Exhibit 10.1

ASSIGNMENT AND LICENSE AGREEMENT

THIS AGREEMENT (this “Agreement”) is made and entered into as of November 28, 2007, by and between Inspire Medical Systems, Inc. (“Inspire”), a Delaware corporation, and Medtronic, Inc., a Minnesota corporation (“Medtronic”).

WITNESSETH:

WHEREAS, Medtronic and Inspire have agreed that in order to enable Inspire to develop and distribute products in the Field, as defined below, on a world-wide basis, Medtronic will transfer to Inspire certain assets for Inspire’s use in connection with the Field (such transfer and related transactions between Medtronic and Inspire, to be known herein as the “Spin-Out”).

WHEREAS, in connection with the Spin-Out, Medtronic and Inspire have entered into an investment agreement of even date herewith whereby Medtronic shall make certain investments in Inspire (the “Investment Agreement”); and

WHEREAS, in connection with the Spin-Out, Medtronic agrees to assign to Inspire, the Assigned Patents (as defined herein) and Trademarks (as defined herein) and to license to Inspire the Technical Information and Licensed Patents (all as defined herein) in the Field (as defined herein), subject to the terms and conditions of this Agreement.

AGREEMENTS:

NOW THEREFORE, in consideration of the representations, warranties, covenants and agreements contained herein, and for other valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties mutually agree as follows:

ARTICLE 1
DEFINITIONS

1.1)                           Specific Definitions. As used in this Agreement, the following definitions and terms shall have the designated meanings:

“Affiliate” has the meaning set forth in the Investment Agreement.

“Agreement” means this Agreement and all Exhibits attached hereto.

“Assigned Patents” means (a) the patents listed on Exhibit A; and (b) all continuation, divisional , re-issue or re-examination applications that may be filed based on the patents listed on Exhibit A.

“Base IP” means Intellectual Property owned by, or licensed to (with the right to sublicense), Inspire that has application in the Field. For the avoidance of doubt, Base IP includes the Assigned Patents and the Licensed Patents.

“Closing” has the meaning set forth in the Investment Agreement.

“Confidential Information” has the meaning set forth in the Investment Agreement.

“Field” means the electrical stimulation of the upper airway for the treatment of obstructive sleep apnea.

“Grant-Back Base IP” means any Base IP that is owned by, or licensed to (with the right to sublicense), Inspire at any time during the period beginning on the Initial Closing Date and ending on the date that the Noncompetition Period ends.

“IDEA Disclosures” means the IDEA disclosures identified on Exhibit B-1.

“IDEA Disclosure Patents” means: (a) any patent applications filed by, or on behalf of, Inspire, or its Affiliates, that are based upon, or that contain subject matter that is related to the subject matter of, any IDEA Disclosures; (b) any patents which issue from any of the patent applications of subpart (a); and (c) all continuation, divisional, re-issue or re-examination applications that may be filed based on the patents and patent applications of subparts (a) and (b), together with any patents that may issue based thereon.

“Improvement Patents” means any patent or patent application included in the Base IP: (a) that claims, or could claim, priority, either directly or indirectly, from any of the patents or patent applications included in the Assigned Patents or Licensed Patents; or (b) from which any of the patents or patent applications included in the Assigned Patents or Licensed Patents claims, or could claim, priority, either directly or indirectly.

“Initial Closing Date” has the meaning set forth in the Investment Agreement.

“Insolvent” with respect to a party means that such party, makes an assignment for the benefit of creditors, files, or has filed against it involuntarily, a petition for relief under any applicable code, or goes into receivership.

“Intellectual Property” has the meaning set forth in the Investment Agreement.

“Indemnifiable Losses” has the meaning set forth in Section 5.1.

“Knowledge” has the meaning set forth in the Investment Agreement.

“L169 IC” means the integrated circuit that is assembled onto the hybrid assembly and further assembled into the 3024 Implantable Pulse Generator as defined in the Development Agreement.

“Licensed Patents” means (a) the patents and patent applications listed on Exhibit B; (b) any patents which issue from the patent applications listed on Exhibit B; (c) all continuation, divisional, re-issue or re-examination applications that may be filed based on the patents and patent applications listed on Exhibit B, together with any patents that may issue based thereon; and (d) any IDEA Disclosure Patents.

“Product Liability” has the meaning set forth in the Investment Agreement.

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“Products” mean the products set forth in the Development Agreement.

“Sale Transaction” has the meaning set forth in the Investment Agreement.

“Software” means software designs necessary to drive the functions of the physician and patient programmers as well as software necessary to drive the test equipment that evaluates the functionality of the Products.

“System” means a device for use in the Field that includes a 3024 Implantable Pulse Generator (as defined in the Development Agreement), a 3063 Stimulation Lead, and a Pressure Sensor Capsule (as defined in the Development Agreement).

“Technical Information” means the information specifically set forth on Exhibit C as it relates to the 3063 Stimulation Lead, the L169 IC, and the Software, and only to the extent such information is required to develop, manufacture, and market products for use in the Field, as well as to ensure compliance to Food and Drug Administrative (FDA) Quality System Regulations and specifically, 21 C.F.R. Part 820, Sections 820.180, 820.181 and 180.184. Technical Information specifically excludes any information relating to Medtronic’s chronicle lead. All Technical Information disclosed under this Agreement shall be considered Confidential Information.

“3063 Stimulation Lead” means the stimulation lead incorporating a full cuff with three electrodes in a guarded bi-polar configuration with a lead body and connector to interface with the 3024 Implantable Pulse Generator.

“Trademarks” means the trademark and trademark applications, together with any registrations that may issue based thereon, set forth in Exhibit D.

1.2)                           Definitional Provisions.

(a)                                 The words “hereof,” “herein,” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provisions of this Agreement.

(b)                                 The terms defined in the singular shall have a comparable meaning when used in the plural, and vice versa. Terms referring to a masculine gender shall be deemed to refer to the feminine or neuter genders, as applicable.

(c)                                  The term “including” is not limiting and, unless preceded by the word “not,” has the meaning “including, without limitation.”

(d)                                 References to an “Exhibit” or to a “Schedule” are, unless otherwise specified, to one of the Exhibits or Schedules attached to or referenced in this Agreement, and references to an “Article” or a “Section” are, unless otherwise specified, to one of the Articles or Sections of this Agreement.

(e)                                  The term “person” means any individual, partnership, firm, corporation, limited liability company, association, trust, unincorporated organization, governmental department or agency, or other entity, as well as any syndicate or group that would be

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deemed to be a person under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.

(f)                                   The term “dollars” or “$” shall refer to the currency of the United States of America.

(g)                                  All references to time shall refer to Minneapolis, Minnesota time.

1.3)                           Other Terms. Other terms may be defined elsewhere in the text of this Agreement and shall have the meaning indicated throughout this Agreement.

ARTICLE 2
ASSIGNMENT AND LICENSE

2.1)                           Assignment. Subject to the terms and conditions of this Agreement, Medtronic hereby assigns to Inspire the Assigned Patents, the Trademarks and the goodwill associated with the Trademarks. Medtronic will execute the recordable assignment forms provided in Exhibit E on the Initial Closing Date.

2.2)                           Technical Information License Grant. Subject to the terms and conditions of this Agreement, Medtronic agrees to grant, and hereby grants, to Inspire a co-exclusive, worldwide, royalty-free, perpetual, irrevocable, non-sublicensable and non-transferable (except as set forth below) license to the Technical Information to make, have made, use, import, offer to sell and sell products in the Field, and to practice methods in the Field. Medtronic agrees that the co-exclusive license rights granted to Inspire under this Section 2.2 shall be exclusive to Inspire unless and until Inspire becomes Insolvent at which point Medtronic may also exercise its co-exclusive rights to practice in the Field. Inspire may not transfer Technical Information except as provided for as part of a Sales Transaction. Nothing set forth herein shall prevent Inspire from granting rights to distribute its products through all standard commercial means, including granting distribution rights to dealers, distributors, agents and other third parties who are in the business of distributing products such as those developed by Inspire.

2.3)                           Patent License Grant. Subject to the terms and conditions of this Agreement, Medtronic agrees to grant, and hereby grants, to Inspire a co-exclusive, worldwide, royalty-free, perpetual, irrevocable, non-sublicensable and non-transferable (except as set forth below) license to the Licensed Patents to make, have made, use, import, offer to sell and sell products in the Field, and to practice methods in the Field. Medtronic agrees that the co-exclusive license rights granted to Inspire under this Section 2.3 shall be exclusive to Inspire unless and until Inspire becomes Insolvent at which point Medtronic may also exercise its co-exclusive rights to practice in the Field. Inspire may not transfer the license granted to it under this Section 2.3 except as provided for as part of a Sales Transaction. The parties acknowledge that as part of its license grant under this Section 2.3, Inspire shall have the right, but not the obligation, to prepare and file, or have prepared and filed on its behalf, at Inspire’s sole cost, IDEA Disclosure Patents.

2.4)                           Co-Exclusive Licenses. The licenses granted to Inspire under Section 2.2 and Section 2.3 shall be co-exclusive licenses, meaning that Medtronic shall also have the worldwide right under the Technical Information and Licensed Patents to make, have made, use, market, import, offer for sale and sell products in the Field, and to practice methods in the Field, but

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Medtronic shall not have the right to grant any further licenses to such Technical Information and Licensed Patents in the Field. Medtronic agrees that it shall not exercise its license rights in such Technical Information and Licensed Patents in the Field unless and until Inspire becomes Insolvent.

2.5)                           License Restrictions.

(a)                                 During the term of the Supply Agreement, Inspire shall not exercise its rights under the license granted in Section 2.3 with respect to having Products made in the Field except as permitted under the Supply Agreement.

(b)                                 The license granted pursuant to Section 2.3 shall not be used in such a way as to manufacture Products on an original equipment manufacturer basis (“OEM basis”) for any person or entity without the prior written approval of Medtronic, which may not be unreasonably withheld. The term “OEM basis” includes, without limitation, the manufacture and sale of a product to any person or entity for (i) incorporation into or sale with or as such other person’s or entity’s product, or (ii) the resale of such product by such person or entity under trademarks other than those owned by Inspire. It is the intent of the parties that the licenses granted herein be used for the sole and exclusive benefit of Inspire and that all licensing of third parties shall be the sole right of Medtronic in its sole and absolute discretion.

2.6)                           Restrictions on Use. Inspire will use reasonable efforts to ensure that all Products manufactured by or for Inspire or sold by Inspire are not used outside of the Field. Without limiting the foregoing, if Inspire has Knowledge that the manufacture, use, sale, import, or other distribution of products manufactured by or for Inspire or sold by Inspire are, or likely will be, in violation of the licenses granted herein, or if Medtronic notifies Inspire of any such violation, then Inspire shall immediately, at Inspire’s sole expense, take reasonable steps to attempt to prohibit or terminate such violation.

2.7)                           Medtronic Licenses to Intellectual Property.

(a)                                 Inspire agrees to grant, and hereby grants, to Medtronic and its Affiliates an exclusive, worldwide, royalty-free, perpetual, irrevocable, sublicensable and transferable license to the Assigned Patents to make, have made, use, import, offer to sell and sell products outside of the Field, and to practice methods outside of the Field.

(b)                                 Inspire agrees to grant, and hereby grants, to Medtronic and its Affiliates an exclusive, worldwide, royalty-free, perpetual, irrevocable, sublicensable and transferable license to any: (a) Improvement Patents; (b) Base IP covering the System; and (c) Grant-Back Base IP; each of (a), (b) and (c) to make, have made, use, import, offer to sell and sell products outside of the Field, and to practice methods outside of the Field.

(c)                                  Inspire agrees to grant, and hereby grants, to Medtronic and its Affiliates a co-exclusive, worldwide, royalty-free, perpetual, and irrevocable license to the Assigned Patents to make, have made, use, import, offer to sell and sell products in the Field, and to practice methods in the Field. Medtronic agrees that it shall not exercise its license rights granted it under this Section 2.7(c) unless and until Inspire becomes Insolvent.

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(d)                                 Inspire agrees to grant, and hereby grants, to Medtronic and its Affiliates a co-exclusive, worldwide, royalty-free, perpetual, and irrevocable license to the Licensed Patents to make, have made, use, market, import, offer for sale and sell products in the Field, and to practice methods in the Field. Medtronic agrees that it shall not exercise its license rights granted it under this Section 2.7(d) unless and until Inspire becomes Insolvent.

(e)                                  Inspire agrees to grant, and hereby grants, to Medtronic and its Affiliates a co-exclusive worldwide, royalty-free, perpetual, and irrevocable license to any Base IP (other than the Base IP which is licensed to Medtronic under Section 2.7(c) and 2.7(d)) to make, have made, use, import, offer to sell and sell products in the Field, and to practice methods in the Field. Medtronic agrees that it shall not exercise its license rights granted it under this Section 2.7(e) unless and until Inspire becomes Insolvent.

(f)                                   The licenses granted to Medtronic under Sections 2.7(c), 2.7(d) and 2.7(e) shall be co-exclusive, meaning that Inspire shall also have the worldwide right to make, have made, use, market, import, offer for sale and sell products in the Field, and to practice methods in the Field, but Inspire shall not have the right to grant any further licenses to such Intellectual Property in the Field.

2.8)                           No Other Rights. Inspire acknowledges and agrees that, as between the parties, Medtronic owns all right, title and interest, including all Intellectual Property Rights, in and to the Licensed Patent Rights, Technical Information and Medtronic’s Confidential Information, and that under this Agreement, Inspire shall acquire no right, title, or interest in or to any of the foregoing, or to any other Intellectual Property Rights of Medtronic, by implication, estoppel or otherwise, other than the license rights expressly granted herein.

2.9)                           Non-Compete.

(a)                                 Except as Medtronic is otherwise permitted or required to perform certain obligations to the benefit of Inspire as set forth herein or in any of the other agreements entered into between Medtronic and Inspire in connection with the Spin-Out (the “Spin-Out Documents”), for a period commencing on the Initial Closing Date and ending on the fifth (5th) anniversary of the Initial Closing Date (the “Noncompetition Period”), neither Medtronic nor its Affiliates shall: (i) market, sell or have sold for it a Competing Product (defined below) anywhere in the United States or in any country where Inspire conducts business; (ii) fund any clinical study that enrolls patients for the sole purpose of obtaining regulatory approval in the United States of a Competing Product for Medtronic or an Affiliate of Medtronic; or (iii) make a direct equity investment (including investment in convertible securities) in excess of One Million Dollars ($1,000,000) in Apnex Medical, any other Person that at the time of the investment markets, sells or has sold for it any Competing Product, or any other Person that at the time of the investment is solely engaged in developing a Competing Product and has enrolled patients in any clinical study for the sole purpose of obtaining regulatory approval in the United States of a Competing Product for such Person.

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(b)                                 For the purposes of this Section 2.9, a “Competing Product” shall mean a product with the primary and regulatory approved purpose of utilizing electrical stimulation of the Hypoglossal Nerve for the treatment (as opposed to diagnosis) of obstructive sleep apnea.

(c)                                  Notwithstanding the foregoing, the restrictions in this Section 2.9 shall not apply: (i) with respect to any Person that becomes an Affiliate of Medtronic or assets that are acquired by Medtronic or an Affiliate of Medtronic after the date of this Agreement if 10% or less of the annual revenues of such Person or of revenues generated by such acquired assets relate to sales of Competing Products at the time such Person first becomes an Affiliate of Medtronic or such assets are acquired by Medtronic; (ii) from and after a Sale Transaction; and (iii) from and after the time that Inspire is Insolvent. Except as explicitly set forth in (a)(iii) above, Inspire acknowledges and agrees that the restrictions in this Section 2.10 shall not apply to any Person in which Medtronic or an Affiliate of Medtronic has an investment unless and until such Person becomes an Affiliate of Medtronic.

(d)                                 The restrictions set forth in this Section 2.9 are for the personal benefit of Inspire only. Inspire’s rights and benefits pursuant to this Section 2.9 shall not be assignable by Inspire and any attempted assignment of Inspire’s rights and benefits under this Section 2.9 shall be void.

(e)                                  Inpire’s sole right and remedy with respect to a violation of this Section 2.9 shall be to seek injunctive relief against Medtronic or an Affiliate of Medtronic to enjoin the activities that are in violation of this Section 2.9. In no event shall Inspire be entitled to money damages (under any theory or cause of action) from Medtronic or an Affiliate of Medtronic with respect to a violation of this Section 2.9 and Inspire hereby waives any and all rights to money damages that may result from a violation of this Section 2.9 as a result of a breach hereof by Medtronic or an Affiliate of Medtronic. Notwithstanding anything to the contrary herein, in the event any Person becomes an Affiliate of Medtronic after the date of this Agreement, or Medtronic or an Affiliate acquires assets that include Competing Products from a Person, and at such time more than 10% of such Person’s annual revenues or revenues of such Person that are generated by such acquired assets relate to sales of Competing Products (a “Prohibited Acquisition”), Medtronic shall have the right to continue to sell such Competing Products for up to 3 months after the date of the Prohibited Acquisition; provided that if Medtronic continues to sell Competing Products after such 3 month period, Inspire’s sole right and remedy shall be to require Medtronic to divest the portion of such Person or acquired assets by the date that is twelve (12) months after the date of the Prohibited Acquisition if such date is within the Noncompetition Period.

ARTICLE 3
INTELLECTUAL PROPERTY

3.1)                           Control of Patents by Inspire.

(a)                                 Inspire shall have the right, through counsel of its choice and at its expense, to prepare, file and prosecute all patent applications and cause the issuance of and maintain

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any patents awarded thereby worldwide (including provisionals, non provisionals, continuations, divisions, continuations in part, PCT applications, national phase applications, reissues and reexaminations) for the Assigned Patents and any IDEA Disclosure Patents. Further, Inspire shall have the right to manage any interference that might be declared with respect to the Assigned Patents and any IDEA Disclosure Patents.

(b)                                 If Inspire does not prosecute or maintain any patent or patent application within the Assigned Patents, Inspire shall so notify Medtronic prior to any relevant deadline and Medtronic shall have the right, but not the obligation, to undertake the prosecution or maintenance of such Assigned Patents. If Medtronic exercises this option, Inspire shall assign such Assigned Patents to Medtronic and Inspire shall execute a recordable assignment form. Any such patents assigned to Medtronic will thereafter be subject to the license grant in Section 2.3.

(c)                                  Medtronic shall have the right to review and comment on any IDEA Disclosure Patent and any filing or other correspondence related to the prosecution of any IDEA Disclosure Patent (“Patent Documents”). Inspire shall provide Medtronic with a copy of any Patent Documents that Inspire intends to file in a patent office prior to such filing (including any patent application that would be an IDEA Disclosure Patent) or that is received from a patent office. Provided that Medtronic’s comments are received within thirty (30) days following receipt of the relevant information by the Medtronic employee responsible for reviewing such Patent Documents from Inspire, Inspire shall incorporate any reasonable comments requested by Medtronic into such Patent Document.

3.2)                           Control of Patents by Medtronic.

(a)                                 Medtronic shall have the right, through counsel of its choice and at its expense, to prepare, file and prosecute all patent applications and cause the issuance of and maintain any patents awarded thereby worldwide (including provisionals, non provisionals, continuations, divisions, continuations in part, PCT applications, national phase applications, reissues and reexaminations) for the Licensed Patents. Further, Medtronic shall have the right to manage any interference that might be declared with respect to the Licensed Patents.

(b)                                 If Medtronic does not prosecute or maintain any patent or patent application within the Licensed Patents in the Field, Medtronic shall so notify Inspire prior to any relevant deadline and Inspire shall have the right, but not the obligation, to undertake the prosecution or maintenance of such Licensed Patents.

3.3)                           Notice of Alleged Infringement or Misappropriation. Inspire shall promptly report in writing to Medtronic during the term of this Agreement any known or suspected infringement of any of the Licensed Patents or Assigned Patents, or any misappropriation of the Technical Information by a third party. Medtronic shall promptly report in writing to Inspire during the term of this Agreement any known or suspected infringement of any of the Licensed Patents in the Field or Assigned Patents in the Field, or any misappropriation of the Technical Information in the Field by a third party.

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3.4)                           Intellectual Property Enforcement.

(a)                                 As between the parties hereto, Inspire reserves the right, and shall have the exclusive first right, to commence, defend, compromise, settle and control (by way of license or otherwise) (collectively, “Actions”) any and all claims, actions or proceedings for infringement, unauthorized use, misappropriation or violation of any of the Licensed Patents or Assigned Patents involving third parties (collectively, “Claims”) in the Field, but shall not have the obligation to do so. Inspire shall promptly notify Medtronic of any Action Inspire intends to take with respect to such Claim during the term of this Agreement, and Medtronic shall provide Inspire with all reasonable cooperation and assistance at Inspire’s expense. Medtronic consents to being joined as a party-plaintiff in any Action hereunder if, and to the extent, such joiner is required by law for standing. If Inspire undertakes any such Action, Inspire shall be entitled to receive any recovery from the Action for damages and other awards to the extent such recovery relates to a Claim in the Field, and Medtronic shall be entitled to receive any recovery from the Action for damages and other awards to the extent such recovery relates to a Claim outside of the Field. Notwithstanding the above, Inspire shall not settle any Action if such settlement would materially adversely impact Medtronic’s rights under this Agreement.

(b)                                 If Inspire does not undertake any Action within (90) days after notice of a Claim in the Field has been sent pursuant to Section 3.3 above, then Medtronic shall have the right to commence, defend, compromise, settle and control (by way of license or otherwise) any and all Actions with respect to such Claim, but shall not have the obligation to do so. Medtronic shall promptly notify Inspire of any Action Medtronic intends to take with respect to a Claim during the term of this Agreement and Inspire shall provide Medtronic with all reasonable cooperation and assistance at Inspire’s expense. Inspire consents to being joined as a party-plaintiff in any Action hereunder if, and to the extent, such joiner is required by law for standing. If Medtronic undertakes any such Action, Medtronic shall be entitled to receive any recovery from the Action for damages and other awards to the extent such recovery relates to a Claim outside of the Field, and Inspire shall be entitled to receive any recovery from the Action for damages and other awards to the extent such recovery relates to a Claim in the Field. Notwithstanding the above, Medtronic shall not settle any Action if such settlement would materially adversely impact Inspire’s rights under this Agreement.

3.5)                           Trademark. Nothing in this Agreement shall confer in Inspire any rights, whether by way of ownership , license or right to use, in the trademark “Medtronic,” the Medtronic corporate logo, or any other trademark, service mark, trade name, trade dress, logotype or similar right owned by Medtronic or its Affiliates.

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ARTICLE 4
REPRESENTATIONS & WARRANTIES

4.1)                           Representations of Inspire. Inspire represents, warrants and covenants to Medtronic that:

(a)                                 Inspire has the skills and resources to conduct due diligence on Medtronic’s published patent portfolio and is entering this Agreement based on its independent evaluation thereof. Inspire acknowledges that it has studied the questions of validity and enforceability of the Assigned Patents and Licensed Patents and believes such rights to be valid and enforceable.

(b)                                 Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated herein will violate any provision of the articles and bylaws of Inspire or any law, rule, regulation, writ, judgment, injunction, decree, determination, award or other order of any court or governmental agency or instrumentality, domestic or foreign.

4.2)                           Representations of Medtronic. Medtronic represents, warrants and covenants to Inspire that it has the right to grant the assignment and licenses granted under this Agreement. To Medtronic’s knowledge, as of immediately prior to the Initial Closing, Medtronic owns title to the Assigned Patents free and clear of all security interests. For purposes of clarification only, and without limiting in any way the disclaimers set forth in this Article 4, Medtronic make no representations with respect to the validity of the Assigned Patents or Licensed Patents and makes no representations with respect to non-infringement of third party proprietary rights by the Assigned Patents or Licensed Patents. OTHER THAN THE WARRANTIES EXPRESSLY GIVEN IN THIS SECTION 4.2, MEDTRONIC MAKES NO WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE ASSIGNED PATENTS, LICENSED PATENTS OR ANY PRODUCTS MANUFACTURED, USED OR SOLD (OTHER THAN AS MAY BE MADE UNDER THE SUPPLY AGREEMENT BETWEEN THE PARTIES) UNDER THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, PATENTABILITY, PATENT VALIDITY, NON-INFRINGEMENT , OR WARRANTIES ARISING FROM COURSE OF DEALING OR USAGE OF TRADE.

4.3)                           Disclaimers of Representations. EXCEPT AS EXPRESSLY SET FORTH IN SECTION 4.2, EACH PARTY HERETO (AS “DISCLAIMING PARTY”) DISCLAIMS, AND THE OTHER PARTY HEREBY WAIVES, ANY AND ALL REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE WITH REGARD TO THIS AGREEMENT. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE DISCLAIMING PARTY DISCLAIMS (A) ANY AND ALL REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE SCOPE, COVERAGE, VALIDITY OR ENFORCEABILITY OF ANY OF THE ASSIGNED PATENTS, LICENSED PATENTS, BASE IP AND ANY OTHER INTELLECTUAL PROPERTY RIGHTS ASSIGNED OR LICENSED HEREUNDER (COLLECTIVELY, “CONTRACT IP”); AND (B) ANY AND ALL REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, WITH REGARD TO ANY PRODUCT DEVELOPED OR

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DISTRIBUTED THAT IS BASED UPON OR INCLUDES ANY CONTRACT IP (INCLUDING, BUT NOT LIMITED TO, ANY INFRINGEMENT, MISAPPROPRIATION OR VIOLATION OF ANY INTELLECTUAL PROPERTY RIGHT OF ANY THIRD PARTY AND ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE).

4.4)                           Limitations of Liability. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR PUNITIVE DAMAGES OR LOST PROFITS OR LOST BUSINESS, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE) ARISING IN ANY WAY OUT OF THIS AGREEMENT, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

ARTICLE 5
INDEMNIFICATION

5.1)                           Indemnification of Medtronic. Inspire shall indemnify, defend and hold harmless Medtronic and its officers, directors, stockholders and Affiliates (such indemnitees referred to in this Article 5 as “Medtronic”) from and against and in respect of any and all demands, claims, actions or causes of action, assessments, losses, damages, liabilities, interest and penalties, costs and expenses (including, without limitation, reasonable legal fees and disbursements incurred in connection therewith and in seeking indemnification therefor, and any amounts or expenses required to be paid or incurred in connection with any action, suit, proceeding, claim, appeal, demand, assessment or judgment) (“Indemnifiable Losses”), resulting from, arising out of, or imposed upon or incurred by any person to be indemnified hereunder by reason of any of the following:

(a)                                 Any breach of any representation, warranty, covenant or agreement of Inspire contained in this Agreement; and

(b)                                 Any act or omission of Inspire or any of its agents, employees or suppliers arising out of or in connection with the development, commercialization, sale or other use of the Licensed Patents, Assigned Patents or any products licensed by, or developed by or for, Inspire, including but not limited to Product Liability Claim except with respect to Losses arising out of matters for which Medtronic has an obligation to indemnify Inspire pursuant to this Agreement.

5.2)                           Indemnification of Inspire. Medtronic shall indemnify, defend and hold harmless Inspire and each of its subsidiaries, officers, directors and stockholders (such indemnitees referred to in this Article 5 as “Inspire”) from and against and in respect of any and all Indemnifiable Losses, resulting from, arising out of, or imposed upon or incurred by any person to be indemnified hereunder by reason of any breach of any representation, warranty, covenant or agreement of Medtronic contained in this Agreement.

5.3)                           Third-Party Claims. If a claim by a third party is made against an indemnified party and if the indemnified party intends to seek indemnity with respect thereto under this Article 8, such indemnified party shall promptly notify the indemnifying party of such claim; provided,

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however, that failure to give timely notice shall not affect the rights of the indemnified party so long as the failure to give timely notice does not adversely affect the indemnifying party’s ability to defend such claim against a third party. The indemnified party shall not settle such claim without the consent of the indemnifying party, which consent shall not be unreasonably withheld or delayed. If the indemnifying party acknowledges in writing its indemnity obligations for Indemnifiable Losses resulting therefrom, the indemnifying party may participate at its own cost and expense in the settlement or defense of any claim for which indemnification is sought.

5.4)                           Cooperation as to Indemnified Liability. Each party hereto shall cooperate fully with the other parties with respect to access to books, records, or other documentation within such party’s control, if deemed reasonably necessary or appropriate by any party in the defense of any claim which may give rise to indemnification hereunder.

ARTICLE 6
CONFIDENTIAL INFORMATION — INSOLVENCY

In the event that Inspire becomes Insolvent, all Confidential Information, other than the Technical Information, shall immediately be returned to Medtronic.

ARTICLE 7
OTHER PROVISIONS

7.1)                           Non-Disclosure. Each party agrees not to disclose or use (except as permitted or required for performance by the party receiving such Confidential Information of its rights or duties hereunder) any Confidential Information of the other party obtained during the term of this Agreement and for as long as such information is maintained as confidential by the disclosing party, but in any event, not less than a period of three (3) years after the receiving party’s receipt of such Confidential Information. Each party further agrees to take appropriate measures to prevent any such prohibited disclosure by its present and future employees, officers, agents, subsidiaries, or consultants during such period.

7.2)                           Complete Agreement. The Investment Agreement, the Supply Agreement, the Development Agreement, the Transaction Documents, and Exhibits to this Agreement shall be construed as an integral part of this Agreement to the same extent as if they had been set forth verbatim herein. This Agreement and the exhibits hereto constitutes the entire agreement between Inspire and Medtronic with respect to the subject matter of this Agreement and supersedes any prior agreements or understandings. This Agreement does not supersede any terms in the Development Agreement and Supply Agreement and terms in such agreements shall co-exist with this Agreement.

7.3)                           Survival of Representations, Warranties and Agreements. The representations, warranties, covenant and agreements contained herein shall survive the Closing and remain in full force and effect; provided however, the representations and warranties shall expire on the third anniversary of the date of the last Closing hereunder. No independent investigation of Inspire by Medtronic, its counsel, or any of its agents or employees shall in any way limit or restrict the scope of the representations and warranties made by Inspire in this Agreement.

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7.4)                           Waiver, Discharge, Amendment, Etc. The exercise by either party of any remedy or recourse available to it hereunder shall not deprive such party of any other remedy or recourse available to it under applicable law. Any waiver by either party of a breach of any term of this Agreement shall not be considered as a waiver of any subsequent breach of the same or other terms or condition hereof. This Agreement may be amended by Inspire and Medtronic by mutual action approved by their respective Boards of Directors or their respective officers authorized by such Board of Directors. Any amendment to this Agreement shall be in writing and signed by Inspire and Medtronic.

7.5)                           Notices. All notices or other communications to a party required or permitted hereunder or under the Certificate of Incorporation, as amended, shall be in writing and shall be delivered personally or by facsimile (receipt confirmed electronically) to such party (or, in the case of an entity, to an executive officer of such party) or shall be sent by a reputable express delivery service or by certified mail, postage prepaid with return receipt requested, addressed as follows:

if to Medtronic to:

Medtronic, Inc.

World Headquarters

710 Medtronic Parkway, N.E.

Minneapolis, MN 55432-5604

Attention: General Counsel

FAX (###) ###-####

with a copy to:

Medtronic, Inc.

World Headquarters

710 Medtronic Parkway, N.E.

Minneapolis, MN 55432-5604

Attention: Vice President and Chief Development Officer

FAX (###) ###-####

if to Inspire to:

Inspire Medical Systems, Inc.

7100 Northland Circle North, Suite 304

Brooklyn Park, MN 55428

ATTN: President and CEO

FAX: (###)-###-####

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with a copy to:

Wiese Law Offices

33 South 6th Street, Suite 4100

Minneapolis, MN 55402

Attn: ####### #####

FAX: (###)-###-####

Any party may change the above-specified recipient and/or mailing address by notice to all other parties given in the manner herein prescribed. All notices shall be deemed given on the day when actually delivered as provided above (if delivered personally or by facsimile) or on the day shown on the return receipt (if delivered by mail or delivery service).

7.6)                           Public Announcement. Public Announcements shall be governed as set forth in the Investment Agreement.

7.7)                           Expenses. Except as expressly provided herein, Inspire and Medtronic shall each pay their own expenses incident to this Agreement and the preparation for, and consummation of, the transactions provided for herein.

7.8)                           Notice of Dispute. The parties shall attempt in good faith to resolve any dispute arising out of or relating to this Agreement promptly by negotiation between executives of each party who have authority to settle the controversy and who are at a higher level of management than the persons with direct responsibility for administration of this Agreement. Either party may give the other party written notice of any dispute not resolved in the normal course of business (“Notice of Dispute”), which Notice of Dispute shall include (i) a statement of that party’s position and a summary of arguments supporting that position, (ii) the dollar amount of the dispute, if known, and the section(s) of the Agreement to which the dispute relates and (iii) the name and title of the executive who will represent that party and of any other person who will accompany the executive. Within 10 days after delivery of the Notice of Dispute, the receiving party shall submit to the other a written response (the “Response to Dispute”). The Response to Dispute shall include (iv) a statement of that party’s position and a summary of arguments including references to any section(s) of the Agreement, if applicable, supporting that position and (v) the name and title of the executive who will represent that party and of any other person who will accompany the executive. Within ten (10) days after delivery of the Response to Dispute, the designated executives of both parties shall meet at a mutually acceptable time and place or by conference telephone, and thereafter as often as they reasonably deem necessary, to attempt to resolve the dispute. All negotiations pursuant to this clause are confidential and shall be treated as compromise and settlement negotiations for purposes of applicable rules of evidence.

7.9)                           Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota, without reference to the choice of law principles thereof.

7.10)                    Titles and Headings; Construction. The titles and headings to articles and sections herein are inserted for the convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. Inspire acknowledges that Medtronic and Inspire have jointly participated in the negotiation and drafting of this Agreement, and the parties

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agree that this Agreement shall be construed without regard to any presumption or other rule requiring construction hereof against the party causing this Agreement to be drafted.

7.11)                    Benefit. Nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties hereto or their respective successors or assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.

7.12)                    Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become a binding agreement when one or more counterparts have been signed by each party and delivered to the other party. Copies of this Agreement with signatures transmitted by facsimile shall be deemed to be original signed versions of this Agreement.

7.13)                    Parties in Interest. All representations, covenants and agreements contained in this Agreement by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not.

7.14)                    Severability. If any provision of this Agreement is held invalid by a court of competent jurisdiction, the remaining provisions shall nonetheless be enforceable according to their terms. Further, if any provision is held to be overbroad as written, such provision shall be deemed amended to narrow its application to the extent necessary to make the provision enforceable according to applicable law and shall be enforced as amended.

7.15)                    No Joint Venture. Nothing contained in this Agreement shall be deemed to create a joint venture, partnership, agency or similar endeavor between the parties hereto. Each party shall act solely as an independent contractor and neither party shall have any power or authority to direct or indirectly bind or act on behalf of the other.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed in the manner appropriate to each, effective as of the date first above written.

Exhibit A: Assigned Patents

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Exhibit B: Licensed Patents

18

19

20

Exhibit B-1: IDEA Disclosures

21

Exhibit C

Technical Information

3063 Lead

22

3063 Lead

23

3024 IPG

24

3024 IPG

25

3024 IPG

26

3024 IPG