PART
III
ITEM
10.
|
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
Directors
The
following table sets forth the names, ages, and positions with Amedica for each of our directors.
Name
|
|
Age
|
|
Positions
|
B.
Sonny Bal, M.D.
|
|
55
|
|
Chairman
of the Board of Directors, President and Chief Executive Officer
|
David
W. Truetzel
|
|
60
|
|
Director
|
Jeffrey
S. White
|
|
64
|
|
Director
|
Eric
A. Stookey
|
|
47
|
|
Director
|
Our
Board is divided into three classes (Class I, Class II and Class III) with staggered three-year terms. Directors in each class
are elected to serve for three-year staggered terms that expire in successive years. Officers serve at the discretion of our Board.
The following is information on the business experience of each director now serving and a discussion of the qualifications, attributes
and skills that led to the Board of Directors’ conclusion that each one is qualified to serve as a director.
David
W. Truetzel
has served on our Board of Directors since our acquisition of US Spine, Inc. in September 2010. Mr. Truetzel has
been the general partner of Augury Capital Partners, a private equity fund that invests in life sciences and information technology
companies, which he co-founded in 2006. Mr. Truetzel is a director of Enterprise Bank, Inc., Verifi, Inc., a provider of electronic
payment solutions, Clearent, LLC, a credit card processing provider, and Paranet, LLC, an IT services provider. Mr. Truetzel holds
a B.S. in Business Administration from Saint Louis University and an M.B.A. from The Wharton School. We believe that Mr. Truetzel’s
financial and managerial expertise qualify him to serve on our Board of Directors.
Eric
A. Stookey
has served on our Board of Directors since October 2014. Mr. Stookey has served as Chief Operating Officer of Osteoremedies,
LLC since March of 2015. From October 2011 until August 2014, Mr. Stookey served as the President of the Extremities-Biologics
division at Wright Medical Group Inc. Mr. Stookey also served in various other marketing and sales positions at Wright Medical
Group Inc. since 1995, including as the Senior Vice President and Chief Commercial Officer from January 2010 to November 2011,
as the Vice President North American Sales from 2007 to January 2010, as the Vice President US Sales from 2005 to 2007, as the
Senior Director of Sales, Central Region, from 2003 to 2005 and as the Director of Marketing for Large Joint Reconstruction Products
from 2001 to 2003. Mr. Stookey earned his M.B.A. from Christian Brothers University and his B.S. in Business from the Indiana
University School of Business. We believe that Mr. Stookey’s industry and executive leadership experience qualifies him
to serve on our Board of Directors.
B.
Sonny Bal, M.D.
has served on our Board of Directors since February 2012, as Chairman of our Board of Directors since August
2014 and as our President and Chief Executive Officer since October 2014. Dr. Bal was a tenured Professor in Orthopaedic Surgery
at the University of Missouri, Columbia, and has an extensive history of research into silicon nitride ceramics. He is Adjunct
Professor of Material Sciences at Missouri Science and Technology University at Rolla. Dr. Bal is a member of the American Academy
of Orthopaedic Surgeons, the American Association of Hip and Knee Surgeons, and the International Society of Technology in Arthroplasty.
Dr. Bal received his M.D. degree from Cornell University and an M.B.A. from Northwestern University, a J.D. from the University
of Missouri, and a Ph.D. in Engineering from the Kyoto Institute of Technology in Japan. We believe that Dr. Bal’s
breadth of experience and scientific expertise in silicon nitride qualifies him to serve as our Chairman, President and Chief
Executive Officer.
Jeffrey S. White
has
served on our Board of Directors since January 2014. Since January 2013, Mr. White has served as Principal at Medtech Advisory
Group LLC, a firm he founded that advises early and mid-stage medical technology firms. In that capacity Mr. White has consulted
MiMedx Group Inc., the leading amniotic tissue and allograft regenerative biomaterials firm since mid-2015 and served as Vice
President, Product Management Strategies at MiMedix. Mr. White previously served as a director of Residency Select LLC, a company
which offers psychometric assessment, training and compliance products to medical and surgical residency programs. Mr. White also
served in 2014 and 2015 as President and director of Liventa Bioscience LLC, a provider of specialty amniotic tissue allografts
for use in surgical and wound care applications. From May 2006 to December 2012 he served as Global Director of Business Development
for Synthes Inc., a global orthopedic firm that was acquired by Johnson and Johnson in 2012. Mr. White has served as Chief Executive
Officer and/or co-founder of several start-up surgical device firms and has previously held executive level positions at United
States Surgical Corporation, unit of Covidien plc. Mr. White holds a B.S. in Biology from Union College in Schenectady NY. We
believe that Mr. White’s experience as an executive and founder of medical device companies qualifies him to serve on our
Board of Directors.
Executive
Officers
Our
current executive officers and their respective ages and positions are as follows:
Name
|
|
Age
|
|
Position
|
B.
Sonny Bal, M.D.
|
|
55
|
|
Chairman
of the Board of Directors, President and Chief Executive Officer, Principal Financial Officer
|
Bryan
J. McEntire
|
|
65
|
|
Chief
Technology Officer
|
The
following is a brief summary of the background of each of our current directors and executive officers.
B. Sonny
Bal, M.D.
has served on our Board of Directors since February 2012, as Chairman of our Board of Directors since August 2014
and as our President and Chief Executive Officer since October 2014. Dr. Bal was a tenured Professor in Orthopaedic Surgery at
the University of Missouri, Columbia, and has an extensive history of research into silicon nitride ceramics. He is Adjunct Professor
of Material Sciences at Missouri Science and Technology University at Rolla. Dr. Bal is a member of the American Academy of Orthopaedic
Surgeons, the American Association of Hip and Knee Surgeons, and the International Society of Technology in Arthroplasty. Dr.
Bal received his M.D. degree from Cornell University and an M.B.A. from Northwestern University, a J.D. from the University of
Missouri, and a Ph.D.
in Engineering from
the Kyoto Institute of Technology in Japan. We believe that Dr. Bal’s breadth of experience and scientific expertise in
silicon nitride qualifies him to serve as our Chairman, President and Chief Executive Officer.
Bryan J.
McEntire
has served as our Chief Technology Officer since May 2012. From June 2004 to May 2012 he served as our Vice President
of Manufacturing and as our Vice President of Research from December 2006 to May 2012. Dr. McEntire has worked in various advanced
ceramic product development, quality engineering and manufacturing roles at Applied Materials, Inc., (Santa Clara, CA), Norton
Advanced Ceramics, a division of Saint-Gobain Industrial Ceramics Corporation (E. Granby, CT), Norton/TRW Ceramics (Northboro,
MA) and Ceramatec, Inc., (Salt Lake City, UT). Dr. McEntire has a BS degree in Materials Science and Engineering and an MBA both
from the University of Utah (Salt Lake City, UT), and a Ph.D.
from
the Kyoto Institute of Technology (Kyoto, Japan).
Arrangements
between Officers and Directors
To
our knowledge, there is no arrangement or understanding between any of our officers and any other person, including directors,
pursuant to which the officer was selected to serve as an officer.
Family
Relationships
None
of our directors are related by blood, marriage, or adoption to any other director, executive officer, or other key employees.
Other
Directorships
None
of the directors of the Company are also directors of issuers with a class of securities registered under Section 12 of the Exchange
Act (or which otherwise are required to file periodic reports under the Exchange Act).
Other
Involvement in Certain Legal Proceedings
None
of our directors or executive officers has been involved in any bankruptcy or criminal proceedings (other than traffic and other
minor offenses) or been subject to any of the items set forth under Item 401(f) of Regulation S-K, nor have there been any judgments
or injunctions brought against any of our directors or executive officers during the last ten years that we consider material
to the evaluation of the ability and integrity of any director or executive officer.
The
Board and Committees
Our
Board of Directors has four members. The Chairman of the Board and our Chief Executive Officer, B. Sonny Bal, MD, PhD, is a member
of the Board and is a full-time employee of Amedica. The other three members of the Board, David W. Truetzel, Eric A. Stookey
and Jeffrey S. White, are non-employee directors, and the Board has determined that these persons (who constitute a majority of
the Board) are “independent directors” under the criteria set forth in Rule 5605(a)(2) of the Nasdaq Listing Rules.
The Board met twelve (12) times during the year ended December 31, 2016. All directors attended 95% of the meetings of the Board
held during 2016.
In
accordance with our restated Certificate of Incorporation, our Board of Directors is divided into three classes with staggered
three-year terms. At each annual meeting of stockholders, the successors to the directors whose terms then expire will be elected
to serve until the third annual meeting following such election. Our directors are divided among the three classes as follows:
|
●
|
The
Class I directors terms will expire at the annual meeting of stockholders to be held in 2018. There are currently no Class
I directors.
|
|
|
|
|
●
|
The
Class II directors are David W. Truetzel and Eric A. Stookey, and their terms will expire at the annual meeting of stockholders
to be held in 2019.
|
|
|
|
|
●
|
The
Class III directors are B. Sonny Bal, M.D. and Jeffrey S. White, and their terms will expire at the annual meeting of stockholders
to be held in 2017.
|
Any
additional directorships resulting from an increase in the number of directors will be distributed among the three classes so
that, as nearly as possible, each class will consist of one-third of the directors.
Our
Board of Directors has three permanent committees: the Audit Committee, the Compensation Committee, and the Corporate Governance
and Nominating Committee. The written charters for these committees are on our website at http://investors.amedica.com/corporate-governance.cfm.
Our Board of Directors may from time to time establish other standing committees. In addition, from time to time, special committees
may be established under the direction of our Board of Directors when necessary to address specific issues.
The
following table sets forth a description of the three permanent Board committees and the chairpersons and members of those committees,
all of whom are independent directors:
Committee
|
|
Independent
Chairman
|
|
Independent
Members
|
|
|
|
|
|
Audit
Committee
|
|
David
W. Truetzel
|
|
Eric
A. Stookey
|
|
Jeffrey
S. White
|
|
|
|
|
|
|
|
Compensation
Committee
|
|
Jeffrey
S. White
|
|
David
W. Truetzel
|
|
Eric
A. Stookey
|
|
|
|
|
|
|
|
Governance
and Nominating Committee
|
|
Eric
A. Stookey
|
|
Jeffrey
S. White
|
|
David
W. Truetzel
|
Corporate
Governance and Nominating Committee
The
Corporate Governance and Nominating Committee is currently comprised of the following members: Eric A. Stookey (Chairman), David
W. Truetzel and Jeffrey S White. Among other items, the Corporate Governance and Nominating Committee is tasked by the Board to:
(1) identify individuals qualified to serve as members of the Board and, where appropriate, recommend individuals to be nominated
by the Board for election by the stockholders or to be appointed by the Board to fill vacancies consistent with the criteria approved
by the Board; (2) develop and periodically evaluate and recommend changes to Amedica’s Corporate Governance Guidelines and
Code of Ethics, and to review the Company’s policies and programs that relate to matters of corporate responsibility, including
public issues of significance to the Company and its stakeholders; and (3) oversee an annual evaluation of the performance of
the Board. The Board has determined that each of the members of the Corporate Governance and Nominating Committee is “independent”
under the standard set forth in Rule 5605(a)(2) of the Nasdaq Listing Rules. The Corporate Governance and Nominating Committee
met seven (7) times in 2016, and all director members of the committee attended 100% of the meetings. The Corporate Governance
and Nominating Committee operates under a written charter adopted by the Board of Directors, which sets forth the responsibilities
and powers delegated by the Board to the Corporate Governance and Nominating Committee.
Board
Nominations
The
Nominating and Governance Committee has adopted a policy and procedures for shareholders to recommend nominees to the Company’s
Board. The Committee will only consider qualified proposed nominees that meet the qualification standards set forth on Appendix
A to the Committee’s charter available on the Company’s website at www.amedica.com. Pursuant to the policy, only shareholders
who meet minimum percentage ownership requirements as established by the Board may make recommendations for consideration by the
Committee. At this time, the Board has set a minimum percentage ownership of 5% of the Company’s issued and outstanding
shares of common stock for a period of at least one year. To make recommendations, s shareholder must submit the recommendation
in writing by mail, courier or personal delivery to: Corporate Secretary, Amedica Corporation, 1885 West 2100 South, Salt Lake
City, UT 84119. For each annual meeting the Committee will consider only one proposed nominee from each shareholder or shareholder
group (within the meaning of Regulation 13D under the Exchange Act).
The
recommendation must set forth (1) the name, address, including telephone number, of the recommending shareholder or shareholder
group; (2) the number of the Company’s shares of common stock held by such shareholder and proof of ownership if the shareholder
is not a holder of record; and (3) a statement that the shareholder has a good faith intention of holding the shares through the
record date of the Company’s next annual meeting. For shareholder groups this information must be submitted for each shareholder
in the group.
The
recommendation must set forth in relation to the proposed nominee being recommended by the shareholder: (1) the information required
by Items 401, 403 and 404 of Regulation S-K under the Exchange Act, (2) any material relationships or agreements between the proposed
nominee and the recommending shareholder or the Company’s competitors, customers, labor unions or other persons with
special interests in the Company; (3) a statement regarding the qualifications of the proposed nominee to serve on the
Board; (4) a statement that the proposed nominee can fairly represent the interests of all shareholders of the Company; and (5)
a signed consent by the proposed nominee to being interviewed by the Nominating and Governance Committee.
Recommendations
must be made not later than 120 calendar days prior to the first anniversary of the date of the proxy statement for the prior
annual meeting of shareholders. In the event that the date of the annual meeting of shareholders for the current year is more
than 30 days following the first anniversary date of the annual meeting of shareholders for the prior year, the submission of
a recommendation will be considered timely if it is submitted not earlier than the close of business on the 120 days prior to
such annual meeting and not later than the close of business on the later of 90 days prior to such annual meeting or the close
of business 10 days following the day on which public announcement of the date of such meeting is first made by the Company.
Audit
Committee
We
have a standing Audit Committee and audit committee charter, which complies with Rule 10A-3 of the Exchange Act, and the requirements
of the Nasdaq Listing Rules. Our Audit Committee was established in accordance with Section 3(a)(58)(A) of the Exchange Act. The
Audit Committee is currently comprised of the following members: David W. Truetzel (Chairman), Eric A. Stookey and Jeffrey S White.
The Audit Committee provides oversight for financial reporting matters, internal controls, and compliance with the Company’s
financial policies, and meets with its auditors when appropriate. The Audit Committee met four (4) times in 2016, and all director
members of the committee attended 100% of the meetings. The Board has determined that David W. Truetzel is an “audit committee
financial expert” within the meaning of Item 407(d)(5) of Regulation S-K. Further, the Board has determined that each of
David W. Truetzel, Jeffrey S. White and Eric A Stookey are “independent” under the standard set forth in Rule 5605(a)(2)
of the Nasdaq Listing Rules. The Audit Committee operates under a written charter adopted by the Board of Directors, which sets
forth the responsibilities and powers delegated by the Board to the Audit Committee.
Compensation
Committee
The
Compensation Committee of the Board is comprised of the following members: Jeffrey S. White, (Chairman), David W. Truetzel and
Eric A. Stookey. The Board has determined that each of David W. Truetzel, Jeffrey S. White and Eric A. Stookey are “independent”
under the standard set forth in Rule 5605(a)(2) of the Nasdaq Listing Rules. The Compensation Committee recommends to the Board
for determination compensation of our executive officers, including the chief executive officer, and addresses salary and benefit
matters for other key personnel and employees of the Company. The Compensation Committee met two (2) times in 2016, and all director
members of the committee attended the meetings. The Compensation Committee operates under a written charter adopted by the Board
of Directors, which sets forth the responsibilities and powers delegated by the Board to the Compensation Committee.
Code
of Business Conduct
The
Board has adopted a Code of Business Conduct that applies to all of our employees, officers and directors, including those officers
responsible for financial reporting. The code of business conduct is available on our website at http://investors.amedica.com/corporate-governance.cfm.
We intend to disclose any amendments to the code or any waivers of its requirements on our website.
The
Bylaws of the Company provide that no contract or transaction between Amedica and one or more of its directors or officers, or
between Amedica and any other corporation, firm, association, or other organization in which one or more of its directors or officers
are financially interested, shall be void or voidable solely for this reason, or solely because the director or officer is present
at or participates in the meeting of the Board of Directors or committee that authorizes or approves the contract or transaction,
or because their votes are counted for such purpose, provided that:
|
●
|
the
material facts as to his, her, or their relationship or interest as to the contract or transaction are disclosed or are known
to the Board of Directors or the committee and noted in the minutes, and the Board of Directors or committee authorizes the
contract or transaction in good faith by the affirmative vote of a majority of disinterested directors, even though the disinterested
directors are less than a quorum;
|
|
|
|
|
●
|
the
material facts as to his, her, or their relationship or interest as to the contract or transaction are disclosed or are known
to the stockholders entitled to vote thereon and the contract or transaction is specifically approved in good faith by vote
of the stockholders; or
|
|
|
|
|
●
|
the
contract or transaction is fair as to Amedica as of the time it is authorized, approved or ratified by the Board of Directors,
a committee thereof, or the stockholders.
|
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our officers, directors, and persons who beneficially own more
than 10% of our common stock (“10% Stockholders”), to file reports of ownership and changes in ownership with the
Securities and Exchange Commission (“SEC”). Such officers, directors and 10% Stockholders are also required by SEC
rules to furnish us with copies of all Section 16(a) forms that they file.
Based
solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, the
Company believes that during fiscal year ended December 31, 2016, the filing requirements applicable to its officers, directors
and greater than 10% percent beneficial owners were complied with.
ITEM
11.
|
EXECUTIVE
COMPENSATION
|
The
following discussion relates to the compensation of our “named executive officers.”
Summary
Compensation Table
The
following table sets forth information about certain compensation awarded or paid to our named executive officers for the 2015
and 2016 fiscal years.
Name
and
Principal Position
|
|
Year
|
|
|
Salary
|
|
|
Bonus
(1)
|
|
|
Non-Equity
Incentive Plan
Compensation
|
|
|
Stock
Awards
(2)
|
|
|
Option
Awards
(2)
|
|
|
All
Other Comp (3)
|
|
|
Total
Compensation
|
|
B. Sonny Bal
|
|
|
2016
|
|
|
$
|
400,000
|
|
|
$
|
73,500
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
10,600
|
|
|
$
|
484,100
|
|
Chief Executive Officer
|
|
|
2015
|
|
|
$
|
353,846
|
|
|
$
|
55,731
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
51,651
|
|
|
$
|
-
|
|
|
$
|
461,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ty Lombardi (4)
|
|
|
2016
|
|
|
$
|
269,519
|
|
|
$
|
-
|
|
|
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
6,123
|
|
|
$
|
275,642
|
|
Chief Financial Officer
|
|
|
2015
|
|
|
$
|
182,308
|
|
|
$
|
20,120
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
33,534
|
|
|
$
|
18,120
|
|
|
$
|
254,082
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bryan McEntire
|
|
|
2016
|
|
|
$
|
225,000
|
|
|
$
|
35,438
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
9,000
|
|
|
$
|
269,438
|
|
Chief Technology Officer
|
|
|
2015
|
|
|
$
|
226,941
|
|
|
$
|
30,427
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
31,721
|
|
|
$
|
21,479
|
|
|
$
|
310,568
|
|
(1)
|
Unless
otherwise noted, 2015 bonus amount reflects a bonus paid in March 2016 for meeting certain corporate objectives for 2015 and
2016 bonus amount reflects a bonus paid in March 2017 for meeting certain corporate objectives for 2016.
|
|
|
(2)
|
These
columns represent the aggregate grant date fair value of stock option awards granted during the year indicated, in accordance
with ASC Topic 718 and do not correspond to the actual value that may be realized by the named executives. For additional
information on the assumptions underlying the valuation of the Company’s stock-based awards, please refer to Note 9
of the Company’s consolidated financial statements included in its Annual Report on Form 10-K filed on September 20,
2017.
|
|
|
(3)
|
Amount
reflects the aggregation of any matching of 401(k) contributions and employee benefit insurance premiums paid by us, unless
otherwise noted.
|
|
|
(4)
|
Mr.
Lombardi left the employ of the company in October 2016. 2016 Salary includes severance payment in the amount of $100,000
paid to Mr. Lombardi in 2016.
|
Base
Salaries.
The base salaries for our named executive officers were determined by our compensation committee after reviewing
a number of factors, including: the responsibilities associated with the position, the seniority of the executive’s position,
the base salary level in prior years, our financial position; and for executive officers other than our Chief Executive Officer,
recommendations made by our Chief Executive Officer.
Outstanding
Equity Awards at Fiscal Year-End
The
following table shows information regarding equity awards held by our named executive officers as of December 31, 2016:
|
|
Number
of Securities
Underlying Unexercised
Options (#)
|
|
|
Option
Exercise
|
|
|
Option
Expiration
|
|
Number
of Securities
Underlying Stock Awards
(#)
|
|
|
Award
Grant
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price
|
|
|
Date
|
|
Vested
|
|
|
Not
Vested
|
|
|
Date
|
|
B. Sonny Bal
|
|
|
2
|
|
|
|
-
|
|
|
$
|
4,638.60
|
|
|
12/19/2017
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
9
|
|
|
|
-
|
|
|
$
|
4,638.60
|
|
|
3/15/2022
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
297
|
|
|
|
190
|
|
|
$
|
174.00
|
|
|
1/7/2025
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
103
|
|
|
|
175
|
|
|
$
|
77.40
|
|
|
9/16/2025
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
283
|
|
|
|
550
|
|
|
$
|
12.24
|
|
|
9/14/2026
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ty Lombardi
|
|
|
97
|
|
|
|
42
|
|
|
$
|
171.00
|
|
|
3/5/2024
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
166
|
|
|
|
106
|
|
|
$
|
174.00
|
|
|
1/7/2025
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
85
|
|
|
|
54
|
|
|
$
|
174.00
|
|
|
1/7/2025
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
139
|
|
|
|
139
|
|
|
$
|
20.28
|
|
|
1/4/2026
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bryan McEntire
|
|
|
370
|
|
|
|
185
|
|
|
$
|
171.00
|
|
|
8/13/2024
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
237
|
|
|
|
152
|
|
|
$
|
174.00
|
|
|
1/7/2025
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
139
|
|
|
|
139
|
|
|
$
|
20.28
|
|
|
1/4/2026
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
401(k)
Plan
We
offer our executive officers, including our named executive officers, retirement benefits, including participation in our tax-qualified
profit sharing plan that includes a “cash-or-deferred” (or 401(k)) feature in the same manner as other employees.
The plan is intended to satisfy the requirements of Section 401 of the Internal Revenue Code. Our employees may elect to reduce
their current compensation by up to the statutorily prescribed annual limit and have a like amount contributed to the plan. In
addition, we may make discretionary and/or matching contributions to the plan in amounts determined annually by our Board. We
currently elect to match the contributions of our employees who participate in our 401(k) plan as follows: a match of 100% on
the first 3% of compensation contributed by a plan participant and a match of 50% on amounts above 3%, up to 5%, of compensation
contributed by a plan participant.
Potential
Payments upon Termination or Change in Control
We
had entered into certain agreements and maintained certain plans that may have required us to make certain payments and/or provide
certain benefits to the executive officers named in the Summary Compensation Table in the event of a termination of employment
or change in control.
Pursuant
to severance agreements that we have entered into with each of our named executive officers, upon the consummation of a change
in control, all outstanding options, restricted stock and other such rights held by the executives will fully vest. Additionally,
if a change in control occurs and at any time during the one-year period following the change in control (i) we or our successor
terminate the executive’s employment other than for cause (but not including termination due to the executive’s death
or disability) or (ii) the executive terminates his employment for good reason, then such executive has the right to receive payment
consisting of a lump sum payment equal to two times his highest annual salary with us during the preceding three-year period,
including the year of such termination and including bonus payments (measured on a fiscal year basis), but not including any reimbursements
and amounts attributable to stock options and other non-cash compensation. “Change in control” is defined in the severance
agreements as occurring upon: (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
becoming the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
representing 50% or more of the total voting power represented by our then outstanding voting securities (excluding securities
held by us or our affiliates or any of our employee benefit plans) pursuant to a transaction or a series of related transactions
which our Board did not approve; (ii) a merger or consolidation of our company, other than a merger or consolidation which would
result in our voting securities outstanding immediately prior thereto continuing to represent at least 50% of the total voting
securities or such surviving entity or parent of such corporation outstanding immediately after such merger or consolidation;
or (iii) the approval by our stockholders of an agreement for the sale or disposition of all or substantially all of our assets.
As defined in the severance agreements, “cause” means: (i) the executive’s commission of a felony (other than
through vicarious liability or through a motor vehicle offense); (ii) the executive’s material disloyalty or dishonesty
to us; (iii) the commission by the executive of an act of fraud, embezzlement or misappropriation of funds; (iv) a material breach
by the executive of any material provision of any agreement to which the executive and we are party, which breach is not cured
within 30 days after our delivery to the executive of written notice of such breach; or (v) the executive’s refusal to carry
out a lawful written directive from our Board. “Good reason” as defined in the severance agreements means, without
the executive’s consent: (i) a change in the principal location at which the executive performs his duties to a new work
location that is at least 50 miles from the prior location; or (ii) a material change in the executive’s compensation, authority,
functions, duties or responsibilities, which would cause his position with us to become of less responsibility, importance or
scope than his prior position, provided, however, that such material change is not in connection with the termination of the executive’s
employment with us for any reason.
In
the event that an officer entitled to receive or receives payment or benefit under the severance agreements described above, or
under any other plan, agreement or arrangement with us, or any person whose action results in a change in control or any other
person affiliated with us and it is determined that the total amount of payments will be subject to excise tax under Section 4999
of the Internal Revenue Code, or any similar successor provisions, we will be obligated to pay such officer a “gross up”
payment to cover all taxes, including any excise tax and any interest or penalties imposed with respect to such taxes due to such
payment.
Code
of Business Conduct Violations
It
is our policy under our Code of Business Conduct to take appropriate action against any executive officer whose actions are found
to violate the Code or any other policy of Amedica. Disciplinary actions may include immediate termination of employment and,
where Amedica has suffered a loss, pursuing its remedies against the executive officer responsible. Amedica will cooperate fully
with the appropriate authorities where laws have been violated.
Board
Compensation
The
following table shows the total compensation paid or accrued during the fiscal year ended December 31, 2016 to each of our non-employee
directors except fees paid to Dr. Bal for his service as a director prior to his employment with the Company are included in the
Summary Compensation Table.
Name
|
|
Fees
Earned or
Paid in Cash
|
|
|
Value
of Stock
Awards (1)
|
|
|
Value
of Option
Grants (1)
|
|
|
Total
|
|
David W. Truetzel
|
|
$
|
163,950
|
|
|
$
|
-
|
|
|
$
|
840
|
|
|
$
|
164,790
|
|
Jeffrey S. White
|
|
$
|
40,066
|
|
|
$
|
-
|
|
|
$
|
840
|
|
|
$
|
40,906
|
|
Eric A. Stookey
|
|
$
|
40,575
|
|
|
$
|
-
|
|
|
$
|
840
|
|
|
$
|
41,415
|
|
(1)
|
These
columns represent the aggregate grant date fair value of restricted stock awards and stock option awards granted during the
year indicated, in accordance with ASC Topic 718 and do not correspond to the actual value that may be realized by the directors.
For additional information on the assumptions underlying the valuation of the Company’s stock-based awards, please refer
to Note 9 of the Company’s consolidated financial statements included in its Annual Report on Form 10-K filed on September
20, 2017.
|
During
2016, our Board approved the following compensation schedule for non-employee directors (paid on a quarterly basis):
|
●
|
Annual
Retainer of $40,000 paid in four equal installments of $10,000 each at the beginning of each calendar quarter;
|
|
|
|
|
●
|
$1,000
for each board and committee meeting attended in person;
|
|
|
|
|
●
|
$500
for each board and committee meeting attended via telephone or other remote medium; and
|
|
|
|
|
●
|
Reimbursement
of reasonable expenses as supported by documentation and receipts.
|
Starting
in 2015, a new Board appointee receives an award of 40,000 stock options upon appointment. Further, each member of the Board will
also be awarded an option grant for 15,000 stock options on an annual basis.
The
chair of the Audit Committee is paid an annual retainer of $120,000 payable in monthly increments of $10,000 each.
ITEM
12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
The
following table sets forth certain information regarding the beneficial ownership of our common stock as of November 30, 2017
by:
●
|
each
of our current directors;
|
|
|
●
|
each
of our executive officers; and
|
|
|
●
|
all
of our directors and executive officers as a group;
|
|
|
●
|
each
stockholder known by us to own beneficially more than 5% of our Common Stock.
|
Beneficial
ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities.
Shares of common stock that may be acquired by an individual or group within 60 days of November 30, 2017, pursuant to the exercise
or vesting of options or warrants or conversion of convertible promissory notes, are deemed to be outstanding for the purpose
of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purpose of computing
the percentage ownership of any other person shown in the table. Percentage of shares beneficially owned is based on 3,022,073
shares issued and outstanding on November 30, 2017.
Except
as indicated in footnotes to this table, we believe that the stockholders named in this table have sole voting and investment
power with respect to all shares of common stock shown to be beneficially owned by them, based on information provided to us by
such stockholders. The address for each director and executive officer listed is: c/o Amedica Corporation, 1885 West 2100 South,
Salt Lake City, Utah 84119.
Name
and Address of Beneficial Owner
|
|
Shares
Beneficially Owned
|
|
|
|
Number
|
|
|
Percentage
|
|
Five
Percent Stockholders:
|
|
|
|
|
|
|
|
|
Sabby
Management, LLC (1)
10 Mountainview Road, Suite 205
Upper Saddle River, New Jersey 07458
|
|
|
175,000
|
|
|
|
5.8
|
%
|
Directors
and Named Executive Officers:
|
|
|
|
|
|
|
|
|
B.
Sonny Bal, M.D. (2)
|
|
|
56,114
|
|
|
|
*
|
|
David
W. Truetzel (3)
|
|
|
3,572
|
|
|
|
*
|
|
Jeffrey
S. White (4)
|
|
|
443
|
|
|
|
*
|
|
Eric
A. Stookey (5)
|
|
|
389
|
|
|
|
*
|
|
Bryan
McEntire (6)
|
|
|
1,467
|
|
|
|
*
|
|
All
executive officers and directors as a group (5 persons)
|
|
|
61,985
|
|
|
|
2.0
|
%
|
*
|
Indicates
ownership of less than 1% of the outstanding shares of the Company’s common stock.
|
(1)
|
As
calculated in accordance with Rule 13d-3 of the Securities Exchange Act of 1934, as amended, (i) Sabby Healthcare Master Fund,
Ltd. and Sabby Volatility Master Fund, Ltd. beneficially own 87,500 and 87,500 shares of the common stock (common shares),
respectively, representing approximately 2.90% and 2.90% of the Common Stock, respectively, and (ii) Sabby Management, LLC
and Hal Mintz each beneficially own 175,000 shares of the common shares, representing approximately 5.79% of the common shares.
Sabby Management, LLC and Hal Mintz do not directly own any common shares, but each indirectly owns 175,000 common shares.
Sabby Management, LLC, a Delaware limited liability company, indirectly owns 175,000 common shares because it serves as the
investment manager of Sabby Healthcare Master Fund, Ltd. and Sabby Volatility Warrant Master Fund, Ltd., Cayman Islands companies.
Mr. Mintz indirectly owns 175,000 common shares in his capacity as manager of Sabby Management, LLC.
|
|
|
(2)
|
Represents
332 shares of Common Stock and options and warrants to purchase 55,782 shares of Common Stock that are currently exercisable
within 60 days of November 30, 2017.
|
|
|
(3)
|
Represents
2,102 shares of Common Stock and options and warrants to purchase 1,470 shares of Common Stock that are currently exercisable
within 60 days of November 30, 2017.
|
|
|
(4)
|
Represents
54 shares of Common Stock and options to purchase 389 shares of Common Stock that are currently exercisable within 60 days
of November 30, 2017.
|
|
|
(5)
|
Represents
options to purchase 389 shares of Common Stock that are currently exercisable within 60 days of November 30, 2017.
|
|
|
(6)
|
Represents
375 shares of Common Stock and options to purchase 1,092 shares of Common Stock that are currently exercisable within 60 days
of November 30, 2017.
|
Equity
Compensation Plan Information
The
following table sets forth information as of December 31, 2016 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.
|
2012
Equity Incentive Plan
The
2012 Plan is intended to encourage ownership of common stock by our employees and directors and certain of our consultants in
order to attract and retain such people, to induce them to work for the benefit of us and to provide additional incentive for
them to promote our success. The number of shares of our common stock reserved for issuance under the 2012 Plan is 95,202, which
number is automatically increased on January 1 of each of year by the lesser of (i) 18,031 shares of our common stock on such
date, (ii) 5% of the number of outstanding shares of our common stock on such date, and (iii) such other amount determined by
the board through the termination of the 2012 Plan.
Types
of Awards.
The 2012 Plan provides for the granting of incentive stock options, NQSOs, stock grants and other stock-based awards,
including RSUs.
●
Incentive and Nonqualified Stock Options
. The plan administrator determines the exercise price of each stock option. The
exercise price of an NQSO may not be less than the fair market value of our common stock on the date of grant. The exercise price
of an incentive stock option may not be less than the fair market value of our common stock on the date of grant if the recipient
holds 10% or less of the combined voting power of our securities, or 110% of the fair market value of a share of our common stock
on the date of grant otherwise.
●
Stock Grants
. The plan administrator may grant or sell stock, including restricted stock, to any participant, which purchase
price, if any, may not be less than the par value of shares of our common stock. The stock grant will be subject to the conditions
and restrictions determined by the administrator. The recipient of a stock grant shall have the rights of a stockholder with respect
to the shares of stock issued to the holder under the 2012 Plan.
●
Stock-Based Awards
. The administrator of the 2012 Plan may grant other stock-based awards, including stock appreciation
rights, phantom stock awards and RSUs, with terms approved by the administrator, including restrictions related to the awards.
The holder of a stock-based award shall not have the rights of a stockholder until shares of our common stock are issued pursuant
to such award.
Plan
Administration.
Our Board is the administrator of the 2012 Plan, except to the extent it delegates its authority to a committee,
in which case the committee shall be the administrator. Our Board has delegated this authority to our compensation committee.
The administrator has the authority to determine the terms of awards, including exercise and purchase price, the number of shares
subject to awards, the value of our common stock, the vesting schedule applicable to awards, the form of consideration, if any,
payable upon exercise or settlement of an award and the terms of award agreements for use under the 2012 Plan.
Eligibility
.
Our Board will determine the participants in the 2012 Plan from among our employees, directors and consultants. A grant may be
approved in advance with the effectiveness of the grant contingent and effective upon such person’s commencement of service
within a specified period.
Termination
of Service.
Unless otherwise provided by our Board or in an award agreement, upon a termination of a participant’s service,
all unvested options then held by the participant will terminate and all other unvested awards will be forfeited.
Transferability.
Awards under the 2012 Plan may not be transferred except by will or by the laws of descent and distribution, unless otherwise
provided by our Board in its discretion and set forth in the applicable agreement, provided that no award may be transferred for
value.
Adjustment.
In the event of a stock dividend, stock split, recapitalization or reorganization or other change in change in capital structure,
our Board will make appropriate adjustments to the number and kind of shares of stock or securities subject to awards.
Corporate
Transaction
. If we are acquired, our Board of Directors (or Compensation Committee) will: (i) arrange for the surviving entity
or acquiring entity (or the surviving or acquiring entity’s parent company) to assume or continue the award or to substitute
a similar award for the award; (ii) cancel or arrange for cancellation of the award, to the extent not vested or not exercised
prior to the effective time of the transaction, in exchange for such cash consideration, if any, as our Board of Directors in
its sole discretion, may consider appropriate; or (iii) make a payment, in such form as may be determined by our Board of Directors
equal to the excess, if any, of (A) the value of the property the holder would have received upon the exercise of the award immediately
prior to the effective time of the transaction, over (B) any exercise price payable by such holder in connection with such exercise.
In addition, in connection with such transaction, our Board of Directors may accelerate the vesting, in whole or in part,
of the award (and, if applicable, the time at which the award may be exercised) to a date prior to the effective time of such
transaction and may arrange for the lapse, in whole or in part, of any reacquisition or repurchase rights held by us with respect
to an award.
Amendment
and Termination.
The 2012 Plan will terminate on September 6, 2022 or at an earlier date by vote of the stockholders or our
Board; provided, however, that any such earlier termination shall not affect any awards granted under the 2012 Plan prior to the
date of such termination. The 2012 Plan may be amended by our Board, except that our Board may not alter the terms of the 2012
Plan if it would adversely affect a participant’s rights under an outstanding stock right without the participant’s
consent. Stockholder approval will be required for any amendment to the 2012 Plan to the extent such approval is required by law,
include the Internal Revenue Code or applicable stock exchange requirements.
Amendment
of Outstanding Awards.
The administrator may amend any term or condition of any outstanding award including, without limitation,
to reduce or increase the exercise price or purchase price, accelerate the vesting schedule or extend the expiration date, provided
that no such amendment shall impair the rights of a participant without such participant’s consent.
ITEM
13.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
Transactions
with Related Persons
Except
as set forth below, we have not entered into any transactions since January 1, 2014 to which we have been a party, in which the
amount involved in the transaction exceeded the lesser of $120,000 or one percent of the average of our total assets at year-end
for the last two completed fiscal years, and in which any of our directors, executive officers or, to our knowledge, beneficial
owners of more than 5% of our common stock, on an as converted basis, or any member of the immediate family of any of the foregoing
persons had or will have a direct or indirect material interest, other than equity and other compensation, termination, change
in control and other arrangements, which are described under “Executive and Director Compensation.”
On
July 28, 2017, we closed on a $2.5 million term loan (the Loan”) with North Stadium Investments, LLC (“North Stadium”),
a company owned and controlled by the Company’s Chief Executive Officer and Chairman of the Board, Dr. Sonny Bal. In connection
with the Loan, the Company issued to North Stadium, a Secured Promissory Note in the amount of $2.5 million (the “Note”).
The Note bears interest at the rate of 10% per annum, requires the Company to make monthly interest only payments for a period
of 12 months, and principal and any unpaid accrued interest are due and payable 12 months from the effective date of the Note,
July 28, 2017. The Note is secured by substantially all of the assets of the Company pursuant to a security agreement between
the Company and North Stadium dated July 28, 2017 (the “Security Agreement”), and is junior to the already existing
security interest in such assets of the Company held by Hercules Capital, Inc. In connection with the Loan and as additional consideration
for the Loan, the Company issued to North Stadium a warrant to acquire up to 55,000 common shares with a purchase price set at
$5.04 per share and a 5-year term (the “Warrant”).
Indemnification
Agreements
. We have entered into indemnification agreements with each of our executive officers and directors that require
us to indemnify such persons against any and all expenses, including judgments, fines or penalties, attorney’s fees, witness
fees or other professional fees and related disbursements and other out-of-pocket costs incurred, in connection with any action,
suit, arbitration, alternative dispute resolution mechanism, investigation, inquiry or administrative hearing, whether threatened,
pending or completed, to which any such person may be made a party by reason of the fact that such person is or was a director,
officer, employee or agent of our company, provided that such director or officer acted in good faith and in a manner that the
director or officer reasonably believed to be in, or not opposed to, our best interests. The indemnification agreements also set
forth procedures that will apply in the event of a claim for indemnification thereunder. We believe that these provisions and
agreements are necessary to attract and retain qualified persons as directors and officers.
Policy
for Review of Related Party Transactions
We
have a policy for the review of transactions with related persons as set forth in our Audit Committee Charter and internal practices.
The policy requires review, approval or ratification of all transactions in which we are a participant and in which any of our
directors, executive officers, shareholders holding more than 5% of our outstanding common stock, an immediate family member of
any of the foregoing persons or any other person who the Board determines may be considered to be a related person has a direct
or indirect material interest and which meet the threshold requirements set forth in Item 404 of Regulation S-K under the Exchange
Act (typically $120,000 or more in value). All related party transactions must be reported for review by the Audit Committee pursuant
to the Audit Committee’s charter.
In
reviewing and approving such transactions, the Audit Committee shall obtain, or shall direct management to obtain on its behalf,
all information that the Audit Committee believes to be relevant and important to a review of the transaction prior to its approval.
Following receipt of the necessary information, a discussion shall be held of the relevant factors if deemed to be necessary by
the Audit Committee prior to approval. No related party transaction shall be entered into prior to the completion of these procedures.
Following
its review, the Audit Committee determines whether these transactions are in, or not inconsistent with, the best interests of
the Company and its stockholders, taking into consideration whether they are on terms no less favorable to the Company than those
available with other parties and the related person’s interest in the transaction.
Our
policy for review of transactions with related persons was followed in all of the transactions set forth above and all such transactions
were reviewed and approved in accordance with our policy for review of transactions with related persons.
Director
Independence
Information
regarding the independence of directors is disclosed above under Item 10 under the heading “The Board and Committees”
and incorporated herein by reference.
ITEM
14.
|
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
|
The
aggregate fees and expenses from our principal accounting firm, BDO USA, LLP for 2016 and for Mantyla McReynolds LLC for 2016
and 2015, for fees and expenses incurred during fiscal years ended December 31, 2016 and 2015, were as follows (in thousands):
|
|
MANTYLA
MCREYNOLDS LLC
|
|
|
BDO
USA, LLP
|
|
|
|
Year
Ended
December 31,
|
|
|
Year
Ended December 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
Audit fees (1)
|
|
$
|
103,520
|
|
|
$
|
170,337
|
|
|
$
|
485,991
|
|
Audit related fees
|
|
|
–
|
|
|
|
–
|
|
|
|
-
|
|
Tax fees
|
|
|
-
|
|
|
|
–
|
|
|
|
-
|
|
All other fees
|
|
|
–
|
|
|
|
–
|
|
|
|
-
|
|
Total Fees
|
|
$
|
103,520
|
|
|
$
|
170,337
|
|
|
$
|
485,991
|
|
(1)
|
Audit
fees consist of fees incurred for professional services rendered for the audit of our annual financial statements and review
of the quarterly financial statements that are normally provided by auditors in connection with regulatory filings or engagements.
Audit fees also include fees related to review of other documents filed with the SEC.
|
Each
of the permitted non-audit services has been pre-approved by the Audit Committee or the Audit Committee’s Chairman pursuant
to delegated authority by the Audit Committee, other than de minimus non-audit services for which the pre-approval requirements
are waived in accordance with the rules and regulations of the Securities and Exchange Commission.
Audit
Fees
Consist
of fees billed for professional services rendered for the audit of our financial statements and review of interim consolidated
financial statements included in quarterly reports and services that are normally provided by the principal accountants in connection
with statutory and regulatory filings or engagements.
Audit
Related Fees
Consist
of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our
consolidated financial statements and are not reported under “Audit Fees”.
Tax
Fees
Consist
of fees billed for professional services for tax compliance, tax advice and tax planning. These services include preparation of
federal and state income tax returns.
All
Other Fees
Consist
of fees for product and services other than the services reported above.
Policy
for Approval of Audit and Permitted Non-Audit Services
The
Audit Committee charter provides that the Audit Committee will pre-approve audit services and non-audit services to be provided
by our independent auditors before the accountant is engaged to render these services. The Audit Committee may consult with management
in the decision-making process, but may not delegate this authority to management. The Audit Committee may delegate its authority
to pre-approve services to one or more committee members, provided that the designees present the pre-approvals to the full committee
at the next committee meeting.