Development Agreement With B. Sonny Bal

Exhibit 10.44


EXECUTION COPY

DEVELOPMENT AGREEMENT

This Development Agreement (this " Agreement" ) is made and entered into as of the 29 th day of December, 2006, by and between AMEDICA CORPORATION, a Delaware corporation (" Amedica" ), and B. Sonny Bal, M.D. (" Bal" ).


RECITALS:


A. Amedica is in the business of designing, developing, manufacturing and selling various products and applications for medical and biomedical uses and from various materials, including the use of advanced ceramic materials;

B. Amedica desires to continue to encourage the conceiving, development, testing, providing education and dealing with novel devices for implant in or use with hip and knee reconstructive medical and surgical procedures, whether manufactured from ceramic materials or other materials;

C. Bal is an orthopedic surgeon having knowledge and expertise relating to hip and knee reconstructive procedures; and


D. Amedica and Bal desire to enter into arrangements between them for past and future development, approval, trial and clinical use of Devices (as defined below).

NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree and represent as follows:

1. Definitions.

For purposes of this Agreement, the following terms shall have the following respective meanings:

a. " Development Services" means the development and related services as requested by Amedica relating to the conceptualization, development, testing, approval and related matters involving the Devices more fully described in Section 1(b) hereof.

b. " Devices" are exclusively limited to those items (each a " Device" ) designed in Schedule A attached hereto, as the same may be amended by agreement of the parties hereto, and includes all ideas, discoveries, creations, improvements, know-how, inventions, designs, developments, apparatus, techniques, methods, processes, and materials, whether or not patentable, including all rights to obtain, perfect or enforce any proprietary


Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company' s application requesting confidential treatment under Rule 406 of the Securities Act of 1933, as amended.

interests therein, pertaining to such items designated in said Schedule A hereto, which Bal, whether alone or in concert with others, may conceive, reduce to practice or develop during the Term (or, if based on or related to any confidential or proprietary information of Amedica, within [***********] after the termination of this Agreement), alone or in conjunction with another, or others, whether during or outside of regular business hours, and whether or not at the request or upon the suggestion of Amedica.

c. " Net After-Tax Profits" means that portion of profits received by Amedica attributable to the sale of Devices, after deducting from all gross proceeds from such sales the costs and expenses attributable to the development, testing, marketing and sale of the Devices (but not including any Amedica overhead or expenses unrelated to the Devices), and less all sales, use, occupation or excise taxes and all income taxes applicable to income generated from the Devices.

d. " Effective Date" means January 1, 2005.

2. Cooperative Development Arrangements.

The parties intend that Bal shall diligently perform the Development Services and provide reasonable input and expertise hereunder. The Development Services shall include, without limitation, the following:


a. Examining and reviewing the characteristics of the Devices and the nature of the materials with which the Devices are constructed;

b. Providing expertise in ideas and testing pertaining to the Devices, and coordination with other Amedica personnel and third-parties related to such testing, as requested by Amedica;


c. Providing guidance and assistance in the clinical details of the Devices;


d. Assisting by providing the written portions of the patent applications pertaining to the Devices as determined by Amedica and approved by Bal; and

e. Assisting by providing the written portions of applications for regulatory approval for the Devices or surgical processes for their implantation or other use.

3. Term and Termination.

a. Unless earlier terminated as provided in Section 3(b) hereof, the term of this Agreement (" Term" ) shall commence as of the Effective Date and shall continue until the later of:


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Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company' s application requesting confidential treatment under Rule 406 of the Securities Act of 1933, as amended.

(i) Ten (10) years from the date hereof; or

(ii) The expiration of patent rights, developed as a result of the performance of Development Services, on the Devices.


b. Either party has the right to terminate this Agreement at any time upon thirty (30) days prior written notice to the other. Upon termination, Subject to Section 16(k) hereof, Amedica' s sole obligation to Bal will be to pay any then outstanding unpaid fees, royalties or other compensation due Bal under the terms of this Agreement and to reimburse Bal for then outstanding reimbursable expenses. Royalty payments rightfully due Bal will continue being paid by Amedica to Bal or his designated beneficiary after the termination of this Agreement.

4. Compensation for Assignment and Sale of Proprietary Rights.

a. As full consideration for the Development Services related solely to [************************] and any assignment of right or rights in Devices related to [************************] to Amedica pursuant to Section 8 hereof, Amedica shall pay Bal, in the form of royalty or similar payments, payable on a monthly basis, [************] of the Net After-Tax Profits generated by sales of the [********************] .


b. As full consideration for the Development Services related solely to the [****************************] and any assignment of right or rights in Devices related to [****************************] to Amedica pursuant to Section 8 hereof, Amedica shall pay Bal, in the form of royalty or similar payments, payable on a monthly basis, [************] of the Net After-Tax Profits generated by the sales of the [****************************] .

c. As full consideration for the Development Services related solely to the [****************************] and any assignment of right or rights in Devices related to [****************************] to Amedica pursuant to Section 8 hereof, Amedica shall pay Bal, in the form of royalty or similar payments, payable on a monthly basis, [************] of the Net After-Tax Profits generated by sales of [****************************] .

d. Upon Bal' s death, or upon letters from two independent physicians that


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Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company' s application requesting confidential treatment under Rule 406 of the Securities Act of 1933, as amended.

Bal is disabled and unable to perform the Development Services hereunder, this Agreement shall terminate as to Bal; provided, that Bal or Bal' s designated beneficiary, shall continue to be entitled to receive the royalties as provided herein, applicable to all Devices for which commercial sales have commenced prior to the date of death or disability.

e. Notwithstanding any provision herein to the contrary, income used for calculating royalties payable to Bal hereunder shall not include any sales attributable to the use of any Devices by any hospital or surgical center where Bal (or a partner, shareholder, employee or contracting physician) concurrently practices medicine. No provision under this Agreement, either overtly or covertly, directly or indirectly, requires or contemplates that Bal make any recommendations to Bal' s patients or health care facilities with respect to Devices or other products. There shall be no adjustment to the percentage of royalties, or the rate of any other compensation, resulting from the presence of or absence of, any recommendations of Devices or other products to Bal' s patients or health care facilities by Bal.


f. Amedica shall maintain separate accountings relating to the Devices. Bal shall, at all times, have reasonable access to examine Amedica' s books and records relating to the Devices solely for the purpose of confirming the accuracy of the amount of royalties payable pursuant to the terms of this Agreement.


g. Bal acknowledges that the payment provisions of this Section 4 represents the sole agreement between the parties with regard to Bal' s compensation for all Development Services and any assignment of rights to the Devices; and Amedica shall not be obligated to make, or otherwise be liable for, any additional payment of compensation, reimbursement of expenses, or any other similar types of payment with regard to Development Services or the assignment of Devices. It is the parties' intent that this Agreement provide for the " sale or exchange of a capital asset" by Bal to Amedica under Internal Revenue Code Section 1235 entitled " Sale or Exchange of Patents," and that all payments made to Bal hereunder shall be taxed as long-term capital gains. Nothing in this Agreement to the contrary shall imply that the parties intend that the payments to Bal hereunder shall be for anything other than the transfer of all proprietary rights that Bal may have in the Devices. Bal acknowledges that Amedica has not made and is not making any representation or warranty as to ultimate tax treatment of the payments to Bal hereunder and that Bal is encouraged to consult with his own tax advisors.

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Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company' s application requesting confidential treatment under Rule 406 of the Securities Act of 1933, as amended. 5. Exclusivity.

Amedica acknowledges that Bal has other professional business and investment dealings in addition to his responsibilities under this Agreement and that Bal will not be required to devote his time exclusively to his responsibilities hereunder. Notwithstanding any provision herein to the contrary, Bal agrees that during the Term, Amedica shall have the exclusive rights to the Devices. 6. Confidentiality.

a. Both during the Term and following termination of this Agreement for any reason, Bal shall not, at any time or in any manner or for any reason, directly or indirectly, use, divulge, disclose or communicate to any third-person or entity any information that was disclosed to or developed by Bal during the course of performing the Development Services and which is not generally available to the public, including, without limiting the generality of the foregoing: (i) information regarding matters affecting or relating to Amedica' s business or Devices; (ii) the nature of Amedica' s properties or products, whether developed or under development; (iii) the identity of Amedica' s customers; (iv) prices which Amedica obtains or has obtained with respect to its products or services; (v) information as to Amedica' s discussions, negotiations and/or dealings with actual or potential third-party buyers, investors, licensees or co-venturers; (vi) Amedica' s costs, overhead or profit margin; or (vii) Amedica' s operatio ...