UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549
 

SCHEDULE 13D

(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO § 240.13d-1(a)
AND AMENDMENTS THERETO FILED PURSUANT TO § 240.13d-2(a)

(Amendment No. ___________________)

RTI SURGICAL HOLDINGS, INC.

(Name of Issuer)

Common Stock, par value $0.001 per share

(Title of Class of Securities)

74975N105

(CUSIP Number)

Marc R. Viscogliosi

PS Spine HoldCo, LLC

505 Park Avenue, 14^th Floor

New York, New York 10022

Telephone: (212) 583-9700

(Name, Address and Telephone Number of Person Authorized to

Receive Notices and Communications)

March 8, 2019

(Date of Event Which Requires Filing of This Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. ¨

Note. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See § 240.13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

This Schedule 13D relates to the common stock, par value $0.001 per share (the “Common Stock”), of RTI Surgical Holdings, Inc., a Delaware corporation (the “Issuer”). The address of the Issuer’s principal executive offices is 520 Lake Cook Road, Suite 315, Deerfield, Illinois 60015.

This Schedule 13D is being filed by PS Spine HoldCo, LLC, a Delaware limited liability company (the “Reporting Person”). The name, present principal occupation or employment and certain other information relating to each of the executive officers and managers of the Reporting Person are set forth on Schedule A hereto, and are incorporated by reference in their entirety into this Item 2.

The principal business address of the Reporting Person, and a business address of each of the individuals listed on Schedule A hereto, is 505 Park Avenue, 14^th Floor, New York, New York 10022.

The principal business of the Reporting Person is to hold, manage and distribute the consideration received by the Reporting Person from the Issuer pursuant to, and to enforce its rights and satisfy its obligations under, the Master Transaction Agreement, dated as of November 1, 2018 (the “Master Transaction Agreement”), by and among RTI Surgical, Inc., a Delaware corporation (“RTI”), the Reporting Person, the Issuer and Bears Merger Sub, Inc., a Delaware corporation (“Merger Sub”).

During the last five years, neither the Reporting Person nor, to the knowledge of the Reporting Person, any individual listed on Schedule A hereto has (i) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

Each of the individuals listed on Schedule A hereto is a United States citizen.

The information set forth in or incorporated by reference into Items 4, 5 and 6 of this Schedule 13D is incorporated by reference in its entirety into this Item 3.

On March 8, 2019, at the closing of the Transaction (as defined below) contemplated by the Master Transaction Agreement (the “Closing”), (i) the Reporting Person contributed all of the issued and outstanding equity interests in Paradigm Spine, LLC, a Delaware limited liability company (“Paradigm”), to the Issuer (the “Contribution”), (ii) Merger Sub was merged with and into RTI (the “Merger”), with RTI surviving as a wholly owned direct subsidiary of the Issuer and (iii) the Issuer changed its name from “Bears Holding Sub, Inc.” to “RTI Surgical Holdings, Inc.” (collectively, the “Transaction”). Accordingly, immediately following the Closing, the Issuer owned both RTI and Paradigm as wholly owned subsidiaries.

At the Closing, pursuant to the Master Transaction Agreement, (i) each share of common stock, par value $0.001 per share, of RTI (“RTI Common Stock”) issued and outstanding immediately prior to the effective time of the Merger (other than shares held by RTI as treasury shares or by the Issuer or Merger Sub immediately prior to such effective time, which were automatically cancelled) were converted automatically into one fully paid and nonassessable share of Common Stock, (ii) each share of Series A convertible preferred stock, par value $0.001 per share, of RTI issued and outstanding immediately prior to the effective time of the Merger (other than shares held by RTI as treasury shares or by the Issuer or Merger Sub immediately prior to such effective time, which were automatically cancelled) were converted automatically into one fully paid and nonassessable share of Series A convertible preferred stock, par value $0.001 per share, of the Issuer and (iii) each stock option and restricted stock award granted by RTI was converted into a stock option or restricted stock award, as applicable, of the Issuer with respect to an equivalent number of shares of Common Stock on the same terms and conditions as were applicable prior to the Closing.

As consideration for the Contribution, pursuant to the Master Transaction Agreement, at the Closing, the Issuer (i) paid the Reporting Person $99,970,000 in cash (the “Closing Cash Consideration Amount”), subject to adjustment as described below, (ii) issued 5,098,588 fully paid and nonassessable shares of Common Stock to the Reporting Person (the “Initial Shares”) and (iii) issued 5,631,026 fully paid and nonassessable shares of Common Stock to the lenders under Paradigm’s pre-Closing senior secured credit agreement and certain of their affiliates (the “Payoff Shares”). A portion of the Closing Cash Consideration Amount was used to pay the Reporting Person’s transaction expenses in connection with the Master Transaction Agreement and the transactions contemplated thereby. The remainder of the Closing Cash Consideration Amount and the Payoff Shares were used to pay amounts outstanding under Paradigm’s pre-Closing senior secured credit agreement and other amounts due to the lenders thereunder and certain of their affiliates. The Issuer and the Reporting Person will determine any adjustment to the Closing Cash Consideration Amount based on the variance of the amounts of Paradigm’s indebtedness, unpaid transaction expenses, cash and working capital as of the Closing to the amounts of Paradigm’s indebtedness, unpaid transaction expenses, cash and working capital estimated by the Reporting Person prior to the Closing for purposes of calculating the Closing Cash Consideration Amount. If the cash consideration to be paid by the Issuer pursuant to the Master Transaction Agreement, as finally determined pursuant to the terms of the Master Transaction Agreement (the “Cash Consideration Amount”), exceeds the Closing Cash Consideration Amount, the Issuer will pay the difference by wire transfer of immediately available funds to the Reporting Person. Conversely, if the Closing Cash Consideration Amount exceeds the Cash Consideration Amount, the Reporting Person will pay the difference by wire transfer of immediately available funds to the Issuer.

In addition to the Cash Consideration Amount, the Initial Shares and the Payoff Shares, the Issuer has agreed to pay contingent consideration to the Reporting Person upon the occurrence of certain events in the future, on the terms and conditions set forth in the Master Transaction Agreement. The contingent consideration includes the following:

The number of Initial Earnout Shares and Final Earnout Shares and the Cash Election Amount will be determined as follows:

In addition, the Master Transaction Agreement provides that, if a change of control of the Issuer occurs or if the Issuer disposes of all or substantially all of the assets of the business of developing, manufacturing, marketing and selling coflex^® spinal fixation products, any remaining contingent consideration that has not been paid or issued to the Reporting Person (other than any contingent consideration that cannot be earned due to the expiration of the applicable time periods set forth above) will accelerate and be payable to the Reporting Person at their respective maximum potential amounts upon the occurrence of such change of control or disposition.

The Master Transaction Agreement provides that any indemnification obligations the Reporting Person owes to RTI or its affiliates or representatives pursuant to the Master Transaction Agreement will be satisfied by (i) withholding and setting off against any contingent consideration earned by the Reporting Person an amount equal to the amount of such indemnification obligation, (ii) permanently reducing the amount of the contingent consideration available to be issued or paid to the Reporting Person pursuant to the Master Transaction Agreement in an amount equal to such indemnification obligation or (iii) reducing the amount of any tax refund attributable to a pre-Closing tax period and due to the Reporting Person by the amount of such indemnification obligation. In addition, the Master Transaction Agreement provides that, subject to certain limited exceptions, RTI is required to withhold, set off or reduce the payment of the Cash Earnout Amount prior to withholding, setting off or reducing any other contingent consideration issuance or payment.

If, pursuant to the terms of the Master Transaction Agreement, the Reporting Person earns the Cash Earnout Amount, $10.0 million of the contingent consideration described above (which can take the form of cash, stock or a combination of both) that would otherwise be issuable or payable to the Reporting Person will be used by the Reporting Person to pay amounts due to the lenders under Paradigm’s pre-Closing senior secured credit agreement and certain of their affiliates.

The Reporting Person did not invest new capital in the Issuer in connection with the Transaction.

References to and any descriptions of the Master Transaction Agreement set forth in this Schedule 13D are not intended to be complete and are qualified in their entirety by reference to the full text of the Master Transaction Agreement, a copy of which is filed as an exhibit hereto and which is incorporated by reference in its entirety herein.

The information set forth in or incorporated by reference into Items 3, 5 and 6 of this Schedule 13D is incorporated by reference in its entirety into this Item 4.

Subject to the terms of the Lock-Up Agreement (as defined below) and any applicable securities laws, the Reporting Person intends to transfer the consideration that it receives pursuant to the Master Transaction Agreement (including shares of Common Stock), net of transaction and other expenses and amounts due to its senior lenders and their affiliates, to its unitholders in accordance with its organizational documents as soon as reasonably practicable following its receipt thereof.

The Master Transaction Agreement provides that, following the Closing, until the later of (i) December 31, 2022, and (ii) the time at which the Reporting Person and its unitholders as of immediately prior to the Contribution own less than 10% of the outstanding Common Stock (assuming the conversion of all of the Issuer’s outstanding convertible preferred stock into Common Stock), the Reporting Person will be entitled to nominate one director to the Issuer’s board of directors (the “Designated Director”), which Designated Director will be Jeffrey C. Lightcap, Anthony G. Viscogliosi or any other person mutually agreed by the Issuer and the Reporting Person. The Master Transaction Agreement also provides that, at each meeting of the Issuer’s stockholders at which the election of directors is to be considered, the Issuer will nominate the Designated Director designated by the Reporting Person for election to the Issuer’s board of directors, solicit proxies from the Issuer’s stockholders in favor of the election of such Designated Director and use its reasonable best efforts to cause such Designated Director to be elected to the Issuer’s board of directors, including voting all unrestricted proxies in favor of the election of such Designated Director, recommending approval of such Designated Director’s election to the Issuer’s board of directors and not taking any action designed to diminish the prospects of such Designated Director being elected to the Issuer’s board of directors. Jeffrey C. Lightcap, currently a manager of the Reporting Person, is the initial Designated Director and, accordingly, was elected to the Issuer’s board of directors at the effective time of the Merger, to hold such office until the next annual meeting of stockholders of the Issuer or until his successor has been duly elected and qualified. It is expected that, from time to time, Mr. Lightcap and any future Designated Director may, as a member of the board of directors of the Issuer, engage in discussions with management, the board of directors and stockholders of the Issuer and other relevant parties, or encourage such persons to consider or explore or be involved in discussions, that relate to one or more of the matters described in clauses (a) through (j) of Item 4 of Schedule 13D, including, without limitation, extraordinary corporate transactions, such as a merger or reorganization, sales of a material amount of assets of the Issuer, changes to the capitalization or dividend policy of the Issuer, other material changes to the Issuer’s business or corporate structure or changes in the Issuer’s certificate of incorporation or bylaws.

Marc Viscogliosi, Chairman and Chief Executive Officer of the Reporting Person and former Chairman and Chief Executive Officer of Paradigm, has agreed to provide certain consulting services to RTI. In addition, the Master Transaction Agreement provides that the Issuer will use its reasonable best efforts to cause progress meetings among the Issuer’s Chief Executive Officer, the leader of the Issuer’s sales force for coflex® and SImmetry products (the “Sales Leader”), Mr. Viscogliosi and other applicable individuals to occur, and to cause progress reports to be prepared, on a monthly basis (or on such other frequency as agreed by the Issuer’s Chief Executive Officer, the Sales Leader and Mr. Viscogliosi). It is expected that, from time to time, Mr. Viscogliosi may, in connection with such consulting services or at such progress meetings, engage in discussions with management of the Issuer and other relevant parties, or encourage such persons to consider or explore or be involved in discussions, that relate to one or more of the matters described in clauses (a) through (j) of Item 4 of Schedule 13D, including, without limitation, material changes to the Issuer’s business.

At the Closing, the Reporting Person entered into a lock-up agreement (the “Lock-Up Agreement”), pursuant to which it agreed not to sell or otherwise transfer any Initial Shares or Payoff Shares, subject to certain limited exceptions (including, among others, the transfer of such shares to the Reporting Person’s unitholders that agree to receive such shares subject to the provisions of the Lock-Up Agreement that are applicable to the Reporting Person), during the period commencing on the Closing and ending on the earlier of (i) the date that is 180 days after the date of Closing and (ii) the date on which the Issuer consummates a liquidation, merger, share exchange or other similar transaction with an unaffiliated third party that results in all of the Issuer’s stockholders having the right to exchange their equity holdings in the Issuer for cash, securities or other property (the “Lock-Up Period”). On March 8, 2019, the Issuer gave its consent to allow the Reporting Person to sell up to an aggregate of 79,505 shares of Common Stock (the “Lock-Up Waiver Shares), constituting a portion of the Initial Shares, in open market transactions for the purpose of paying for certain administrative expenses, from time to time prior to the expiration of the Lock-Up Period. Such consent is effective until the date on which the Lock-Up Period expires. As described in greater detail on Schedule B hereto, which Schedule B is incorporated by reference in its entirety into this Item 4, the Reporting Person has sold all of the Lock-Up Waiver Shares in open market transactions on the Nasdaq Global Market.

In addition to the above, subject to the terms of the Lock-Up Agreement and any applicable securities laws, the Reporting Person may acquire or dispose of shares of Common Stock or other securities of the Issuer, including derivatives or other instruments that are based upon or relate to the value of Common Stock or other securities of the Issuer, and engage in discussions with management, the board of directors and stockholders of the Issuer and other relevant parties, or encourage such persons to consider or explore or be involved in discussions, that relate to one or more of the matters described in clauses (a) through (j) of Item 4 of Schedule 13D, including, without limitation, extraordinary corporate transactions, such as a merger or reorganization, sales of a material amount of assets of the Issuer, changes to the capitalization or dividend policy of the Issuer, other material changes to the Issuer’s business or corporate structure or changes in the Issuer’s certificate of incorporation or bylaws.

Other than as described in, or in the information incorporated by reference into, this Item 4, the Reporting Person does not have any current plans or proposals that relate to, or that would result in any of the matters described in, clauses (a) through (j) of Item 4 of Schedule 13D; provided, that the Reporting Person may, at any time, review or reconsider its position with respect to the Issuer and reserves the right to develop such plans or proposals.

References to and any descriptions of the Master Transaction Agreement and the Lock-Up Agreement set forth in this Schedule 13D are not intended to be complete and are qualified in their entirety by reference to the full text of the Master Transaction Agreement and the Lock-Up Agreement, respectively, copies of which are filed as exhibits hereto and which are incorporated by reference in their entirety herein.

The information set forth on the cover page to this Schedule 13D and the information set forth in or incorporated by reference into Items 3, 4 and 6 of this Schedule 13D is incorporated by reference in its entirety into this Item 5.

The information set forth in or incorporated by reference into Items 3, 4 and 5 of this Schedule 13D is incorporated by reference in its entirety into this Item 6.

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

SCHEDULE A

SCHEDULE B

Sales Data

EXHIBIT 2

Execution Version

LOCK-UP AGREEMENT

March 8, 2019

Reference is made to that certain Master Transaction Agreement, dated as of November 1, 2018 (the “Master Transaction Agreement”), by and among PS Spine HoldCo, LLC, a Delaware limited liability company, RTI Surgical, Inc., a Delaware corporation (“Parent”), Bears Holding Sub, Inc., a Delaware corporation (“Holdco”), and Bears Merger Sub, Inc., a Delaware corporation (“Merger Sub”). Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Master Transaction Agreement.

As a material inducement to each of Parent, Holdco and Merger Sub to enter into the Master Transaction Agreement and to consummate the transaction contemplated thereby, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned hereby agrees as follows:

The undersigned hereby agrees not to, during the period commencing from the Closing and ending on the earlier of (x) the date that is one hundred eighty (180) days after the Closing Date and (y) the date on which Holdco consummates a liquidation, merger, share exchange or other similar transaction with an unaffiliated third party that results in all of Holdco’s stockholders having the right to exchange their equity holdings in Holdco for cash, securities or other property (the “Lock-Up Period”): (i) lend, offer, pledge, hypothecate, encumber, donate, assign, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of Holdco Common Stock issued in respect of the Stock Consideration (the “Restricted Securities”) or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Restricted Securities, whether any such swap or other arrangement is to be settled by delivery of Restricted Securities or other securities, in cash or otherwise (any of the foregoing described in clauses (i) or (ii), a “Prohibited Transfer”). The foregoing sentence shall not apply to the transfer of any or all of the Restricted Securities owned by the undersigned (A) as a bona fide gift or gifts, (B) by will or intestate succession upon the death of the undersigned, (C) to any Permitted Transferee (as defined below), (D) pursuant to a court order or settlement agreement related to the distribution of assets in connection with the dissolution of marriage or civil union or (E) as a distribution to limited partners, stockholders, unitholders, members of or owners of similar equity interests in the undersigned; provided, however, that in any of cases (A), (B), (C), (D) or (E) it shall be a condition to such transfer that the transferee executes and delivers to Holdco an agreement stating that the transferee is receiving and holding the Restricted Securities subject to the provisions of this Agreement applicable to the undersigned, and there shall be no further transfer of such Restricted Securities except in accordance with this Agreement. As used in this Agreement, the term “Permitted Transferee” shall mean: (I) the members of the undersigned’s immediate family (for purposes of this Agreement, “immediate family” shall mean with respect to any natural person, any of the following: such person’s spouse, the siblings of such person and his or her spouse, and the direct descendants and ascendants (including adopted and step children and parents) of such person and his or her spouse and siblings), (II) any trust for the direct or indirect benefit of the undersigned or the immediate family of the undersigned, (III) if the undersigned is a trust, the trustor or beneficiary of such trust or the estate of a beneficiary of such trust or (IV) any affiliate of the undersigned. The undersigned further agrees to execute such agreements as may be reasonably requested by Holdco that are consistent with the foregoing or that are necessary to give further effect thereto.

If any Prohibited Transfer is made or attempted contrary to the provisions of this Agreement, the undersigned acknowledges and agrees that such purported Prohibited Transfer shall be null and void ab initio, and that Holdco is entitled to refuse to recognize any such purported transferee of the Restricted Securities as one of its stockholders for any purpose. The undersigned further acknowledges and agrees that, in order to enforce the immediately preceding sentence, Holdco may impose stop-transfer instructions with respect to the Restricted Securities of the undersigned (and permitted transferees and assigns thereof) until the end of the Lock-Up Period.

During the Lock-Up Period, the undersigned acknowledges and agrees that each certificate evidencing any Restricted Securities shall be stamped or otherwise imprinted with a legend in substantially the following form, in addition to any other applicable legends:

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AND MAY ONLY BE TRANSFERRED IN COMPLIANCE WITH A LOCK-UP AGREEMENT, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.

For the avoidance of any doubt, the undersigned shall retain all rights as a stockholder of Holdco with respect to the Restricted Securities during the Lock-Up Period, including the right to vote any Restricted Securities that are entitled to vote.

Notwithstanding anything to the contrary contained herein, in the event that the Master Transaction Agreement is terminated in accordance with its terms prior to the Closing, this Agreement and all rights and obligations of the undersigned hereunder shall automatically terminate and be of no further force or effect.

The undersigned hereby represents and warrants that the undersigned has full power and authority to enter into this Agreement. All authority herein conferred or agreed to be conferred and any obligations of the undersigned shall be binding upon the successors, permitted assigns, heirs or personal representatives of the undersigned.

All issues and questions concerning the construction, validity, interpretation and enforceability of this Agreement will be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to any choice of Law or conflict of Law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Delaware.

Any and all remedies herein expressly conferred upon Holdco will be deemed cumulative with, and not exclusive of, any other remedy conferred hereby, or by law or equity upon Holdco, and the exercise by Holdco of any one remedy will not preclude the exercise of any other remedy. The undersigned agrees that irreparable damage would occur and that Holdco would not have any adequate remedy at law in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, and that money damages or other legal remedies would not be an adequate remedy therefor. Accordingly, in addition to any other remedies available under this Agreement, the undersigned agrees that, prior to the termination of the Lock-Up Period, Holdco will be entitled to an injunction or injunctions, specific performance and other equitable relief to prevent the undersigned’s breach of this Agreement and to enforce specifically the terms and provisions of this Agreement. The undersigned agrees that the undersigned will not oppose the granting of an injunction, specific performance and other equitable relief when expressly available pursuant to the terms of this Agreement, and hereby waives (i) any defenses in any Legal Proceeding for an injunction, specific performance or other equitable relief, including the defense that Holdco has an adequate remedy at law or an award of specific performance is not an appropriate remedy for any reason at law or equity and (ii) any requirement under Law to post a bond, undertaking or other security as a prerequisite to obtaining equitable relief.

This Agreement, to the extent signed and delivered by means of a facsimile machine or scanned pages via electronic mail, will be treated in all manner and respect as an original contract and will be considered to have the same binding legal effects as if it were the original signed version thereof delivered in person.

[SIGNATURE PAGE FOLLOWS]

[Signature Page to Lock-Up Agreement]