Item 1.01 Entry into a Material Definitive Agreement.
On April 24, 2023, Assertio Holdings, Inc., a Delaware corporation
(the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among
the Company, Spade Merger Sub 1, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”),
and Spectrum Pharmaceuticals, Inc., a Delaware corporation (“Spectrum”), pursuant to which, subject to the terms
and conditions set forth therein, Merger Sub will merge with and into Spectrum (the “Merger”), with Spectrum surviving
such Merger as a wholly owned subsidiary of the Company.
Merger Consideration
Under the Merger Agreement, at the effective time of the Merger (the
“Effective Time”), each share of common stock, par value $0.001 per share, of Spectrum (the “Spectrum Common
Stock”) issued and outstanding immediately prior to the Effective Time (other than (i) treasury shares, (ii) any shares
of Spectrum Common Stock held directly by the Company or Merger Sub and (iii) shares of Spectrum Common Stock held by any holder
who properly demands appraisal of such shares in compliance with Section 262 of the Delaware General Corporation Law) will be converted
into the right to receive (A) 0.1783 (the “Exchange Ratio”) of a fully paid and non-assessable share of common
stock, par value $0.0001 per share, of the Company (the “Company Common Stock”) and, if applicable, cash in lieu of
fractional shares, subject to any applicable withholding (the “Upfront Consideration”), and (B) one contingent
value right (a “CVR”), which shall represent the right to receive the Milestone Payments (as defined below), at the
times and in the form provided for in the CVR Agreement (as defined below) (collectively, with the Upfront Consideration, the “Merger
Consideration”).
At the Effective Time, Spectrum and a rights agent selected by Spectrum
and the Company (the “Rights Agent”) will enter into a contingent value rights agreement (the “CVR Agreement”),
a form of which is attached as an exhibit to the Merger Agreement, governing the terms of each CVR. Each CVR entitles the holder thereof
to receive a maximum of two contingent cash and/or Company Common Stock payments, as described below, with an aggregate maximum value
of $0.20, without interest, and subject to deduction for any required withholding of taxes (each, a “Milestone Payment”),
if the following milestones are achieved:
| · | If Net Sales (as defined in the CVR Agreement) of $175 million or more during the period commencing January 1, 2024 and ending
December 31, 2024 is achieved, such Milestone Payment will consist of a dollar amount per CVR equal to the lesser of (i) $0.10
and (ii) (A) 0.249 multiplied by (B) (I) the Applicable Parent Stock Price (as defined in the CVR Agreement),
multiplied by (II) the Exchange Ratio (rounded down to the closest hundredth of a penny) (provided that such amount
shall not be less than $0) (the “2024 Annual Net Sales Milestone Payment”); and |
| · | If Net Sales of $225 million or more during the period commencing January 1, 2025 and ending December 31, 2025 is achieved,
such Milestone Payment will consist of a dollar amount per CVR equal to the lesser of (i) $0.10 and (ii) (A) 0.249 multiplied
by (B) (I) the Applicable Parent Stock Price, multiplied by (II) the Exchange Ratio, less (III) the
2024 Annual Net Sales Milestone Payment (rounded down to the closest hundredth of a penny) (provided that such amount shall not
be less than $0). |
The foregoing description of the CVR Agreement does not purport to
be complete and is qualified in its entirety by reference to the full text of the CVR Agreement, a copy of which is included as an exhibit
to the Merger Agreement filed as Exhibit 2.1 to this Current Report on Form 8-K (this “Current Report”) and
incorporated by reference herein.
At the Effective Time, each option (other than an option under Spectrum’s
employee stock purchase plan) (each, a “Spectrum Stock Option”) to purchase Spectrum Common Stock granted under any
of Spectrum’s equity incentive plans, that is outstanding as of immediately prior to the Effective Time, shall, if unvested, become
vested, and automatically and without any required action on the part of the holder or Spectrum, be cancelled and treated as follows:
| · | With respect to any Spectrum Stock Options with an exercise price per share that is less than the value of the Upfront Consideration,
converted into the right to receive (i) a number of shares of Company Common Stock, subject to certain exceptions with respect to
fractional shares and any applicable withholdings, that is equal to the quotient of (A) the product of (x) the total number
of Spectrum Common Stock underlying the Spectrum Stock Option multiplied by (y) the excess, if any, of the value of the Upfront Consideration
over the exercise price of such Spectrum Stock Option, divided by (B) the average of the daily volume-weighted average price per
share of Company Common Stock calculated based on the ten (10) consecutive trading days ending two trading days prior to the date
of the Merger Agreement and (ii) a number of CVRs equal to the number of Spectrum Common Stock underlying such Spectrum Stock Option. |
| · | With respect to any Spectrum Stock Options with an exercise per share that is equal to or greater than the value of the Upfront Consideration
and less than the sum of the Upfront Consideration and the maximum amount payable under a CVR (each, a “Contingent In-the-Money
Stock Option”), converted into the right to receive a number of CVRs equal the number of Spectrum Common Stock underlying such
Spectrum Stock Option; provided, however, that the payment, if any, under each CVR shall be reduced by the amount by which the exercise
price per share exceeds the value of the Upfront Consideration; provided, further that, for the avoidance of doubt, such Contingent In-the-Money
Stock Option shall not entitle the holder thereof to receive any shares of Company Common Stock, cash or other consideration in connection
with the Effective Time. |
| · | With respect to any Spectrum Stock Options with an exercise price per share that is equal to or greater than the value of the Merger
Consideration (each, an “Underwater Spectrum Stock Option”), the holder of such Underwater Spectrum Stock Option will
receive no consideration and, effective as of immediately prior to the Effective Time, shall have no further rights thereto. |
At the Effective Time, each Spectrum restricted stock unit (each, a
“Spectrum RSU”) with respect to Spectrum Common Stock granted under Spectrum’s equity incentive plans, whether
vested or unvested, that is outstanding immediately prior to the Effective Time shall become fully vested, and the holder of such Spectrum
RSUs shall, automatically and without any required action on the part of the holder thereof or Spectrum, receive the Merger Consideration.
At the Effective Time, each unvested restricted Spectrum Common Stock
granted under Spectrum’s equity incentive plans that is outstanding immediately prior to the Effective Time shall, automatically
and without any required action on the part of the holder thereof or Spectrum, fully vest and be treated like all other shares of Spectrum
Common Stock.
At the Effective Time, each stock appreciation right with respect to
Spectrum Common Stock (each, a “Spectrum SAR”) granted under Spectrum equity incentive plans that is outstanding as
of immediately prior to the Effective Time, shall, if unvested, become vested, and automatically and without any required action on the
part of the holder or Spectrum be cancelled and:
| · | With respect to any Spectrum SARs with an exercise price per share that is less than the value of the Upfront Consideration (each
such Spectrum SAR, an “In-the-Money SAR”), converted into the right to receive (i) a number of shares of Company
Common Stock, subject to certain terms with respect to fractional shares and any required withholding of taxes pursuant as described further
in the Merger Agreement, that is equal to the quotient of (A) the product of (x) the total number of Spectrum Common Stock underlying
the Spectrum SAR multiplied by (y) the excess, if any, of the value of the Upfront Consideration over the exercise price of such
Spectrum SAR, divided by (B) the average of the daily volume-weighted average price per share of Company Common Stock calculated
based on the ten (10) consecutive trading days ending two trading days prior to the date of the Merger Agreement and (ii) a
number of CVRs equal to the number of Spectrum Common Stock underlying such Spectrum SAR. |
| · | With respect to any Spectrum SARs with an exercise price per share that is equal to or greater than the value of the Upfront Consideration
and less than the sum of the Upfront Consideration and the maximum amount payable under a CVR (each, a “Contingent In-the-Money
SAR”), converted into the right to receive a number of CVRs equal the number of Spectrum Common Stock underlying such Spectrum SAR;
provided, however, that the payment, if any, under each CVR shall be reduced by the amount by which the exercise price per share exceeds
the value of the Upfront Consideration; provided, further that, for the avoidance of doubt, such Contingent In-the-Money SAR shall not
entitle the holder thereof to receive any shares of Company Common Stock, cash or other consideration in connection with the Effective
Time. |
| · | With respect to any Spectrum SAR with an exercise price per share that is equal to or greater than the value of the Merger Consideration
(each, an “Underwater Spectrum SAR”), the holder of such Underwater Spectrum SAR will receive no consideration and,
effective as of immediately prior to the Effective Time, shall have no further rights thereto. |
To the extent the Company and any holder of a Spectrum Stock Option,
Spectrum RSU, share of unvested restricted Spectrum Common Stock or Spectrum SAR agree in writing to treatment different than as described
above, the terms of such written agreement will apply in lieu of the treatment described above.
At the Effective Time, upon the election of the holder of each Spectrum
warrant (the “Spectrum Warrant”), under that certain Warrant to Purchase Stock, dated as of September 21, 2022,
by and between Spectrum and SLR Investment Corp., a Maryland corporation, that is outstanding immediately prior to the Effective Time
shall be cancelled and, in exchange therefor, Spectrum shall pay to each former holder of any such cancelled Spectrum Warrant as soon
as practicable following the Effective Time (i) a number of shares of Company Common Stock equal to the (A) product of (x) the
excess of $1.10 over the exercise price per Spectrum Common Stock under such Spectrum Warrant, and (y) the number of shares of Spectrum
Common Stock subject to such Spectrum Warrant, multiplied by (B) the Exchange Ratio, and (ii) one CVR for Spectrum Common
Stock underlying such Spectrum Warrant, in each case, without interest, and subject to deduction for any required withholding of taxes.
Post-Closing Governance
Subject to applicable laws and the listing and corporate governance
rules and regulations of the Nasdaq Capital Market (“Nasdaq”) that are applicable to the Company, Spectrum shall
nominate one member of Spectrum’s board of directors (such individual, the “Spectrum Board Designee”) to the
Company’s board of directors prior to the Effective Time. The Spectrum Board Designee will be selected and designated to the Company’s
board of directors upon the Company’s consent (such consent not to be unreasonably withheld, conditions or delayed) effective as
of the Closing (as defined in the Merger Agreement). During the 12-month period following the Closing Date (as defined in the Merger Agreement),
the Company’s board of directors shall not propose to remove the Spectrum Board Designee other than for cause.
Conditions to the Merger
The obligation of Spectrum and the Company to consummate the transactions
contemplated by the Merger Agreement is subject to the satisfaction or waiver of a number of customary conditions, including: (i) the
adoption of the Merger Agreement by Spectrum’s stockholders; (ii) approval of the issuance of shares of Company Common Stock
in the Merger by the Company’s stockholders; (iii) the Company’s registration statement on Form S-4 to be filed
in connection with the Merger having become effective and not subject of any stop order, and the shares of Company Common Stock issuable
in the Merger having been approved for listing on the Nasdaq, subject to official notice of issuance; (iv) the expiration of any
applicable waiting period, the absence of any pending agreement between the Company and any governmental entity not to close, and receipt
of any required approvals under the antitrust laws of the United States; (v) the absence of laws or orders restraining the consummation
of the Merger; (vi) the representations and warranties of Spectrum and the Company being true and correct, subject to the materiality
standards contained in the Merger Agreement, and Spectrum and the Company having complied in all material respects with their respective
obligations under the Merger Agreement; (vii) the absence of any effects that have constituted or resulted in, or would reasonably
be expected to constitute or result in, a material adverse effect for Spectrum or the Company; (viii) execution of the CVR Agreement
by the Company and the Rights Agent; and (ix) the receipt by Spectrum of a written opinion from Spectrum’s tax counsel that,
for U.S. federal income tax purposes, the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended.
Representations and Warranties; Covenants
The Merger Agreement contains customary representations and warranties
given by Spectrum, the Company and Merger Sub. The Company and Spectrum have also each made customary covenants in the Merger Agreement,
including covenants by each of the parties relating to conduct of their business prior to the closing of the Merger. The parties have
generally agreed to use their respective reasonable best efforts to complete the Merger, including to obtain the required regulatory approvals
for the transaction.
The Merger Agreement also contains reciprocal covenants by Spectrum
and the Company not to solicit or participate in any discussions or negotiations with any person making an inquiry or proposal for an
alternative transaction, and requiring Spectrum’s and the Company’s respective boards of directors to recommend the transaction-related
proposals to their stockholders, in each case subject to certain exceptions. Prior to the approval of the transaction-related proposals
by their stockholders, the boards of directors of Spectrum and the Company, as applicable, may change their recommendation in response
to an unsolicited proposal for an alternative transaction, if the board of directors determines that the proposal constitutes a “Company
Superior Proposal” or “Parent Superior Proposal” (each as defined in the Merger Agreement), as applicable, and that
failure to take such action would reasonably be expected to be inconsistent with their fiduciary duties to their stockholders under applicable
law, subject to complying with certain procedures set forth in the Merger Agreement. Prior to the approval of the transaction-related
proposals by their stockholders, Spectrum’s and the Company’s respective boards of directors may also change their recommendation
if a “Company Intervening Event” or “Parent Intervening Event” (each as defined in the Merger Agreement), as applicable,
occurs, and the applicable board of directors determines, after consultation with its outside legal counsel and financial advisor, that
failing to change its recommendation would be reasonably likely to be inconsistent with their fiduciary duties, subject to complying with
certain procedures set forth in the Merger Agreement.
Termination and Termination Fees
The Merger Agreement contains customary mutual termination rights for
Spectrum and the Company, including if the Merger is not completed by October 24, 2023 (the “Outside Date”); provided,
further, that if the satisfaction of the last to be satisfied or waived of the conditions set forth under Article VI of the Merger
Agreement occur less than two (2) business days prior to the Outside Date, the Outside Date shall be deemed extended to the extent
necessary to permit closing to occur. The Merger Agreement also contains customary termination rights for the benefit of each party, including
(i) if the board of directors of the other party changes its recommendation, (ii) if the board of directors of such party authorizes
entry into a definitive agreement relating to a superior proposal and (iii) if the other party breaches its representations, warranties
or covenants under the Merger Agreement in a way that would result in a failure of its condition to closing being satisfied (subject to
certain procedures and cure periods).
Under the Merger Agreement, Spectrum and the Company will be required
to pay a termination fee to the other party equal to $8,300,000, less the amount of previously paid expenses, if any, if the Merger Agreement
is terminated in certain circumstances, including if the board of directors of such party authorizes entry into a definitive agreement
relating to a superior proposal. If the Merger Agreement is terminated by either Spectrum or the Company due to the other party’s
failure to receive the requisite approval of its stockholders, then the party that failed to obtain such approval will be required to
reimburse the other party for up to $1,000,000 of reasonable and documented out-of-pocket fees and expenses incurred in connection with
the transaction.
Additional Information
The foregoing description of the Merger and the Merger Agreement does
not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is filed as Exhibit 2.1
to this Current Report and is incorporated herein by reference. A copy of the Merger Agreement has been included to provide investors
with information regarding its terms and is not intended to provide any factual information about Spectrum or the Company.
The Merger Agreement contains representations, warranties, covenants
and agreements, which were made only for purposes of such agreement and as of specified dates. The representations and warranties in the
Merger Agreement reflect negotiations between the parties to the Merger Agreement and are not intended as statements of fact to be relied
upon by stockholders, or any individual or other entity other than the parties. In particular, the representations, warranties, covenants
and agreements in the Merger Agreement may be subject to limitations agreed by the parties, including having been modified or qualified
by certain confidential disclosures that were made between the parties in connection with the negotiation of the Merger Agreement, and
having been made for purposes of allocating risk among the parties rather than establishing matters of fact. In addition, the parties
may apply standards of materiality in a way that is different from what may be viewed as material by investors. As such, the representations
and warranties in the Merger Agreement may not describe the actual state of affairs at the date they were made or at any other time and
you should not rely on them as statements of fact. Moreover, information concerning the subject matter of the representations and warranties
may change after the date of the Merger Agreement, and unless required by applicable law, the Company undertakes no obligation to update
such information.