13D Filing: OrbiMed Advisors and Xtant Medical Holdings Inc. (XTNT)

For so long as the Ownership Threshold is met, the Issuer must obtain the approval of a majority of the Shares held by ROS Acquisition and ORO II 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 assets or businesses of the Issuer or its 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 $1.5 million in the aggregate during a fiscal year; (vi) approve the Issuer’s annual budget; (vii) hire or terminate the Issuer’s chief executive officer; (viii) appoint or remove the chairperson of the Board; 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, the Issuer may not increase the size of the Board beyond seven directors without the approval of a majority of the directors nominated by the OrbiMed Purchasers.

The Investor Rights Agreement grants ROS Acquisition and ORO II the right to purchase from the Issuer a pro rata amount of any new securities that the Issuer 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 written notice of any party if ROS Acquisition and ORO II’s ownership percentage of the Shares is less than 10%, or (c) upon written notice of ROS Acquisition and ORO II.

Credit Agreement Amendment

As a condition to the closing of the Transactions, the Issuer is required to enter into an amendment to the Amended and Restated Credit Agreement among the Issuer and the OrbiMed Purchasers entered into on July 31, 2015 (the “Credit Facility”) which will amend the Credit Facility as follows:

(a)

Through December 31, 2018, the Issuer will have the option at its sole discretion (i) to pay “payment-in-kind” (“PIK”) interest at LIBOR plus 12% or (ii) pay cash interest at LIBOR plus 10%.

(b)

Beginning January 1, 2019 through June 30, 2019, the Issuer will have the option at its sole discretion to either (i) pay PIK interest at LIBOR plus 15% or (ii) pay cash interest at LIBOR plus 10%.

(c)

Beginning July 1, 2019 through the maturity date of the New Facility, the Issuer will pay cash interest at LIBOR plus 10%.

(d)

All prepayment or repayment fees under the New Facility will be reduced from 9% to 1%.

(e)

The following financial covenants will be revised as follows:

(i)

The Issuer will be required to maintain a minimum Adjusted EBITDA as follows: