EXECUTION
VERSION


 


EXCHANGE
AGREEMENT


 


THIS
EXCHANGE AGREEMENT (the “Agreement”) is dated this 3rd day of January, 2018 (the “Effective
Date”), by and among Amedica Corporation, a Delaware corporation (the “Company”), and MEF I, L.P. (the
“Holder”).


 


WHEREAS,
the Holder entered into that certain Assignment Agreement, dated as of even date herewith (the “Assignment Agreement”),
by and among, the Company, US Spine, Inc., a wholly-owned subsidiary and guarantor of the Company, Anson Investments Master Fund
LP, Hercules Capital, Inc. (fka, Hercules Technology Growth Capital, Inc.), a Maryland corporation (“Hercules Technology
Growth”), and Hercules Technology III, L.P., a Delaware limited partnership (“Hercules Technology III”;
and together with Hercules Technology Growth, “Hercules”);


 


WHEREAS,
pursuant to the Assignment Agreement, Hercules assigned all of its rights, title, and interests contained in that certain Loan
and Security Agreement, dated June 30, 2014, as amended (the “Loan Agreement”), by and among the Company, the
subsidiaries and guarantor of the Company, and Hercules, to Holder, along with all rights, title, and interests contained in the
ancillary transaction documents;


 


WHEREAS,
pursuant to the Assignment Agreement, Holder is now deemed the lender of the One Million One Hundred Thirty-Two Thousand Three
Hundred Eleven and 40/100 Dollars ($1,132,311.40) outstanding under the Loan Agreement (the “Loan”);


 


WHEREAS,
the Loan is evidenced by that certain Secured Term Promissory Note (the “Note”);


 


WHEREAS,
pursuant to the Assignment Agreement the Holder beneficially owns and holds a portion of the Note, as set forth on Exhibit
A hereto (the “Securities”);


 


WHEREAS,
the Holder desires to exchange the Securities for one of the Company’s Senior Secured Convertible Promissory Notes (the
“Exchange Securities”) as set forth on Exhibit B, and the Company desires to issue the Exchange Securities
in exchange for the Securities, all on the terms and conditions set forth in this Agreement; and


 


WHEREAS,
the reliance upon the representations made by the Holder and the Company in this Agreement, the transactions contemplated by this
Agreement are such that the offer and exchange of securities by the Company under this Agreement will be exempt from registration
under applicable United States securities laws as a result of this exchange offer being undertaken pursuant to Section 3(a)(9)
of the Securities Act of 1933, as amended (the “Securities Act”).


 


NOW,
THEREFORE, in consideration of the terms and conditions contained herein, and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the Company and the Holder hereby agree as follows:


 


Section
1. Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement: (a) capitalized
terms that are not otherwise defined herein have the meanings given to such terms in the Note (as defined herein), and (b) the
following terms have the meanings set forth below:


 






    	 



     


    




 


“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.


 


“Board
of Directors” means the board of directors of the Company.


 


“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action
to close.


 


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


 


“Common
Stock” means the common stock of the Company, par value $0.01 per share, and any other class of securities into which
such securities may hereafter be reclassified or changed.


 


“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 debt, preferred stock, right, option, warrant 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.


 


“Conversion
Price” shall have the meaning ascribed to such term in the Exchange Securities.


 


“Conversion
Shares” shall have the meaning ascribed to such term in the Exchange Securities. For the avoidance of doubt, such Conversion
Shares includes all shares of Common Stock issued and issuable pursuant to the terms of the Note, including without limitation,
shares of Common Stock issued and issuable in lieu of the cash payment of interest, if any, on the Note in accordance with the
terms of the Note, in each case without respect to any limitation or restriction on the conversion of the Note.


 


“Disclosure
Schedules” shall have the meaning ascribed to such term in Section 3.


 


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


 


“FCPA”
means the Foreign Corrupt Practices Act of 1977, as amended.


 


“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.2.


 


“Material
Permits” shall have the meaning ascribed to such term in Section 3.13.


 






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“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.


 


“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time
to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.


 


“SEC
Reports” shall have the meaning ascribed to such term in Section 3.1(h).


 


“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.


 


“Subsidiary”
means any subsidiary of the Company as set forth on Schedule 3.1 and shall, where applicable, also include any direct or
indirect subsidiary of the Company formed or acquired after the date hereof.


 


“Trading
Day” means a day on which the principal Trading Market is open for trading.


 


“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 NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the
New York Stock Exchange, (or any successors to any of the foregoing).


 


“Transaction
Documents” means this Agreement, the Exchange Securities, that certain Assignment Agreement, dated January 3, 2018,
by and among the Company, the subsidiaries and guarantor of the Company, the Holder, and Hercules Capital, Inc. (fka, Hercules
Technology Growth Capital, Inc.), a Maryland corporation, and those certain UCC-3 Financing Statement Amendments.


 


Section
2. Exchange. Subject to and upon the terms and conditions set forth in this Agreement, Holder agrees to surrender to the
Company the Securities (other than any Securities or portions thereof which have previously been paid or repaid in cash pursuant
to their terms) and, in exchange therefore, the Company shall issue to the Holder the Exchange Securities (each, an “Exchange”).


 


2.1
Closing. On the date hereof (the “Closing Date”), the Company will issue and deliver (or cause to be
issued and delivered) the Exchange Securities to the Holder, or in the name of a custodian or nominee of the Holder, or as otherwise
requested by the Holder in writing, and the Holder will surrender to the Company an equal amount of the Securities.


 


2.2
Section 3(a)(9). Assuming the accuracy of the representations and warranties of each of the Company and the Holder set
forth in Sections 3 and 4 of this Agreement, the parties acknowledge and agree that the purpose of such representations and warranties
is, among other things, to ensure that the Exchange qualifies as an exchange of securities under Section 3(a)(9) of the Securities
Act.


 






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2.3
Legal Opinion. At the Closing the Company shall have a legal opinion of its counsel, substantially in the form of Exhibit
C attached hereto. Such opinion shall opine on the availability of an exemption from registration under the Securities Act
as it relates to the Exchange, the tacking of the holding period of the Exchange Securities to the original issuance date of the
Securities under Rule 144 and other matters reasonably requested by the Holder. The Company shall be responsible for all costs
and expenses related to the issuance of the legal opinion described in this Section 2.3.


 


2.4
Non-Shell Representation Letter. At the Closing, the Company shall provide in substantially in the form of Exhibit D
attached hereto, a non-shell representation letter. Such letter shall represent that the Company is not and has not been an
entity that fits within the definition of a “shell company” under Section 12b-2
of the Exchange Act and Rule 144.


 


2.5
Irrevocable Transfer Agent Instruction Letter. At the Closing, the Company shall provide an
irrevocable transfer agent instruction letter, in substantially the form of Exhibit E attached hereto.


 


Section
3. Representations and Warranties of the Company. Except as set forth in the disclosure schedules (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, represents
and warrants to the Holder that:


 


3.1
Subsidiaries. All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1. The Company
owns, directly or indirectly, all of the capital stock or other equity interests of each any subsidiary of the Company as set
forth on Schedule 3.1 and shall, where applicable, also include any direct or indirect subsidiary of the Company formed
or acquired after the date hereof (a “Subsidiary”) free and clear of any liens, and all of the issued and outstanding
shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar
rights to subscribe for or purchase securities. If the Company has no subsidiaries, all other references to the Subsidiaries or
any of them in the Transaction Documents (as defined in the Note) shall be disregarded.


 


3.2
Organization and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite
power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the
Company nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business
and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in: (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 (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in
any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.


 






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3.3
Authorization; Enforcement. The Company has the requisite power and authority to enter into and to consummate the transactions
contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder
and thereunder. The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders
in connection herewith or therewith other than in connection with the Required Approvals. This Agreement and each other Transaction
Document to which it is a party has been (or upon delivery will have 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.


 


3.4
No Conflicts. The execution, delivery and performance by the Company of this Agreement and the other transaction documents
to which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby
and thereby do not and will not: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter documents; (ii) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default) under, result in the creation of any lien (except
liens in favor of the Holder) upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights
of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the
Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected;
or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject
(including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to
result in a Material Adverse Effect.


 






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3.5
Filings, Consents and Approvals. Except as set forth on Schedule 3.5, the Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal,
state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the
Company of the Transaction Documents, other than: (i) the filings required by Section 21, and (ii) the filing of Form D (if applicable)
and Form 8-K with the Commission and such filings as are required to be made under applicable state securities laws (collectively,
the “Required Approvals”).


 


3.6
Issuance of the Securities. The Securities are duly authorized, validly issued, fully paid and nonassessable, free and
clear of all liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents. The Exchange
Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, 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 provided for in the Transaction Documents.


 


3.7
Capitalization. The capitalization of the Company is as set forth on Schedule 3.7, which Schedule 3.7 shall
also include the number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as of the date
hereof. Except as set forth on Schedule 3.7, the Company has not issued any capital stock since its most recently filed
periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options under the Company’s
stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase
plans and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most recently
filed periodic report under the Exchange Act. Except as set forth on Schedule 3.7, other than with regards to an Exempt
Issuance (as defined in the Note), no Person has any right of first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by the Transaction Documents. Except as a result of the purchase
and sale of the Securities and securities issued to employees, officers or directors, or former employees, officers or directors
and other service providers or former service providers of the Company pursuant to the Equity Incentive Plan or otherwise, except
as set forth on Schedule 3.7, there are no outstanding options, warrants, rights to subscribe to, calls or commitments
of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable
for, or giving any Person any right to subscribe for or acquire any shares of Common Stock, or contracts, commitments, understandings
or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common
Stock Equivalents. Except as set forth on Schedule 3.7, the issuance and sale of the Securities will not obligate the Company
to issue shares of Common Stock or other securities to any Person (other than the Holder) and will not result in a right of any
holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of
the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable, have
been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation
of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any
stockholder, the Board of Directors or others is required for the issuance and sale of the Securities. Other than as set forth
on Schedule 3.7, there are no stockholders agreements, voting agreements or other similar agreements with respect to the
Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the
Company’s stockholders.


 






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3.8
SEC Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents
required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation
to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein,
being collectively referred to herein as the “SEC Reports”). As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of
the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to
be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were
made, not misleading. The Company has never been an issuer subject to Rule 144(i) under the Securities Act. The financial statements
of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules
and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been
prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods
involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and
except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material
respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results
of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments.


 


3.9
Material Changes; Undisclosed Events, Liabilities or Developments. Since the filing of the Company’s Form 10-Q for
the period ended September 30, 2017, except as set forth on Schedule 3.9: (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 any stock option plan or as set forth in the SEC Reports. Except for
the issuance of the Securities contemplated by this Agreement, no event, liability, fact, circumstance, occurrence or development
has occurred or exists or 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 (1) Trading Day prior to the date that this representation is made.


 






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3.10
Litigation. Except as set forth on Schedule 3.10, there is no action, suit, inquiry, notice of violation, proceeding
or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any
of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges
the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an
unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect, and neither the Company nor any Subsidiary,
nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under
federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company,
there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director
or officer of the Company that is likely to lead to action that can reasonably be expected to result in a Material Adverse Effect.
There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission
involving the Company or any current or former director or officer of the Company. The Commission has not issued any stop order
or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange
Act or the Securities Act.


 


3.11
Labor Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees
of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its
Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such
Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company
and its Subsidiaries believe that their relationships with their employees are good. To the knowledge of the Company, no executive
officer of the Company or any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement
or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not
subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and
its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment
and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance
could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.


 






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3.12
Compliance. Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred
that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary
under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation
of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any
of its properties is bound (whether or not such default or violation has been waived); (ii) is in violation of any judgment, decree
or order of any court, arbitrator or other governmental authority; or (iii) is or has been in violation of any statute, rule,
ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws
relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor
matters, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.


 


3.13
Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the
appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described
in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material
Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material Permit.


 


3.14
Title to Assets. Except as set forth on Schedule 3.14, the Company and the Subsidiaries have good and marketable
title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that
is material to the business of the Company and the Subsidiaries, in each case free and clear of all liens, except for (i) liens
as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made
of such property by the Company and the Subsidiaries and (ii) liens for the payment of federal, state or other taxes, for which
appropriate reserves have been made therefor in accordance with GAAP and, the payment of which is neither delinquent nor subject
to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.


 






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3.15
Intellectual Property. The Company and the Subsidiaries have, or have 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 SEC Reports, all as necessary or required for use in connection with their
respective businesses as presently conducted and which the failure to so have could have a Material Adverse Effect (collectively,
the “Intellectual Property Rights”). None of, and neither the Company nor any Subsidiary has 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. Neither the Company nor any Subsidiary
has received, since the date of the latest audited financial statements included within the SEC 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 and its Subsidiaries have 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.


 


3.16
Transactions with Affiliates and Employees. Except for any Exempt Issuances, none of the officers or directors of the Company
or any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a
party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including
any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or
personal property to or from providing for the borrowing of money from or lending of money to, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member or partner, in each case
in excess of $120,000 other than for: (i) payment of salary or consulting fees for services rendered; (ii) reimbursement for expenses
incurred on behalf of the Company; and (iii) other employee benefits, including stock option or stock award agreements under the
Equity Incentive Plan.


 


3.17
Sarbanes-Oxley; Internal Accounting Controls. Except as set forth on Schedule 3.17, the Company and the Subsidiaries
are 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 and as of the Closing Date. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient
to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific
authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP
and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or
specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences. The Company and the Subsidiaries have established disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed
such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files
or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s
rules and forms. The Company’s certifying officers have evaluated the effectiveness of the disclosure controls and procedures
of the Company and the Subsidiaries as of the end of the period covered by the most recently filed periodic report under the Exchange
Act (such date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under
the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures
based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the internal control
over financial reporting (as such term is defined in the Exchange Act) of the Company that have materially affected, or is reasonably
likely to materially affect, the internal control over financial reporting of the Company and its Subsidiaries.


 






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3.18
Certain Fees. Other than as set forth on Schedule 3.18, no brokerage or finder’s fees or commissions are or
will be payable by the Company or any Subsidiaries to any broker, financial advisor or consultant, finder, placement agent, investment
banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Holder shall have
no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type
contemplated in this Section 3.18 that may be due in connection with the transactions contemplated by the Transaction Documents.


 


3.19
Private Placement. Assuming the accuracy of the Holder’s representations and warranties set forth in Section 4, no
registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Holder as contemplated
hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.


 


3.20
Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities,
will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940,
as amended. The Company shall conduct its business in a manner so that it will not become an “investment company”
subject to registration under the Investment Company Act of 1940, as amended.


 


3.21
Registration Rights. Except as set forth on Schedule 3.21, no Person has any right to cause the Company to effect
the registration under the Securities Act of any securities of the Company or any Subsidiaries.


 


3.22
Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange
Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating
terminating such registration. The Company has not, in the twelve (12) months preceding the date hereof, received notice from
any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance
with the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will
not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.


 






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3.23
Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in
order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar
charter documents) or the laws of its state of incorporation that is or could become applicable to the Holder as a result of the
Holder and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without
limitation as a result of the Company’s issuance of the Securities and the Holder’s ownership of the Securities.


 


3.24
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 any other Person acting on its behalf has provided any of the Holder or their
agents or counsel with any information that it believes constitutes or might constitute material, non-public information. The
Company understands and confirms that the Holder 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 Holder 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 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 Company
acknowledges and agrees that no Holder makes or has made any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 3 hereof.


 


3.25
No Integrated Offering. Assuming the accuracy of the Holder’s representations and warranties set forth in this Section
4, 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 would cause this offering
of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require
the registration of any such securities under the Securities 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.


 






    	12



     


    

 


3.26
No General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of
the Securities by any form of general solicitation or general advertising. The Company has offered the Securities for sale only
to the Holder and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.


 


3.27
Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary,
any agent or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly, used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity; (ii)
made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties
or campaigns from corporate funds; (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made
by any person acting on its behalf of which the Company is aware) which is in violation of law; or (iv) violated in any material
respect any provision of FCPA.


 


3.28
Accountants. The Company’s accounting firm is set forth on Schedule 3.28 of the Disclosure Schedules. To the
knowledge and belief of the Company, such accounting firm is a registered public accounting firm as required by the Exchange Act.


 


3.29
No Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the
Company.


 


3.30
Acknowledgment Regarding Holder’s Purchase of Securities. The Company acknowledges and agrees that the Holder is
acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions
contemplated thereby. The Company further acknowledges that no Holder is acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice
given by any Holder or any of their respective representatives or agents in connection with the Transaction Documents and the
transactions contemplated thereby is merely incidental to the Holder’s purchase of the Securities. The Company further represents
to the Holder that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based
solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.


 


3.31
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, other than, in the case of clauses (ii) and (iii), compensation paid
to the Company’s placement agent (if applicable) in connection with the placement of the Securities.


 






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3.32
Stock Option Plans. Each stock option granted by the Company was granted (i) in accordance with the terms of the applicable
stock option plan of the Company and (ii) with an exercise price at least equal to the fair market value of the Common Stock on
the date such stock option would be considered granted under GAAP and applicable law. No stock option granted under the Company’s
stock option plan has been backdated. The Company has not knowingly granted, and there is no and has been no policy or practice
of the Company to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with,
the release or other public announcement of material information regarding the Company or its Subsidiaries or their financial
results or prospects.


 


3.33
Office of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company’s knowledge, any director,
officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered
by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).


 


3.34
U.S. Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation
within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon a Holder’s
request.


 


3.35
Bank Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding
Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve
System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls,
directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent
or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither
the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the management or policies of a bank
or any entity that is subject to the BHCA and to regulation by the Federal Reserve.


 


3.36
Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result
in a Material Adverse Effect, the Company (i) has made or filed all United States federal, state and local income and all foreign
income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid
all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns,
reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes
for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any
such claim.


 






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3.37
Seniority. No Indebtedness or other claim against the Company is senior to the Loan Agreement 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).


 


3.38
Money Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance
with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money
Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body
or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge
of the Company or any Subsidiary, threatened.


 


3.39
Promotional Stock Activities. Neither the Company, its officers, or any affiliates or agents of the Company have engaged
in any stock promotional activity that could give rise to a complaint or inquiry by the Securities and Exchange Commission alleging
(i) a violation of the anti-fraud provisions of the federal securities laws, (ii) violations of the anti-touting provisions, (iii)
improper “gun-jumping; or (iv) promotion without proper disclosure of compensation.


 


3.40
Withdrawal or Payments of Cash. Neither the Company, its officers, or any affiliates or agents of the Company have withdrawn
or paid cash to any Person in an aggregate amount that exceeds Five Thousand Dollars ($5,000), except in connection with payments
made in the ordinary course of business, such as the payment of employees’ salaries, payment of fees to members of the Board
of Directors, and interest payments made to the Company’s Chief Executive Officer with respect to a loan that he made to
the Company.


 


Section
4. Representations and Warranties of the Holder. The Holder represents and warrants to the Company that:


 


4.1
Ownership of the Securities. The Holder is the legal and beneficial owner of its pro-rata portion of the Securities. The
Holder paid for the Securities, and has continuously held the Securities since its issuance or purchase. The Holder, individually
or through an affiliate, owns the Securities outright and free and clear of any options, contracts, agreements, liens, security
interests, or other encumbrances.


 


4.2
No Public Sale or Distribution. The Holder is acquiring its pro-rata portion of the Exchange Securities in the ordinary
course of business for its own account and not with a view toward, or for resale in connection with, the public sale or distribution
thereof; provided, however, that by making the representations herein, the Holder does not agree to hold any of the Exchange Securities
for any minimum or other specific term and reserves the right to dispose of the Exchange Securities at any time in accordance
with an exemption from the registration requirements of the Securities Act and applicable state securities laws. The Holder does
not presently have any agreement or understanding, directly or indirectly, with any person to distribute, or transfer any interest
or grant participation rights in, the Securities or the Exchange Securities.


 






    	15



     


    

 


4.3
Accredited Investor and Affiliate Status. At the time the Holder was offered the Exchange Securities, it was, as of the
date hereof, it is, and as of the date it converts the Exchange Securities, it will be, an “accredited investor” as
that term is defined in Rule 501 of Regulation D under the Securities Act. The Holder is not, and has not been, for a period of
at least three (3) months prior to the date of this Agreement (a) an officer or director of the Company, (b) an “affiliate”
of the Company (as defined in Rule 144) (an “Affiliate”) or (c) a “beneficial owner” of more than
10% of the common stock (as defined for purposes of Rule 13d-3 of the Exchange Act).


 


4.4
Reliance on Exemptions. The Holder understands that the Exchange is being made 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 Holder’s compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Holder set forth herein in order to determine the availability of such exemptions and the eligibility
of the Holder to complete the Exchange and to acquire its pro-rata portion of the Exchange Securities.


 


4.5
Information. The Holder has been furnished with all materials relating to the business, finances and operations of the
Company and materials relating to the Exchange which have been requested by the Holder. The Holder has been afforded the opportunity
to ask questions of the Company. Neither such inquiries nor any other due diligence investigations conducted by the Holder or
its representatives shall modify, amend or affect the Holder’s right to rely on the Company’s representations and
warranties contained herein. The Holder acknowledges that all of the documents filed by the Company with the SEC under Sections
13(a), 14(a) or 15(d) of the Exchange Act that have been posted on the SEC’s EDGAR site are available to the Holder, and
the Holder has not relied on any statement of the Company not contained in such documents in connection with the Holder’s
decision to enter into this Agreement and the Exchange.


 


4.6
Risk. The Holder understands that its investment in the Exchange Securities involves a high degree of risk. The Holder
is able to bear the risk of an investment in the Exchange Securities including, without limitation, the risk of total loss of
its investment. The Holder has sought such accounting, legal and tax advice as it has considered necessary to make an informed
investment decision with respect to the Exchange.


 


4.7
No Governmental Review. The Holder 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 in connection with the Exchange or the fairness or
suitability of the investment in the Exchange Securities nor have such authorities passed upon or endorsed the merits of the Exchange
Securities.


 






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4.8
Organization; Authorization. The Holder is duly organized, validly existing and in good standing under the laws of its
state of formation and has the requisite organizational power and authority to enter into and perform its obligations under this
Agreement.


 


4.9
Validity; Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of the Holder
and shall constitute the legal, valid and binding obligations of the Holder enforceable against the Holder in accordance with
its terms. The execution, delivery and performance of this Agreement by the Holder and the consummation by the Holder of the transactions
contemplated hereby (including, without limitation, the irrevocable surrender of the Securities) will not result in a violation
of the organizational documents of the Holder.


 


4.10
Prior Investment Experience. The Holder acknowledges that it has prior investment experience, including investment in securities
of the type being exchanged, including the Securities or the Exchange Securities, and has read all of the documents furnished
or made available by the Company to it and is able to evaluate the merits and risks of such an investment on its behalf, and that
it recognizes the highly speculative nature of this investment.


 


4.11
Tax Consequences. The Holder acknowledges that the Company has made no representation regarding the potential or actual
tax consequences for the Holder which will result from entering into the Agreement and from consummation of the Exchange. The
Holder acknowledges that it bears complete responsibility for obtaining adequate tax advice regarding the Agreement and the Exchange.


 


4.12
No Registration, Review or Approval. The Holder acknowledges, understands and agrees that its pro-rata portion of the Exchange
Securities are being exchanged hereunder pursuant to an exchange offer exemption under Section 3(a)(9) of the Securities Act.


 


Section
5. Conditions Precedent to Obligations of the Company. The obligation of the Company to consummate the transactions contemplated
by this Agreement is subject to the satisfaction on the Closing Date of each of the following conditions, provided that these
conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing
the Holder with prior written notice thereof:


 


5.1
Delivery. The Holder shall have delivered to the Company the Securities.


 


5.2
No Prohibition. No order of any court, arbitrator, or governmental or regulatory authority shall be in effect which purports
to enjoin or restrain any of the transactions contemplated by this Agreement.


 


5.3
Representations. The accuracy in all material respects when made and on the Closing Date of the representations and warranties
of the Holder contained herein (unless as of a specific date therein).


 






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Section
6. Conditions Precedent to Obligations of the Holder. The obligation of the Holder to consummate the transactions contemplated
by this Agreement is subject to the satisfaction on the Closing Date of each of the following conditions, provided that these
conditions are for the Holder’s sole benefit and may be waived by the applicable Holder at any time in its sole discretion
by providing the Company with prior written notice thereof:


 


6.1
No order of any court, arbitrator, or governmental or regulatory authority shall be in effect which purports to enjoin or restrain
any of the transactions contemplated by this Agreement;


 


6.2
The accuracy in all material respects when made and on the Closing Date of the representations and warranties of the Company contained
herein (unless as of a specific date therein);


 


6.3
All obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been
performed;


 


6.4
There is no event of default then existing on the Securities on such date; and


 


6.5
From the date hereof to the relevant Closing Date, trading in the Company’s common stock shall not have been suspended by
the SEC or any trading market and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg
L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are
reported by such service, or on any trading market, nor shall a banking moratorium have been declared either by the United States
or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national
or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in
each case, in the reasonable judgment of the Holder makes it impracticable or inadvisable to purchase the Exchange Securities
at the closing.


 


6.6
The Company consents to the filing of a UCC-3 Financing Statement Amendment in the appropriate jurisdictions to evidence and perfect
Holder’s security interests in the Collateral (as defined in the Loan Agreement).


 


Section
7. Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement shall be construed under the laws of the state of
New York, without regard to principles of conflicts of law or choice of law that would permit or require the application of the
laws of another jurisdiction. The Company and the Holder each hereby agrees that all actions or proceedings arising directly or
indirectly from or in connection with this Agreement shall be litigated only in the Supreme Court of the State of New York or
the United States District Court for the Southern District of New York located in New York County, New York. The Company and the
Holder each consents to the exclusive jurisdiction and venue of the foregoing courts and consents that any process or notice of
motion or other application to either of said courts or a judge thereof may be served inside or outside the State of New York
or the Southern District of New York by generally recognized overnight courier or certified or registered mail, return receipt
requested, directed to such party at its or his address set forth below (and service so made shall be deemed “personal service”)
or by personal service or in such other manner as may be permissible under the rules of said courts. THE COMPANY AND THE HOLDER
EACH HEREBY WAIVE ANY RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY LITIGATION PURSUANT TO THIS AGREEMENT.


 






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Section
8. Indemnification of Holder. Subject to the provisions of this Section 8, the Company shall indemnify and hold the Holder
and its directors, officers, managers, shareholders, members, partners, employees and agents (and any other Persons with a functionally
equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls
the Holder (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers,
managers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a
Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Holder
Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation
that any such Holder Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties,
covenants or agreements made by any Company in this Agreement or in the other document related to this exchange or (b) any action
instituted against Holder Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company
who is not an Affiliate of such Holder Party, with respect to any of the transactions contemplated by this exchange (unless such
action is based upon a breach of such Holder Party’s representations, warranties or covenants under the exchange or any
agreements or understandings such Holder Party may have with any such stockholder or any violations by such Holder Party of state
or federal securities laws or any conduct by such Holder Party which constitutes fraud, gross negligence, willful misconduct or
malfeasance). If any action shall be brought against any Holder Party in respect of which indemnity may be sought pursuant to
this Agreement, such Holder Party shall promptly notify the Company in writing, and the Company shall have the right to assume
the defense thereof with counsel of its own choosing reasonably acceptable to the Holder Party. Any Holder Party shall have the
right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Holder Party except to the extent that (i) the employment thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and
to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material
issue between the position of the Company and the position of such Holder Party, in which case the Company shall be responsible
for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Holder Party
under this Agreement (y) for any settlement by a Holder Party effected without the Company’s prior written consent, which
shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability
is attributable to any Holder Party’s breach of its representations, warranties or covenants under the Transaction Documents
or any agreements or understandings such Holder Party may have with any such stockholder or any violations by such Holder Party
of state or federal securities laws or any conduct by such Holder Party which constitutes fraud, gross negligence, willful misconduct
or malfeasance. The indemnification required by this Section 8 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received or are incurred; however, each Holder Party who receives
such interim payment agrees to reimburse the Company for any such payment made by the Company to such Holder Party if it is finally
determined in such action or proceeding that such Holder Party is not entitled to indemnification pursuant to this Section 8.
The indemnity agreements contained herein shall be in addition to any cause of action or similar right of any Holder Party against
any Company or others and any liabilities the Company may be subject to pursuant to law.


 






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Section
9. Fees and Expenses. Except as expressly set forth below, each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement. The Company acknowledges and agrees that it was obligated to previously
pay to Holder’s legal counsel a cash deposit of Fifteen Thousand Dollars ($15,000) for its initial legal fees and initial
out of pocket due diligence costs. Notwithstanding the foregoing, the Company shall pay: (i) the Holder’s legal counsel
for all of its legal fees and all of its out of pocket due diligence costs on the Closing Date; (ii) 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 the Holder), stamp taxes and other taxes and duties levied in connection with the delivery of
any Exchange Securities to the Holder; and (iii) the costs and expenses of the issuance of any and all legal opinions with respect
to the conversion and sale by the Holder of the Exchange Securities.


 


Section
10. Certain Transactions. The Holder covenants that neither it, nor any affiliate acting on its behalf or pursuant to any
understanding with it will execute any “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act
of any of the Company’s securities during the period commencing with the execution of this Agreement and ending on the later
of (i) the Maturity Date (as defined in the Exchange Securities) or (ii) the date that the Exchange Securities are no longer outstanding
(provided that this provision shall not prohibit any sales made where a corresponding Notice of Conversion (as defined in the
Exchange Securities) is tendered to the Company and the shares received upon such conversion or exercise are used to close out
such sale).


 


Section
11. Certificates. Certificates evidencing the shares of the Company’s common stock underlying the Exchange Securities
(the “Underlying Shares”) shall not contain any legend: (i) while a registration statement covering the resale
of such security is effective under the Securities Act; (ii) following any sale of such Underlying Shares pursuant to Rule 144;
or (iii) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations
and pronouncements issued by the staff of the Commission). The Company shall cause its counsel to issue a legal opinion to the
Company’s transfer agent promptly after any of the events described in (i)-(iii) in the preceding sentence if required by
the Company’s transfer agent to effect the removal of the legend hereunder (with a copy to the Holder and its broker). If
all or any portion of an Exchange Security is converted at a time when there is an effective registration statement to cover the
resale of the Underlying Shares, or if such Underlying Shares may be sold under Rule 144 or if such legend is not otherwise required
under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff
of the Commission) then such Underlying Shares shall be issued free of all legends. The Company agrees that following the Effective
Date or at such time as such legend is no longer required under this Section 11, it will, no later than two (2) Trading Days following
the delivery by the Holder to the Company or the Company’s transfer agent of a certificate representing Underlying Shares,
as applicable, issued with a restrictive legend, deliver or cause to be delivered to the Holder a certificate representing such
shares that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions
to the Company’s transfer agent that enlarge the restrictions on transfer set forth in this Section 11. Certificates for
Underlying Shares subject to legend removal hereunder shall be transmitted by the Company’s transfer agent to the applicable
Holder by crediting the account of the Holder’s prime broker with the Depository Trust Company System as directed by the
Holder.


 






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Section
12. Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered
one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other
party; provided that a facsimile signature shall be considered due execution and shall be binding upon the signatory thereto with
the same force and effect as if the signature were an original, not a facsimile signature.


 


Section
13. Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.


 


Section
14. Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or
the validity or enforceability of any provision of this Agreement in any other jurisdiction.


 


Section
15. Entire Agreement; Amendments. This Agreement supersedes all other prior oral or written agreements between the Holder,
the Company, its affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement
and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein
and therein and, except as specifically set forth herein or therein, neither the Company nor the Holder make any representation,
warranty, covenant or undertaking with respect to such matters; provided, however, that all representations and warranties contained
in the Loan Agreement, shall be incorporated herein. No provision of this Agreement may be amended other than by an instrument
in writing signed by each of the Company and the Holder. No provision hereof may be waived other than by an instrument in writing
signed by the party against whom enforcement is sought.


 


Section
16. Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of
this Agreement must be in writing and will be deemed to have been delivered: (a) upon receipt, when delivered personally; or (b)
one calendar day (excluding Saturdays, Sundays, and national banking holidays) after deposit with an overnight courier service,
in each case properly addressed to the party to receive the same.


 






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The
addresses for such communications shall be:


 


If
to the Company:


Amedica
Corporation


1885
West 2100 South


Salt
Lake City, UT 84119


Attn:
VP Operations and General Manager




 


If
to the Holder:


 


MEF
I, L.P.


c/o
Magna


40
Wall Street


New
York, NY 10005


Attn:
Joshua Sason


 


With
a copy (which shall not constitute notice) to:


 


Robinson
Brog Leinwand Greene Genovese & Gluck P.C.

875 Third Avenue, 9th Floor

New York, NY 10022

Attn: David E. Danovitch, Esq.


 


or
to such other address and/or to the attention of such other person as the recipient party has specified by written notice given
to each other party five (5) days prior to the effectiveness of such change.


 


Section
17. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective
successors and assigns, including any purchasers of the Exchange Securities. The Holder may assign some or all of their rights
hereunder without the consent of any of the Company, in which event such assignee shall be deemed to be the Holder hereunder with
respect to such assigned rights.


 


Section
18. No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.


 


Section
19. Survival of Representations. The representations and warranties of the Company and the Holder contained in Sections
3 and 4, respectively, will survive the closing of the transactions contemplated by this Agreement.


 






    	22



     


    

 


Section
20. Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions
contemplated hereby.


 


Section
21. Securities Laws Disclosure; Publicity. The Company shall (a) by 9:00 a.m. (New York City time) on the Trading Day immediately
following the date hereof, issue a press release disclosing the material terms of the transactions contemplated hereby, and (b)
file a Current Report on Form 8-K, including the Transaction Documents as exhibits thereto, with the Commission within the time
required by the Exchange Act. From and after the issuance of such press release, the Company represents to the Holder that it
shall have publicly disclosed all material, non-public information delivered to any of the Holder 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. In addition, effective upon the issuance of such press release, the Company acknowledges and agrees
that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company, any
of its Subsidiaries or any of their respective officers, directors, agents, employees or Affiliates on the one hand, and the Holder
or any of its Affiliates on the other hand, shall terminate. Notwithstanding the foregoing, the Company shall not publicly disclose
the name of the Holder, or include the name of the Holder in any filing with the Commission or any regulatory agency or Trading
Market, without the prior written consent of the Holder, except (a) as required by federal securities law in connection with the
filing of final Transaction Documents with the Commission and (b) to the extent such disclosure is required by law or Trading
Market regulations, in which case the Company shall provide the Holder with prior notice of such disclosure permitted under this
clause (b).


 


Section
22. Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by
the Transaction Documents, which shall be disclosed pursuant to Section 21, the Company covenants and agrees that neither it,
nor any other Person acting on its behalf has provided nor will provide the Holder or its agents or counsel with any information
that constitutes, or the Company reasonably believes constitutes, material non-public information, unless prior thereto the Holder
shall have consented to the receipt of such information and agreed with the Company to keep such information confidential. The
Company understands and confirms that the Holder shall be relying on the foregoing covenant in effecting transactions in securities
of the Company. To the extent that the Company delivers any material, non-public information to the Holder without the Holder’s
consent, the Company hereby covenants and agrees that the Holder shall not have any duty of confidentiality to the Company, any
of its Subsidiaries, or any of their respective officers, directors, agents, employees or Affiliates, or a duty to the Company,
any of its Subsidiaries or any of their respective officers, directors, agents, employees or Affiliates not to trade on the basis
of, such material, non-public information, provided that the Holder shall remain subject to applicable law. To the extent that
any notice provided pursuant to any Transaction Document constitutes, or contains, material, non-public information regarding
the Company or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K. The Company understands and confirms that the Holder shall be relying on the foregoing covenant in effecting transactions
in securities of the Company.


 


[Signature
Page Follows]


 






    	23



     


    

 





IN
WITNESS WHEREOF, the parties have executed this Exchange Agreement as of the date first written above.


 


Amedica
Corporation




 


	By:	 	 
	Name:	 	 
	Title:	 	 



 


MEF
I, L.P.




 


	By:	 	 
	Name:	 	 
	Title:	 	 


 






    	24



     


    

 


SCHEDULE
3.1


List
of Subsidiaries


 


	Name
    of Entity	 	Jurisdiction
    of Incorporation	 	Ownership
	US
    Spine, Inc.	 	Delaware	 	100%
    Amedica Corporation






 






    	25



     


    

 


SCHEDULE
3.5


Filings,
Consents and Approvals


 


Nasdaq
Listing Of Additional Shares Notification Form



 






    	26



     


    

 


SCHEDULE
3.7


Capitalization


 


	 	 	Number
                                         of
 Common
                  Stock
 or
                     Equivalents
	 
	 	 	 	 
	Common
    Stock Outstanding	 	 	3,022,073	 
	 	 	 	 	 
	Common Stock Warrants
    Outstanding	 	 	1,537,688	 
	Unit Option (Dawson
    James)	 	 	3,178	 
	Options
    Outstanding	 	 	11,446	 
	Total
    Derivative Securities Outstanding	 	 	1,552,312	 
	 	 	 	 	 
	Total
    Shares Outstanding & Derivative Securities	 	 	4,574,385	 
	 	 	 	 	 
	Common Shares Owned
    and Beneficially Owned by Affiliates	 	 	61,985	 
	 	 	 	 	 
	Common Shares Authorized	 	 	250,000,000	 



 






    	27



     


    

 


SCHEDULE
3.8


SEC
Reports; Financial Statements


 


The
Company filed a Current Report on Form 8-K with the SEC on December 11, 2017, wherein the Company disclosed under Item 4.02 that
the Company will restate the audited consolidated financial statements contained in its annual report on Form 10-K for the year
ended December 31, 2016, as well as the unaudited condensed consolidated financial statements contained in its Quarterly Reports
on Form 10-Q for the quarters ended September 30, 2016, March 31, 2017, June 30, 2017, and September 30, 2017, and that the consolidated
financial statements contained in these reports should no longer be relied upon. In this regards, on December 27, 2017, the Company
filed Amendment No. 2 to its Annual Report on Form 10-K/A for the fiscal year ended December 31, 2016, and also filed Amendment
No. 2 to its Quarterly Report on Form 10-Q/A for the quarterly period ended September 30, 2016. Additionally, on December 29,
2017, the Company filed amendments to its previously filed Quarterly Reports on Form 10-Q/A for the quarterly periods ended, March
31, 2017, June 30, 2017 and September 30, 2017.


 






    	28



     


    

 


SCHEDULE
3.9


Material
Changes; Undisclosed Events, Liabilities or Developments


 


The
Company filed a Current Report on Form 8-K filed with the SEC on December 11, 2017, wherein the Company disclosed under Item 4.02
that the Company will restate the audited consolidated financial statements contained in its annual report on Form 10-K for the
year ended December 31, 2016, as well as the unaudited condensed consolidated financial statements contained in its Quarterly
Reports on Form 10-Q for the quarters ended September 30, 2016, March 31, 2017, June 30, 2017, and September 30, 2017, and that
the consolidated financial statements contained in these reports should no longer be relied upon.


 


On
January 2, 2018, the Company received notice from the Nasdaq Stock Market that because the Company has not yet held an annual
meeting of shareholders within twelve months of the end of the Company’s fiscal year end, it no longer complies with its
Listing Rules (the “Rules”) for continued listing. The Company has 45 calendar days to submit a plan to regain compliance
and if Nasdaq accepts the plan, Nasdaq can grant an exception of up to 180 calendar days from the fiscal year end, or until June
29, 2018, to regain compliance.


 






    	29



     


    

 


SCHEDULE
3.10


Litigation


 


None.



 






    	30



     


    

 


SCHEDULE
3.14


Title
to Assets


 


Hercules
Technology Loan and Security Agreement


 


North
Stadium Investments Security Agreement


 


Stratasys
filed on 4/7/16 - Lease for a 3D printer in our Product Development lab


 


Revco
Leasing Company files on 7/18/13 - Lease for our multi-function devices in the office area


 






    	31



     


    

 


SCHEDULE
3.16


Transactions
with Affiliates and Employees


 


North
Stadium Investments $2.5 million loan to the Company. Sonny Bal, Chairman of the Board and CEO of the Company is also the owner
of North Stadium Investments.



 






    	32



     


    

 


SCHEDULE
3.17


Sarbanes-Oxley;
Internal Accounting Controls


 


The
Company included the following report in its Quarterly Report on Form 10-Q for the 3rd Quarter 2017, filed with the
SEC on November 14, 2017:


 


ITEM
4. CONTROLS AND PROCEDURES


 


This
Report includes the certifications of our Chief Executive Officer and Principal Financial Officer required by Rule 13a-14 of the
Securities Exchange Act of 1934 (the “Exchange Act”). See Exhibits 31.1 and 31.2. This Item 4 includes information
concerning the controls and control evaluations referred to in those certifications.


 


Evaluation
of Disclosure Controls and Procedures


 


We
maintain disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange
Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in the reports
filed or submitted under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified
by the Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure
that information required to be disclosed in our reports filed or submitted under the Exchange Act are properly recorded, processed,
summarized and reported within the time periods required by the Commission’s rules and forms.


 


We
carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer
(principal executive officer and principal financial officer), of the effectiveness of the design and operation of these disclosure
controls and procedures, as such term is defined in Exchange Act Rule 13a-15(e), as of September 30, 2017. Based on this evaluation,
the Chief Executive Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2017,
the end of the period covered by this Quarterly Report on Form 10-Q due to the material weaknesses described below.


 


As
defined in SEC Regulation S-X, a material weakness is a deficiency, or combination of deficiencies, in internal control over financial
reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial
statements will not be prevented or detected on a timely basis. Based on this assessment, management determined that, as of December
31, 2016, the Company’s internal control over financial reporting was not effective because of the material weaknesses described
below.


 


The
design and operating effectiveness of our controls were inadequate to ensure that complex accounting matters are properly accounted
for and reviewed in a timely manner. As a result, we failed to accurately record a complex equity transaction which caused the
restatement of our third quarter 2016 financial results as set forth in our Quarterly Report on Form 10-Q for the third quarter
filing 2016. In addition, we failed to properly evaluate and test certain long-lived assets for impairment, which ultimately resulted
in recognition of an impairment charge. These errors are a result of the following control deficiencies:


 


Control
Environment and Risk Assessment – The Company did not have an effective control environment with the structure necessary
for effective internal controls over financial reporting. Furthermore, the Company did not have an effective risk assessment to
identify and assess risks associated with changes to the Company’s structure and the resultant impact on internal controls.
With the dismissal of the Company’s CFO, the Company did not have qualified personnel necessary to meet the Company’s
control objectives. The Company does not have personnel with an appropriate level of knowledge and experience with U.S. GAAP to
properly review and evaluate the work performed by other Company personnel and experts related to complex accounting matters.


 






    	33



     


    

 


Control
Activities – The Company did not have control activities that were designed and operating effectively including management
review controls, controls related to monitoring and assessing the work of technical experts and consultants, and controls to verify
the completeness and adequacy of information. Specifically, the Company did not have procedures for competent personnel to review
work performed by technical experts and consultants in relation to complex debt and equity transactions and impairment evaluations.


 


Monitoring
Activities – The Company did not maintain effective monitoring controls related to the financial reporting process.
The Company did not effectively monitor the changes in internal control related to changes in the roles and responsibilities associated
with the changes in personnel and organizational structure. The failure to properly monitor impacted the timing, accuracy, and
completion of the work related to significant accounting matters.


 


Our
Chief Executive Officer is in the preliminary stage of a review of our controls relating to complex accounting matters. Although
our analysis is not complete, we will be adding additional resources with expertise in accounting for complex accounting matters
including timely review and evaluation of assets for potential impairment. We are also considering redesigning controls to add
additional layers of review and approval whenever entering into or subsequently converting, exercising, amending, repricing, exiting
or otherwise experiencing changes in or to complex financial instruments.


 


Notwithstanding
the identified material weaknesses, the Company believes the condensed consolidated financial statements included in this Quarterly
Report on Form 10-Q fairly represent in all material respects our financial condition, results of operations and cash flows at
and for the periods presented in accordance with accounting principles generally accepted in the United States of America.


 






    	34



     


    

 


SCHEDULE
3.18


Certain
Fees


 


None.



 






    	35



     


    

 


SCHEDULE
3.21


Registration
Rights


 


None.



 






    	36



     


    

 


SCHEDULE
3.22


Listing
and Maintenance Requirements


 


On
August 17, 2016, Amedica Corporation (the “Company”) received a letter from the Listing Qualifications Staff (the
“Staff”) of The NASDAQ Stock Market LLC (“Nasdaq”) indicating that the bid price for the Company’s
common stock had closed below the minimum $1.00 per share threshold for continued listing on The Nasdaq Capital, as set forth
in Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”), for the prior 30 consecutive trading days. In accordance
with Nasdaq Listing Rule 5810(c)(3)(A), the Company was ultimately provided with two consecutive 180 calendar day periods to demonstrate
compliance with the Bid Price Rule, which expired on August 14, 2017.


 


The
Company did not regain compliance with the Bid Price Rule by August 14, 2017; accordingly, on August 22, 2017, the Company received
notice from the Staff that based upon the Company’s continued non-compliance with the Rule, the Company’s securities
would be subject to delisting from Nasdaq unless the Company timely requests a hearing before the Nasdaq Hearings Panel (the “Panel”).
The Staff’s August 22, 2017 notice also indicated that, notwithstanding the extension previously granted by the Staff to
the Company to file its delinquent periodic reports with the Securities and Exchange Commission, including the Form 10-K for the
period ended December 31, 2016, and the Forms 10-Q for the periods ended March 31, 2017 and June 30, 2017, and thereby evidence
compliance with Nasdaq Listing Rule 5250(c)(1) (the “Filing Rule”) the Company’s non-compliance with the Filing
Rule could serve as a separate basis for delisting.


 


On
November 27, 2017, the Company received formal notice from The NASDAQ Stock Market LLC (“Nasdaq”) indicating that
the Company has evidenced full compliance with all requirements for continued listing on The Nasdaq Capital Market. Accordingly,
the previously-disclosed listing matter has been resolved and the Company’s securities will continue to be listed on Nasdaq.


 


Additionally,
the Company has not held its Annual Meeting of Stockholders for 2017. On January 2, 2018, the Company received notice from the
Nasdaq Stock Market that because the Company has not yet held an annual meeting of shareholders within twelve months of the end
of the Company’s fiscal year end, it no longer complies with its Listing Rules (the “Rules”) for continued listing.
The Company has 45 calendar days to submit a plan to regain compliance and if Nasdaq accepts the plan, Nasdaq can grant an exception
of up to 180 calendar days from the fiscal year end, or until June 29, 2018, to regain compliance.


 






    	37



     


    

 


SCHEDULE
3.28


Accountants


 


Tanner
LLC,


36
S State St #600


City
Creek Center


Salt
Lake City, UT 84111


 






    	38



     


    

 


SCHEDULE
3.32


Stock
Option Plans


 


Equity
Compensation Plan Information


 


The
following table sets forth information relating to all of our equity compensation plans:


 


 


	Plan
    Category	 	(a)

    Number of Shares

    to be Issued upon

    Exercise of

    Outstanding

    Options	 	 	(b)

    Weighted-

    average

    Exercise Price

    of Outstanding

    Options	 	 	(c)

    Number of Securities

    Remaining Available

    for Future Issuance

    under Equity

    Compensation Plans

    (Excluding Securities

    Referenced in

    Column (a))	 
	Equity compensation plans
    approved by stockholders	 	 	11,446	(1)	 	$	367.08	(2)	 	 	75,600	 
	Equity compensation
    plans not approved by Stockholders	 	 	-	 	 	 	-	 	 	 	-	 
	Total	 	 	11,446	(1)	 	$	367.08	(2)	 	 	75,600	 



 


	(1)	Includes
    options outstanding under our 2012 Equity Incentive Plan 
	 	 
	(2)	Represents
    weighted-average exercise price per share of common stock acquirable upon exercise of outstanding stock options.


 






    	39



     


    

 


SCHEDULE
3.28


Accountants


 


Tanner
LLC,


36
S State St #600


City
Creek Center


Salt
Lake City, UT 84111


 






    	40



     


    

 


SCHEDULE
3.32


Stock
Option Plans


 


Equity
Compensation Plan Information


 


The
following table sets forth information relating to all of our equity compensation plans:


 


	Plan
    Category	 	(a)

    Number of Shares

    to be Issued upon

    Exercise of

    Outstanding

    Options	 	 	(b)

    Weighted-average

    Exercise Price

    of Outstanding

    Options	 	 	(c)

    Number of Securities

    Remaining Available

    for Future Issuance

    under Equity

    Compensation Plans

    (Excluding Securities

    Referenced in

    Column (a))	 
	Equity compensation plans
    approved by stockholders	 	 	11,446	(1)	 	$	367.08	(2)	 	 	75,600	 
	Equity compensation
    plans not approved by Stockholders	 	 	-	 	 	 	-	 	 	 	-	 
	Total	 	 	11,446	(1)	 	$	367.08	(2)	 	 	75,600	 



 


	(1)	Includes
    options outstanding under our 2012 Equity Incentive Plan 
	 	 
	(2)
	

        Represents
        weighted-average exercise price per share of common stock acquirable upon exercise of outstanding stock options.



 






    	41



     


    

 





Exhibit
A


 


Securities


 






    	42



     


    

 


Exhibit
B


 


Exchange
Securities


 






    	43



     


    

 








EXHIBIT
C


 


Form
of Legal Opinion


 






    	44



     


    

 


EXHIBIT
D


 


Form
of Non-Shell Representation Letter


 






    	45



     


    

 


EXHIBIT
E


 


Form
of Irrevocable Transfer Agent Instruction Letter


 






    	46