NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE
FOREGOING, SUBJECT TO THE PROVISIONS OF THE BORROWER’S ARTICLES OF ASSOCIATION
REGARDING RESTRICTIONS ON TRANSFER OF THE BORROWER'S SECURITIES, AS SHALL BE
AMENDED FROM TIME TO TIME, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.
 
Principal Amount: $1,250,000.00
   
Issue Date: July 20, 2010

 

CONVERTIBLE DEBENTURE

FOR VALUE RECEIVED, InspireMD Ltd., a corporation continued under the laws of
the State of Israel (hereinafter called “Borrower”), hereby promises to pay to
the order of Genesis Asset Opportunity Fund, L.P., maintaining an address at 61
Paine Avenue, New Rochelle, NY 10084, Fax: (212) 798–1366 (“Holder”) without
demand, the sum of  One Million Two Hundred Fifty Thousand Dollars
($1,250,000.00) (“Principal Amount”), with interest accruing thereon, on the
Maturity Date, if not sooner paid or converted into the Borrower’s or Pubco’s
securities as provided herein.

This Debenture has been entered into pursuant to the terms of a securities
purchase agreement among the Borrower, the Holder and certain other holders (the
“Other Holders”) of convertible debentures (the “Other Debentures”), dated of
even date herewith (the “Securities Purchase Agreement”) for an aggregate
Principal Amount of $1,250,000.

ARTICLE I
DEFINITIONS

1.1           Definitions.  Capitalized terms used and not otherwise defined
herein that are defined in the Securities Purchase Agreement shall have the
meanings given to such terms in the Securities Purchase Agreement.  Whenever
used in this Agreement, the following terms shall have the following respective
meanings:
 
§           “Audit Default” shall have the meaning set forth in the Securities
Purchase Agreement;
 
§           “Business Day” shall have the meaning set forth in the Securities
Purchase Agreement;
 
§           “Closing Date” shall have the meaning set forth in the Securities
Purchase Agreement;
 
 
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§           “Company Financing” shall mean the closing of, or execution of a
definitive and binding agreement (subject to customary closing conditions) with
respect to, an equity or convertible debt financing, or series of related
financings, that provides for the receipt by the Borrower of not less than
$3,000,000 in the aggregate; which closing occurs, or definitive agreement is
executed, as the case may be, between the Closing and twelve months following
the Maturity Date;
 
§           “Debenture” shall mean this instrument as originally executed, or if
later amended or supplemented, then as so amended or supplemented;
 
§           “Exclusivity Period” shall have the meaning set forth in the
Securities Purchase Agreement;
 
§           “Material Adverse Effect” shall mean (i) any event, occurrence, fact
or circumstance which has had a material adverse effect on the business, assets,
condition (financial or otherwise), liabilities or results of operations of the
Borrower or (ii) an Audit Default; provided, however, that the following
occurrences shall not be deemed to be a Material Adverse Effect: (A) changes
resulting from the announcement of the sale of the Debentures or the intention
to effectuate the PIPE Financing; (B) changes resulting from the parties'
compliance with the terms of the Transaction Documents; (C) the failure of the
Borrower to meet its financial projections and (D) provided that the Borrower is
able to continue its business in substantially the same manner as before, the
occurrence of: (i) changes in general political, economic or financial market
conditions; (ii) changes in industry conditions that do not disproportionately
effect the Borrower or its subsidiaries; (iii) changes in GAAP; (iv) changes in
law; and (v) acts of terrorism or war;
 
§           “Material Subsidiary” means a subsidiary of the Borrower whose total
assets (after intercompany eliminations) exceed 30 percent of the total assets
of the Borrower and all of its subsidiaries, as calculated on a consolidated
basis, as of the end of the most recently completed fiscal quarter;
 
§           “Maturity Date” shall mean the date that payment or conversion, as
the case may be, of this Debenture is required hereunder;
 
§           “Merger” shall have the meaning set forth in the Securities Purchase
Agreement;
 
§           “Ordinary Shares” shall have the meaning set forth in the Securities
Purchase Agreement;
 
§           “Original Maturity Date” shall have the meaning set forth in Section
2.1 herein;
 
§           “Other Debentures” shall have the meaning set forth in the preamble
of this Debenture;
 
§           “Other Holders” shall have the meaning set forth in the preamble of
this Debenture;
 
§           “Pipe Default” shall mean (i) the Borrower’s failure to act in good
faith to timely effectuate the Pipe Financing or (ii) the occurrence of a
Material Adverse Effect;
 
§           “Pipe Financing” shall have the meaning set forth in the Securities
Purchase Agreement;
 
§           “Pubco” shall have the meaning set forth in the Securities Purchase
Agreement;
 
§           “Pubco Common Stock” shall have the meaning set forth in the
Securities Purchase Agreement;
 
 
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§           “Second Maturity Date” shall have the meaning set forth in Section
2.2 herein;
 
§           “Securities Purchase Agreement” shall have the meaning set forth in
the preamble of this Debenture;
 
§           “Tax Ruling” shall have the meaning set forth in the Securities
Purchase Agreement;
 
§           “Transaction Documents” shall have the meaning set forth in the
Securities Purchase Agreement.

ARTICLE II
GENERAL PROVISIONS

2.1           Original Maturity Date.  The Borrower shall pay all sums due on
the Debenture on the later of (i) two months subsequent to the Borrower’s
receipt of the Tax Ruling or (ii) the six month anniversary of the Closing Date
(the “Original Maturity Date”).

2.2           Second Maturity Date.  Provided neither a Pipe Default nor an
Event of Default have occurred then, commencing 20 Business Days before the
Original Maturity Date, the Borrower shall have the right, in its sole
discretion, to extend the Maturity Date until nine months after the Original
Maturity Date (such extended date being the “Second Maturity Date”) by providing
written notice to the Holder not later than 10 Business Days prior to the
Original Maturity Date.

2.3           Interest Rate.  Interest payable on this Debenture shall accrue at
the annual rate of eight percent (8%) from the Issue Date through the date the
Debenture is paid or converted as provided for herein.

2.4           Pari Passu.  All payments made on this Debenture and the Other
Debentures and except as otherwise set forth herein all actions taken by the
Borrower with respect to this Debenture and the Other Debentures, including but
not limited to Mandatory Conversion and Optional Redemption (as set forth in
Article III), shall be made and taken pari passu with respect to this Debenture
and the Other Debentures.

2.5           No Insolvency Proceedings.  The Holder shall not initiate any
insolvency or bankruptcy proceedings against the Borrower due to the failure of
the Borrower to pay this Debenture or the interest thereon.

ARTICLE III
MANDATORY CONVERSION AND OPTIONAL REDEMPTION

3.1           Pipe Financing Conversion.  Provided the closing of the Pipe
Financing occurs before the Original Maturity Date, or, in the event that the
Borrower elects to extend the term of this Debenture pursuant to Section 2.2
hereof, the Second Maturity Date, then, at the option of the Holder, this
Debenture shall convert (in full and not in part) into shares of Pubco Common
Stock at the price of $1.50 per share at the closing of the Pipe Financing.  If
this Debenture is not converted at the closing of the Pipe Financing, it will be
repaid in cash at the closing of the Pipe Financing.

3.2           Company Financing Conversion.  Provided a Pipe Default, an Event
of Default or a Pipe Financing have not occurred, upon a Company Financing
occurring after the expiration of the Exclusivity Period but prior to the one
year anniversary of the Second Maturity Date, this Debenture shall automatically
convert into Ordinary Shares of the Borrower at price per share calculated at a
15% discount to the pricing of the Company Financing; provided, however, the
total coupon and discount granted to the Holder under this Section 3.2 shall not
exceed a 20% discount to the pricing of the Company Financing.  For the purpose
of clarity commencing on the expiration of the Exclusivity Period, this
Debenture shall be convertible in accordance with both Sections 3.1 or 3.2
herein, which ever occurs first.
 
 
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3.3           Second Maturity Date Conversion.  Provided neither a Pipe Default
nor an Event of Default have occurred and this Debenture was not previously
converted pursuant to Sections 3.1 or 3.2 herein before the Second Maturity Date
then, upon the Second Maturity Date, this Debenture shall automatically convert
into Ordinary Shares of the Borrower as follows:
`
(a) If a Company Financing occurs within one year after the Second Maturity Date
then at the closing of the Company Financing this Debenture shall automatically
convert into Ordinary Shares of the Borrower at price per share calculated at a
15% discount to the pricing of the Company Financing; provided, however, the
total coupon and discount granted to the Holder under this Section 3.2 shall not
exceed a 20% discount to the pricing of the Company Financing.

(b) If a Company Financing does not occur within one year after the Second
Maturity Date then on the First Anniversary of the Second Maturity Date this
Debenture shall automatically convert into Ordinary Shares of the Borrower at a
price of $10 per share.

(c) For the purpose of clarity an Event of Default first occurring after the
Second Maturity Date shall not affect the conversion provisions of this Section
3.3.

3.4           Reclassification, etc.  If the Borrower at any time shall, by
reclassification or otherwise, change the Ordinary Shares into the same or a
different number of securities of any class or classes that may be issued or
outstanding, this Debenture, as to the unpaid principal portion thereof and
accrued interest thereon, shall thereafter be deemed to evidence the right to
purchase an adjusted number of such securities and kind of securities as would
have been issuable as the result of such change with respect to the Ordinary
Shares immediately prior to such reclassification or other change.

3.5           Stock Splits, Combinations and Dividends.  If the Ordinary Shares
are subdivided or combined into a greater or smaller number of Ordinary Shares,
or if a dividend is paid on the Ordinary Shares in Ordinary Shares, the
Conversion Price shall be proportionately reduced in case of subdivision of
shares or stock dividend or proportionately increased in the case of combination
of shares, in each such case by the ratio which the total number of Ordinary
Shares outstanding immediately after such event bears to the total number of
Ordinary Shares outstanding immediately prior to such event.

3.6           Redemption.  This Debenture may be prepaid by the Borrower at any
time without the consent of the Holder.

ARTICLE IV
EVENT OF DEFAULT

The occurrence of any of the following events of default (“Event of Default”)
shall, at the option of the Holder hereof, make all sums of principal and
interest then remaining unpaid hereon and all other amounts payable hereunder
immediately due and payable, upon demand, without presentment or grace period,
all of which hereby are expressly waived, except as set forth below:

4.1           Failure to Pay Principal or Interest.  The Borrower fails to pay
any installment of principal, interest or other sum due under this Debenture
when due.
 
 
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4.2           Breach of Covenant.  The Borrower or any Material Subsidiary
breaches any material covenant or other term or condition of the Transaction
Documents in any material respect and such breach, if subject to cure, continues
for a period of fifteen (15) days.

4.3           Breach of Representations and Warranties.  Any material
representation or warranty of the Borrower made in the Transaction Documents, or
in any agreement, statement or certificate given in writing pursuant thereto or
in connection therewith shall be false or misleading in any material respect as
of the date made and the Closing Date.

4.4           Liquidation.  Any dissolution, liquidation or winding up of the
Borrower or a Material Subsidiary.
 
4.5           Cessation of Operations.  Any cessation of operations by the
Borrower or a Material Subsidiary, for 60 consecutive days, or the Borrower is
unable to pay its undisputed debt as such debts become due.
 
4.6           Financing Default.  If the Borrower enters into a reverse merger,
public offering or other private placement during the Exclusivity Period.

4.7           Receiver or Trustee.  The Borrower shall make an assignment for
the benefit of creditors, or apply for or consent to the appointment of a
receiver, trustee or liquidator for it or for a substantial part of its property
or business; or such a receiver, trustee or liquidator shall otherwise be
appointed which appointment has not been terminated by a court of competent
jurisdiction within ninety (90) days of such appointment.

4.8           Judgments.  Any money judgment, writ or similar final process
shall be entered or made in a non-appealable adjudication against the Borrower
or any Material Subsidiary or any of its property or other assets for more than
$500,000, unless paid, stayed, vacated, bonded or satisfied within sixty (60)
days.

4.9           Bankruptcy.  Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings or relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against the Borrower or a
Material Subsidiary and, if instituted against the Borrower or a Material
Subsidiary, shall not be dismissed within ninety (90) days after such
institution.

4.10           Reservation Default.  Failure by the Borrower to have reserved
for issuance upon exercise of the Warrants the number of shares of Ordinary
Shares required to allow exercise of all Warrants issued pursuant to the
Securities Purchase Agreement in the event such failure persists for a period of
more than  thirty (30) days.

4.11           Merger.  Other than as part of the Merger, the merger,
consolidation or reorganization of the Borrower with or into another corporation
or person or entity (other than with or into a subsidiary, at least 80% of which
is owned by the Borrower), or the sale of capital stock of the Borrower by the
Borrower or the holders thereof, in any case under circumstances in which the
holders of a majority of the voting power of the outstanding capital stock of
the Borrower immediately prior to such transaction shall own less than a
majority in voting power of the outstanding capital stock of the Borrower or the
surviving or resulting corporation or other entity, as the case may be,
immediately following such transaction.

4.12.           Material Adverse Effect.  The occurrence of one or more events
having a Material Adverse Effect.

4.13           Other Debenture Default.  The occurrence of an Event of Default
under any Other Debenture.
 
 
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4.14           Adverse Tax Ruling.  A Tax Ruling from the Israeli Tax Authority
that the issuance of Pubco securities in exchange for Company securities held by
Company shareholders and option holders upon the closing of the Merger shall not
constitute a deferred tax event for the Company and/or its shareholders and
shall obligate them to pay any amounts prior to receiving actual funds resulting
from sale of Pubco's securities as a result of such exchange.

4.15           Failure to Obtain Tax Ruling.  If the Borrower fails to obtain a
Tax Ruling within 15 months after the Closing Date.

ARTICLE V
MISCELLANEOUS

5.1           Failure or Indulgence Not Waiver.  No failure or delay on the part
of the Holder hereof in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege.  All rights and remedies existing
hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
 
5.2           Notices.  All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice.  Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the first business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur.  The addresses for
such communications shall be: (i) if to the Borrower to: InspireMD, Ltd., 3
Menorat Hamaor St. Tel Aviv, Israel Fax:  + 972-3-6917692, Attn: Dr. Asher
Holzer, with a copy to:  Haynes and Boone, LLP, 1221 Avenue of the Americas,
26th Floor, New York, NY 10020-1007, Fax: (212) 884–8234, Attention: Rick
Werner, Esq., and (ii) if to the Holder, to the name, address and facsimile
number set forth on the front page of this Debenture, with a copy by fax only to
Grushko & Mittman, P.C., 515 Rockaway Avenue, Valley Stream, New York 11581,
facsimile: (212) 697–3575.
 
5.3           Assignability.  This Debenture shall be binding upon the Borrower
and its successors and assigns, and shall inure to the benefit of the Holder and
its successors and assigns.  The Borrower may not assign its obligations under
this Debenture.
 
5.4           Cost of Collection.  If default is made in the payment of this
Debenture, the Borrower shall pay the Holder hereof reasonable costs of
collection, including reasonable attorneys’ fees.
 
5.5           Governing Law.  This Debenture shall be governed by and construed
in accordance with the laws of the State of Israel without regard to conflicts
of laws principles that would result in the application of the substantive laws
of another jurisdiction.  Any action brought by either party against the other
concerning the transactions contemplated by this Agreement must be brought only
in the courts located in the Tel Aviv Jaffa District, the State of Israel.  Both
parties and the individual signing this Agreement on behalf of the Borrower
agree to submit to the exclusive jurisdiction of such courts and the Holder
irrevocably waives any objection to venue as an “inconvenient forum.”  In the
event that any provision of this Debenture is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law.  Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or unenforceability of any other provision of this Debenture.
 
 
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5.6           Maximum Payments.  Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum rate permitted by applicable law.  In the event that the
rate of interest required to be paid or other charges hereunder exceed the
maximum rate permitted by applicable law, any payments in excess of such maximum
rate shall be credited against amounts owed by the Borrower to the Holder and
thus refunded to the Borrower.
 
5.7           Non-Business Days.  Whenever any payment or any action to be made
shall be due on a Saturday, Sunday or a public holiday under the laws of the
State of New York or the State of Israel, such payment may be due or action
shall be required on the next succeeding business day and, for such payment,
such next succeeding day shall be included in the calculation of the amount of
accrued interest payable on such date.
 
5.8           Shareholder Status.  The Holder shall not have rights as a
shareholder of the Borrower with respect to unconverted portions of this
Debenture.

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IN WITNESS WHEREOF, the Borrower has caused this Debenture to be signed in its
name by an authorized officer as of the 20 day of July, 2010.

 
INSPIREMD LTD.
           
 
By: 
       
Name:
Title:
 

 
WITNESS:

______________________________________
 
 
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