Preview | 1. Sublicense Grant |

This KYPHON-BRI Sublicense Agreement (this ?Agreement?), is made and entered into as of this 19th day of August, 2002 (hereinafter ?Effective Date?), by and between Bonutti Research Inc., an Illinois corporation (hereinafter ?BRI?), and KYPHON Inc., a Delaware corporation (?KYPHON?).

WHEREAS, General Surgical Innovations, Inc. (?GSI?) was assigned, pursuant to the Apogee Agreement (as defined below), and owns certain patents and patent applications disclosing or claiming the ?Bonutti Inventions? (as defined in the Apogee Agreement and set forth on Exhibit A attached hereto and made a part hereof) (such patents, together with any continuation, continuation-in-part, divisional, reissued or reexamined patent thereof, any patent application, or any foreign counterpart application of any such patents and applications, as well as any patents claiming priority to any of the foregoing patents, are sometimes collectively referred to as the ?Licensed Patents?);

WHEREAS, GSI, BRI and Dr. Peter M. Bonutti have entered into a certain Settlement Agreement and Mutual General Release (the ?Settlement?), part of the consideration of which is the execution and performance of a certain GSI-BRI License Agreement (the ?GSI Agreement?) and the right of BRI to enter into this Agreement; and

1.1 Exclusive Sublicense in KYPHON Exclusive Field. BRI hereby grants to KYPHON the exclusive, worldwide, royalty-free right and sublicense to make, have made, use, import, export, offer to sell and sell any product and practice or promote any process or method covered by at least one valid and enforceable claim of the Licensed Patents (such products, processes and/or methods, collectively, the ?Products?) for use within the KYPHON Exclusive Field (as ?KYPHON Exclusive Field? is defined on Exhibit B attached hereto and made a part hereof). KYPHON understands and agrees that BRI?s right to grant the sublicense set forth herein and in section 1.2 derives from the Settlement and the GSI Agreement and that GSI has consented to such grant by BRI to KYPHON pursuant to the GSI Agreement. KYPHON further agrees that BRI shall not be liable or responsible to KYPHON or any Affiliate (as defined herein) in any way

for any breach, default, action or inaction by GSI or any Affiliate thereof, whether under the GSI Agreement or otherwise. As used in this Agreement, the term ?Affiliate? of a party shall mean an entity that owns the majority of equity of, or the majority of its equity is owned by, or is under common ownership with, such party.

1.2 Non-Exclusive Sublicense in Co-Exclusive Field. BRI hereby grants to KYPHON the non-exclusive, worldwide, royalty-free, right and sublicense to make, have made, use, import, export, offer to sell and sell any product and practice any process covered by at least one valid and enforceable claim of the Licensed Patents solely in the Co-Exclusive Field (as defined on Exhibit C) (such rights and license, the ?Co-Exclusive Rights?). The parties agree that any Products which do not fall within the scope of the KYPHON Exclusive Field or the Co-Exclusive Field fall in the Field of General Surgery (as defined on Exhibit D), provided that if a party believes that such Product is in the Exclusive Field or Co-Exclusive Field, it shall notify the other party, as well as GSI. KYPHON, BRI and GSI would then meet to resolve which field is appropriate for such Product. If the issue is not resolved in a reasonable period of time, not to exceed thirty (30) days, the matter will be resolved pursuant to Article 11. In the event of a termination of the GSI Agreement, BRI?s rights hereunder may be assigned to GSI, subject to the exception that GSI shall have no right to further license, sublicense or assign any of BRI?s rights to a third party (except in accordance with the terms of this Agreement) and therefore at that time there would be only GSI and KYPHON with rights in the Co-Exclusive Field.

1.3 Limitations on KYPHON?s Use of Sublicensed Patents. KYPHON understands, acknowledges and agrees that (a) the sublicense set forth in section 1.2 is co-exclusive and the right to make, have made, use, import, export, offer to sell and sell any product and practice any process covered by at least one valid and enforceable claim of the Licensed Patents in the Co-