Exhibit 10.1

EXECUTION COPY

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (the “Agreement”) is made as of the 30th day
of June, 2014 by and between Amedica Corporation, a Delaware corporation (the
“Company”), and MG Partners II Ltd., a company with limited liability organized
under the laws of Gibraltar (the “Investor”).

WHEREAS, the Company and the Investor are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”),
and Rule 506 of Regulation D (“Regulation D”) as promulgated by the United
States Securities and Exchange Commission (the “Commission”) under the 1933 Act
(without limiting any other such exemption which may apply to the transactions
contemplated by this Agreement);

WHEREAS, the Company has authorized the issuance of senior convertible notes, in
the aggregate original principal amount of $6,400,000, in the form attached
hereto as Exhibit A (the “Notes”), which Notes shall be convertible into shares
of the Company’s common stock, $0.01 par value per share (the “Common Stock”),
in accordance with the terms of the Notes;

WHEREAS, in consideration for the Investor’s execution and delivery of this
Agreement, the Company is concurrently causing its transfer agent to issue to
the Investor the Commitment Shares (as defined below), upon the terms and
subject to the conditions set forth in this Agreement;

WHEREAS, Investor wishes to purchase, and the Company wishes to sell at the
Initial Closing (as defined below), upon the terms and conditions stated in this
Agreement, (i) a Note in the aggregate original principal amount as set forth in
column (3) on Schedule I hereto (the “Initial Note”) (and the shares of Common
Stock issuable upon conversion thereof, collectively, the “Initial Conversion
Shares”) and (ii) a warrant to initially acquire up to the aggregate number of
additional shares of Common Stock set forth opposite such Investor’s name in
column (4) on Schedule I hereto, in the form attached hereto as Exhibit B (the
“Warrants”) (as exercised, collectively, the “Warrant Shares”).

WHEREAS, subject to the terms and conditions set forth in this Agreement, the
Company may require the Investor to participate in an Additional Closing (as
defined below) for the purchase by the Investor, and the sale by the Company, of
a Note in an original principal amount as set forth in column (5) on Schedule I
hereto (the “Additional Note”) (and the shares of Common Stock issuable upon
conversion thereof, collectively, the “Additional Conversion Shares” and,
collectively with the Initial Conversion Shares, the “Conversion Shares”);

WHEREAS, the Notes, the Conversion Shares, the Commitment Shares, the Warrants
and the Warrant Shares are collectively referred to herein as the “Securities”
and the offering contemplated hereby is referred to herein as the “Offering”;

WHEREAS, the parties have agreed that the obligation to repay the Notes shall be
an unsecured obligation of the Company; and

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WHEREAS, at the Initial Closing, the parties hereto shall execute and deliver a
Registration Rights Agreement, in the form attached hereto as Exhibit C (the
“Registration Rights Agreement”), pursuant to which the Company has agreed to
provide certain registration rights with respect to the Registrable Securities
(as defined in the Registration Rights Agreement), under the 1933 Act and the
rules and regulations promulgated thereunder, and applicable state securities
laws.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and in consideration of the premises and the
mutual agreements, representations and warranties, provisions and covenants
contained herein, the parties hereto, intending to be legally bound hereby,
agree as follows:

1. Issuance of Commitment Shares; Purchase and Sale of Notes and Warrants.

1.1 Issuance of Commitment Shares. In consideration for the Investor’s execution
and delivery of this Agreement, concurrently with the execution and delivery of
this Agreement on the Initial Closing Date (as defined below), the Company shall
deliver irrevocable instructions to its transfer agent (the “Transfer Agent”),
substantially in the form of Exhibit D attached hereto, to issue to the
Investor, not later than 4:00 p.m. (New York City time) on the third
(3rd) Trading Day (as defined in the Notes) immediately following the Initial
Closing Date, a certificate representing an aggregate of 50,853 shares of duly
authorized, validly issued, fully paid and nonassessable shares of Common Stock
(collectively, the “Commitment Shares”), in the name of the Investor or its
designee (in which case such designee name shall have been provided to the
Company prior to the Closing Date). Such certificate shall be delivered to the
Investor by overnight courier at its address set forth in Section 12.4 hereof.
For the avoidance of doubt, all of the Commitment Shares shall be fully earned
as of the Initial Closing Date regardless of whether the Additional Closing (as
defined below) shall occur.

1.2 Purchase and Sale of Initial Notes and Warrants. Subject to the satisfaction
(or, where legally permissible, the waiver) of the conditions set forth in
Section 4.1, the Company shall issue and sell to the Investor, and the Investor
shall purchase from the Company on the Initial Closing Date (as defined below),
an Initial Note in the aggregate original principal amount as set forth in
column (3) on Schedule I hereto along with Warrants to initially acquire up to
the aggregate number of Warrant Shares as is set forth in column (4) on Schedule
I hereto (the “Initial Closing”).

1.3 Purchase and Sale of Additional Notes. Subject to the satisfaction (or,
where legally permissible, the waiver) of the conditions set forth in Sections
3.2(b) and 4.2 below, the Company shall issue and sell to the Investor, and the
Investor shall purchase from the Company on the Additional Closing Date (as
defined below), an Additional Note in the aggregate original principal amount as
set forth in column (5) on Schedule I hereto (the “Additional Closing”).

 

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1.4 Form of Payment.

(a) On the Initial Closing Date, (i) the Investor shall pay the Initial Purchase
Price (as defined below) (less the amounts withheld pursuant to Section 12.12)
to the Company for the Initial Note and Warrants to be issued and sold to the
Investor at the Initial Closing, by wire transfer of immediately available funds
in accordance with the Company’s written wire instructions and (ii) immediately
following the Company’s receipt of such amount, the Company shall deliver to the
Investor (x) an Initial Note in the aggregate original principal amount as set
forth in column (3) on Schedule I hereto and (y) Warrants to initially acquire
up to the aggregate number of Warrant Shares as is set forth in column (4) on
Schedule I hereto, in each case, duly executed on behalf of the Company and
registered in the name of the Investor or its designee.

(b) On the Additional Closing Date, (i) the Investor shall pay the Additional
Purchase Price (as defined below) to the Company for the Additional Note to be
issued and sold to the Investor at the Additional Closing, by wire transfer of
immediately available funds in accordance with the Company’s written wire
instructions and (ii) immediately following the Company’s receipt of such
amount, the Company shall deliver to the Investor an Additional Note in the
aggregate original principal amount as set forth in column (5) on Schedule I
hereto, duly executed on behalf of the Company and registered in the name of the
Investor or its designee.

(c) Rank. The parties hereto acknowledge that the Initial Note and the
Additional Note shall be part of a single series of notes and shall rank pari
passu with each other.

2. Purchase Price. The purchase price for the Initial Note and Warrants to be
purchased by the Investor (the “Initial Purchase Price”) shall be the amount as
set forth in column (6) on Schedule I hereto. The purchase price for the
Additional Note to be purchased by the Investor (the “Additional Purchase
Price”, and together with the Initial Purchase Price, each, a “Purchase Price”)
shall be the amount as set forth in column (7) on Schedule I hereto. As
indicated on Schedule I, the Initial Note will be issued with an original issue
discount of approximately 13.79%.

3. Closings. The Initial Closing and the Additional Closing are each sometimes
referred to in this Agreement as a “Closing”. Each Closing shall occur at the
offices of Greenberg Traurig, LLP, MetLife Building, 200 Park Avenue, New York,
NY 10166.

3.1 Initial Closing. The date and time of the Initial Closing (the “Initial
Closing Date”) shall be 10:00 a.m. (New York City time), on the first
(1st) Trading Day (as defined below) (and including the date hereof if a Trading
Day) on which the conditions to the Initial Closing set forth in Section 4.1
below are satisfied or waived.

 

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3.2 Additional Closing.

(a) Additional Closing Date. If the Company delivers an Additional Closing
Notice (as defined below), the date and time of the Additional Closing shall be
10:00 a.m. (New York City time), on a date that is no later than the tenth
(10th) calendar day after the Effective Date (the “Additional Closing Date,” and
the Initial Closing Date and the Additional Closing Date are each sometimes
referred to in this Agreement as a “Closing Date”).

(b) Additional Closing Mechanics. Subject to the satisfaction (or waiver) of the
conditions set forth in this Section 3.2(b) and Section 4.2 below, the Company
shall have the right to require the Investor to purchase the Additional Note on
the Additional Closing Date by delivering to the Investor on the Effective Date,
by facsimile and overnight courier at its address set forth in Section 12.4
hereof, an irrevocable written notice that the Company has exercised its right
to require the Investor to purchase the Additional Note (the “Additional Closing
Notice”, and such date, the “Additional Closing Notice Date”). For the avoidance
of doubt, the Company shall not be entitled to effect an Additional Closing if
there shall exist an Additional Note Conditions Failure (as defined below).

4. Closing Conditions; Certain Covenants.

4.1 Conditions to the Initial Closing.

(a) Conditions of the Company to the Initial Closing. The obligation of the
Company to sell and issue the Initial Note and the Warrants to the Investor at
the Initial Closing is subject to the fulfillment, to the Company’s reasonable
satisfaction, prior to or at the Initial Closing, of each of the following
conditions:

(i) Representations and Warranties. The representations and warranties of the
Investor contained in this Agreement (x) that are not qualified by “materiality”
shall have been true and correct in all material respects when made and shall be
true and correct in all material respects as of the Initial Closing Date with
the same force and effect as if made on such dates, except to the extent such
representations and warranties are as of another date, in which case, such
representations and warranties shall be true and correct in all material
respects as of such other date and (y) that are qualified by “materiality” shall
have been true and correct when made and shall be true and correct as of the
Initial Closing Date with the same force and effect as if made on such dates,
except to the extent such representations and warranties are as of another date,
in which case, such representations and warranties shall be true and correct as
of such other date.

 

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(ii) Registration Rights Agreement. The Investor shall have duly executed and
delivered the Registration Rights Agreement to the Company.

(iii) Initial Purchase Price. The Company shall have received the Initial
Purchase Price.

(iv) No Injunction. No statute, regulation, order, decree, writ, ruling or
injunction shall have been enacted, entered, promulgated, threatened or endorsed
by any court or governmental authority of competent jurisdiction which prohibits
the consummation of or which would materially modify or delay any of the
transactions contemplated by the Transaction Documents.

(b) Conditions to the Investor to the Initial Closing. The obligation of the
Investor to purchase the Initial Note and the Warrants to be issued to the
Investor at the Initial Closing is subject to the satisfaction, or (where
legally permissible) the waiver by the Investor, on the Initial Closing Date, of
each of the following conditions:

(i) Representations and Warranties. The representations and warranties of the
Company contained in this Agreement (x) that are not qualified by “materiality”
or “Material Adverse Effect” shall have been true and correct in all material
respects when made and shall be true and correct in all material respects as of
the Initial Closing Date with the same force and effect as if made on such
dates, except to the extent such representations and warranties are as of
another date, in which case, such representations and warranties shall be true
and correct in all material respects as of such other date and (y) that are
qualified by “materiality” or “Material Adverse Effect” shall have been true and
correct when made and shall be true and correct as of the Initial Closing Date
with the same force and effect as if made on such dates, except to the extent
such representations and warranties are as of another date, in which case, such
representations and warranties shall be true and correct as of such other date.

(ii) Performance of the Company. The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement and the Registration Rights Agreement to be
performed, satisfied or complied with by the Company at or prior to the Initial
Closing Date. The Company shall have delivered to the Investor on the Initial
Closing Date a written certification by an executive officer of the Company to
the foregoing substantially in the form attached hereto as Exhibit E.

(iii) No Suspension of Trading in or Notice of Delisting of Common Stock.
Trading in the Common Stock shall not have been suspended by the Commission, the
Trading Market or the FINRA (except for any suspension of trading of less than
fourteen (14) days, which suspension shall be terminated prior to the Initial
Closing Notice Date), the Company shall not have received any final and
non-appealable notice that the listing or quotation of the Common Stock on the
Trading Market shall be terminated on a date certain (unless, prior to such date
certain, the Common Stock is listed or quoted on any other Trading Market),
trading in securities generally as reported on the Trading Market shall not have
been suspended or limited, nor shall a banking moratorium have been declared
either by the U.S. or New York State authorities (except

 

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for any suspension, limitation or moratorium which shall be terminated prior to
the Initial Closing Notice Date), there shall not have been imposed any
suspension of electronic trading or settlement services by the Depository Trust
Company (“DTC”) with respect to the Common Stock that is continuing, the Company
shall not have received any notice from DTC to the effect that a suspension of
electronic trading or settlement services by DTC with respect to the Common
Stock is being imposed or is contemplated (unless, prior to such suspension, DTC
shall have notified the Company in writing that DTC has determined not to impose
any such suspension), nor shall there have occurred any material outbreak or
escalation of hostilities or other national or international calamity or crisis
that has had or would reasonably be expected to have a material adverse change
in any U.S. financial, credit or securities market that is continuing.

(iv) Compliance with Laws. The Company shall have complied with all applicable
federal, state and local governmental laws, rules, regulations and ordinances in
connection with the execution, delivery and performance of this Agreement and
the other Transaction Documents (as defined below) to which it is a party and
the consummation of the transactions contemplated hereby and thereby, including,
without limitation, the Company shall have obtained all permits and
qualifications required by any applicable state securities or “Blue Sky” laws
for the offer and sale of the Securities by the Company to the Investor.

(v) No Injunction. No statute, regulation, order, decree, writ, ruling or
injunction shall have been enacted, entered, promulgated, threatened or endorsed
by any court or governmental authority of competent jurisdiction which prohibits
the consummation of or which would materially modify or delay any of the
transactions contemplated by the Transaction Documents.

(vi) No Proceedings or Litigation. No action, suit or proceeding before any
arbitrator or any court or governmental authority shall have been commenced or
threatened, and no inquiry or investigation by any governmental authority shall
have been commenced or threatened, against the Company or any Subsidiary, or any
of the officers, directors or affiliates of the Company or any Subsidiary,
seeking to restrain, prevent or change the transactions contemplated by the
Transaction Documents, or seeking material damages in connection with such
transactions.

(vii) Listing of Securities. All of the Conversion Shares and Warrant Shares
that may be issued pursuant to the Notes and Warrants, respectively, and all of
the Commitment Shares shall have been approved for listing or quotation on the
Trading Market as of the Initial Closing Date, in each case, without regard to
any limitations on conversion or exercise set forth in the Notes or Warrants,
respectively, subject only to notice of issuance.

(viii) No Material Adverse Effect. No condition, occurrence, state of facts or
event constituting a Material Adverse Effect shall have occurred and be
continuing.

 

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(ix) Opinion of Counsel. On the Initial Closing Date, the Investor shall have
received an opinion from outside counsel to the Company, dated the Initial
Closing Date, in the form mutually agreed to by the parties hereto prior to the
date hereof.

(x) Initial Note and Warrants; Delivery of Transfer Agent Instructions. At the
Initial Closing, the Company shall have (x) tendered to the Investor the Initial
Note and Warrants and (y) delivered irrevocable instructions to the Transfer
Agent, substantially in the form of Exhibit D attached hereto, to issue the
Commitment Shares to the Investor in accordance with Section 1.1 of this
Agreement.

(xi) Registration Rights Agreement. The Company shall have duly executed and
delivered the Registration Rights Agreement to the Investor.

(xii) Current Public Information. All reports, schedules, registrations, forms,
statements, information and other documents required to have been filed by the
Company with the Commission pursuant to the reporting requirements of the 1934
Act, including all material required to have been filed pursuant to
Section 13(a) or 15(d) of the 1934 Act, shall have been filed with the
Commission under the 1934 Act.

4.2 Conditions to the Additional Closing.

(a) Conditions of the Company to the Additional Closing. The obligation of the
Company to sell and issue the Additional Note to the Investor at the Additional
Closing is subject to the fulfillment, to the Company’s reasonable satisfaction,
prior to or at the Additional Closing, of each of the following conditions:

(i) Representations and Warranties. The representations and warranties of the
Investor contained in this Agreement (x) that are not qualified by “materiality”
shall have been true and correct in all material respects when made and shall be
true and correct in all material respects as of the Additional Closing Date with
the same force and effect as if made on such dates, except to the extent such
representations and warranties are as of another date, in which case, such
representations and warranties shall be true and correct in all material
respects as of such other date and (y) that are qualified by “materiality” shall
have been true and correct when made and shall be true and correct as of the
Additional Closing Date with the same force and effect as if made on such dates,
except to the extent such representations and warranties are as of another date,
in which case, such representations and warranties shall be true and correct as
of such other date.

(ii) No Injunction. No statute, regulation, order, decree, writ, ruling or
injunction shall have been enacted, entered, promulgated, threatened or endorsed
by any court or governmental authority of competent jurisdiction which prohibits
the consummation of or which would materially modify or delay any of the
transactions contemplated by the Transaction Documents.

 

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(b) Conditions of the Investor to the Additional Closing. The obligation of the
Investor to purchase the Additional Note to be issued to the Investor at the
Additional Closing is subject to the satisfaction, or (where legally
permissible) the waiver by the Investor, on the Additional Closing Date, of each
of the following conditions:

(i) Representations and Warranties. The representations and warranties of the
Company contained in this Agreement (x) that are not qualified by “materiality”
or “Material Adverse Effect” shall have been true and correct in all material
respects when made and shall be true and correct in all material respects as of
the Additional Closing Notice Date and the Additional Closing Date with the same
force and effect as if made on such dates, except to the extent such
representations and warranties are as of another date, in which case, such
representations and warranties shall be true and correct in all material
respects as of such other date and (y) that are qualified by “materiality” or
“Material Adverse Effect” shall have been true and correct when made and shall
be true and correct as of the Additional Closing Notice Date and the Additional
Closing Date with the same force and effect as if made on such dates, except to
the extent such representations and warranties are as of another date, in which
case, such representations and warranties shall be true and correct as of such
other date.

(ii) Performance of the Company. The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement, the Initial Note, the Warrants and the Registration
Rights Agreement to be performed, satisfied or complied with by the Company at
or prior to the Additional Closing Notice Date and the Additional Closing Date
(as applicable). The Company shall have delivered to the Investor on the
Additional Closing Date a written certification by an executive officer of the
Company to the foregoing substantially in the form attached hereto as Exhibit E.

(iii) Registration Statement Effective. The Initial Registration Statement (as
defined in the Registration Rights Agreement) covering the resale by the
Investor of the Registrable Securities covered thereby shall have been declared
effective under the Securities Act by the Commission and shall remain effective,
and the Investor shall be permitted to utilize the Prospectus therein to resell
such Registrable Securities.

(iv) No Material Notices. None of the following events shall have occurred and
be continuing: (a) receipt of any request by the Commission or any other federal
or state governmental authority for any additional information relating to the
Registration Statement, the Prospectus (as defined in the Registration Rights
Agreement) or any supplement to the Prospectus (each, a “Prospectus
Supplement”), or for any amendment of or supplement to the Registration
Statement, the Prospectus, or any Prospectus Supplement; (b) the issuance by the
Commission or any other federal or state governmental authority of any stop
order suspending the effectiveness of the Registration Statement or prohibiting
or suspending the use of the Prospectus or any Prospectus Supplement, or of the
suspension of qualification or exemption from qualification of the Securities
for offering or sale in any jurisdiction, or the initiation or contemplated
initiation of any proceeding for such purpose; or (c) the occurrence of any
event or the existence of any condition or state of facts, which makes any
statement of a material fact made in the Registration Statement, the Prospectus
or any Prospectus Supplement untrue

 

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or which requires the making of any additions to or changes to the statements
then made in the Registration Statement, the Prospectus or any Prospectus
Supplement in order to state a material fact required by the Securities Act to
be stated therein or necessary in order to make the statements then made therein
(in the case of the Prospectus or any Prospectus Supplement, in light of the
circumstances under which they were made) not misleading, or which requires an
amendment to the Registration Statement or a supplement to the Prospectus or any
Prospectus Supplement to comply with the Securities Act or any other law (other
than the transactions contemplated by the Additional Closing Notice and the
settlement thereof). The Company shall have no knowledge of any event that could
reasonably be expected to have the effect of causing the suspension of the
effectiveness of the Registration Statement or the prohibition or suspension of
the use of the Prospectus or any Prospectus Supplement in connection with the
resale of the Registrable Securities by the Investor.

(v) No Suspension of Trading in or Notice of Delisting of Common Stock. Trading
in the Common Stock shall not have been suspended by the Commission, the Trading
Market or the FINRA (except for any suspension of trading of less than fourteen
(14) days, which suspension shall be terminated prior to the Additional Closing
Notice Date), the Company shall not have received any final and non-appealable
notice that the listing or quotation of the Common Stock on the Trading Market
shall be terminated on a date certain (unless, prior to such date certain, the
Common Stock is listed or quoted on any other Trading Market), trading in
securities generally as reported on the Trading Market shall not have been
suspended or limited, nor shall a banking moratorium have been declared either
by the U.S. or New York State authorities (except for any suspension, limitation
or moratorium which shall be terminated prior to the Additional Closing Notice
Date), there shall not have been imposed any suspension of electronic trading or
settlement services by DTC with respect to the Common Stock that is continuing,
the Company shall not have received any notice from DTC to the effect that a
suspension of electronic trading or settlement services by DTC with respect to
the Common Stock is being imposed or is contemplated (unless, prior to such
suspension, DTC shall have notified the Company in writing that DTC has
determined not to impose any such suspension), nor shall there have occurred any
material outbreak or escalation of hostilities or other national or
international calamity or crisis that has had or would reasonably be expected to
have a material adverse change in any U.S. financial, credit or securities
market that is continuing.

(vi) Compliance with Laws. The Company shall have complied with all applicable
federal, state and local governmental laws, rules, regulations and ordinances in
connection with the execution, delivery and performance of this Agreement and
the other Transaction Documents to which it is a party and the consummation of
the transactions contemplated hereby and thereby, including, without limitation,
the Company shall have obtained all permits and qualifications required by any
applicable state securities or “Blue Sky” laws for the offer and sale of the
Securities by the Company to the Investor and the subsequent resale of the
Registrable Securities by the Investor (or shall have the availability of
exemptions therefrom).

 

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(vii) No Injunction. No statute, regulation, order, decree, writ, ruling or
injunction shall have been enacted, entered, promulgated, threatened or endorsed
by any court or governmental authority of competent jurisdiction which prohibits
the consummation of or which would materially modify or delay any of the
transactions contemplated by the Transaction Documents.

(viii) No Proceedings or Litigation. No action, suit or proceeding before any
arbitrator or any court or governmental authority shall have been commenced or
threatened, and no inquiry or investigation by any governmental authority shall
have been commenced or threatened, against the Company or any Subsidiary, or any
of the officers, directors or affiliates of the Company or any Subsidiary,
seeking to restrain, prevent or change the transactions contemplated by the
Transaction Documents, or seeking material damages in connection with such
transactions.

(ix) Listing of Securities. All of the Conversion Shares and Warrant Shares that
may be issued pursuant to the Notes and Warrants, respectively, and all of the
Commitment Shares shall have been approved for listing or quotation on the
Trading Market as of the Closing Date, in each case, without regard to any
limitations on conversion or exercise set forth in the Notes or Warrants,
respectively, subject only to notice of issuance.

(x) No Material Adverse Effect. No condition, occurrence, state of facts or
event constituting a Material Adverse Effect shall have occurred and be
continuing.

(xi) Delivery of Commitment Shares, Initial Conversion Shares and Warrant
Shares. The Company shall have delivered on a timely basis all of the Commitment
Shares required to be delivered pursuant to this Agreement, all of the Initial
Conversion Shares issuable upon any conversion of the Initial Note by the
Investor, as applicable, and all of the Warrant Shares issuable upon any
exercise of the Warrants by the Investor, as applicable.

(xii) No Restrictive Legends. If requested by the Investor from and after the
Effective Date, the Company shall have either (i) issued and delivered (or
caused to be issued and delivered) to the Investor one or more certificates
representing the Commitment Shares, the Initial Conversion Shares that have been
issued upon any conversion of the Initial Note by the Investor and the Warrant
Shares that have been issued upon any exercise of the Warrants by the Investor,
as applicable, that are free from all restrictive and other legends or
(ii) caused the Company’s transfer agent to credit the Investor’s or its
designee’s account at DTC through its Deposit/Withdrawal at Custodian (DWAC)
system with a number of shares of Common Stock equal to the number of Commitment
Shares, Initial Conversion Shares and/or Warrant Shares, as applicable,
represented by the certificate(s) delivered by the Investor to the Company in
accordance with Section 4.4 of this Agreement.

(xiii) Opinion of Counsel. On the Additional Closing Date, the Investor shall
have received an opinion from outside counsel to the Company, dated the
Additional Closing Date, in the form mutually agreed to by the parties hereto
prior to the date hereof.

 

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(xiv) Additional Note. At the Additional Closing, the Company shall have
tendered to the Investor the Additional Note.

(xv) Current Public Information. The Current Report (as defined below) shall
have been filed with the Commission as required pursuant to Section 4.3, and the
Initial Press Release and the Additional Press Release (each as defined below)
shall have been issued by the Company in accordance with Section 4.3. All
reports, schedules, registrations, forms, statements, information and other
documents required to have been filed by the Company with the Commission
pursuant to the reporting requirements of the 1934 Act, including all material
required to have been filed pursuant to Section 13(a) or 15(d) of the 1934 Act,
shall have been filed with the Commission under the 1934 Act.

(xvi) No Additional Note Conditions Failure. No Additional Note Conditions
Failure shall exist.

4.3 Securities Law Disclosure; Publicity. The Company shall (a) by 9:00 a.m.
(New York City time) on the Trading Day immediately following the Initial
Closing Date, issue a press release in form and substance reasonably acceptable
to the Investor disclosing the material terms of the transactions contemplated
hereby (the “Initial Press Release”) and (b) issue a Current Report on Form 8-K
(the “Current Report”) disclosing the material terms of the transactions
contemplated hereby, and including the Transaction Documents as exhibits
thereto, within the time required by the 1934 Act. From and after the issuance
of the Initial Press Release, the Company represents to the Investor that the
Company shall have publicly disclosed all material, non-public information
delivered to the Investor as of such time by the Company or any of its
Subsidiaries, or any of their respective officers, directors, employees or
agents in connection with the transactions contemplated by the Transaction
Documents. The Company shall, on or before 9:00 a.m. (New York City time) on the
Trading Day immediately following the Additional Closing Notice Date, issue a
press release in form and substance reasonably acceptable to the Investor
disclosing that the Company has elected to deliver an Additional Closing Notice
to the Investor (the “Additional Press Release”). From and after the issuance of
the Additional Press Release, the Company represents to the Investor that the
Company shall have publicly disclosed all material, non-public information
delivered to the Investor as of such time by the Company or any of its
Subsidiaries, or any of their respective officers, directors, employees or
agents in connection with the transactions contemplated by the Transaction
Documents. The Company shall afford the Investor and its counsel with a
reasonable opportunity to review and comment upon, shall consult with the
Investor and its counsel on the form and substance of, and shall give due
consideration to all such comments from the Investor or its counsel on, any
press release, Commission filing or any other public disclosure made by or on
behalf of the Company relating to the Investor, its purchases hereunder or any
aspect of the Transaction Documents or the transactions contemplated thereby,
prior to the issuance, filing or public disclosure thereof, and the Company
shall not issue, file or publicly disclose any such information to which the
Investor shall object. For the avoidance of doubt, the Company shall not be
required to submit for review any such disclosure contained in periodic reports
filed with the Commission under the Exchange Act if it shall have previously
provided the same disclosure for review in connection with a previous filing.

 

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4.4 Legends. The Securities may only be disposed of in compliance with state and
federal securities laws. In connection with any transfer of Securities other
than pursuant to an effective registration statement or Rule 144 (as defined
below), to the Company or to an affiliate of the Investor or in connection with
a pledge, the Company may require the transferor thereof to provide to the
Company an opinion of counsel selected by the transferor and reasonably
acceptable to the Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred Securities under the 1933 Act. The
Investor understands that the certificate or other instrument representing the
Notes and the Warrants and the stock certificates representing the Commitment
Shares, the Conversion Shares and the Warrant Shares, except as set forth below,
shall bear any legends as required by applicable state securities or “Blue Sky”
laws in addition to a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of such stock
certificates):

[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE][EXERCISABLE]
HAVE BEEN] [THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN]
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY
ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
(II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER
SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.

The Company shall use its reasonable best efforts to cause its transfer agent to
remove the legend set forth above and to issue a certificate without such legend
to the holder of the Securities upon which it is stamped, or to issue to such
holder by electronic delivery at the applicable balance account at DTC, unless
otherwise required by state securities or “Blue Sky” laws, at such time as
(i) such Securities are registered for resale under the 1933 Act, (ii) in
connection with a sale, assignment or other transfer (other than under Rule 144
or Rule 144A), such holder provides the Company with an opinion of counsel, in a
form generally acceptable to the Company’s legal counsel and the Transfer Agent,
to the effect that such sale, assignment or transfer of the Securities may be
made without registration under the 1933 Act, or (iii) if such Securities are
eligible to be sold under Rule 144 or Rule 144A, such holder provides the
Company and its legal counsel with reasonable assurance in writing that the
Securities are being sold, assigned or transferred pursuant to Rule 144 or Rule
144A (which shall not include an opinion of Investor’s counsel). In furtherance
of the foregoing, the Company agrees that,

 

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following the Effective Date or at such time as such legend is not required
pursuant to this Section 4.4, the Company shall, no later than three Trading
Days following the delivery by the Investor to the Company or the Transfer Agent
(with a copy delivered to the Company) of a certificate representing Conversion
Shares, Warrant Shares or Commitment Shares issued with a restrictive legend
(such third Trading Day, the “Legend Removal Date”), either: (A) issue and
deliver (or cause to be issued and delivered) to the Investor a certificate
representing such Conversion Shares, Warrant Shares or Commitment Shares, as
applicable, that is free from all restrictive and other legends or (B) cause the
Transfer Agent to credit the Investor’s or its designee’s account at DTC through
its Deposit/Withdrawal at Custodian (DWAC) system with a number of shares of
Common Stock equal to the number of Conversion Shares, Warrant Shares or
Commitment Shares, as applicable, represented by the certificate so delivered by
the Investor. If the Company fails on or prior to the Legend Removal Date to
either (i) issue and deliver (or cause to be issued and delivered) to the
Investor a certificate representing the Conversion Shares, Warrant Shares or
Commitment Shares, as applicable, that is free from all restrictive and other
legends or (ii) cause the Transfer Agent to credit the balance account of the
Investor or its designee at DTC through its Deposit/Withdrawal at Custodian
(DWAC) system with a number of shares of Common Stock equal to the number of the
Conversion Shares, Warrant Shares or Commitment Shares, as applicable,
represented by the certificate delivered by the Investor pursuant hereto (a
“Delivery Failure”), and if on or after the Legend Removal Date the Investor
purchases (in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by the Investor of shares of Common Stock that
the Investor anticipated receiving from the Company without any restrictive
legend, then the Company shall, within three Trading Days after the Investor’s
request, pay cash to the Investor in an amount equal to the Investor’s total
purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased, at which point the Company’s obligation to deliver a
certificate or credit the Investor’s or its designee’s account at DTC for such
shares of Common Stock shall terminate and such shares shall be cancelled (the
“Buy-In Remedy”). For the avoidance of doubt, with respect to any given Delivery
Failure, the Investor shall be entitled, at the election of the Investor, to
recovery either pursuant to this Buy-In Remedy or Section 3(c)(ii) of the Notes,
but not both.

4.5 No Short Sales. So long as the Notes remain outstanding, neither the
Investor nor any of its affiliates nor any entity managed or controlled by the
Investor (collectively, the “Restricted Persons” and each of the foregoing is
referred to herein as a “Restricted Person”) shall, directly or indirectly,
engage in any Short Sales involving the Company’s securities. Notwithstanding
the foregoing, it is expressly understood and agreed that nothing contained
herein shall (without implication that the contrary would otherwise be true)
prohibit any Restricted Person from: (1) selling “long” (as defined under Rule
200 promulgated under Regulation SHO) the Securities; or (2) selling a number of
shares of Common Stock equal to the number of Conversion Shares and/or Warrant
Shares, as applicable, that such Restricted Person is entitled to receive under
a pending Conversion Notice (as defined in the Notes) and/or Exercise Notice (as
defined in the Warrants) but has not yet taken possession of so long as such
Restricted Person delivers the Conversion Shares purchased pursuant to such
Conversion Notice and/or the Warrant Shares purchased pursuant to such Exercise
Notice, as applicable, to the purchaser thereof; provided, however, such
Restricted Person shall not be required to so deliver any such Conversion Shares

 

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subject to such Conversion Notice or the Warrant Shares purchased pursuant to
such Exercise Notice, as applicable, if the Company fails for any reason to
deliver such Conversion Shares to the Investor on the applicable settlement date
upon the terms and subject to the provisions of the Notes and/or such Warrant
Shares to the Investor on the applicable settlement date upon the terms and
subject to the provisions of the Warrants, as applicable.

4.6 Volume Restriction. Unless otherwise mutually agreed by the Company and the
Investor, the Investor shall not sell Conversion Shares, Warrant Shares or
Commitment Shares in an amount, in the aggregate, exceeding the greater of
(i) $125,000 worth of Common Stock during any five consecutive Trading Day
period or (ii) 15% of the composite aggregate dollar trading volume of the
Common Stock as reported on Bloomberg, L.P. on any Trading Day; provided,
however, that if the composite aggregate dollar trading volume of the Common
Stock as reported on Bloomberg, L.P. for any Trading Day exceeds $250,000, then
the Investor may sell Conversion Shares, Warrant Shares or Commitment Shares on
such Trading Day in an amount, in the aggregate, not exceeding 33% of the
composite aggregate dollar trading volume of the Common Stock as reported on
Bloomberg, L.P. for such Trading Day; provided, further, however, that the
volume restrictions contained in this Section 4.6 shall not apply with respect
to any Trading Day on which any sale price for a share of Common Stock is below
$2.50. If the Investor sells any Conversion Shares, Warrant Shares or Commitment
Shares on any Trading Day, the Investor shall provide a trading activity report
to the Company with respect to sales of Conversion Shares, Warrant Shares and
Commitment Shares on such Trading Day.

4.7 Stockholder Approval; NASDAQ Share Cap.

(a) Stockholder Approval. If at any time (such time, the “Market Cap Threshold
Time”) the aggregate number of Conversion Shares, Warrant Shares and Commitment
Shares issuable under this Agreement, the Notes and the Warrants, as applicable,
in each case, without regard to any limitations on conversion or exercise set
forth in the Notes or Warrants, would equal or exceed 15% of the total
outstanding shares of the Common Stock outstanding on the date of this
Agreement, then at the next special or annual meeting of stockholders of the
Company with a record date after the date of this Agreement (the “First
Stockholder Meeting”), the Company shall take all action necessary to obtain the
approval of its stockholders of the issuance of all of the Conversion Shares,
Warrant Shares and Commitment Shares issuable under this Agreement, the Notes
and the Warrants, as applicable, in each case, without regard to any limitations
on conversion or exercise set forth in the Notes or Warrants, pursuant to and in
accordance with the applicable rules and regulations of the Trading Market (such
affirmative approval being referred to herein as the “Stockholder Approval”, and
the date such Stockholder Approval is obtained, the “Stockholder Approval
Date”). In connection therewith, the Company shall provide each stockholder
entitled to vote at the First Stockholder Meeting a proxy statement soliciting
the affirmative vote of the Company’s stockholders necessary to obtain the
Stockholder Approval at the First Stockholder Meeting, and the Company shall use
its commercially reasonable efforts to solicit and obtain the Stockholder
Approval at the First Stockholder Meeting and to cause the Board of Directors of
the Company to recommend, to the extent possible consistent with its fiduciary
duties under Delaware law, to the Company’s stockholders that they vote to
approve the Stockholder Approval proposal at the First Stockholder Meeting. If,
despite the Company’s commercially reasonable efforts the Stockholder Approval
is not obtained at the First Stockholder Meeting, the Company shall seek

 

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to obtain the Stockholder Approval at each special or annual meeting of
stockholders of the Company convened after the First Stockholder Meeting (each
such meeting, a “Subsequent Stockholder Meeting”) until such Stockholder
Approval is obtained. In connection therewith, the Company shall provide each
stockholder entitled to vote at a Subsequent Stockholder Meeting a proxy
statement soliciting the affirmative vote of the Company’s stockholders
necessary to obtain the Stockholder Approval at such Subsequent Stockholder
Meeting, and the Company shall use its commercially reasonable efforts to
solicit and obtain the Stockholder Approval at such Subsequent Stockholder
Meeting and to cause the Board of Directors of the Company to recommend, to the
extent possible consistent with its fiduciary duties under Delaware law, to the
Company’s stockholders that they vote to approve the Stockholder Approval
proposal at such Subsequent Stockholder Meeting.

(b) NASDAQ Share Cap. Notwithstanding anything contained herein or in any other
Transaction Document to the contrary, until Stockholder Approval is obtained,
the Company shall not issue shares of Common Stock to the Investor pursuant to
the Transaction Documents, including the issuance Commitment Shares, Conversion
Shares and Warrant Shares, in an aggregate amount in excess of 19.99% of the
issued and outstanding Common Stock on the date hereof.

5. Representations and Warranties of the Company. Except as set forth in the
Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof
and shall qualify any representation or otherwise made herein to the extent of
the disclosure contained in the corresponding section of the Disclosure
Schedules, the Company hereby makes the following representations and warranties
to the Investor as of the Initial Closing Date, the Additional Closing Notice
Date and the Additional Closing Date (each a “Representation Date”):

5.1 Organization, Good Standing and Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. The Company is duly qualified to transact business and is in
good standing in each jurisdiction in which the failure to so qualify would have
a Material Adverse Effect.

5.2 Capitalization and Voting Rights. The authorized capital stock of the
Company and the shares thereof issued and outstanding were as set forth in the
Public Reports as of the dates reflected therein. All of the outstanding shares
of Common Stock have been duly authorized and validly issued, and are fully paid
and nonassessable. Except as set forth in the Public Reports, this Agreement and
the Registration Rights Agreement, there are no agreements or arrangements under
which the Company is obligated to register the sale of any securities under the
Securities Act. Except as set forth in the Public Reports, no shares of Common
Stock are entitled to preemptive rights and there are no outstanding debt
securities and no contracts, commitments, understandings, or arrangements by
which the Company is or may become bound to issue additional shares of the
capital stock of the Company or options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into or

 

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exchangeable for, any shares of capital stock of the Company other than those
issued or granted in the ordinary course of business pursuant to the Company’s
equity incentive and/or compensatory plans or arrangements. Except for customary
transfer restrictions contained in agreements entered into by the Company to
sell restricted securities or as set forth in the Public Reports, the Company is
not a party to, and it has no knowledge of, any agreement restricting the voting
or transfer of any shares of the capital stock of the Company. Except as set
forth in the Public Reports, the offer and sale of all capital stock,
convertible or exchangeable securities, rights, warrants or options of the
Company issued prior to the applicable Representation Date complied with all
applicable federal and state securities laws, and no stockholder has any right
of rescission or damages or any “put” or similar right with respect thereto that
would have a Material Adverse Effect. Except as set forth in the Public Reports,
there are no securities or instruments containing anti-dilution or similar
provisions that will be triggered by the Notes, the Warrants, this Agreement or
the Registration Rights Agreement or the consummation of the transactions
described herein or therein.

5.3 Authorization; Enforcement. All corporate action on the part of the Company,
its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement, the Notes, the Warrants and the
Registration Rights Agreement (the “Transaction Documents”) and the performance
of all obligations of the Company hereunder and thereunder, and the
authorization (or reservation for issuance), sale and issuance of the Notes and
the Warrants, and the Common Stock into which the Notes and the Warrants are
convertible or exercisable, as applicable, have been taken on or prior to the
date hereof. Each of the Transaction Documents has been duly executed by the
Company and, when delivered in accordance with the terms hereof and thereof,
will constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except: (i) as limited by
general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

5.4 Valid Issuance of the Conversion Shares, Warrant Shares and Commitment
Shares; Reservation of Shares. Each of the Notes and Warrants has been duly
authorized and, when issued and paid for in accordance with this Agreement, will
be duly and validly issued, fully paid and nonassessable, free and clear of all
Liens imposed by the Company other than restrictions on transfer under this
Agreement and under applicable state and federal securities laws. Upon
conversion in accordance with the Notes or exercise in accordance with the
Warrants (as the case may be), the Conversion Shares and the Warrant Shares,
respectively, when issued and delivered in accordance with the terms of this
Agreement and the Notes or the Warrants, as applicable, for the consideration
expressed herein and therein, will be duly and validly issued, fully paid and
non-assessable, free and clear of all Liens imposed by the Company, other than
restrictions on transfer under this Agreement and under applicable state and
federal securities laws. The Commitment Shares, when issued and delivered in
accordance with the terms of this Agreement, will be duly and validly issued,
fully paid and non-assessable and free and clear of all Liens imposed by the
Company, other than restrictions on transfer under this Agreement and under

 

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applicable state and federal securities laws. The Company has reserved from its
duly authorized capital stock a sufficient number of shares of Common Stock for
issuance of the Conversion Shares as required by Section 8 of the Notes and
Warrant Shares as required by Section 1(g) of the Warrants.

5.5 Offering. Subject to the truth and accuracy of the Investor’s
representations set forth in Section 6 of this Agreement, the offer and issuance
of the Securities as contemplated by this Agreement are exempt from the
registration requirements of the Securities Act of 1933, as amended (the “1933
Act”), and the qualification or registration requirements of state securities
laws or other applicable “Blue Sky” laws. Neither the Company nor any authorized
agent acting on its behalf will take any action hereafter that would cause the
loss of such exemptions.

5.6 Public Reports. The Company is current in its filing obligations under the
1934 Act, including without limitation as to its filings of Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K
(collectively, the “Public Reports”). The Public Reports do not contain any
untrue statement of a material fact or omit to state any fact necessary to make
any statement therein not misleading. The financial statements included within
the Public Reports for the fiscal year ended December 31, 2013 and for each
quarterly period thereafter (the “Financial Statements”) have been prepared in
accordance with generally accepted accounting principles (“GAAP”) applied on a
consistent basis throughout the periods indicated and with each other, except
that unaudited Financial Statements may not contain all footnote required by
generally accepted accounting principles. The Financial Statements fairly
present, in all material respects, the financial condition and operating results
of the Company as of the dates, and for the periods, indicated therein, subject
in the case of unaudited Financial Statements to normal year-end audit
adjustments.

5.7 Compliance With Laws. The Company has not violated any law or any
governmental regulation or requirement which violation has had or would
reasonably be expected to have a Material Adverse Effect on its business and the
Company has not received written notice of any such violation.

5.8 Violations. The consummation of the transactions contemplated by the
Transaction Documents and all other documents and instruments required to be
delivered in connection therewith will not result in or constitute any of the
following: (a) a violation of any provision of the certificate of incorporation,
bylaws or other governing documents of the Company; (b) a violation of any
provisions of any applicable law or of any writ or decree of any court or
governmental instrumentality; (c) a default or an event that, with notice or
lapse of time or both, would be a default, breach, or violation of a lease,
license, promissory note, conditional sales contract, commitment, indenture,
mortgage, deed of trust, or other agreement, instrument, or arrangement to which
the Company is a party or by which the Company or its property is bound;

 

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(d) an event that would permit any party to terminate any agreement or to
accelerate the maturity of any indebtedness or other obligation of the Company;
or (e) the creation or imposition of any lien, pledge, option, security
agreement, equity, claim, charge, encumbrance or other restriction or limitation
on the capital stock or on any of the properties or assets of the Company.

5.9 Consents; Waivers. Except for Stockholder Approval, no consent, waiver,
approval or authority of any nature, or other formal action, by any Person, firm
or corporation, or any agency, bureau or department of any government or any
subdivision thereof, not already obtained, is required in connection with the
execution and delivery of the Transaction Documents by the Company or the
consummation by the Company of the transactions provided for herein and therein.

5.10 Sarbanes-Oxley Act. The Company is in compliance with any and all
applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as
of the date hereof, and any and all applicable rules and regulations promulgated
by the Commission thereunder that are effective as of the date hereof.

5.11 Absence of Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the
Company, threatened against or affecting the Company, the Common Stock or any of
the Company’s officers or directors in their capacities as such.

5.12 Material Changes; Undisclosed Events, Liabilities or Developments. Since
the date of the latest audited financial statements included within the Public
Reports, except as specifically disclosed in a subsequent Public Report filed
prior to the date hereof: (i) there has been no event, occurrence or development
that has had or that could reasonably be expected to result in a Material
Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or
otherwise) other than (A) trade payables and accrued expenses incurred in the
ordinary course of business consistent with past practice and (B) liabilities
not required to be reflected in the Company’s financial statements pursuant to
GAAP or disclosed in filings made with the Commission, (iii) the Company has not
altered its method of accounting, (iv) the Company has not declared or made any
dividend or distribution of cash or other property to its stockholders or
purchased, redeemed or made any agreements to purchase or redeem any shares of
its capital stock and (v) the Company has not issued any equity securities to
any officer, director or affiliate, except pursuant to existing Company equity
compensation, employee stock purchase or other employee benefit plans or any
product sales agent/distributor equity incentive program. The Company does not
have pending before the Commission any request for confidential treatment of
information. Except for the issuance of the Securities contemplated by this
Agreement, no event, liability, fact, circumstance, occurrence or development
has occurred or exists or, to the knowledge of the Company, is reasonably
expected to occur or exist with respect to the Company or its Subsidiaries or
their respective businesses, properties, operations, assets or financial
condition, that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made or deemed
made that has not been publicly disclosed at least one Trading Day prior to the
date that this representation is made.

 

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5.13 Intellectual Property. The Company has, or has rights to use, all patents,
patent applications, trademarks, trademark applications, service marks, trade
names, trade secrets, inventions, copyrights, licenses and other intellectual
property rights and similar rights as described in the Public Reports as
necessary or required for use in connection with their respective businesses and
which the failure to so have could have a Material Adverse Effect (collectively,
the “Intellectual Property Rights”). None of, and the Company has not received a
notice (written or otherwise) that any of, the Intellectual Property Rights has
expired, terminated or been abandoned, or is expected to expire or terminate or
be abandoned, within two (2) years from the date of this Agreement. The Company
has not received, since the date of the latest audited financial statements
included within the Public Reports, a written notice of a claim or otherwise has
any knowledge that the Intellectual Property Rights violate or infringe upon the
rights of any Person, except as could not have or reasonably be expected to not
have a Material Adverse Effect. To the knowledge of the Company, all such
Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property Rights. The
Company has taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual properties, except where
failure to do so could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

5.14 Registration Rights. Other than the Investor or as set forth in the Public
Reports, no Person has any right to cause the Company to effect the registration
under the 1933 Act of any securities of the Company.

5.15 Disclosure. Except with respect to the material terms and conditions of the
transactions contemplated by the Transaction Documents, the Company confirms
that neither it nor, to the Company’s knowledge, any other Person acting on its
behalf has provided the Investor or its agents or counsel with any information
that it believes constitutes or might constitute material, non-public
information. The Company understands and confirms that the Investor will rely on
the foregoing representation in effecting transactions in securities of the
Company. All of the disclosure furnished by or on behalf of the Company to the
Investor regarding the Company and its Subsidiaries, their respective businesses
and the transactions contemplated hereby, including the Disclosure Schedules to
this Agreement, is true and correct in all material respects and does not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The press releases
disseminated by the Company since February 12, 2014 taken as a whole do not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made and when made,
not misleading. The Company acknowledges and agrees that the Investor does not
make nor has made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
Section 6 hereof.

5.16 No Integrated Offering. Assuming the accuracy of the Investor’s
representations and warranties set forth in Section 6, neither the Company, nor
any of its affiliates, nor any Person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that

 

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would cause this offering of the Securities to be integrated with prior
offerings by the Company for purposes of (i) the 1933 Act which would require
the registration of any such securities under the 1933 Act, or (ii) any
applicable shareholder approval provisions of any Trading Market on which any of
the securities of the Company are listed or designated.

5.17 Seniority. Except for the GE Secured Credit Facility, as of the applicable
Representation Date, no Indebtedness or other claim against the Company is
senior to the Notes in right of payment, whether with respect to interest or
upon liquidation or dissolution, or otherwise, other than indebtedness secured
by purchase money security interests (which is senior only as to underlying
assets covered thereby) and capital lease obligations (which is senior only as
to the property covered thereby).

5.18 Bankruptcy Status; Indebtedness. The Company has no current intention or
expectation to file for reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from the applicable
Representation Date. Schedule 5.18 sets forth as of the date hereof all
outstanding secured and unsecured Indebtedness (as defined below) of the Company
or any Subsidiary, or for which the Company or any Subsidiary has commitments.
For the purposes of this Agreement, “Indebtedness” means (x) any liabilities for
borrowed money or amounts owed in excess of $100,000 (other than trade accounts
payable incurred in the ordinary course of business), (y) all guaranties,
endorsements and other contingent obligations in respect of indebtedness of
others, whether or not the same are or should be reflected in the Company’s
consolidated balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (z) the present value of
any lease payments in excess of $100,000 due under leases required to be
capitalized in accordance with GAAP. The Company is not in default with respect
to any Indebtedness.

5.19 Regulation M Compliance. The Company has not, and to its knowledge no one
acting on its behalf has, (i) taken, directly or indirectly, any action designed
to cause or to result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay
to any Person any compensation for soliciting another to purchase any other
securities of the Company.

5.20 No Disqualification Events. None of the Company, any of its predecessors,
any affiliated issuer, any director, executive officer, other officer of the
Company participating in the offering contemplated hereby, any beneficial owner
of 20% or more of the Company’s outstanding voting equity securities, calculated
on the basis of voting power, nor any promoter (as that term is defined in Rule
405 under the 1933 Act) connected with the Company in any capacity at the time
of sale (each, an “Issuer Covered Person”) is subject to any of the “Bad Actor”
disqualifications described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a
“Disqualification Event”), except for a Disqualification Event covered by Rule
506(d)(2) or (d)(3). The Company has exercised reasonable care to determine
whether any Issuer Covered Person is subject to a Disqualification Event.

 

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6. Representations and Warranties of the Investor. The Investor hereby
represents, warrants and covenants that:

6.1 Authorization. The Investor has full power and authority to enter into this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby and has taken all action necessary to authorize
the execution and delivery of this Agreement and the Registration Rights
Agreement, the performance of its obligations hereunder and thereunder and the
consummation of the transactions contemplated hereby and thereby.

6.2 No Public Sale or Distribution. The Investor is (i) acquiring the Commitment
Shares, the Notes and the Warrants, and (ii) upon conversion of the Notes will
acquire the Conversion Shares and (iii) upon exercise of the Warrants will
acquire the Warrant Shares for its own account, not as a nominee or agent, and
not with a view towards, or for resale in connection with, the public sale or
distribution of any part thereof, except pursuant to sales registered or
exempted under the 1933 Act. The Investor is acquiring the Securities hereunder
in the ordinary course of its business. The Investor does not presently have any
contract, agreement, undertaking, arrangement or understanding, directly or
indirectly, with any Person to sell, transfer, pledge, assign or otherwise
distribute any of the Securities.

6.3 Accredited Investor Status; Investment Experience. The Investor is an
“accredited investor” as that term is defined in Rule 501(a) of Regulation D.
The Investor can bear the economic risk of its investment in the Securities, and
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of an investment in the Securities.

6.4 Reliance on Exemptions. The Investor understands that the Securities are
being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of, and the
Investor’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Investor set forth herein in order to
determine the availability of such exemptions and the eligibility of the
Investor to acquire the Securities.

6.5 Information. The Investor and its advisors, if any, have been furnished with
all materials relating to the business, finances and operations of the Company
and materials relating to the offer and sale of the Securities which have been
requested by the Investor. The Investor and its advisors, if any, have been
afforded the opportunity to ask questions of the Company. Neither such inquiries
nor any other due diligence investigations conducted by the Investor or its
advisors, if any, or its representatives shall modify, amend or affect the
Investor’s right to rely on the Company’s representations and warranties
contained herein. The Investor understands that its investment in the Securities
involves a high degree of risk. The Investor has sought such

 

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accounting, legal and tax advice as it has considered necessary to make an
informed investment decision with respect to its acquisition of the Securities.
The Investor is relying solely on its own accounting, legal and tax advisors,
and not on any statements of the Company or any of its agents or
representatives, for such accounting, legal and tax advice with respect to its
acquisition of the Securities and the transactions contemplated by this
Agreement.

6.6 No Governmental Review. The Investor understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.

6.7 Validity; Enforcement; No Conflicts. This Agreement and each Transaction
Document to which the Investor is a party have been duly and validly authorized,
executed and delivered on behalf of the Investor and shall constitute the legal,
valid and binding obligations of the Investor enforceable against the Investor
in accordance with their respective terms, except as such enforceability may be
limited by general principles of equity or to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies. The execution, delivery and performance by the Investor of this
Agreement and each Transaction Document to which the Investor is a party and the
consummation by the Investor of the transactions contemplated hereby and thereby
will not (i) result in a violation of the organizational documents of the
Investor or (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Investor is a party, or
(iii) result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities or “Blue Sky” laws) applicable to
the Investor, except in the case of clause (ii) above, for such conflicts,
defaults or rights which would not, individually or in the aggregate, reasonably
be expected to have a material adverse effect on the ability of the Investor to
perform its obligations hereunder.

6.8 Organization and Standing. The Investor is a limited liability company duly
organized, validly existing and in good standing under the laws of Gibraltar.

6.9 Brokers or Finders. The Investor represents and warrants, to the best of its
knowledge, that no finder, broker, agent, financial advisor or other
intermediary, nor any purchaser representative or any broker-dealer acting as a
broker, is entitled to any compensation in connection with the transactions
contemplated by this Agreement or the transactions contemplated hereby.

6.10 Ability to Perform. There are no actions, suits, proceedings or
investigations pending against Investor or Investor’s assets before any court or
governmental agency (nor is there any threat thereof) which would impair in any
way Investor’s ability to enter into and fully perform its commitments and
obligations under this Agreement or the transactions contemplated hereby.

 

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7. Use of Proceeds. The Investor acknowledges that the Company will use the
proceeds received from the purchase of the Notes and Warrants for, among other
things, (i) costs and expenses relating to the sale of the Notes and Warrants to
the Investor and (ii) general working capital purposes, including, but not
limited to, the payment of liabilities of the Company, including payments to its
senior secured lenders.

8. Rule 144 Availability; Public Information. At all times during the period
commencing on the six (6) month anniversary of the Initial Closing Date and
ending at such time that all of the Securities can be sold without the
requirement to be in compliance with Rule 144(c)(1) under the 1933 Act and
otherwise without restriction or limitation pursuant to Rule 144 under the 1933
Act, the Company shall use its reasonable best efforts to ensure the
availability of Rule 144 under the 1933 Act to the Investor with regard to the
Commitment Shares, the Conversion Shares and the Warrant Shares (assuming a
cashless exercise of the Warrants), including compliance with Rule 144(c)(1)
under the 1933 Act. If, (i) at any time during the period commencing from the
six (6) month anniversary of the Initial Closing Date and ending on the first
anniversary of the Additional Closing Date, the Company shall fail for any
reason to satisfy the current public information requirement under Rule 144(c)
under the 1933 Act (a “Public Information Failure”), or (ii) the Company shall
fail to take such action as is reasonably requested by the Investor to enable
the Investor to sell the Commitment Shares, the Conversion Shares and the
Warrant Shares (assuming a cashless exercise of the Warrants) pursuant to Rule
144 under the 1933 Act (including, without limitation, delivering all such legal
opinions, consents, certificates, resolutions and instructions to the Company’s
transfer agent as may be reasonably requested from time to time by the Investor
and otherwise fully cooperate with Investor and Investor’s broker to effect such
sale of securities pursuant to Rule 144 under the 1933 Act) (a “Process
Failure”), then, in either case, in addition to the Investor’s other available
remedies, the Company shall pay to a Investor, in cash, as liquidated damages
and not as a penalty, by reason of any such delay in or reduction of its ability
to sell the Securities, an amount in cash equal to two percent (2.0%) of the
aggregate Purchase Price of the Investor’s Securities on the day of a Public
Information Failure or Process Failure, as applicable, and on every thirtieth
(30th) day (pro rated for periods totaling less than thirty days) thereafter
until (a) in the case of a Process Failure, the date such Process Failure is
cured, or (b) in the case of a Public Information Failure, the earlier of
(1) the date such Public Information Failure is cured and (2) such time that
such public information is no longer required for the Investor to transfer the
Commitment Shares, the Conversion Shares or the Warrant Shares (assuming a
cashless exercise of the Warrants) pursuant to Rule 144 under the 1933 Act. The
payments to which the Investor shall be entitled pursuant to this Section 8 are
referred to herein as “Rule 144 Failure Payments.” Rule 144 Failure Payments
shall be paid on the earlier of (i) the last day of the calendar month during
which such Rule 144 Failure Payments are incurred and (ii) the third
(3rd) Trading Day after the event or failure giving rise to the Rule 144 Failure
Payments is cured.

 

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9. Indemnification. In consideration of the Investor’s execution and delivery of
the Transaction Documents and acquiring the Securities thereunder and in
addition to all of the Company’s other obligations under the Transaction
Documents, the Company shall defend, protect, indemnify and hold harmless the
Investor and each holder of any Securities and all of their stockholders,
partners, members, officers, directors, employees and direct or indirect
investors and any of the foregoing Persons’ agents or other representatives
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the “Indemnitees”)
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by
any Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Company or any Subsidiary in any of the Transaction Documents, (b) any breach of
any covenant, agreement or obligation of the Company or any Subsidiary contained
in any of the Transaction Documents or (c) any cause of action, suit or claim
brought or made against such Indemnitee by a third party (including for these
purposes a derivative action brought on behalf of the Company or any Subsidiary)
and arising out of or resulting from (i) the execution, delivery, performance or
enforcement of any of the Transaction Documents, (ii) any transaction financed
or to be financed in whole or in part, directly or indirectly, with the proceeds
of the issuance of the Securities, or (iii) the status of the Investor or holder
of the Securities as an investor in the Company pursuant to the transactions
contemplated by the Transaction Documents. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law. Except as
otherwise set forth herein, the mechanics and procedures with respect to the
rights and obligations under this Section 9 shall be the same as those set forth
in Section 6 of the Registration Rights Agreement. Notwithstanding anything to
the contrary in this Section 9, the Company shall not be obligated to pay an
Indemnitee any sums otherwise due under this Section 9 if the Company has
already paid the Indemnitee such sums for the same Indemnified Liabilities under
Section 6 of the Registration Rights Agreement.

10. Participation Rights. From and after the date hereof through and including
the second (2nd) anniversary of the date of this Agreement, neither the Company
nor any of its Subsidiaries shall, directly or indirectly, effect any Subsequent
Placement (as defined below) unless the Company shall have first complied with
this Section 10.

10.1 At least three (3) Trading Days prior to any proposed or intended
Subsequent Placement, the Company shall deliver to the Investor a written notice
of its proposal or intention to effect a Subsequent Placement (each such notice,
a “Pre-Notice”), which Pre-Notice shall not contain any information (including,
without limitation, material, non-public information) other than: either
(A) (i) a statement that the Company proposes or intends to effect a Subsequent
Placement, (ii) a statement that the statement in clause (i) above does not
constitute material, non-public information and (iii) a statement informing the
Investor that it is entitled to receive an Offer Notice (as defined below) with
respect to such Subsequent Placement upon its written request or (B) if the
existence of such Subsequent Placement is, as of the date of such Pre-Notice,
material, non-public information, a statement that the Investor is entitled to
receive material, non-public information. Upon the written request of the
Investor within three (3)

 

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Trading Days after the Company’s delivery to the Investor of such Pre-Notice,
and only upon a written request by the Investor, the Company shall promptly, but
no later than one (1) Trading Day after such request, deliver to the Investor an
irrevocable written notice (the “Offer Notice”) of any proposed or intended
issuance or sale or exchange (the “Offer”) of the securities being offered (the
“Offered Securities”) in a Subsequent Placement, which Offer Notice shall
(w) identify and describe the Offered Securities, (x) describe the price and
other terms upon which they are to be issued, sold or exchanged, and the
aggregate number or amount of the Offered Securities to be issued, sold or
exchanged, (y) identify the Persons (if known) to which or with which the
Offered Securities are to be offered, issued, sold or exchanged and (z) offer to
issue and sell to or exchange with the Investor in accordance with the terms of
the Offer up to 30% of the Offered Securities (the “Participation Securities”).

10.2 To accept an Offer, in whole or in part, the Investor must deliver a
written notice to the Company prior to the end of the third (3rd) Business Day
after the Investor’s receipt of the Offer Notice (the “Offer Period”), setting
forth the portion of the Participation Securities that the Investor elects to
purchase (in either case, the “Notice of Acceptance”). Notwithstanding the
foregoing, if the Company desires to modify or amend the terms and conditions of
the Offer prior to the expiration of the Offer Period, the Company may deliver
to the Investor a new Offer Notice and the Offer Period shall expire on the
third (3rd) Business Day after the Investor’s receipt of such new Offer Notice.

10.3 The Company shall have five (5) Business Days from the expiration of the
Offer Period above (i) to offer, issue, sell or exchange all or any part of such
Offered Securities as to which a Notice of Acceptance has not been given by the
Investor (the “Refused Securities”) pursuant to a definitive agreement(s) (the
“Subsequent Placement Agreement”) (or, if the closing of such Offer is to occur
more than five (5) Business Days from the expiration of the Offer Period, to
enter into the Subsequent Placement Agreement), but only to the offerees
described in the Offer Notice (if so described therein) and only upon terms and
conditions (including, without limitation, unit prices and interest rates) that
are not more favorable to the acquiring Person or Persons or less favorable to
the Company than those set forth in the Offer Notice and (ii) to publicly
announce the execution of such Subsequent Placement Agreement, which shall be
filed with the Commission on a Current Report on Form 8-K with such Subsequent
Placement Agreement and any documents contemplated therein filed as exhibits
thereto.

10.4 In the event the Company shall propose to sell less than all the Refused
Securities (any such sale to be in the manner and on the terms specified in
Section 10.3 above), then the Investor may, at its sole option and in its sole
discretion, reduce the number or amount of the Participation Securities
specified in its Notice of Acceptance to an amount that shall be not less than
the number or amount of the Participation Securities that the Investor elected
to purchase pursuant to Section 10.2 above multiplied by a fraction, (i) the
numerator of which shall be the number or amount of Offered Securities the
Company actually proposes to issue, sell or exchange (including Participation
Securities to be issued or sold to the Investor pursuant to this Section 10
prior to such reduction) (the “Reduced Offered Securities”) and (ii) the
denominator of which shall be the original amount of the Offered Securities. In
the event that the Investor so elects to reduce the number or amount of
Participation Securities specified in its Notice of Acceptance, the Company may
not issue, sell or exchange more than the reduced number or amount of the
Reduced Offered Securities unless and until such securities have again been
offered to the Investor in accordance with Section 10.1 above.

 

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10.5 Upon the closing of the Subsequent Placement, the Investor shall acquire
from the Company, and the Company shall issue to the Investor, the number or
amount of Participation Securities specified in its Notice of Acceptance. The
purchase by the Investor of any Participation Securities is subject in all cases
to the execution and delivery by the Investor of the Subsequent Placement
Agreement with respect to such Offer and any other transaction documents related
thereto (collectively, the “Subsequent Placement Documents”).

10.6 Any Offered Securities not acquired by the Investor or other Persons in
accordance with this Section 10 may not be issued, sold or exchanged until they
are again offered to the Investor under the procedures specified in this
Agreement.

10.7 The Company and the Investor agree that if the Investor elects to
participate in the Offer, the Subsequent Placement Documents shall not include
any term or provision whereby the Investor shall be required to agree to any
restrictions on trading as the Securities or be required to consent to any
amendment to or termination of, or grant any waiver, release or the like under
or in connection with, any agreement previously entered into with the Company or
any instrument received from the Company.

10.8 Notwithstanding anything to the contrary in this Section 10 and unless
otherwise agreed to by the Investor, the Company shall either confirm in writing
to the Investor that the transaction with respect to the Subsequent Placement
has been abandoned or shall publicly disclose its intention to issue the Offered
Securities, in either case, in such a manner such that the Investor will not be
in possession of any material, non-public information, by the fifth
(5th) Business Day following delivery of the Offer Notice. If by such fifth
(5th) Business Day, no public disclosure regarding a transaction with respect to
the Offered Securities has been made, and no notice regarding the abandonment of
such transaction has been received by the Investor, such transaction shall be
deemed to have been abandoned and the Investor shall not be in possession of any
material, non-public information with respect to the Company or any of its
Subsidiaries. Should the Company decide to pursue such transaction with respect
to the Offered Securities, the Company shall provide the Investor with another
Offer Notice and the Investor will again have the right of participation set
forth in this Section 10.

10.9 The restrictions contained in this Section 10 shall not apply in connection
with the issuance of any Excluded Securities (as defined below).

10.10 For purposes of this Section 10 and for all other purposes of this
Agreement, the following definitions shall apply:

(a) “Approved Stock Plan” means, collectively, any (a) employee benefit plan
which has been approved by the board of directors of the Company prior to or
subsequent to the date hereof pursuant to which shares of Common Stock, options
to purchase Common Stock, restricted shares of Common Stock, restricted stock
units, or other form of equity compensation (collectively, “Employee Equity
Compensation Awards”) may be issued to any employee, officer, consultant or
director for services provided to the Company in their capacity as such, and
(b) any program or plan approved by the board of directors of the company prior
to or

 

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subsequent to the date hereof pursuant to which shares of Common Stock, options
to purchase Common Stock, restricted shares of Common Stock, restricted stock
units, other forms of equity compensation and credit for the foregoing
(collectively, “Sales Agent Equity Awards”; Employee Equity Compensation Awards
and Sales Agent Equity Awards being referred to herein collectively as “Equity
Compensation Awards”).

(b) “Business Day” means any day other than Saturday, Sunday or other day on
which commercial banks in The City of New York are authorized or required by law
to remain closed.

(c) “Convertible Securities” means any capital stock or other security of the
Company or any of its Subsidiaries that is at any time and under any
circumstances directly or indirectly convertible into, exercisable or
exchangeable for, or which otherwise entitles the holder thereof to acquire, any
capital stock or other security of the Company (including, without limitation,
Common Stock) or any of its Subsidiaries.

(d) “Excluded Securities” means (A) Equity Compensation Awards to directors,
officers, consultants or employees of the Company in their capacity as such
pursuant to an Approved Stock Plan (as defined above), provided that (1) all
such issuances (taking into account the shares of Common Stock issuable upon
exercise of such options) after the date hereof pursuant to this clause (A) do
not, in the aggregate, exceed more than 15% of the Common Stock issued and
outstanding immediately prior to the date hereof and (2) the exercise price of
any such options is not lowered, none of such options are amended to increase
the number of shares issuable thereunder and none of the terms or conditions of
any such options are otherwise materially changed in any manner that adversely
affects the Investor; (B) the Securities; (C) shares of Common Stock issuable
upon conversion of Convertible Securities that are either (1) outstanding as of
the date hereof or (2) issued in accordance with the provisions of this
Section 10 and (D) shares of Common Stock or Convertible Securities issued or
issuable in connection with transactions with strategic industry, business or
operating partners that provide benefits to the Company other than the
investment of funds, provided, that (1) the primary purpose of such issuance is
not to raise capital, (2) the purchasers or acquirers of the securities in such
issuance does not include any affiliate of the Company or any of its
Subsidiaries and solely consists of either (x) the actual strategic industry,
business or operating partners or (y) the stockholders, partners or members of
such strategic industry, business or operating partners, and (3) any such shares
of Common Stock and/or Convertible Securities (and all shares of Common Stock
issuable upon conversion or exercise of such Convertible Securities) are issued
at a fixed price and not as a result of a Variable Rate Transaction.

(e) “Variable Rate Transaction” means a transaction in which the Company or any
Subsidiary (i) issues or sells any Convertible Securities either (A) at a
conversion, exercise or exchange rate or other price that is based upon and/or
varies with the trading prices of or quotations for the shares of Common Stock
at any time after the initial issuance of such Convertible Securities, or
(B) with a conversion, exercise or exchange price that is subject to being reset
at some future date after the initial issuance of such Convertible Securities or
upon the occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common Stock,
including, without limitation, pursuant to any “weighted average” or
“full-ratchet” anti-dilution provision, or (ii) enters into any agreement
(including, without limitation, an equity line of credit or an “at-the-market”
offering) whereby the Company or any Subsidiary may sell securities at a future
determined price.

 

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(f) “Subsequent Placement” means any, direct or indirect, issuance, offer, sale,
grant of any option or right to purchase, or otherwise dispose of (or
announcement of any issuance, offer, sale, grant of any option or right to
purchase or other disposition of) any equity or debt security or any
equity-linked or related security (including, without limitation, any “equity
security” (as that term is defined under Rule 405 promulgated under the 1933
Act), any Convertible Securities, any debt, any preferred stock or any purchase
rights) of the Company or any of its Subsidiaries, including, without
limitation, pursuant to Section 3(a)(9) or Section 3(a)(10) of the 1933 Act.

11. Exclusivity. From and after the date hereof and so long as the Notes and
Warrant remain outstanding, neither the Company nor any of its affiliates or
Subsidiaries, nor any of its or their respective officers, employees, directors,
agents or other representatives, will, without the prior written consent of the
Investor (which consent may be withheld, delayed or conditioned in the
Investor’s sole discretion), directly or indirectly: (a) solicit, initiate,
encourage or accept any other inquiries, proposals or offers from any Person
(other than the Investor) relating to any exchange (i) of any security of the
Company or any of its Subsidiaries for any other security of the Company or any
of its Subsidiaries, except to the extent (x) consummated pursuant to an
exchange registered under a registration statement of the Company filed pursuant
to the 1933 Act and declared effective by the Commission or (y) such exchange is
exempt from registration pursuant to an exemption provided under the 1933 Act
(other than Section 3(a)(10) of the 1933 Act) or (ii) of any indebtedness or
other securities of, or claim against, the Company or any of its Subsidiaries
relying on the exemption provided by Section 3(a)(10) of the 1933 Act (any such
transaction described in clauses (i) or (ii), an “Exchange Transaction”);
(b) enter into, effect, alter, amend, announce or recommend to its stockholders
any Exchange Transaction with any Person (other than the Investor); or
(c) participate in any discussions, conversations, negotiations or other
communications with any Person (other than the Investor) regarding any Exchange
Transaction, or furnish to any Person (other than the Investor) any information
with respect to any Exchange Transaction, or otherwise cooperate in any way,
assist or participate in, facilitate or encourage any effort or attempt by any
Person (other than the Investor) to seek an Exchange Transaction involving the
Company or any of its Subsidiaries. Notwithstanding the foregoing or anything
contained herein to the contrary, neither the Company nor any of its affiliates
or Subsidiaries, nor any of its or their respective officers, employees,
directors, agents or other representatives, will, without the prior written
consent of the Investor (which consent may be withheld, delayed or conditioned
in the Investor’s sole discretion), directly or indirectly, cooperate in any
way, assist or participate in, facilitate or encourage any effort or attempt by
any Person (other than the Investor) to effect any acquisition of securities or
indebtedness of, or claim against, the Company by such Person from an existing
holder of such securities, indebtedness or claim in connection with a proposed
exchange of such securities or indebtedness of, or claim against, the Company
(whether pursuant to Section 3(a)(9) or 3(a)(10) of the 1933 Act or otherwise)
(a “Third Party Exchange Transfer”). The Company, its affiliates and
Subsidiaries, and each of its and their respective officers, employees,
directors, agents or other representatives shall immediately cease and cause to
be terminated all existing discussions, conversations, negotiations and other
communications with any Persons (other than the Investor) with respect to any of
the foregoing. The Company shall promptly (and in no event later than 24

 

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hours after receipt) notify (which notice shall be provided orally and in
writing and shall identify the Person making the inquiry, request, proposal or
offer and set forth the material terms thereof) the Investor after receipt of
any inquiry, request, proposal or offer relating to any Exchange Transaction or
Third Party Exchange Transfer, and shall promptly (and in no event later than 24
hours after receipt) provide copies to the Investor of any written inquiries,
requests, proposals or offers relating thereto. The Company agrees that it and
its affiliates and Subsidiaries, and each of its and their respective officers,
employees, directors, agents or other representatives Subsidiaries will not
enter into any agreement with any Person subsequent to the date hereof which
prohibits the Company from providing any information to the Investor in
accordance with this provision. As used in this Agreement, “Person” means any
individual, partnership, firm, corporation, limited liability company,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under Section 13(d)(3) of
the Exchange Act. For all purposes of this Agreement, violations of the
restrictions set forth in this Section 11 by any Subsidiary or affiliate of the
Company, or any officer, employee, director, agent or other representative of
the Company or any of its Subsidiaries or affiliates shall be deemed a direct
breach of this Section 11 by the Company.

12. Miscellaneous

12.1 Successors and Assigns. Except as otherwise provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective successors and assigns of the parties (including transferees of
the Securities), but excluding any Person to whom the Investor sells Conversion
Shares, Warrant Shares or Commitment Shares. Nothing in this Agreement, express
or implied, is intended to confer upon any party, other than the parties hereto
or their respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.

12.2 Governing Law; Jurisdiction; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of Illinois, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of Illinois or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of Illinois. The Company hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in Chicago, Illinois, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE, AND AGREES NOT TO REQUEST, A JURY

 

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TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

12.3 Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.

12.4 Notices. All notices required or permitted hereunder shall be in writing
and shall be deemed effectively given: (a) upon personal delivery to the party
to be notified, (b) when sent by confirmed telex or facsimile if sent during
normal business hours of the recipient; if not, then on the next Trading Day,
(c) five (5) Trading Days after having been sent by registered or certified
mail, return receipt requested, postage prepaid, or (d) one (1) day after
deposit with a nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. All communications shall be sent
to (a) in the case of the Company, to Amedica Corporation, 1885 West 2100 South,
Salt Lake City, UT 84119, Telephone Number: (801) 839-3500, Fax: (801) 503-9255,
Attention: Eric K. Olson, Chief Executive Officer, with a copy (which shall not
constitute notice) to Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., One
Financial Center, Boston, MA 02111, Telephone Number (617) 542-6000, Fax:
(617) 542-2241, Attention: Anthony E. Hubbard, Esq., or (b) in the case of the
Investor, to MG Partners II Ltd., c/o Magna Group, 5 Hanover Square, New York,
NY 10004, Telephone Number: (347) 491-4240, Fax: (646) 737-9948, Attention: Marc
Manuel, with a copy (which shall not constitute notice) to Greenberg Traurig,
LLP, The MetLife Building, 200 Park Avenue, New York, New York 10166, Telephone
Number (212) 801-9200, Fax: (212) 801-6400, Attention: Anthony J. Marsico, Esq.

12.5 Finder’s Fees. Each party represents that it neither is nor will be
obligated for any finders’ fee or commission in connection with this
transaction. The Company shall indemnify and hold harmless each Investor from
any liability for any commission or compensation in the nature of a finders’ fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.

12.6 Amendments and Waivers. No provision of this Agreement may be amended other
than by a written instrument signed by both parties hereto. No provision of this
Agreement may be waived other than in a written instrument signed by the party
against whom enforcement of such waiver is sought. No failure or delay in the
exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercises thereof or of any other right,
power or privilege.

 

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12.7 Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this
Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.

12.8 Entire Agreement. This Agreement and the documents referred to herein
constitute the entire agreement among the parties and no party shall be liable
or bound to any other party in any manner by any warranties, representations or
covenants except as specifically set forth herein or therein.

12.9 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

12.10 Interpretation. Unless the context of this Agreement clearly requires
otherwise, (a) references to the plural include the singular, the singular the
plural, the part the whole, (b) references to any gender include all genders,
(c) “including” has the inclusive meaning frequently identified with the phrase
“but not limited to” and (d) references to “hereunder” or “herein” relate to
this Agreement.

12.11 Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, the Investor and the
Company will be entitled to specific performance under the Transaction
Documents. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
contained in the Transaction Documents and hereby agree to waive and not to
assert in any action for specific performance of any such obligation the defense
that a remedy at law would be adequate.

12.12 Fees and Expenses. Each party shall bear its own fees and expenses related
to the transactions contemplated by the Transaction Documents; provided,
however, that $50,000 (less $15,000 heretofore paid by the Company to the
Investor) shall be withheld by the Investor from its applicable Initial Purchase
Price at the Initial Closing as a non-accountable and non-refundable document
preparation fee (the “Document Preparation Fee”) in connection with the
preparation, negotiation, execution and delivery of the Transaction Documents
and legal due diligence of the Company, and shall be paid directly to the
Investor’s counsel on the Initial Closing Date by wire transfer of immediately
available funds. For the avoidance of doubt, the Document Preparation Fee (and
any portion thereof) shall be non-refundable when paid. The Company shall pay
all transfer agent fees (including, without limitation, any fees required for
same-day processing of any instruction letter delivered by the Company and any
conversion or exercise notice delivered by a Investor), stamp taxes and other
taxes and duties levied in connection with the delivery of any Securities to the
Investor.

 

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12.13 No Frustration. So long as the Investor or its affiliates remain the
record holders of at least 20% of the original face amount of either of the
Notes, neither the Company nor any of its affiliates or Subsidiaries, nor any of
its or their respective officers, employees, directors, agents or other
representatives, will, without the prior written consent of the Investor (which
consent may be withheld, delayed or conditioned in the Investor’s sole
discretion), effect, enter into, announce or recommend to its stockholders any
agreement, plan, arrangement or transaction (or issue, amend or waive any
security) that would or would reasonably be expected to (i) constitute or
involve a Variable Rate Transaction or (ii) restrict, delay, conflict with or
impair the ability or right of the Company to timely perform its obligations
under this Agreement, the Notes or the Warrants, including, without limitation,
the obligation of the Company to timely deliver shares of Common Stock to the
Investor or its affiliates in accordance with this Agreement, the Notes or the
Warrants.

12.14 No Integration. None of the Company, any of its affiliates (as defined in
Rule 501(b) under the 1933 Act), or any person acting on behalf of the Company
or such affiliate will sell, offer for sale, or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the 1933 Act)
which will be integrated with the sale of the Securities in a manner which would
require the registration of the Securities under the 1933 Act or require
stockholder approval under the rules and regulations of the Trading Market and
the Company will take all action that is appropriate or necessary to assure that
its offerings of other securities will not be integrated for purposes of the
1933 Act or the rules and regulations of the Trading Market, with the issuance
of Securities contemplated hereby.

13. Additional Defined Terms. In addition to the terms defined elsewhere in this
Agreement, the Notes or the Warrants the following terms have the meanings set
forth in this Section 11:

13.1 “1934 Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

13.2 “Additional Note Conditions” means, as of any given date of determination:
(i) all the Conversion Shares may be issued in full without violating the rules
or regulations of the Trading Market on which the Common Stock is then listed or
designated for quotation (as applicable); (ii) no public announcement of a
pending, proposed or intended Fundamental Transaction shall have occurred which
has not been abandoned, terminated or consummated; (iii) the Company shall have
no knowledge of any fact that would reasonably be expected to cause any
Registration Statement required to be filed pursuant to the Registration Rights
Agreement to not be effective or the prospectus contained therein to not be
available for the resale of all of the Registrable Securities in accordance with
the terms of the Registration Rights Agreement; (iv) the Investor shall not be
in possession of any material, non-public information provided to it by the
Company, any of its affiliates or any of their respective employees, officers,
representatives, agents or the like (other than any material, non-public
information that will be disclosed in the Additional 8-K); (v) there shall not
have occurred any suspension of electronic trading or settlement services by the
DTC with respect to the Common Stock occurs which is continuing or any receipt
by the Company of any notice from DTC to the effect that a suspension of
electronic trading or settlement services by DTC with respect to the Common
Stock is being imposed or is contemplated (unless, prior to such suspension, DTC
shall have notified the Company in writing that DTC has determined not to impose
any such

 

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suspension); (vi) no Public Information Failure shall exist and (vii) there
shall not have occurred an Event of Default (as defined in the Initial Note) or
an event that with the passage of time or giving of notice would constitute an
Event of Default (as defined in the Initial Note).

13.3 “Additional Note Conditions Failure” means that on any day during the
period commencing on the Additional Closing Notice Date through the Additional
Closing Date, the Additional Note Conditions have not been satisfied (or waived
in writing by the Investor).

13.4 “Commission” means the United States Securities and Exchange Commission.

13.5 “Common Stock Equivalents” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any Convertible Security, Option or
other instrument that is at any time convertible into or exercisable or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.

13.6 “Effective Date” means the date that the Initial Registration Statement (as
defined in the Registration Rights Agreement) filed pursuant to the Registration
Rights Agreement has been declared effective by the Commission.

13.7 “GE Secured Credit Facility” means the secured credit facility of the
Company established pursuant to that Loan and Security Agreement dated as of
December 17, 2012, by and among General Electric Capital Corporation, as lender
and administrative and collateral agent, the lenders thereto, and the Company
(as the same has been amended prior to the date hereof and as it may be amended
following the date hereof, and including any senior secured credit facility
provided to the Company by one or more commercial lenders that shall replace the
GE Secured Credit Facility).

13.8 “Liens” means a lien, charge pledge, security interest, encumbrance, right
of first refusal, preemptive right or other restriction.

13.9 “Material Adverse Effect” means (i) a material adverse effect on the
legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Company’s ability to perform in any material respect on a timely basis its
obligations under any Transaction Document.

13.10 “Registrable Securities” shall have the meaning set forth in the
Registration Rights Agreement.

13.11 “Short Sales” shall mean “short sales” as defined in Rule 200 promulgated
under Regulation SHO under the 1934 Act.

13.12 “Subsidiary” shall mean any corporation or other entity of which at least
a majority of the securities or other ownership interest having ordinary voting
power for the election of directors or other persons performing similar
functions are at the time owned directly or indirectly by the Company and/or any
of its other Subsidiaries.

 

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13.13 “Trading Day” means any day on which the Common Stock is traded on the
Trading Market, provided that “Trading Day” shall not include any day on which
the Common Stock is scheduled to trade on the Trading Market for less than 4.5
hours or any day that the Common Stock is suspended from trading during the
final hour of trading on the Trading Market (or if the Trading Market does not
designate in advance the closing time of trading on the Trading Market, then
during the hour ending at 4:00:00 p.m., New York City time) unless such day is
otherwise designated as a Trading Day in writing by the Investor.

13.14 “Trading Market” means any of the following markets or exchanges on which
the Common Stock is listed or quoted for trading on the date in question: the
OTC Bulletin Board, The NASDAQ Global Market, The NASDAQ Global Select Market,
The NASDAQ Capital Market, the New York Stock Exchange, NYSE Arca, the NYSE MKT,
or the OTCQX Marketplace or the OTCQB Marketplace operated by OTC Markets Group
Inc. (or any successor to any of the foregoing).

[SIGNATURES ON THE FOLLOWING PAGE]

 

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IN WITNESS WHEREOF, the parties have caused this Securities Purchase Agreement
to be duly executed and delivered as of the date provided above.

 

THE COMPANY AMEDICA CORPORATION By:  

/s/ Eric K. Olson

  Name:   Eric K. Olson   Title:   Chief Executive Officer

 

Securities Purchase Agreement – Signature Page

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IN WITNESS WHEREOF, the parties have caused this Securities Purchase Agreement
to be duly executed and delivered as of the date provided above.

 

THE INVESTOR: MG PARTNERS II LTD. By:  

/s/ Joshua Sason

Name:   Joshua Sason Title:   Managing Member

 

Securities Purchase Agreement – Signature Page

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Schedule I

 

(1)   (2)   (3)     (4)     (5)     (6)     (7)  

Investor

 

Address and Facsimile Number

  Original
Principal
Amount of
Initial Notes     Number of
Warrant Shares     Original Principal
Amount of
Additional Notes     Initial
Purchase Price     Additional
Purchase Price  

MG Partners II Ltd.

 

c/o Magna Group

5 Hanover Square

New York, NY 10004

Tel: (347) 491-4240

Fax: (646) 737-9948

Attention: Marc Manuel

 

with a copy (which shall not constitute notice) to

 

Greenberg Traurig, LLP

The MetLife Building

200 Park Avenue

New York, New York 10166

Tel: (212) 801-9200

Fax: (212) 801-6400

Attention: Anthony J. Marsico, Esq.

  $ 2,900,000        568,889      $ 3,500,000      $ 2,500,000      $ 3,500,000
  

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EXHIBIT A

FORM OF NOTES

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EXHIBIT B

FORM OF WARRANTS

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EXHIBIT C

FORM OF REGISTRATION RIGHTS AGREEMENT

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EXHIBIT D

FORM OF TRANSFER AGENT INSTRUCTION LETTER

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EXHIBIT E

FORM OF OFFICER’S CERTIFICATE