inspemploymentagreemente






                                                                                                                                                   EXHIBIT 10.1                     EXECUTIVE EMPLOYMENT AGREEMENT         This EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is made and entered  into as of June 1, 2020 (the “Effective Date”), by and between Inspire Medical Systems, Inc.  (“Inspire” or the “Company”), a Delaware corporation, and Philip Ebeling (“Executive”).         WHEREAS, Executive desires to provide services to the Company on the terms herein  provided.         NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants  and obligations of this Agreement, the receipt and sufficiency of which are hereby acknowledged,  the parties agree as follows:         1.    Employment. Subject to all of the terms and conditions of this Agreement, Inspire  agrees to employ Executive, and Executive agrees to accept employment with Inspire. It is  understood that Executive and Executive’s employment with Inspire will be subject to the policies  and terms (as they may be amended from time to time by Inspire) as adopted by Inspire’s Board  of Directors (the “Board”) or its President, Inspire’s employee handbook and other policies in  effect for salaried employees of Inspire, except as otherwise specifically provided in this  Agreement.         2.    Duties. The services of Executive shall be exclusive to Inspire, except as otherwise  agreed to in writing by Inspire. Executive shall function in the capacity of Chief Operating Officer,  shall exert Executive’s energy and full working time to the prosecution of Executive’s duties, and  shall promptly and faithfully perform all these duties which pertain to that employment. Executive  shall assume primary responsibility for the duties of the Chief Operating Officer, and such other  duties as may be mutually agreed upon by Executive and Inspire’s President. Executive will  perform Executive’s obligations in a competent and professional manner, consistent with the  expectations of Inspire’s Board and its President. Executive may serve on outside boards of  directors or committees of public or private organizations if the outside activities are first disclosed  to and approved in writing by Inspire’s Board or its President. That approval will not be granted if  the outside activities are deemed by the Board or Inspire’s President to conflict in any way with  the provisions of this Agreement, to impair Executive’s ability to perform Executive’s duties under  this Agreement, or to otherwise conflict in any way with business interests of Inspire.  Notwithstanding the foregoing, Executive shall be entitled to serve on boards or committees of  religious, educational, or charitable non-profit organizations, or on advisory boards of for-profit  entities, without disclosing such activities to the Board or obtaining its consent, provided such  service does not in any material respect interfere with Executive’s services as an employee of  Inspire.         3.    Term of Employment. This Agreement is not intended to establish any minimum  or maximum period for Executive’s employment. Executive and Inspire have an “at-will”  employment relationship, which means that either party has the right to terminate the employment  relationship at any time and for any reason, with or without cause. The reason for and timing of      





 






 the termination, as set forth in Paragraph 5, will determine the amount of post-termination   payments and benefits, if any, as set forth in Paragraph 6.          4.    Compensation, Reimbursement and Benefits. As compensation for all of   Executive’s services under this Agreement, the Company agrees to provide Executive the   following compensation, reimbursements and benefits:                a.    Base Salary. The Company will pay Executive a base salary (the “Base   Salary”), payable in accordance with Inspire’s standard payroll practices. The annualized Base   Salary shall be in the gross amount of $370,000. The Base Salary shall be subject to annual   performance review and possible adjustments by Inspire’s President.                b.    Incentive Awards. As additional compensation, Executive will be eligible   to receive discretionary annual bonuses and/or long term incentive compensation (“Incentive   Awards”) pursuant to the terms and conditions of Inspire’s annual bonus plan and/or Inspire’s long   term incentive plan (jointly, “Incentive Plans”) which may be adopted, amended, supplemented,   terminated and/or replaced by Inspire from time to time. With reference to the Incentive Plans, the   parties understand as follows:                    i.      Executive’s eligibility to receive Incentive Awards will be   determined by the Board or such other committee or executive as may have responsibility for   making that determination, in its sole discretion. Notwithstanding the foregoing, it is the intention   of Inspire that Executive’s target Incentive Award for each fiscal year during Executive’s term of   employment shall be 50% of the Base Salary (the “Target Bonus Amount”), provided that   Executive and Inspire have achieved certain performance goals and objectives. Except as   otherwise set forth in Paragraph 6(c), to be eligible for an Incentive Award, the employee must be   employed on the last day of the calendar year.                    ii.     The Incentive Plans are not necessarily all-inclusive because  circumstances which Inspire has not anticipated may arise. Inspire may interpret or vary from the  Incentive Plans if, in its opinion, the circumstances warrant it. Further, Executive’s eligibility to  receive Incentive Awards may be affected in the event Inspire has determined that such Incentive  Awards would be in violation of law or reasonably create an adverse effect on Inspire or its  obligations or agreements including, without limitation, leaving Inspire with insufficient liquidity  (including adequate reserves) to carry on its business and pay its debt in the ordinary course.                   iii.    Inspire reserves the right to make any changes at any time to the  Incentive Plans by adding to, deleting from or otherwise amending any portion of them, with or  without notice to Executive, provided, however, that if Executive has been awarded non-cash  compensation pursuant to such plans, then Executive shall receive notice of any changes to the  plan as may be required by applicable law, and provided, further, that any such changes are  applicable to participants in the Incentive Plans generally and not specific to Executive.                   iv.     Any questions regarding the computation of Incentive Awards under  the Incentive Plans will be conclusively determined by Inspire’s President, pursuant to the terms  and conditions of the Incentive Plans.                                               





 






            c.    Expenses. Inspire will reimburse Executive for any and all ordinary,  necessary and reasonable business expenses that Executive incurs in connection with the  performance of Executive’s duties under this Agreement, including entertainment, telephone,  travel and miscellaneous expenses. Executive must obtain proper approval for such expenses  pursuant to the Company’s policies and procedures and Executive must provide the Company with  documentation for such expenses in a form sufficient to sustain Inspire’s deduction for such  expenses under the Internal Revenue Code of 1986, as amended (the “Code”).                  d.    Time Off. Executive will be entitled to time off with or without pay in  accordance with Inspire’s policies in effect at any particular time.               e.    Health, Disability and Life Insurance, and Other Executive Benefit Plans.  Inspire will provide Executive with the same health, disability, and life insurance coverage  provided generally to other full-time salaried employees of Inspire, and with other employee  benefit plans which are presently existing or which may be established in the future by Inspire for  its full-time salaried employees, subject to the terms and conditions of the applicable benefit plans.               f.    Indemnification. Inspire will defend, indemnify and hold Executive  harmless from costs, expenses, damages and other liability incurred by Executive as a result of  performing services to Inspire, subject to the limitations and other terms and conditions of  applicable Delaware statutes and Inspire’s Articles of Incorporation or By Laws.               g.    Changes in Benefit Plans. It is understood that no references in this  Agreement to particular employee benefit plans established or maintained by Inspire are intended  to change the terms and conditions of these plans or to preclude Inspire from amending or  terminating any such benefit plans.               h.    Withholding; Taxes. Inspire may withhold from any compensation,  reimbursements and benefits payable to Executive all federal, state, city and other taxes as shall  be required pursuant to any law or governmental regulation or ruling, as well as other standard  withholdings and deductions. Executive recognizes that all of the payments and some of the  benefits which Executive receives under this Agreement will constitute compensation, and will be  fully taxable to Executive. Executive agrees to properly report such payments and benefits on  Executive’s applicable income tax returns and to pay all appropriate taxes.         5.    Termination. Executive’s employment may be terminated at any time as follows:               a.    Death. Executive’s employment shall automatically terminate upon  Executive’s death.               b.    Disability. Either party may terminate Executive’s employment at any time,  upon written notice to the other party if Executive sustains a disability which precludes Executive  from performing the essential functions of Executive’s job, with or without reasonable  accommodations, as defined by applicable state and federal disability laws. Executive shall be  presumed to have such a disability for purposes of this Agreement if Executive qualifies, because  of illness or incapacity, to begin receiving disability income insurance payments under any long  term disability income insurance policy that Inspire maintains for the benefit of Executive. If  Executive does not qualify for such payments, Executive shall nevertheless be presumed to have                                            





 






 such a disability if Executive is substantially incapable of performing the essential functions of   Executive’s job for a period of more than twenty six (26) consecutive weeks, with or without a   reasonable accommodation, or for shorter non-consecutive periods aggregating thirty six (36)   weeks in any twelve (12) month period.                c.    With Cause. Inspire may terminate Executive’s employment at any time,   with “Cause”, upon written notice to Executive. “Cause” shall be defined as:                    i.      Executive’s material breach of any of Executive’s obligations under  this Agreement, or Executive’s repeated failure or refusal to perform or observe Executive’s duties,  responsibilities and obligations as an Executive of Inspire, for reasons other than disability if such  breach, failure or refusal continues or it or another breach, failure or refusal is repeated following  written notice thereof to Executive;                    ii.    Any material dishonesty or other breach of the duty of loyalty of  Executive affecting Inspire or any customer, vendor or employee of Inspire;                   iii.    Use of alcohol or other drugs in a manner which affects the  performance of Executive’s duties, responsibilities and obligations as an employee of Inspire if   such use continues or is repeated following written notice to Executive;                   iv.      Conviction of, or a plea of guilty or nolo contendere to, a charge of   commission of a felony or of any crime involving misrepresentation, moral turpitude or fraud;                    v.     Commission by Executive of any other willful or intentional act  which materially injures the reputation, business or business relationships of Inspire if such act  occurs or continues following written notice to Executive of the same or of a prior willful or  intentional act injuring the reputation, business or business relationships of Inspire; or                   vi.     The existence of any court order or settlement agreement prohibiting  Executive’s continued employment with Inspire.    A matter of the type described in this Paragraph 5(c) shall be “material” if such matter, alone or  together with other such matters, is material.                d.    Without Cause. Inspire may terminate Executive’s employment at any time,   without Cause, upon one (1) month’s written notice to Executive. Inspire may, in its sole   discretion, opt not to have Executive provide active employment services during some or all of the   notice period, and place Executive on a paid leave of absence for some or all of the notice period.                e.    Resignation With or Without Good Reason. Executive may, upon two (2)   weeks’ written notice to Inspire, terminate Executive’s employment at any time for no reason or  may, at any time, terminate Executive’s employment for Good Reason (as defined below). Upon  receiving such notice, Inspire may, in its sole discretion, opt not to have Executive provide active  employment services during some or all of the notice period, and place Executive on a paid leave  of absence for some or all of the notice period. If Inspire exercises this option, it shall not convert  the resignation to a termination by Inspire. For purposes of this paragraph, “Good Reason” shall  mean:                                                 





 






                i.      A material reduction, without Executive’s consent, in Executive’s  duties or responsibilities (provided no such reduction shall be deemed to have occurred solely by  reason of the Company’s having hired a new Chief Operating Officer as long as Executive  continues to have responsibilities that are consistent with executive status and further provided  that no such reduction shall be deemed to have occurred solely due to the change in the Company’s  status from that of an independent company to that of a subsidiary or division of a buyer of the  Company following a Change of Control (as defined below);                   ii.     A material reduction, without Executive’s consent, of the Base  Salary, unless such reduction is part of an overall reduction in salary for executive employees and  Executive’s reduction is proportionate to the overall reduction in salary;                   iii.     The Company’s moving Executive’s place of employment, without  Executive’s consent, more than fifty (50) miles from the place of Executive’s employment prior  to such move, although business travel shall not be deemed to be a move of Executive’s place of  employment; or                  iv.      The Company’s material breach of this Agreement.   Notwithstanding the foregoing, Executive may only terminate Executive’s employment for Good  Reason within two (2) years following the occurrence of one or more of the foregoing conditions,  subject to Executive first providing thirty (30) days written notice of Executive’s claimed Good  Reason to the Company within ninety (90) days after the initial existence of such condition and  the Company failing to cure the basis for such claimed Good Reason within thirty (30) days  following such notice.          6.    Payments and Benefits Upon Termination. Upon the termination of Executive’s  employment, Executive shall only be entitled to the following payments and benefits:               a.    Disability; Death. If Executive’s employment is terminated due to the  disability or death of Executive, regardless of the date of termination, Executive or Executive’s  estate or heirs, as appropriate, shall be paid (i) any portion of Base Salary  through the date of  termination not theretofore paid; (ii) any cash bonus either accrued in accordance with the terms  of the relevant plan or previously awarded but not yet paid to Executive at the time of Executive’s  death or disability; (iii) any benefits payable under any disability or life insurance policy  maintained by Inspire for the benefit of Executive at the time of the termination of employment,  subject to the terms and conditions of such policies; (iv) Executive’s accrued but unpaid PTO  through the date of termination; (v) any unpaid expense reimbursement; and (vi) Executive’s or  Executive’s estate or heirs, as appropriate, other vested benefits, if any, under any of Inspire’s  Incentive Plans or any of Inspire’s other employee benefit plans (e.g., 401(k) plan), subject to the  terms and conditions of those plans.               b.    Termination by Inspire For Cause; Resignation Without Good Reason. If  Inspire terminates Executive’s employment for Cause, or if Executive resigns without Good  Reason, regardless of the date of termination, Executive shall be paid (i) any portion of Base Salary   through the date of termination not theretofore paid; (ii) Executive’s accrued but unpaid PTO  through the date of termination; (iii) any unpaid expense reimbursement; and (iv) Executive’s other                                             





 






 vested benefits, if any, under any of Inspire’s Incentive Plans or any of Inspire’s other employee   benefit plans (e.g., 401(k) plan), subject to the terms and conditions of those plans.                c.    Termination by Inspire Without Cause; Resignation for Good Reason. If the   Company terminates Executive’s employment without Cause, or Executive resigns for Good   Reason, in either case regardless of the date of termination, Executive shall be paid the same   payments and benefits as set forth in Paragraph 6(a) above. In addition, Inspire shall, subject to   Paragraph 10 and subject to Executive’s execution and non-revocation of a release of claims, to   the full extent permitted by law, in a form reasonably satisfactory to Inspire in accordance with   Paragraph 10(c) (the “Release”), which assures, among other things, that Executive will not   commence any type of litigation or assert other claims as a result of the termination (except to   enforce Executive’s rights under this Agreement):                    i.      Pay to the Executive an amount equal to the sum of (A) nine (9)   months of the Base Salary as of the date of termination and (B) a prorated portion of the Target   Bonus Amount based on the ratio of the number of days during the period commencing on the first  day of the fiscal year and ending on the date of termination to 365, in substantially equal  installments during the period beginning on the date of termination and ending on the nine (9)-  month anniversary of the date of termination in accordance with the Company’s regular payroll   practice as of the date of termination; provided that, notwithstanding anything to the contrary in   this Paragraph 6(c)(i), if such termination of employment occurs within the twelve (12)-month   period immediately following a Change of Control (as defined below) (such period, the “CIC   Period”), then, in lieu of the foregoing payments set forth in this Paragraph 6(c)(i), Inspire shall   pay to the Executive the sum of (A) twelve (12) months of the Base Salary and (B) the Target  Bonus Amount, in substantially equal installments during the period beginning on the date of   termination and ending on the twelve-month anniversary of the date of termination in accordance   with the Company’s regular payroll practice as of the date of termination;                    ii.     Continue to provide, subject to the Executive’s valid election to   continue healthcare coverage under COBRA, the Executive and the Executive’s eligible   dependents with payment of premiums for any COBRA benefits during the period commencing   on the date of termination and ending on the nine (9)-month anniversary of the date of termination   (if such termination of employment occurs within the CIC Period, the twelve (12)-month  anniversary of the date of termination).                   iii.    In the event that such termination of employment occurs within the  CIC Period, cause each of Executive’s equity awards that are granted on or following the Effective  Date to become fully vested.  For the avoidance of doubt, the foregoing shall not apply to any of   Executive’s equity awards that were granted prior to the Effective Date.                d.    Change of Control Definition.  For purposes of this Agreement, “Change of   Control” means the occurrence of any of the following: (1) a sale by shareholders of the Company   of a substantial portion of their stock in the Company, or a merger, reorganization or consolidation,   whereby the Company’s equity holders existing immediately prior to such sale, merger,   reorganization or consolidation do not, immediately after consummation of such sale,   reorganization, merger or consolidation, own more than fifty percent (50%) of the combined voting   power of the surviving entity’s then outstanding voting securities entitled to vote generally in the                                               





 






 election of directors, but only if such event results in a change in Board composition such that the   directors immediately preceding such events do not comprise a majority of the Board following   such event; or (2) the sale or other disposition of all or substantially all of the Company’s assets to   an entity in which the Company, any subsidiary of the Company, or the Company’s equity holders   existing immediately prior to such sale beneficially own less than fifty percent (50%) of the   combined voting power of such acquiring entity’s then outstanding voting securities entitled to   vote generally in the election of directors but only if such event results in a change in Board   composition such that the directors immediately preceding such events do not comprise a majority   of the Board following such event          7.    Business Protections. Inspire has many confidential and proprietary business   interests and other information relating to its products, services and customers, which it needs to   adequately protect. For this reason, its willingness to enter into this Agreement is contingent upon   Executive’s acceptance of the covenants set forth in Paragraph 8 below. Executive understands   that the business protections in Paragraph 8 will apply throughout Executive’s employment, and   will continue to apply thereafter even if Executive’s employment is terminated under Paragraph 5   of this Agreement, regardless of the reason for or timing of the termination.          8.    Post-Employment Restrictions.                a.    Restrictions on Competition. Executive agrees that while employed by   Inspire, and for twelve (12) months after the last day Executive is employed by Inspire, Executive   will not be employed by or otherwise perform services for an organization which is engaged in the   research and development, marketing, or distribution of a product or treatment which is the same   as or which competes with any product or treatment offered or being developed by Inspire during,   or as of the date of termination of, Executive’s employment with Inspire.                b.    Prohibition on Solicitation of Inspire Employees. Executive agrees that at   all times while employed by Inspire, and for twelve (12) months thereafter, Executive will not   solicit, cause to be solicited, or participate in or promote the solicitation of any person to terminate   that person’s employment with Inspire or to breach that person’s employment agreement with   Inspire.                c.    Post-Employment Disclosure. In the event Executive’s employment with   Inspire terminates, Executive agrees that during the term of the restrictions described in Paragraph   8(a) above, Executive will promptly inform Inspire of the identity of any new employer, the job   title of Executive’s new position, and a description of any services to be rendered to that employer.  In addition, Executive agrees to respond within ten (10) days to any written request from Inspire  for further information concerning Executive’s work activities sufficient to provide Inspire with  assurances that Executive is not violating any of the obligations Executive has undertaken in this  Agreement.                                                





 






             d.    Prohibition on Disclosure of Confidential Information. Executive shall hold   the “Confidential Information”, as defined in Paragraph 8(e), including trade secrets and/or data,   in the strictest confidence and will never, without prior written consent of the Company, directly   or indirectly disclose, assign, transfer, convey, communicate to or use for Executive’s own or   another’s benefit, or directly or indirectly disclose, assign, transfer, convey, communicate to or use   by a competitor of the Company or any other person or entity, including, but not limited to, the   press, other professionals, corporations, partnerships or the public, at any time during Executive’s   employment with the Company or at any time after Executive’s termination of employment with   the Company, regardless of the reason for the Executive’s termination, whether voluntary or   involuntary. Executive further promises and agrees that he will faithfully abide by any rules,   policies, practices or procedures existing or which may be established by the Company for insuring   the confidentiality of the Confidential Information, including, but not limited to, rules, policies,   practices or procedures:                      i)    Limiting access to authorized personnel;                      ii)   Limiting copying of any writing, data or recording;                      iii)  Requiring storage of property, documents or data in secure facilities         provided by the Company and limiting safe or vault lock combinations or keys to         authorized personnel; and/or                      iv)   Checkout and return or other procedures promulgated by the         Company from time to time.    The Executive acknowledges that the Company has provided the Executive with the following   notice of immunity rights in compliance with the requirements of the Defend Trade Secrets Act of   2016: (A) the Executive shall not be held criminally or civilly liable under any federal or state   trade secret law for the disclosure of Confidential Information that is made in confidence to a  federal, state or local government official or to an attorney solely for the purpose of reporting or  investigating a suspected violation of law, (B) the Executive shall not be held criminally or civilly  liable under any federal or state trade secret law for the disclosure of Confidential Information that   is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is   made under seal and (C) if the Executive files a lawsuit for retaliation by the Company for  reporting a suspected violation of law, the Executive may disclose the Confidential Information to   the Executive’s attorney and use the Confidential Information in the court proceeding, if the   Executive files any document containing the Confidential Information under seal, and does not   disclose the Confidential Information, except pursuant to court order.                e.    Definition of Confidential Information. For the purposes of this Agreement,   “Confidential Information” means any information not generally known to the public and   proprietary to or in the possession of the Company and includes, without limitation, trade secrets,   inventions, and information pertaining to research, development, purchasing, marketing, selling,   accounting, licensing, business systems, business techniques, customer lists, prospective customer   lists, price lists, business strategies and plans, pending patentable materials and/or designs, design   documentation, documentation of meetings, tests and/or test standards, or manuals whether in   document, electronic, computer or other form. For example, Confidential Information may be                                               





 






 contained in the Company’s customer lists, prospective customer lists, the particular needs and   requirements of customers, the particular needs and requirements of prospective customers, and   the identity of customers or prospective customers. Information shall be treated as Confidential   Information irrespective of its source and any information which is labeled or marked as being   “confidential” or “trade secret” shall be presumed to be Confidential Information. The definition   of “Confidential Information” as set forth in this paragraph is not intended to be complete. From   time to time during the term of Executive’s employment, Executive may gain access to other   information not generally known to the public and proprietary to or in the possession of the   Company concerning the Company’s businesses that is of commercial value to the Company,   which information shall be included in the definition in this paragraph, even though not specifically   listed above. The definition of Confidential Information applies to any form in which the subject   information, trade secrets, or data may appear, whether written, oral, or any other form of recording   or storage.                f.    Restrictions. The restrictions herein provided shall not apply with respect to   “Confidential Information” which: (A) is or becomes a part of the public domain without breach   of this Agreement by the Executive; or (B) is disclosed pursuant to judicial action or government   regulations, provided the Executive notifies the Company prior to such disclosure and cooperates   with the Company in the event the Company elects to legally contest and avoid such disclosure.                g.    Certain Company Remedies. The Executive acknowledges that the   Company will suffer irreparable harm if the Executive breaches Paragraphs 8(a), 8(b) and/or 8(d).   Accordingly, the Company shall be entitled to equitable relief, including but not limited to, an   injunction, enjoining or restraining Executive from any violation of Paragraphs 8(a), 8(b) and/or   8(d) of this Agreement, in addition to any other remedies the Company is entitled to at law or in   equity. In the event the Company pursues any remedies pursuant to this Paragraph 8(f) and prevails   in such a proceeding, the Executive shall pay the Company’s attorneys’ fees in connection with   such proceeding. Should the Company not prevail in such a proceeding, the Company shall pay   the Executive’s attorneys’ fees in connection with such proceeding. Furthermore, should a court   of competent jurisdiction determine that the Executive has breached Paragraphs 8(a), 8(b), and/or   8(d), the restrictions in such Paragraphs will be extended by the period during which the Executive   was in breach.          9.    Parachute Payments.                 a.    Notwithstanding any other provisions of this Agreement, in the event that  any payment or benefit by the Company or otherwise to or for the benefit of the Executive, whether   paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise   (all such payments and benefits, including the payments and benefits under Paragraph 6 above,   being hereinafter referred to as the “Total Payments”), would be subject (in whole or in part) to   the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Total Payments   shall be reduced (in the order provided in Paragraph 9(b) below) to the minimum extent necessary   to avoid the imposition of the Excise Tax on the Total Payments, but only if (i) the net amount of   such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local   income and employment taxes on such reduced Total Payments and after taking into account the   phase out of itemized deductions and personal exemptions attributable to such reduced Total   Payments), is greater than or equal to (ii) the net amount of such Total Payments without such                                               





 






 reduction (but after subtracting the net amount of federal, state and local income and employment   taxes on such Total Payments and the amount of the Excise Tax to which the Executive would be  subject in respect of such unreduced Total Payments and after taking into account the phase out of  itemized deductions and personal exemptions attributable to such unreduced Total Payments).               b.    The Total Payments shall be reduced in the following order:  (i) reduction  on a pro-rata basis of any cash severance payments that are exempt from Section 409A of the Code  (“Section 409A”), (ii) reduction on a pro-rata basis of any non-cash severance payments or benefits  that are exempt from Section 409A, (iii) reduction on a pro-rata basis of any other payments or  benefits that are exempt from Section 409A, and (iv) reduction of any payments or benefits  otherwise payable to the Executive on a pro-rata basis or such other manner that complies with  Section 409A; provided, in case of subclauses (ii), (iii) and (iv), that reduction of any payments  attributable to the acceleration of vesting of Company equity awards shall be first applied to  Company equity awards that would otherwise vest last in time.               c.    The Company will select an adviser with experience in performing  calculations regarding the applicability of Section 280G of the Code and the Excise Tax, provided  that the adviser’s determination shall be made based upon “substantial authority” within the  meaning of Section 6662 of the Code, (the “Independent Advisors”) to make determinations  regarding the application of this Paragraph 9.  The Independent Adviser shall provide its  determination, together with detailed supporting calculations and documentation, to the Executive   and the Company within fifteen (15) business days following the date on which the Executive’s   right to the Total Payments is triggered, if applicable, or such other time as requested by the   Executive (provided, that the Executive reasonably believes that any of the Total Payments may  be subject to the Excise Tax) or the Company.  The costs of obtaining such determination and all  related fees and expenses (including related fees and expenses incurred in any later audit) shall be  borne by the Company.  Any good faith determinations of the Independent Adviser made  hereunder shall be final, binding and conclusive upon the Company and the Executive.                d.    In the event it is later determined that to implement the objective and intent   of this Paragraph 9, (i) a greater reduction in the Total Payments should have been made, the excess   amount shall be returned promptly by the Executive to the Company or (ii) a lesser reduction in   the Total Payments should have been made, the excess amount shall be paid or provided promptly   by the Company to the Executive, except to the extent the Company reasonably determines would   result in imposition of an excise tax under Section 409A.          10.   Section 409A.                a.    General.  The parties hereto acknowledge and agree that, to the extent   applicable, this Agreement shall be interpreted in accordance with, and incorporate the terms and   conditions required by, Section 409A.  Notwithstanding any provision of this Agreement to the   contrary, in the event that the Company determines that any amounts payable hereunder will be   immediately taxable to the Executive under Section 409A, the Company reserves the right (without   any obligation to do so or to indemnify the Executive for failure to do so) to (i) adopt such   amendments to this Agreement and appropriate policies and procedures, including amendments   and policies with retroactive effect, that the Company determines to be necessary or appropriate   to preserve the intended tax treatment of the benefits provided by this Agreement, to preserve the                                               





 






 economic benefits of this Agreement and to avoid less favorable accounting or tax consequences   for the Company and/or (ii) take such other actions as the Company determines to be necessary or   appropriate to exempt the amounts payable hereunder from Section 409A or to comply with the   requirements of Section 409A and thereby avoid the application of penalty taxes thereunder.  No  provision of this Agreement shall be interpreted or construed to transfer any liability for failure to  comply with the requirements of Section 409A from the Executive or any other individual to the  Company or any of its affiliates, employees or agents.                  b.    Separation from Service under Section 409A.  Notwithstanding any   provision to the contrary in this Agreement:  (i) no amount that constitutes “nonqualified deferred   compensation” under Section 409A shall be payable pursuant to Paragraph 6 unless the termination   of the Executive’s employment constitutes a “separation from service” within the meaning of   Section 1.409A-1(h) of the Department of Treasury Regulations; (ii) for purposes of Section 409A,   any right to receive installment payments pursuant to this Agreement shall be treated as a right to   receive a series of separate and distinct payments; and (iii) to the extent that any reimbursement of   expenses or in-kind benefits constitutes “deferred compensation” under Section 409A, such   reimbursement or benefit shall be provided no later than December 31 of the year following the   year in which the expense was incurred.  The amount of expenses reimbursed in one year shall not   affect the amount eligible for reimbursement in any subsequent year.  The amount of any in-kind   benefits provided in one year shall not affect the amount of in-kind benefits provided in any other   year. Notwithstanding any provision to the contrary in this Agreement, if the Executive is deemed   at the time of Executive’s separation from service to be a “specified employee” for purposes of   Section 409A(a)(2)(B)(i) of the Code, to the extent delayed commencement of any portion of the   termination benefits to which the Executive is entitled under this Agreement is required in order  to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of the  Executive’s termination benefits shall not be provided to the Executive prior to the earlier of (A)  the expiration of the six-month period measured from the date of the Executive’s “separation from  service” with the Company (as such term is defined in the Treasury Regulations issued under  Section 409A of the Code) or (B) the date of the Executive’s death; upon the earlier of such dates,  all payments deferred pursuant to this sentence shall be paid in a lump sum to the Executive, and  any remaining payments due under the Agreement shall be paid as otherwise provided herein.                 c.    Release.   Notwithstanding anything to the contrary in this Agreement, to   the extent that any payments of “nonqualified deferred compensation” (within the meaning of   Section 409A) due under this Agreement as a result of the Executive’s termination of employment   are subject to the Executive’s execution and delivery of a Release, (i) the Company shall deliver   the Release to the Executive within seven (7) days following the date of termination, and (ii) if the   Executive fails to execute the Release on or prior to the Release Expiration Date (as defined below)   or timely revokes Executive’s acceptance of the Release thereafter, the Executive shall not be   entitled to any payments or benefits otherwise conditioned on the Release.  For purposes of this   Paragraph 10(c), “Release Expiration Date” shall mean the date that is twenty-one (21) days   following the date upon which the Company timely delivers the Release to the Executive, or, in   the event that the Executive’s termination of employment is “in connection with an exit incentive   or other employment termination program” (as such phrase is defined in the Age Discrimination   in Employment Act of 1967), the date that is forty-five (45) days following such delivery date.  To   the extent that any payments of nonqualified deferred compensation (within the meaning of   Section 409A) due under this Agreement as a result of the Executive’s termination of employment                                               





 






 are delayed pursuant to this Paragraph 10(c), such amounts shall be paid in a lump sum on the first   payroll date to occur on or after the 60th day following the date of Executive’s termination of   employment, provided that Executive executes and does not revoke the Release prior to such 60th   day (and any applicable revocation period has expired).            11.   Compensation Recovery. The Executive acknowledges and agrees that, to the   extent the Company adopts any clawback or similar policy in connection with or otherwise as a   result of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and any rules and   regulations promulgated thereunder (including, without limitation, any listing rules or standards   resulting therefrom), he or she shall, during the Executive’s term of employment and thereafter,   take all action necessary or appropriate to comply with such policy, as may be amended from time   to time in the Company’s sole discretion (including, without limitation, entering into any further   agreements, amendments or policies necessary or appropriate to implement and/or enforce such   policy). The Executive’s obligations under this Paragraph 11 shall survive the termination of this   Agreement.          12.   Inventions. Inventions mean any and all inventions, discoveries, ideas, processes,   writings, works of authorship, designs, developments and improvements, whether or not   protectable under the applicable patent, trademark or copyright statutes, generated, conceived or   reduced to practice by the Executive, alone or in conjunction with others, while employed by   Inspire.                a.    Disclosure. Executive agrees to promptly disclose to Inspire in writing all   Inventions.                b.    Ownership, Assignment and Recordkeeping. All Inventions shall be the   exclusive property of Inspire. Executive hereby assigns all Inventions to Inspire. Executive agrees   to keep accurate, complete and timely records of Executive’s Inventions, which records shall be   the property of Inspire and shall be retained on Inspire’s premises.                c.    Cooperation. During and after the termination of Executive’s employment,   Executive agrees to give Inspire all cooperation and assistance necessary to perfect, protect, and   use its rights to Inventions. Without limiting the generality of the foregoing, Executive agrees to   sign all documents, do all things, and supply all information that Inspire may deem necessary to   (i) transfer or record the transfer of Executive’s entire right, title and interest in Inventions, and (ii)   enable Inspire to obtain patent, copyright or trademark protection for Inventions anywhere in the   world.                d.    Attorney-in-Fact. Executive irrevocably designates and appoints Inspire   and its duly authorized officers and agents as attorney-in-fact to act for and in Executive’s behalf  and stead to execute and file any lawful and necessary documents, and to do all other lawfully  permitted acts, required for the assignment of, application for, or prosecution of any United States  or foreign application for letters patent, copyright or trademark with the same legal force and effect  as if executed by Executive.                                                





 






            e.    Waiver. Executive hereby waives and quitclaims to Inspire any and all  claims, or any nature whatsoever, which Executive may now have or may hereafter have for  infringement of any patent, copyright, or trademark resulting from any Inventions.               f.    Future Patents. Any Invention relating to the business of Inspire with  respect to which Executive files a patent application within one (1) year following termination of  Executive’s employment shall be presumed to cover Inventions conceived by Executive during  the term of Executive’s employment, subject to proof to the contrary by Executive by good faith,  contemporaneous, written and duly corroborated records establishing that such Invention was  conceived and made following termination of employment and without using Confidential  Information.               g.    Release or License. If an Invention does not relate to the existing or  reasonable foreseeable business interests of Inspire, Inspire may, in its sole and unreviewable  discretion, release or license the Invention to the Executive upon written request by the Executive.  No release or license shall be valid unless in writing signed by Inspire’s general counsel.               h.    Notice. Executive is hereby notified that this Agreement and this Paragraph  12 do not apply to any Invention for which no equipment, supplies, facility or trade secret  information of Inspire was used and which was developed entirely on the Executive’s own time,  and (1) which does not relate (i) directly to the business of Inspire or (ii) to Inspire’s actual or  demonstrably anticipated research or development, or (2) which does not result from any work  performed by the Executive for Inspire.         13.   Miscellaneous.               a.    Entire Agreement. The terms of this Agreement (together with any other  agreements and instruments contemplated by this Agreement or referred to herein) is intended by  the parties hereto to be the final expression of their agreement with respect to the employment of  Executive by the Company, and supersedes and may not be contradicted by evidence of any prior  or contemporaneous agreement (including, without limitation, the Existing Employment  Agreement). The parties hereto further intend that this Agreement shall constitute the complete  and exclusive statement of its terms and that no extrinsic evidence whatsoever may be introduced  in any judicial, administrative or other legal proceeding to vary the terms of this Agreement.                b.    Construction. Each provision of this Agreement shall be interpreted so that  it is valid and enforceable under applicable law. If any provision of this Agreement is to any extent  invalid or unenforceable under applicable law, that provision will still be effective to the extent it  remains valid and enforceable. The remainder of this Agreement also will continue to be valid and  enforceable, and the entire Agreement will continue to be valid and enforceable in other  jurisdictions. In the event that a court of competent jurisdiction determines that any of the  provisions of Paragraphs 8 or 12 of this Agreement are not enforceable for any reason, such court  shall reform such provisions to the minimum extent necessary to make them enforceable, it being  the intention of the parties that such provisions be enforced to the maximum extent permitted by  applicable law.                                              





 






            c.    Waivers. No term or condition of this Agreement shall be deemed to have  been waived, nor shall there be any estoppel to enforce any provisions of this Agreement, except  by a statement in writing signed by the party against who enforcement of the waiver or estoppel is  sought. A waiver shall operate only as to the specific term or condition waived. No waiver shall  constitute a continuing waiver or a waiver of such term or condition for the future unless  specifically stated. No single or partial exercise of any right or remedy under this Agreement shall  preclude any party from otherwise or further exercising such rights or remedies, or any other rights  or remedies granted by law or any other document.               d.    Captions. The headings in this Agreement are for convenience of reference  only and do not affect the interpretation of this Agreement.               e.    Modifications. This Agreement may not be altered, modified or amended  except by an instrument in writing signed by each of the parties hereto.               f.    Governing Law. The laws of the State of Minnesota shall govern the  validity, construction and performance of this Agreement, to the extent not pre-empted by federal  law. Any legal proceeding related to this Agreement shall be brought in an appropriate Minnesota  court, and each of the parties hereto hereby consents to the exclusive jurisdiction of the courts of  the State of Minnesota for this purpose.               g.    Notices. All notices and other communications required or permitted under  this Agreement shall be in writing and provided to the other party either in person, by fax, or by  certified mail. Notices to Inspire must be provided or sent to its President; notices to Executive  must be provided or sent to Executive in person or at Executive’s home.               h.    Survival. Notwithstanding the termination of Executive’s employment and  the termination of this Agreement, the terms of this Agreement which relate to periods, activities,  obligations, rights or remedies of the parties upon or subsequent to such termination shall survive  such termination and shall govern all rights, disputes, claims or causes of action arising out of or  in any way related to this Agreement.               i.    Successors and Assigns. This Agreement shall be binding on and inure to  the benefit of Inspire’s successors and assigns.                                                                 [Remainder of Page Left Blank Intentionally]                                             





 






            IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective  Date.                                           INSPIRE MEDICAL SYSTEMS, INC.   /s/ Philip Ebeling                      /s/ Timothy P. Herbert   By:   Philip Ebeling                    By:   Timothy P. Herbert        Chief Operating Officer                 President