Exhibit 10.4

GOLDMAN, SACHS & CO. | 200 WEST STREET | NEW YORK, NEW YORK 10282-2198 | TEL:
(212) 902-1000

June 24, 2011

 

To:    NuVasive, Inc.    7475 Lusk Blvd    San Diego, CA 92121 Attention:   
Chief Financial Officer Telephone No.:    858-909-1800 Facsimile No.:   
858-909-2000

Re: Additional Call Option Transaction (Reference No. SDB4165059074)

The purpose of this letter agreement (this “Confirmation”) is to confirm the
terms and conditions of the call option transaction entered into between
Goldman, Sachs & Co. (“Bank”) and NuVasive, Inc. (“Counterparty”) on the Trade
Date specified below (the “Transaction”). This letter agreement constitutes a
“Confirmation” as referred to in the ISDA Master Agreement specified below. This
Confirmation shall replace any previous agreements and serve as the final
documentation for this Transaction.

The definitions and provisions contained in the 2002 ISDA Equity Derivatives
Definitions (the “Equity Definitions”), as published by the International Swaps
and Derivatives Association, Inc. (“ISDA”) are incorporated into this
Confirmation. In the event of any inconsistency between the Equity Definitions
and this Confirmation, this Confirmation shall govern. Certain defined terms
used herein have the meanings assigned to them in the indenture (the
“Indenture”) to be dated as of June 28, 2011 between Counterparty and U.S. Bank
National Association, as trustee, relating to the USD 402,500,000 principal
amount of 2.75% Convertible Senior Notes due 2017 (the “Convertible Notes” and,
each USD 1,000 principal amount of Convertible Notes, a “Convertible Note”). In
the event of any inconsistency between the terms defined in the Indenture and
this Confirmation, this Confirmation shall govern. For the avoidance of doubt,
references herein to sections of the Indenture are based on the draft of the
Indenture most recently reviewed by the parties at the time of execution of this
Confirmation. If any relevant sections of the Indenture are changed, added or
renumbered following execution of this Confirmation but prior to the execution
of the Indenture, the parties will amend this Confirmation in good faith to
preserve the economic intent of the parties based on the draft of the Indenture
so reviewed. For the avoidance of doubt, references to the Indenture herein are
references to the Indenture as in effect on the date of its execution and if the
Indenture is amended following its execution, any such amendment will be
disregarded for purposes of this Confirmation unless the parties agree otherwise
in writing.

Each party is hereby advised, and each such party acknowledges, that the other
party has engaged in, or refrained from engaging in, substantial financial
transactions and has taken other material actions in reliance upon the parties’
entry into the Transaction to which this Confirmation relates on the terms and
conditions set forth below.

1. This Confirmation evidences a complete and binding agreement between Bank and
Counterparty as to the terms of the Transaction to which this Confirmation
relates. This Confirmation shall supplement, form a part of, and be subject to
an agreement in the form of the 2002 ISDA Master Agreement (the “Agreement”) as
if Bank and Counterparty had executed an agreement in such form (but without any
Schedule except for the election of the laws of the State of New York as the
governing law) on the Trade Date. In the event of any inconsistency between
provisions of that Agreement and this Confirmation, this Confirmation will
prevail for the purpose of the Transaction to which this Confirmation relates.
The parties hereby agree that no Transaction other than the Transaction to which
this Confirmation relates shall be governed by the Agreement. For the avoidance
of doubt, the Transaction shall not constitute a “Transaction” as defined in any
ISDA Master Agreement currently existing or entered into from time to time
between Bank and Counterparty.

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2. The terms of the particular Transaction to which this Confirmation relates
are as follows:

General Terms:

 

Trade Date:

   June 24, 2011

Option Style:

   “Modified American”, as described under “Procedures for Exercise” below

Option Type:

   Call

Buyer:

   Counterparty

Seller:

   Bank

Shares:

   The common stock of Counterparty, par value USD 0.001 per Share (Exchange
symbol “NUVA”)

Number of Options:

   52,500. For the avoidance of doubt, the Number of Options shall be reduced by
any Options exercised by Counterparty. In no event will the Number of Options be
less than zero.

Applicable Percentage:

   50%

Option Entitlement:

   As of any date, a number equal to the product of the Applicable Percentage
and the Conversion Rate as of such date (as defined in the Indenture, but
without regard to any adjustments to the Conversion Rate pursuant to Section
4.04 or Section 4.05(h) of the Indenture), for each Convertible Note.

Strike Price:

   USD 42.1330

Premium:

   USD 5,223,750

Premium Payment Date:

   June 28, 2011

Exchange:

   The NASDAQ Global Select Market

Related Exchange(s):

   All Exchanges

Procedures for Exercise:

  

Exercise Period(s):

   Notwithstanding anything to the contrary in the Equity Definitions, an
Exercise Period shall occur with respect to an Option hereunder only if such
Option is an Exercisable Option (as defined below) and the Exercise Period shall
be, in respect of any Exercisable Option, the period commencing on, and
including, the relevant Conversion Date and ending on, and including, the
Scheduled Valid Day immediately preceding the first day of the relevant
Settlement Averaging Period in respect of such Conversion Date; provided that in
respect of Exercisable Options relating to Convertible Notes for which the
relevant Conversion Date occurs on or after the Free Convertibility Date, the
final day of the Exercise Period shall be the Scheduled Valid Day immediately
preceding the Expiration Date.

 

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Conversion Date:

   With respect to any conversion of Convertible Notes, the date on which the
Holder (as such term is defined in the Indenture) of such Convertible Notes
satisfies all of the requirements for conversion thereof as set forth in
Sections 4.02(b) and 4.02(c) of the Indenture.

Exercisable Options:

   Upon the occurrence of a Conversion Date, a number of Options equal to (i)
the number of Convertible Notes surrendered to Counterparty for conversion with
respect to such Conversion Date minus (ii) the number of “Exercisable Options”
(as defined in the Base Call Option Transaction Confirmation letter agreement
dated June 22, 2011 between Bank and Counterparty (the “Base Call Option
Confirmation”)); provided that such number shall not be less than zero or
greater than the Number of Options.

Free Convertibility Date:

   January 1, 2017

Expiration Time:

   The Valuation Time

Expiration Date:

   July 1, 2017, subject to earlier exercise.

Multiple Exercise:

   Applicable, as described under Exercisable Options above.

Automatic Exercise:

   Applicable; and means that in respect of an Exercise Period, a number of
Options not previously exercised hereunder equal to the number of Exercisable
Options shall be deemed to be exercised on the final day of such Exercise Period
for such Exercisable Options; provided that such Options shall be deemed
exercised only to the extent that Counterparty has provided a Notice of Exercise
to Bank.

Notice of Exercise:

   Notwithstanding anything to the contrary in the Equity Definitions, in order
to exercise any Exercisable Options, Counterparty must notify Bank in writing
before 5:00 p.m. (New York City time) on the Scheduled Valid Day prior to the
scheduled first day of the Settlement Averaging Period for the Exercisable
Options being exercised of (i) the number of such Exercisable Options, (ii) the
scheduled first day of the Settlement Averaging Period and the scheduled
Settlement Date, (iii) the Relevant Settlement Method for such Exercisable
Options, and (iv) regardless of the Relevant Settlement Method for such
Exercisable Options, the maximum cash amount per Convertible Note Counterparty
has elected or is deemed to have elected, if applicable, to be delivered to
Holders (as such term is defined in the Indenture) of the related Convertible
Notes (the “Specified Dollar Amount”), and such notice shall also include the
information, representations, acknowledgements and agreements required pursuant
to “Settlement Method Election Conditions” below; provided that in respect of
any Exercisable Options relating to Convertible Notes with a Conversion Date

 

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   occurring on or after the Free Convertibility Date, (A) such notice may be
given on or prior to the second Scheduled Valid Day immediately preceding the
Expiration Date and need only specify the information required in clause (i)
above, and (B) if the Relevant Settlement Method for such Exercisable Options is
not the Default Settlement Method (as defined below), Bank shall have received a
separate notice (the “Notice of Final Settlement Method”) in respect of all such
Convertible Notes before 5:00 p.m. (New York City time) on or prior to the Free
Convertibility Date specifying the information required in clauses (iii) and
(iv) above, as well as the information, representations, acknowledgements and
agreements required pursuant to “Settlement Method Election Conditions” below.

Valuation Time:

   At the close of trading of the regular trading session on the Exchange;
provided that if the principal trading session is extended, the Calculation
Agent shall determine the Valuation Time in its reasonable discretion.

Market Disruption Event:

   Section 6.3(a)(ii) of the Equity Definitions is hereby amended by replacing
clause (ii) in its entirety with “(ii) an Exchange Disruption, or” and inserting
immediately following clause (iii) the phrase “; in each case that the
Calculation Agent determine is material.”    Section 6.3(d) of the Equity
Definitions is hereby amended by deleting the remainder of the provision
following the term “Scheduled Closing Time” in the fourth line thereof.

Settlement Terms:

  

Settlement Method:

   For any Exercisable Option, the Default Settlement Method; provided that if
the Relevant Settlement Method set forth below for such Exercisable Option is
not the Default Settlement Method, then the Settlement Method for such
Exercisable Option shall be such Relevant Settlement Method, but only if the
Settlement Method Election Conditions have been satisfied and Counterparty shall
have notified Bank of the Relevant Settlement Method in the Notice of Exercise
or Notice of Final Settlement Method, as applicable, for such Exercisable
Option.

Default Settlement Method:

   Cash Settlement; provided that if Counterparty shall have received
Shareholder Approval (as defined in the Indenture) and shall have notified Bank
of such receipt concurrently with notice to the Holders (as defined in the
Indenture) of Convertible Notes, the Default Settlement Method shall be Net
Share Settlement.

 

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Relevant Settlement Method:

   In respect of any Exercisable Option, subject to the Settlement Method
Election Conditions:   

(i)       if Counterparty has elected to settle its conversion obligations in
respect of the related Convertible Note (A) entirely in Shares pursuant to
Section 4.02(a)(i) of the Indenture (together with cash in lieu of any
fractional Share) (such settlement method, “Settlement in Shares”), (B) in a
combination of cash and Shares pursuant to Section 4.02(a)(i) of the Indenture
with a Specified Dollar Amount less than USD 1,000 (such settlement method, “Low
Cash Combination Settlement”) or (C) in a combination of cash and Shares
pursuant to Section 4.02(a)(i) of the Indenture with a Specified Dollar Amount
equal to USD 1,000, then, in each case, the Relevant Settlement Method for such
Exercisable Option shall be Net Share Settlement;

  

(ii)      if Counterparty has elected or is deemed to have elected to settle its
conversion obligations in respect of the related Convertible Note in a
combination of cash and Shares pursuant to Section 4.02(a)(i) of the Indenture
with a Specified Dollar Amount greater than USD 1,000, then the Relevant
Settlement Method for such Exercisable Option shall be Combination Settlement;
and

  

(iii)    if Counterparty has elected to settle its conversion obligations in
respect of the related Convertible Note entirely in cash pursuant to Section
4.02(a)(i) of the Indenture (such settlement method, “Settlement in Cash”), then
the Relevant Settlement Method for such Exercisable Option shall be Cash
Settlement.

Settlement Method Election Conditions:

   For any Relevant Settlement Method other than the Default Settlement Method,
such Relevant Settlement Method shall apply to an Exercisable Option only if the
Notice of Exercise or Notice of Final Settlement Method for such Exercisable
Option, as applicable, contains:   

(i)       a representation that, on the date of such Notice of Exercise or
Notice of Final Settlement Method for such Exercisable Option, as applicable,
Counterparty is not in possession of any material non-public information with
respect to Counterparty or the Shares;

  

(ii)      a representation that Counterparty is electing the settlement method
for the related Convertible Note and such Relevant Settlement Method in good
faith and not as part of a plan or scheme to evade the prohibitions of Rule
10b-5 under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”);

 

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(iii)    a representation that Counterparty has not entered into or altered any
hedging transaction relating to the Shares corresponding to or offsetting the
Transaction;

  

(iv)     a representation that Counterparty is not electing the settlement
method for the related Convertible Note and such Relevant Settlement Method to
create actual or apparent trading activity in the Shares (or any security
convertible into or exchangeable for the Shares) or to raise or depress or
otherwise manipulate the price of the Shares (or any security convertible into
or exchangeable for the Shares);

  

(v)      an acknowledgment by Counterparty that (A) any transaction by Bank
following Counterparty’s election of the settlement method for the related
Convertible Note and such Relevant Settlement Method shall be made at Bank’s
sole discretion and for Bank’s own account subject to applicable law and (B)
Counterparty does not have, and shall not attempt to exercise, any influence
over how, when, whether or at what price to effect such transactions, including,
without limitation, the price paid or received per Share pursuant to such
transactions, or whether such transactions are made on any securities exchange
or privately; and

  

(vi)     a representation that Counterparty has received Shareholder Approval
(as defined in the Indenture).

Net Share Settlement:

   If Net Share Settlement is applicable to any Exercisable Option exercised or
deemed to be exercised hereunder, Bank will deliver to Counterparty, on the
relevant Settlement Date for each such Exercisable Option, a number of Shares
(the “Net Share Settlement Amount”) equal to the sum, for each Valid Day during
the Settlement Averaging Period for each such Exercisable Option, of (i) the
Daily Option Value for such Valid Day, divided by (ii) the Relevant Price on
such Valid Day, divided by (iii) the number of Valid Days in the Settlement
Averaging Period; provided that in no event shall the Net Share Settlement
Amount for any Exercisable Option exceed a number of Shares equal to the
Applicable Limit for such Exercisable Option divided by the Applicable Limit
Price on the Settlement Date for such Exercisable Option.    Bank will deliver
cash in lieu of any fractional Shares to be delivered with respect to any Net
Share Settlement Amount valued at the Relevant Price for the last Valid Day of
the Settlement Averaging Period.

 

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Combination Settlement:

   If Combination Settlement is applicable to any Exercisable Option exercised
or deemed exercised hereunder, Bank will deliver to Counterparty, on the
relevant Settlement Date for each such Exercisable Option:   

(i)       cash (the “Combination Settlement Cash Amount”) equal to the sum, for
each Valid Day during the Settlement Averaging Period for such Exercisable
Option, of (A) an amount (the “Daily Combination Settlement Cash Amount”) equal
to the lesser of (1) the product of (x) the Applicable Percentage and (y) the
Specified Dollar Amount minus USD 1,000 and (2) the Daily Option Value, divided
by (B) the number of Valid Days in the Settlement Averaging Period; provided
that if the calculation in clause (A) above results in zero or a negative number
for any Valid Day, the Daily Combination Settlement Cash Amount for such Valid
Day shall be deemed to be zero; and

  

(ii)      Shares (the “Combination Settlement Share Amount”) equal to the sum,
for each Valid Day during the Settlement Averaging Period for such Option, of a
number of Shares for such Valid Day (the “Daily Combination Settlement Share
Amount”) equal to (A) the Daily Option Value on such Valid Day minus the Daily
Combination Settlement Cash Amount for such Valid Day, divided by (B) the
Relevant Price on such Valid Day, divided by (C) the number of Valid Days in the
Settlement Averaging Period; provided that if the calculation in clause (A)
above results in zero or a negative number for any Valid Day, the Daily
Combination Settlement Share Amount for such Valid Day shall be deemed to be
zero;

   provided that in no event shall the sum of (x) the Combination Settlement
Cash Amount for any Exercisable Option and (y) the Combination Settlement Share
Amount for such Exercisable Option multiplied by the Applicable Limit Price on
the Settlement Date for such Exercisable Option, exceed the Applicable Limit for
such Exercisable Option.    Bank will deliver cash in lieu of any fractional
Share to be delivered with respect to any Combination Settlement Share Amount
valued at the Relevant Price for the last Valid Day of the Settlement Averaging
Period.

Cash Settlement:

   If Cash Settlement is applicable to any Exercisable Option exercised or
deemed to be exercised hereunder, in lieu of Section 8.1 of the Equity
Definitions, Bank will pay to Counterparty, on the relevant Settlement Date for
each such Exercisable Option, an amount of cash (the “Cash Settlement Amount”)
equal to the sum, for each Valid Day during the Settlement Averaging Period for
such Exercisable Option, of (i) the Daily Option Value for such Valid Day,
divided by (ii) the number of Valid Days in the Settlement Averaging Period.

 

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Daily Option Value:

   For any Valid Day, an amount equal to (i) the Option Entitlement on such
Valid Day, multiplied by (ii) the Relevant Price on such Valid Day less the
Strike Price on such Valid Day; provided that if the calculation contained in
clause (ii) above results in a negative number, the Daily Option Value for such
Valid Day shall be deemed to be zero. In no event will the Daily Option Value be
less than zero.

Applicable Limit:

   For any Exercisable Option, an amount of cash equal to the Applicable
Percentage multiplied by the excess of (i) the aggregate of (A) the amount of
cash, if any, delivered to the Holder of the related Convertible Note upon
conversion of such Convertible Note and (B) the number of Shares, if any,
delivered to the Holder of the related Convertible Note upon conversion of such
Convertible Note multiplied by the Applicable Limit Price on the Settlement Date
for such Exercisable Option, over (ii) USD 1,000.

Applicable Limit Price:

   On any day, the opening price as displayed under the heading “Op” on
Bloomberg page NUVA <equity> (or any successor thereto).

Valid Day:

   A day on which (i) there is no Market Disruption Event and (ii) trading in
the Shares generally occurs on the Exchange or, if the Shares are not then
listed on the Exchange, on the principal other U.S. national or regional
securities exchange on which the Shares are then listed or, if the Shares are
not then listed on a U.S. national or regional securities exchange, on the
principal other market on which the Shares are then traded; provided that if the
Shares are not so listed or admitted for trading, “Valid Day” means a Business
Day.

Scheduled Valid Day:

   A day that is scheduled to be a Valid Day; provided that if the Shares are
not listed or admitted for trading on any U.S. national or regional securities
exchange or other market, “Scheduled Valid Day” means a Business Day.

Relevant Price:

   For each of the Valid Days during the applicable Settlement Averaging Period,
the per Share volume-weighted average price as displayed under the heading
“Bloomberg VWAP” on Bloomberg page “NUVA.UQ <equity> AQR” (or its equivalent
successor if such page is not available) in respect of the period from the
scheduled open of trading until the scheduled close of trading of the primary
trading session on such Valid Day (or if such volume-weighted average price is
unavailable, the market value of one Share on such Valid Day, as determined by
the Calculation Agent using a volume-weighted average method).

 

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Settlement Averaging Period:

   For any Exercisable Option and regardless of the Settlement Method applicable
to such Exercisable Option:   

(x)      if Counterparty has delivered a Notice of Exercise to Bank with respect
to such Exercisable Option with a Conversion Date occurring prior to the Free
Convertibility Date, the 40 consecutive Valid Days beginning on, and including,
the second Valid Day after such Conversion Date; provided that if the Notice of
Exercise for such Exercisable Option specifies that Settlement in Shares or Low
Cash Combination Settlement applies to the related Convertible Note, the
Settlement Averaging Period shall be the 80 consecutive Valid Day period
beginning on, and including, the second Valid Day immediately after such
Conversion Date; or

  

(y)      if Counterparty has, on or following the Free Convertibility Date,
delivered a Notice of Exercise to Bank with respect to such Exercisable Option
with a Conversion Date occurring on or following the Free Convertibility Date,
the 40 consecutive Valid Days beginning on, and including, the 42nd Scheduled
Valid Day immediately preceding the Expiration Date; provided that if the Notice
of Exercise or Notice of Final Settlement Method, as applicable, for such
Exercisable Option specifies that Settlement in Shares or Low Cash Combination
Settlement applies to the related Convertible Note, the Settlement Averaging
Period shall be the 80 consecutive Valid Days commencing on, and including, the
82nd Scheduled Valid Day immediately preceding the Expiration Date.

Settlement Date:

   For any Exercisable Option, the third Valid Day immediately following the
final Valid Day of the Settlement Averaging Period with respect to such
Exercisable Option.

Settlement Currency:

   USD

Other Applicable Provisions:

   The provisions of Sections 9.1(c), 9.8, 9.9, 9.11, 9.12 and 10.5 of the
Equity Definitions will be applicable as if Physical Settlement were applicable.

Restricted Certificated Shares:

   Notwithstanding anything to the contrary in the Equity Definitions, Bank may,
in whole or in part, deliver Shares in certificated form representing the Number
of Shares to be Delivered or the Payment Obligation to Counterparty in lieu of
delivery through the Clearance System.

 

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Representation and Agreement:

   Notwithstanding Section 9.11 of the Equity Definitions, the parties
acknowledge that any Shares delivered to Counterparty shall be, upon delivery,
subject to restrictions and limitations arising from Counterparty’s status as
issuer of the Shares under applicable securities laws. 3. Additional Terms
applicable to the Transaction:   

Adjustments applicable to the Transaction:

  

Potential Adjustment Events:

   Notwithstanding Section 11.2(e) of the Equity Definitions, a “Potential
Adjustment Event” means an occurrence of any event or condition, as set forth in
Section 4.05(a), (b), (c), (d) or (e) or Section 4.06 of the Indenture that
results in an adjustment to the Conversion Rate of the Convertible Notes;
provided that in no event shall there be any adjustment hereunder as a result of
an adjustment to the Conversion Rate pursuant to Section 4.04 or Section 4.05(h)
of the Indenture.

Method of Adjustment:

   Calculation Agent Adjustment, and means that, notwithstanding Section 11.2(c)
of the Equity Definitions, upon any adjustment to the Conversion Rate of the
Convertible Notes pursuant to the Indenture (other than Section 4.04 or Section
4.05(h) of the Indenture), the Calculation Agent will make a corresponding
adjustment to any one or more of the Strike Price, Number of Options, the Option
Entitlement and any other variable relevant to the exercise, settlement or
payment for the Transaction; provided that, notwithstanding the foregoing, if
any Potential Adjustment Event occurs during the Settlement Averaging Period but
no adjustment was made to any Convertible Note under the Indenture because the
relevant Holder (as such term is defined in the Indenture) was deemed to be a
record owner of the underlying Shares on the related Conversion Date, then the
Calculation Agent shall make an adjustment, as determined by it, to the terms
hereof in order to account for such Potential Adjustment Event. Extraordinary
Events applicable to the Transaction:   

Merger Events:

   Applicable; provided that notwithstanding Section 12.1(b) of the Equity
Definitions, a “Merger Event” means the occurrence of any event or condition set
forth in Section 4.07(a) of the Indenture.

Tender Offers:

   Applicable; provided that notwithstanding Section 12.1(d) of the Equity
Definitions, a “Tender Offer” means the occurrence of any event or condition set
forth in Section 4.05(e) of the Indenture.

Consequence of Merger Events/

  

Tender Offers:

   Notwithstanding Section 12.2 and Section 12.3 of the Equity Definitions, upon
the occurrence of a Merger Event or a Tender Offer, the Calculation Agent shall
make a corresponding adjustment in respect of any adjustment under the Indenture
to any one or more of the nature of the

 

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   Shares, Strike Price, Number of Options, the Option Entitlement and any other
variable relevant to the exercise, settlement or payment for the Transaction;
provided, however, that such adjustment shall be made without regard to any
adjustment to the Conversion Rate pursuant to Section 4.04 of the Indenture; and
provided further that if, with respect to a Merger Event or a Tender Offer, the
consideration for the Shares includes (or, at the option of a holder of Shares,
may include) shares of an entity or person not organized under the laws of the
United States, any State thereof or the District of Columbia,” Cancellation and
Payment shall apply.

Nationalization, Insolvency or Delisting:

   Cancellation and Payment (Calculation Agent Determination); provided that, in
addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it
will also constitute a Delisting if the Exchange is located in the United States
and the Shares are not immediately re-listed, re-traded or re-quoted on any of
the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ
Global Market (or their respective successors); if the Shares are immediately
re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The
NASDAQ Global Select Market or The NASDAQ Global Market (or their respective
successors), such exchange or quotation system shall thereafter be deemed to be
the Exchange.

Additional Disruption Events:

  

Change in Law:

   Applicable; provided that Section 12.9(a)(ii) of the Equity Definitions is
hereby amended by (w) adding the words “(including, for the avoidance of doubt
and without limitation, adoption or promulgation of new regulations authorized
or mandated by existing statute)” after the word “regulation” in the second line
thereof, (x) adding the words “or any Hedge Positions” after the word “Shares”
in the clause (X) thereof and (y) adding the words “, or holding, acquiring or
disposing of Shares or any Hedge Positions relating,” after the word
“obligations” in clause (Y) thereof.    The parties agree, for purposes of
Section 12.9(a)(ii) of the Equity Definitions, “any applicable law or
regulation” shall include the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010, any rules and regulations promulgated thereunder and any
similar law or regulation, and the consequences specified in Section 12.9(b)(i)
of the Equity Definitions shall apply to any Change in Law arising from any such
act, rule or regulation.

Failure to Deliver:

   Applicable

Insolvency Filing:

   Applicable

 

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Hedging Disruption:

   Applicable; provided that:   

(i)       Section 12.9(a)(v) of the Equity Definitions is hereby amended by
inserting the following two phrases at the end of such Section:

  

“For the avoidance of doubt, the term “equity price risk” shall be deemed to
include stock price and volatility risk. And, for the further avoidance of
doubt, any such transactions or assets referred to in phrases (A) or (B) above
must be available on commercially reasonable pricing terms.”; and

  

(ii)      Section 12.9(b)(iii) of the Equity Definitions is hereby amended by
inserting in the third line thereof, after the words “to terminate the
Transaction”, the words “or a portion of the Transaction affected by such
Hedging Disruption”.

Increased Cost of Hedging:

   Applicable

Determining Party:

   For all applicable Extraordinary Events, Bank; provided that Bank shall make
all determinations required pursuant to this Transaction, in a commercially
reasonable manner.

Non-Reliance:

   Applicable Agreements and Acknowledgements Regarding Hedging Activities:   
Applicable

Additional Acknowledgments:

   Applicable

Illegality:

   The parties agree that, for the avoidance of doubt, for purposes of Section
5(b)(i) of the Agreement, “any applicable law” shall include the Dodd-Frank Wall
Street Reform and Consumer Protection Act of 2010, any rules and regulations
promulgated thereunder and any similar law or regulation, without regard to
Section 739 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of
2010 or any similar legal certainty provision in any legislation enacted, or
rule or regulation promulgated, on or after the Trade Date, and the consequences
specified in the Agreement, including without limitation, the consequences
specified in Section 6 of the Agreement, shall apply to any Illegality arising
from any such act, rule or regulation.

4. Calculation Agent:

   Bank; provided that (i) if an Event of Default as a result of Section
5(a)(vii) of the Agreement has occurred and is continuing with respect to Bank,
the Calculation Agent shall be a leading recognized dealer in equity derivatives
designated in good faith by Counterparty for so long as such Event of Default is
continuing and (ii) Calculation Agent shall make all calculations, adjustments
and determinations required pursuant to this Transaction, in a commercially
reasonable manner.

 

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5. Account Details:

 

  (a) Account for payments to Counterparty:

To be provided by Counterparty

Account for delivery of Shares to Counterparty:

To be provided by Counterparty.

 

  (b) Account for payments to Bank:

Chase Manhattan Bank New York

For A/C Goldman, Sachs & Co.

A/C #930-1-011483

ABA: 021-000021

Account for delivery of Shares from Bank:

To be provided by Bank.

6. Offices:

The Office of Counterparty for the Transaction is: Inapplicable, Counterparty is
not a Multibranch Party.

The Office of Bank for the Transaction is: 200 West Street, New York, NY
10282-2198

7. Notices: For purposes of this Confirmation:

 

  (a) Address for notices or communications to Counterparty:

NuVasive, Inc.

7475 Lusk Blvd

San Diego, CA 92121

Attention: Chief Financial Officer

Telephone No.: 858-909-1800

Facsimile No.: 858-909-2000

 

  (b) Address for notices or communications to Bank:

 

  To: Goldman, Sachs & Co.

       200 West Street

       New York, NY 10282-2198

  Attn: Serge Marquié,

       Equity Capital Markets

  Telephone: 212-902-9779

  Facsimile: 917-977-4253

  Email: marqse@am.ibd.gs.com

With a copy to:

 

  Attention: Kevin Castellano, Equity Capital Markets

Equity Capital Markets

  Telephone: +1-212-902-3511

  Facsimile: +1-212-256-4336

  Email: kevin.castellano@gs.com

And email notification to the following address:

Eq-derivs-notifications@am.ibd.gs.com

 

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8. Representations, Warranties and Agreements of Counterparty and Bank

 

  (a) The representations and warranties of Counterparty set forth in
Section 1(a) of the Underwriting Agreement (the “Underwriting Agreement”) dated
as of June 22, 2011 among Counterparty, Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Goldman, Sachs & Co., as Representatives of the Underwriters
(the “Underwriters”), are true and correct and are hereby deemed to be repeated
to Bank as if set forth herein. Counterparty hereby further represents and
warrants to Bank that on the Trade Date and the Premium Payment Date:

 

  (i) Counterparty has all necessary corporate power and authority to execute,
deliver and perform its obligations in respect of this Transaction; such
execution, delivery and performance have been duly authorized by all necessary
corporate action on Counterparty’s part; and this Confirmation has been duly and
validly executed and delivered by Counterparty and constitutes its valid and
binding obligation, enforceable against Counterparty in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors’ rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity) and except that rights to indemnification and contribution hereunder
may be limited by federal or state securities laws or public policy relating
thereto.

 

  (ii) Neither the execution and delivery of this Confirmation nor the
incurrence or performance of obligations of Counterparty hereunder will conflict
with or result in a breach of the certificate of incorporation or by-laws (or
any equivalent documents) of Counterparty, or any applicable law or regulation,
or any order, writ, injunction or decree of any court or governmental authority
or agency applicable to Counterparty, or any agreement or instrument to which
Counterparty or any of its subsidiaries is a party or by which Counterparty or
any of its subsidiaries is bound or to which Counterparty or any of its
subsidiaries is subject, or constitute a default under, or result in the
creation of any lien under, any such agreement or instrument.

 

  (iii) No consent, approval, authorization, or order of, or filing with, any
governmental agency or body or any court is required by Counterparty in
connection with the execution, delivery or performance by Counterparty of this
Confirmation, except such as have been obtained or made and such as may be
required under the Securities Act of 1933, as amended (the “Securities Act”) or
state securities laws.

 

  (iv) Counterparty is not and will not be required to register as an
“investment company” as such term is defined in the Investment Company Act of
1940, as amended.

 

  (v) It is an “eligible contract participant” (as such term is defined in
Section 1a(17) of the Commodity Exchange Act, as amended).

 

  (vi) Neither Counterparty nor any “affiliate” or “affiliated purchaser” (each
as defined in Rule 10b-18 of the Exchange Act (“Rule 10b-18”)) shall directly or
indirectly (including, without limitation, by means of any cash-settled or other
derivative instrument other than the Transaction) purchase, offer to purchase,
place any bid or limit order that would effect a purchase of, or commence any
tender offer relating to, any Shares (or an equivalent interest, including a
unit of beneficial interest in a trust or limited partnership or a depository
share) or any security convertible into or exchangeable or exercisable for
Shares.

 

14

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  (vii) Without limiting the generality of Section 13.1 of the Equity
Definitions, Counterparty acknowledges that Bank is not making any
representations or warranties with respect to the treatment of the Transaction
under any accounting standards including FASB Statements 128, 133 (as amended),
149 or 150, EITF Issue No. 00-19, 01-6 or 03-6 (or any successor issue
statements) or under FASB’s Liabilities & Equity Project.

 

  (viii) Without limiting the generality of Section 3(a)(iii) of the Agreement,
the Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange
Act.

 

  (ix) Prior to the Trade Date, Counterparty shall deliver to Bank a resolution
of Counterparty’s board of directors authorizing the Transaction and such other
certificate or certificates as Bank shall reasonably request.

 

  (x) Counterparty is not “insolvent” (as such term is defined under
Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code)
(the “Bankruptcy Code”)) and Counterparty would be able to purchase the Shares
hereunder in compliance with the laws of the jurisdiction of Counterparty’s
incorporation.

 

  (xi) Counterparty understands no obligations of Bank to it hereunder will be
entitled to the benefit of deposit insurance and that such obligations will not
be guaranteed by any affiliate of Bank or any governmental agency.

 

  (b) Each of Bank and Counterparty acknowledges that the offer and sale of the
Transaction to it is intended to be exempt from registration under the
Securities Act, by virtue of Section 4(2) thereof. Accordingly, Counterparty
represents and warrants to Bank that (i) it has the financial ability to bear
the economic risk of its investment in the Transaction and is able to bear a
total loss of its investment and its investments in and liabilities in respect
of the Transaction, which it understands are not readily marketable, are not
disproportionate to its net worth, and it is able to bear any loss in connection
with the Transaction, including the loss of its entire investment in the
Transaction, (ii) it is an “accredited investor” as that term is defined in
Regulation D as promulgated under the Securities Act, (iii) it is entering into
the Transaction for its own account and without a view to the distribution or
resale thereof, (iv) the assignment, transfer or other disposition of the
Transaction has not been and will not be registered under the Securities Act and
is restricted under this Confirmation, the Securities Act and state securities
laws, and (v) its financial condition is such that it has no need for liquidity
with respect to its investment in the Transaction and no need to dispose of any
portion thereof to satisfy any existing or contemplated undertaking or
indebtedness and is capable of assessing the merits of and understanding (on its
own behalf or through independent professional advice), and understands and
accepts, the terms, conditions and risks of the Transaction.

 

  (c) Each party acknowledges and agrees to be bound by the Conduct Rules of the
National Association of Securities Dealers, Inc. applicable to transactions in
options, and further agrees not to violate the position and exercise limits set
forth therein.

 

  (d) Counterparty represents and warrants that it has received, read and
understands the OTC Options Risk Disclosure Statement and a copy of the most
recent disclosure pamphlet prepared by The Options Clearing Corporation entitled
“Characteristics and Risks of Standardized Options”.

 

15

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9. Other Provisions:

 

  (a) Opinions. Counterparty shall deliver to Bank an opinion of counsel, dated
as of the Trade Date, with respect to the matters set forth in Sections 8(a)(i)
through (iii) of this Confirmation; provided that with respect to “any agreement
or instrument” referred to in Section 8(a)(ii), such opinion shall only refer to
agreements and instruments filed as exhibits to Counterparty’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2010, as updated by any
exhibits to Current Reports on Form 8-K filed on January 6, 2011, January 11,
2011, January 19, 2011, February 3, 2011, February 23, 2011, March 9,
2011, May 5, 2011 and May 31, 2011.

 

  (b)

Repurchase Notices. Counterparty shall, on any day on which Counterparty effects
any repurchase of Shares, promptly give Bank a written notice of such repurchase
(a “Repurchase Notice”) on such day if following such repurchase, the quotient
of (x) the sum of (a) the product of the Number of Options and the Option
Entitlement, (b) the product of the “Number of Options” and the “Option
Entitlement” (each as defined in the Base Call Option Confirmation) and (c) the
product of the “Number of Options” and the “Option Entitlement” (each as defined
in the letter agreement between Company and Bank dated as of March 3, 2008, as
amended by the letter agreement between Company and Bank dated as of March 11,
2008), divided by (y) the number of Counterparty’s outstanding Shares (such
quotient expressed as a percentage, the “Option Equity Percentage”) would be
(i) greater than 7.5% or (ii) 0.5% greater than the Option Equity Percentage
included in the immediately preceding Repurchase Notice. Counterparty agrees to
indemnify and hold harmless Bank and its affiliates and their respective
officers, directors, employees, affiliates, advisors, agents and controlling
persons (each, an “Indemnified Person”) from and against any and all losses
(including losses relating to Bank’s hedging activities as a consequence of
becoming, or of the risk of becoming, a Section 16 “insider”, including without
limitation, any forbearance from hedging activities or cessation of hedging
activities and any losses in connection therewith with respect to this
Transaction), claims, damages, judgments, liabilities and expenses (including
reasonable attorney’s fees), joint or several, which an Indemnified Person may
become subject to, as a result of Counterparty’s failure to provide Bank with a
Repurchase Notice on the day and in the manner specified in this paragraph, and
to reimburse, within 30 days, upon written request, each of such Indemnified
Persons for any reasonable legal or other expenses incurred in connection with
investigating, preparing for, providing testimony or other evidence in
connection with or defending any of the foregoing. If any suit, action,
proceeding (including any governmental or regulatory investigation), claim or
demand shall be brought or asserted against the Indemnified Person as a result
of Counterparty’s failure to provide Bank with a Repurchase Notice in accordance
with this paragraph, such Indemnified Person shall promptly notify Counterparty
in writing, and Counterparty, upon request of the Indemnified Person, shall
retain counsel reasonably satisfactory to the Indemnified Person to represent
the Indemnified Person and any others Counterparty may designate in such
proceeding and shall pay the fees and expenses of such counsel related to such
proceeding. Counterparty shall not be liable for any settlement of any
proceeding contemplated by this paragraph that is effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, Counterparty agrees to indemnify any Indemnified Person from and
against any loss or liability by reason of such settlement or judgment.
Counterparty shall not, without the prior written consent of the Indemnified
Person, effect any settlement of any pending or threatened proceeding
contemplated by this paragraph that is in respect of which any Indemnified
Person is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Person, unless such settlement includes an
unconditional release of such Indemnified Person from all liability on claims
that are the subject matter of such proceeding on terms reasonably satisfactory
to such Indemnified Person. If the indemnification provided for in this
paragraph is unavailable to an Indemnified Person or insufficient in respect of
any losses, claims, damages or liabilities referred to therein, then

 

16

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Counterparty hereunder, in lieu of indemnifying such Indemnified Person
thereunder, shall contribute to the amount paid or payable by such Indemnified
Person as a result of such losses, claims, damages or liabilities. The remedies
provided for in this paragraph (c) are not exclusive and shall not limit any
rights or remedies which may otherwise be available to any Indemnified Party at
law or in equity. The indemnity and contribution agreements contained in this
paragraph shall remain operative and in full force and effect regardless of the
termination of this Transaction.

 

  (c) Regulation M. Counterparty is not on the date hereof engaged in a
distribution, as such term is used in Regulation M under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), of any securities of Counterparty,
other than a distribution meeting the requirements of the exception set forth in
Rules 101(b)(10) and 102(b)(7) of Regulation M. Counterparty shall not, until
the second Scheduled Trading Day immediately following the Trade Date, engage in
any such distribution.

 

  (d) No Manipulation. Counterparty is not entering into this Transaction (i) on
the basis of, and it is not aware of, any material non-public information with
respect to itself or the Shares (ii) in anticipation of, in connection with, or
to facilitate, a distribution of its securities, a self tender offer or a
third-party tender offer or (iii) to create actual or apparent trading activity
in the Shares (or any security convertible into or exchangeable for the Shares)
or to raise or depress or otherwise manipulate the price of the Shares (or any
security convertible into or exchangeable for the Shares) or otherwise in
violation of the Exchange Act.

 

  (e) Transfer or Assignment. (i) Counterparty shall have the right to transfer
or assign its rights and obligations hereunder with respect to all, but not less
than all, of the Options hereunder (such Options, the “Transfer Options”);
provided that such transfer or assignment shall be subject to reasonable
conditions that Bank may impose, including but not limited, to the following
conditions:

(A) With respect to any Transfer Options, Counterparty shall not be released
from its notice and indemnification obligations pursuant to Section 9(b) or any
obligations under Section 9(m) or 9(r) of this Confirmation;

(B) Any Transfer Options shall only be transferred or assigned to a third party
that is a U.S. person (as defined in the Internal Revenue Code of 1986, as
amended);

(C) Such transfer or assignment shall be effected on terms, including any
reasonable undertakings by such third party (including, but not limited to, an
undertaking with respect to compliance with applicable securities laws in a
manner that, in the reasonable judgment of Bank, will not expose Bank to
material risks under applicable securities laws) and execution of any
documentation and delivery of legal opinions with respect to securities laws and
other matters by such third party and Counterparty, as are requested and
reasonably satisfactory to Bank;

(D) Bank will not, as a result of such transfer and assignment, be required to
pay the transferee on any payment date an amount under Section 2(d)(i)(4) of the
Agreement greater than an amount that Bank would have been required to pay to
Counterparty in the absence of such transfer and assignment;

(E) An Event of Default, Potential Event of Default or Termination Event will
not occur as a result of such transfer and assignment;

(F) Without limiting the generality of clause (B), Counterparty shall cause the
transferee to make such Payee Tax Representations and to provide such tax
documentation as may be reasonably requested by Bank to permit Bank to determine
that results described in clauses (D) and (E) will not occur upon or after such
transfer and assignment; and

 

17

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(G) Counterparty shall be responsible for all reasonable costs and expenses,
including reasonable counsel fees, incurred by Bank in connection with such
transfer or assignment.

(ii) Bank may, without Counterparty’s consent, transfer or assign all or any
part of its rights or obligations under the Transaction to any bank or bank
affiliate (a “Transferee Affiliate”) that is a leading dealer in equity
derivatives with a rating for its long term, unsecured and unsubordinated
indebtedness equal to or better than the greater of (1) the credit rating of The
Goldman Sachs Group, Inc at the time of the transfer and (2) A- by Standard and
Poor’s Rating Group, Inc. or its successor (“S&P”), or A3 by Moody’s Investors
Service, Inc. (“Moody’s”) or, if either S&P or Moody’s ceases to rate such debt,
at least an equivalent rating or better by a substitute agency rating mutually
agreed by Counterparty and Bank, or to any of its affiliates whose obligations
hereunder would be guaranteed by The Goldman Sachs Group, Inc. If after Bank’s
commercially reasonable efforts, Bank is unable to effect such a transfer or
assignment on pricing terms reasonably acceptable to Bank and within a time
period reasonably acceptable to Bank, or the Transfer Conditions set forth below
are not satisfied following a proposed transfer or assignment, of a sufficient
number of Options to reduce (1) Bank Group’s “beneficial ownership” (within the
meaning of Section 13 of the Exchange Act and rules promulgated thereunder) to
8.5% of Counterparty’s outstanding Shares or less or (2) the Option Equity
Percentage to 14.5% or less, Bank may designate any Exchange Business Day as an
Early Termination Date with respect to a portion (the “Terminated Portion”) of
this Transaction, such that (1) Bank Group’s “beneficial ownership” following
such partial termination will be equal to or less than 8.5% or (2) the Option
Equity Percentage following such partial termination will be equal to or less
than 14.5%. In the event that Bank so designates an Early Termination Date with
respect to a portion of this Transaction, a payment shall be made pursuant to
Section 6 of the Agreement as if (1) an Early Termination Date had been
designated in respect of a Transaction having terms identical to this
Transaction and a Number of Options equal to the Terminated Portion,
(2) Counterparty shall be the sole Affected Party with respect to such partial
termination and (3) such Transaction shall be the only Terminated Transaction
(and, for the avoidance of doubt, the provisions of Section 9(j) shall apply to
any amount that is payable by Bank to Counterparty pursuant to this sentence as
if Counterparty was not the Affected Party). “Bank Group” means Bank or any
affiliate of Bank subject to aggregation with Bank under such Section 13 of the
Exchange Act and rules promulgated thereunder and all persons who may form a
“group” (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) with
Bank. Bank shall provide Counterparty with prompt written notice of any transfer
made pursuant to this Section 9(e)(ii), including the identity of the third
party to whom such transfer is made.

Notwithstanding the foregoing, Bank may not transfer or assign under this clause
(ii) unless the following conditions are satisfied (the “Transfer Conditions”):

(1) the transferee agrees in writing with Bank to be bound by the terms of this
Confirmation with respect to the transferred obligations;

(2) as of the date of such transfer, and giving effect thereto, the Transferee
Affiliate will not be required to withhold or deduct on account of Tax from any
payments under the Agreement or will be required to gross up for such Tax under
Section 2(d)(i)(4) of the Agreement;

(3) as of the date of such transfer, and giving effect thereto, Counterparty
will not be required to gross up for such Tax under Section 2(d)(i)(4) of the
Agreement;

(4) no Event of Default where Bank is the Defaulting Party or Termination Event
where Bank is the sole Affected Party has occurred and is continuing at the time
of the transfer, and no Event of Default or Termination Event will occur with
respect to Counterparty, Bank or the transferee as a result of such transfer;
and

 

18

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(5) as of the date of such transfer, and giving effect thereto, no material
adverse legal or regulatory consequences shall result to Bank, Counterparty or
the transferee as a result of such transfer, including, without limitation,
adverse legal or regulatory consequences under the Dodd-Frank Wall Street Reform
and Consumer Protection Act of 2010 or any rules or regulations promulgated
thereunder or any similar law or regulation.

 

  (f) Staggered Settlement. If Net Share Settlement or Combination Settlement is
applicable to any Exercisable Option exercised or deemed exercised hereunder,
and Bank, based upon advice of counsel with respect to applicable legal and
regulatory requirements, including any requirements relating to Bank’s hedging
activities hereunder, determines that it would have a legal or regulatory
concern if it were to deliver, or to acquire Shares to deliver, any of all of
the Shares to be delivered by Bank on the relevant Settlement Date, Bank may, by
notice to Counterparty on or prior to any Settlement Date (a “Nominal Settlement
Date”), in a commercially reasonable manner, elect to deliver the Shares on two
or more dates (each, a “Staggered Settlement Date”) as follows:

 

  (a) in such notice, Bank will specify to Counterparty the related Staggered
Settlement Dates (which it shall choose in a commercially reasonable manner, the
last of which will be no later than the twentieth (20th) Exchange Business Day
following such Nominal Settlement Date) and the number of Shares that it will
deliver on each Staggered Settlement Date;

 

  (b) the aggregate number of Shares that Bank will deliver to Counterparty
hereunder on all such Staggered Settlement Dates will equal the number of Shares
that Bank would otherwise be required to deliver on such Nominal Settlement
Date; and

 

  (c) if the Net Share Settlement terms set forth above were to apply on the
Nominal Settlement Date, then the Net Share Settlement terms will apply on each
Staggered Settlement Date, except that the Net Shares will be allocated among
such Staggered Settlement Dates as specified by Bank in the notice referred to
in clause (a) above.

 

  (g) Additional Termination Events. (i) Notwithstanding anything to the
contrary in this Confirmation if an event of default with respect to
Counterparty shall occur and be continuing under the terms of the Convertible
Notes as set forth in Section 7.01 of the Indenture and result in the
Convertible Notes becoming or being declared due and payable, then such event of
default shall constitute an Additional Termination Event applicable to the
Transaction and, with respect to such event of default (A) Counterparty shall be
deemed to be the sole Affected Party and the Transaction shall be the sole
Affected Transaction and (B) Bank shall be the party entitled to designate an
Early Termination Date pursuant to Section 6(b) of the Agreement.

(ii) Notwithstanding anything to the contrary in this Confirmation, the giving
of any Notice of Exercise shall constitute an Additional Termination Event
hereunder with respect to the number, if any, of Exercisable Options specified
in such Notice of Exercise as corresponding to a conversion of Convertible Notes
in compliance with Section 4.04 of the Indenture. Upon receipt of any such
Notice, Bank shall designate an Exchange Business Day as an Early Termination
Date (such day to occur as close as practicable, in Bank’s commercially
reasonable judgment, to the settlement date of the relevant Convertible Notes),
with respect to the portion of this Transaction corresponding to number of such
Exercisable Options so specified. Any payment hereunder with respect to such
termination shall be calculated pursuant to Section 6 of the Agreement; provided

 

19

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that for the purposes of such calculation, (A) Counterparty shall be the sole
Affected Party with respect to such Additional Termination Event, (B) Bank shall
be the party entitled to designate an Early Termination Date pursuant to
Section 6(b) of the Agreement; and (C) for the avoidance of doubt, in
determining the amount payable pursuant to Section 6 of the Agreement, the
Calculation Agent (i) shall take into account the time value of this Transaction
with respect to the Expiration Date and (ii) shall not take into account any
adjustments to the Option Entitlement that result from corresponding adjustments
to the Conversion Rate pursuant to Section 4.04 of the Indenture; and provided
further that (A) in case of a partial termination, an Early Termination Date
shall be designated in respect of a Transaction having terms identical to this
Transaction and a Number of Options equal to the terminated portion and such
Transaction shall be the only Terminated Transaction; (B) any amount payable by
Bank to Counterparty shall be satisfied solely by delivery by Bank to
Counterparty of a number of Shares and cash in lieu of a fractional share equal
to such amount calculated pursuant to Section 6 divided by a price per Share
determined by the Calculation Agent; and (C) the number of Shares deliverable in
respect of such early termination by Bank to Counterparty shall not be greater
than the product of (x) the Applicable Percentage and (y) the excess of (a) the
total number of Shares underlying the corresponding Convertible Notes (including
the number of Additional Shares (as defined in the Indenture) resulting from any
adjustment set forth in Section 4.04 of the Indenture) deliverable with respect
to such Convertible Notes over (b) the number of Shares equal in value to the
aggregate principal amount of the corresponding Convertible Notes, as determined
by the Calculation Agent in its sole reasonable discretion.

 

  (h) Amendments to Equity Definitions. (i) Section 12.6(a)(ii) of the Equity
Definitions is hereby amended by (1) deleting from the fourth line thereof the
word “or” after the word “official” and inserting a comma therefor, and
(2) deleting the semi-colon at the end of subsection (B) thereof and inserting
the following words therefor “or (C) at Bank’s option, the occurrence of any of
the events specified in Section 5(a)(vii)(1) through (9) of the ISDA Master
Agreement with respect to that Issuer.”

(ii) Section 12.9(b)(i) of the Equity Definitions is hereby amended by
(1) replacing “either party may elect” with “Bank may elect” and (2) replacing
“notice to the other party” with “notice to Counterparty” in the first sentence
of such section.

 

  (i)

Setoff and No Collateral. Notwithstanding any provision of the Agreement, the
Confirmation or the Equity Definitions or any other agreement between the
parties to the contrary, the obligations of Company hereunder are not secured by
any collateral. In addition to and without limiting any rights of set-off that a
party hereto may have as a matter of law, pursuant to contract or otherwise,
upon the occurrence of an Early Termination Date, Bank (and only Bank) shall
have the right to set off any obligation that it may have to Counterparty under
this Confirmation, including without limitation any obligation to make any
payment of cash or delivery of Shares to Counterparty, against any obligation
Counterparty may have to Bank under any other agreement between Bank and
Counterparty relating to Shares (each such contract or agreement, a “Separate
Agreement”), including without limitation any obligation to make a payment of
cash or a delivery of Shares or any other property or securities. For this
purpose, Bank shall be entitled to convert any obligation (or the relevant
portion of such obligation) denominated in one currency into another currency at
the rate of exchange at which it would be able to purchase the relevant amount
of such currency, and to convert any obligation to deliver any non-cash property
into an obligation to deliver cash in an amount calculated by reference to the
market value of such property as of the Early Termination Date, as determined by
the Calculation Agent in its sole discretion; provided that in the case of a
set-off of any obligation to release or deliver assets against any right to
receive fungible assets, such obligation and right shall be set off in kind; and
provided further that in determining the value of any obligation to deliver
Shares, the value at any time of such obligation shall be determined by
reference to the market value of the Shares

 

20

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at such time, as determined in good faith by the Calculation Agent. If an
obligation is unascertained at the time of any such set-off, the Calculation
Agent may in good faith estimate the amount or value of such obligation, in
which case set-off will be effected in respect of that estimate, and the
relevant party shall account to the other party at the time such obligation or
right is ascertained. For the avoidance of doubt and notwithstanding anything to
the contrary provided in this Section 9(i), in the event of bankruptcy or
liquidation of Counterparty neither party shall have the right to set off any
obligation that it may have to the other party under this Transaction against
any obligation such other party may have to it, whether arising under the
Agreement, this Confirmation or any other agreement between the parties hereto,
by operation of law or otherwise.

 

  (j) Alternative Calculations and Payment on Early Termination and on Certain
Extraordinary Events. If in respect of this Transaction, an amount is payable by
Bank to Counterparty (i) pursuant to Section 12.2, 12.3, 12.6, 12.7 or
Section 12.9 of the Equity Definitions or (ii) pursuant to Sections 6(d) and
6(e) of the Agreement (a “Payment Obligation”), Counterparty may request Bank to
satisfy any such Payment Obligation by the Share Termination Alternative (as
defined below) (except that Counterparty shall not make such an election in the
event of a Nationalization, Insolvency, a Merger Event or Tender Offer, in each
case, in which the consideration to be paid to holders of Shares consists solely
of cash, or an Event of Default in which Counterparty is the Defaulting Party or
a Termination Event in which Counterparty is the Affected Party, other than an
Event of Default of the type described in Section 5(a)(iii), (v), (vi), (vii) or
(viii) of the Agreement or a Termination Event of the type described in
Section 5(b) of the Agreement in each case that resulted from an event or events
outside Counterparty’s control) and shall give irrevocable telephonic notice to
Bank, confirmed in writing within one Currency Business Day, no later than 12:00
p.m. New York local time on the Merger Date, the Announcement Date (in the case
of Nationalization, Insolvency or Delisting), the Early Termination Date or, in
the case of an Additional Disruption Event, the date of cancellation, as
applicable; provided that if Counterparty does not validly request Bank to
satisfy its Payment Obligation by the Share Termination Alternative, Bank shall
have the right, in its sole discretion, to satisfy its Payment Obligation by the
Share Termination Alternative, notwithstanding Counterparty’s election to the
contrary.

 

Share Termination Alternative:

   Applicable and means that Bank shall deliver to Counterparty the Share
Termination Delivery Property on, or within a commercially reasonable period of
time after, the date when the Payment Obligation would otherwise be due pursuant
to Section 12.2, 12.3, 12.6, 12.7 or 12.9 of the Equity Definitions or Sections
6(d) and 6(e) of the Agreement, as applicable (the “Share Termination Payment
Date”), in satisfaction of the Payment Obligation in the manner reasonably
requested by Counterparty free of payment.

Share Termination Delivery Property:

   A number of Share Termination Delivery Units, as calculated by the
Calculation Agent, equal to the Payment Obligation divided by the Share
Termination Unit Price. The Calculation Agent shall adjust the Share Termination
Delivery Property by replacing any fractional portion of a security therein with
an amount of cash equal to the value of such fractional security based on the
values used to calculate the Share Termination Unit Price.

 

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Share Termination Unit Price:

   The value to Bank of property contained in one Share Termination Delivery
Unit, as determined by the Calculation Agent in its discretion by commercially
reasonable means and notified by the Calculation Agent to Bank at the time of
notification of the Payment Obligation. For the avoidance of doubt, the parties
agree that in determining the Share Termination Delivery Unit Price the
Calculation Agent may consider the purchase price paid in connection with the
purchase of Share Termination Delivery Property.

Share Termination Delivery Unit:

   One Share or, if a Merger Event has occurred and a corresponding adjustment
to this Transaction has been made, a unit consisting of the number or amount of
each type of property received by a holder of one Share (without consideration
of any requirement to pay cash or other consideration in lieu of fractional
amounts of any securities) in such Merger Event, as determined by the
Calculation Agent.

Failure to Deliver:

   Applicable

Other Applicable Provisions:

   If Share Termination Alternative is applicable, the provisions of Sections
9.8, 9.9, 9.11, 9.12 and 10.5 (as modified above) of the Equity Definitions will
be applicable, except that all references in such provisions to
“Physically-settled” shall be read as references to “Share Termination Settled”
and all references to “Shares” shall be read as references to “Share Termination
Delivery Units”. “Share Termination Settled” in relation to this Transaction
means that Share Termination Alternative is applicable to this Transaction.

 

  (k) Governing Law. New York law (without reference to choice of law doctrine
other than Title 14 of Article 5 of the New York General Obligations Law).

 

  (l) Waiver of Jury Trial. Each party waives, to the fullest extent permitted
by applicable law, any right it may have to a trial by jury in respect of any
suit, action or proceeding relating to this Transaction. Each party
(i) certifies that no representative, agent or attorney of either party has
represented, expressly or otherwise, that such other party would not, in the
event of such a suit, action or proceeding, seek to enforce the foregoing waiver
and (ii) acknowledges that it and the other party have been induced to enter
into this Transaction, as applicable, by, among other things, the mutual waivers
and certifications provided herein.

 

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  (m) Registration. Counterparty hereby agrees that if, in the good faith
reasonable judgment of Bank, the Shares (“Hedge Shares”) acquired by Bank for
the purpose of hedging its obligations pursuant to this Transaction cannot be
sold in the public market by Bank without registration under the Securities Act,
Counterparty shall, at its election, either (i) in order to allow Bank to sell
the Hedge Shares in a registered offering, make available to Bank an effective
registration statement under the Securities Act and enter into an agreement, in
form and substance satisfactory to Bank, substantially in the form of an
underwriting agreement for a registered secondary offering; provided, however,
that if Bank, in its sole reasonable discretion, is not satisfied with access to
due diligence materials, the results of its due diligence investigation, or the
procedures and documentation for the registered offering referred to above, then
clause (ii) or clause (iii) of this paragraph shall apply at the election of
Counterparty, (ii) in order to allow Bank to sell the Hedge Shares in a private
placement, enter into a private placement agreement substantially similar to
private placement purchase agreements customary for private placements of equity
securities of its size, in form and substance satisfactory to Bank (in which
case, the Calculation Agent shall make any adjustments to the terms of this
Transaction that are necessary, in its reasonable judgment, to compensate Bank
for any discount from the public market price of the Shares incurred on the sale
of Hedge Shares in a private placement), or (iii) purchase the Hedge Shares from
Bank at the Reference Price on such Exchange Business Days, and in the amounts,
requested by Bank.

 

  (n) Tax Disclosure. Effective from the date of commencement of discussions
concerning the Transaction, Counterparty and each of its employees,
representatives, or other agents may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the Transaction
and all materials of any kind (including opinions or other tax analyses) that
are provided to Counterparty relating to such tax treatment and tax structure.

 

  (o) Right to Extend. Bank may delay any Settlement Date or any other date of
delivery by Bank, with respect to some or all of the Options hereunder, if Bank
reasonably determines, in its discretion, that such extension is reasonably
necessary to enable Bank to effect purchases of Shares in connection with its
hedging activity or settlement activity hereunder in a manner that would, if
Bank were Counterparty or an affiliated purchaser of Counterparty, be in
compliance with applicable legal, regulatory or self-regulatory requirements, or
with related policies and procedures applicable to Bank.

 

  (p) Status of Claims in Bankruptcy. Bank acknowledges and agrees that this
Confirmation is not intended to convey to Bank rights against Counterparty with
respect to the Transaction that are senior to the claims of common stockholders
of Counterparty in any U.S. bankruptcy proceedings of Counterparty; provided
that nothing herein shall limit or shall be deemed to limit Bank’s right to
pursue remedies in the event of a breach by Counterparty of its obligations and
agreements with respect to the Transaction; provided, further, that nothing
herein shall limit or shall be deemed to limit Bank’s rights in respect of any
transactions other than the Transaction.

 

  (q) Securities Contract; Swap Agreement. Each of Bank and Counterparty agrees
and acknowledges that Bank is a “financial institution,” “swap participant”
and/or “financial participant” within the meaning of Sections 101(22), 101(53C)
and 101(22A) of the Bankruptcy Code. The parties hereto further agree and
acknowledge (A) that this Confirmation is (i) a “securities contract,” as such
term is defined in Section 741(7) of the Bankruptcy Code, with respect to which
each payment and delivery hereunder is a “settlement payment,” as such term is
defined in Section 741(8) of the Bankruptcy Code, and (ii) a “swap agreement,”
as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect
to which each payment and delivery hereunder is a “transfer,” as such term is
defined in Section 101(54) of the Bankruptcy Code, and (B) that Bank is entitled
to the protections afforded by, among other sections, Sections 362(b)(6),
362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code.

 

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  (r) Additional Provisions. Counterparty covenants and agrees that, as promptly
as practicable following the public announcement of any consolidation, merger
and binding share exchange to which Counterparty is a party, or any sale of all
or substantially all of Counterparty’s assets, in each case pursuant to which
the Shares will be converted into cash, securities or other property,
Counterparty shall notify Bank in writing of the types and amounts of
consideration that holders of Shares have elected to receive upon consummation
of such transaction or event (the date of such notification, the “Consideration
Notification Date”); provided that in no event shall the Consideration
Notification Date be later than the date on which such transaction or event is
consummated.

 

  (s) Receipt or Delivery of Cash. For the avoidance of doubt, following receipt
of Shareholder Approval (as defined in the Indenture) and Counterparty’s
notification to Bank of such receipt concurrently with notice to the Holders (as
defined in the Indenture) of Convertible Notes, other than payment of the
Premium by Counterparty, nothing in this Confirmation shall be interpreted as
requiring Counterparty to receive or deliver cash in respect of the settlement
of the Transaction contemplated by this Confirmation, except in circumstances
where the cash settlement thereof is within Counterparty’s control (including,
without limitation, where Counterparty elects to receive or deliver cash or
fails timely to elect to receive or deliver Share Termination Delivery Property
in respect of the settlement of such Transaction or in those circumstances in
which holders of the Shares would also receive cash).

 

  (t) Payment by Counterparty. In the event that (a) an Early Termination Date
occurs or is designated with respect to the Transaction as a result of a
Termination Event or an Event of Default (other than an Event of Default arising
under Section 5(a)(ii) or 5(a)(iv) of the Agreement) and, as a result,
Counterparty owes to Bank an amount calculated under Section 6(e) of the
Agreement, or (b) Counterparty owes to Bank, pursuant to Section 12.7 or
Section 12.9 of the Equity Definitions, an amount calculated under Section 12.8
of the Equity Definitions, such amount shall be deemed to be zero.

 

  (u) Early Unwind. In the event the sale of the “Option Securities” (as defined
in the Underwriting Agreement) is not consummated with the Underwriters for any
reason, or Counterparty fails to deliver to Bank opinions of counsel as required
pursuant to Section 9(a), in each case by 5:00 p.m. (New York City time) on the
Premium Payment Date, or such later date as agreed upon by the parties (the
Premium Payment Date or such later date, the “Early Unwind Date”), the
Transaction shall automatically terminate (the “Early Unwind”) on the Early
Unwind Date and (i) the Transaction and all of the respective rights and
obligations of Bank and Counterparty under the Transaction shall be cancelled
and terminated and (ii) each party shall be released and discharged by the other
party from and agrees not to make any claim against the other party with respect
to any obligations or liabilities of the other party arising out of and to be
performed in connection with the Transaction either prior to or after the Early
Unwind Date; provided that Counterparty shall purchase from Bank on the Early
Unwind Date all Shares purchased by Bank or one or more of its affiliates in
connection with the Transaction at the then prevailing market price. Each of
Bank and Counterparty represents and acknowledges to the other that, subject to
the proviso included in this Section 9(u), upon an Early Unwind, all obligations
with respect to the Transaction shall be deemed fully and finally discharged.

[Remainder Intentionally Blank]

 

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Counterparty hereby agrees (a) to check this Confirmation carefully and
immediately upon receipt so that errors or discrepancies can be promptly
identified and rectified and (b) to confirm that the foregoing (in the exact
form provided by Bank) correctly sets forth the terms of the agreement between
Bank and Counterparty with respect to the Transaction, by manually signing this
Confirmation or this page hereof as evidence of agreement to such terms and
providing the other information requested herein and immediately returning an
executed copy to Equity Derivatives Documentation Department, Facsimile No.
(212) 428-1980/83.

 

Very truly yours, Goldman, Sachs & Co. By:   /s/ Goldman Sachs Authorized
Signatory Name: Goldman Sachs

 

Accepted and confirmed as of the Trade Date: NuVasive, Inc. By:   /s/ Michael
Lambert Authorized Signatory Name: Michael Lambert

[Additional Bond Hedge Confirmation for GS]