Exhibit 10.3

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT, dated as of June 30, 2014 (as amended,
restated, supplemented or otherwise modified from time to time, this
“Agreement”), is among Hercules Technology Growth Capital, Inc., a Maryland
corporation (“HTGC”), in its capacity as administrative and collateral agent for
Lenders (together with its successors and assigns in such capacity, “Agent”),
the financial institutions who are or hereafter become parties to this Agreement
as lenders (together with HTGC, collectively the “Lenders”, and each
individually, a “Lender”), Amedica Corporation, a Delaware corporation
(“Borrower”), and the other Persons (as defined below), if any, who are or
hereafter become parties to this Agreement as guarantors (each a “Guarantor” and
collectively, the “Guarantors”, and together with Borrower, each a “Loan Party”
and collectively, “Loan Parties”).

Loan Parties, Agent and Lenders agree as follows:

 

1. DEFINITIONS.

1.1 Defined Terms. Capitalized terms used herein shall have the meanings set
forth in Section 11. All other capitalized terms used but not defined herein
shall have the meaning given to such terms in the UCC. Any accounting term used
but not defined herein shall be construed in accordance with GAAP and all
calculations shall be made in accordance with GAAP. The term “financial
statements” shall include the accompanying notes and schedules.

1.2 Section References. Any section, subsection, schedule or exhibit references
are to this Agreement unless otherwise specified.

 

2. THE LOAN.

2.1 Loan Commitments.

(a) Term Loan Commitment.

(i) Subject to the terms and conditions of this Agreement and the occurrence of
the Funding Condition, and in reliance upon the representations and warranties
of the Loan Parties contained herein, each Lender with a Term Loan Commitment
severally and not jointly agrees to make a loan (the “Term Loan”) in Dollars to
Borrower on the Closing Date, in an amount equal to such Lender’s Term Loan
Commitment. Upon the funding of such Term Loan, the Term Loan Commitment shall
terminate.

(ii) Once the Term Loan is repaid or prepaid, it cannot be reborrowed.

(iii) The Term Loan made by each Lender is evidenced by this Agreement, and if
requested by such Lender, a Note payable to such Lender.

2.2 Reserved.

2.3 Interest.

(a) Term Loan. The Term Loan shall accrue interest in arrears from the date made
until such Term Loan is fully repaid at the Term Loan Interest Rate.

(b) Computation. All computations of interest and fees calculated on a per annum
basis shall be made by Agent on the basis of a three hundred sixty (360) day
year, in each case for the actual number of days occurring in the period for
which such interest and fees are payable. Such method of calculation will result
in an effective rate that exceeds the rate stated in this Section. Each
determination of an interest rate or the amount of a fee under the Loan
Documents shall be made by Agent and shall be conclusive, binding and final for
all purposes, absent manifest error.

 

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(c) Default Rate. In the event any payment is not paid on the scheduled payment
date, an amount equal to five percent (5%) of the past due amount shall be
payable on demand. In addition, all Loans and other Obligations shall bear
interest from and after the occurrence and during the continuation of an Event
of Default at a rate equal to the Default Rate. The application of the Default
Rate shall not be interpreted or deemed to extend any cure period or waive any
Default or Event of Default or otherwise limit Agent’s or any Lender’s right or
remedies hereunder. All interest payable at the Default Rate shall be payable on
demand. In the event any interest is not paid when due hereunder, delinquent
interest shall be added to principal and shall bear interest on interest,
compounded at the rate set forth in Section 2.3(a) or Section 2.3(d), as
applicable

(d) Maximum Lawful Rate. Anything herein or any other Loan Document to the
contrary notwithstanding, the obligations of Loan Parties hereunder and
thereunder shall be subject to the limitation that payments of interest shall
not be required, for any period for which interest is computed hereunder, to the
extent (but only to the extent) that contracting for or receiving such payment
by Agent and Lenders would be contrary to the provisions of any Requirement of
Law applicable to Agent and Lenders limiting the highest rate of interest which
may be lawfully contracted for, charged or received by Agent and Lenders, and in
such event Loan Parties shall pay Agent and Lenders interest at the highest rate
permitted by applicable Requirements of Law (“Maximum Lawful Rate”); provided,
however, that if at any time thereafter the rate of interest payable hereunder
or thereunder is less than the Maximum Lawful Rate, Loan Parties shall continue
to pay interest hereunder and thereunder at the Maximum Lawful Rate until such
time as the total interest received by Agent and Lenders is equal to the total
interest that would have been received had the interest payable hereunder been
(but for the operation of this paragraph) the interest rate payable since the
making of the Term Loan as otherwise provided in this Agreement or any other
Loan Document.

2.4 Payments.

(a) Interest Payments. For the Term Loan, Borrower shall pay interest to Agent,
for the benefit of Lenders in accordance with their Pro Rata Shares, at the rate
of interest determined in accordance with Section 2.3 in arrears on each
Scheduled Payment Date, commencing on July 1, 2014.

(b) Principal Payments. For the Term Loan, Borrower shall pay principal to
Agent, for the benefit of Lenders in accordance with their Pro Rata Shares, in
thirty (30) (the “Number of Payments”) equal consecutive payments (mortgage
style where the monthly amount is the same but the amount of principal and
interest will vary) of principal and interest (the “Monthly Amortization
Amount”) on each Scheduled Payment Date, commencing on August 1, 2015 (the
“Initial Principal Payment Date”) and one final payment in an amount equal to
the entire remaining principal balance of the Term Loan and accrued but unpaid
interest on the Final Maturity Date; provided, however, if the Interest Only
Extension Conditions are satisfied, the “Number of Payments” shall be reduced to
twenty four (24) and the “Initial Principal Payment Date” shall be extended to
February 1, 2016, but periodic payments of principal and interest will continue
to be in equal consecutive payments (mortgage style where the monthly amount is
the same but the amount of principal and interest will vary) of principal and
interest with one final payment in an amount equal to the entire remaining
principal balance of the Term Loan and accrued but unpaid interest on the Final
Maturity Date.

(c) Maturity. Notwithstanding the foregoing provisions of Section 2.4(b), all
outstanding Obligations are due and payable in full on the earlier of (i) the
Final Maturity Date or (ii) the date that the Loans otherwise become due and
payable hereunder, whether by acceleration of the Obligations pursuant to
Section 8.2 or otherwise.

(d) Method of Payments. All payments (including prepayments) to be made by any
Loan Party under any Loan Document shall be made by ACH transfer in immediately
available funds (which shall be the exclusive means of payment hereunder) in
Dollars, without setoff, recoupment, counterclaim or deduction of any kind.
Lender will initiate debit entries to the Borrower’s account as authorized in
the Automatic Payment Authorization Agreement on each Scheduled Payment Date.
Whenever any payment required under any Loan Document would otherwise be due on
a date that is not a Business Day, such payment shall instead be due on the next
Business Day, and additional fees and interest (including late fees and default
interest), as the case may be, shall not accrue and be payable for the period of
such extension. Borrower shall not revoke the Automatic Payment Authorization
Agreement without Agent’s prior written consent.

 

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(e) Withholdings and Increased Costs.

(i) All payments by any Loan Party under any Loan Document shall be made free
and clear of all Indemnified Taxes. If any Indemnified Taxes shall be required
by any Requirement of Law to be withheld or deducted from or in respect of any
sum payable under any Loan Document to Agent or any Lender, (A) an additional
amount shall be payable as may be necessary so that, after making all required
withholdings or deductions (including withholdings or deductions applicable to
additional sums payable under this Section), Agent or such Lender receives an
amount equal to the sum it would have received had no such withholdings or
deductions been made, (B) Loan Parties shall make such withholdings or
deductions, (C) Loan Parties shall pay the full amount withheld or deducted to
the relevant taxing authority or other authority in accordance with any
applicable Requirement of Law, and (D) Loan Parties shall deliver to Agent or
such Lender evidence of such payment.

(ii) If the introduction of or any change in, after the Closing Date, any
Requirement of Law increases Agent’s or any Lender’s costs or reduces its income
for any Loan, then Borrower shall upon provision of reasonable evidence of such
increase or decrease and ten (10) days written notice by Agent or such Lender
(with a copy of such demand to Agent) promptly pay to Agent for its own account
or for the account of such Lender, as the case may be, the increase in cost or
reduction in income or additional expense; provided that all requests, rules,
guidelines or directives issued or promulgated under, in connection with or
pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act or
Basel III shall be deemed to be a change in a Requirement of Law, regardless of
the date enacted, adopted or issued. The Agent or such Lender (with a copy to
Agent) shall submit a certificate as to the amount of such reduction or such
increased cost to Borrower, provided that, neither Agent nor any Lender shall be
entitled to payment of any amounts under this Section 2.4(e) relating to periods
prior to 180 days before the date Agent or such Lender sends the Certificate.
Agent and each Lender agrees that it shall allocate any such increased costs
among its customers similarly affected in good faith and in a manner consistent
with Agent’s or such Lender’s customary practice.

(f) Loan Account. Agent, on behalf of the Lenders, shall record on its books and
records the amount of the Term Loan made, the interest rate applicable, all
payments of principal and interest thereon and the principal balance thereof
from time to time outstanding. Such record shall, absent manifest error, be
conclusive evidence of the amount of the Loans made by the Lenders to Borrower
and the interest and payments thereon. Any failure to so record or any error in
doing so shall not, however, limit or otherwise affect the obligation of
Borrower hereunder (and under any Note) to pay any amount owing with respect to
the Loans or provide the basis for any claim against Agent.

(g) Payment of Obligations. Without limiting Section 2.4(d), Agent is authorized
to, and at its sole election may, debit funds from Borrower’s operating account
specified in the Automatic Payment Authorization Agreement to pay all
Obligations under any Loan Document if and to the extent Borrower fails to
promptly pay any such amounts as and when due.

(h) Optional Payment in Common Stock.

(i) Borrower Election for Payment in Common Stock. Subject to satisfaction of
the Conversion Conditions and compliance with the other terms and conditions of
this Section 2.4(h), Borrower may elect to pay, in whole or in part, any
regularly scheduled installment of principal (a “Principal Installment Payment”)
up to an aggregate maximum amount of $1,500,000 by converting a portion of the
principal of the Term Loan into shares of Common Stock that are free of any
transfer restrictions in lieu of payment in cash (such option, the “Conversion
Option”). In order to validly exercise a Conversion Option, (A) Borrower must
deliver written notice thereof, in the form attached hereto as Exhibit F, to
Lender (a “Borrower Conversion Election Notice”) five (5) days prior to the
applicable due date of the Principal Installment Payment (the “Principal
Installment Due Date”), (B) Borrower shall transfer (or cause to be transferred)
to the applicable Lender the shares of Common Stock to be issued as provided in
the Borrower Conversion Election Notice via the Fast Automated Securities
Transfer Program of the Depository

 

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Trust Company no later than the first trading day following the applicable
Principal Installment Due Date (such date, the “Delivery Date”), and (C) all
Conversion Conditions must be satisfied in respect of such payment. A Borrower
Conversion Election Notice, once delivered by Borrower, shall be irrevocable
unless otherwise agreed, in writing, by Agent. The number of such shares of
Common Stock to be issued in respect of such Borrower Conversion Election Notice
shall be equal to the number determined by dividing (x) the principal amount to
be paid in shares of Common Stock by (y) the Fixed Conversion Price. The
aggregate principal amount to be paid in shares of Common Stock pursuant to this
Section 2.4(h)(i) shall not exceed One Million Five Hundred Thousand Dollars
($1,500,000). Any shares of Common Stock issued pursuant to a Borrower
Conversion Election Notice shall be deemed to be issued upon conversion of the
Note should a Note have been issued by Borrower.

(ii) Conversion Conditions. Notwithstanding Section 2.4(h)(i) or 2.4(h)(iii),
Borrower’s right to deliver, and Lender’s obligation to accept, shares of Common
Stock in lieu of payment in cash of a Principal Installment Payment is
conditioned on the satisfaction of each of the following conditions
(collectively, the “Conversion Conditions”) as of such Delivery Date: (A) the
closing price of the shares of Common Stock as reported by Bloomberg, L.P. on
the Nasdaq stock market (the “Nasdaq”) or other national securities exchange for
each of the seven (7) consecutive trading days immediately preceding the
Delivery Date shall be greater than or equal to the Fixed Conversion Price;
(B) the Common Stock issued in connection with any such payment does not exceed
15% of the total trading volume of the Common Stock for the twenty-two
(22) consecutive trading days immediately prior to and including such Delivery
Date; (C) only one Borrower Conversion Election Notice and Agent Conversion
Election Notice may be given in any calendar month during the amortization
period; (D) the Common Stock is (and was on each of the thirty (30) consecutive
trading days immediately preceding such Delivery Date) quoted or listed on the
Nasdaq or other national securities exchange; (E) a registration statement is
effective and available for the resale of all of the shares of Common Stock to
be delivered on such Delivery Date so that the shares of Common Stock can be
sold without restriction by the Delivery Date and Lender shall not be subject to
any lock-up or market standoff agreement which prohibits or restricts its
ability to sell such shares of Common Stock; (F) after giving effect to the
issuance of such shares of Common Stock to Lender, Lender would not
(1) beneficially own, together with its Affiliates, Common Stock in excess of
the limitations specified in subsection (h)(iv) below and (2) have been issued
shares of Common Stock pursuant to all Borrower Conversion Election Notices and
Agent Conversion Election Notices in an aggregate amount in excess of the Cap,
as defined in subsection (h)(iv) below; (G) as of such Delivery Date, there is
no outstanding Event of Default and there is no breach or default that, if left
uncured, would result in an Event of Default; and (H) Borrower shall have
sufficient authorized but unissued shares of Common Stock to provide for the
issuance of the shares of Common Stock pursuant to the Borrower Conversion
Election Notice or Agent Conversion Election Notice, as applicable. If any of
the Conversion Conditions are not satisfied as of a Delivery Date, Borrower
shall not be permitted to pay, and Lender shall not be obligated to accept, the
Principal Installment Payment in shares of Common Stock, and Borrower shall
instead pay such principal amount in cash; provided, however, that the
Conversion Conditions set forth in clauses (A), (B), (C), (D), (E) and (G) above
may be waived by a writing executed by both Borrower and Agent. In the event the
Borrower is relying upon an effective registration statement to satisfy clause
(E) of the Conversion Conditions, each of the Borrower and Lender shall provide
customary indemnification to one another with respect to such registration
statement in a form acceptable to the Borrower and Lender.

(iii) Lender Election for Payment in Cash or Conversion to Common Stock. Subject
to satisfaction of the Conversion Conditions and compliance with the other terms
and conditions of this Section 2.4(h), with respect to any Principal Installment
Payment scheduled from Borrower, Agent may elect to have Borrower make payment
in Common Stock by requiring Borrower to effect a Conversion Option. In order to
effect such a Conversion Option, Agent shall (A) deliver a written notice
thereof in the form attached hereto as Exhibit G (an “Agent Conversion Notice”)
to Borrower five (5) days prior to (i) the applicable Principal Installment Due
Date. Borrower shall transfer (or cause to be transferred) to the applicable
Lender the shares of Common Stock to be issued as provided in the Agent
Conversion Election Notice via the Fast

 

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Automated Securities Transfer Program of the Depository Trust Company no later
than the Delivery Date, which shares of Common Stock shall be free of any
restrictions on transfer. An Agent Conversion Election Notice, once delivered by
Agent, shall be irrevocable unless otherwise agreed, in writing, by Borrower.
The number of such shares of Common Stock to be issued in respect of such
Principal Installment Payment shall be equal to the number determined by
dividing (x) the principal amount to be paid in shares of Common Stock by
(y) the Fixed Conversion Price. Any shares of Common Stock issued pursuant to an
Agent Conversion Election Notice shall be deemed to be issued upon partial
conversion of the principal of the Note should a Note have been issued by
Borrower. Notwithstanding the foregoing, Lender’s right to receive, and
Borrower’s obligation to issue, shares of Common Stock in lieu of payment in
cash of a Principal Installment Payment is conditioned on the satisfaction of
the following condition as of such Delivery Date: the aggregate principal amount
to be paid in shares of Common Stock pursuant to Section 2.4(h)(iii) of this
Agreement shall not exceed One Million Five Hundred Thousand Dollars
($1,500,000).

(iv) Beneficial Ownership Limitation. Notwithstanding any provision herein to
the contrary, Lenders, together with their Affiliates, shall not be permitted to
beneficially own a number of shares of Common Stock (other than shares that may
be deemed beneficially owned except for being subject to a limitation analogous
to the limitation contained in this Section 2.4(h)(iv)) in excess of 9.99% of
the number of shares of Common Stock then issued and outstanding, it being the
intent of Borrower and Lenders that Lenders, together with their Affiliates, not
be deemed at any time to have the power to vote or dispose of greater than 9.99%
of the number of shares of Common Stock issued and outstanding at any time;
provided, however, that Agent shall have the right, upon 61 days’ prior written
notice to Borrower, to waive the 9.99% limitation of this subsection.
Notwithstanding anything contained herein to the contrary, Borrower shall not be
permitted to issue to Lenders, and Lenders shall not be required to accept,
shares of Common Stock pursuant to ether a Borrower Conversion Election Notice
or an Agent Conversion Election Notice if and to the extent such issuance, when
taking together with all other issuances pursuant to prior such notices, would
result in (A) the issuance of more than 19.99% of the Common Stock outstanding
as of the date of this Agreement or (B) Lenders, together with their Affiliates,
beneficially owning in excess of 19.99% of the outstanding Common Stock (each of
clauses (A) and (B) are referred to herein as the “Cap”). As used herein,
beneficial ownership shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended (the “1934 Act”). For any reason at
any time, upon written or oral request of Agent, Borrower shall within one
business day confirm orally and in writing to Agent the number of shares of
Common Stock then issued and outstanding as of any given date.

(v) Reserved.

(vi) Stock Reservation. Borrower covenants and agrees to reserve from its duly
authorized capital stock not less than the number of shares of Common Stock that
may be issuable upon payment of any Principal Installment Payment pursuant to
Section 2.4(h) of this Agreement. Borrower further represents, warrants and
covenants that, upon issuance of any shares of Common Stock pursuant to
Section 2.4(h) of this Agreement, such shares of Common Stock shall be validly
issued, fully paid and non-assessable and free from all preemptive or similar
rights, taxes, liens and charges with respect to the issue thereof.

(vii) Authorization. For so long as a Lender holds any shares of Common Stock
issued pursuant to Section 2.4(h) of this Agreement, Borrower shall maintain the
Common Stock’s authorization for listing on Nasdaq (or on another national
securities exchange) and Borrower shall not take any action which would
reasonably be expected to result in the delisting or suspension of the Common
Stock on Nasdaq (or other national securities exchange on which the Common Stock
is listed).

(viii) If the shares of Common Stock purportedly issued pursuant to this
Section 2.4(h) are not issued timely and/or the Conversion Conditions were not
satisfied and Agent did not waive such noncompliance in writing, Agent may, at
any time prior to thirty (30) days after the

 

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applicable Principal Installment Payment was due, reject the delivery of such
shares and require payment in Cash together with any late fees, default interest
or other applicable charges. On receipt of such Cash payment, Agent shall
cooperate with Borrower to return such shares.

2.5 Prepayments and Commitment Terminations.

(a) Voluntary Prepayments and Commitment Terminations. After the first
anniversary of the Closing Date, Borrower may, without premium or penalty, upon
five (5) Business Days’ prior written notice to Agent, voluntarily prepay the
Term Loan in full, but not in part. Prior to the first anniversary of the
Closing Date, Borrower may prepay the Term Loan in full, but not in part, by
paying the entire principal balance, all accrued and unpaid interest thereon,
together with a prepayment charge equal to 6% of the principal amount of the
Term Loan being repaid (the “Prepayment Charge”). Borrower agrees that the
Prepayment Charge is a reasonable calculation of Lender’s lost profits in view
of the difficulties and impracticality of determining actual damages resulting
from an early repayment of the Term Loan.

(b) Term Loan Prepayment Amounts. Upon the date of (i) any voluntary prepayment
of the Term Loan in accordance with Section 2.5(a) or (ii) any mandatory
prepayment of the Term Loan required under this Agreement (whether by
acceleration of the Obligations pursuant to Section 8.2 or otherwise), Borrower
shall pay to Agent, for the benefit of Lenders in accordance with their Pro Rata
Shares, a sum equal to all outstanding principal and all accrued interest
thereon and other Obligations with respect to the Term Loan. In addition,
Borrower shall pay the Prepayment Charge if the prepayment of the Term Loan is
made within the first anniversary of the Closing Date.

2.6 Lender Fees.

(a) Closing Fee. On the Closing Date, Borrower shall pay to Agent, for the
benefit of Lenders in accordance with their Pro Rata Shares, a non-refundable
closing fee in an amount equal to $200,000, which fee shall be fully earned when
paid regardless of the early termination of this Agreement.

(b) End of Term Fee. On the earliest to occur of (i) the Final Maturity Date,
(ii) the date that Borrower prepays the outstanding Obligations, or (iii) the
date that the Obligations become due and payable, Borrower shall pay to Agent,
for the benefit of Lenders in accordance with their Pro Rata Shares, a
non-refundable end of term fee in an amount equal to $1,450,000, provided,
however, if the Financing Condition is not satisfied, such fee shall be
$1,950,000. Notwithstanding the required payment date of fee, it shall be deemed
fully earned as of the Closing Date regardless of the early termination of this
Agreement.

2.7 Authorization and Issuance of the Warrants. Borrower has duly authorized the
issuance to each Term Loan Lender (or its respective Affiliate or designee) of
Warrants evidencing each Term Loan Lender’s (or its respective Affiliate’s or
designee’s) right to acquire its respective Pro Rata Share of Borrower’s Common
Stock pursuant to such Warrants. The exercise period shall expire five (5) years
from the date such Warrants are issued.

 

3. CREATION OF SECURITY INTEREST.

3.1 Grant of Security Interest. As security for the prompt and complete payment
and performance when due, whether at the Final Maturity Date, by acceleration or
otherwise, of all Obligations, and as security for the prompt and complete
payment and performance when due by each Guarantor of the Guaranteed Obligations
(as defined in the Guaranty), each Loan Party hereby grants to Agent, for the
benefit of Agent and Lenders, a lien on and security interest in all of its
right, title and interest in, to and under the following Property:

All of such Loan Party’s personal property of every kind and nature whether now
owned or hereafter acquired by, or arising in favor of, such Loan Party, and
regardless of where located, including, without limitation, all of such Loan
Party’s Accounts, Chattel Paper (whether tangible or electronic), Commercial
Tort Claims, Deposit Accounts, Documents, Equipment, Financial Assets, Fixtures,
Goods, Instruments, Investment Property (including, without limitation, all
Securities Accounts), Inventory, Letter-of-Credit Rights, letters of credit,
Securities, Supporting Obligations, cash, Cash Equivalents, any other contract
rights (including, without limitation, rights

 

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under any license agreements, leases, and franchise agreements or rights to the
payment of money), General Intangibles (including, without limitation,
Intellectual Property), all books and records of such Loan Party relating to
each of the foregoing, and all additions, attachments, accessories, accessions
and improvements to such Property, all substitutions, replacements or exchanges
therefor, and all Proceeds, insurance claims, products, profits and other rights
to payments not otherwise included in the foregoing; provided, that, the grant
of security interest herein shall not extend to and the term “Collateral” shall
not include equipment subject to liens permitted pursuant to Section 7.1 where
the agreements governing the capital lease obligations or purchase money
Indebtedness related thereto prohibit such security interest, for so long as
such prohibition exists.

Each Loan Party hereby represents and covenants that such security interest
constitutes a valid, first priority perfected security interest in the
Collateral in existence on the Closing Date, and will constitute a valid, first
priority perfected security interest in Collateral acquired after the Closing
Date. Each Loan Party hereby covenants that it shall give written notice to
Agent promptly upon the acquisition by such Loan Party or creation in favor of
such Loan Party of any commercial tort claim. In order to perfect or protect
Agent’s security interest and other rights in each Loan Party’s Intellectual
Property, each Loan Party hereby authorizes Agent to file, as applicable and in
each case in form and substance reasonably satisfactory to Agent, a patent
security agreement and/or a trademark security agreement, to be filed with the
United States Patent and Trademark Office, and a copyright security agreement to
be filed with the United States Copyright Office (each of the foregoing, an
“Intellectual Property Security Agreement”).

3.2 Financing Statements. Each Loan Party hereby authorizes Agent to file UCC
financing statements in all appropriate jurisdictions and amendments thereto
describing the Collateral as “all assets of the debtor” or words of similar
import and containing any other information required by the applicable UCC to
perfect Agent’s security interest (for the benefit of itself and the Lenders)
granted hereby.

3.3 Termination of Security Interest. Upon the Termination Date, (a) Agent’s
lien on and security interest in the Collateral shall be automatically
terminated without delivery of any instrument or performance of any act and
(b) at the request of any Loan Party, Agent shall, at the Loan Parties’ sole
cost and expense and without any recourse, representation or warranty, execute
and deliver to such Loan Party such documents as such Loan Party shall
reasonably request to evidence such termination.

 

4. CONDITIONS OF CREDIT EXTENSIONS.

4.1 Conditions Precedent to Term Loan. No Lender shall be obligated to make its
Pro Rata Share of the Term Loan, or to take, fulfill, or perform any other
action hereunder, until the following have been delivered to Agent, in form and
substance satisfactory to Agent and Lenders (the date on which Lenders make the
Term Loan, the “Closing Date”):

(a) a counterpart of this Agreement duly executed by each Loan Party, each
Lender and Agent;

(b) a certificate duly executed by the Secretary or Assistant Secretary of each
Loan Party, the form of which is attached as Exhibit A, providing verification
of incumbency and certifying as to and attaching (i) such Loan Party’s board
resolutions approving the transactions contemplated by the Loan Documents and
(ii) such Loan Party’s formation documents certified by the Secretary of State
of such Loan Party’s state of formation as of a recent date acceptable to Agent
and such Loan Party’s governing documents;

(c) Notes duly executed by Borrower in favor of each Lender that has requested a
Note;

(d) filed copies of UCC financing statements, collateral assignments, and
termination statements, with respect to the Collateral, as Agent shall request;

(e) certificates of insurance evidencing the insurance coverage and satisfactory
additional insured and lender loss payable endorsements, in each case as
required pursuant to Section 6.4;

 

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(f) certified copies, dated as of a recent date acceptable to Agent, of UCC,
judgment, bankruptcy and tax lien search results demonstrating that there are no
Liens on the Collateral other than Permitted Liens;

(g) a certificate of status/good standing of each Loan Party from the
jurisdiction of such Loan Party’s organization and a certificate of foreign
qualification from each jurisdiction where such Loan Party’s failure to be so
qualified could reasonably be expected to have a Material Adverse Effect, in
each case certified as of a recent date acceptable to Agent;

(h) an executed legal opinion of Loan Parties’ counsel, in form and substance
satisfactory to Agent;

(i) an Automatic Payment Authorization Agreement, duly executed by Borrower;

(j) a Perfection Certificate completed and duly executed by each Loan Party;

(k) a Disbursement Letter, duly executed by each Loan Party, Agent and Lenders;

(l) one or more Account Control Agreements, duly executed by the applicable Loan
Parties and the applicable depository or financial institution, to the extent
required pursuant to Section 6.10;

(m) a Pledge Agreement, duly executed by each Loan Party, together with the
certificates and instruments required to be delivered in connection therewith
and related undated powers and endorsements duly executed in blank;

(n) a Guaranty Agreement, duly executed by each Guarantor;

(o) a Warrant in favor of each Term Loan Lender (or its Affiliate or designee)
for such Term Loan Lender’s Pro Rata Share of the number of shares of Stock of
Borrower described in Section 2.7, duly executed by Borrower;

(p) the Intellectual Property Security Agreement required by Section 3.1, duly
executed by each Loan Party;

(q) a pay-off letter satisfactory to Agent and duly executed by GECC, for itself
and in its capacity as administrative and collateral agent for all lenders under
the Existing Indebtedness, confirming that all of the Indebtedness and other
obligations owed under the Existing Indebtedness will be repaid in full from the
proceeds of the Term Loan and all Liens upon any Loan Party’s property in favor
of GECC and the lenders under the Existing Indebtedness shall be terminated
immediately upon such payment;

(r) all fees required to be paid by Borrower under the Loan Documents, and
Borrower shall have reimbursed Agent and Lenders for all fees, costs and
expenses presented as of the Closing Date; and

(s) all other documents and instruments as Agent or any Lender may reasonably
deem necessary or appropriate to effectuate the intent and purpose of this
Agreement.

 

5. REPRESENTATIONS AND WARRANTIES OF LOAN PARTIES.

Each Loan Party, jointly and severally, represents and warrants to Agent and
each Lender that:

5.1 Due Organization and Authorization. Each Loan Party’s exact legal name is as
set forth in the Perfection Certificate, and each Loan Party is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization as specified in the Perfection Certificate, has its chief executive
office at the location specified in the Perfection Certificate, and is duly
qualified and licensed in every jurisdiction wherever necessary to carry on its
business and operations, except where the failure to be so qualified and
licensed could not reasonably be expected to have a Material Adverse Effect. As
of the Closing Date, all information set forth on the Perfection Certificate
pertaining to each of the Loan Parties is accurate and complete. This Agreement
and the other

 

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Loan Documents have been duly authorized, executed and delivered by each Loan
Party and constitute the legal, valid and binding obligations of each such
Person that is a party thereto, enforceable against such Person in accordance
with their respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws affecting the enforcement of
creditors’ rights generally or by equitable principles relating to
enforceability. Each Loan Party has all requisite power and authority to own its
assets, carry on its business and execute, deliver and perform its obligations
under the Loan Documents to which it is a party.

5.2 No Conflicts. The execution, delivery and performance by each Loan Party of
the Loan Documents to which it is a party will not (a) contravene any of the
organizational documents of such Loan Party, (b) violate any material
Requirement of Law, (c) require any action by, filing, registration,
qualification with, or approval, consent or withholding of objections from, any
Governmental Authority or any other Person, except those which have been
obtained and are in full force and effect, (d) result in the creation of any
Lien on any of such Loan Party’s Property (except for Liens in favor of Agent,
on behalf of itself and Lenders), or (e) result in any breach of or constitute a
default under, or permit the termination or acceleration of, any Material
Agreement to which such Loan Party is a party. A list of all Material Agreements
as of the Closing Date is set forth on Schedule 5.2 hereto. No Loan Party is in
default under any agreement to which it is a party or by which it is bound which
could reasonably be expected to have a Material Adverse Effect.

5.3 Litigation. There are no actions, suits, proceedings or investigations
pending (or to the knowledge of any Loan Party, threatened) against any Loan
Party or any of its Subsidiaries or their respective properties, which (a) could
reasonably be expected to result in monetary judgment(s) or relief, individually
or in the aggregate, in excess of $500,000, (b) seek an injunction or other
equitable relief that could reasonably be expected to have a Material Adverse
Effect, or (c) affect or pertain to the Loan Documents or any transaction
contemplated hereby or thereby.

5.4 Financial Statements. All consolidated financial statements for Borrower and
any of its Subsidiaries delivered to Agent or Lenders have been prepared in
accordance with GAAP (subject, in the case of unaudited financial statements, to
the absence of footnotes and normal year-end audit adjustments) and fairly
present in all material respects Borrower’s consolidated financial condition and
consolidated results of operations. Since the date of the most recent audited
financial statements, no event has occurred which has had or could reasonably be
expected to have a Material Adverse Effect. There has been no material adverse
deviation from the most recent annual operating plan of Borrower delivered to
Agent.

5.5 Use of Proceeds; Margin Stock. The proceeds of the Loans shall be used to
repay the Existing Indebtedness and for working capital and general corporate
purposes. No Loan Party and no Subsidiary of any Loan Party is engaged in the
business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock. As of the Closing Date, no Loan
Party and no Subsidiary of any Loan Party owns any Margin Stock.

5.6 Collateral.

(a) Each Loan Party has good title to, has rights in, and the power to grant a
Lien on and to Transfer each item of the Collateral upon which it purports to
grant a Lien under any Loan Document, free and clear of any and all Liens except
Permitted Liens. As of the Closing Date, all tangible Collateral (other than
inventory or equipment in transit) is located at a location specified on the
Perfection Certificate.

(b) No Loan Party owns any Stock or Stock Equivalents, except for Permitted
Investments.

(c) As of the Closing Date, no Loan Party has any Deposit Accounts, Securities
Accounts, commodity accounts or other investment accounts other than those
described in the Perfection Certificate.

(d) As of the Closing Date, no Loan Party owns any real property.

 

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5.7 Compliance with Laws.

(a) Each Loan Party is in compliance with all Requirements of Law applicable to
it, except to the extent that any such non-compliance, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

(b) Without limiting the generality of the immediately preceding clause (a),
each Loan Party and each Subsidiary of a Loan Party is in compliance in all
material respects with all U.S. economic sanctions laws, Executive Orders and
implementing regulations as promulgated by OFAC, and all applicable anti-money
laundering and counter-terrorism financing provisions of the Bank Secrecy Act
and all regulations issued pursuant to it. No Loan Party nor any Affiliate of a
Loan Party (i) is a Person designated by the U.S. Government on the list of the
Specially Designated Nationals and Blocked Persons (the “SDN List”) with which a
U.S. Person cannot deal with or otherwise engage in business transactions,
(ii) is a Person who is otherwise the target of U.S. economic sanctions laws
such that a U.S. Person cannot deal or otherwise engage in business transactions
with such Person, or (iii) is controlled by (including without limitation by
virtue of such Person being a director or owning voting Stock), or acts,
directly or indirectly, for or on behalf of, any Person on the SDN List or a
foreign government that is the target of U.S. economic sanctions prohibitions
such that the entry into, or performance under, any Loan Document would be
prohibited under U.S. law.

(c) Each Loan Party and each of its Affiliates is in compliance with (i) the
Trading with the Enemy Act of 1917, Ch. 106, 40 Stat. 411, as amended, and each
of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B Chapter V, as amended) and any other enabling
legislation or executive order relating thereto, (ii) the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001, P.L. 107-56, as amended (the “Patriot Act”), and
(iii) other federal or state laws relating to “know your customer” and
anti-money laundering rules and regulations. No part of the proceeds of any Loan
will be used directly or indirectly for any payments to any government official
or employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977.

(d) No Loan Party is an “investment company” or a company “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940.

(e) No Property of any Loan Party has been used by any Loan Party or, to any
Loan Party’s knowledge, by previous Persons, in disposing, producing, storing,
treating, or transporting any hazardous substance other than in material
compliance with applicable Requirements of Law.

5.8 Intellectual Property. A list of all of each Loan Party’s owned Intellectual
Property (limited to clause (a) of the definition thereof, and further limited
to only such Intellectual Property which is registered or for which there is an
application) and all license agreements (including all in-bound license
agreements, but excluding over-the-counter software that is commercially
available to the public) as of the Closing Date is set forth on Schedule 5.8
hereto, which indicates, for each such item of Property: (a) the name of the
Loan Party owning such Intellectual Property or licensing such Intellectual
Property, (b) the Loan Party’s identifier for such property (e.g., name of
patent, license, etc.), (c) whether such Property is Intellectual Property (or
application therefor) that is owned by such Loan Party or is licensed by such
Loan Party, (d) the expiration date of such Intellectual Property or license
agreement, and (e) whether such Intellectual Property is material to the
condition (financial or otherwise), business or operations of any Loan Party. In
the case of any Intellectual Property described in the foregoing clause (e) that
is an in-bound license agreement, Schedule 5.8 further indicates, for each:
(i) the name and address of the licensor, (ii) the name and date of the
agreement pursuant to which such item of Intellectual Property is licensed,
(iii) whether or not such license agreement grants an exclusive license to a
Loan Party, (iv) whether there are any purported restrictions in such license
agreement as to the ability of a Loan Party to grant a security interest in, or
to Transfer any of its rights as a licensee under, such license agreement, and
(v) whether a default under or termination of such license agreement could
interfere with Agent’s right to sell or assign such license or any other
Collateral. Except as specified on Schedule 5.8, each Loan Party’s Intellectual
Property is valid and enforceable and each Loan Party owns or has rights to use
all Intellectual Property material to the conduct of its business as now or
heretofore conducted by it or proposed to be conducted by it, without such Loan
Parties’ Knowledge of any actual or threatened infringement, upon the rights of
third parties. Except as specified on Schedule 5.8, as of the Closing Date, each
Loan Party is the sole owner of its Intellectual Property, and such Intellectual
Property is free and clear of all Liens, except for Liens securing the
Obligations and non-exclusive licenses of Intellectual Property granted by a

 

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Loan Party to third parties in the ordinary course of its business. Except as
specified on Schedule 5.8, no Loan Party has entered into any agreement or
financing arrangement (other than any Loan Document) prohibiting or otherwise
restricting the existence of any Lien upon any of its Intellectual Property.
Upon filing of the Intellectual Property Security Agreements with the United
States Patent and Trademark Office and the United States Copyright Office, as
applicable, and the filing of appropriate financing statements, all action
necessary to perfect Agent’s Lien on each Loan Party’s owned Intellectual
Property in the United States shall have been duly taken.

5.9 Solvency. Both before and after giving effect to each Loan, the transactions
contemplated herein, and the payment and accrual of all transaction costs in
connection with the foregoing, each Loan Party is Solvent.

5.10 Taxes; Pension. Each Loan Party and its Subsidiaries has timely filed all
required material tax returns and reports with the appropriate Governmental
Authority and timely paid all federal and state, and all material local and
foreign taxes, assessments, deposits and contributions owed by such Person,
excluding such amounts that are the subject of a Permitted Contest. No Loan
Party is aware of any claims or adjustments proposed for any prior tax year that
could result in additional material taxes becoming due and payable by a Loan
Party or any of its Subsidiaries. Proper and accurate amounts have been withheld
by each Loan Party from its respective employees for all periods in compliance
with applicable Requirements of Law and such withholdings have been timely paid
to the respective Governmental Authorities. Each Loan Party has paid all amounts
necessary to fund all pension, profit sharing, deferred compensation and other
retirement plans in accordance with their terms and as may be required under
ERISA or other applicable Requirements of Law, and no Loan Party has withdrawn
from participation in, or has permitted partial or complete termination of, or
permitted the occurrence of any other event with respect to, any such plan which
could reasonably be expected to result in any liability of a Loan Party,
including any liability to the Pension Benefit Guaranty Corporation or its
successors or any other Governmental Authority.

5.11 Full Disclosure. No representation, warranty or other statement made by or
on behalf of a Loan Party to Agent or any Lender (including in any certificate,
instrument, agreement or document delivered pursuant to any Loan Document)
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained therein not misleading (it being
recognized by Agent and Lenders that the projections and forecasts provided by
Loan Parties in good faith and based upon reasonable and stated assumptions are
not to be viewed as facts and that actual results during the period or periods
covered by any such projections and forecasts may differ from the projected or
forecasted results). Additionally, any and all financial or business projections
provided by Borrower to Agent, whether prior to or after the Closing Date, shall
be (i) provided in good faith and based on the most current data and information
available to Borrower, and (ii) the most current of such projections provided to
Borrower’s Board of Directors, it being understood that projections are not to
be viewed as facts and that actual results during the period or periods covered
by any such projections may differ from the projected results.

5.12 Regulatory Compliance.

(a) Each Loan Party has, and it and its products are in conformance with, all
Registrations that are required to conduct its business as currently conducted,
or as proposed to be conducted, except to the extent that any such
non-compliance, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. To the knowledge of each Loan
Party, the FDA is not considering limiting, suspending, or revoking such
Registrations or changing the marketing classification or labeling or other
significant parameter affecting the products of any Loan Party. To the knowledge
of each Loan Party, any third party that is a manufacturer or contractor for any
Loan Party is in compliance, and has been in compliance for the previous three
years, with all Registrations required by the FDA and all Public Health Laws
insofar as they reasonably pertain to the manufacture of product components or
products regulated as drugs or medical devices and marketed or distributed by
such Loan Party.

(b) All products designed, developed, investigated, manufactured, prepared,
assembled, packaged, tested, labeled, distributed, sold or marketed by or, to
the Knowledge of a Loan Party, on behalf of any Loan Party that are subject to
the jurisdiction of the FDA have been and are being designed, developed,
investigated, manufactured, prepared, assembled, packaged, tested, labeled,
distributed, sold and marketed in compliance with the Public Health Laws and
have been for the previous six years. All activities conducted by the Loan
Parties are conducted in compliance in all material respects with the Public
Health Laws.

 

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(c) No Loan Party is subject to any obligation arising under a Regulatory Action
and no such obligation has been threatened. There is no Regulatory Action or
other civil, criminal or administrative action, suit, demand, claim, complaint,
hearing, investigation, demand letter, proceeding or written request for
information pending against any Loan Party or an officer, director, or employee
of any Loan Party and, to each Loan Party’s knowledge, no Loan Party has any
liability (whether actual or contingent) for failure to comply with any Public
Health Laws.

(d) As of the Closing Date, no Loan Party is undergoing any FDA inspection
related to any activities or products of any Loan Party that are subject to
Public Health Laws, or any other comparable Governmental Authority
investigation.

(e) No Loan Party has received any notice or communication from the FDA alleging
material noncompliance with any Public Health Law. No product has been seized,
withdrawn, recalled, detained, or subject to a suspension (other than in the
ordinary course of business) of research, manufacturing, distribution or
commercialization activity. No proceedings in the United States or any other
jurisdiction seeking the withdrawal, recall, revocation, suspension, import
detention, or seizure of any product are pending or threatened in writing
against any Loan Party.

(f) No Loan Party, and to the Knowledge of any Loan Party, any of its respective
officers, directors, employees, agents or contractors (i) has been excluded or
debarred from any federal healthcare program (including without limitation
Medicare or Medicaid) or any other federal program or (ii) has received notice
from the FDA with respect to debarment or disqualification of any Person that
could reasonably be expected to have a Material Adverse Effect.

5.13 Government Contracts. Except as set forth on Schedule 5.13, as of the
Closing Date, no Loan Party is a party to any contract or agreement with any
Governmental Authority and no Loan Party’s Accounts are subject to the Federal
Assignment of Claims Act (31 U.S.C. Section 3727) or any similar state, county
or municipal law.

5.14 Customer and Trade Relations. As of the Closing Date, there exists no
actual or, to the knowledge of any Loan Party, overtly threatened termination or
cancellation of, or any material adverse modification or change in (a) the
business relationship of any Loan Party with any customer or group of customers
whose purchases during the preceding 12 calendar months caused them to be ranked
among the ten largest customers of such Loan Party or (b) the business
relationship of any Loan Party with any supplier essential to its operations.

5.15 Bonding. As of the Closing Date, no Loan Party is a party to or bound by
any surety bond agreement, indemnification agreement therefor or bonding
requirement with respect to products or services sold by it.

 

6. AFFIRMATIVE COVENANTS.

6.1 Good Standing. Each Loan Party shall maintain, and shall cause each of its
Subsidiaries to maintain, its existence and good standing in its jurisdiction of
organization and maintain qualification in each jurisdiction in which the
failure to so qualify could reasonably be expected to have a Material Adverse
Effect. Each Loan Party shall maintain, and shall cause each of its Subsidiaries
to maintain, in full force all permits, licenses, approvals and agreements, the
loss of which could reasonably be expected to have a Material Adverse Effect.

6.2 Notice to Agent and the Lenders.

(a) Loan Parties shall promptly (but in any event within five (5) days after a
Responsible Officer of a Loan Party obtains Knowledge) provide Agent and each
Lender with written notice of (i) the occurrence of any Default or Event of
Default, (ii) the commencement of, or any material development in, any
litigation or proceeding affecting any Loan Party or any of its Subsidiaries or
its respective Property (A) in which the amount of damages claimed is $250,000
or more, (B) which could reasonably be expected to have a Material Adverse
Effect or (C) in which the relief sought is an injunction or other stay of
performance of any Loan Document, and (iii) any amendments to (and copies of all
statements, reports and notices (other than non-material

 

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statements, reports and notices delivered in the ordinary course of business)
delivered to or by a Loan Party in connection with) any Material Agreement or
any Loan Party entering into any Material Agreement or any termination or
material breach thereof.

(b) Each Loan Party shall promptly (but in any event within three (3) Business
Days) after the receipt or occurrence thereof notify Agent of (i) any written
notice received by a Loan Party or any Subsidiary of Loan Party alleging
potential or actual violations of any Public Health Law, (ii) any notice that
the FDA is limiting, suspending or revoking any Registration, changing the
market classification, distribution pathway or parameters, or labeling of the
products of any Loan Party, or considering any of the foregoing, (iii) any
notice that any Loan Party has become subject to any Regulatory Action, (iv) any
inspections by FDA that results in an FDA Form 483, warning letter or other
formal notice of serious deficiencies, (v) the exclusion or debarment from any
federal healthcare program or debarment or disqualification by FDA of any Loan
Party or any of its respective officers, directors, employees, agents, or
contractors, or (vi) any notice that any product of any Loan Party has been
seized, withdrawn, recalled, detained, or subject to a suspension of
manufacturing, or the commencement of any proceedings in the United States or
any other jurisdiction seeking the withdrawal, recall, suspension, import
detention, or seizure of any product are pending or threatened in writing
against any Loan Party.

6.3 Financial Statements; Reports; Collateral Reporting.

(a) Borrower shall deliver to Agent and Lenders (i) as soon as available and in
any event within 30 days after the end of each fiscal month, unaudited
consolidated (and if available, consolidating) balance sheets, statements of
income or operations and cash flow statements of Borrower and its Subsidiaries
as of the end of such fiscal month and that portion of the fiscal year ending as
of the close of such fiscal month, in a form acceptable to Agent and certified
by Borrower’s president, chief executive officer or chief financial officer,
(ii) as soon as available and in any event within 45 days after the end of each
fiscal quarter, unaudited consolidated (and if available, consolidating) balance
sheets, statements of income or operations and cash flow statements of Borrower
and its Subsidiaries as of the end of such fiscal quarter and that portion of
the fiscal year ending as of the close of such fiscal quarter, in a form
acceptable to Agent and certified by Borrower’s president, chief executive
officer or chief financial officer and (iii) as soon as available and in any
event within ninety (90) days after the end of each fiscal year, audited
consolidated (and if available, consolidating) balance sheets, statements of
income or operations and cash flow statements of Borrower and its Subsidiaries
as of the end of such fiscal year, together with a report of an independent
certified public accounting firm reasonably acceptable to Agent, which report
shall contain an unqualified opinion (other than a going concern statement with
respect to fiscal year 2013 based solely on the amount of cash and Cash
Equivalents held by Borrower and its Subsidiaries) stating that such audited
financial statements fairly present in all material respects the financial
position of Borrower and its Subsidiaries for the periods indicated therein in
conformity with GAAP applied on a basis consistent with prior years without
qualification as to the scope of the audit or as to going concern (other than a
going concern statement with respect to fiscal year 2013 based solely on the
amount of cash and Cash Equivalents held by Borrower and its Subsidiaries) and
without any similar qualification. All such financial statements are to be
prepared using GAAP (subject, in the case of unaudited financial statements, to
the absence of footnotes and normal year end audit adjustments).

(b) Concurrently with the delivery of the financial statements specified in this
Section 6.3, Borrower shall deliver to Agent and Lenders a compliance
certificate, signed by the chief financial officer of Borrower, in the form
attached hereto as Exhibit B.

(c) Borrower shall deliver to Agent and Lenders (i) copies of all statements,
reports and notices made available generally by any Loan Party to the holders of
its Stock or Stock Equivalents or to any holders of Subordinated Indebtedness,
all notices sent to any Loan Party by the holders of such Subordinated
Indebtedness, and all material documents filed with the SEC or any securities
exchange or Governmental Authority exercising a similar function, promptly (but
in any event within three (3) Business Days) after delivering or receiving such
information to or from such Persons, (ii) an annual operating plan for Borrower,
on a consolidated (and if available, consolidating) basis, for the current
fiscal year within five (5) days after such plan is approved by the Board of
Directors of Borrower (but in any event not later than sixty (60) days after the
end of the immediately preceding fiscal year of Borrower), and (iii) such
budgets, sales projections, or other business, financial, corporate affairs and
other information as Agent or any Lender may reasonably request from time to
time.

 

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Notwithstanding anything herein to the contrary, documents required to be
delivered pursuant to this Section 6.3 may be delivered by (x) electronic mail
in accordance with Section 10.2 or (y) Borrower posting such documents, or
providing a link thereto, on Borrower’s website on the Internet at
www.amedica.com, and such documents shall be deemed delivered in the case of
clause (y) on the date on which Agent receives written notification of such
posting (which notification may be made by electronic mail in accordance with
Section 10.2).

6.4 Insurance. Each Loan Party, at its expense, shall maintain, and shall cause
each Subsidiary to maintain, insurance (including, without limitation,
comprehensive general liability, hazard, and business interruption insurance)
with respect to all of its properties and businesses (including, the
Collateral), in such amounts and covering such risks as is carried generally in
accordance with sound business practice by companies in similar businesses
similarly situated and in any event with deductible amounts, insurers and
policies that shall be reasonably acceptable to Agent. Borrower shall deliver to
Agent certificates of insurance evidencing such coverage, together with
endorsements to such policies naming Agent as a lender loss payee or additional
insured, as appropriate, in form and substance satisfactory to Agent. Each
policy shall provide that coverage may not be canceled or altered by the insurer
except upon thirty (30) days prior written notice to Agent and shall not be
subject to co-insurance. Each Loan Party appoints Agent as its attorney-in-fact,
if an Event of Default has occurred and is continuing, to make, settle and
adjust all claims under and decisions with respect to such Loan Party’s policies
of insurance, and to receive payment of and execute or endorse all documents,
checks or drafts in connection with insurance payments, provided that, Agent
shall not act as such Loan Party’s attorney-in-fact unless an Event of Default
has occurred and is continuing. The appointment of Agent as any Loan Party’s
attorney in fact is a power coupled with an interest and is irrevocable until
the Termination Date. Proceeds of insurance shall be applied, at the option of
Agent, to repair or replace the Collateral or to reduce any of the Obligations.
Notwithstanding the foregoing, if a Loan Party delivers to Agent a certificate,
signed by such Loan Party’s chief financial officer, that it intends within one
hundred twenty (120) days of receipt of such insurance proceeds (the
“Reinvestment Period”) to use all or a portion of such proceeds to purchase
assets used or useful in the ordinary course of business, then so long as no
Default or Event of Default shall have occurred and be continuing on the date
such Loan Party receives such insurance proceeds or at any point during such
Reinvestment Period, such Loan Party may use all or such portion of such
proceeds in the manner set forth in such certificate; provided that (a) the
aggregate amount of such insurance proceeds so used shall not exceed $500,000 in
the aggregate in any fiscal year and (ii) any such proceeds not so used or
committed to such use pursuant to a binding agreement within the Reinvestment
Period shall, on the first Business Day immediately following such period, be
applied in accordance with the immediately preceding sentence. Further, prior to
an Event of Default, any Loan Party may retain all insurance proceeds it
receives which are for the reimbursement of legal costs and expenses relating to
litigation that is pending at the time of the Closing Date and is disclosed on
the Perfection Certificate.

6.5 Taxes; Pension. Each Loan Party shall, and shall cause each Subsidiary to,
timely file all tax reports and returns with the appropriate Governmental
Authority and pay and discharge all federal, state, local and foreign taxes,
assessments, deposits and contributions owed by such Person, excluding such
amounts that are the subject of a Permitted Contest. Each Loan Party shall pay
all amounts necessary to fund all present pension, profit sharing, deferred
compensation and other retirement plans in accordance with their terms and as
may be required under ERISA or other applicable Requirements of Law.

6.6 Access Agreements. Unless otherwise agreed to by Agent in writing, each Loan
Party shall obtain and maintain an Access Agreement with respect to any real
property (other than real property owned by such Loan Party) (a) that is such
Loan Party’s principal place of business (other than Borrower’s current
principal place of business located at 1885 West 2100 South, Salt Lake City, UT
84119, (b) where such Loan Party’s books or records are maintained or (c) where
any Collateral is stored or maintained; provided, however, that the Loan Parties
shall not be required to obtain an Access Agreement with respect to one or more
locations described in the foregoing clause (c) if (1) the value of the
Collateral at all such locations is less than $100,000 in the aggregate and
Borrower gives written notice to Agent of the existence of each such location or
(2) such Collateral is in the possession of (or in transit to or from) a
distributor in the ordinary course of such Loan Party’s business and such
distributor has executed a distributor agreement with such Loan Party. Without
limiting the obligations above, if a Loan Party is not able to obtain an Access
Agreement with respect to any real property that is required pursuant to the
immediately preceding sentence or Borrower’s current principal place of business
located at 1885 West 2100 South, Salt Lake City, UT 84119, then within ten
(10) Business Days after the due date for any rental payments with respect to
such real property, Borrower shall deliver to Agent (i) evidence in form
reasonably satisfactory to Agent that such rental payment was made and (ii) a
certification that no default or event of default exists under any such lease.

 

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6.7 Protection of Intellectual Property. Each Loan Party shall (a) protect,
defend and maintain the validity and enforceability of any Intellectual Property
material to the conduct of its business, (b) promptly advise Agent in writing of
material infringements of any Intellectual Property material to such Loan
Party’s business of which any Responsible Officer of any Loan Party has
knowledge, (c) not allow any Intellectual Property material to such Loan Party’s
business to be abandoned, forfeited or dedicated to the public without Agent’s
written consent (which decision regarding consent or non-consent by Agent shall
not be unreasonably delayed after such Loan Party delivers written notice to
Agent of such proposed abandonment, forfeiture or dedication to the public), and
(d) notify Agent promptly, but in any event within three (3) Business Days, if
it knows or has reason to know that any application or registration relating to
any patent, trademark or copyright (now or hereafter existing) material to its
business is reasonably likely to become abandoned or dedicated, or if it knows
or has reason to know of any adverse determination or the occurrence of any
development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark Office,
the United States Copyright Office or any court) regarding such Loan Party’s
ownership of any Intellectual Property material to its business, or its right to
register the same or to keep and maintain the same. Each Loan Party shall at all
times conduct its business without knowingly infringing, misappropriating,
diluting, violating, or otherwise impairing the Intellectual Property of any
other Person. Each Loan Party shall remain liable under each of its Intellectual
Property licenses pursuant to which it is a licensee that are material to such
Loan Party’s business, and shall observe and perform all of the conditions and
obligations to be observed and performed by it thereunder. None of Agent or any
Lender shall have any obligation or liability under any such license by reason
of or arising out of any Loan Document, the granting of a Lien, if any, in such
license or the receipt by Agent (on behalf of itself and Lenders) of any payment
relating to any such license. If after the Closing Date any Loan Party
(i) obtains any patent, registered trademark or service mark, registered
copyright, registered mask work, or any pending application for any of the
foregoing, whether as owner, licensee or otherwise, or (ii) applies for any
patent or the registration of any trademark, service mark, copyright or mask
work, then such Loan Party shall concurrently with delivery of the next
Compliance Certificate provide written notice thereof to Agent and shall
promptly execute an Intellectual Property Security Agreement (or updates to the
Exhibits to the Intellectual Property Security Agreement previously delivered if
not filed at such time by Agent) and other documents and take such other actions
as Agent shall request in its good faith business judgment to protect or perfect
and maintain a first priority perfected security interest (which will be
effective as provided herein) in favor of Agent, for the benefit of Lenders, in
such Property. If requested by Agent, each Loan Party shall promptly provide to
Agent copies of all applications that it files for patents or for the
registration of trademarks, service marks, copyrights or mask works.

6.8 Collateral/Audit/Management Rights.

(a) Each Loan Party shall maintain all of the tangible Collateral (including
cash and Cash Equivalents) in the continental United States. Notwithstanding the
foregoing, Loan Parties shall be permitted to maintain Inventory and Equipment
outside the United States if such Inventory and Equipment is in the possession
of (or in transit to or from) a distributor in the ordinary course of such Loan
Party’s business and such distributor has executed a distributor agreement with
such Loan Party, and the aggregate value thereof does not exceed $1,500,000.

(b) Each Loan Party shall maintain and preserve in good working order and
condition all of its Property necessary in the conduct of its business, ordinary
wear and tear excepted.

(c) Each Loan Party shall maintain proper books of record and account, in which
full, true and correct entries shall be made in accordance with GAAP and all
other applicable Requirements of Law of all financial transactions and matters
involving the assets and business of such Loan Party.

(d) Each Loan Party shall, during normal business hours and upon reasonable
prior notice (unless a Default or Event of Default has occurred and is
continuing in which event no notice shall be required and Agent and Lenders
shall have access at all times during the continuance thereof), as frequently as
Agent reasonably determines to be appropriate, permit Agent (who may be
accompanied by representatives of any Lender) and any of its Related Persons
(i) to have access to the properties, facilities, and employees (including
officers) of each Loan Party and to the Collateral, (ii) to conduct field
examinations and to inspect, audit and make extracts and copies of any Loan
Party’s books and records (or at the request of Agent, deliver true and correct
copies of such books and records to Agent), and (iii) to inspect, audit,
appraise, review, evaluate or make test verifications and counts of the Accounts
and any other Collateral. The Loan Parties shall only be required to reimburse
Agent and any applicable Lender for the expenses of two (2) such field
examinations, inspections and audits per calendar year (unless a

 

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Default or Event of Default has occurred and is continuing in which case Loan
Parties shall be responsible for all such expenses). Upon Agent’s request, each
Loan Party will promptly notify Agent in writing of the location of any
Collateral. In addition, any such representative shall have the right to meet
with management and officers of Borrower to discuss such books of account and
records. In addition, Agent or Lender shall be entitled at reasonable times and
intervals to consult with and advise the management and officers of Borrower
concerning significant business issues affecting Borrower. Such consultations
shall not unreasonably interfere with Borrower’s business operations. The
parties intend that the rights granted Agent and Lender shall constitute
“management rights” within the meaning of 29 C.F.R Section 2510.3-101(d)(3)(ii),
but that any advice, recommendations or participation by Agent or Lender with
respect to any business issues shall not be deemed to give Agent or Lender, nor
be deemed an exercise by Agent or Lender of, control over Borrower’s management
or policies.

6.9 Compliance with Law. Each Loan Party shall comply with all applicable
Requirements of Law except where the failure to comply could not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect. Without limiting the generality of the foregoing, each Loan Party shall
comply in all material respects with all Public Health Laws and their
implementation by any applicable Governmental Authority and all lawful requests
of any Governmental Authority applicable to its products. Each Loan Party shall
continue to operate all facilities, locations, and processes in compliance in
all material respects with all Registrations and Public Health Laws. All
products designed, developed, investigated, manufactured, prepared, assembled,
packaged, tested, labeled, distributed, sold or marketed by or on behalf of any
Loan Party that are subject to the jurisdiction of the FDA shall be designed,
developed, investigated, manufactured, prepared, assembled, packaged, tested,
labeled, distributed, sold and marketed in compliance in all material respects
with the Public Health Laws.

6.10 Deposit Accounts and Securities Accounts; Cash Management Procedures.

(a) Each Loan Party shall hold all of its cash and Cash Equivalents in a Deposit
Account or Securities Account, and each Loan Party shall enter into, and cause
each depository or securities intermediary to enter into, a deposit account
control agreement or securities account control agreement, as the case may be,
in form and substance reasonably satisfactory to Agent (an “Account Control
Agreement”) with respect to each Deposit Account and Securities Account
maintained by such Person, prior to or concurrently with the establishment of
such Deposit Account or Securities Account (or in the case of any such Deposit
Account or Securities Account maintained as of the Closing Date, on or before
the Closing Date). Such Account Control Agreement shall provide for “springing”
cash dominion with respect to each such account. With respect to each Deposit
Account or Securities Account providing for “springing” cash dominion, Agent
will not deliver to the relevant institution a notice or other instruction which
provides for exclusive control over such account by Agent until an Event of
Default has occurred and is continuing. Upon Agent’s written request, the Loan
Parties shall create or designate a dedicated deposit account or accounts to be
used exclusively for payroll or withholding tax purposes.

6.11 Further Assurances. Each Loan Party shall, upon request of Agent, furnish
to Agent such further information, execute and deliver to Agent such documents
and instruments (including, without limitation, UCC financing statements) and
shall do such other acts and things as Agent may at any time reasonably request
relating to the perfection or protection of the security interest created by any
Loan Document or for the purpose of carrying out the intent of the Loan
Documents. If any Loan Party acquires any real property, such Loan Party shall
notify Agent in writing and simultaneously with such acquisition, execute and/or
deliver to Agent a mortgage or such other agreements and documents as Agent
shall require to grant to Agent a security interest over such real property as
security for the Obligations, and shall satisfy such other requirements as Agent
shall reasonably request (including, without limitation, appraisal, insurance,
environmental and survey requirements).

6.12 SBA Provisions. Agent and HT III have received a license from the U.S.
Small Business Administration (“SBA”) to extend loans as a small business
investment company (“SBIC”) pursuant to the Small Business Investment Act of
1958, as amended, and the associated regulations (collectively, the “SBIC Act”).
Portions of the Loan to Borrower will be made under the SBA license and the SBIC
Act. Addendum 1 to this Agreement outlines various responsibilities of Agent, HT
III and Borrower associated with an SBA loan, and such Addendum 1 is hereby
incorporated in this Agreement.

6.13 Post Closing Deliverables. Not later than ten (10) Business Days after the
date of this Agreement, Borrower shall deliver Agent fully executed copies of
the documents listed on Schedule 6.13

 

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7. NEGATIVE COVENANTS.

7.1 Liens. No Loan Party shall, and no Loan Party shall permit any of its
Subsidiaries to, (a) create, incur, assume or permit to exist any Lien on any of
its Property, other than Permitted Liens, or (b) enter into, assume or become
subject to any agreement or other contractual obligation (other than this
Agreement) prohibiting or otherwise restricting the existence of any Lien upon
any of its Property (including, without limitation, any of its Intellectual
Property), whether now owned or hereafter acquired, except in this clause (b),
(i) limitations on Liens on any Property whose acquisition, repair, improvement
or construction is financed by capitalized lease obligations or purchase money
Indebtedness (permitted under clause (c) of the definition of Permitted
Indebtedness) set forth in the agreement governing such Indebtedness with
respect thereto and (ii) any such restriction customarily contained in any real
property lease or sublease of any Loan Party.

7.2 Indebtedness. No Loan Party shall, and no Loan Party shall permit any of its
Subsidiaries to, directly or indirectly create, incur, assume, permit to exist,
guarantee or otherwise become or remain directly or indirectly liable with
respect to, any Indebtedness, except for Permitted Indebtedness.

7.3 Dispositions. No Loan Party shall, and no Loan Party shall permit any of its
Subsidiaries to, Transfer any of its Property, except for Permitted
Dispositions.

7.4 Change in Name, Location or Executive Office; Change in Business; Change in
Fiscal Year. No Loan Party shall, and no Loan Party shall permit any of its
Subsidiaries to, (a) without Agent’s prior written consent, change its legal
name, its jurisdiction of organization, its organizational structure or type, or
any organizational identification number (if any) assigned by its jurisdiction
of organization, (b) relocate its chief executive office without thirty
(30) days prior written notification to Agent, (c) engage in any business other
than or reasonably related or incidental to the businesses currently engaged in
by such Person, (d) cease to conduct business substantially in the manner
conducted by such Person as of the date of this Agreement (including, without
limitation, terminating the employment of all or substantially all of its
employees) or (e) change its fiscal year end.

7.5 Mergers and Investments. No Loan Party shall, and no Loan Party shall permit
any of its Subsidiaries to, directly or indirectly, (a) merge or consolidate
with or into any other Person (other than mergers of a Subsidiary of Borrower
into Borrower so long as Borrower is the surviving entity), or (b) acquire, own
or make any Investment in or to any Person other than Permitted Investments.

7.6 Restricted Payments. No Loan Party shall, and no Loan Party shall permit any
of its Subsidiaries to, (a) declare or pay any dividends or make any other
distribution or payment on account of or redeem, retire, defease or purchase any
Stock or Stock Equivalent (other than (i) the payment of dividends to Borrower,
(ii) the payment of dividends or distributions payable solely in such Loan
Party’s Stock or Stock Equivalents, (iii) the issuance of Stock upon the
exercise or conversion of Stock Equivalents, and (iv) so long as no Default or
Event of Default is then continuing or would result therefrom, the repurchase of
Borrower’s Stock and Stock Equivalents from current or former officers,
employees, surgeon advisors or directors (or their permitted transferees or
estates) upon their death, disability or termination of employment in an
aggregate amount not to exceed $250,000 in any fiscal year), (b) purchase,
redeem, defease or prepay any principal of, premium, if any, interest or other
amount payable in respect of any Indebtedness (other than with respect to the
Obligations as described in Section 2.5) prior to its scheduled maturity,
(c) purchase or make any payment on or with respect to any Subordinated
Indebtedness, except as expressly permitted by the applicable Subordination
Agreement, (d) pay any management, consulting or similar fees to any Affiliate
or holder of Stock or Stock Equivalents of a Loan Party (other than
(i) director’s fees and reimbursement of actual out of pocket expenses incurred
in connection with attending board of director meetings not to exceed in the
aggregate, with respect to all such items, $400,000 in any fiscal year, and
(ii) bona fide consulting fees on arm’s-length terms paid to such Affiliates for
actual services rendered to the Loan Parties in the ordinary course of business
in an aggregate amount not to exceed $300,000 in any fiscal year) or (e) be a
party to or bound by an agreement that restricts a Loan Party or any Subsidiary
of a Loan Party from paying dividends or otherwise making any payments or
distributions to any Loan Party.

7.7 Transactions with Affiliates. No Loan Party shall, and no Loan Party shall
permit any of its Subsidiaries to, directly or indirectly enter into or permit
to exist any transaction with or for the benefit of any Affiliate of a Loan
Party except for (a) Permitted Investments described in clauses (f) and (j) of
such definition, (b) transactions that are in the ordinary course of such Loan
Party’s or such Subsidiary’s business, upon fair and

 

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reasonable terms that are no more favorable to such Affiliate than would be
obtained in an arm’s length transaction, (c) sales of equity securities of
Borrower in bona fide equity financings for the purpose of raising capital to
the extent such equity financing is not otherwise prohibited under the Loan
Documents; (d) Investments by a Loan Party in another Loan Party to the extent
permitted under Section 7.5 and (e) transactions among Loan Parties.

7.8 Compliance. No Loan Party shall, and no Loan Party shall permit any of its
Subsidiaries to, (a) fail to comply with the laws and regulations described in
clauses (b) or (c) of Section 5.7, (b) use any portion of the Loans to purchase
or carry, become engaged in the business of purchasing or selling, or extend
credit for the purpose of purchasing or carrying Margin Stock, or (c) fail to
meet the minimum funding requirements of ERISA, permit a Reportable Event or
Prohibited Transaction, as defined in ERISA, to occur, fail to comply in any
material respect with the Federal Fair Labor Standards Act, withdraw from
participation in, permit partial or complete termination of, or permit the
occurrence of any other event with respect to, any present pension, profit
sharing and deferred compensation plan which could reasonably be expected to
result in any liability of any Loan Party, including any liability to the
Pension Benefit Guaranty Corporation or its successors or any other Governmental
Authority.

7.9 Amendments to Other Agreements. No Loan Party shall amend, modify or waive
any provision of (a) any Material Agreement (except as provided in clause
(b) below) or any of such Loan Party’s organizational documents, unless the net
effect of such amendment, modification or waiver is not adverse to any Loan
Party, Agent or Lenders, or (b) any document relating to any Subordinated
Indebtedness.

7.10 Financial Covenants.

(a) Unrestricted Cash. From the Closing Date through August 15, 2014, Loan
Parties shall not allow at any time Unrestricted Cash to be less than
$6,000,000, and thereafter, Loan Parties shall not allow at any time
Unrestricted Cash to be less than $9,000,000.

 

8. DEFAULT AND REMEDIES.

8.1 Events of Default. Each of the following shall be an “Event of Default”:

(a) any Loan Party shall fail to pay any principal when due, provided, however,
that an Event of Default shall not occur on account of a failure to pay due
solely to administrative or operational error of Agent if Borrower had the funds
to make the payment when due and makes the payment the Business Day following
Borrower’s knowledge of such failure to pay;

(b) any Loan Party breaches any of its obligations under Section 6.1 (solely as
it relates to maintaining its existence), Section 6.2, Section 6.3, Section 6.4,
Section 6.8(a) and (d), Section 6.10, Section 6.12 or Article 7;

(c) any Loan Party breaches any of its other obligations under any of the Loan
Documents and fails to cure such breach within thirty (30) days after the
earlier of (i) the date on which an officer of such Loan Party becomes aware, or
through the exercise of reasonable diligence should have become aware, of such
failure and (ii) the date on which notice shall have been given to any Loan
Party from Agent or the Requisite Lenders;

(d) any representation, warranty or statement made or deemed made by or on
behalf of any Loan Party in any of the Loan Documents or otherwise in connection
with any of the Obligations shall be incorrect or misleading in any material
respect (or in any respect if qualified by “material” or “Material Adverse
Effect”) when made or deemed made;

(e) (i) service of process is made that seeks to attach any funds of a Loan
Party on deposit in any Deposit Account or Securities Account, (ii) a notice of
Lien, levy, or assessment is filed against any Loan Party’s assets by any
Governmental Authority, and the same under the preceding subclauses (i) and
(ii) are not, within twenty (20) days after the occurrence thereof, discharged
or stayed (whether through the posting of a bond or otherwise), or (iii) any
portion of the assets of the Loan Parties with an aggregate value in excess of
$50,000 is attached, seized, levied on, or comes into possession of a trustee or
receiver;

 

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(f) one or more judgments, orders or decrees shall be rendered against any Loan
Party or any Subsidiary of a Loan Party that exceeds by more than $250,000 any
insurance coverage applicable thereto (to the extent the relevant insurer has
been notified of such claim and has not denied coverage therefor) or one or more
non-monetary judgments, orders or decrees shall be rendered against any Loan
Party or any Subsidiary of a Loan Party that could reasonably be expected to
result in a Material Adverse Effect, and in either case (i) enforcement
proceedings shall have been commenced by any creditor upon any such judgment,
order or decree or (ii) such judgment, order or decree shall not have been
satisfied, vacated or discharged for a period of thirty (30) consecutive days
and there shall not be in effect (by reason of a pending appeal or otherwise)
any stay of enforcement thereof;

(g) (i) any Loan Party or any Subsidiary of a Loan Party shall generally not pay
its debts as such debts become due, shall admit in writing its inability to pay
its debts generally, shall make a general assignment for the benefit of
creditors, or shall cease doing business as a going concern, (ii) any proceeding
shall be instituted by or against any Loan Party or any Subsidiary of a Loan
Party seeking to adjudicate it as bankrupt or insolvent or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief,
composition of it or its debts or any similar order, in each case under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors or
seeking the entry of an order for relief or the appointment of a custodian,
receiver, trustee, conservator, liquidating agent, liquidator, other similar
official or other official with similar powers, in each case for it or for any
substantial part of its Property and, in the case of any such proceedings
instituted against (but not by or with the consent of) such Loan Party or such
Subsidiary, either such proceedings shall remain undismissed or unstayed for a
period of forty-five (45) days or more or any action sought in such proceedings
shall occur, (iii) any Loan Party or any Subsidiary of a Loan Party shall take
any corporate or similar action or any other action to authorize any action
described in clauses (i) or (ii) above, or (iv) if Borrower is a public company,
Borrower’s Stock ceases to be traded on a major United States stock exchange;

(h) a Material Adverse Effect has occurred;

(i) (i) any provision of any Loan Document shall fail to be valid and binding
on, or enforceable against, a Loan Party that is a party thereto, (ii) any Loan
Document purporting to grant a security interest to secure any Obligation shall
fail to create a valid and enforceable security interest on any Collateral
purported to be covered thereby or such security interest shall fail or cease to
be a perfected Lien with the priority required in the relevant Loan Document, or
(iii) the holder of any Subordinated Indebtedness shall breach the terms of the
applicable Subordination Agreement, or any subordination provision set forth in
the Subordination Agreement or any other document evidencing or relating to any
Subordinated Indebtedness shall, in whole or in part, terminate or otherwise
fail or cease to be valid and binding on, or enforceable against, any agent for
or holder of the Subordinated Indebtedness (or such Person shall so state in
writing), or any Loan Party shall state in writing that any of the events
described in clauses (i), (ii) or (iii) above shall have occurred;

(j) (i) any Loan Party or any Subsidiary of a Loan Party defaults under any
Material Agreement (after any applicable grace period contained therein), and as
a result of such default the other party thereto has the right to terminate such
Material Agreement, (ii) (A) any Loan Party or any Subsidiary of a Loan Party
fails to make (after any applicable grace period) any payment when due (whether
due because of scheduled maturity, required prepayment, acceleration, demand or
otherwise) on any Material Indebtedness, (B) any other event shall occur or
condition shall exist under any contractual obligation relating to any Material
Indebtedness, if the effect of such event or condition is to accelerate, or to
permit the acceleration of (without regard to any subordination terms with
respect thereto), the maturity of such Material Indebtedness or (C) any Material
Indebtedness shall become or be declared to be due and payable, or be required
to be prepaid, redeemed, defeased or repurchased (other than by a regularly
scheduled required prepayment), prior to the stated maturity thereof, or
(iii) any Loan Party defaults (beyond any applicable grace period) under any
obligation for payments due or otherwise under any lease agreement that meets
the criteria for the requirement of an Access Agreement under Section 6.6 and,
as a result thereof, the landlord thereunder has the right to terminate such
lease agreement;

(k) (i) any of the chief executive officer, the chief financial officer or the
chief technology officer of Borrower shall cease to be involved in the day to
day operations (including research development) or management of the business of
Borrower, unless a successor of such officer (including an interim replacement)
is appointed by the Board of Directors of Borrower and employed within ninety
(90) days of such cessation of involvement, and such successor is in compliance
with OFAC, money-laundering, anti-terrorism, SEC, drug/device laws and
regulations, and other similar regulations (in each case, to the extent
applicable to a natural Person), (ii)

 

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during any period of twelve consecutive calendar months, individuals who at the
beginning of such period constituted the Board of Directors of Borrower
(together with any new directors whose election or appointment by the then
current members of the Board of Directors of Borrower, or whose nomination for
election by the directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election was
previously so approved was approved by a vote of at least a majority of the
Board of Directors of Borrower or by a plurality of votes cast by the
stockholders of Borrower) cease for any reason other than death or disability to
constitute a majority of the directors then in office; (iii) the acquisition,
directly or indirectly, by any Person or group (as such term is used in
Section 13(d)(3) of the 1934 Act) of more than thirty-five percent (35%) of the
voting Stock of Borrower, or (iv) the occurrence of any “change of control” or
any term of similar effect under any Subordinated Indebtedness document;

(l) Any event occurs, that is not insured or insurable, as a result of which
revenue-producing activities cease or are substantially curtailed at facilities
of any Loan Party generating more than 33% of the Loan Parties’ consolidated
revenues for the fiscal year preceding such event and such cessation or
curtailment continues for more than one hundred twenty (120) days; or

(m) (i) The FDA initiates a Regulatory Action or any other enforcement action
against any Loan Party or any supplier of a Loan Party that causes any Loan
Party to recall, withdraw, remove or discontinue marketing any of its products;
(ii) the FDA issues a warning letter to any Loan Party with respect to any of
its activities or products which could reasonably be expected to have a Material
Adverse Effect; (iii) any Loan Party conducts a mandatory or voluntary recall
which could reasonably be expected to result in liability and expense to the
Loan Parties of $250,000 or more; (iv) any Loan Party enters into a settlement
agreement with the FDA that results in aggregate liability as to any single or
related series of transactions, incidents or conditions, of $250,000 or more, or
that could reasonably be expected to have a Material Adverse Effect; or (v) the
FDA revokes any authorization or permission granted under any Registration, or
any Loan Party withdraws any Registration, that could reasonably be expected to
have a Material Adverse Effect.

8.2 Lender Remedies. Upon the occurrence and during the continuance of any Event
of Default, upon the written request of the Requisite Lenders, Agent shall
terminate or suspend any Commitment (if outstanding) and/or declare any or all
of the Obligations to be immediately due and payable, without demand or notice
to any Loan Party, and the accelerated Obligations shall bear interest at the
Default Rate, provided that, upon the occurrence of any Event of Default
specified in Section 8.1(g), the Obligations shall be automatically accelerated.
After the occurrence and during the continuance of an Event of Default, Agent
shall have (on behalf of itself and Lenders) all of the rights and remedies of a
secured party under the UCC and under any other applicable Requirement of Law.
Without limiting the foregoing, upon the occurrence and during the continuance
of an Event of Default, (a) at the written request of the Requisite Lenders,
Agent shall, or (b) upon the termination of the Commitments or the acceleration
of the Obligations pursuant to this Section 8.2, or upon receipt of written
request of the Requisite Lenders to exercise remedies generally, Agent may,
(w) notify any Account Debtor or any obligor on any instrument which constitutes
part of the Collateral to make payments to Agent (for the benefit of itself and
Lenders), (x) with or without legal process, enter any premises where the
Collateral may be and take possession of and remove the Collateral from the
premises or store it on the premises, (y) sell the Collateral at public or
private sale, in whole or in part, and have the right to bid and purchase at
such sale, or (z) lease or otherwise dispose of all or part of the Collateral,
applying proceeds from such disposition to the Obligations in accordance with
Section 8.3. If requested by Agent, Loan Parties shall promptly assemble the
Collateral and make it available to Agent at a place to be designated by Agent.
Agent may also render any or all of the Collateral unusable at a Loan Party’s
premises and may dispose of such Collateral on such premises without liability
for rent or costs. Any notice that Agent is required to give to a Loan Party
under the UCC of the time and place of any public sale or the time after which
any private sale or other intended disposition of the Collateral is to be made
shall be deemed to constitute reasonable notice if such notice is given in
accordance with this Agreement at least ten (10) days prior to such action.
Effective only upon the occurrence and during the continuance of an Event of
Default, each Loan Party hereby irrevocably appoints Agent (and any of Agent’s
Related Persons) as such Loan Party’s true and lawful attorney to: (i) take any
of the actions specified above in this paragraph; (ii) endorse such Loan Party’s
name on any checks or other forms of payment or security that may come into
Agent’s possession; (iii) settle and adjust disputes and claims respecting the
Accounts directly with Account Debtors, for amounts and upon terms which Agent
determines to be reasonable; and (iv) do such other and further acts and deeds
in the name of such Loan Party that Agent may deem necessary or desirable to
enforce its rights in or to any of the Collateral or to perfect or better
perfect Agent’s security interest (on behalf of itself and Lenders) in any of
the Collateral. For the purpose of enabling Agent to exercise rights and

 

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remedies under this Section 8.2 at such time as Agent shall be lawfully entitled
to exercise such rights and remedies, each Loan Party hereby grants to Agent (on
behalf of itself and Lenders), (A) an irrevocable, nonexclusive, worldwide
license (exercisable without payment of royalty or other compensation to such
Loan Party), to use or sublicense any Intellectual Property now owned or
hereafter acquired by such Loan Party and including in such license access to
all media in which any of the licensed items may be recorded or stored and to
all computer software and programs used for the compilation or printout thereof
and (B) an irrevocable license (without payment of rent or other compensation to
such Loan Party) to use, operate and occupy all real property owned, operated,
leased, subleased or otherwise occupied by such Loan Party. The appointment of
Agent as each Loan Party’s attorney in fact is a power coupled with an interest
and is irrevocable until the Termination Date. Notwithstanding anything to the
contrary contained in this Section 8.2, Agent shall not be required to obtain
the consent of any Lender to take any action to protect, preserve or take
possession of any Collateral that is subject to an Exigent Circumstance.

8.3 Application of Proceeds. Proceeds from any Transfer of the Collateral,
including, without limitation, the Intellectual Property (other than Permitted
Dispositions) and all payments made to or Proceeds of Collateral, including,
without limitation, Intellectual Property received by Agent during the
continuance of an Event of Default shall be applied as follows: (a) first, to
pay all fees, costs, indemnities, reimbursements and expenses then due to Agent
under the Loan Documents in its capacity as Agent under the Loan Documents,
until paid in full in cash, (b) second, to pay all fees, costs, indemnities,
reimbursements and expenses then due to Lenders under the Loan Documents in
accordance with their respective Pro Rata Shares, until paid in full in cash,
(c) third, to pay all interest on the Loans then due to Lenders in accordance
with their respective Pro Rata Shares (other than interest, fees, expenses and
other amounts accrued after the commencement of any proceeding referred to in
Section 8.1(g) if a claim for such amounts is not allowable in such proceeding),
until paid in full in cash, (d) fourth, to pay all principal on the Loans then
due to Lenders in accordance with their respective Pro Rata Shares, until paid
in full in cash, (e) fifth, to pay all other Obligations then due to Agent and
Lenders in accordance with their respective Pro Rata Shares (including, without
limitation, all interest, fees, expenses and other amounts accrued after the
commencement of any proceeding referred to in Section 8.1(g) whether or not a
claim for such amounts is allowable in such proceeding), until paid in full in
cash, and (f) sixth, to Borrower or as otherwise required by any Requirement of
Law. Borrower shall remain fully liable for any deficiency. Each Loan Party
irrevocably waives the right to direct the application during the continuance of
an Event of Default of any and all payments in respect of any Obligation and any
proceeds of Collateral, including, without limitation, the Intellectual
Property.

 

9. THE AGENT.

9.1 Appointment of Agent.

(a) Each Lender hereby appoints HTGC (together with any successor Agent pursuant
to Section 9.7) as Agent under the Loan Documents and authorizes Agent to
(i) execute and deliver the Loan Documents and accept delivery thereof on its
behalf from any Loan Party, (ii) take such action on its behalf and to exercise
all rights, powers and remedies and perform the duties as are expressly
delegated to Agent under such Loan Documents and (iii) exercise such powers as
are reasonably incidental thereto.

(b) Without limiting the generality of clause (a) above, Agent shall have the
sole and exclusive right and authority (to the exclusion of the Lenders), and is
hereby authorized, to (i) act as the disbursing and collecting agent for the
Lenders with respect to all payments and collections arising in connection with
the Loan Documents (including in any other bankruptcy, insolvency or similar
proceeding), and each Person making any payment in connection with any Loan
Document to any Lender is hereby authorized to make such payment to Agent,
(ii) file and prove claims and file other documents necessary or desirable to
allow the claims of Agent and Lenders with respect to any Obligation in any
bankruptcy, insolvency or similar proceeding (but not to vote, consent or
otherwise act on behalf of such Lender), (iii) act as collateral agent for Agent
and each Lender for purposes of the perfection of all Liens created by the Loan
Documents and all other purposes stated therein, (iv) manage, supervise and
otherwise deal with the Collateral, (v) take such other action as is necessary
or desirable to maintain the perfection and priority of the Liens created or
purported to be created by the Loan Documents, (vi) except as may be otherwise
specified in any Loan Document, exercise all remedies given to Agent and the
other Lenders with respect to the Loan Parties and/or the Collateral, whether
under the Loan Documents, applicable Requirements of Law or otherwise and
(vii) execute any amendment, consent or waiver under the Loan Documents on
behalf of any Lender that has consented in writing to such amendment, consent or
waiver; provided, however,

 

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that Agent hereby appoints, authorizes and directs each Lender to act as
collateral sub-agent for Agent and the Lenders for purposes of the perfection of
all Liens with respect to the Collateral, including any Deposit Account
maintained by a Loan Party with, and cash and Cash Equivalents held by, such
Lender, and may further authorize and direct the Lenders to take further actions
as collateral sub-agents for purposes of enforcing such Liens or otherwise to
transfer the Collateral subject thereto to Agent, and each Lender hereby agrees
to take such further actions to the extent, and only to the extent, so
authorized and directed. Agent may, upon any term or condition it specifies,
delegate or exercise any of its rights, powers and remedies under, and delegate
or perform any of its duties or any other action with respect to, any Loan
Document by or through any trustee, co-agent, employee, attorney-in-fact and any
other Person (including any Lender). Any such Person shall benefit from this
Article 9 to the extent provided by Agent.

(c) Under the Loan Documents, Agent (i) is acting solely on behalf of the
Lenders, with duties that are entirely administrative in nature, notwithstanding
the use of the defined term “Agent”, the terms “agent”, “Agent” and “collateral
agent” and similar terms in any Loan Document to refer to Agent, which terms are
used for title purposes only, (ii) is not assuming any obligation under any Loan
Document other than as expressly set forth therein or any role as agent,
fiduciary or trustee of or for any Lender or any other Person and (iii) shall
have no implied functions, responsibilities, duties, obligations or other
liabilities under any Loan Document, and each Lender, by accepting the benefits
of the Loan Documents, hereby waives and agrees not to assert any claim against
Agent based on the roles, duties and legal relationships expressly disclaimed in
clauses (i) through (iii) above. Except as expressly set forth in the Loan
Documents, Agent shall not have any duty to disclose, and shall not be liable
for failure to disclose, any information relating to any Loan Party or any of
its Subsidiaries that is communicated to or obtained by HTGC or any of its
Affiliates in any capacity.

9.2 Binding Effect; Use of Discretion; E-Systems.

(a) Each Lender, by accepting the benefits of the Loan Documents, agrees that
(i) any action taken by Agent or Requisite Lenders (or, if expressly required in
any Loan Document, a greater proportion of the Lenders) in accordance with the
provisions of the Loan Documents, (ii) any action taken by Agent in reliance
upon the instructions of Requisite Lenders (or, where so required, such greater
proportion) and (iii) the exercise by Agent or Requisite Lenders (or, where so
required, such greater proportion) of the powers set forth herein or therein,
together with such other powers as are reasonably incidental thereto, shall be
authorized and binding upon all of Lenders.

(b) If Agent shall request instructions from Requisite Lenders or all affected
Lenders with respect to any act or action (including failure to act) in
connection with any Loan Document, then Agent shall be entitled to refrain from
such act or taking such action unless and until Agent shall have received
instructions from Requisite Lenders or all affected Lenders, as the case may be,
and Agent shall not incur liability to any Person by reason of so refraining.
Agent shall be fully justified in failing or refusing to take any action under
any Loan Document (i) if such action would, in the opinion of Agent, be contrary
to any Requirement of Law or any Loan Document, (ii) if such action would, in
the opinion of Agent, expose Agent to any potential liability under any
Requirement of Law or (iii) if Agent shall not first be indemnified to its
satisfaction against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action. Without limiting
the foregoing, no Lender shall have any right of action whatsoever against Agent
as a result of Agent acting or refraining from acting under any Loan Document in
accordance with the instructions of Requisite Lenders or all affected Lenders,
as applicable.

(c) Agent is hereby authorized by each Loan Party and each Lender to establish
procedures (and to amend such procedures from time to time) to facilitate
administration and servicing of the Loans and other matters incidental thereto.
Without limiting the generality of the foregoing, Agent is hereby authorized to
establish procedures to make available or deliver, or to accept, notices,
documents and similar items on, by posting to or submitting and/or completion,
on E-Systems. Each Loan Party and each Lender acknowledges and agrees that the
use of transmissions via an E-System or electronic mail is not necessarily
secure and that there are risks associated with such use, including risks of
interception, disclosure and abuse, and each Loan Party and each Lender assumes
and accepts such risks by hereby authorizing the transmission via E-Systems or
electronic mail. Each “e-signature” on any such posting shall be deemed
sufficient to satisfy any requirement for a “signature”, and each such posting
shall be deemed sufficient to satisfy any requirement for a “writing”, in each
case including pursuant to any Loan Document, any applicable provision of any
UCC, the federal Uniform Electronic Transactions Act, the Electronic

 

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Signatures in Global and National Commerce Act and any substantive or procedural
Requirement of Law governing such subject matter. All uses of an E-System shall
be governed by and subject to, in addition to this Section, the separate terms,
conditions and privacy policy posted or referenced in such E-System (or such
terms, conditions and privacy policy as may be updated from time to time,
including on such E-System) and related contractual obligations executed by
Agent, Loan Parties and/or Lenders in connection with the use of such E-System.
ALL E-SYSTEMS AND ELECTRONIC TRANSMISSIONS SHALL BE PROVIDED “AS IS” AND “AS
AVAILABLE”. NO REPRESENTATION OR WARRANTY OF ANY KIND IS MADE BY AGENT, ANY
LENDER OR ANY OF THEIR RELATED PERSONS IN CONNECTION WITH ANY E-SYSTEMS.

9.3 Agent’s Reliance, Etc. Agent may, without incurring any liability hereunder,
(a) treat the payee of any Note as its holder until such Note has been assigned
in accordance with Section 10.1, (b) consult with any of its Related Persons
and, whether or not selected by it, any other advisors, accountants and other
experts (including advisors to, and accountants and experts engaged by, any Loan
Party) and (c) rely and act upon any document and information (including those
transmitted by electronic transmission) and any telephone message or
conversation, in each case believed by it to be genuine and transmitted, signed
or otherwise authenticated by the appropriate parties. None of Agent and its
Related Persons shall be liable for any action taken or omitted to be taken by
any of them under or in connection with any Loan Document, and each Lender and
each Loan Party hereby waives and shall not assert (and each Loan Party shall
cause its Subsidiaries to waive and agree not to assert) any right, claim or
cause of action based thereon, except to the extent of liabilities resulting
from the gross negligence or willful misconduct of Agent or, as the case may be,
such Related Person (each as determined in a final, non-appealable judgment of a
court of competent jurisdiction) in connection with the duties of Agent
expressly set forth herein. Without limiting the foregoing, Agent: (i) shall not
be responsible or otherwise incur liability for any action or omission taken in
reliance upon the instructions of the Requisite Lenders or for the actions or
omissions of any of its Related Persons, except to the extent that a court of
competent jurisdiction determines in a final non-appealable judgment that Agent
acted with gross negligence or willful misconduct in the selection of such
Related Person; (ii) shall not be responsible to any Lender or other Person for
the due execution, legality, validity, enforceability, effectiveness,
genuineness, sufficiency or value of, or the attachment, perfection or priority
of any Lien created or purported to be created under or in connection with, any
Loan Document; (iii) makes no warranty or representation, and shall not be
responsible, to any Lender or other Person for any statement, document,
information, representation or warranty made or furnished by or on behalf of any
Loan Party or any Related Person of any Loan Party in connection with any Loan
Document or any transaction contemplated therein or any other document or
information with respect to any Loan Party, whether or not transmitted or
(except for documents expressly required under any Loan Document to be
transmitted to the Lenders) omitted to be transmitted by Agent, including as to
completeness, accuracy, scope or adequacy thereof, or for the scope, nature or
results of any due diligence performed by Agent in connection with the Loan
Documents; and (iv) shall not have any duty to ascertain or to inquire as to the
performance or observance of any provision of any Loan Document, whether any
condition set forth in any Loan Document is satisfied or waived, as to the
financial condition of any Loan Party or as to the existence or continuation or
possible occurrence or continuation of any Default or Event of Default, and
shall not be deemed to have notice or knowledge of such occurrence or
continuation unless it has received a notice from Borrower or any Lender
describing such Default or Event of Default that is clearly labeled “notice of
default” (in which case Agent shall promptly give notice of such receipt to all
Lenders, provided that Agent shall not be liable to any Lender for any failure
to do so, except to the extent that such failure is attributable to Agent’s
gross negligence or willful misconduct as determined by a final non-appealable
judgment of a court of competent jurisdiction); and, for each of the items set
forth in clauses (i) through (iv) above, each Lender and each Loan Party hereby
waives and agrees not to assert (and each Loan Party shall cause its
Subsidiaries to waive and agree not to assert) any right, claim or cause of
action it might have against Agent based thereon.

9.4 Agent Individually. Agent and its Affiliates may make loans and other
extensions of credit to, acquire Stock and Stock Equivalents of, engage in any
kind of business with, any Loan Party or Affiliate thereof as though it were not
acting as Agent and may receive separate fees and other payments therefor. To
the extent Agent or any of its Affiliates makes any Loans or otherwise becomes a
Lender hereunder, it shall have and may exercise the same rights and powers
hereunder and shall be subject to the same obligations and liabilities as any
other Lender and the terms “Lender”, “Requisite Lender” and any similar terms
shall, except where otherwise expressly provided in any Loan Document, include,
without limitation, Agent or such Affiliate, as the case may be, in its
individual capacity as Lender, or as one of the Requisite Lenders.

 

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9.5 Lender Credit Decision; Agent Report. Each Lender acknowledges that it
shall, independently and without reliance upon Agent, any Lender or any of their
Related Persons or upon any document solely or in part because such document was
transmitted by Agent or any of its Related Persons, conduct its own independent
investigation of the financial condition and affairs of each Loan Party and make
and continue to make its own credit decisions in connection with entering into,
and taking or not taking any action under, any Loan Document or with respect to
any transaction contemplated in any Loan Document, in each case based on such
documents and information as it shall deem appropriate. Except for documents
expressly required by any Loan Document to be transmitted by Agent to the
Lenders, Agent shall not have any duty or responsibility to provide any Lender
with any credit or other information concerning the business, prospects,
operations, Property, financial and other condition or creditworthiness of any
Loan Party or any Affiliate of any Loan Party that may come in to the possession
of Agent or any of its Related Persons. Each Lender agrees that is shall not
rely on any field examination, audit or other report provided by Agent or its
Related Persons (an “Agent Report”). Each Lender further acknowledges that any
Agent Report (a) is provided to the Lenders solely as a courtesy, without
consideration, and based upon the understanding that such Lender will not rely
on such Agent Report, (b) was prepared by Agent or its Related Persons based
upon information provided by the Loan Parties solely for Agent’s own internal
use, and (c) may not be complete and may not reflect all information and
findings obtained by Agent or its Related Persons regarding the operations and
condition of the Loan Parties. Neither Agent nor any of its Related Persons
makes any representations or warranties of any kind with respect to (i) any
existing or proposed financing, (ii) the accuracy or completeness of the
information contained in any Agent Report or in any related documentation,
(iii) the scope or adequacy of Agent’s and its Related Persons’ due diligence,
or the presence or absence of any errors or omissions contained in any Agent
Report or in any related documentation, and (iv) any work performed by Agent or
Agent’s Related Persons in connection with or using any Agent Report or any
related documentation. Neither Agent nor any of its Related Persons shall have
any duties or obligations in connection with or as a result of any Lender
receiving a copy of any Agent Report. Without limiting the generality of the
forgoing, neither Agent nor any of its Related Persons shall have any
responsibility for the accuracy or completeness of any Agent Report, or the
appropriateness of any Agent Report for any Lender’s purposes, and shall have no
duty or responsibility to correct or update any Agent Report or disclose to any
Lender any other information not embodied in any Agent Report, including any
supplemental information obtained after the date of any Agent Report. Each
Lender releases, and agrees that it will not assert, any claim against Agent or
its Related Persons that in any way relates to any Agent Report or arises out of
any Lender having access to any Agent Report or any discussion of its contents,
and agrees to indemnify and hold harmless Agent and its Related Persons from all
claims, liabilities and expenses relating to a breach by any Lender arising out
of such Lender’s access to any Agent Report or any discussion of its contents.

9.6 Indemnification. Each Lender agrees to reimburse Agent and each of its
Related Persons (to the extent not reimbursed by any Loan Party) promptly upon
demand for its Pro Rata Share of any out-of-pocket costs and expenses
(including, without limitation, fees, charges and disbursements of financial,
legal and other advisors and any taxes or insurance paid in the name of, or on
behalf of, any Loan Party) incurred by Agent or any of its Related Persons in
connection with the preparation, syndication, execution, delivery,
administration, modification, amendment, consent, waiver or enforcement of, or
the taking of any other action (whether through negotiations, through any
work-out, bankruptcy, restructuring or other legal or other proceeding
(including, without limitation, preparation for and/or response to any subpoena
or request for document production relating thereto) or otherwise) in respect
of, or legal advice with respect to, its rights or responsibilities under, any
Loan Document. Each Lender further agrees to indemnify Agent and each of its
Related Persons (to the extent not reimbursed by any Loan Party), ratably
according to its Pro Rata Share, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever (including, to the
extent not indemnified by the applicable Lender, taxes, interests and penalties
imposed for not properly withholding or backup withholding on payments made to
or for the account of any Lender) that may be imposed on, incurred by, or
asserted against Agent or any of its Related Persons in any matter relating to
or arising out of, in connection with or as a result of any Loan Document or any
other act, event or transaction related, contemplated in or attendant to any
such document, or, in each case, any action taken or omitted to be taken by
Agent or any of its Related Persons under or with respect to the foregoing;
provided that no Lender shall be liable to Agent or any of its Related Persons
under this Section 9.6 to the extent such liability has resulted from the gross
negligence or willful misconduct of Agent or, as the case may be, such Related
Person, as determined by a final non-appealable judgment of a court of competent
jurisdiction. To the extent required by any applicable Requirement of Law, Agent
may withhold from any payment to any Lender under a Loan Document an amount
equal to any applicable withholding tax. If the Internal Revenue Service or any
other Governmental Authority asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender for any
reason, or if Agent reasonably

 

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determines that it was required to withhold taxes from a prior payment to or for
the account of any Lender but failed to do so, such Lender shall promptly
indemnify Agent fully for all amounts paid, directly or indirectly, by Agent as
tax or otherwise, including penalties and interest, and together with all
expenses incurred by Agent. Agent may offset against any payment to any Lender
under a Loan Document, any applicable withholding tax that was required to be
withheld from any prior payment to such Lender but which was not so withheld, as
well as any other amounts for which Agent is entitled to indemnification from
such Lender under the immediately preceding sentence of this Section 9.6.

9.7 Successor Agent. Agent may resign at any time by delivering notice of such
resignation to the Lenders and Borrower, effective on the date set forth in such
notice or, if no such date is set forth therein, upon the date such notice shall
be effective, in accordance with the terms of this Section 9.7. If Agent
delivers any such notice, the Requisite Lenders shall have the right to appoint
a successor Agent. If, after 30 days after the date of the retiring Agent’s
notice of resignation, no successor Agent has been appointed by the Requisite
Lenders that has accepted such appointment, then the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent from among the Lenders.
Effective immediately upon its resignation, (a) the retiring Agent shall be
discharged from its duties and obligations under the Loan Documents, (b) the
Lenders shall assume and perform all of the duties of Agent until a successor
Agent shall have accepted a valid appointment hereunder, (c) the retiring Agent
and its Related Persons shall no longer have the benefit of any provision of any
Loan Document other than with respect to any actions taken or omitted to be
taken while such retiring Agent was, or because such Agent had been, validly
acting as Agent under the Loan Documents, and (iv) subject to its rights under
Section 9.2(b), the retiring Agent shall take such action as may be reasonably
necessary to assign to the successor Agent its rights as Agent under the Loan
Documents. Effective immediately upon its acceptance of a valid appointment as
Agent, a successor Agent shall succeed to, and become vested with, all the
rights, powers, privileges and duties of the retiring Agent under the Loan
Documents.

9.8 Release of Collateral. Each Lender hereby consents to the release and hereby
directs Agent to release (or in the case of (b)(ii) below, release or
subordinate) the following:

(a) any Guarantor if all of the Stock of such Subsidiary owned by any Loan Party
is sold or transferred in a transaction permitted under the Loan Documents
(including pursuant to a valid waiver or consent), to the extent that, after
giving effect to such transaction, such Subsidiary would not be required to
guaranty any Obligations pursuant to any Loan Document; and

(b) any Lien held by Agent for the benefit of itself and the Lenders against
(i) any Collateral that is sold or otherwise disposed of by a Loan Party in a
transaction permitted by the Loan Documents (including pursuant to a valid
waiver or consent), (ii) any Collateral subject to a Lien that is expressly
permitted under clause (d) of the definition of the term “Permitted Lien” and
(iii) all of the Collateral and all Loan Parties, upon (A) termination of all of
the Commitments, (B) payment in full in cash of all of the Obligations (other
than contingent indemnity obligations that survive termination of this Agreement
and for which no claim has been asserted) that Agent has theretofore been
notified in writing by the holder of such Obligation are then due and payable,
and (C) to the extent requested by Agent, receipt by Agent and Lenders of
liability releases from the Loan Parties in form and substance reasonably
acceptable to Agent (the satisfaction of the conditions in this clause (iii),
the “Termination Date”).

9.9 Setoff and Sharing of Payments. In addition to any rights now or hereafter
granted under any applicable Requirement of Law and not by way of limitation of
any such rights, upon the occurrence and during the continuance of any Event of
Default and subject to Section 9.10(d), each Lender is hereby authorized at any
time or from time to time upon the direction of Agent, without notice to any
Loan Party or any other Person, any such notice being hereby expressly waived,
to setoff and to appropriate and to apply any and all balances held by it at any
of its offices for the account of the Loan Parties (regardless of whether such
balances are then due to the Loan Parties) and any other properties or assets at
any time held or owing by that Lender or that holder to or for the credit or for
the account of any Loan Party against and on account of any of the Obligations
that are not paid when due. Any Lender exercising a right of setoff or otherwise
receiving any payment on account of the Obligations in excess of its Pro Rata
Share thereof shall purchase for cash (and the other Lenders or holders shall
sell) such participations in each such other Lender’s or holder’s Pro Rata Share
of the Obligations as would be necessary to cause such Lender to share the
amount so offset or otherwise received with each other Lender or holder in
accordance with their respective Pro Rata Shares of the Obligations. Each Loan
Party agrees, to the fullest extent permitted by law, that

 

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(a) any Lender may exercise its right to offset with respect to amounts in
excess of its Pro Rata Share of the Obligations and may purchase participations
in accordance with the preceding sentence and (b) any Lender so purchasing a
participation in the Loans made or other Obligations held by other Lenders or
holders may exercise all rights of offset, bankers’ lien, counterclaim or
similar rights with respect to such participation as fully as if such Lender or
holder were a direct holder of the Loans and the other Obligations in the amount
of such participation. Notwithstanding the foregoing, if all or any portion of
the offset amount or payment otherwise received is thereafter recovered from the
Lender that has exercised the right of offset, the purchase of participations by
that Lender shall be rescinded and the purchase price restored without interest.

9.10 Advances; Payments; Actions in Concert.

(a) Advances; Payments. If Agent receives any payment with respect to a Term
Loan for the account of Lenders on or prior to 2:00 p.m. (New York time) on any
Business Day, Agent shall pay to each applicable Lender such Lender’s Pro Rata
Share of such payment on such Business Day. If Agent receives any payment with
respect to a Term Loan for the account of Lenders after 2:00 p.m. (New York
time) on any Business Day, Agent shall pay to each applicable Lender such
Lender’s Pro Rata Share of such payment on the next Business Day.

(b) Return of Payments.

(i) If Agent pays an amount to a Lender under this Agreement in the belief or
expectation that a related payment has been or will be received by Agent from a
Loan Party and such related payment is not received by Agent, then Agent will be
entitled to recover such amount (including interest accruing on such amount at
the rate otherwise applicable to such Obligation) from such Lender on demand
without setoff, counterclaim or deduction of any kind.

(ii) If Agent determines at any time that any amount received by Agent under any
Loan Document must be returned to a Loan Party or paid to any other Person
pursuant to any insolvency law or otherwise, then, notwithstanding any other
term or condition of any Loan Document, Agent will not be required to distribute
any portion thereof to any Lender. In addition, each Lender will repay to Agent
on demand any portion of such amount that Agent has distributed to such Lender,
together with interest at such rate, if any, as Agent is required to pay to a
Loan Party or such other Person, without setoff, counterclaim or deduction of
any kind and Agent will be entitled to setoff against future distributions to
such Lender any such amounts (with interest) that are not repaid on demand.

(c) Actions in Concert. Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights arising out of any Loan
Document (including exercising any rights of setoff) without first obtaining the
prior written consent of Agent or Requisite Lenders, it being the intent of
Lenders that any such action to protect or enforce rights under any Loan
Document shall be taken in concert and at the direction or with the consent of
Agent or Requisite Lenders.

 

10. MISCELLANEOUS.

10.1 Assignment.

(a) Each Lender may sell, transfer or assign, at any time or times, all or a
portion of its rights and obligations hereunder and under the other Loan
Documents (including, without limitation, all or a portion of its Commitments
and its rights and obligations with respect to its Loans) to any Qualified
Assignee; provided, however, that any such sale, transfer or assignment shall
(i) require the execution of an assignment agreement in form and substance
reasonably satisfactory to, and acknowledged by, Agent (an “Assignment
Agreement”), (ii) be in an amount of not less than $1,000,000, unless such
assignment is made to an existing Lender or an Affiliate of an existing Lender
or is of the assignor’s (together with its Affiliates’) entire interest in such
facility or is made with the prior written consent of Agent, (iii) unless
otherwise agreed to by Agent, be in an equal proportion of such Lender’s Terms
Loan and Term Loan Commitment, and (iv) include a payment to Agent of an
assignment fee of $3,500 (unless otherwise agreed by Agent). In the case of an
assignment by a Lender under this Section 10.1(a), the

 

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assignee shall have, to the extent of such assignment, the same rights, benefits
and obligations as all other Lenders hereunder. The assigning Lender shall be
relieved of its obligations hereunder with respect to the assigned portion of
its Commitments and Loans from and after the date of such assignment. Borrower
hereby acknowledges and agrees that any assignment shall give rise to a direct
obligation of Borrower to the assignee and that the assignee shall be considered
to be a “Lender”. In the event any Lender assigns or otherwise transfers all or
any part of the Commitments or Loans, Borrower shall, upon the assignee’s or the
assignor’s request, execute new Notes in exchange for the Notes, if any, being
assigned. Agent may amend Schedule A to this Agreement to reflect assignments
made in accordance with this Section 10.1.

(b) In addition to the other rights provided in this Section 10.1, each Lender
may, without notice to or consent from any other Person, sell participations to
one or more Persons in or to all or a portion of its rights and obligations
under the Loan Documents (including all of its rights and obligations with
respect to the Loans); provided, however, that, whether as a result of any term
of any Loan Document or of such participation, (i) no such participant shall
have a commitment, or be deemed to have made an offer to commit, to make any
Loan hereunder, and, no such participant shall be liable for any obligation of
such Lender hereunder, (ii) such Lender’s rights and obligations, and the rights
and obligations of the Loan Parties and Agent and other Lenders towards such
Lender, under any Loan Document shall remain unchanged and each other party
hereto shall continue to deal solely with such Lender, which shall remain the
holder of the Obligations, and in no case shall a participant have the right to
enforce any of the terms of any Loan Document, and (iii) the consent of such
participant shall not be required (either directly, as a restraint on such
Lender’s ability to consent hereunder or otherwise) for any amendments, waivers
or consents with respect to any Loan Document or to exercise or refrain from
exercising any powers or rights such Lender may have under or in respect of the
Loan Documents (including the right to enforce or direct enforcement of the
Obligations), except for those described in clauses (ii), (iii) and (iv) of
Section 10.6(a).

(c) In addition to the other rights provided in this Section 10.1, each Lender
may grant a security interest in, or otherwise assign as collateral, any of its
rights under this Agreement, whether now owned or hereafter acquired (including
rights to payments of principal or interest on the Loans), to (A) any federal
reserve bank (pursuant to Regulation A of the Federal Reserve Board), without
notice to Agent or (B) any holder of, or trustee for the benefit of the holders
of, such Lender’s Indebtedness or equity securities, by notice to Agent;
provided, however, that no such holder or trustee, whether because of such grant
or assignment or any foreclosure thereon (unless such foreclosure is made
through an assignment in accordance with clause (a) above), shall be entitled to
any rights of such Lender hereunder and no such Lender shall be relieved of any
of its obligations hereunder.

10.2 Notices. All notices or other communications given in connection with the
Loan Documents shall be in writing, shall be addressed to the parties at their
respective addresses set forth on the signature pages hereto below such parties’
name or in the most recent Assignment Agreement executed by any Lender (unless
and until a different address may be specified in a written notice to the other
party delivered in accordance with this Section 10.2), and shall be deemed given
(a) on the date of receipt if delivered by hand, (b) on the date of sender’s
receipt of confirmation of proper transmission if sent by facsimile
transmission, (c) on the next Business Day after being sent by a
nationally-recognized overnight courier, (d) on the fourth Business Day after
being sent by registered or certified mail, postage prepaid, (e) on the date of
proper transmission if sent by electronic mail, provided that transmissions may
be made by electronic mail only for notices or other communications if such
transmission is specifically authorized in a Loan Document and such transmission
is delivered in compliance with procedures of Agent applicable at the time and
previously communicated to Borrower, or (f) on the later of the Business Day of
such posting and the Business Day access to such posting is given to the
recipient thereof in accordance with the standard procedures applicable to such
E-System, if posted to any E-System approved by or set-up by or at the direction
of Agent.

10.3 Payment of Fees and Expenses. Loan Parties agree, jointly and severally, to
pay or reimburse upon demand all reasonable fees, costs and expenses incurred by
Agent and Lenders in connection with (a) the investigation, preparation,
negotiation, execution, administration of, or any amendment, modification,
waiver or termination of, any Loan Document, (b) any legal advice relating to
Agent’s rights or responsibilities under any Loan Document, (c) the
administration of the Loans and the facilities hereunder and any other
transaction contemplated under any Loan Document and (d) the enforcement,
assertion, defense or preservation of Agent’s and Lenders’ rights and remedies
under the Loan Documents, including, without limitation, preparation for and/or

 

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response to any subpoena or request for document production relating thereto, in
each case of clauses (a) through (d), including, without limitation, reasonable
attorneys’ fees and expenses, reasonable fees and expenses of consultants,
auditors (including internal auditors) and appraisers, internal audit reviews
and field examinations (subject to the terms of this Agreement) and UCC and
other corporate search and filing fees and wire transfer fees. Each Loan Party
further agrees that such fees, costs and expenses shall constitute Obligations.
The Agent acknowledges receipt of a $37,500 commitment charge from the Borrower
prior to the Closing Date which shall be applied towards Agent and Lender’s
transaction costs and non-legal expenses.

10.4 Indemnity. Each Loan Party agrees, jointly and severally, to indemnify,
hold harmless and defend Agent, each Lender, and each of their respective
Related Persons (each an “Indemnitee”) from and against all liabilities, losses,
damages, expenses, penalties, claims, actions and suits (including, without
limitation, related reasonable attorneys’ fees and expenses) of any kind
whatsoever arising, directly or indirectly, that may be imposed on, incurred by
or asserted against such Indemnitee as a result of or in connection with any
Loan Documents, any E-System, or any of the transactions contemplated hereby or
thereby, including, without limitation, any actual or prospective investigation,
litigation or other proceeding, whether or not brought by any such Indemnitee or
any of its Related Persons or whether or not any such Person is a party thereto
(the “Indemnified Liabilities”); provided that, no Loan Party shall have any
obligation to any Indemnitee with respect to any Indemnified Liabilities to the
extent such Indemnified Liabilities arise from the gross negligence or willful
misconduct of such Indemnitee as determined by a final non-appealable judgment
of a court of competent jurisdiction. In no event shall any Indemnitee be liable
on any theory of liability for any special, indirect, consequential or punitive
damages (including, without limitation, any loss of profits, business or
anticipated savings). Each Loan Party waives, releases and agrees (and shall
cause each other Loan Party to waive, release and agree) not to sue upon any
such claim for any special, indirect, consequential or punitive damages, whether
or not accrued and whether or not known or suspected to exist in its favor.

10.5 Rights Cumulative. Agent’s and Lenders’ rights and remedies under the Loan
Documents or otherwise arising are cumulative and may be exercised singularly or
concurrently. Neither the failure nor any delay on the part of Agent or any
Lender to exercise any right, power or privilege under any Loan Document shall
operate as a waiver, nor shall any single or partial exercise of any right,
power or privilege preclude any other or further exercise of that or any other
right, power or privilege. NEITHER AGENT NOR ANY LENDER SHALL BE DEEMED TO HAVE
WAIVED ANY OF ITS RESPECTIVE RIGHTS UNDER ANY LOAN DOCUMENT OR UNDER ANY OTHER
AGREEMENT, INSTRUMENT OR PAPER SIGNED BY A LOAN PARTY UNLESS SUCH WAIVER IS
EXPRESSED IN WRITING AND SIGNED BY AGENT, REQUISITE LENDERS OR ALL LENDERS, AS
APPLICABLE. A waiver on any one occasion shall not be construed as a bar to or
waiver of any right or remedy on any future occasion.

10.6 Amendments, Waivers.

(a) No amendment or waiver of any provision of any Loan Document, and no consent
with respect to any departure by any Loan Party therefrom, shall be effective
unless the same shall be in writing and signed by Agent, Requisite Lenders (or
by Agent with the consent of Requisite Lenders) and Borrower; provided that no
such amendment, waiver or consent shall, unless in writing and signed by all
Lenders directly affected thereby (or by Agent with the consent of all Lenders
directly affected thereby), in addition to Agent, Requisite Lenders (or by Agent
with the consent of Requisite Lenders) and Borrower, do any of the following:
(i) increase or decrease the amount of, or extend the term of, any Commitment
(which shall be deemed to affect all Lenders), (ii) reduce the principal of or
rate of interest on (other than waiving the imposition of the Default Rate) any
Loan or reduce the amount of any fees payable under any Loan Document,
(iii) postpone the date fixed for or reduce or waive any scheduled installment
of principal or any payment of interest or fees due to any Lender under the Loan
Documents, (iv) release or subordinate the Lien on all or substantially all of
the Collateral, except as otherwise may be provided in any Loan Document (which
shall be deemed to affect all Lenders), (v) release a Loan Party from, or
consent to a Loan Party’s assignment or delegation of, such Loan Party’s
obligations under the Loan Documents (which shall be deemed to affect all
Lenders), except as otherwise may be provided in any Loan Document, (vi) amend,
modify, terminate or waive Sections 8.3, 9.9, or 10.6(a), or (vii) amend or
modify the definition of “Requisite Lenders” or any provision providing for the
consent or other action by all Lenders.

(b) Notwithstanding any provision in this Section 10.6 to the contrary, (i) no
amendment, modification, termination or waiver affecting or modifying the rights
or obligations of Agent under any Loan

 

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Document shall be effective unless signed by Borrower, Agent and Requisite
Lenders, (ii) Agent may amend Schedule A to reflect assignments permitted
hereunder, and (iii) Agent and Borrower may amend or modify any Loan Document to
grant a new Lien, extend an existing Lien over additional Property or join
additional Persons as Loan Parties, in each case for the benefit of Agent and
Lenders.

10.7 Performance. Time is of the essence of the Loan Documents.

10.8 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns;
provided that any assignment by any Lender shall be subject to the provisions of
Section 10.1, and provided further that no Loan Party may assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of Agent and each Lender. No other Person shall be deemed a third party
beneficiary of this Agreement. This Agreement shall continue in full force and
effect until the Termination Date; provided, however, that the provisions of
this Section 10.8 and Sections 2.4(e), 9.6, 10.3, 10.4, 10.11, 10.12 and 10.13
and the other indemnities contained in the Loan Documents shall survive the
Termination Date. The surrender, upon payment or otherwise, of any Note or any
other Loan Document evidencing any of the Obligations shall not affect the right
of Agent to retain the Collateral for such other Obligations as may then exist
or as it may be reasonably contemplated will exist in the future. To the extent
Agent or any Lender receives any payment in respect of the Obligations and such
payment is subsequently, in whole or in part, invalidated, declared to be
fraudulent or preferential, set aside or otherwise required to be paid to any
other Person, then to the extent of such recovery, the Obligation or part
thereof originally intended to be satisfied, and all Liens, rights and remedies
therefor, shall be revived and continued in full force and effect as if such
payment had not occurred.

10.9 Creditor-Debtor Relationship. The relationship between Agent and each
Lender, on the one hand, and the Loan Parties, on the other hand, is solely that
of creditor and debtor. Neither Agent nor any Lender has any fiduciary
relationship or duty to any Loan Party arising out of or in connection with, and
there is no agency, tenancy or joint venture relationship between Agent or
Lenders and Loan Parties by virtue of, any Loan Document or any transaction
contemplated herein or therein.

10.10 Tombstones and Related Matters. Each Loan Party consents to the
publication by Agent or any Lender of any press releases, tombstone, advertising
or other promotional materials (including, without limitation, via any
electronic transmission) relating to the financing transaction contemplated by
this Agreement using such Loan Party’s name, product, photographs, logo or
trademark. No Loan Party shall, and no Loan Party shall permit any of its
Affiliates to, issue any press release or other public disclosure (other than
any document filed with any Governmental Authority relating to a public offering
of the securities of any Loan Party) using the name, logo or otherwise referring
to HTGC or of any of its Affiliates, the Loan Documents or any transaction
contemplated herein or therein to which any of them is a party without the prior
written consent of Agent except to the extent required to do so under applicable
Requirements of Law and then, only after consulting with Agent.

10.11 Governing Law. This Agreement and the other Loan Documents have been
negotiated and delivered to Agent and Lender in the State of California, and
shall have been accepted by Agent and Lender in the State of California. Payment
to Agent and Lender by Borrower of the Obligations is due in the State of
California. This Agreement and the other Loan Documents shall be governed by,
and construed and enforced in accordance with, the laws of the State of
California, excluding conflict of laws principles that would cause the
application of laws of any other jurisdiction.

10.12 Consent to Jurisdiction and Venue. All judicial proceedings (to the extent
that the reference requirement of Section 10.13 is not applicable) arising in or
under or related to this Agreement or any of the other Loan Documents may be
brought in any state or federal court located in the State of California. By
execution and delivery of this Agreement, each party hereto generally and
unconditionally: (a) consents to nonexclusive personal jurisdiction in Santa
Clara County, State of California; (b) waives any objection as to jurisdiction
or venue in Santa Clara County, State of California; (c) agrees not to assert
any defense based on lack of jurisdiction or venue in the aforesaid courts; and
(d) irrevocably agrees to be bound by any judgment rendered thereby in
connection with this Agreement or the other Loan Documents. Service of process
on any party hereto in any action arising out of or relating to this Agreement
shall be effective if given in accordance with the requirements for notice set
forth in Section 10.2, and shall be deemed effective and received as set forth
in Section 10.2. Nothing herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right of either party to bring
proceedings in the courts of any other jurisdiction.

 

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10.13 Mutual Waiver of Jury Trial / Judicial Reference.

(a) Because disputes arising in connection with complex financial transactions
are most quickly and economically resolved by an experienced and expert Person
and the parties wish applicable state and federal laws to apply (rather than
arbitration rules), the parties desire that their disputes be resolved by a
judge applying such applicable laws. EACH OF BORROWER, AGENT AND EACH LENDER
SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF
ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER CLAIM
(COLLECTIVELY, “CLAIMS”) ASSERTED BY BORROWER AGAINST AGENT, LENDER OR THEIR
RESPECTIVE ASSIGNEE OR BY AGENT, LENDER OR THEIR RESPECTIVE ASSIGNEE AGAINST
BORROWER. This waiver extends to all such Claims, including Claims that involve
Persons other than Agent, Borrower and Lender; Claims that arise out of or are
in any way connected to the relationship among Borrower, Agent and Lender; and
any Claims for damages, breach of contract, tort, specific performance, or any
equitable or legal relief of any kind, arising out of this Agreement or any
other Loan Document.

(b) If the waiver of jury trial set forth in Section 10.13(a) is ineffective or
unenforceable, the parties agree that all Claims shall be resolved by reference
to a private judge sitting without a jury, pursuant to Code of Civil Procedure
Section 638, before a mutually acceptable referee or, if the parties cannot
agree, a referee selected by the Presiding Judge of Santa Clara County,
California. Such proceeding shall be conducted in Santa Clara County,
California, with California rules of evidence and discovery applicable to such
proceeding.

(c) In the event Claims are to be resolved by judicial reference, either party
may seek from a court identified in Section 10.12, any prejudgment order, writ
or other relief and have such prejudgment order, writ or other relief enforced
to the fullest extent permitted by law notwithstanding that all Claims are
otherwise subject to resolution by judicial reference.

10.14 Confidentiality. Each Lender and Agent agrees to use all reasonable
efforts to maintain, in accordance with its customary practices, the
confidentiality of information obtained by it pursuant to any Loan Document and
designated in writing by any Loan Party as confidential, except that such
information may be disclosed (a) with Borrower’s consent, (b) to such Lender’s
or Agent’s Related Persons, as the case may be, that are advised of the
confidential nature of such information and are instructed to keep such
information confidential in accordance with the terms hereof, (c) to the extent
such information presently is or hereafter becomes (i) publicly available other
than as a result of a breach of this Section 10.14 or (ii) available to such
Lender or Agent or any of their Related Persons, as the case may be, from a
source (other than any Loan Party) not known by them to be subject to disclosure
restrictions, (d) to the extent disclosure is required by any applicable
Requirements of Law, or other legal, administrative, governmental or regulatory
request, order or proceeding or otherwise requested or demanded by any
Governmental Authority, (e) to the extent necessary or customary for inclusion
in league table measurements, (f) (i) to the National Association of Insurance
Commissioners or any similar organization, any examiner or any nationally
recognized rating agency or (ii) otherwise to the extent consisting of general
portfolio information that does not identify Loan Parties, (g) to current or
prospective assignees or participants and to their respective Related Persons,
in each case to the extent such assignees, participants or Related Persons agree
to be bound by provisions substantially similar to the provisions of this
Section 10.14 (and such Persons may disclose information to their respective
Related Persons in accordance with clause (b) above), (h) to any other party
hereto, and (i) in connection with the exercise or enforcement of any right or
remedy under any Loan Document, in connection with any litigation or other
proceeding to which such Lender or Agent or any of their Related Persons is a
party or bound, or to the extent necessary to respond to public statements or
disclosures by Loan Parties or their Related Persons referring to a Lender or
Agent or any of their Related Persons. In the event of any conflict between the
terms of this Section 10.14 and those of any other contractual obligation
entered into with any Loan Party (whether or not a Loan Document), the terms of
this Section 10.14 shall govern.

10.15 USA Patriot Act. Each Lender that is subject to the Patriot Act hereby
notifies Loan Parties that pursuant to the requirements of the Patriot Act, it
is required to obtain, verify and record information that identifies each Loan
Party, which information includes the name and address of each Loan Party and
other information that will allow such Lender to identify each Loan Party in
accordance with the Patriot Act.

 

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10.16 Severability. Any provision of any Loan Document being held illegal,
invalid or unenforceable in any jurisdiction shall not affect any part of such
provision not held illegal, invalid or unenforceable, any other provision of any
Loan Document or any part of such provision in any other jurisdiction.

10.17 Entire Agreement; Counterparts; Construction. The Loan Documents
constitute the entire agreement of the parties and supersede all prior
agreements and understandings (whether written, verbal or implied) with respect
to the subject matter thereof (including, without limitation, any proposal
letter or confidentiality agreement between the parties hereto or any of their
respective Affiliates relating to a financing of substantially similar form,
purpose or effect). Section headings contained in this Agreement have been
included for convenience only, and shall not affect the construction or
interpretation of this Agreement. This Agreement may be executed in any number
of counterparts and by different parties in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which when taken
together shall constitute one and the same agreement. Delivery of an executed
signature page of this Agreement by facsimile transmission or electronic
transmission shall be as effective as delivery of a manually executed
counterpart hereof. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement

10.18 Duty of Agent With Respect to Collateral; Marshaling. Agent’s sole duty
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession shall be to deal with it in a reasonable manner and
as Agent deals with similar property for its own account. The powers conferred
on Agent hereunder are solely to protect Agent’s interest in the Collateral and
shall not impose any duty upon Agent to exercise any such powers. Agent shall be
accountable only for amounts that it receives as a result of the exercise of
such powers, and neither Agent nor any Indemnitee shall be responsible to any
Loan Party for any act or failure to act hereunder, except for their own gross
negligence or willful misconduct as finally determined by a non-appealable
judgment of a court of competent jurisdiction. In addition, Agent shall not be
liable or responsible for any loss or damage to any Collateral, or for any
diminution in the value thereof, by reason of the act or omission of any
warehousemen, carrier, forwarding agency, consignee or other bailee if such
Person has been selected by Agent in good faith. Agent may (but shall not be
obligated to) pay taxes on behalf of any Loan Party, satisfy any Liens against
the Collateral (other than Permitted Liens), purchase insurance to protect
Agent’s and Lenders’ interest if Loan Parties fail to maintain the insurance
required hereunder and may pay for the maintenance, insurance, protection and
preservation of the Collateral and effect compliance with the terms of any Loan
Document. Each Loan Party agrees to reimburse Agent, on demand, for all costs
and expenses incurred by Agent in connection with such payment or performance
and agrees that such amounts shall constitute Obligations. Each Loan Party
hereby (a) waives any right under the UCC or any other applicable Requirement of
Law to receive notice and/or copies of any filed or recorded financing
statements, amendments thereto, continuations thereof or termination statements
and (b) releases and excuses Agent and each Lender from any obligation under the
UCC or any other applicable law to provide notice or a copy of any such filed or
recorded documents. Neither Agent nor any Lender shall be under any obligation
to marshal any property in favor of any Loan Party or any other Person or
against or in payment of any Obligation.

10.19 Joint and Several; Waiver of Defense. The obligations of the Loan Parties
under the Loan Documents are joint and several. Each Loan Party waives (a) any
suretyship defenses available to it under the UCC or any other applicable
Requirement of Law, and (b) any right to require Agent and Lenders to proceed
against any other Loan Party or any other Person, proceed against or exhaust any
security, or pursue any other remedy. Agent and Lenders may exercise or not
exercise any right or remedy they have against any Loan Party, any Collateral or
any other security (including the right to foreclose by judicial or non-judicial
sale) without affecting any other Loan Party’s liability. Notwithstanding any
other provision of any Loan Document, each Loan Party irrevocably waives all
rights that it may have under any Requirement of Law or in equity (including,
without limitation, any Requirement of Law subrogating any Loan Party to the
rights of Agent and Lenders under any Loan Document) to seek contribution,
indemnification or any other form of reimbursement from any other Loan Party, or
any other Person now or hereafter primarily or secondarily liable for any of the
Obligations, for any payment made by any Loan Party with respect to the
Obligations in connection with any Loan Document or otherwise and all rights
that it might have to benefit from, or to participate in, any security for the
Obligations as a result of any payment made by any Loan Party with respect to
the Obligations in connection with any Loan Document or otherwise. Any agreement
providing for indemnification, reimbursement or any other arrangement prohibited
under this Section shall be null and void. If any payment is made to a Loan
Party in contravention of this Section, such Loan Party shall hold such payment
in trust for Agent and Lenders and such payment shall be promptly delivered to
Agent for application to the Obligations, whether matured or unmatured.

 

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10.20 Revival of Obligations. This Agreement and the Loan Documents shall remain
in full force and effect and continue to be effective if any petition is filed
by or against Borrower for liquidation or reorganization, if Borrower becomes
insolvent or makes an assignment for the benefit of creditors, if a receiver or
trustee is appointed for all or any significant part of Borrower’s assets, or if
any payment or transfer of Collateral is recovered from Agent or Lender. The
Loan Documents and the Obligations and Collateral security shall continue to be
effective, or shall be revived or reinstated, as the case may be, if at any time
payment and performance of the Obligations or any transfer of Collateral to
Agent, or any part thereof is rescinded, avoided or avoidable, reduced in
amount, or must otherwise be restored or returned by, or is recovered from,
Agent, Lender or by any obligee of the Obligations, whether as a “voidable
preference,” “fraudulent conveyance,” or otherwise, all as though such payment,
performance, or transfer of Collateral had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, avoided, avoidable,
restored, returned, or recovered, the Loan Documents and the Obligations shall
be deemed, without any further action or documentation, to have been revived and
reinstated except to the extent of the full, final, and indefeasible payment to
Agent or Lender in cash.

10.21 No Third Party Beneficiary. No provisions of the Loan Documents are
intended, nor will be interpreted, to provide or create any third-party
beneficiary rights or any other rights of any kind in any Person other than
Agent, Lender and Borrower unless specifically provided otherwise herein, and,
except as otherwise so provided, all provisions of the Loan Documents will be
personal and solely among Agent, the Lender and the Borrower.

 

11. Defined Terms. The following terms are defined in the Sections or
subsections referenced opposite such terms:

 

“1934 Act”    Section 2.4(h)(iv) “Account Control Agreement”    Section 6.10
“Agent”    Preamble “Agent Conversion Election Notice”    Section 2.4(h)(iii)
“Agreement”    Preamble “Assignment Agreement”    Section 10.1(a) “Borrower”   
Preamble “Borrower Conversion Election Notice”    Section 2.4(h)(i) “Closing
Date”    Section 4.1 “Conversion Conditions”    Section 2.4(h)(ii) “Conversion
Option”    Section 2.4(h)(i) “Delivery Date”    Section 2.4(h)(i) “Event of
Default”    Section 8.1 “Guarantor” and “Guarantors”    Preamble “HTGC”   
Preamble “Indemnitee”    Section 10.4 “Indemnified Liabilities”    Section 10.4
“Intellectual Property Security Agreements”    Section 3.1 “Intercompany Note”
   Definition of “Permitted Indebtedness” “Lender” and “Lenders”    Preamble
“Loan Party” and “Loan Parties”    Preamble “Maximum Lawful Rate”    Section
2.3(d) “Nasdaq”    Section 2.4(h)(ii) “Patriot Act”    Section 5.7(c)
“Prepayment Charge”    Section 2.5(a) “Principal Installment Due Date”   
Section 2.4(h)(i) “Principal Installment Payment”    Section 2.4(h)(i) “SBA”   
Section 6.12

 

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“SBIC”    Section 6.12 “SBIC Act”    Section 6.12 “SDN List”    Section 5.7(b)
“Term Loan”    Section 2.1(a) “Termination Date”    Section 9.8(b)

In addition to the terms defined elsewhere in this Agreement, the following
terms have the following meanings:

“Access Agreement” means a landlord consent and/or bailee letter, substantially
in the forms of Exhibit C-1 and C-2 respectively, in favor of Agent executed by
the applicable landlord or bailee and the applicable Loan Party.

“Account” means, as at any date of determination, all “accounts” (as such term
is defined in the UCC) of the Loan Parties, including, without limitation, the
unpaid portion of the obligation of a customer of a Loan Party in respect of
Inventory purchased by and shipped to such customer and/or the rendition of
services by a Loan Party, as stated on the respective invoice of a Loan Party,
net of any credits, rebates or offsets owed to such customer.

“Account Debtor” means the customer of a Loan Party who is obligated on or under
an Account.

“Affiliate” means, with respect to any Person, (a) each Responsible Officer,
director, partner or joint-venturer of such Person (and in the case of any
Person that is a limited liability company, each manager and member of such
Person), and (b) any other Person that, directly or indirectly, controls, is
controlled by or is under common control with such Person.

“Automatic Payment Authorization Agreement” means an automatic payment
authorization agreement, substantially in the form of Exhibit D, executed by
Borrower.

“Business Day” means and includes any day other than Saturdays, Sundays, or
other days on which commercial banks in New York, New York are required or
authorized to be closed.

“Cash Equivalents” means (a) any readily-marketable securities (i) issued by, or
directly, unconditionally and fully guaranteed or insured by the United States
federal government or (ii) issued by any agency of the United States federal
government the obligations of which are fully backed by the full faith and
credit of the United States federal government, (b) any readily-marketable
direct obligations issued by any other agency of the United States federal
government, any state of the United States or any political subdivision of any
such state or any public instrumentality thereof, in each case having a rating
of at least “A-1” from S&P or at least “P-1” from Moody’s, (c) any commercial
paper rated at least “A-1” by S&P or “P-1” by Moody’s and issued by any Person
organized under the laws of any state of the United States, (d) any
Dollar-denominated time deposit, insured certificate of deposit, overnight bank
deposit or bankers’ acceptance issued or accepted by (i) Agent or (ii) any
commercial bank that is (A) organized under the laws of the United States, any
state thereof or the District of Columbia, (B) “adequately capitalized” (as
defined in the regulations of its primary federal banking regulators) and
(C) has Tier 1 capital (as defined in such regulations) in excess of
$250,000,000 or (e) shares of any United States money market fund that (i) has
substantially all of its assets invested continuously in the types of
investments referred to in clause (a), (b), (c) or (d) above with maturities as
set forth in the proviso below, (ii) has net assets in excess of $500,000,000
and (iii) has obtained from either S&P or Moody’s the highest rating obtainable
for money market funds in the United States; provided, however, that the
maturities of all obligations specified in any of clauses (a), (b), (c) and
(d) above shall not exceed 365 days. For the avoidance of doubt, “Cash
Equivalents” does not include (and each Loan Party is prohibited from purchasing
or purchasing participations in) any auction rate securities or other corporate
or municipal bonds with a long-term nominal maturity for which the interest rate
is reset through a Dutch auction.

“Collateral” means all Property and interests in Property and proceeds thereof
now owned or hereafter acquired by any Loan Party in or upon which a Lien is
granted or purported to be granted in favor of Agent for the benefit of Agent
and Lenders pursuant to any Loan Document.

“Commitments” means the Term Loan Commitments.

“Common Stock” means Borrower’s common stock, par value $0.01 per share.

 

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“Convertible Debt Offering” means the sale by Borrower of Stock Equivalents to
MG Partners II, Ltd. or its Affiliates in two tranches which results in
Borrower’s receipt of not less than $6,000,000, the terms of which are
substantially in accordance with Exhibit H, hereto.

“Default” means any event, which with the giving of notice or the passage of
time, or both, would constitute an Event of Default.

“Default Rate” means a rate of interest equal to 5.0% per annum above the rate
of interest otherwise in effect for the applicable Obligation.

“Disbursement Letter” means a disbursement instruction letter, in form and
substance satisfactory to Agent, among each Loan Party, Agent and each Lender.

“Dollars” and “$” each mean lawful money of the United States of America.

“EBITDA” means, with respect to Borrower and its consolidated Subsidiaries for
any period, the total of the following, which shall be determined in accordance
with GAAP: (a) the consolidated net income (loss) of Borrower and its
consolidated Subsidiaries for such period, plus (b) without duplication, to the
extent included in the calculation of consolidated net income of Borrower and
its consolidated Subsidiaries for such period, the sum of the following amounts
of Borrower and its consolidated Subsidiaries for such period, (i) income taxes
paid or accrued (excluding any amounts Borrower or any of its consolidated
Subsidiaries includes in its sales, general and administrative expenses),
(ii) interest expense (net of interest income), paid or accrued,
(iii) amortization and depreciation expense, (iv) compensation paid in Stock,
and (v) other non-cash charges as approved by Agent in its reasonable
discretion. EBITDA shall be measured on an accrued accounting basis.

“ERISA” means the United States Employee Retirement Income Security Act of 1974,
as amended.

“E-System” means any electronic system approved by Agent, including any Internet
or extranet-based site, whether such electronic system is owned, operated or
hosted by Agent, any of its Related Persons or any other Person, providing for
access to data protected by passcodes or other security system.

“Exigent Circumstance” means any event or circumstance that, in the reasonable
judgment of Agent, imminently threatens the ability of Agent to realize upon all
or any material portion or material piece of the Collateral, such as, without
limitation, fraudulent removal, concealment, or abscondment thereof, destruction
or material waste thereof, or failure of any Loan Party after reasonable demand
to maintain or reinstate adequate casualty insurance coverage, or which, in the
judgment of Agent, could result in a material diminution in value of the
Collateral (including, for the avoidance of doubt and without limitation,
circumstances where Agent reasonably believes the Loan Parties’ remaining cash
and Cash Equivalents are being, or are likely to be, significantly and
imminently diminished).

“Existing Indebtedness” means all of the Indebtedness and other obligations owed
immediately prior to the Closing Date under that certain Loan and Security
Agreement dated as of December 12, 2012, by and among Borrower, GECC and the
other lender parties thereto, as such agreement has been amended from time to
time.

“FDA” means the U.S. Food and Drug Administration or any successor thereto or
any other comparable Governmental Authority.

“Final Maturity Date” means January 1, 2018.

“Financing Condition” means Borrower’s receipt of not less than $6,000,000
pursuant to the Convertible Debt Offering on or before August 15, 2014, proof of
which has been provided by such date to Lender’s reasonable satisfaction.

“Fixed Conversion Price” means $5.721825, provided, however, that upon the
occurrence of any stock split, stock dividend, combination of shares or reverse
stock split pertaining to the Common Stock, the Fixed Conversion Price shall be
proportionately increased or decreased as necessary to reflect the proportionate
change in the shares of Common Stock issued and outstanding as a result of such
stock split, stock dividend, combination of shares or reverse stock split.

“Funding Condition” means the closing of the first tranche of the Convertible
Debt Offering which results in Borrower’s receipt of not less than $2,500,000,
proof of which has been provided to Lender’s reasonable satisfaction.

“GAAP” means generally accepted accounting principles in the United States of
America, as in effect from time to time.

 

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“GECC” means General Electric Credit Corporation and its Affiliates.

“Governmental Authority” means any nation, sovereign or government, any state or
other political subdivision thereof, any agency, authority or instrumentality
thereof and any entity or authority exercising executive, legislative, taxing,
judicial, regulatory or administrative functions of or pertaining to government,
including any central bank, stock exchange, regulatory body, arbitrator, public
sector entity, supra-national entity and any self-regulatory organization.

“Guaranty Agreement” means a guaranty agreement, in form and substance
satisfactory to Agent, made by Guarantors in favor of Agent, for the benefit of
Agent and Lenders.

“HT III” means Hercules Technology III, L.P., a Delaware limited partnership
which is an affiliate of Agent.

“Indebtedness” means, with respect to any Person, at any date, without
duplication, (a) all indebtedness for borrowed money, (b) all obligations
evidenced by bonds, debentures, notes or other similar instruments, (c) all
obligations to pay the deferred purchase price of Property or services,
including earnouts or similar payments (other than trade payables incurred in
the ordinary course of business), (d) all capital lease obligations, (e) the
principal balance outstanding under any synthetic lease, tax retention operating
lease, off-balance sheet loan or similar off-balance sheet financing product,
(f) all contingent or non-contingent obligations of such Person to reimburse any
bank or other Person in respect of amounts paid under a letter of credit, surety
bond or other similar instrument, (g) all equity securities of such Person
subject to repurchase or redemption other than at the sole option of such
Person, (h) all indebtedness secured by a Lien on any asset of such Person,
whether or not such indebtedness is an obligation of such Person, (i) all
obligations under any foreign exchange contract, currency swap agreement,
interest rate swap, cap or collar agreement or other similar agreement or
arrangement designed to alter the risks of that Person arising from fluctuations
in currency values or interest rates, in each case whether contingent or
matured, and (j) all indebtedness, obligations or liabilities of others
guaranteed, endorsed (other than in the ordinary course of business), co-made,
discounted with recourse or sale with recourse by such Person or for which such
Person is otherwise directly or indirectly liable.

“Indemnified Taxes” means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings and all liabilities with respect thereto
(other than taxes measured by net income and franchise taxes imposed in lieu of
net income taxes, in each case imposed on Agent or any Lender as a result of a
present or former connection between Agent or such Lender and the jurisdiction
of the Governmental Authority imposing such tax or any political subdivision or
taxing authority thereof or therein, except for such connection arising solely
from Agent or such Lender having executed, delivered or performed its
obligations or received a payment under, or enforced, any Loan Document).

“Intellectual Property” means (a) all copyright rights, copyright applications,
copyright registrations and like protections in each work of authorship and
derivative work, whether published or unpublished, any patents, patent
applications and like protections, including improvements, divisions,
continuations, renewals, reissues, extensions, and continuations-in-part of the
same, trademarks, trade names, service marks, mask works, rights of use of any
name, domain names, or any other similar rights, any applications therefor,
whether registered or not, and (b) the goodwill of the business of any Person
connected with and symbolized thereby, know-how, operating manuals, trade secret
rights, clinical and non-clinical data, and rights to unpatented inventions.

“Interest Only Extension Conditions” means the satisfaction of each of the
following events: (a) no default or Event of Default shall have occurred and be
continuing; and (b) Borrower’s trailing six month Operating Revenue as of
June 30, 2015, shall be not less than $15,000,000.

“Operating Revenue” means the gross revenue Borrower receives from its
operations in the ordinary course of business, less refunds, returns and credits
issued that correspond to any such revenue.

“Interest Period” means, as applicable, (a) the period commencing on the Closing
Date and ending on the day immediately preceding the first Business Day of the
next succeeding calendar month, or (b) subsequent to the period described in
clause (a), the period commencing on the first Business Day of the calendar
month and ending on the day immediately preceding the first Business Day of the
next succeeding calendar month.

“Investment” means, with respect to any Person, directly or indirectly, (a) to
purchase or acquire any Stock or Stock Equivalents, or any obligations or other
securities of, or any interest in, any Person, including the establishment or
creation of a Subsidiary, (b) to make or commit to make any acquisition of all
or substantially all of the assets of another Person, or of any business,
division or other unit operation of any Person or (c) make or purchase any
advance, loan, extension of credit or capital contribution to, or any other
investment in, any Person.

 

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“Knowledge” means, as to any Person, such Person has knowledge or should have
had knowledge after using reasonable diligence.

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment,
charge, deposit arrangement, encumbrance, easement, lien (statutory or
otherwise), security interest or other security arrangement and any other
preference, priority or preferential arrangement of any kind or nature
whatsoever, including any conditional sale contract or other title retention
agreement, the interest of a lessor under a capital lease and any synthetic or
other financing lease having substantially the same economic effect as any of
the foregoing.

“Loan” means the Term Loan and any other loan made or deemed made by any Lender
hereunder.

“Loan Documents” means this Agreement, the Notes (if any), the Warrants, the
Intellectual Property Security Agreements, the Account Control Agreements, the
Access Agreements, the Perfection Certificate, the Pledge Agreement, the
Guaranty (if any), any Subordination Agreement, the Disbursement Letter and all
other agreements, instruments, documents and certificates delivered to Agent or
any Lender from time to time in connection with any of the foregoing.

“Margin Stock” means “margin stock” within the meaning of Regulations T, U and X
of the Board of Governors of the Federal Reserve System.

“Material Adverse Effect” means a material adverse effect on any of (a) the
operations, business, assets, properties, or condition (financial or otherwise)
of Borrower, individually, or the Loan Parties, taken as a whole, (b) the
ability of a Loan Party to perform any of its obligations under any Loan
Document to which it is a party, (c) the legality, validity or enforceability of
any Loan Document, (d) the rights and remedies of Agent or Lenders under any
Loan Document or (e) the validity, perfection or priority of any Lien in favor
of Agent, on behalf of itself and Lenders, on any of the Collateral.

“Material Agreement” means (a) any agreement or contract to which a Loan Party
is a party and involving the receipt or payment of amounts in the aggregate
exceeding $250,000 per year, (b) any agreement or contract to which a Loan Party
is a party of which the breach, nonperformance, termination or failure to renew
could reasonably be expected to have a Material Adverse Effect, or (c) each
agreement relating to any Subordinated Indebtedness.

“Material Indebtedness” means (a) any Subordinated Indebtedness and (b) any
other Indebtedness (other than the Obligations) of a Loan Party or any of its
Subsidiaries having an aggregate principal amount (including undrawn committed
or available amounts and including amounts owing to all creditors under any
combined or syndicated credit arrangement) of more than $250,000.

“Note” means a promissory note of Borrower, in form and substance satisfactory
to Agent, payable to a Lender in a principal amount equal to the amount of such
Lender’s Term Loan Commitment.

“OFAC” means U.S. Treasury Department’s Office of Foreign Assets Control.

“Obligations” means all Loans and all other debts, obligations and liabilities
of any kind whatsoever owing by the Loan Parties to Agent and Lenders under the
Loan Documents (other than the Warrants), whether for principal, interest, fees,
expenses, prepayment premiums, indemnities, reimbursements or other sums, and
whether or not such amounts accrue after the filing of any petition in
bankruptcy or after the commencement of any insolvency, reorganization or
similar proceeding, and whether or not allowed in such case or proceeding,
whether direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising and
howsoever acquired, and whether or not evidenced by any instrument or for the
payment of any money.

“Perfection Certificate” means a perfection certificate in the form provided by
Agent, completed and duly executed by each Loan Party.

“Permitted Contest” means the contesting in good faith by appropriate
proceedings diligently conducted and with respect to which adequate reserves or
other appropriate provisions are maintained on the books of the applicable Loan
Party in accordance with GAAP and which do not involve, in the judgment of
Agent, any risk of the sale, forfeiture or loss of any of the Collateral.

“Permitted Dispositions” means (a) sales of inventory in the ordinary course of
business, (b) sales of obsolete or worn out equipment or tangible assets that
are no longer used or useful in the business of a Loan Party for cash and fair
value so long as no Default or Event of Default has occurred and is continuing
at the time of such sale or would result after giving effect thereto,
(c) licenses of the Intellectual Property of a Loan Party in the ordinary course
of business of the applicable Loan Party, provided that (i) any such license is
non-exclusive (but may be exclusive in

 

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respects other than territory and may be exclusive as to territory only as to
discreet geographical areas outside of the United States, provided further that
in the case of any such permitted exclusive license, such license shall be
approved by the Board of Directors of the applicable Loan Party) and does not
result in a legal transfer of title of the licensed Intellectual Property,
(ii) no Default or Event of Default has occurred and is continuing at the time
of such license or would result after giving effect thereto, and (iii) the terms
of such license do not restrict the applicable Loan Party’s ability to grant a
Lien on, assign or otherwise Transfer such license or any Intellectual Property;
provided further, that in the case of a license that does not comply with clause
(c)(i) above, but otherwise is in compliance with the other terms of this
Agreement, Agent agrees that its decision regarding consent or non-consent to
such license will not be unreasonably withheld or delayed after such Loan Party
delivers written notice to Agent and Lenders summarizing the proposed licensing
transaction, provides a copy of the term sheet and when available the licensing
documents and provides all others documents and instruments reasonably requested
by Agent or any Lender, and (d) transfers of Intellectual Property listed on
Schedule 11.1 which is not material to any Loan Party’s business.

“Permitted Indebtedness” means (a) the Obligations, (b) Indebtedness existing on
the Closing Date and set forth on Schedule 7.2, (c) Indebtedness consisting of
capitalized lease obligations and purchase money Indebtedness, in each case
incurred by any Loan Party or any of its Subsidiaries to finance the
acquisition, repair, improvement or construction of fixed or capital assets of
such Person, provided that (i) the aggregate outstanding principal amount of all
such Indebtedness does not exceed $300,000 at any time and (ii) the principal
amount of such Indebtedness does not exceed the lower of the cost or fair market
value (plus taxes, shipping and installation expenses) of the property so
acquired or built or of such repairs or improvements financed with such
Indebtedness (each measured at the time of such acquisition, repair, improvement
or construction is made), (d) Indebtedness owing by any Loan Party to another
Loan Party, provided that (i) each Loan Party shall have executed and delivered
to each other Loan Party a demand note (each, an “Intercompany Note”) to
evidence such intercompany loans or advances owing at any time by each Loan
Party to the other Loan Parties, which Intercompany Note shall be in form and
substance reasonably satisfactory to Agent and shall be pledged and delivered to
Agent pursuant to a Pledge Agreement as additional Collateral for the
Obligations, (ii) any and all Indebtedness of any Loan Party to another Loan
Party shall be subordinated to the Obligations pursuant to the subordination
terms set forth in each Intercompany Note, and (iii) no Default or Event of
Default shall result after giving effect to any such Indebtedness,
(e) Subordinated Indebtedness, (f) guaranties by one or more Loan Parties of the
Indebtedness of another Loan Party, so long as such Indebtedness is otherwise
permitted pursuant to Section 7.2, (g) reimbursement obligations in connection
with letters of credit in an amount not to exceed $100,000, and (h) obligations
owing to trade creditors incurred in the ordinary course of business and past
due by more than 90 days in an amount not to exceed $50,000 in the aggregate.

“Permitted Investments” means (a) Investments existing on the Closing Date and
set forth on Schedule 7.5, (b) subject to Section 6.10, Investments in cash and
Cash Equivalents, (c) endorsements for collection or deposit in the ordinary
course of business consistent with past practice, (d) extensions of trade credit
(other than to Affiliates of a Loan Party) in the ordinary course of business,
(e) Investments received in connection with the bankruptcy or reorganization of
customers or suppliers and in settlement of delinquent obligations of, and other
disputes with, customers or suppliers arising in the ordinary course of
business, (f) loans and advances to employees of any Loan Party to finance
travel, entertainment and relocation expenses and other business purposes in the
ordinary course of business in an aggregate outstanding principal amount not to
exceed $150,000 at any time, (g) Investments consisting of non-cash loans made
by Borrower to officers, directors and employees of a Loan Party which are used
by such Persons to purchase simultaneously the Stock of Borrower, (h) advances
by a Loan Party to another Loan Party in accordance with the terms and
conditions described in clause (d) of the definition of “Permitted
Indebtedness”, (i) joint ventures or strategic alliances in the ordinary course
of business consisting of the non-exclusive licensing of technology, the
development of technology or the providing of technical support, but in no event
consisting of Investments of cash, Cash Equivalents or tangible assets, and
(j) non-recourse equity capital contributions made by Borrower to any of its
Subsidiaries that constitutes a Loan Party.

“Permitted Liens” means each of the following: (a) Liens created pursuant to any
Loan Document, (b) Liens existing on the Closing Date and set forth on Schedule
7.1, (c) Liens (i) with respect to the payment of taxes, assessments or other
governmental charges or (ii) of suppliers, carriers, materialmen, warehousemen,
workmen or mechanics and other similar Liens, in each case imposed by law and
arising in the ordinary course of business, and securing amounts that are not
yet due or that are subject to a Permitted Contest, (d) Liens securing
Indebtedness permitted under clause (c) of the definition of “Permitted
Indebtedness”, provided that (i) such Liens exist prior to the acquisition of,
or attach substantially simultaneous with, or within 20 days after, the
acquisition, repair, improvement or construction of, such property financed by
such Indebtedness and (ii) such Liens do not extend to any Property of a Loan
Party other than the Property (and proceeds thereof) acquired or built, or the
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or repairs, financed by such Indebtedness, (e) Liens of a collection bank on
items in the course of collection arising under Section 4-208 of the UCC,
(f) pledges or cash deposits made in the ordinary course of business (i) in
connection with workers’ compensation, unemployment insurance or other types of
social security benefits (other than any Lien imposed by ERISA), (ii) to secure
the performance of bids, tenders, leases (other than capital leases), sales or
other trade contracts (other than for the repayment of borrowed money) or
(iii) made in lieu of, or to secure the performance of, surety, customs,
reclamation or performance bonds (in each case not related to judgments or
litigation), (g) judgment liens (other than for the payment of taxes,
assessments or other governmental charges) securing judgments and other
proceedings not constituting an Event of Default under Section 8.1(f) and
pledges or cash deposits made in lieu of, or to secure the performance of,
judgment or appeal bonds in respect of such judgments and proceedings, (h) Liens
arising by reason of zoning restrictions, easements, licenses, reservations,
restrictions, covenants, rights-of-way, encroachments, minor defects or
irregularities in title (including leasehold title) and other similar
encumbrances on the use of real property that do not materially (i) impair the
value or marketability of such real property or (ii) interfere with the ordinary
conduct of the business conducted and proposed to be conducted at such real
property, and (i) licenses described in clause (c) of the definition of
“Permitted Disposition.”

“Person” means any individual, partnership, corporation (including a business
trust and a public benefit corporation), joint stock company, estate,
association, firm, enterprise, trust, limited liability company, unincorporated
association, joint venture and any other entity or Governmental Authority.

“Pledge Agreement” means a pledge agreement in form and substance satisfactory
to Agent executed by each Loan Party and Agent.

“Prime Rate” means the prime rate as reported in The Wall Street Journal from
time to time.

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, and whether tangible or intangible.

“Pro Rata Share” means:

(a) with respect to the Warrants in any respect, or with respect to a Lender’s
obligation to make the Term Loan and right to receive payments of interest, fees
and principal with respect thereto, the percentage obtained by dividing (a) the
aggregate outstanding principal amount of the Term Loan owing to such Lender at
such time by (b) the aggregate outstanding principal amount of the Term Loan
owing to all Lenders at such time;

(b) with respect to all other matters at any time, the percentage obtained by
dividing (i) such Lender’s Commitments at such time (or if any Commitment of
such Lender is terminated at such time, the aggregate outstanding principal
amount of the applicable Loan at such time owing to such Lender), by (ii) the
Commitments of all Lenders at such time (or, if any Commitments of all such
Lenders are terminated at such time, the aggregate outstanding principal amount
of the applicable Loan owing to all Lenders at such time).

“Public Health Laws” means all Requirements of Law relating to the procurement,
development, clinical and non-clinical evaluation, product approval or
clearance, manufacture, production, analysis, distribution, dispensing,
importation, exportation, use, handling, quality, sale, labeling, promotion, or
postmarket requirements of any drug, medical device, food, dietary supplement,
or other product (including, without limitation, any ingredient or component of
the foregoing products) subject to regulation under the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. et seq.) and similar state laws, controlled substances
laws, pharmacy laws, or consumer product safety laws.

“Qualified Assignee” means (a) any Lender, (b) any Affiliate of any Lender,
(c) any commercial bank, savings and loan association or savings bank or any
other entity which is an “accredited investor” (as defined in Regulation D under
the Securities Act of 1933, as amended) which extends credit or buys loans as
one of its businesses, including insurance companies, mutual funds, lease
financing companies and commercial finance companies, in each case of this
clause (c), which either (i) has a rating of BBB or higher from Standard &
Poor’s Rating Group and a rating of Baa2 or higher from Moody’s Investor
Service, Inc. at the date that it becomes a Lender, or (ii) together with its
Affiliated entities, holds loan assets in excess of $250,000,000 or (d) any
other Person (other than a natural person) approved by Agent, provided however,
that notwithstanding the foregoing, unless approved by Agent, “Qualified
Assignee” shall not include (A) any Person who is not capable of lending to
Borrower without the imposition of any withholding or similar taxes, (B) any
Loan Party or any Affiliate of a Loan Party or any Person or Affiliate of such
Person that holds any subordinated debt or Stock or Stock Equivalents issued by
any Loan Party or its Affiliates (other than any Person that is a Lender on the
Closing Date or any Affiliate thereof) or (C) any Person acting in the capacity
of a vulture fund or distressed debt purchaser.

 

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“Registrations” means registrations, authorizations, approvals, licenses,
permits, clearances, certificates, and exemptions issued or allowed by the FDA
(including, without limitation, new drug applications, abbreviated new drug
applications, biologics license applications, investigational new drug
applications, over-the-counter drug monograph, device pre-market approval
applications, device pre-market notifications, investigational device
exemptions, product recertifications, manufacturing approvals and
authorizations, CE Marks, pricing and reimbursement approvals, labeling
approvals or their foreign equivalent, controlled substance registrations, and
wholesale distributor permits).

“Regulatory Action” means an administrative or regulatory action, proceeding,
investigation or inspection, FDA Form 483 inspectional observation, warning
letter, untitled letter, notice of violation letter, recall, alert, seizure,
Section 305 notice or other similar communication, or consent decree, issued by
the FDA.

“Related Persons” means, with respect to any Person, each Affiliate of such
Person and each director, officer, employee, agent, trustee, representative,
attorney, accountant and each insurance, environmental, legal, financial and
other advisor and other consultants and agents of or to such Person or any of
its Affiliates.

“Requirement of Law” means, with respect to any Person, any law (statutory or
common), ordinance, treaty, rule, regulation, order, policy, judgment, writ,
injunction, decree, or other legal requirement or determination of an arbitrator
or of a Governmental Authority, in each case applicable to or binding upon such
Person or any of its Property or to which such Person or any of its Property is
subject.

“Requisite Lenders” means Lenders whose Pro Rata Shares aggregate more than 60%;
provided, however, that so long as a Lender on the Closing Date does not assign
any portion of its Commitments or Loans (other than an assignment to any
Affiliate of such Lender or another Lender existing on the Closing Date), the
“Requisite Lenders” shall include such Lender; provided, further, that when more
than one Lender exists, “Requisite Lenders” shall include at least two
(2) Lenders.

“Responsible Officer” shall mean, each to the extent such exists, the chief
executive officer, president, chief financial officer, chief operating officer,
chief technology officer, vice president of finance, general counsel, chief
scientific officer, vice president of regulatory affairs and compliance, and any
other officer with substantially the same responsibility as any of the above.

“Scheduled Payment Date” means the first day of each calendar month.

“SEC” means the Securities and Exchange Commission.

“Solvent” means, with respect to any Person as of any date of determination,
that, as of such date, (a) the value of the assets of such Person (both at fair
value and present fair saleable value) is greater than the total amount of
liabilities (including contingent and unliquidated liabilities) of such Person,
(b) such Person is able to pay all liabilities of such Person as such
liabilities mature and (c) such Person does not have unreasonably small capital.
In computing the amount of contingent or unliquidated liabilities at any time,
such liabilities shall be computed at the amount that, in light of all the facts
and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.

“Stock” means all shares of capital stock (whether denominated as common stock
or preferred stock), equity interests, beneficial, partnership or membership
interests, joint venture interests, participations or other ownership or profit
interests in or equivalents (regardless of how designated) of or in a Person
(other than an individual), whether voting or non-voting.

“Stock Equivalents” means all securities convertible into or exchangeable for
Stock or any other Stock Equivalent and all warrants, options or other rights to
purchase, subscribe for or otherwise acquire any Stock or any other Stock
Equivalent, whether or not presently convertible, exchangeable or exercisable.

“Subordinated Indebtedness” means any unsecured Indebtedness owing by any Loan
Party to any Person that is not a holder of any Stock or Stock Equivalents of
any Loan Party on the date such Indebtedness is incurred, which Indebtedness is
subordinated to the Obligations pursuant to a Subordination Agreement.

“Subordination Agreement” means, with respect to any Subordinated Indebtedness,
a subordination agreement in form and substance satisfactory to Agent executed
by Agent, the Loan Parties and each holder of such Subordinated Indebtedness.

 

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“Subsidiary” means, with respect to any Person, any entity the management of
which is, directly or indirectly controlled by, or of which an aggregate of more
than 50% of the outstanding voting Stock is, at the time, owned or controlled,
directly or indirectly by, such Person or one or more Subsidiaries of such
Person.

“Term Loan Commitment” means, with respect to each Lender, the amount set forth
opposite such Lender’s name on Schedule A hereto under the caption “Term Loan
Commitment”, as amended from time to time to reflect any permitted assignments
and as such amount may be reduced or terminated pursuant to this Agreement.
“Term Loan Commitments” means the Term Loan Commitments of all Lenders with a
Term Loan Commitment.

“Term Loan Interest Rate” means for any day a per annum rate of interest equal
to the greater of either (i) the Prime Rate plus 7.7%, and (ii) 10.95%.

“Term Loan Lender” means each Lender with a Term Loan Commitment, or if the Term
Loan Commitment is no longer in effect, each Lender owning a Term Loan.

“Transfer” means, with respect to any Property, to sell, convey, transfer,
assign, license, rent, lease, sublease, mortgage, transfer or otherwise dispose
of any interest therein or to permit any Person to acquire any such interest.

“UCC” means the Uniform Commercial Code as from time to time in effect in the
State of New York; provided, however, that, in the event that, by reason of
mandatory provisions of any applicable Requirement of Law, any of the
attachment, perfection or priority of Agent’s or any other Lender’s security
interest in any Collateral is governed by the Uniform Commercial Code of a
jurisdiction other than the State of New York, “UCC” shall mean the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such attachment, perfection or priority and for
purposes of the definitions related to or otherwise used in such provisions.

“Unrestricted Cash” means the amount of Cash held in Deposit Accounts or the
market value of accounts holding Investment Property, all of which are subject
to an Account Control Agreement in favor of Agent, less (i) the amount of any
Indebtedness which has been due for 30 or more days, and (ii) any funds for
which there are any restrictions on use other than restrictions provided in this
Agreement. Cash or Investment Property held in accounts not subject to an
Account Control Agreement shall not be included in determining Unrestricted
Cash.

“Warrants” means the common stock purchase warrants issued to each Term Loan
Lender (or its Affiliate or designee) substantially in the form of the warrant
attached as Exhibit E.

[Signature Page Follows]

 

Loan and Security Agreement - Amedica

 

40

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their duly authorized officers as of the day and year
first written above.

BORROWER:

 

AMEDICA CORPORATION By:  

 

  Name:  

 

  Title:  

 

GUARANTOR: US SPINE, INC. By:  

 

  Name:  

 

  Title:  

 

Address For Notices For All Loan Parties:

c/o Amedica Corporation

1885 West 2100 South

Salt Lake City, UT 84119

Attention: Gordon G. Esplin, CPA

Phone: (801) 839-3516

Facsimile: (801) 683-2805

 

Loan and Security Agreement – Amedica signature page

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With a copy to:

AGENT AND LENDER:

 

HERCULES TECHNOLOGY GROWTH CAPITAL, INC. By:  

 

  Name:   Ben Bang   Title:   Senior Counsel

Address For Notices (except in the case of notices under Section 6.3):

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

Legal Department

Attention: Chief Legal Officer and Chad Norman

400 Hamilton Avenue, Suite 310

Palo Alto, CA 94301

Facsimile: 650-473-9194

Telephone: 650-289-3060

LENDER:

 

HERCULES TECHNOLOGY III, L.P.,

a Delaware limited partnership

By:   Hercules Technology SBIC   Management, LLC, its General   Partner By:  
Hercules Technology Growth   Capital, Inc., its Manager   By:  

 

  Name:   Ben Bang   Its:   Senior Counsel

 

Loan and Security Agreement – Amedica signature page

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Address For Notices (except in the case of notices under Section 6.3):

HERCULES TECHNOLOGY III, L.P.

Legal Department

Attention: Chief Legal Officer and Chad Norman

400 Hamilton Avenue, Suite 310

Palo Alto, CA 94301

Facsimile: 650-473-9194

Telephone: 650-289-3060

 

Loan and Security Agreement - Amedica

2

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ADDENDUM 1 to LOAN AND SECURITY AGREEMENT

(a) Borrower’s Business. For purposes of this Addendum 1, Borrower shall be
deemed to include its “affiliates” as defined in Title 13 Code of Federal
Regulations Section 121.103. Borrower represents and warrants to Agent and
Lender as of the Closing Date and covenants to Agent and Lender for a period of
one year after the Closing Date with respect to subsections 2, 3, 4, 5, 6 and 7
below, as follows:

 

  1. Size Status. Borrower does not have tangible net worth in excess of $18
million or average net income after Federal income taxes (excluding any
carry-over losses) for the preceding two completed fiscal years in excess of $6
million;

 

  2. No Relender. Borrower’s primary business activity does not involve,
directly or indirectly, providing funds to others, purchasing debt obligations,
factoring, or long-term leasing of equipment with no provision for maintenance
or repair;

 

  3. No Passive Business. Borrower is engaged in a regular and continuous
business operation (excluding the mere receipt of payments such as dividends,
rents, lease payments, or royalties). Borrower’s employees are carrying on the
majority of day to day operations. Borrower will not pass through substantially
all of the proceeds of the Loan to another entity;

 

  4. No Real Estate Business. Borrower is not classified under Major Group 65
(Real Estate) or Industry No. 1531 (Operative Builders) of the SIC Manual. The
proceeds of the Loan will not be used to acquire or refinance real property
unless Borrower (x) is acquiring an existing property and will use at least 51
percent of the usable square footage for its business purposes; (y) is building
or renovating a building and will use at least 67 percent of the usable square
footage for its business purposes; or (z) occupies the subject property and uses
at least 67 percent of the usable square footage for its business purposes.

 

  5. No Project Finance. Borrower’s assets are not intended to be reduced or
consumed, generally without replacement, as the life of its business progresses,
and the nature of Borrower’s business does not require that a stream of cash
payments be made to the business’s financing sources, on a basis associated with
the continuing sale of assets (e.g., real estate development projects and oil
and gas wells). The primary purpose of the Loan is not to fund production of a
single item or defined limited number of items, generally over a defined
production period, where such production will constitute the majority of the
activities of Borrower (e.g., motion pictures and electric generating plants).

 

  6. No Farm Land Purchases. Borrower will not use the proceeds of the Loan to
acquire farm land which is or is intended to be used for agricultural or
forestry purposes, such as the production of food, fiber, or wood, or is so
taxed or zoned.

 

  7. No Foreign Investment. The proceeds of the Loan will not be used
substantially for a foreign operation. At the time of the Loan, Borrower will
not have more than 49 percent of its employees or tangible assets located
outside the United States. The representation in this subsection (7) is made
only as of the date hereof and shall not continue for one year as contemplated
in the first sentence of this Section 1.

(b) Small Business Administration Documentation. Agent and Lender acknowledge
that Borrower completed, executed and delivered to Agent SBA Forms 480, 652 and
1031 (Parts A and B) together with a business plan showing Borrower’s financial
projections (including balance sheets and income and cash flows statements) for
the period described therein and a written statement (whether included in the
purchase agreement or pursuant to a separate statement) from Agent regarding its
intended use of proceeds from the sale of securities to Lender (the “Use of
Proceeds Statement”). Borrower represents and warrants to Agent and Lender that
the information regarding Borrower and its affiliates set forth in the SBA
Form 480, Form 652 and Form 1031 and the Use of Proceeds Statement delivered as
of the Closing Date is accurate and complete.

 

Loan and Security Agreement - Amedica

3

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(c) Inspection. The following covenants contained in this Section (c) are
intended to supplement and not to restrict the related provisions of the Loan
Documents. Subject to the preceding sentence, Borrower will permit, for so long
as Lender holds any debt or equity securities of Borrower, Agent, Lender or
their representative, at Agent’s or Lender’ expense, and examiners of the SBA to
visit and inspect the properties and assets of Borrower, to examine its books of
account and records, and to discuss Borrower’s affairs, finances and accounts
with Borrower’s officers, senior management and accountants, all at such
reasonable times as may be requested by Agent or Lender or the SBA.

(d) Annual Assessment. Promptly after the end of each calendar year (but in any
event prior to February 28 of each year) and at such other times as may be
reasonably requested by Agent or Lender, Borrower will deliver to Agent a
written assessment of the economic impact of Lender’s investment in Borrower,
specifying the full-time equivalent jobs created or retained in connection with
the investment, the impact of the investment on the businesses of Borrower in
terms of expanded revenue and taxes, other economic benefits resulting from the
investment (such as technology development or commercialization, minority
business development, or expansion of exports) and such other information as may
be required regarding Borrower in connection with the filing of Lender’s SBA
Form 468. Lender will assist Borrower with preparing such assessment. In
addition to any other rights granted hereunder, Borrower will grant Agent and
Lender and the SBA access to Borrower’s books and records for the purpose of
verifying the use of such proceeds. Borrower also will furnish or cause to be
furnished to Agent and Lender such other information regarding the business,
affairs and condition of Borrower as Agent or Lender may from time to time
reasonably request.

(e) Use of Proceeds. Borrower will use the proceeds from the Loan only for
purposes set forth in Section 7.16. Borrower will deliver to Agent from time to
time promptly following Agent’s request, a written report, certified as correct
by Borrower’s Chief Financial Officer, verifying the purposes and amounts for
which proceeds from the Loan have been disbursed. Borrower will supply to Agent
such additional information and documents as Agent reasonably requests with
respect to its use of proceeds and will permit Agent and Lender and the SBA to
have access to any and all Borrower records and information and personnel as
Agent deems necessary to verify how such proceeds have been or are being used,
and to assure that the proceeds have been used for the purposes specified in
Section 7.16.

(f) Activities and Proceeds. Neither Borrower nor any of its affiliates (if any)
will engage in any activities or use directly or indirectly the proceeds from
the Loan for any purpose for which a small business investment company is
prohibited from providing funds by the SBIC Act, including 13 C.F.R.
§107.720. Without obtaining the prior written approval of Agent, Borrower will
not change within 1 year of the date hereof, Borrower’s current business
activity to a business activity which a licensee under the SBIC Act is
prohibited from providing funds by the SBIC Act.

(g) Redemption Provisions. Notwithstanding any provision to the contrary
contained in the Certificate of Incorporation of Borrower, as amended from time
to time (the “Charter”), if, pursuant to the redemption provisions contained in
the Charter, Lender is entitled to a redemption of its Warrant, such redemption
(in the case of Lender) will be at a price equal to the redemption price set
forth in the Charter (the “Existing Redemption Price”). If, however, Lender
delivers written notice to Borrower that the then current regulations
promulgated under the SBIC Act prohibit payment of the Existing Redemption Price
in the case of an SBIC (or, if applied, the Existing Redemption Price would
cause the Common Stock to lose its classification as an “equity security” and
Lender has determined that such classification is unadvisable), the amount
Lender will be entitled to receive shall be the greater of (i) fair market value
of the securities being redeemed taking into account the rights and preferences
of such securities plus any costs and expenses of the Lender incurred in making
or maintaining the Warrant, and (ii) the Existing Redemption Price where the
amount of accrued but unpaid dividends payable to the Lender is limited to
Borrower’s earnings plus any costs and expenses of the Lender incurred in making
or maintaining the Warrant; provided, however, the amount calculated in
subsections (i) or (ii) above shall not exceed the Existing Redemption Price.

 

Loan and Security Agreement - Amedica

4

--------------------------------------------------------------------------------

(h) Compliance and Resolution. Borrower agrees that a failure to comply with
Borrower’s obligations under this Addendum, or any other set of facts or
circumstances where it has been asserted by any governmental regulatory agency
(or Agent or Lender believes that there is a substantial risk of such assertion)
that Agent, Lender and their affiliates are not entitled to hold, or exercise
any significant right with respect to, any securities issued to Lender by
Borrower, will constitute a breach of the obligations of Borrower under the
financing agreements among Borrower, Agent and Lender. In the event of (i) a
failure to comply with Borrower’s obligations under this Addendum; or (ii) an
assertion by any governmental regulatory agency (or Agent or Lender believes
that there is a substantial risk of such assertion) of a failure to comply with
Borrower’s obligations under this Addendum, then (i) Agent, Lender and Borrower
will meet and resolve any such issue in good faith to the satisfaction of
Borrower, Agent, Lender, and any governmental regulatory agency, and (ii) upon
request of Lender or Agent, Borrower will cooperate and assist with any
assignment of the financing agreements among Hercules Technology III, L.P. and
Hercules Technology Growth Capital, Inc.

 

Loan and Security Agreement - Amedica

5

--------------------------------------------------------------------------------

SCHEDULE A

COMMITMENTS

 

Name of Lender

   Term Loan
Commitment      Pro Rata
Share of
Term Loan
Commitments     Total
Commitments      Pro Rata Share
of
Commitments  

Hercules Technology Growth Capital, Inc.

   $ 10,000,000         50.0 %    $ 10,000,000         50.0 % 

Hercules Technology III, L.P.

   $ 10,000,000         50.0 %    $ 10,000,000         50.0 %    

 

 

    

 

 

   

 

 

    

 

 

 

TOTAL

   $ 20,000,000         100 %    $ 20,000,000         100 %    

 

 

    

 

 

   

 

 

    

 

 

 

 

Loan and Security Agreement - Amedica

6

--------------------------------------------------------------------------------

DISCLOSURES

SCHEDULE 5.2

MATERIAL AGREEMENTS

 

1. Underwriting Agreement between Borrower and JMP Securities.

 

2. Restated Certificate of Incorporation, as amended and as currently in effect.

 

3. Amended and Restated By-Laws, as currently in effect.

 

4. Fifth Amended and Restated Registration Rights Agreement by and among
Borrower and certain of its stockholders, dated as of July 27, 2010.

 

5. Warrant Agreement by and between Borrower and Creation Capital LLC, dated as
of February 24, 2006.

 

6. Series D Warrant Agreement by and between Borrower and Creation Capital LLC,
dated as of April 27, 2007.

 

7. Common Stock Warrant Agreement by and between Borrower and Creation Capital
LLC, dated as of April 30, 2008.

 

8. Series E Warrant Agreement by and between Borrower and Creation Capital LLC,
dated as of September 14, 2010.

 

9. Warrant to Purchase 156,978 Shares of Series F Convertible Preferred Stock by
and between Borrower and GE Capital Equity Investments, Inc., dated as of
December 17, 2012.

 

10. Warrant to Purchase 113,022 Shares of Series F Convertible Preferred Stock
by and between Borrower and Zions First National Bank, dated as of December 17,
2012.

 

11. Warrant to Purchase Shares of Common Stock of Borrower by and between
Borrower and the University of Utah Research Foundation, dated as of
February 17, 2010.

 

12. Warrant to Purchase Shares of Common Stock of Borrower by and between
Borrower and Zions First National Bank, dated as of March 17, 2011.

 

13. Series E Warrant Agreement by and between Borrower and Zions First National
Bank, dated as of April 7, 2010.

 

14. Warrant to Purchase Shares of Common Stock of Borrower, issued to TGP
Securities, Inc. on August 30, 2013 and September 20, 2013, as amended.

 

15. Amendment to Warrant to Purchase Shares of Common Stock of Borrower, issued
to TGP Securities, Inc., dated as of December 23, 2013.

 

16. Joint Development and License Agreement by and between Borrower and
Orthopaedic Synergy, Inc., dated as of February 8, 2010.

 

17. Distribution Agreement by and between Borrower and Orthopaedic Synergy,
Inc., dated as of February 22, 2010, and First Amendment and Addendum thereto,
dated as of November 1, 2012.

 

18. Centrepointe Business Park Lease Agreement Net by and between Borrower and
Centrepointe Properties, LLC, dated as of April 21, 2009.

 

Loan and Security Agreement – Amedica signature page

--------------------------------------------------------------------------------

19. First Addendum to Centrepointe Business Park Lease Agreement Net by and
between Borrower and Centrepointe Properties, LLC, dated as of January 31, 2012.

 

20. Employment Term Sheet by and between Borrower and Jay M. Moyes, dated as of
October 29, 2013.

 

21. Restricted Stock Unit Agreement by and between Borrower and Jay Moyes, dated
as of October 30, 2013.

 

22. Indemnification Agreement by and between Borrower and its directors and
officers.

 

23. Amedica Corporation Amended and Restated 2012 Equity Incentive Plan.

 

24. 2012 Stock Option Grant Notices and Stock Option Agreements.

 

25. 2012 Restricted Stock Awards and Restricted Stock Unit Agreements.

 

26. Amedica Corporation 2003 Stock Option Plan.

 

27. 2003 Non-Qualified Stock Option Agreements and Notices of Exercise of
Non-Qualified Stock Options thereunder.

 

28. 2003 Incentive Stock Option Agreements and Notices of Exercise of Incentive
Stock Options thereunder.

 

29. The Loan Documents executed as of the date hereof.

 

Loan And Security Agreement - Amedica

 

--------------------------------------------------------------------------------

SCHEDULE 5.8

INTELLECTUAL PROPERTY

Attached

 

Loan And Security Agreement - Amedica

 

--------------------------------------------------------------------------------

SCHEDULE 5.13

GOVERNMENT CONTRACTS; GOVERNMENT ACCOUNTS

None.

 

Loan And Security Agreement - Amedica

--------------------------------------------------------------------------------

SCHEDULE 6.13

POST CLOSING REQUIREMENTS

1. A termination letter dated on or about June 30, 2014, relating to that
certain Lockbox Account Agreement dated December 17, 2012, among Zions First
National Bank, a national banking association, Amedica Corporation, and General
Electric Capital Corporation, as agent.

2. That certain Termination And Release Of Security Interest In Patents And
Trademarks dated on or about June 30, 2014, executed by General Electric Capital
Corporation, in its capacity as administrative and collateral agent.

3. A termination letter dated on or about June 30, 2014, relating to that
certain Deposit Account Control Agreement, dated December 17, 2012, among Zions
First National Bank, a national banking association, Amedica Corporation, US
Spine, Inc., and General Electric Capital Corporation, as agent.

4. A termination letter agreement for that certain agreement dated December 17,
2012, among Western National Trust Company, a non-deposit trust company
regulated by the office of the Comptroller of the Currency,, General Electric
Capital Corporation, in its capacity as administrative and collateral agent and
Amedica Corporation.

5. A termination letter agreement for that certain letter agreement dated
December 7, 2012 among Millstone Medical Outsourcing), Amedica Corporation, and
General Electric Capital Corporation, as agent.

--------------------------------------------------------------------------------

SCHEDULE 7.1

LIENS IN EXISTENCE ON THE CLOSING DATE

None.

--------------------------------------------------------------------------------

SCHEDULE 7.2

INDEBTEDNESS IN EXISTENCE ON THE CLOSING DATE

None.

--------------------------------------------------------------------------------

SCHEDULE 7.7

INVESTMENTS IN EXISTENCE ON THE CLOSING DATE

None.

--------------------------------------------------------------------------------

SCHEDULE 11.1

PERMITTED DISPOSITIONS (PATENTS)

 

ML Ref

  

US Patent /
Publication #

  

Application #

  

Issue Date

  

Filing Date

  

Title

  

Status

517001AU    AU 755174    AU 19980086635    3/20/2003    7/27/1998    CEMENTED
PROSTHETIC COMPONENT    Granted 517001CA    CA 2304677    CA 2304677   
4/17/2007    7/27/1998    CEMENTED PROSTHETIC COMPONENT    Granted 517001EP   
EP 1023009    EP 98938019.1    3/26/2008    7/27/1998    CEMENTED PROSTHETIC
COMPONENT    Granted 517001CH    EP 1023009    EP 98938019.1    3/26/2008   
7/27/1998    CEMENTED PROSTHETIC COMPONENT    Granted 517001DE    DE 69839308   
EP 98938019.1    3/26/2008    7/27/1998    CEMENTED PROSTHETIC COMPONENT   
Granted 517001GB    EP 1023009    EP 98938019.1    3/26/2008    7/27/1998   
CEMENTED PROSTHETIC COMPONENT    Granted 517001JP    JP 2002-521129   
JP 2000-0561913    n/a    7/27/1998    CEMENTED PROSTHETIC COMPONENT   
Abandoned 517001KR    KR 0638949    KR 2000-7003286    10/19/2006    7/27/1998
   CEMENTED PROSTHETIC COMPONENT    Granted 517D01KR       KR 2006-7013931   
n/a    7/27/1998    CEMENTED PROSTHETIC COMPONENT    Abandoned 517001US   
5876460    08/709186    3/2/1999    9/6/1996    CEMENTED PROSTHETIC COMPONENT
AND PLACEMENT METHOD    Active 517N01US    6355067    09/509282    3/12/2002   
3/22/2000    CEMENTED PROSTHETIC COMPONENT AND PLACEMENT METHOD    Active

--------------------------------------------------------------------------------

EXHIBIT A

SECRETARY’S CERTIFICATE OF AUTHORITY

[DATE]

Reference is made to the Loan and Security Agreement, dated as of June 30, 2014
(as amended, restated, supplemented or otherwise modified from time to time, the
“Agreement”), among Amedica Corporation, a Delaware corporation (the
“Borrower”), the guarantors from time to time party thereto, Hercules Technology
Growth Capital, Inc., a Maryland corporation (“HTGC”), as a lender and as agent
(in such capacity, together with its successors and assigns in such capacity,
“Agent”), and the other lenders signatory thereto from time to time (HTGC and
such other lenders, the “Lenders”). Capitalized terms used but not defined
herein are used with the meanings assigned to such terms in the Agreement.

I, [                    ], do hereby certify that:

(i) I am the duly elected, qualified and acting [Assistant] Secretary of [INSERT
NAME OF LOAN PARTY] (the “Company”);

(ii) attached hereto as Exhibit A are true, complete and correct copies of the
Company’s [Restated Certificate/Articles of Incorporation or Articles of
Organization/Certificate of Formation] and the [Bylaws/LLC Agreement/Partnership
Agreement], each of which is in full force and effect on and as of the date
hereof;

(iii) each of the following named individuals is a duly elected or appointed,
qualified and acting officer of the Company who holds the offices set opposite
such individual’s name, and such individual is authorized to sign the Loan
Documents to which the Company is a party and all other notices, documents,
instruments and certificates to be delivered pursuant thereto, and the signature
written opposite the name and title of such officer is such officer’s genuine
signature:

 

Name

 

Title

 

Signature

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(iv) attached hereto as Exhibit B are true, complete and correct copies of
resolutions adopted by the Board of Directors/Members of the Company (the
“Board”) authorizing the execution, delivery and performance of the Loan
Documents to which the Company is a party, which resolutions were duly adopted
by the Board on [DATE] and all such resolutions are in full force and effect on
the date hereof in the form in which adopted without amendment, modification,
rescission or revocation;

(v) the Company is organized and in good standing in the State of Delaware and
is duly qualified to do business and in good standing in the State of Utah, as
evidenced by the Certificates of Good Standing attached hereto as Exhibit C.

(vi) the foregoing authority shall remain in full force and effect, and Agent
and each Lender shall be entitled to rely upon same, until written notice of the
modification, rescission or revocation of same, in whole or in part, has been
delivered to Agent and each Lender, but no such modification, rescission or
revocation shall, in any event, be effective with respect to any documents
executed or actions taken in reliance upon the foregoing authority before such
written notice is delivered to Agent and each Lender; and

--------------------------------------------------------------------------------

(vii) no Default or Event of Default has occurred and is continuing or will
result from the making of the Loan, and all representations and warranties of
the Company in the Loan Documents are true, accurate and complete in all
material respects (but in all respects if such representation or warranty is
qualified by “material” or “Material Adverse Effect”) on and as of the date
hereof, except to the extent such representations and warranties expressly
relate to an earlier date, in which case such representations and warranties
were true, accurate and complete in all material respects (but in all respects
if such representation or warranty is qualified by “material” or “Material
Adverse Effect”) on and as of such earlier date.

[Signature Page Follows]

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, I have hereunto set my hand as of the first date written
above

 

 

Name:  

 

Title:   [Assistant] Secretary

The undersigned does hereby certify on behalf of the Company that he/she is the
duly elected or appointed, qualified and acting [TITLE] of the Company and that
[NAME FROM ABOVE] is the duly elected or appointed, qualified and acting
[Assistant] Secretary of the Company, and that the signature set forth
immediately above is his/her genuine signature.

 

 

Name:  

 

Title:  

 

--------------------------------------------------------------------------------

EXHIBIT B TO SECRETARY’S CERTIFICATE OF AUTHORITY

[FORM OF] RESOLUTIONS

BOARD RESOLUTIONS

                 , 20    

WHEREAS, Amedica Corporation, a Delaware corporation (“Borrower”) has requested
that Hercules Technology Growth Capital, Inc., a Maryland corporation (“HTGC”),
as agent (in such capacity, together with its successors and assigns in such
capacity, the “Agent”) and lender, and certain other lenders (HTGC and such
other lenders, collectively, the “Lenders”) provide a credit facility in a
maximum principal amount not to exceed $20,000,000 (the “Credit Facility”); and

WHEREAS, the terms of the Credit Facility are set forth in a loan and security
agreement by and among Borrower, the guarantors from time to time party thereto,
Agent, and the Lenders and certain related agreements, documents and instruments
described in detail below; and

[WHEREAS, as a subsidiary of Borrower,             , the “Company”) will benefit
from the making of the loan(s) to Borrower under the Credit Facility; and]

WHEREAS, the Board of Directors of [Borrower] [Company] (the “Directors”) deems
it advisable and in the best interests of [Borrower] [Company] to execute,
deliver and perform its obligations under those transaction documents described
and referred to below.

NOW, THEREFORE, be it

RESOLVED, that the Credit Facility be, and it hereby is, approved; and further

RESOLVED, that the form of Loan and Security Agreement (the “Loan and Security
Agreement”), by and among [Borrower], [Company,] the [other] guarantors from
time to time party thereto, Agent and the Lenders, as presented to the
Directors, be and it hereby is, approved and the [President, the Chief Executive
Officer, Chief Financial Officer, the Vice President or Treasurer] of [Borrower]
[Company] (collectively, the “Proper Officers”) be, and each of them hereby is,
authorized and directed on behalf of [Borrower] [Company] to execute and deliver
to Agent the Loan and Security Agreement, in substantially the form as presented
to the Directors, with such changes as the Proper Officers may approve, such
approval to be conclusively evidenced by execution and delivery thereof; and
further

[RESOLVED, that the form of Promissory Note (the “Note”), as presented to the
Directors, be, and it hereby is, approved and the Proper Officers be, and each
of them hereby is, authorized and directed on behalf of Borrower to execute and
deliver to Lender one or more promissory Notes, in substantially the form as
presented to the Directors, with such changes as the Proper Officers may
approve, such approval to be conclusively evidenced by execution and delivery
thereof; and further]

[RESOLVED, that the form(s) of [Intellectual Property Security Agreements]
[Pledge Agreement] [and] [Account Control Agreement] [(collectively, the
“Security Documents”)] [and the form of the Common Stock Warrants (“Lender
Warrants”),] [Disbursement Letter,] [Fee Letter,] [Guaranty,] [INCLUDE OTHER
DOCUMENTS AS APPROPRIATE] (together with the Security Documents, the “Ancillary
Documents”), each as presented to the Directors, be, and each of them hereby is,
approved and the Proper Officers be, and each of them hereby is, authorized and
directed on behalf of Borrower to execute and deliver to Agent each of the
Ancillary Documents, in

--------------------------------------------------------------------------------

substantially the form as presented to the Directors, with such changes as the
Proper Officers may approve, such approval to be conclusively evidenced by
execution and delivery thereof; and further]

RESOLVED, that the Proper Officers be, and each of them hereby is, authorized
and directed to execute and deliver any and all other agreements, certificates,
security agreements, financing statements, indemnification agreements,
instruments and documents (together with the Loan and Security Agreement, [the
Notes] [, and the Ancillary Documents], the “Loan Documents”) and take any and
all other further action, in each case, as may be required or which they may
deem appropriate, on behalf of [Borrower] [Company], in connection with the
Credit Facility and carrying into effect the foregoing resolutions, transactions
and matters contemplated thereby; and further

RESOLVED, that [Borrower] [Company] is hereby authorized to perform its
obligations under the Loan Documents [including, without limitation, the
borrowing of any advances made under the Credit Facility and] the granting of
any security interest in [Borrower’s] [Company’s] assets contemplated thereby to
secure [Borrower’s] [Company’s] obligations in connection therewith; and further

RESOLVED, that the issuance and delivery of shares of the Company’s Common Stock
issuable upon exercise of the Lender Warrants pursuant to their terms be, and it
hereby is, authorized and approved in all respects and the shares of the
Company’s Common Stock (and any additional shares of Common Stock issuable upon
operation of any anti-dilution or other adjustment provisions provided for under
the Lender Warrants or the Company’s Certificate of Incorporation then in
effect) be, and they hereby are, reserved for issuance;

RESOLVED, that upon exercise of the Lender Warrants pursuant to its terms, the
shares of Common Stock issuable upon exercise of the Lender Warrants shall be
duly and validly issued, fully paid and nonassessable;

RESOLVED, that the officers of the Company be, and each of them hereby is,
authorized and directed, for and on behalf of the Company, to execute and
deliver one or more certificates for the Common Stock to be issued upon exercise
of the Lender Warrants, in such form as may be approved by such officers;

RESOLVED, that the (a) Lender Warrants, and (b) the Common Stock issuable upon
exercise of the Lender Warrants shall be offered, sold and issued in reliance on
any applicable exemption from registration provided by the Securities Act of
1933, as amended, and any applicable exemption under applicable state blue sky
laws, and that the officers of the Company be, and each of them hereby is,
authorized and directed, for and on behalf of the Company, to execute and file
any forms, certificates, notices or other documents that are necessary or
appropriate pursuant to federal or state securities laws;

RESOLVED, that in addition to executing any documents approved in the preceding
resolutions, the Secretary or any Assistant Secretary of [Borrower] [Company]
may attest to such Loan Documents, the signature thereon or the corporate seal
of [Borrower] [Company] thereon; and further

RESOLVED, that any actions taken by the Proper Officers prior to the date of
these resolutions in connection with the transactions contemplated by these
resolutions are hereby ratified and approved; and further

RESOLVED, that these resolutions shall be valid and binding upon [Borrower]
[Company].

--------------------------------------------------------------------------------

EXHIBIT B

COMPLIANCE CERTIFICATE

[DATE]

Reference is made to the Loan and Security Agreement, dated as of June 30, 2014
(as amended, restated, supplemented or otherwise modified from time to time, the
“Agreement”), among Amedica Corporation, a Delaware corporation (the
“Borrower”), the guarantors from time to time party thereto, Hercules Technology
Growth Capital, Inc., a Maryland corporation (“HTGC”), in its capacity as agent
(in such capacity, together with its successors and assigns, in such capacity,
the “Agent”) and lender, and the other lenders signatory thereto (HTGC and such
other lenders, the “Lenders”). Capitalized terms used but not defined herein are
used with the meanings assigned to such terms in the Agreement.

I, [                    ], do hereby certify that:

(i) I am the duly elected, qualified and acting chief financial officer of
Borrower;

(ii) attached hereto as Exhibit A are the financial statements required to be
delivered in accordance with Section 6.3(a) of the Agreement, which financial
statements fairly present, in all material respects, in accordance with GAAP the
financial position and the results of operations of Borrower and its
Subsidiaries as of the dates of and for the periods covered by such financial
statements (subject, in the case of interim financial statements, to normal
year-end adjustments and the absence of footnote disclosure);

(iii) no Default or Event of Default has occurred under the Agreement which has
not been previously disclosed, in writing, to Agent;

(iv) all representations and warranties of the Loan Parties stated in the Loan
Documents are true and correct in all material respects (but in all respects if
such representation or warranty is qualified by “material” or “Material Adverse
Effect”) on and as of the date hereof, except to the extent such representations
and warranties expressly relate to an earlier date, in which case such
representations and warranties were true and correct in all material respects
(but in all respects if such representation or warranty is qualified by
“material” or “Material Adverse Effect”) on and as of such earlier date;

(v) the Loan Parties own no Margin Stock;

(vi) attached is a list of new applications or registrations that any Loan Party
has made or filed (or acquired) in respect of any Intellectual Property of a
Loan Party or any material change in status of any outstanding application or
registration since the date of the last Compliance Certificate delivered to
Agent; and

(vii) set forth below is a list of all Deposit Accounts and Securities Accounts
maintained in the name of each Loan Party and whether such account has been
opened since the date of the last Compliance Certificate.

 

    

Bank/Financial Institution

  

Account Number

  

New Account?

1)          Yes    No 2)          Yes    No 3)          Yes    No 4)         
Yes    No

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IN WITNESS WHEREOF, I have hereunto set my hand as of the first date written
above

 

 

 

Name:  

 

Title:  

 

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EXHIBIT C-1

FORM OF LANDLORD CONSENT

[Landlord]

[Address]

[            ,             ]

Ladies and Gentlemen:

Hercules Technology Growth Capital, Inc. (together with its successors and
assigns, if any, “Agent”) and certain other lenders (the “Lenders”) have entered
into, or are about to enter into, a Loan and Security Agreement, dated as of
June 30, 2014 (as amended, restated, supplemented or otherwise modified from
time to time, the “Agreement”) with Amedica Corporation (“Borrower”) [and
            (“Company”)], pursuant to which [Borrower] [Company] has granted, or
will grant, to Agent, on behalf of itself and the Lenders, a security interest
in certain assets of [Borrower] [Company], including, without limitation, all of
[Borrower’s] [Company’s] cash, cash equivalents, accounts, books and records,
goods, inventory, machinery, equipment, furniture and trade fixtures (such as
equipment bolted to floors), together with all additions, substitutions,
replacements and improvements to, and proceeds, including, insurance proceeds,
of the foregoing, but excluding any and all building fixtures (such as plumbing,
lighting and HVAC systems that are permanently attached to the Premises)
(collectively, the “Collateral”). Some or all of the Collateral is, or will be,
located at certain premises known as [                    ] in the City or Town
of [                    , County of                      and State of
                    ] (“Premises”), and [Borrower] [Company] occupies the
Premises pursuant to a lease, dated as of [DATE], between [Borrower] [Company],
as tenant, and you, [NAME], as [owner/landlord/mortgagee/realty manager] (as
amended, restated, supplemented or otherwise modified from time to time, the
“Lease”).

By your signature below, you hereby agree that: (i) the Lease is in full force
and effect and you are not aware of any existing defaults thereunder, (ii) the
Collateral is, and shall remain, personal property regardless of the method by
which it may be, or become, affixed to the Premises; (iii) you agree to use your
best efforts to provide Agent with written notice of any default by [Borrower]
[Company] under the Lease resulting in a termination of the Lease (“Default
Notice”) and Agent shall have the right, but not the obligation to cure such
default within 15 days following Agent’s receipt of such Default Notice,
(iv) any security interest, landlord’s lien or other lien or interest that you
may have in the Collateral and any proceeds thereof (including, without
limitation, proceeds of any insurance therefor) shall be, and remain, subject
and subordinate to the security interest of Agent in the Collateral, and you
agree not to levy upon any Collateral or to assert any landlord lien, right of
distraint or other claim against the Collateral for any reason; (v) Agent, and
its employees and agents, shall have the right, from time to time, to enter into
the Premises for the purpose of inspecting the Collateral; and (vi) Agent, and
its employees and agents, shall have the right, upon any default by [Borrower]
[Company] under the Agreement, to enter into the Premises and to remove or
otherwise deal with the Collateral, including, without limitation, by way of
public auction or private sale (provided that, if Agent conducts a public
auction or private sale of the Collateral at the Premises, Agent shall use
reasonable efforts to notify Landlord first and to hold such auction or sale in
a manner that would not unduly disrupt Landlord’s or any other tenant’s use of
the Premises). Agent agrees to repair or reimburse you for any physical damage
actually caused to the Premises by Agent, or its employees or agents, during any
such removal or inspection (other than ordinary wear and tear), provided that it
is understood by the parties hereto that Agent shall not be liable for any
diminution in value of the Premises caused by the removal or absence of the
Collateral therefrom. You hereby acknowledge that Agent shall have no obligation
to remove or dispose of the Collateral from

--------------------------------------------------------------------------------

the Premises and no action by Agent pursuant to this Consent shall be deemed to
be an assumption by Agent of any obligation under the Lease and, except as
provided in the immediately preceding sentence, Agent shall not have any
obligation to you.

You hereby acknowledge and agree that [Borrower’s] [Company’s] granting of a
security interest in the Collateral in favor of Agent, on behalf of itself and
the Lenders, shall not constitute a default under the Lease nor permit you to
terminate the Lease or re-enter or repossess the Premises or otherwise be the
basis for the exercise of any remedy available to you.

This Consent and the agreements contained herein shall be binding upon, and
shall inure to the benefit of, any successors and assigns of the parties hereto
(including any transferees of the Premises). This Consent shall terminate upon
the indefeasible payment of Borrower’s indebtedness in full in immediately
available funds and the satisfaction in full of Borrower’s [and Company’s]
performance of its obligations under the Agreement and the related documents.

This Consent and any amendments, waivers, consents or supplements hereto or in
connection herewith may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. Delivery of an executed signature page of this Consent or any delivery
contemplated hereby by facsimile or electronic transmission shall be as
effective as delivery of a manually executed counterpart thereof.

--------------------------------------------------------------------------------

We appreciate your cooperation in this matter of mutual interest.

 

Hercules Technology Growth Capital, Inc., as Agent By:  

 

Name:  

 

Title:  

 

Legal Department Attention: Chief Legal Officer and Chad Norman 400 Hamilton
Avenue, Suite 310 Palo Alto, CA 94301 Facsimile: 650-473-9194 Telephone:
650-289-3060

AGREED TO AND ACCEPTED BY:

 

[NAME], as [owner/landlord/mortgagee/realty manager] By:  

 

Name:  

 

Title:  

 

Address: AGREED TO AND ACCEPTED BY: AMEDICA CORPORATION By:  

 

Name:  

 

Title:  

 

Interest in the Premises (check applicable box)

 

¡    Owner ¡    Mortgagee ¡    Landlord ¡    Realty Manager Address:    1885
West 2100 South    Salt Lake City, UT 84119    Attn.: Kevin Ontiveros

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EXHIBIT C-2

FORM OF BAILEE CONSENT

[Letterhead of Hercules]

            , 20    

 

[NAME OF BAILEE]

 

 

Re: [Name of the Loan Party] (the “Company”)

Dear Sirs:

Please accept this letter as notice that we have entered into or may enter into
financing arrangements with the Company under which the Company has granted to
us continuing security interests in substantially all personal property and
assets of the Company and the proceeds thereof, including, without limitation,
certain [equipment/inventory/goods] owned by the Company held by you at the
[manufacturing/warehouse] facility (the “Premises”) owned by you and located at
[                    ](the “Personal Property”).

Please acknowledge that as a result of such arrangements, you are holding all of
the Personal Property solely for our benefit and subject only to the terms of
this letter and our instructions; provided, however, that until you receive
further written notice from us, you are authorized to use and/or release any and
all of the Personal Property in your possession as directed by the Company in
the ordinary course of business. The foregoing instructions shall continue in
effect until we modify them in writing, which we may unilaterally do without any
consent or approval from the Company. Upon receipt of our instructions, you
agree that (a) you will release the Personal Property only to us or our
designee; (b) you will cooperate with us in our efforts to assemble, sell
(whether by public or private sale), take possession of, and remove all of the
Personal Property located at the Premises; (c) you will permit the Personal
Property to remain on the Premises for forty-five (45) days after your receipt
of our instructions or at our option, to have the Personal Property removed from
the Premises within a reasonable time, not to exceed forty-five (45) days after
your receipt of our instructions; (d) you will not hinder our actions in
enforcing our liens on the Personal Property; and (e) after receipt of our
instructions, you will abide solely by our instructions with respect to the
Personal Property, and not those of the Company.

You hereby waive and release in our favor: (a) any contractual lien, security
interest, charge or interest and any other lien which you may be entitled to
whether by contract, or arising at law or in equity against any Personal
Property; (b) any and all rights granted under any present or future laws to
levy or distrain for rent or any other charges which may be due to you against
the Personal Property; and (c) any and all other claims, liens, rights of
offset, deduction, counterclaim and demands of every kind which you have or may
hereafter have against the Personal Property.

You agree that (i) you have not and will not commingle the Personal Property
with any other property of a similar kind owned or held by you in any manner
such that the Personal Property is not readily identifiable, (ii) you have not
and will not issue any negotiable or non-negotiable documents or instruments
relating to the Personal Property, and (iii) the Personal Property is not and
will not be deemed to be fixtures.

--------------------------------------------------------------------------------

Notwithstanding the foregoing, all of your charges of any nature whatsoever
shall continue to be charged to and paid by the Company and we shall not be
liable for such charges.

You hereby authorize us to file at any time such financing statements naming you
as the debtor/bailee, Company as the secured party/bailor, and us as the
Company’s assignee, indicating as the collateral goods of the Company now or
hereafter in your custody, control or possession and proceeds thereof, and
including any other information with respect to the Company required under the
Uniform Commercial Code for the sufficiency of such financing statement or for
it to be accepted by the filing office of any applicable jurisdiction (and any
amendments or continuations with respect thereto).

The arrangement as outlined herein is to continue without modification, until we
have given you written notice to the contrary.

EACH OF THE PARTIES HERETO HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS LETTER.

Any notice(s) required or desired to be given hereunder shall be directed to the
party to be notified at the address stated herein.

The terms and conditions contained herein are to be construed and enforced in
accordance with the laws of the State of New York.

This terms and conditions contained herein shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns.

--------------------------------------------------------------------------------

The Company has signed below to indicate its consent to, and agreement with, the
foregoing arrangements, terms and conditions. By your signature below, you
hereby agree to be bound by the terms and conditions of this letter.

 

Very truly yours, Hercules Technology Growth Capital, Inc. By:  

 

Name:  

 

Title:   Duly Authorized Signatory Legal Department Attention: Chief Legal
Officer and Chad Norman 400 Hamilton Avenue, Suite 310 Palo Alto, CA 94301
Facsimile: 650-473-9194 Telephone: 650-289-3060

 

Agreed to: AMEDICA CORPORATION By:  

 

Name:  

 

Title:  

 

Address: 1885 West 2100 South Salt Lake City, UT 84119 [NAME OF BAILEE] By:  

 

Name:  

 

Title:  

 

Address:  

 

 

 

--------------------------------------------------------------------------------

EXHIBIT D

AUTOMATIC PAYMENT AUTHORIZATION AGREEMENT

 

Introduction: When you use the automatic payment service, the payment is
automatically made by electronic transfer directly from your bank account at the
financial institution specified below. An “authorized check signer” must
complete, sign and submit one copy of this Authorization Agreement.

Authorization Agreement for Automatic Payment Service (ACH Debits)

1. Amedica Corporation (“Borrower”) hereby authorizes Hercules Technology Growth
Capital, Inc. (“Agent”) to initiate debit entries from the account identified
below for amounts due under the Loan and Security Agreement, dated as of [DATE]
(as amended, restated, supplemented or otherwise modified from time to time, the
“Loan Agreement”), among Borrower, the guarantors from time to time party
thereto, Agent and the lenders from time to time party thereto and the other
Loan Documents. Capitalized terms used herein but not defined herein are used
herein as defined in the Loan Agreement.

2. Borrower understands that the payment of all Obligations are solely its
responsibility. If payment is not satisfied due to account closure, insufficient
funds, or cancellation of any required automated payment services, Borrower
agrees to remit payment plus any additional amounts due as set forth in the Loan
Agreement.

3. It is incumbent upon Borrower to give written notice to Agent of any changes
to this Authorization Agreement or the below referenced bank account information
10 days prior to payment date. Borrower may revoke this Authorization Agreement
by giving 10 days written notice to Agent unless otherwise stipulated in the
Loan Agreement.

4. If the account identified below is a joint account, all of the account
holders must sign this Authorization Agreement.

Account:

Provide the following information regarding the account to be debited.

 

           Account type:    ¨  Checking    ¨   Savings

           Financial Institution:  

 

           Name of Account:  

 

           Address of Financial Institution:  

 

           City/State/Zip:  

 

           Account #:  

 

           ABA Routing #:  

 

 

AMEDICA CORPORATION By:  

 

Name:   Title:  

--------------------------------------------------------------------------------

[INSERT NAME OF EACH JOINT-ACCOUNT HOLDER, IF ANY]

 

By:  

 

Name:   Title:  

--------------------------------------------------------------------------------

EXHIBIT E

FORM OF WARRANT

 

Loan And Security Agreement - Amedica

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EXHIBIT F

BORROWER CONVERSION ELECTION NOTICE

[INSERT DATE]

Hercules Technology Growth Capital, Inc.

400 Hamilton Avenue, Suite 310

Palo Alto, CA 94301

Reference is made to that certain Loan and Security Agreement dated June 30,
2014 and all ancillary documents entered into in connection with such Loan and
Security Agreement all as may be amended from time to time, (hereinafter
referred to collectively as the “Loan Agreement”) between Hercules Technology
Growth Capital, Inc., as administrative and collateral agent for Lenders and
Amedica, Inc. (the “Company”) as Borrower. All capitalized terms not defined
herein shall have the same meaning as defined in the Loan Agreement.

Borrower hereby irrevocably elects to make the Principal Installment Payment in
the amount of $         due on [            ] (the “Delivery Date”) in shares of
Common Stock in accordance with Section 2.4(h)(i) of the Loan Agreement.1 The
number of shares of Common Stock to be delivered to Lender, on or prior to the
Delivery Date, is [                    ], which amount was determined in
accordance with Section 2.4(h) of the Loan Agreement. The stock certificates
shall be delivered free and clear of any restrictive legends.

Borrower hereby represents, warrants and certifies to Lender that, as of the
date hereof, all of the Conversion Conditions have been satisfied. Borrower
acknowledges and agrees that its right to pay the Principal Installment Payment
in Common Stock in accordance with this Borrower Conversion Election Notice is
subject to the satisfaction of all of the Conversion Conditions on the Delivery
Date and, to the extent any of the Conversion Conditions are not satisfied on
the Delivery Date, Borrower shall pay the Principal Installment Payment in cash
rather than in Common Stock.

 

Sincerely, AMEDICA, INC. By:  

 

Name:  

 

Its:  

 

 

1 Note: In accordance with Section 2.4(h) of the Loan Agreement, the Delivery
Date must be at least 10 days following the date of delivery of this Borrower
Conversion Election Notice.

 

Loan And Security Agreement - Amedica

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EXHIBIT G

AGENT CONVERSION ELECTION NOTICE

[INSERT DATE]

Amedica, Inc.

[ADDRESS]

Reference is made to that certain Loan and Security Agreement dated June 30,
2014 and all ancillary documents entered into in connection with such Loan and
Security Agreement all as may be amended from time to time, (hereinafter
referred to collectively as the “Loan Agreement”) between Hercules Technology
Growth Capital, Inc., as administrative and collateral agent for Lenders and
Amedica, Inc. (the “Company”) as Borrower. All capitalized terms not defined
herein shall have the same meaning as defined in the Loan Agreement.

On behalf of Lenders, Agent hereby irrevocably elects to receive the Principal
Installment Payment in the amount of $         due on [            ] (the
“Delivery Date”) in shares of Common Stock in accordance with
Section 2.4(h)(iii) of the Loan Agreement.1 The number of shares of Common Stock
to be delivered to Lenders, on or prior to the Delivery Date, is
[                    ], which amount was determined in accordance with
Section 2.4(h) of the Loan Agreement. The stock certificates shall be delivered
free and clear of any restrictive legends.

The payment of the Principal Installment Payment in Common Stock in accordance
with this Agent Conversion Election Notice is subject to the satisfaction of all
of the Conversion Conditions on the Delivery Date and, to the extent any of the
Conversion Conditions are not satisfied on the Delivery Date, Borrower shall pay
the Principal Installment Payment in cash rather than in Common Stock.

 

Sincerely, Hercules Technology Growth Capital, Inc. By:  

 

Name:  

 

Its:  

 

 

1 Note: In accordance with Section 2.4(h) of the Loan Agreement, the Delivery
Date must be at least 10 days following the date of delivery of this Agent
Conversion Election Notice.

 

Loan And Security Agreement - Amedica

--------------------------------------------------------------------------------

EXIBIIT H

CONVERTIBLE DEBT FINANCING TERMS

 

Loan And Security Agreement - Amedica