Item
1.01 Entry into a Material Definitive Agreement.
Securities
Purchase Agreement
On
January 31, 2018, Amedica Corporation (the “Company”) entered into a securities purchase agreement (the “Purchase
Agreement”) with L2 Capital LLC (“L2” or the “Holder”). Pursuant to the Purchase Agreement, the
Company agreed to sell an original issue discount promissory note in the aggregate principal amount of up to $840,000 (the “Note”)
for an aggregate purchase price of up to $750,000 (the “Consideration”) and warrants to purchase up to an aggregate
of 68,257 shares of common stock of the Company (the “Warrants”). At the closing of the Purchase Agreement on January
31, 2018, the investor agreed to pay to the Company an aggregate of $500,000 such that the outstanding principal of the Note was
$565,000.
The
Note
The
Holder may pay, in its sole discretion, such additional amounts of the aggregate principal and at such dates as the Holder may
choose in its sole discretion. The maturity date for each tranche funded shall be six months from the effective date of each payment.
The Note bears interest at a rate of 8% per year and a default interest rate of 18% per year. The Note contains a 4.99% beneficial
ownership limitation and may be converted by the Holder at any time following an event of default. The conversion price of the
Note in the event of a default is equal to the product of (i) 0.70 multiplied by (ii) the lowest volume weighted average price,
or VWAP, of the Company’s common stock during the 20 trading period ending in the Holder’s sole discretion on the
last complete trading day prior to conversion, or, the conversion date.
So
long as the Note is outstanding, if the Company issues any security that contains any term more favorable to the holder of such
security or with a term in favor of the holder of such security that was not similarly provided to the Holder of the Note, then,
at the Holder’s option, such term shall become a part of the transaction documents with the Holder. The types of terms contained
in another security that may be more favorable to the holder of such security include, but are not limited to, terms addressing
conversion discounts, prepayment rate, conversion look back periods, interest rates, original issue discounts, stock sale price,
private placement price per share, and warrant coverage.
Events
of default include failure to pay principal or interest on the Note when due, failure to reserve sufficient amount of shares for
conversion, appointment of a new auditor, restatement of financial statements, failure to repay the Note in full upon a financing
of $10,000,000 or more and other customary events of default. As described in the Note, upon certain events of default, the Company
shall be required to immediately pay the Holder the product of (i) two multiplied by (ii) an amount equal to 140% (plus an
additional 5% per each additional event of default that occurs) multiplied by the then outstanding entire balance of the Note
(including principal and accrued and unpaid interest) plus default interest, if any, plus any other amounts owed to the Holder.
The
Note may be prepaid at any time during the 30 day period following the issue date by making a payment of an amount in cash equal
to 110% of the amount being repaid, during the 31
st
and 60
th
calendar day period from the issue date by
making a payment of an amount in cash equal to 120% of the amounts being repaid, and, at any time after the 60
th
calendar
day after the issue date by making a payment of an amount of cash equal to 125% of the amounts being repaid. The Company shall
be required to pay certain penalties upon entry into Section 3(a)(10) transactions and Section 3(a)(9) transactions, reverse splits
and failures to provide Holder with piggyback registration rights. The Company agreed to use up to 50% of the proceeds received
in a new financing of $2,000,000 or more to repay amounts owed under the Note.
The
Warrants
The
Warrants are exercisable beginning on the date that is six months from the date of issuance and have a term of five years. The
exercise price of the Warrants is $3.31, subject to adjustment as provided therein. If the highest traded price of the common
stock during the 30 trading days prior to the date of an exercise notice is greater than the exercise price, then the Holder may
elect to exercise the Warrants pursuant to a cashless exercise if there is no effective registration statement covering
the warrant shares. The Warrants have a 4.99% beneficial ownership limitation and the exercise price shall be adjusted in the
event of future issuances of Company securities at a price per share below $3.31.
The
foregoing descriptions of the Purchase Agreement, the Note and the Warrants do not purport to be complete, and are qualified
in their entirety by reference to each such document (or form thereof, as applicable), filed as Exhibits 4.1, 10.1, and 10.2,
respectively, and incorporated herein by reference.