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EXHIBIT 10.26    
    

 
 

SUPPLY AGREEMENT    
    

        THIS SUPPLY AGREEMENT (the "Agreement") is made and entered into as of this 21st day of January, 2002 (the "Effective Date"), by and between NuVasive, Inc.
("NuVasive"), a Delaware corporation having its principal offices at 10065 Old Grove Road, San Diego, California 92131; and Intermountain Tissue Center ("ITC"), a division of Ohio Valley
Tissue & Skin Center, non-profit organization, with said division having its principal place of business at 615 Arapeen Drive, Suite 105, Salt Lake City, Utah 84108, facsimile
number (801) 583-0957 and e-mail address jpierce@itcutah.org. ITC and NuVasive are sometimes individually referred to as a "Party" and together referred to herein as the
"Parties." 

RECITALS:  

        WHEREAS, ITC procures, processes and distributes certain human allograft tissues for transplantation; 

        WHEREAS, NuVasive desire to engage ITC to develop, process and distribute certain allograft bone for NuVasive, all subject to and in
accordance with specifications and other terms of this Agreement. 

        WHEREAS, ITC and NuVasive, in recognition of the need for and benefits that may result from the availability of human allograft bone
tissues for transplantation, desire to cooperate with each other in the provision, processing and distribution of such tissue. 

AGREEMENT:  

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

1.    Processing and Transfer Responsibilities of ITC.    

        (A)    Processing.    ITC shall from time to time use its best efforts to process, package, label, store and transfer
to NuVasive the human allograft bone listed and more particularly described on Exhibit A hereto (the "Tissues"), as such Exhibit may be amended
by the Parties from time to time, in accordance with the specifications pertaining to the Tissues imposed by NuVasive set forth on Exhibit A (the
"Specifications"). 

        (B)    Change of Specifications.    NuVasive may modify, change or supplement the Specifications upon 60 days'
written notice to ITC or upon the mutual agreement of the parties; provided, however, that any requested modifications, changes or supplements shall not affect existing firm purchase orders unless
both parties agree to such changes. ITC shall notify NuVasive at least 30 days in advance of any change in any processing procedures or protocols. 

        (C)    Forecast and Inventory.    NuVasive shall provide ITC with a month-by-month forecast of
its anticipated Tissue requirements for each calendar year, beginning with the 2002 calendar year, not later than 30 days prior to the commencement of the applicable calendar year. Within
10 days of ITC's receipt of each calendar year forecast, ITC shall indicate whether it anticipates being able to meet such forecast. NuVasive may at any time update any such forecast for any
monthly period(s) beginning 30 days or more following the date NuVasive provides written notice of such update. Such update(s) may be contained in any writing, including a purchase order or an
MRP report. ITC shall use its best efforts to maintain in inventory a stock of a minimum amount of Tissue material equal to the amount forecast by NuVasive for the next month's forecasted volume. For
instance, if the forecast for January through March is 10, 12 and 14 units respectively, then ITC shall keep 12 units on the shelf in January (February's forecast) and 14 units in February (March's
forecast). ITC shall use FIFO (first in, first out) inventory procedures with respect to the Tissues so that older stock is used up first. 

 

        (D)    Inspection of Facilities.    NuVasive shall have the right to inspect the processing facility where the Tissues
are to be processed (the "Facility") between the hours of 9:00 a.m. and 5:00 p.m. on any business day upon giving no less than 24 hours written notice during the term of this
Agreement in order to ensure ITC's continuing compliance with the terms and conditions of this Agreement. The performance of NuVasive's obligations under this Agreement is expressly conditioned upon
NuVasive's ability to regularly inspect the Facility, NuVasive's ability to regularly review ITC's processing practices, and NuVasive's being reasonably satisfied that the Facility and ITC's
processing practices conform to all of requirements set forth in this Agreement and imposed by Governing Law (as defined in Section 4(A)) and all applicable regulations. 

        (E)    Milling Machine.    Subsequent to the execution of this Agreement, but prior to any obligation to perform on
the part of ITC, NuVasive shall provide to ITC at no cost to ITC a milling machine (the "Machine") for use by ITC during the term of this Agreement in the processing of the Tissues and for other use
by ITC in its operations generally. ITC shall maintain the Machine in good working condition while in ITC's use, care or possession, shall perform all maintenance and repairs required to keep the
Machine in such condition, and hereby assumes all responsibility and liability for any loss, theft or destruction of the Machine prior to its return to NuVasive, as well as any damage, injury or harm
caused by the Machine or ITC's use thereof prior to its return to NuVasive. Upon any termination of this Agreement, ITC shall promptly return to NuVasive the Machine in good working condition,
ordinary wear and tear excepted. 

2.    Responsibilities of NuVasive.    

        (A)    Payments.    NuVasive shall promptly pay for the Tissues shipped to it as per the terms of paragraph 3
below. 

        (B)    Specifications.    NuVasive shall provide the written Specifications to ITC in sufficient detail to enable ITC
to process the Tissues as efficiently as possible. 

        (C)    Inspection of Facilities.    ITC shall have the right to inspect the handling and storage facility where the
Tissues are to be stored by NuVasive pending further shipment by NuVasive (the "NuVasive Facility") between the hours of 9:00 a.m. and 5:00 p.m. on any business day upon giving no less
than 24 hours written notice during the term of this Agreement in order to ensure NuVasive's continuing compliance with the terms and conditions of this Agreement. The performance of ITC's
obligations under this Agreement is expressly conditioned upon ITC's ability to regularly inspect the NuVasive Facility, ITC's ability to regularly review NuVasive's handling and storing practices,
and 1TC's being reasonably satisfied that the NuVasive Facility and NuVasive's handling and storage practices conform to all of requirements set forth in this Agreement and imposed by Governing Law
(as defined in Section 12) and all applicable regulations. 

3.    Professional Fees, Purchase Orders, and Terms of Payment.    

        (A)    Professional Fees.    In consideration of services performed by ITC and the Tissues to be sold by ITC, NuVasive
shall pay to ITC per particular type of Tissue as set forth in detail on Exhibit A attached hereto and made a part hereof. ITC will invoice NuVasive for all Tissues shipped to NuVasive as of
the date of each shipment and payment from NuVasive shall be due within 30 days from the date of invoice. 

        (B)    Purchase Orders and Terms of Payment.    NuVasive shall place orders for Tissues by transmitting a written
purchase order via facsimile, e-mail or First Class Mail to ITC at the address, e-mail address or facsimile number identified in the Preamble of this Agreement. The terms and
conditions set forth in such purchase orders shall apply to ITC's fee-for-service to NuVasive and delivery of the Tissues to the end users of the Tissues (the "Customers")
designated by NuVasive, unless any such term or condition conflicts with any term or condition of this Agreement, in which event the terms and conditions of this Agreement shall govern. Except as
otherwise set forth under this 

2

 

Agreement,
payment for the Tissues shall be due to ITC no later than 30 days following date of shipment to NuVasive. NuVasive shall be responsible for invoicing hospitals and collecting payment
from its Customers. NuVasive's obligation to pay ITC shall not be dependent upon to NuVasive's actual collection of revenues from its Customers. 

4.    Delivery and Title.    

        (A)    Timing and Place of Delivery.    The Parties acknowledge and agree that, ITC will ship the Tissues directly to
NuVasive and that NuVasive will maintain an inventory of such Tissues for distribution by NuVasive to its customers. ITC shall use its best efforts to ship the Tissues within twenty-four
(24) hours of the time the purchase order is received if NuVasive requests expedited delivery. If expedited delivery is not requested, ITC shall ship the Tissues in accordance with the time
period specified in the purchase order. ITC shall provide adequate insurance for the Tissues until such Tissues(s) have been received by NuVasive. Title and risk of loss and damage with respect to all
Tissues purchased by NuVasive under this Agreement shall remain with ITC until NuVasive has received the Tissues at its designated address. 

        (B)    Packaging.    All Tissues shall be suitably packed for shipment in containers adequate to insure safe arrival
of the Tissues at NuVasive's designated delivery destination. ITC shall supply all packaging and labeling materials for the Tissues; provided, however, such packaging and labeling must be in
accordance with specifications and format provided by NuVasive. ITC shall mark all containers with necessary shipping and handling information, purchase order numbers and date of shipment. An itemized
packing list shall accompany each shipment, which will also contain customer purchase order number(s), catalog numbers, and serial numbers of the Tissues. 

        (C)    Defective Products/Return.    Within five days of receipt NuVasive will inspect the Tissues in order to
determine their suitability and their compliance with the terms of this Agreement and Governing Law. If NuVasive determines within such limited time that any Tissues do not comply with the
Specifications, Governing Law, or any representation, warranty or other provisions of this Agreement (any such Tissue, a ("Returned Tissue"), NuVasive shall notify ITC of the Returned Tissue, identify
the defects in the Returned Tissue and return the same to ITC at ITC's expense. If at any time the Parties agree, are deemed to agree, or a nonappellable order determines, that any Returned Tissue
does not comply with the Specifications, Governing Law, or any representation, warranty or other provisions of this Agreement, such Returned Tissue shall be deemed to be a "Defective Tissue". ITC
shall have a period of thirty (30) days from receipt of any Returned Tissue during which to evaluate and respond to NuVasive's claim that the Tissue is a Defective Tissue. If NuVasive has not
received a written notice of disagreement from ITC by the end of such thirty (30) day period, the Returned Tissue shall be deemed to be a Defective Tissue. If NuVasive receives a written notice
of disagreement by the end of such thirty (30) day period, the Parties agree to negotiate in good faith regarding whether and/or to what extent the Returned Tissue is a Defective Tissue for a
period of thirty (30) days from NuVasive's receipt of such notice prior to commencing any legal action or pursuing any other remedy with respect to the Returned Tissue. With respect to any
Tissues sold or supplied under this Agreement, ITC shall be prepared to promptly address corrective actions and determine root causes of defects. ITC will report in writing (or by form supplied by
NuVasive) how the root causes have been addressed and corrected within 30 days of being notified of the defect. 

        (D)    Payment of Fee-for-Service of Returned Product.    If NuVasive returns to ITC a
Returned Tissue prior to paying for such Returned Tissue, NuVasive shall have no obligation to pay for the Returned Tissue unless and until the Parties agree or a nonappellable order determines that
the Tissue was not a Defective Tissue. If NuVasive returns a Returned Tissue after paying for such Returned Tissue, NuVasive may, in its discretion (i) offset the fees paid for the Returned
Tissue against any yet unpaid invoice received from ITC, or (ii) require ITC to reimburse NuVasive for the fees paid with respect to the Returned Tissue. If following either (i) or
(ii) above, the Returned Tissue is determined 

3

 

by
agreement of the Parties or a nonappellable order not to be a Defective Tissue, NuVasive shall promptly pay to ITC the fees for the Returned Tissue. 

5.    ITC's Representations, Warranties, and Covenants.    In addition to the other matters set forth herein, ITC hereby represents,
warrants, and covenants, on a continuing basis, to NuVasive as follows: 

        (A)    Compliance with Laws and Specifications.    ITC shall comply fully with the American Association of Tissue
Banks ("AATB") standards and all federal and state laws, regulations, rules and orders (including without limitation those of the Federal Food and Drug Administration (the "FDA")) governing the
recovery of human tissues for, processing, storage, packaging, shipping, labeling and aspects of the production and handling of the Tissues ("Governing Laws"), including, without limitation, the Good
Tissue Banking Practices and labeling requirements contained in 21 C.F.R. Parts
1270 and 1271. ITC represents and warrants that all Tissues will be recovered, processed, stored, packaged, shipped, labeled and otherwise produced and handled in accordance with all applicable
federal and state laws and regulations, AATB standards applicable to human tissues, as well as the Specifications. 

        (B)    Approvals.    ITC shall obtain and maintain, at its cost, all governmental, administrative and other approvals,
licenses, permits and other authorizations and registrations necessary for the operation and conduct of its business and performance of its obligations under this Agreement, including, without
limitation, its accreditation from the American Association of Tissue Banks, FDA tissue establishment registration and listing and all required state licenses. 

        (C)    Due Authorization; Validity.    The execution, delivery and performance of this Agreement have been duly
authorized by all necessary corporate or other action on the part of ITC, and upon execution and delivery, this Agreement will constitute a valid and binding obligation of ITC enforceable against ITC
in accordance with its terms except as enforceability may be limited by bankruptcy, insolvency and other similar laws affecting claims and rights generally or by general equitable principles. 

        (D)    Litigation.    ITC has not been served with or otherwise notified in writing of any judgment, suit, claim,
action, arbitration, legal, administrative, or other proceeding or government investigation, nor to ITC's knowledge are any such actions pending or threatened, with respect to the Tissues or ITC's
assets or business which would materially adversely affect ITC's ability to conduct business or to perform its obligations under this Agreement. 

6.    NuVasive's Representations, Warranties and Covenants.    

        (A)    Compliance with Laws and Specifications.    NuVasive shall comply fully with the American Association of Tissue
Banks ("AATB") standards and all federal and state laws, regulations, rules and orders (including without limitation those of the Federal Food and Drug Administration (the "FDA")) governing the
recovery of human tissues for, storage, packaging, shipping, labeling and aspects of the handling of the Tissues ("Governing Laws"), including, without limitation, the Good Tissue Banking Practices
and labeling requirements contained in 21 C.F.R. Parts 1270 and 1271. NuVasive represents and warrants that all Tissues will be stored, packaged, shipped, labeled and otherwise handled in accordance
with all applicable federal and state laws and regulations, AATB standards applicable to human tissue, as well as the Specifications. 

        (B)    Approvals.    NuVasive shall obtain and maintain, at its cost, all governmental, administrative and other
approvals, licenses, permits and other authorizations and registrations necessary for the operation and conduct of its business and performance of its obligations under this Agreement, including,
without limitation, FDA tissue establishment registration and listing and all required state licenses. 

        (C)    Due Authorization; Validity.    The execution, delivery and performance of this Agreement have been duly
authorized by all necessary corporate or other action on the part of NuVasive, and upon 

4

 

execution
and delivery, this Agreement will constitute a valid and binding obligation of NuVasive enforceable against NuVasive in accordance with its terms except as enforceability may be limited by
bankruptcy, insolvency and other similar laws affecting claims and rights generally or by general equitable principles. 

        (D)    Litigation.    NuVasive has not been served with or otherwise notified in writing of any judgment, suit, claim,
action, arbitration, legal, administrative, or other proceeding or government investigation, nor to NuVasive's knowledge are any such actions pending or threatened, with respect to the Tissues or
NuVasive's assets or business which would materially adversely affect NuVasive's ability to conduct business or to perform its obligations under this Agreement. 

        (E)    Specifications.    The Specifications as set forth on Exhibit A and as amended from time to time by
NuVasive do not infringe upon the patent or other property rights of third party and NuVasive shall defend against any such claims asserted by such third party against ITC. 

7.    Indemnification.    

        (A)  Each
party (the "Indemnifying Party") shall indemnify, defend and hold harmless the other (The "Indemnified Party"), its shareholders, subsidiaries and affiliates, and
its and their respective officers, directors, members, trustees, agents, employees and customers, and their successors and assigns, from and against any and all claims, demands, actions, liabilities,
fees, suits, causes of action, damages, penalties, recoveries and deficiencies, costs and expenses (including, without limitation, attorneys' fees) (collectively "Damages") which arise out of or
relate to (1) any breach by the Indemnifying Party of any of its representations, covenants or warranties set forth in this Agreement, or (2) any negligence by the Indemnifying Party
arising out of, in connection with or resulting from the processing, supply, or transfer of any Tissue. Such indemnification shall not be limited to claims brought by third parties. 

8.    Insurance and Notice of Claims.    

        (A)  ITC
represents and warrants that it is currently insured and covenants that at all times during the term of this Agreement it will maintain a comprehensive general
liability insurance policy (including products liability coverage and payment of attorneys fees coverage) with a financially sound and reputable insurer which is sufficient to adequately protect
against the risks associated with its ongoing business, including the risks which might possibly arise in connection with the transactions contemplated by this Agreement, and including without
limitation, professional liability insurance, with minimum coverage amounts of $2,000,000.00 per occurrence and $4,000,000.00 in the aggregate. ITC agrees to provide NuVasive a copy of its insurance
policy upon request and to provide thirty (30) days advanced written notice prior to terminating any such policy. 

        (B)  NuVasive
represents and warrants that it is currently insured and covenants that at all times during the term of this Agreement it will maintain a comprehensive general
liability insurance policy (including products liability coverage and payment of attorneys fees coverage) with a financially sound and reputable insurer which is sufficient to adequately protect
against the risks associated with its ongoing business, including the risks which might possibly arise in connection with the transactions contemplated by this Agreement, and including without
limitation, professional liability insurance, with minimum coverage amounts of $2,000,000.00 per occurrence and $4,000,000.00 in the aggregate. NuVasive agrees to provide ITC a copy of its insurance
policy upon request and to provide thirty (30) days advanced written notice prior to terminating any such policy. 

        (C)    Notification of Claims.    Each of the Parties shall promptly notify the other Party after becoming aware of
any liability claims regarding the Tissues and any customer complaints or suspected adverse reactions or outcomes concerning the Tissues. Each party agrees to coordinate the evaluation of such events. 

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9.    Confidentiality.    

        (A)    Confidential Information.    The "Confidential Information" of any Party shall mean any information of a
confidential or proprietary nature of such Party and shall include, without limitation, all business, strategy, pricing and marketing information of such Party, all patents, copyrights, trademarks,
service marks, trade dress and other proprietary rights and applications for or with respect to any of the foregoing of such Party, and all discoveries, inventions, improvements, documents,
know-how, proprietary rights and ideas related to any process, method, formula, machine, device, manufacture, composition of matter, plan or design owned or developed by such Party,
whether patentable or not, that the other Party acquires under, through, as a result of or during the term of this Agreement. Notwithstanding the foregoing, a Party's Confidential Information shall
not include any information which: (i) has been published or otherwise becomes a matter of public knowledge by any means other than the other Party's default in the observance or performance of
any term or provision of this Agreement or any other obligation on its part to be observed and performed; (ii) was known to the other Party at the time of such disclosure without a requirement
of confidentiality, as evidenced by its written business records; (iii) is at any time disclosed to the other Party by any person or entity not a party hereto whom the other Party believes,
after reasonable inquiry, has the
right to so disclose the same; or (iv) is required to be disclosed in compliance with any law governmental regulation, or court order, provided that the Party disclosing the same shall notify
the Party to which such information belongs ten (10) days in advance of any such disclosure, if feasible. 

        (B)    NuVasive's Confidential Information.    

          (i)  ITC
hereby confirms that NuVasive has and shall retain the sole right, title and interest in and to NuVasive's Confidential Information. Subject to the conditions,
restrictions and obligations contained in this Agreement, NuVasive hereby grants to ITC a limited, non-exclusive, worldwide, royalty free license (without the right to sublicense or
transfer) to use NuVasive's Confidential Information solely for the purposes of performing ITC's obligations under this Agreement. No other rights or licenses are granted by NuVasive to ITC relating
to NuVasive's Confidential Information or any other proprietary rights of NuVasive. Upon the termination or expiration of this Agreement, the licenses granted herein by NuVasive shall terminate, and
ITC shall cease all further use of NuVasive's Confidential Information or any other proprietary rights of NuVasive except with respect to Tissues that conform to the Specifications and which were
being held by ITC in its inventory at the time of termination. Such inventory may be sold by ITC after the expiration of this Agreement in the ordinary course of its business. 

         (ii)  ITC
shall maintain NuVasive's Confidential Information in confidence and shall not disclose same to any person or entity not a party hereto or use the same for its
benefit or the benefit of any person or entity other than NuVasive. ITC shall maintain complete and accurate written records of NuVasive's Confidential Information, mark same with such legends as
NuVasive may reasonably direct, and promptly deliver the same to NuVasive upon written request upon the expiration or termination hereof or at such other times as NuVasive may request, except that in
any such event, counsel for ITC may retain one copy thereof solely for use should any dispute between the Parties arise. In addition, both during the term and after the expiration or termination of
this Agreement, ITC shall take such other reasonable actions as NuVasive may request to enable NuVasive to publish, protect by litigation or otherwise, or further its title to any of NuVasive's
Confidential Information. 

        (C)    ITC's Confidential Information.    

          (i)  NuVasive
hereby confirms that ITC has and shall retain the sole right, title and interest in and to ITC's Confidential Information. Subject to the conditions,
restrictions and obligations contained in this Agreement, ITC hereby grants to NuVasive a limited, non-exclusive, worldwide, royalty free license to use ITC's Confidential Information
solely for the purposes of exercising 

6

 

NuVasive's
rights and performing NuVasive's obligations under this Agreement and using the Tissues for their intended purpose. No other rights or licenses are granted by ITC to NuVasive relating to
ITC's Confidential Information or any other proprietary rights of ITC. Upon the termination or expiration of this Agreement, the licenses granted herein by ITC shall terminate, and NuVasive shall
cease all further use of ITC's Confidential Information or any other proprietary rights of ITC except with respect to Tissues that conform to the Specifications and which were being held by NuVasive
in its inventory at the time of termination. Such inventory may be sold by NuVasive after the expiration of this Agreement in the ordinary course of its business. 

         (ii)  NuVasive
shall maintain ITC's Confidential Information in confidence and will not disclose same to any person or entity not a party hereto or use same for its benefit
or the benefit of any person or entity other than ITC. NuVasive shall maintain complete and accurate written records of ITC's Confidential information, mark the same with such legends as ITC may
reasonably direct, and promptly deliver the same to ITC upon written request upon the expiration or termination hereof or at such other times as ITC may request, except that in any such event, counsel
for NuVasive may retain one copy thereof solely for use should any dispute between the Parties arise. In addition, both during the term and after the expiration or termination of this Agreement,
NuVasive shall take such other reasonable actions as ITC may request to enable ITC to publish, protect by litigation or otherwise, or further its title to any of ITC's Confidential Information. 

10.    Term and Termination.    

        (A)    Term.    The term of this Agreement shall commence on the Effective Date and continue for a period of three
years following the Effective Date and, unless earlier terminated as provided herein, shall automatically renew for an additional one-year term on each anniversary of the Effective Date
unless either party gives written notice to terminate 60 days prior to completion of the first three year term or additional one-year anniversary date. 

        (B)    Early Termination.    This Agreement may be terminated as otherwise provided in this Agreement, and as follows: 

          (i)  By
either party if the other party fails to perform or otherwise breaches any of its obligations hereunder, by giving notice of its intent to terminate and stating the
grounds therefore. The party receiving such notice shall have thirty (30) days from the receipt thereof to cure the failure or breach, at which time this Agreement shall terminate if such
failure or breach has not been cured. In no event,
however, shall such notice of intention to terminate be deemed to waive any rights to damages or any other remedy which the party giving notice of breach may have as a consequence of such failure or
breach. 

         (ii)  By
NuVasive, if ITC sells all or substantially all of its assets or securities to another person or entity or merges into another person or entity, which termination
shall not be unreasonably exercised by NuVasive. 

        (C)    Effect of Termination.    If this Agreement is terminated, the parties shall be released from all obligations,
duties imposed or assumed hereunder, except as otherwise provided in this Agreement. Termination of this Agreement, for whatever reason, shall not affect the obligation of either party to make
payments for which such party is liable prior to such termination, any remedies of NuVasive under Section 5, any Party's indemnification obligations under Section 7 or the obligations of
confidentiality specified in Section 9 hereof. 

11.    Notices.    All notices required or permitted to be given under this Agreement shall be in writing and shall be addressed to
the Party at the address and/or facsimile number first set forth above (which either party may change at any time upon five days written notice). Notices may be served by certified or registered mail,
postage paid, with return receipt requested, by private courier, prepaid, by telex, 

7

 

facsimile,
or other telecommunication device capable of transmitting or creating a written record, or personally. Mailed notices shall be deemed delivered five days after mailing, properly addressed. 

12.    Governing Law; Venue.    The parties intend that this Agreement shall be governed by and construed in accordance with the
laws of the state of Utah applicable to contracts made and wholly performed within Utah by persons domiciled in Utah and exclusive of choice of law rules. The parties hereby consent and submit to the
exclusive jurisdiction and venue of State of Utah and federal courts located in the Salt Lake County, State of Utah for any litigation arising out of this Agreement. 

13.    Integration; Amendment.    This Agreement and the other documents contemplated hereby constitute the entire agreement of the
parties relating to the subject matter hereof. There are no promises, terms, conditions, obligations, or warranties other than those contained in this Agreement or in such other agreements and
documents. No modification of this Agreement (by purchase order, invoice or otherwise (except as provided in Section 2(C)) shall be of any force or effect unless such modification is in
writing, refers specifically to this Agreement, contains language indicating it is a modification of this Agreement and is signed the party alleged to be bound thereby. 

14.    Waiver.    No provision of this Agreement shall be deemed to have been waived unless such waiver is in writing signed by the
waiving Party. No failure by any Party to insist upon the strict performance of any provision of this Agreement, or to exercise any right or remedy consequent upon a breach thereof, shall constitute a
waiver of any such breach of such provision or of any other provision. No waiver of any provision of this Agreement shall be deemed a waiver of any other provision of this Agreement or a waiver of
such provision with respect to any subsequent breach, unless expressly provided in writing. 

15.    Attorney's Fees.    If any suit or action arising out of or related to this Agreement is brought by any Party, the prevailing
Party shall be entitled to recover the costs and fees (including reasonable attorneys' fees) incurred by such Party in such suit or action, including without limitation any post-trial or
appellate proceeding. 

16.    Exhibits.    Each Exhibit to this Agreement shall be considered a part hereof as if set forth herein in full. 

17.    Continuing Agreement; Binding Effect.    This Agreement is a continuing agreement and shall remain in full force and effect
until all obligations of the parties hereunder have been fully performed or otherwise discharged, and shall bind and inure to the benefit of, and be enforceable by, the Parties hereto and their
respective successors, heirs, and permitted assigns. 

18.    Assignment.    No Party may assign this Agreement, in whole or in part, without the written consent of the other party. 

19.    No Third-Party Beneficiary Rights.    No person not a party to this Agreement is an intended beneficiary of this Agreement,
and no person not a party to this Agreement shall have any right to enforce any term of this Agreement. 

20.    Counterparts.    This Agreement may be executed in any number of counterparts, all of which when taken together shall
constitute one agreement binding on all parties, notwithstanding that all parties are not signatories to the same counterpart. 

21.    Invalidity.    The invalidity or unenforceability of any term or provision of this Agreement shall not affect the other terms
and provisions, and such invalid or unenforceable term or provision will, in all events, be construed and enforced to the fullest extent permissible under applicable law. 

22.    Force Majeure.    Neither Party shall be responsible for any loss or damage resulting from any delay in performing or failure
to perform any provisions of this Agreement, so long as any such failure or delay arises from a fire, explosion, flood, storm, earthquake, tidal wave, war, military operation, 

8

 

national
emergency, civil commotion, strike or other difference with workers or unions that is beyond the control of the Parties hereto. 

23.    Relationship.    The Parties are acting independently and shall at all times act as independent contractors of each other in
the manufacture and sale of the Products and are not partners, joint venturers, agents, or legal representatives of each other, for any purpose. Neither Party shall have any right or power to act for
or bind the other, in any respect, to pledge its credit, to accept any service of process upon it, or to receive any notices of any nature whatsoever. 

24.    Publicity.    Neither Party shall initiate any publicity, news release or other announcement, written or oral, whether to the
public or press, to stockholders or otherwise, relating to this Agreement, to any amendment hereto or to performance hereunder without the prior written consent of the other, except as may be
required, in the judgment of either parties legal counsel, to comply with the requirements of any applicable law, including, but not limited to, any disclosures required by state or federal securities
laws. 

        IN
WITNESS WHEREOF, the parties hereto have caused this Supply Agreement to be duly executed and effective as of the date and year first written above. 

	"NuVasive"	 	NuVasive, Inc.,

a Delaware corporation
	

 	
 	

By:	
 	

/s/ illegible

	 	 	Its:	 	President and CEO

	

"ITC"	
 	

Intermountain Tissue Center; a Non-profit Corporation
	

 	
 	

By:	
 	

/s/ illegible

	 	 	Its:	 	Executive Director

9

 

 Exhibit A  

	 
	 	Products

	 
	 	NuVasive

Price
	 	ITC

Price

	Cervical Allograft	 	***	 	***
	Biportal Lumbar Allograft	 	***	 	***
	Uniportal Lumbar Allograft	 	***	 	***

	***
	Material
has been omitted pursuant to a request for confidential treatment. 

10

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EXHIBIT 10.26

SUPPLY AGREEMENTQuickLinks
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EXHIBIT 10.38    
    

 
 

CLINICAL ADVISOR, PATENT PURCHASE, AND DEVELOPMENT AGREEMENT    
    

        THIS AGREEMENT ("Agreement") is entered into as of March 31, 2004 (the "Effective Date"), by and between James L. Chappuis ("Dr. Chappuis") and
NuVasive, Inc., a Delaware corporation ("NuVasive"). Dr. Chappuis and NuVasive agree as follows: 

        1.    Description of Services.    NuVasive hereby retains Dr. Chappuis with respect to the field of
neurophysiology (e.g. pedicle screw testing, and nerve root retraction), posterior fixation, and cervical plate systems ("Field") and Dr. Chappuis hereby agrees to perform the following
services: (a) advising NuVasive regarding the design, development and testing NuVasive products within the Field; (b) organizing and developing clinical studies to engage other
physicians to evaluate the design of, and facilitate gathering clinical information regarding, NuVasive products within the Field; (c) suggesting new concepts or directions that might be
appropriate for further investigation or development; (d) educating other physicians about NuVasive products within the Field; (e) testing or directing the testing of NuVasive products
within the Field, including bench lab testing, and/or animal lab testing, and/or clinical testing; (f) serving on the Clinical Advisory Board of NuVasive, which includes meeting periodically
with other clinicians to provide input on NuVasive product direction and attending the annual Clinical Advisory Board meeting; and (g) preparing scientific papers on NuVasive products within
the Field for publication and presentation by Dr. Chappuis ("Services"). Dr Chappuis' Services may be rendered telephonically or at mutually convenient locations. Should Dr. Chappuis'
Services exceed 16 hours per month, NuVasive shall pay Dr. Chappuis a consulting fee of $150/hour, to be invoiced monthly by Dr. Chappuis. Dr. Chappuis agrees that the
exclusivity of this Agreement prohibits Dr. Chappuis from working with any other party with respect to systems or methods in the Field. 

        2.    Compensation    

        A.    Stock Options.    In exchange for the services set forth in Section 1 above, NuVasive shall issue
non-statutory stock options to purchase *** shares of Common Stock pursuant to its 1998 Stock Option Plan to Dr. Chappuis, subject to the Stock Option Agreements attached hereto as
Exhibit A. These Stock options shall vest over a four-year period. 

        B.    Publication Fee.    For each scientific publication approved in advance by NuVasive and submitted for
publication by Dr. Chappuis during the term of the Agreement, NuVasive shall pay Dr. Chappuis a Publication Fee of *** Dollars ($***) payable within thirty (30) days of submission
for publication. 

        C.    Other Expenses.    NuVasive shall reimburse Dr. Chappuis for all reasonable expenses actually incurred
and reasonably documented which are incidental to the services performed hereunder. 

        3.    Chappuis Pressure Sensing Nerve Retractor:    

        A.    Patent Purchase.    Dr. Chappuis agrees to and hereby does sell and transfer to NuVasive his entire
right, title, and interest in U.S. Patent No. 5,769,781 entitled "Protector Retractor" ("the '781 Patent"). As a precondition to this transfer, Dr. Chappuis warrants that he is the owner
of the entire right, title, and interest in the '781 Patent and that he has not previously assigned or licensed the '781 Patent and is not aware of any infringement issues or adverse claims of
ownership to the '781 Patent. Subject to the preceding warrant, NuVasive agrees to: (1) purchase the '781 Patent from Dr. Chappuis for *** Dollars ($***); and (2) pay on a
quarterly basis to Dr. Chappuis a royalty of *** percent (*** %) of Net Sales of any NuVasive nerve root retractor having EMG and pressure sensing capabilities ("Combination Nerve Root
Retractor") and be based on both the EMG and pressure sensing functionalities. As used herein, "Net Sales" shall be defined as the actual invoiced price billed to the hospital and/or other
professional end-users of 

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has been omitted pursuant to a request for confidential treatment. 

 

the
Combination Nerve Root Retractor, net of: sales commissions, returns, transportation charges and any applicable taxes. The royalty shall be paid to Dr. Chappuis within thirty
(30) days of the end of each
calendar quarter, and shall remain payable and due Dr. Chappuis for the period during which all patent claims in the '781 Patent, or any, later acquired patent rights to the Combination Nerve
Root Retractor developed under this Agreement, remain valid and enforceable. The acceptance by Dr. Chappuis of any of the statements furnished or payments hereunder shall not preclude
Dr. Chappuis from questioning the correctness at any time of any payments or statements. Upon reasonable notice and during regular business hours, NuVasive shall from time to time (but no more
frequently than twice a year) make available its records of Net Sales and its calculations or payments to Dr. Chappuis (including its records of returns, transportation charges and any
applicable taxes) for audit at Dr. Chappuis' expense by independent representatives selected by Dr. Chappuis to verify the accuracy of the payments provided to Dr. Chappuis. If
such inspection reveals an underpayment of payments to Dr. Chappuis, NuVasive shall immediately pay to Dr. Chappuis the amount owing to him in accordance with the results of the
inspection. Upon discovery of an understatement in the payments of ten percent (10%) or more, NuVasive shall reimburse Dr. Chappuis for expenses connected with such inspection, including but
not limited to, reasonable accounting, auditing, and legal fees and costs, as well as interest on the unreported and unpaid payment. 

        B.    Proof of Concept.    NuVasive shall have a period of one hundred eighty (180) days from the Effective
Date to perform (with the assistance of Dr. Chappuis) clinical proof-of-concept testing ("Proof of Concept Period") regarding the Combination Nerve Root Retractor. In
the event the Combination Nerve Retractor successfully passes the Proof of Concept (as determined by NuVasive in good faith), NuVasive agrees to pay Dr. Chappuis *** Dollars ($***). 

        C.    Commercialization Period and Reversion of Patent Rights.    NuVasive shall have a period of eighteen
(18) months from the Effective Date to commercialize a Combination Nerve Root Retractor ("Commercialization Period"), unless mutually agreed upon by the Parties in writing to extend the
Commercialization Period or unless the lack of commercialization is caused by delays in obtaining FDA clearance for the Combination Nerve Root Retractor. In the instance NuVasive fails to introduce a
Combination Nerve Root Retractor within the Commercialization Period (as may be extended), NuVasive agrees to grant the '781 Patent back to Dr. Chappuis. Dr. Chappuis agrees that, as a
precondition to the grant back of the '781 Patent, NuVasive shall be entitled to receive a patent reversion fee of *** *** Dollars ($***). 

        4.    Independent Contractor.    Dr. Chappuis' relationship with NuVasive shall be that of an independent
contractor and nothing in this Agreement shall be construed to create an employer-employee relationship between NuVasive and Dr. Chappuis. 

        5.    No Conflict with Existing Agreements.    NuVasive hereby states that NuVasive does not desire to acquire from
Dr. Chappuis any secret or confidential know-how or information which Dr. Chappuis may have acquired from others. Accordingly, Dr. Chappuis represents and warrants
that Dr. Chappuis is free to divulge to NuVasive, without any obligation to, or violation of any right of others, any and all information, practice or techniques which Dr. Chappuis will
describe, demonstrate, divulge or in any other manner make known to NuVasive during Dr. Chappuis' performance of services hereunder. 

        6.    Inventions/Copyrights.    

        A.    Improvement Inventions Within Field.    Dr. Chappuis warrants that Dr. Chappuis shall promptly and
fully disclose and assign to NuVasive all inventions made by Dr. Chappuis which are improvements on current NuVasive products and/or products in development (Improvement Inventions) resulting
from or arising out of Dr. Chappuis' Services hereunder and relating to the 

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has been omitted pursuant to a request for confidential treatment. 

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Field,
and Dr. Chappuis will, if NuVasive shall so request, assist in every proper way (at the expense of NuVasive) to obtain for the benefit of NuVasive patents on such Improvement Inventions
in any and all countries); all such Improvement Inventions to be and remain the sole property of NuVasive whether or not disclosed, assigned or patented. Dr. Chappuis represents and warrants
that, Dr. Chappuis has no contractual or other obligations to any third party which preclude or in any way encumber the right to assign to NuVasive the full and exclusive right, title and
interest in and to any and all Improvement Inventions made by Dr. Chappuis resulting from or arising out of Dr. Chappuis' Services hereunder. As used in this Agreement, the term
"Improvement Inventions" means any and all inventions, discoveries, designs, formulas, technology, improvements, trade secrets, processes, techniques and know-how, related to the Field,
whether or not patentable, which are invented, conceived, discovered, developed or reduced to practice by Dr. Chappuis, either alone or jointly with others, and result from or arise out of
Dr. Chappuis' Services hereunder and which amount to improvements to current NuVasive products and/or products in development. Dr. Chappuis agrees that any copyrightable works created
by: Dr. Chappuis (in whole or in part, either alone or jointly with others) resulting from or arising out of Dr. Chappuis' Services hereunder and relating to the Field are "works made
for hire" for NuVasive as that term is defined and used in the United States Copyright Act, Title 17 of the United States Code. In the event that such "work made for hire" designation is challenged,
Dr. Chappuis hereby assigns any and all of his rights to such copyrightable works to NuVasive, which assignment shall be effective for any such copyrightable work as of the date of its
creation. Dr. Chappuis further agrees that if NuVasive is unable because of Dr. Chappuis' unavailability, dissolution, mental or physical incapacity, or for any other reason, to secured
Dr. Chappuis' signature to apply for or to pursue any application for any United States or foreign patents or mask work or copyright registrations covering the Inventions assigned to NuVasive
above, then Dr. Chappuis hereby irrevocably designates and appoints NuVasive and its duly authorized officers and agents as its agent and attorney in fact, to act for and in its behalf and
stead to execute and file any such applications and
to do all other lawfully permitted acts to further the prosecution and issuance of patents, copyright and mask work registrations thereon with the same legal force and effect as if executed by
Dr. Chappuis, as the case may be. 

        B.    Other Inventions Outside Field.    Dr. Chappuis warrants and agrees to provided NuVasive a right of first
negotiation regarding each Other Invention developed or conceived during the course of this Agreement ("Right of First Negotiation"). As used in this Agreement, the term "Other Invention" means any
and all inventions, discoveries, designs, formulas, technology, improvements, trade secrets, processes, techniques and know-how outside the Field, whether or not patentable, which are
invented, conceived, discovered, developed or reduced to practice by Dr. Chappuis, either alone or jointly with others or which otherwise fall outside the term Improvement Inventions as set
forth in Section 6.B above. As part of this Right of First Negotiation, Dr. Chappuis shall provide written notice ("Notice") promptly following the invention, conception, discovery,
development, or reduction to practice of each Other Invention, including a written disclosure of the Other Invention in sufficient detail to convey an adequate understanding of said Other Invention.
NuVasive shall have an exclusive evaluation period of sixty (60) days ("Evaluation Period") following receipt of the Notice to render a due diligence assessment, project evaluation and reach a
separate and final royalty agreement with Dr. Chappuis concerning the Other Invention. During the Evaluation Period, Dr. Chappuis agrees: (i) to act in good faith and provide full
cooperation to NuVasive to facilitate completion of its due diligence assessment and project evaluation; (ii) to maintain confidentiality as to the existence of the Evaluation Period and/or
Right of First Negotiation with NuVasive; and (iii) to refrain from discussing, contacting, and/or negotiating with any third-party regarding the Other Invention. 

        7.    NuVasive Materials and Confidentiality.    Dr. Chappuis recognizes that all NuVasive Materials received
by Dr. Chappuis during the period of this Agreement are and shall be the exclusive property of NuVasive. Dr. Chappuis agrees to keep the same at all times in strict confidence and under
his custody and control. Dr. Chappuis shall surrender such materials to NuVasive immediately upon 

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request
or termination under paragraph 8. "NuVasive Materials" are documents or other media or tangible items that contain or embody proprietary information or any other information concerning
the business, operations, or plans of NuVasive, whether such documents have been prepared by Dr. Chappuis or by others, and shall be treated with strict confidentiality by Dr. Chappuis.
Dr. Chappuis further agrees to treat as confidential and secret all NuVasive Proprietary Information that has been or may hereafter be disclosed, directly or indirectly, to the
Dr. Chappuis, either orally, in writing or through inspection. Dr. Chappuis agrees not to use NuVasive Proprietary Information in any way for their own purpose or benefit or those of any
third party, nor disclose to anyone any Proprietary Information received. Nothing in this Agreement is intended to grant or transfer any rights to Recipient under any patent or copyright, or any
rights in or to the NuVasive Proprietary Information "NuVasive Proprietary Information" is any information, data and know-how relating to the design, development, manufacturing and
marketing of the NuVasive's products as well as operational, financial and business information about the NuVasive. Nothing contained in this Agreement shall in any way restrict or impair the
Dr. Chappuis' right to use, disclose or otherwise deal with, any NuVasive Proprietary Information which: (a) at the time of disclosure is generally available to the public or after the
time of disclosure becomes generally available to the public through no wrongful act of the Dr. Chappuis; (b) was in the Dr. Chappuis' possession prior to the time of disclosure
and was not acquired, directly or indirectly, from NuVasive; and (c) is made available to the Dr. Chappuis by others who did not acquire such Proprietary Information, directly or
indirectly, from NuVasive. 

        8.    Term and Termination.    The term of this Agreement shall be for ten (10) years. Dr. Chappuis and
NuVasive agree that this Agreement may be terminated by either NuVasive or Dr. Chappuis in the event of a breach which is not remedied within a reasonable time period, by giving thirty
(30) days written notice of such termination to the other party per paragraph 8. Upon termination of this Agreement, NuVasive's obligation to pay any compensation, except for services or
expenses already accrued or incurred, shall forthwith cease and terminate. Termination of this Agreement for any reason shall not affect Dr. Chappuis' obligations under paragraphs 5, 6 and 7. 

        9.    Notices.    All payments, notices and other communications made hereunder shall be in writing and sent by First
Class mail, facsimile, or email to the parties at such address as set forth below. 

        10.    Governing Law.    This agreement shall be governed by and construed in accordance with the laws of the state of
California. 

        11.    Entire Agreement.    This Agreement (together with documents and agreements entered into herewith) constitutes
the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings. Each party to this
Agreement acknowledges that no representations, inducements, promises or agreements have been made by any party, or any one acting on behalf of any party, that are not embodied in this Agreement with
respect to the subject matter hereof. 

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        IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. 

	NuVasive, Inc.	 	Dr. Chappuis
	

By	
 	

/s/  ALEXIS LUKIANOV      
 Alexis V. Lukianov

President and CEO

NuVasive, Inc.

10065 Old Grove Road

San Diego, CA 92131	
 	

By	
 	

/s/  JAMES L. CHAPPUIS      
 James L. Chappuis, M.D.

 
 
 

	

Date:	
 	

3-31-04
	
 	

Date:	
 	

3/31/04

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QuickLinks

EXHIBIT 10.38

CLINICAL ADVISOR, PATENT PURCHASE, AND DEVELOPMENT AGREEMENT

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