our annual financial statements,
quarterly reviews of our interim financial statements, and services normally provided by the independent accountant in connection with
statutory and regulatory filings or engagements for those fiscal periods. “Audit-related fees” are fees not included in audit
fees that are billed by the independent accountant for assurance and related services that are reasonably related to the performance
of the audit or review of our financial statements. These audit-related fees also consist of the review of our registration statements
filed with the SEC and related services normally provided in connection with statutory and regulatory filings or engagements. “Tax
fees” are fees billed by the independent accountant for professional services rendered for tax compliance, tax advice, and tax
planning. “All other fees” are fees billed by the independent accountant for products and services not included in the foregoing
categories.
Pre-Approval
Policy
It
is the Audit Committee’s policy to approve in advance the types and amounts of audit, audit-related, tax, and any other services
to be provided by our independent registered public accounting firm. In situations where it is not practicable to obtain full Audit Committee
approval, the Audit Committee has delegated authority to the Chair of the Audit Committee to grant pre-approval of auditing, audit-related,
tax, and all other services up to $20,000. Any pre-approved decisions by the Chair are required to be reviewed with the Audit Committee
at its next scheduled meeting. The Audit Committee or Audit Committee Chair pursuant to his delegation approved 100% of all services
provided by Plante Moran during 2020 and 2019.
Audit
Committee Report
The
Audit Committee reviews the Company’s financial reporting process on behalf of the Board. Management has the primary responsibility
for establishing and maintaining adequate internal financial control, for preparing the financial statements, and for the public reporting
process. Plante Moran, our independent registered public accounting firm, is responsible for expressing opinions on the conformity of
the Company’s audited financial statements with generally accepted accounting principles. In this context, the Audit Committee
has (i) reviewed and discussed the audited financial statements with management and our independent registered public accounting firm,
(ii) discussed with our independent auditor the matters that are required to be discussed by the applicable Public Company Accounting
Oversight Board standards, and (iii) received written disclosures and the letter from our independent registered public accounting firm
required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor’s communications
with the Audit Committee concerning independence and has discussed with the independent auditor the independent auditor’s independence.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements
be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.
This
report is dated as of February 24, 2021.
Respectfully
submitted,
John
Bakewell
Robert McNamara
Board
Recommendation
The
Board unanimously recommends that stockholders vote “FOR” the ratification of the appointment of Plante Moran as our independent
registered public accounting firm for the fiscal year ending December 31, 2021.
The
Board Recommends a Vote FOR the Ratification of the Appointment of Plante Moran as our Independent Registered Public Accounting Firm
for the Fiscal Year Ended December 31, 2021
|
☑
|
PROPOSAL
three—advisory vote on executive compensation
Background
The
Board is providing our stockholders with an advisory vote on our executive compensation pursuant to the Dodd-Frank Wall Street Consumer
Protection Act and Section 14A of the Securities Exchange Act of 1934, as amended. This advisory vote, commonly known as a say-on-pay
vote, is a non-binding vote on the compensation paid to our named executive officers as set forth in this proxy statement.
At
our 2020 Annual Meeting of Stockholders, our stockholders had the opportunity to vote on an advisory say-on-pay proposal. Over 99% of
the votes cast were in favor of our say-on-pay proposal. At our 2019 Annual Meeting of Stockholders, the Company submitted to stockholders
a frequency of say-on-pay vote, recommending that a say-on-pay proposal be submitted annually. Our stockholders voted overwhelmingly
in favor of an annual say-on-pay vote. Accordingly, stockholders are being provided with a say-on-pay vote at this year’s Annual
Meeting.
Why
You Should Vote in Favor of Our Say-On-Pay Proposal
Our
executive compensation program is generally designed to attract, retain, motivate, and reward highly qualified and talented executive
officers that will enable us to drive long-term stockholder value.
Our
compensation practices include many best pay practices that support our executive compensation objectives and principles and benefit
our stockholders.
What We Do:
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What We Don’t Do:
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Structure
our executive officer compensation so that a significant portion of pay is at risk
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No
repricing of stock options unless approved by stockholders
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Emphasize
long-term performance in our equity-based incentive awards
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No
excessive perquisites
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Use
a mix of performance measures and caps on payouts
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No
guaranteed salary increases or bonuses
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Require
minimum vesting periods on equity awards
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No
tax or excise tax gross-ups
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Require
double-trigger for equity acceleration upon a change of control
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No
short sales or derivative transactions in Xtant stock, including hedges
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Maintain
competitive compensation packages
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No
pledging of Xtant securities
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We
encourage our stockholders to read the “Executive Compensation” section beginning on page 19, which describes in detail
our executive compensation program and the executive compensation decisions made by the Compensation Committee in 2020, as well as the
accompanying executive compensation tables and narratives that provide detailed information on the compensation of our named executive
officers.
We
believe that our executive compensation program is competitive, focused on pay for performance, and strongly aligned with the long-term
interests of our stockholders. The Board believes that executive compensation for 2020 was reasonable, appropriate, and justified by
the performance of the Company and the result of a carefully considered approach.
Proposed
Resolution
The
Board recommends that our stockholders vote in favor of the say-on-pay vote as set forth in the following resolution:
RESOLVED,
that our stockholders approve, on an advisory basis, the compensation paid to our named executive officers, as disclosed pursuant to
the compensation disclosure rules of the SEC, including in the “Executive Compensation” section, the accompanying
compensation tables and the corresponding narrative discussion and footnotes, and any related material disclosed in this proxy statement.
Stockholders
are not voting to approve or disapprove the Board’s recommendation. As this is an advisory vote, the outcome of the vote is not
binding on us with respect to future executive compensation decisions, including those relating to our named executive officers, or otherwise.
The Compensation Committee and Board expect to take into account the outcome of the vote when considering future executive compensation
decisions.
Next
Say-On-Pay Vote
The
next say-on-pay vote will occur at our 2022 Annual Meeting of Stockholders.
Board
Recommendation
The
Board unanimously recommends that our stockholders vote “FOR” approval, on an advisory basis, of our executive compensation,
or say-on-pay vote.
The
Board Recommends a Vote FOR Approval, on an Advisory Basis, of our Executive Compensation, or Say-on-Pay Vote
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☑
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EXECUTIVE
COMPENSATION
Summary
Compensation Table
The
table below provides summary information concerning all compensation awarded to, earned by, or paid to the individual that served as
a principal executive officer of the Company during the year ended December 31, 2020 and the two most highly compensated executives for
the year ended December 31, 2020.
Name and Principal Position
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Year
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Salary(1)
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Bonus(2)
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|
|
Stock
Awards(3)
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Option
Awards(4)
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Non-Equity
Incentive Plan
Compensation(5)
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All
Other
Compen- sation(6)
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Total
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Sean E. Browne(7)
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|
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2020
|
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$
|
603,692
|
|
|
$
|
—
|
|
|
$
|
1,850,762
|
|
|
$
|
1,508,484
|
|
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$
|
510,000
|
|
|
$
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76,116
|
|
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$
|
4,549,054
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President and Chief Executive Officer
|
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2019
|
|
|
|
115,745
|
|
|
|
—
|
|
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888,419
|
|
|
|
688,130
|
|
|
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150,000
|
|
|
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9,970
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|
|
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1,852,264
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|
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|
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Greg Jensen(8)
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2020
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402,462
|
|
|
|
—
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|
|
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107,557
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|
|
|
108,469
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170,000
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|
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72,616
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|
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861,104
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Vice President, Finance and Chief Financial Officer
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2019
|
|
|
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336,032
|
|
|
|
—
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|
|
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93,558
|
|
|
|
82,056
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|
|
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114,375
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|
|
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63,173
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|
|
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689,194
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|
|
|
|
|
|
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|
|
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|
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|
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|
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Kevin D. Brandt
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2020
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417,554
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|
|
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—
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|
|
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107,557
|
|
|
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108,469
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176,375
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11,400
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821,355
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Chief Commercial Officer
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2019
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|
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398,113
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|
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90,000
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|
|
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97,066
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|
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85,546
|
|
|
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124,125
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|
|
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17,416
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|
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812,266
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(1)
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All
salaries for 2020 reflect a 20% temporary reduction during second quarter of 2020 as part
of our cost-savings measures in response to the COVID-19 pandemic. Additional detail on these
measures and their impact on executive compensation is below under “Impact of COVID-19
Pandemic.”
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(2)
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We
generally do not pay any discretionary bonuses or bonuses that are subjectively determined
and did not pay any such bonuses to any named executive officers in 2020. Annual cash incentive
bonus payouts based on performance against pre-established performance goals are reported
in the “Non-equity incentive plan compensation” column.
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(3)
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Amounts
reported represent the aggregate grant date fair value for RSU awards computed in accordance
with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) Topic 718. The grant date fair value is determined based on the per share
closing sale price of our common stock on the grant date for 2020 and on the date immediately
prior to the grant date for 2019.
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(4)
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Amounts
reported represent the aggregate grant date fair value for option awards granted to each
named executive officer computed in accordance with FASB ASC Topic 718. The grant date fair
value is determined based on our Black-Scholes option pricing model. The table below sets
forth the specific assumptions used in the valuation of each such option award:
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Grant Date
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Grant Date Fair
Value Per Share
|
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Risk Free
Interest Rate
|
|
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Expected
Life
|
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Expected
Volatility
|
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Expected
Dividend Yield
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11/15/2020
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$
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1.03
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|
|
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0.56
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%
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6.25 years
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105.28
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%
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|
—
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08/15/2020
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0.90
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|
|
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0.43
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%
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6.25 years
|
|
|
101.99
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%
|
|
|
—
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10/15/2019
|
|
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2.09
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|
|
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1.65
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%
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6.50 years
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|
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92.55
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%
|
|
|
—
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08/15/2019
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|
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2.11
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1.45
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%
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6.25 years
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|
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92.76
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%
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—
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(5)
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Amounts
reported represent payouts under our annual bonus plan and for each year reflect the amounts
earned for that year but paid during the following year.
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(6)
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The
table below provides information concerning amounts reported in the “All Other Compensation”
column of the Summary Compensation Table for 2020 with respect to each named executive officer.
Additional detail on these amounts is provided in the table below.
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Name
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401(k) Match
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Commuting
Expenses
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Total
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Sean E. Browne
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$
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8,327
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$
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67,789
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$
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76,116
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Greg Jensen
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11,400
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61,216
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72,616
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Kevin D. Brandt
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11,400
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|
|
|
—
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11,400
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(7)
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Mr. Browne was appointed our President and Chief Executive
Officer effective October 7, 2019.
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(8)
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Mr.
Jensen was appointed our Vice President, Finance and Chief Financial Officer effective August
8, 2019. From February 2019 to August 2019, Mr. Jensen served as our Vice President, Finance
and Interim Chief Financial Officer, and from March 18, 2019 until the appointment of Mr.
Browne as President and Chief Executive Officer on October 7, 2019, Mr. Jensen served in
the capacity as our principal executive officer.
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Employment
and Other Agreements with Executive Officers
Effective
October 7, 2019, we entered into an employment agreement with Sean E. Browne, our President and Chief Executive Officer, which provides
for an annual base salary $600,000 and a target annual bonus opportunity equal to 100% of his annual base salary. We agreed to reimburse
his reasonable travel and business expenses. In addition, we agreed to grant him an option to purchase 329,044 shares of our common stock
and an RSU unit award covering 329,044 shares of our common stock under the Xtant Medical Holdings, Inc. 2018 Equity Incentive Plan,
as amended (the “2018 Plan”), effective as of October 15, 2019, consistent with our equity grant policy. The total number
of shares subject to these equity awards represented 5% of our then outstanding common stock. We also agreed to grant Mr. Browne additional
stock options and RSU awards, in the same proportionate split, in the event OrbiMed (including its affiliates) converts any of our outstanding
indebtedness into equity of the Company within five years. Accordingly, in response to the completion of our October 2020 debt restructuring,
on November 15, 2020, we granted Mr. Browne an additional option to purchase 1,468,859 shares of our common stock and an RSU award covering
1,468,859 shares of our common stock. The terms of these awards are described under “—Outstanding Equity Awards at Fiscal
Year-End.” Our agreement with Mr. Browne also contains standard confidentiality, non-competition, non-solicitation and assignment
of intellectual property provisions, as well as standard severance and change in control provisions, which are described under “—Potential
Payments upon Termination or Change in Control.”
We
are party to an employment agreement with Mr. Jensen pursuant to which he serves as Vice President, Finance and Chief Financial Officer
and which provides for an annual base salary $400,000 and a target annual bonus opportunity equal to 50% of his annual base salary. This
agreement also contains standard confidentiality, non-competition, non-solicitation and assignment of intellectual property provisions,
as well as standard severance and change in control benefits, which are described under “—Potential Payments upon Termination
or Change in Control.”
Effective
July 9, 2018, we entered into an employment agreement with Kevin D. Brandt, our Chief Commercial Officer, which provided for an initial
annual base salary of $400,000 (which was subsequently increased to $415,000 in April 2019) with a target annual bonus of 50% of his
annual base salary, and a $90,000 signing bonus, which was required to be paid back if Mr. Brandt terminated his employment with Xtant
prior to the one-year anniversary of his hire date. In addition, the agreement provided for the grant of an RSU award covering 40,000
shares of our common stock, which will vest in full on July 9, 2021, the three-year anniversary date of Mr. Brandt’s hire date,
assuming continued employment. The agreement also provides that Mr. Brandt is eligible to receive an annual equity award, subject to
the approval of the Board, provided that the grant value of such equity award shall not be less than 50% of his annual base salary. Accordingly,
on August 15, 2020, Mr. Brandt was granted an option to purchase 119,942 shares of our common stock and an RSU award covering 95,183
shares of our common stock, which are described under ““—Outstanding Equity Awards at Fiscal Year-End.”
This agreement contains standard confidentiality, non-competition, non-solicitation, and assignment of intellectual property provisions,
as well as standard severance and change in control provisions, which are described under “—Potential Payments upon Termination
or Change in Control.”
We
have entered into indemnification agreements with our executive officers that require us to indemnify them against certain liabilities
that may arise by reason of their status or service as directors or executive officers to the fullest extent not prohibited by Delaware
law.
Impact
of the COVID-19 Pandemic
In
response to the COVID-19 pandemic, during the second quarter of 2020, we implemented a series of cost-savings actions intended to preserve
capital to support our operations, many of which impacted our executive compensation. These temporary cost-saving actions included:
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●
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termination
or furlough of 42% of our workforce;
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●
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suspension
in hiring most open positions;
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●
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elimination
of planned merit increases;
|
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●
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institution
of a temporary 20% base salary or wage reduction for all executive officers and employees;
|
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●
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20%
reduction in non-employee director retainers for second quarter of 2020;
|
|
●
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suspension
of future 401(k) plan matching contributions by the Company; and
|
|
●
|
reduction
in sales and marketing expenses and other discretionary spending
|
Effective
July 1, 2020, we reinstituted the full base salaries and wages of all our employees and restored future 401(k) plan matching contributions.
Xtant
Medical Holdings, Inc. Amended and Restated 2018 Equity Incentive Plan
In
2020, the Board approved and the Company’s stockholders approved and adopted the Xtant Medical Holdings, Inc. Amended and Restated
2018 Equity Incentive Plan. The purpose of the 2018 Plan is to advance the interests of the Company and our stockholders by enabling
us to attract and retain qualified individuals to perform services, provide incentive compensation for such individuals in a form that
is linked to the growth and profitability of our company and increases in stockholder value, and provide opportunities for equity participation
that align the interests of participants with those of our stockholders.
The
2018 Plan replaced the Amended and Restated Xtant Medical Equity Incentive Plan (the “Prior Plan”). However, the terms of
the Prior Plan, as applicable, continue to govern awards outstanding under the Prior Plan until exercised, expired, paid, or otherwise
terminated or canceled.
The
2018 Plan permits the Board, or a committee or subcommittee thereof, to grant to eligible employees, non-employee directors, and consultants
of the Company non-statutory and incentive stock options, stock appreciation rights, restricted stock awards, RSUs, deferred stock units,
performance awards, non-employee director awards, and other stock-based awards. Subject to adjustment, the maximum number of shares of
our common stock authorized for issuance under the 2018 Plan is 8,358,055 shares. To date, the Company has granted stock options, restricted
stock and RSUs under the 2018 Plan. As of June 7, 2021, 3,507,165 shares of Xtant common stock remained available for issuance under
the 2018 Plan.
401(k)
Plan
We
have a 401(k) plan for our employees. The 401(k) plan is a defined contribution plan covering substantially all of our employees. Employees
are eligible to participate in the plan on the first day of any month after starting employment. Employees are allowed to contribute
a percentage of their wages to the 401(k) plan, subject to statutorily prescribed limits and are subject to a discretionary employer
match of 100% of their wage deferrals not in excess of 4% of their wages. As mentioned above, we suspended matching contributions during
the second quarter of 2020 as part of our cost-savings measures in response to the COVID-19 pandemic.
Outstanding
Equity Awards at Fiscal Year-End
The
table below provides information regarding unexercised option awards and unvested stock awards held by each of our named executive officers
that remained outstanding at our fiscal year-end, December 31, 2020. All of the outstanding equity awards described below were granted
under the 2018 Plan.
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
|
Option
Exercise
Price
|
|
|
Option
Expiration
Date(1)
|
|
|
Number of
Shares or
Units of Stock
that Have Not
Vested
|
|
|
Market Value
of Shares or
Units of Stock
that Have Not
Vested(2)
|
|
Sean E. Browne
|
|
|
65,809
|
|
|
|
263,235
|
(3)
|
|
$
|
2.70
|
|
|
10/15/2029
|
|
|
|
263,235
|
(3)
|
|
$
|
315,882
|
|
|
|
|
—
|
|
|
|
1,468,859
|
(4)
|
|
|
1.26
|
|
|
11/15/2030
|
|
|
|
1,468,859
|
(4)
|
|
|
1,762,631
|
|
Greg Jensen
|
|
|
9,765
|
|
|
|
29,298
|
(5)
|
|
|
2.76
|
|
|
08/15/2029
|
|
|
|
25,424
|
(6)
|
|
|
30,509
|
|
|
|
|
—
|
|
|
|
119,942
|
(7)
|
|
|
1.13
|
|
|
08/15/2030
|
|
|
|
95,183
|
(8)
|
|
|
114,220
|
|
Kevin D. Brandt
|
|
|
15,384
|
|
|
|
15,386
|
(9)
|
|
|
6.20
|
|
|
08/15/2028
|
|
|
|
40,000
|
(10)
|
|
|
48,000
|
|
|
|
|
10,131
|
|
|
|
30,396
|
(5)
|
|
|
2.76
|
|
|
08/15/2029
|
|
|
|
26,377
|
(6)
|
|
|
31,652
|
|
|
|
|
—
|
|
|
|
119,942
|
(7)
|
|
|
1.13
|
|
|
08/15/2030
|
|
|
|
95,183
|
(8)
|
|
|
114,220
|
|
(1)
|
All
options awards have a 10-year term, but may terminate earlier if the recipient’s employment
or service relationship with the Company terminates.
|
|
|
(2)
|
Based
on the closing price of our common stock on December 31, 2020 ($1.20), as reported by the
NYSE American.
|
|
|
(3)
|
This
award vests in nearly equal installments annually over a five-year period beginning on October
15, 2020. In addition, this award will vest in full immediately in the event that it is discontinued
upon a change in control or up to one year following a change in control, and a pro rata
percentage will vest immediately if Mr. Browne dies.
|
|
|
(4)
|
This
award vests in nearly equal installments annually over a four-year period beginning on October
15, 2021. In addition, this option will vest in full immediately in the event that it is
discontinued upon a change in control or up to one year following a change in control, and
a pro rata percentage will vest immediately if Mr. Browne dies.
|
|
|
(5)
|
This
stock option vests in nearly equal installments annually over a four-year period beginning
on August 15, 2020. In addition, this option will vest in full immediately in the event that
it is discontinued upon a change in control or up to one year following a change in control,
and a pro rata percentage will vest immediately if the executive dies.
|
|
|
(6)
|
This
RSU award vests in nearly equal installments annually over a four-year period beginning on
August 15, 2020. In addition, this RSU award will vest in full immediately in the event that
it is discontinued upon a change in control or up to 12 months following a change in control,
and a pro rata percentage will vest immediately if the executive dies.
|
|
|
(7)
|
This
stock option vests with respect to 25% of the shares on August 15, 2021 and with respect
to the remaining 75% of such shares over the three-year period thereafter in 12 as nearly
equal as possible quarterly installments. In addition, this option will vest in full immediately
in the event that it is discontinued upon a change in control or up to one year following
a change in control, and a pro rata percentage will vest immediately if the executive dies.
|
|
|
(8)
|
This
RSU award vests in nearly equal installments annually over a four-year period beginning on
August 15, 2021. In addition, this RSU award will vest in full immediately in the event that
it is discontinued upon a change in control or up to 12 months following a change in control,
and a pro rata percentage will vest immediately if the executive dies.
|
|
|
(9)
|
This
stock option vests in equal installments annually over a four-year period beginning on August
15, 2019. In addition, this option will vest in full immediately in the event that it is
discontinued upon a change in control or up to one year following a change in control, and
a pro rata percentage will vest immediately if Mr. Brandt dies.
|
|
|
(10)
|
This
RSU award will vest in full on July 9, 2021 but may terminate earlier if the recipient’s
employment or service relationship with the Company terminates. In addition, this RSU award
will vest in full immediately in the event that it is discontinued upon a change in control
or up to 12 months following a change in control, and a pro rata percentage will vest immediately
if Mr. Brandt dies.
|
Potential
Payments upon Termination or Change in Control
Executive
Employment Agreements
Under
the terms of the employment agreements we have entered into with our named executive officers, if the executive’s employment is
terminated by the Company without “cause” (as defined in the agreement), the executive will be entitled to receive a severance
payment equal to 12 months of his annual base salary, payable as salary continuation, reimbursement of COBRA payments for up to 12 months,
and the prorated amount of any unpaid bonus for the calendar year in which his termination of employment occurs, if earned pursuant to
the terms thereof. If the executive’s employment is terminated by the Company without “cause” or by the executive for
“good reason” in connection with or within 12 months after a “change in control” (as such terms are defined in
the agreement), the executive’s severance payment, as previously described, will be paid in one lump sum, and in the case of Mr.
Brandt, will equal two times his base salary. To be eligible to receive these payments, the executive will be required to execute and
not revoke a release of claims against the Company.
Equity
Award Agreements
All
equity awards held by our named executive officers have been granted under 2018 Plan. Under the terms of the 2018 Plan and the award
agreements governing these awards, if an executive’s employment or other service with the Company is terminated for cause, then
all outstanding awards held by such executive will be terminated and forfeited. In the event an executive’s employment or other
service with the Company is terminated by reason of death, then:
|
●
|
All
outstanding stock options will vest and become exercisable immediately as to a pro rata percentage
of the unvested portion of the option scheduled to vest on the next applicable vesting date,
and the vested portion of the options will remain exercisable for a period of one year after
the date of such termination (but in no event after the expiration date).
|
|
|
|
|
●
|
The
outstanding unvested RSU awards will vest and become immediately issuable as to a pro rata
percentage of the unvested portion of the RSU awards scheduled to vest on the next applicable
vesting date and the unvested portion of the RSU awards will terminate.
|
In
the event an executive’s employment or other service with the Company is terminated by reason of disability, then:
|
●
|
All
outstanding stock options will remain exercisable to the extent exercisable on the termination
date for a period of one year after the date of such termination (but in no event after the
expiration date).
|
|
|
|
|
●
|
All
outstanding unvested RSU awards will terminate.
|
In
the event an executive’s employment or other service with the Company is terminated for any other reason, then:
|
●
|
All
outstanding stock options will remain exercisable to the extent exercisable on the termination
date for a period of 90 days after the date of such termination (but in no event after the
expiration date).
|
|
|
|
|
●
|
All
outstanding unvested RSU awards will terminate.
|
In
addition, the equity award agreements governing the equity awards held by our named executive officers contain “change in control”
provisions. Under the award agreements, without limiting the authority of the Compensation Committee to adjust awards, if a “change
in control” of the Company (as defined in the 2018 Plan) occurs, then, unless otherwise provided in the award or other agreement,
if an award is continued, assumed, or substituted by the successor entity, the award will not vest or lapse solely as a result of the
change in control but will instead remain outstanding under the terms pursuant to which it has been continued, assumed, or substituted
and will continue to vest or lapse pursuant to such terms. If the award is continued, assumed, or substituted by the successor entity
and within one year following the change in control, the executive is either terminated by the successor entity without “cause”
or, if the executive resigns for “good reason,” each as defined in the award agreement, then the outstanding option will
vest and become immediately exercisable as of the termination or resignation and will remain exercisable until the earlier of the expiration
of its full specified term or the first anniversary of the date of such termination or resignation, and the outstanding RSU award will
be fully vested and will be converted into shares of our common stock immediately thereafter. If an award is not continued, assumed,
or substituted by the successor entity, then the outstanding option will be fully vested and exercisable, and the Compensation Committee
will either give the executive a reasonable opportunity to exercise the option prior to the change in control transaction or will pay
the difference between the exercise price of the option and the per share consideration paid to similarly situated stockholders. Under
these conditions, the outstanding RSU award will be fully vested and will be converted into shares of our common stock immediately thereafter.
TRANSACTIONS
WITH RELATED PERSONS, PROMOTERS, AND CERTAIN CONTROL PERSONS
Policies
and Procedures for Review and Approval of Related Party Transactions
Pursuant
to its charter, the Audit Committee reviews and approves all related party transactions and makes recommendations to the full Board regarding
approval of such transactions, unless the Board specifically delegates this responsibility to the Compensation Committee. The Audit Committee
reviewed the transactions described below and determined that they were fair, just, and reasonable to the Company and in the best interests
of the Company and its stockholders.
In
addition, because of its significance, the debt restructuring described below was also approved by a Special Restructuring Committee
composed solely of the two Audit Committee members. Prior to approving the transaction, the Special Restructuring Committee received
a written opinion dated August 7, 2020 from its advisor, Duff & Phelps, LLC, that, as of the date of such opinion, the exchange price
of the debt restructuring was fair, from a financial point of view, to the stockholders of the Company unaffiliated with Royalty Opportunities
and ROS, without giving effect to any impact of the proposed transaction on any particular stockholder other than in its capacity as
a stockholder.
Related
Party Transactions
Below
is a description of all arrangements with a related party during the period from January 1, 2019 through the date of this proxy statement.
Investor
Rights Agreement
We
are party to an Investor Rights Agreement with Royalty Opportunities and ROS pursuant to which Royalty Opportunities and ROS are permitted
to nominate a majority of the directors and designate the chairperson of our Board of Directors at subsequent annual meetings, as long
as they maintain an ownership threshold in our Company of at least 40% of our then outstanding common stock. If Royalty Opportunities
and ROS are unable to maintain the Ownership Threshold, the Investor Rights Agreement contemplates a reduction of nomination rights commensurate
with our ownership interests. For so long as the Ownership Threshold is met, we must obtain the approval of a majority of our common
stock held by Royalty Opportunities and ROS to proceed with the following actions: (i) issue new securities; (ii) incur over $250,000
of debt in a fiscal year; (iii) sell or transfer over $250,000 of our assets or businesses or our subsidiaries in a fiscal year; (iv)
acquire over $250,000 of assets or properties in a fiscal year; (v) make capital expenditures over $125,000 individually, or $1,500,000
in the aggregate during a fiscal year; (vi) approve our annual budget; (vii) hire or terminate our chief executive officer; (viii) appoint
or remove the chairperson of our Board of Directors; and (ix) make loans to, investments in, or purchase, or permit any subsidiary to
purchase, any stock or other securities in another entity in excess of $250,000 in a fiscal year. As long as the Ownership Threshold
is met, we may not increase the size of our Board or Directors beyond seven directors without the approval of a majority of the directors
nominated by Royalty Opportunities and ROS.
The
Investor Rights Agreement may be terminated (a) upon the mutual written agreement of all the parties, (b) upon our written notice or
the written notice of ROS or Royalty Opportunities if the ownership percentage of our then outstanding common stock of ROS and Royalty
Opportunities is less than 10%, or (c) upon written notice of ROS and Royalty Opportunities.
Debt
Restructuring
On
August 7, 2020, we entered into a Restructuring and Exchange Agreement (the “Restructuring Agreement”) with Royalty Opportunities
and ROS, pursuant to which the parties thereto agreed, subject to the terms and conditions set forth therein, to take certain actions
as set forth therein and as described below (collectively, the “Restructuring Transactions”) in furtherance of a restructuring
of our outstanding indebtedness under that certain Second A&R Credit Agreement, as defined below under “—Second Amended
and Restated Credit Agreement and Warrant Issuance”. The primary purpose of the Restructuring Transactions was to improve our
capital structure by reducing the amount of our indebtedness and cost to service our debt, which should make it easier for us to refinance
or replace this debt in the future, as well as facilitate easier access to capital markets for investment in our growth initiatives.
The Restructuring Transactions also allowed us to regain compliance with the NYSE American continued listing standards, which we achieved
on October 5, 2020. The Restructuring Transactions included, among others:
|
●
|
an
amendment to the Company’s Amended and Restated Certificate of Incorporation, as amended
(the “Charter”), to increase the number of authorized shares of our common stock
from 75 million to 300 million (the “Charter Amendment”);
|
|
●
|
the
exchange by the Company of shares of our common stock for approximately $40.8 million of
the aggregate outstanding principal amount of loans outstanding held by the Royalty Opportunities
and ROS under the Second A&R Credit Agreement, as well as, without duplication, approximately
$21.1 million of the outstanding amount of PIK Interest (as defined in the Second A&R
Credit Agreement) (such loans and PIK Interest, the “Exchanging Loans”), plus
all other accrued and unpaid interest on the Exchanging Loans outstanding as of the closing
date, at an exchange price of $1.07 per share, representing the average closing price of
our common stock over the 10 trading days immediately prior to the parties entering into
the Restructuring Agreement, and resulting in the issuance of approximately 57.8 million
shares of our common stock (the “Share Issuance”);
|
|
●
|
the
execution of an amendment to the Second A&R Credit Agreement by the parties thereto to
change certain provisions therein, including extinguishing loans in an aggregate principal
amount equal to the Exchanging Loans outstanding thereunder together with all accrued and
unpaid interest thereon, paying a portion of the prepayment fee payable thereunder in respect
of the Exchanging Loans with proceeds of additional loans under the Second A&R Credit
Agreement, with the remaining portion of the prepayment fee exchanged for an additional 0.9
million shares of our common stock, reducing the amount of credit availability thereunder,
decreasing the interest rate and eliminating certain financial covenants; and
|
|
●
|
the
launch by the Company of a rights offering to allow stockholders of the Company to purchase
up to an aggregate of $15 million of our common stock at the same price per share as the
$1.07 per share exchange price used to exchange the Exchanging Loans into our common stock
as part of the Share Issuance.
|
Immediately
after the execution of the Restructuring Agreement by the parties thereto, we solicited and obtained the written consent of Royalty Opportunities
and ROS, the holders of an aggregate of 9,248,678 shares of our common stock as of August 7, 2020 (the “Consenting Majority Stockholders”),
representing a majority of the outstanding shares of our common stock as of such date, for the approval of the Charter Amendment and
the Share Issuance, in accordance with applicable provisions of the Delaware General Corporation Law and the Company’s Second Amended
and Restated Bylaws. The written consent of the Consenting Majority Stockholders was sufficient to approve the Charter Amendment and
the Share Issuance. Therefore, no proxies or additional consents were solicited by us in connection with the Charter Amendment and the
Share Issuance. Pursuant to Section 14(c) of the Exchange Act, and the rules and regulations promulgated thereunder, on September 10,
2020, we sent a definitive information statement to all holders of our common stock as of August 7, 2020 for the purpose of informing
such stockholders of the written actions taken by the Consenting Majority Stockholders. In accordance with Exchange Act Rule 14c-2, the
stockholder consent of the Consenting Majority Stockholders could not become effective until at least 20 calendar days following the
mailing of the information statement.
On
October 1, 2020, the closing of the Restructuring Transactions, other than the Rights Offering, occurred, and in connection therewith,
the following actions took place:
|
●
|
the
Charter Amendment was filed with the Office of the Secretary of State of the State of Delaware;
|
|
●
|
the
Share Issuance occurred;
|
|
●
|
an
amendment to the Second A&R Credit Agreement was executed by the parties thereto, and
in connection therewith, the Company issued an additional 0.9 million shares of our common
stock in exchange for a portion of the prepayment fee payable under the Second A&R Credit
Agreement in respect of the Exchanging Loans; and
|
|
●
|
the
Registration Rights Agreement, as described in more detail below, was executed by the parties
thereto.
|
Pursuant
to the terms of the Restructuring Agreement, we commenced the Rights Offering to allow our stockholders as of the November 5, 2020 record
date to purchase up to an aggregate of 14,018,690 shares of our common stock at a subscription price of $1.07 per share, the same price
per share as the $1.07 per share exchange price used in the Share Issuance. The rights offering expired on December 4, 2020. We issued
712,646 shares of common stock in the Rights Offering and received $762,531 in gross proceeds.
As
a result of the completion of these Restructuring Transactions, Royalty Opportunities and ROS owned immediately thereafter, in the aggregate,
approximately 93.9% of our outstanding common stock, and all other existing stockholders of the Company own approximately 56.1% of our
outstanding common stock as of December 31, 2020.
2020
Registration Rights Agreement
Effective
October 1, 2020, we entered into a Registration Rights Agreement with Royalty Opportunities and ROS, which required us, among other things,
to file with the SEC a shelf registration statement covering the resale, from time to time, of our common stock that was issued pursuant
to the Share Issuance no later than December 30, 2020 and use our best efforts to cause the shelf registration statement to become effective
under the Securities Act no later than March 30, 2021. This registration statement was filed on December 18, 2020 and was declared effective
by the SEC on December 23, 2020.
Second
Amended and Restated Credit Agreement and Warrant Issuance
On
March 29, 2019, the Company and our subsidiaries, Bacterin International, Inc., Xtant Medical, Inc. and X-spine Systems, Inc., entered
into a Second Amended and Restated Credit Agreement with OrbiMed Royalty Opportunities II, LP, and ROS Acquisition Offshore LP (the “Second
A&R Credit Agreement”) which amended and restated the prior Amended and Restated Credit Agreement dated as of July 27, 2015
among the parties thereto, and as subsequently amended through the Twenty-Fifth Amendment to the Amended and Restated Credit Agreement
(the “Prior Credit Agreement”). Under the terms of the Second A&R Credit Agreement, the Prior Credit Agreement was amended
to provide that:
|
●
|
We
could request additional term loans from Royalty Opportunities and ROS in the remaining amount
available to be requested as additional delayed draw loans, which was approximately $2,200,000
as of the date of the Second A&R Credit Agreement, and request new additional term loans
in an aggregate amount of up to $10 million, the making of each such loan to be subject to
the discretion of Royalty Opportunities and ROS and the Company’s production of a thirteen-week
cash flow forecast that is approved by Royalty Opportunities and ROS and shows a projected
cash balance for the following two-week period of less than $1,500,000, as well as the satisfaction
(or waiver in writing by each Investor) of conditions precedent, including closing certificate,
delivery of budget, and other satisfactory documents;
|
|
|
|
|
●
|
No
interest would accrue on the loans thereunder from and after January 1, 2019 until March
31, 2020;
|
|
|
|
|
●
|
Beginning
April 1, 2020 through the maturity date of the Second A&R Credit Agreement, interest
payable in cash would accrue on the loans thereunder at a rate per annum equal to the sum
of (i) 10.00% plus (ii) the higher of (x) the LIBO Rate (as such term is defined in the Second
A&R Credit Agreement) and (y) 2.3125%;
|
|
|
|
|
●
|
The
maturity date of the loans would be March 31, 2021;
|
|
|
|
|
●
|
The
Consolidated Senior Leverage Ratio and Consolidated EBITDA (as such terms were defined in
the Prior Credit Agreement) financial covenants were deleted and a new Revenue Base (as such
term is defined in the Second A&R Credit Agreement) financial covenant was added; and
|
|
|
|
|
●
|
The
key person event default provision was revised to refer specifically to certain then recently
hired executives.
|
On
April 1, 2019, we issued warrants to purchase an aggregate of 1.2 million shares of our common stock to the Investors, with an exercise
price of $0.01 per share and an expiration date of April 1, 2029. The issuance of these warrants occurred on April 1, 2019 and was a
condition to the effectiveness of the Second A&R Credit Agreement. These warrants were exercised in full in November 2020.
First
Amendment to Second A&R Credit Agreement and Warrant Issuance
On
May 6, 2020, the Company and our subsidiaries, Bacterin International, Inc., Xtant Medical, Inc. and X-spine Systems, Inc., entered into
a First Amendment to the Second Amended and Restated Credit Agreement with Royalty Opportunities and ROS, which among other things, provided
that:
|
●
|
No
interest would accrue on outstanding loans thereunder from and after March 31, 2020 until
September 30, 2020;
|
|
●
|
Beginning
October 1, 2020 through the maturity date, interest payable in cash would accrue on the loans
thereunder at a rate per annum equal to the sum of (i) 10.00% plus (ii) the higher of (x)
the LIBO Rate (as such term is defined in the Second A&R Credit Agreement) and (y) 2.3125%;
|
|
|
|
|
●
|
The
maturity date of the loans thereunder was extended to December 31, 2021;
|
|
|
|
|
●
|
The
Revenue Base financial covenant was revised through December 31, 2021; and
|
|
|
|
|
●
|
The
key person event default provision was revised to refer specifically to Sean Browne in lieu
of a former executive.
|
In
conjunction therewith, we issued warrants to purchase an aggregate of 2.4 million shares of our common stock to Royalty Opportunities
and ROS, with an exercise price of $0.01 per share and an expiration date of May 6, 2030. The issuance of these warrants was a condition
to the effectiveness of this amendment. These warrants were exercised in full in November 2020.
Second
Amendment to Second A&R Credit Agreement
On
October 1, 2020, pursuant to the Restructuring Transactions discussed above, the Company and our subsidiaries, Bacterin International,
Inc., Xtant Medical, Inc. and X-spine Systems, Inc., entered into a Second Amendment to the Second A&R Credit Agreement with Royalty
Opportunities and ROS, which among other things, provided for:
|
●
|
Extinguishment
by Royalty Opportunities and ROS of approximately $61.9 million of principal and paid-in-kind
interest outstanding on the loans under the Second A&R Credit Agreement in exchange for
approximately 57.8 million shares of our common stock and the addition of a principal amount
equal to prepayment fees associated with the loans thereunder not paid in cash or exchanged
for shares of our common stock;
|
|
|
|
|
●
|
Exchange
of approximately $0.9 million of prepayment fees associated with the loans thereunder for
approximately 0.9 million shares of our common stock;
|
|
|
|
|
●
|
Elimination
of the availability of additional draw loan advances and reduction of available additional
term loans to $5.0 million, the availability of which is in the sole and absolute discretion
of the lender;
|
|
|
|
|
●
|
accrual
of interest payable in cash for the remaining term of the Second A&R Credit Agreement
at a rate per annum equal to the sum of (i) 7.00% plus (ii) the higher of (x) the LIBO Rate
(as such term is defined in the Second A&R Credit Agreement) and (y) 1.00%; and
|
|
|
|
|
●
|
Elimination
of the base revenue financial covenant.
|
After
execution of the Second Amendment to the Second A&R Credit Agreement, Royalty Opportunities was the sole holder of our outstanding
long-term debt and the sole lender under the Second A&R Credit Agreement, as amended.
During
the year ended December 31, 2019, the largest amount of principal outstanding under this credit facility was $55.8 million. During the
year ended December 31, 2020, the largest amount of principal outstanding under this credit facility was $55.8 million, and as of June
7, 2021, the amount of principal outstanding was $0.00. Other than principal and interest paid in Xtant common stock as part of the debt
restructuring transaction described above under ““—Debt Restructuring,” the Company paid $0.3 million
in interest under the credit facility and no principal amount during the year ended December 31, 2020.
Warrant
Exercises
On
November 17, 2020, ROS and Royalty Opportunities exercised warrants representing an aggregate of 4.8 million shares of Xtant common stock
and in connection therewith the Company received aggregate proceeds of $48,000.
Termination
of Second A&R Credit Agreement
On
May 6, 2021, we, as guarantor, and our subsidiaries, as borrowers, entered into a (i) Credit, Security and Guaranty Agreement (Term Loan)
(the “Term Credit Agreement”) with MidCap Financial Trust, in its capacity as agent (the “Agent”) and a lender
and the additional lenders from time to time party thereto and (ii) Credit, Security and Guaranty Agreement (Revolving Loan) (the “Revolving
Credit Agreement,” and, together with the Term Credit Agreement, the “Credit Agreements”), with the Agent and the lenders
from time to time party thereto. On May 6, 2021, contemporaneously with the execution and delivery of the new Credit Agreements, the
Second A&R Credit Agreement, as amended, was terminated in accordance with the terms thereof and all outstanding amounts were repaid
by the borrowers to Royalty Opportunities in its role as sole lender thereunder.
Lock-Up
Agreements
On
February 24, 2021, we entered into Lock-Up Agreements with each of our directors and executive officers, pursuant to the Securities Purchase
Agreement, dated as of February 22, 2021, between us and the purchasers signatory thereto. Pursuant to the Lock-Up Agreements, our directors
and executive officers, among other things, agreed not to offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of
(or enter into any transaction which is designated to, or might reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or otherwise) by the undersigned or any affiliate or any person
in privity), directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position
within the meaning of Section 16 of the Exchange Act with respect to any shares of our common stock, or securities convertible, exchangeable
or exercisable into, our common stock beneficially owned, held or acquired by each of our executive officers or directors. The lock-up
period has a 90-day duration and expired on May 25, 2021.
Sublease
Agreement
We
are party to a Sublease Agreement with Cardialen, Inc., under which we lease a portion of Cardialen’s office space in Brooklyn
Center, Minnesota. The Sublease Agreement has been amended several times to change the amount of office space and monthly rent. Under
the amended Sublease Agreement, we agreed to pay rent ranging from $500 to $1,350 per month for 2020, $950 per month for 2021, $975 per
month for 2022 and $1,000 per month thereafter through the expiration date of January 31, 2024. During fiscal 2020 and 2019, we paid
a total of $11,215 and $18,306, respectively to Cardialen under this lease agreement. Because Jeffrey Peters is both a member of our
Board and the Chief Executive Officer, President, and a director of Cardialen, this transaction qualifies as a related party transaction.
Family
Relationships
There
are no family relationships between or among our directors, executive officers, or persons nominated or chosen by the Company to become
directors or executive officers.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Significant
Beneficial Owners
The
table below sets forth, as of June 7, 2021, information as to beneficial owners that have reported to the SEC or have otherwise advised
us that they are a beneficial owner, as defined by the SEC’s rules and regulations, of more than 5% of our outstanding common stock.
Title of Class
|
|
Name and Address of Beneficial Owner
|
|
Amount and
Nature of
Beneficial
Ownership
|
|
|
Percent of
Class(1)
|
|
Common Stock
|
|
OrbiMed Advisors LLC(2)
601 Lexington Avenue, 54th Floor
New York, NY 10022
|
|
|
72,873,494
|
|
|
|
84.0
|
%
|
Common Stock
|
|
Altium Capital Management, LP(3)
152 West 57th Street, Floor 20
New York, NY 10019
|
|
|
15,063,420
|
(4)
|
|
|
9.9
|
%(4)
|
(1)
|
Percent of class is based on 86,707,286 shares of our common
stock outstanding as of June 7, 2021.
|
|
|
(2)
|
Based
in-part on information contained in a Schedule 13D/A filed with the SEC on October 5, 2020.
Includes 55,820,296 shares of common stock held of record by ROS Acquisition Offshore LP.
OrbiMed Advisors LLC, a registered adviser under the Investment Advisors Act of 1940, as
amended, is the investment manager of ROS. OrbiMed is also the investment manager of Royalty
Opportunities S.àr.l., of which ROS is a wholly-owned subsidiary. By virtue of such
relationships, OrbiMed may be deemed to have voting and investment power with respect to
the securities held by ROS noted above and as a result may be deemed to have beneficial ownership
over such securities. OrbiMed exercises this investment and voting power through a management
committee comprised of Carl L. Gordon, Sven H. Borho, and Jonathan T. Silverstein, each of
whom disclaims beneficial ownership of the securities held by ROS.
|
Also
includes 17,053,198 shares of common stock held of record by OrbiMed Royalty Opportunities II, LP. OrbiMed ROF II LLC (“ROF II”)
is the sole general partner of Royalty Opportunities, and OrbiMed is the sole managing member of ROF II. By virtue of such relationships,
OrbiMed may be deemed to have voting and investment power with respect to the securities held by Royalty Opportunities noted above and
as a result may be deemed to have beneficial ownership over such securities. OrbiMed exercises this investment and voting power through
a management committee comprised of Carl L. Gordon, Sven H. Borho, and Jonathan T. Silverstein, each of whom disclaims beneficial ownership
of the securities held by Royalty Opportunities.
(3)
|
Based
on information contained in a Schedule 13G filed with the SEC on March 8, 2021 and other
information known to the Company. Altium Growth Fund, LP (the “Fund”), Altium
Capital Management, LLC, and Altium Growth GP, LLC each have shared dispositive power and
voting power over the shares. The Fund is the record and direct beneficial owner of the shares.
Altium Capital Management, LP is the investment adviser of, and may be deemed to beneficially
own the shares owned by the Fund. Altium Growth GP, LLC is the general partner of, and may
be deemed to beneficially own the shares owned by the Fund. The number of shares consists
of 8,565,502 shares of our common stock and 6,497,918 shares of our common stock issuable
upon exercise of a warrant (the “Investor Warrant”).
|
|
|
(4)
|
While
the total number of shares of our common stock issuable upon exercise of the Investor Warrant
is reflected in this table, the Fund is not permitted to exercise such Investor Warrant to
the extent that such exercise would result in the Fund and its affiliates beneficially owning
more than 9.99% of the number of shares of our common stock outstanding immediately after
giving effect to the issuance of shares of common stock issuable upon exercise of such warrants.
The Fund has the right to increase this beneficial ownership limitation in its discretion
on 61 days’ prior written notice to us.
|
Security
Ownership of Management
The
table below sets forth information relating to the beneficial ownership of our common stock as of June 7, 2021 by:
|
●
|
each
of our directors;
|
|
●
|
each
of our named executive officers; and
|
|
●
|
all
directors and executive officers as a group.
|
The
number of shares beneficially owned by each person is determined in accordance with the SEC’s rules and regulations, and the information
is not necessarily indicative of beneficial ownership for any other purpose. Under the SEC’s rules and regulations, beneficial
ownership includes any shares over which the individual has sole or shared voting power or investment power as well as any shares that
the individual has the right to acquire within 60 days of June 7, 2021 through the exercise of any stock options, warrants, or other
rights or the vesting of any restricted stock unit awards. Except as otherwise indicated, and subject to applicable community property
laws, the persons named in the table have sole voting and investment power with respect to all shares of common stock held by that person.
The
percentage of shares beneficially owned is computed on the basis of 86,707,286 shares of our common stock outstanding as of June 7, 2021.
Shares of our common stock that a person has the right to acquire within 60 days of June 7, 2021 are deemed outstanding for purposes
of computing the percentage ownership of the person holding such rights, but are not deemed outstanding for purposes of computing the
percentage ownership of any other person.
Title of Class
|
|
Name of Beneficial Owner
|
|
Amount and
Nature of
Beneficial
Ownership(1)
|
|
|
Percent of Class
|
|
Common Stock
|
|
John Bakewell
|
|
|
89,695
|
|
|
|
*
|
|
Common Stock
|
|
Michael Eggenberg
|
|
|
—
|
|
|
|
—
|
|
Common Stock
|
|
Robert McNamara
|
|
|
87,958
|
|
|
|
*
|
|
Common Stock
|
|
Jeffrey Peters
|
|
|
89,695
|
|
|
|
*
|
|
Common Stock
|
|
Matthew Rizzo
|
|
|
—
|
|
|
|
—
|
|
Common Stock
|
|
Sean E. Browne
|
|
|
131,618
|
|
|
|
*
|
|
Common Stock
|
|
Greg Jensen
|
|
|
18,239
|
|
|
|
*
|
|
Common Stock
|
|
Kevin D. Brandt
|
|
|
74,307
|
|
|
|
*
|
|
Common Stock
|
|
All executive officers and directors as a group (8 persons)
|
|
|
491,512
|
|
|
|
*
|
|
*
|
Less than 1% of outstanding shares of common stock.
|
|
|
(1)
|
Includes
for the persons listed below the following shares subject to options and RSUs held by that
person that are currently exercisable or become exercisable within 60 days of June 7, 2021:
|
Name
|
|
Options
|
|
|
RSUs
|
|
John Bakewell
|
|
|
—
|
|
|
|
—
|
|
Michael Eggenberg
|
|
|
—
|
|
|
|
—
|
|
Robert McNamara
|
|
|
—
|
|
|
|
—
|
|
Jeffrey Peters
|
|
|
—
|
|
|
|
—
|
|
Matthew Rizzo
|
|
|
—
|
|
|
|
—
|
|
Sean E. Browne
|
|
|
65,809
|
|
|
|
—
|
|
Greg Jensen
|
|
|
9,765
|
|
|
|
—
|
|
Kevin D. Brandt
|
|
|
25,515
|
|
|
|
40,000
|
|
All directors and executive officers as a group (8 persons)
|
|
|
101,089
|
|
|
|
40,000
|
|
Anti-Hedging
and Pledging Policy
Our
insider trading policy prohibits all directors, and officers and employees of the Company, their family members and members of their
households, and entities (such as trusts, partnerships, corporations and investment clubs) over which such directors, officers and employees
of the Company have or share voting or investment control from engaging in any of the following transactions at any time (even if the
individual involved is not in the possession of material, non-public information): (a) short sales of the Company’s securities,
including without limitation “sales against the box” (sales with delayed delivery); and (b) buying or selling puts, calls
or other derivative securities relating to the Company’s securities. In addition, the policy prohibits all directors and officers
who are subject to the reporting and liability provisions of Section 16 of the Securities Exchange Act of 1934, as amended, from pledging
the Company’s securities as collateral for a loan.
ADDITIONAL
INFORMATION
Stockholder
Proposals and Director Nominations
Proposals
by stockholders that are submitted for inclusion in our proxy statement for our 2022 Annual Meeting of Stockholders must follow the procedures
set forth in Rule 14a-8 under the Securities Exchange Act of 1934, as amended, and our Second Amended and Restated Bylaws. To be timely
under Rule 14a-8, stockholder proposals must be received by our Corporate Secretary at Xtant Medical Holdings, Inc., 664 Cruiser Lane,
Belgrade, Montana 59714 by February 14, 2022. However, if the date of the 2022 Annual Meeting is changed by more than 30 days from the
first anniversary of the date of the 2021 Annual Meeting, the deadline will instead be a reasonable time before we begin to print and
mail the proxy statement for the 2022 Annual Meeting.
The
Company’s Second Amended and Restated Bylaws also establish an advance notice procedure with regard to nominations of persons for
election to the Board and stockholder proposals to be brought before an annual meeting. Stockholder proposals and nominations may not
be brought before an annual meeting unless, among other things, the stockholder’s submission contained certain information concerning
the proposal or the nominee, as the case may be, and other information specified in the Company’s Second Amended and Restated Bylaws.
Proposals or nominations not meeting these requirements will not be entertained at an annual meeting.
Stockholder
proposals and nominations may not be brought before the 2022 Annual Meeting unless, among other things, the stockholder’s submission
contains certain information concerning the proposal or the nominee, as the case may be, and other information specified in the Company’s
Second Amended and Restated Bylaws, and the stockholder’s submission is received by us no earlier than the close of business on
March 29, 2022 and no later than April 28, 2022. However, if the date of the 2022 Annual Meeting is changed by more than 30 days before
or more than 70 days after the first anniversary of the date of the 2021 Annual Meeting, notice by the stockholder must be delivered
not earlier than the close of business on the 120th day prior to the 2022 Annual Meeting and not later than the close of business on
the later of the 90th day prior to the 2022 Annual Meeting or the 10th day following the day on which public announcement of the date
of the 2022 Annual Meeting is first made by the Company. Proposals or nominations not meeting these requirements will not be entertained
at the 2022 Annual Meeting.
Stockholders
recommending candidates for consideration by the Board must provide the candidate’s name, biographical data, and qualifications.
Any such recommendation should be accompanied by a written statement from the individual of his or her consent to be named as a candidate
and, if nominated and elected, to serve as a director. These requirements are separate from, and in addition to, the SEC’s requirements
that a stockholder must meet in order to have a stockholder proposal included in the proxy statement.
Householding
Information
The
SEC has adopted rules that permit companies and intermediaries (such as banks and brokers) to satisfy the delivery requirements for proxy
statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement
addressed to those stockholders. This delivery method is referred to as “householding” and can result in cost savings for
us. To take advantage of this opportunity, we may deliver a single proxy statement to multiple stockholders who share an address unless
we have received contrary instructions. We will deliver upon oral or written request a separate copy of our proxy statement to any stockholder
of a shared address to which a single copy of our proxy statement was delivered. If you prefer to receive separate copies of our proxy
statement, either now or in the future, or if you currently are a stockholder sharing an address with another stockholder and wish to
receive only one copy of future proxy statements for your household, please call us at (406) 388-0480 or send your request in writing
to us at the following address: 664 Cruiser Lane, Belgrade, Montana 59714, Attention: Corporate Secretary.
Copies
of 2020 Annual Report
Our
Annual Report on Form 10-K for the fiscal year ended December 31, 2020 is being sent along with this proxy statement. The 2020 Annual
Report is also available on our website at www.xtantmedical.com.
Important
Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be Held on July 27, 2021:
The
proxy statement, along with our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 are available at www.xtantmedical.com
(click “Investors” and “SEC Filings”).
Your
vote is important. Please promptly vote your shares of our common stock by completing, signing, dating, and returning your proxy
card or by Internet or telephone voting as described on your proxy card.
|
By
Order of the Board of Directors
|
|
|
|
Jeffrey
Peters
|
|
Chairman
of the Board
|
Belgrade,
Montana
June
14, 2021
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