AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

This Amended and Restated Employment Agreement (the “Agreement”), entered into
and effective as of February 4, 2019 (the “Effective Date”), is by and between
InspireMD, Inc., a Delaware corporation (the “Company”), and James J. Barry PhD,
an individual (the “Executive”). This Agreement amends, restates and supersedes
that certain Employment Agreement by and between the Company and the Executive
dated July 14, 2014, including any amendments thereto, in its entirety.

 

PRELIMINARY STATEMENTS

 

A. The Company continues to desire to employ the Executive as its President and
Chief Executive Officer.

 

B. The Company and the Executive desire to set forth in writing the terms and
conditions of their agreement and understanding with respect to the employment
of the Executive as its President and Chief Executive Officer.

 

C. Capitalized terms used herein and not otherwise defined have the meaning for
them set forth on Exhibit A attached hereto and incorporated herein by
reference.

 

The parties, intending to be legally bound, hereby agree as follows:

 

I. EMPLOYMENT AND DUTIES

 

1.1 Duties. The Company hereby employs the Executive as an employee, and the
Executive agrees to be employed by the Company, upon the terms and conditions
set forth herein. While serving as an employee of the Company, the Executive
shall serve as President and Chief Executive Officer of the Company. The
Executive shall report to the Board and shall have such power and authority and
perform such duties, functions and responsibilities as are associated with and
incident to such positions, and as the Board may from time to time require of
him; provided, however, that such authority, duties, functions and
responsibilities are commensurate with the power, authority, duties, functions
and responsibilities generally performed by the President and Chief Executive
Officer of public companies which are similar in size and nature to, and the
financial position of, the Company, including, but not limited to, management
responsibility for the operations and administration of the Company. The
Executive also agrees to serve, if elected, as an officer of any other direct or
indirect subsidiary of the Company or InspireMD Ltd., the wholly-owned
subsidiary of the Company (“Subsidiary”), in each such case at no compensation
in addition to that provided for in this Agreement, but the Executive serves in
such positions solely as an accommodation to the Company and such positions
shall grant him no rights hereunder. The Company will use reasonable efforts to
cause the Executive to serve as a member of the Board, without any additional
compensation, as long as the Executive continues to serve as its President and
Chief Executive Officer.

 

1.2 Services. During the Term (as defined in Section 1.3), and excluding any
periods of vacation, sick leave or Disability, the Executive agrees to devote
his full business time, attention and efforts to the business and affairs of the
Company. During the Term, it shall not be a violation of this Section 1.2 for
the Executive to (a) serve on civic or charitable boards or committees, (b)
serve on three (3) for-profit corporate boards (in addition to the Company’s
Board of Directors) at any one time (provided that such activities do not create
a conflict with Executive’s employment hereunder as determined by the Board in
its reasonable discretion), (c) deliver lectures or fulfill speaking
engagements, or (d) manage personal investments, so long as such activities do
not interfere with the performance of the Executive’s responsibilities in
accordance with this Agreement. The Executive must request the Board’s written
consent to serve on a corporate board, which consent shall be at the Board’s
reasonable discretion and only so long as such service does not interfere with
the performance of his responsibilities hereunder.

 

   

 

 

1.3 Term of Employment. Unless sooner terminated by either party as provided in
Articles IV and V hereunder, or extended upon the mutual agreement of the
parties, the term of this Agreement shall continue until December 31, 2020 (the
“Term”). The Executive shall resign as a member of the Board at the end of the
Term if requested by the Company.

 

II. COMPENSATION

 

2.1 General. The base salary (as set forth in Section 2.2) and Incentive
Compensation (as defined in Section 2.3) payable to the Executive hereunder, as
well as any stock-based compensation, including stock options, stock
appreciation rights and restricted stock grants, shall be determined from time
to time by the Board and paid pursuant to the Company’s customary payroll
practices or in accordance with the terms of the applicable stock-based Plans
(as defined in Section 2.4). The Company shall pay the Executive in cash, in
accordance with the normal payroll practices of the Company, the base salary and
Incentive Compensation set forth below. For the avoidance of doubt, in providing
any compensation payable in stock, the Company may withhold, deduct or collect
from the compensation otherwise payable or issuable to the Executive a portion
of such compensation to the extent required to comply with applicable tax laws
to the extent such withholding is not made or otherwise provided for pursuant to
the agreement governing such stock-based compensation.

 

2.2 Base Salary. The Executive shall be paid a base salary of no less than
$33,333.33 per month ($400,000 on an annualized basis) while he is employed by
the Company during the Term, payable in accordance with the Company’s normal
payroll practices; provided, however, that nothing shall prohibit the Company
from reducing the base salary as part of an overall cost reduction program that
affects all senior executives of the Company Group and does not
disproportionately affect the Executive, so long as such reductions do not
reduce the base salary to a rate that is less than 90% of the minimum base
salary amount set forth above (or, if the minimum base salary amount has been
increased during the Term, 90% of such increased amount). The base salary shall
be reviewed annually by the Board for increase (but not decrease, except as
permitted above) as part of the Company’s annual compensation review, and any
increased amount shall become the base salary under this Agreement.

 

2.3 Bonus or other Incentive Compensation. During the Term, the Executive shall
be eligible to receive annual bonus compensation in an amount equal to 100% of
his base salary (the “Annual Bonus”) upon the achievement of reasonable target
objectives and performance goals as may be determined by the Board in
consultation with the Executive (the “Goals”). In the event the Executive’s
actual performance exceeds the Goals, the Board may, in its sole discretion, pay
the Executive bonus compensation of more than 100% of the Annual Bonus. In each
case, the Annual Bonus shall be payable in accordance with the Company’s annual
bonus plan (the “Bonus Plan”). Amounts payable under the Bonus Plan shall be
determined by the Board and shall be payable following such fiscal year and no
later than two and one-half months after the end of such fiscal year. Amounts
paid will be less than the Annual Bonus or nothing if the Goals are not met as
set forth under the terms of the Bonus Plan. Any bonus or incentive compensation
under this Section 2.3, the Bonus Plan or otherwise is referred to herein as
“Incentive Compensation.” Stock-based compensation shall not be considered
Incentive Compensation under the terms of this Agreement unless the parties
expressly agree otherwise in writing. The payment of any Incentive Compensation
shall be subject to all federal, state and withholding taxes, social security
deductions and other general withholding obligations.

 

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2.4 Stock Compensation. The Executive has received grants of stock subject to
the terms and conditions of the applicable agreements, and the Company’s 2013
Long Term Incentive Plan or other stock-based compensation plans as the Company
may have established or may establish from time to time (collectively, the
“Plans”). In addition, on the Effective Date, the Company shall grant the
Executive 2,000,000 shares of Restricted Stock (the “RS Grant”). The RS Grant
will be governed in full by the terms and conditions of the Plans and the
Executive’s individual RS Grant agreement to be entered into between the Company
and the Executive as of the Effective Date. Furthermore, upon the achievement of
the criteria set forth separately by mutual agreement of the Board and the
Executive, the Executive shall be eligible to receive, as soon as practicable,
subject to Board approval, an equity grant relating to the number of shares of
the Company’s common stock equal to 5% of the Company’s outstanding common stock
on the date of such grant (inclusive of, rather than in addition to, the shares
granted as part of the RS Grant) (the “Equity Bonus”), subject to the terms and
conditions of the applicable Plans and applicable agreement(s). The Equity Bonus
shall be comprised of as close as is practicable to 50% stock options and 50%
shares of Restricted Stock. The Executive will also be eligible to receive
additional stock based compensation whether stock options, stock appreciation
rights, restricted stock grants, or otherwise under the Plans, at the sole
discretion of the Board.

 

2.5 Accrued Unpaid Vacation. The Executive shall receive payment for any accrued
by unused vacation time through the calendar year 2018, payable on the Company’s
first regular payroll date after December 31, 2018.

 

III. EMPLOYEE BENEFITS

 

3.1 General. Subject only to any post-employment rights under Article V, so long
as the Executive is employed by the Company pursuant to this Agreement, he shall
be eligible for the following benefits to the extent generally available to
senior executives of the Company or by virtue of his position, tenure, salary
and other qualifications. Any eligibility shall be subject to and in accordance
with the terms and conditions of the Company’s benefits policies and applicable
plans (including as to deductibles, premium sharing, co-payments or other
cost-splitting arrangements).

 

3.2 Employee Benefits. During the Term and subject to any contribution therefor
generally required of senior executives of the Company, the Executive shall be
entitled to participate in such employee benefit plans and benefit programs as
are made available by the Company to the Company’s senior executives. Such
participation shall be subject to the terms of the applicable plan documents and
generally applicable Company policies. The Company may alter, modify, add to or
delete its employee benefit plans at any time, as it, in its sole judgment,
determines to be appropriate, without recourse by the Executive.

 

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3.3 Vacation. The Executive shall be entitled to 4 weeks paid vacation per
12-month period.

 

3.4 Expenses. The Executive shall be entitled to receive prompt reimbursement
for all reasonable business-related expenses incurred by the Executive in
performing his duties under this Agreement. Reimbursement of the Executive for
such expenses will be made upon presentation to the Company of expense vouchers
that are in sufficient detail to identify the nature of the expense, the amount
of the expense, the date the expense was incurred and to whom payment was made
to incur the expense, all in accordance with the expense reimbursement
practices, policies and procedures of the Company.

 

IV. TERMINATION OF EMPLOYMENT

 

4.1 Termination by Mutual Agreement. The Executive’s employment may be
terminated at any time during the Term by mutual written agreement of the
Company and the Executive.

 

4.2 Death. The Executive’s employment hereunder shall terminate upon his death.

 

4.3 Disability. In the event the Executive incurs a Disability for a continuous
period exceeding 90 days or for a total of 180 days during any period of 12
consecutive months, the Company may, at its election, terminate the Executive’s
employment during or after the Term by delivering a Notice of Termination (as
defined in Section 4.8) to the Executive 30 days in advance of the date of
termination.

 

4.4 Good Reason. The Executive may terminate his employment at any time during
or after the Term for Good Reason by delivering a Notice of Termination to the
Company 30 days in advance of the date of termination; provided, however, that
the Executive agrees not to terminate his employment for Good Reason until the
Executive has given the Company at least 30 days’ in which to cure the
circumstances set forth in the Notice of Termination constituting Good Reason
and if such circumstances are not cured by the 30th day, the Executive’s
employment shall terminate on such date. If the circumstances constituting Good
Reason are remedied within the cure period to the reasonable satisfaction of the
Executive, such event shall no longer constitute Good Reason for purposes of
this Agreement and the Executive shall thereafter have no further right
hereunder to terminate his employment for Good Reason as a result of such event.
Unless the Executive provides written notification of an event described in the
definition of Good Reason within 90 days after the Executive has actual
knowledge of the occurrence of any such event, the Executive shall be deemed to
have consented thereto and such event shall no longer constitute Good Reason for
purposes of this Agreement.

 

4.5 Termination without Cause. The Company may terminate the Executive’s
employment at any time during or after the Term without Cause by delivering to
the Executive a Notice of Termination 30 days in advance of the date of
termination; provided that as part of such notice the Company may request that
the Executive immediately tender the resignations contemplated by Section 4.9
and otherwise cease performing his duties hereunder. The Notice of Termination
need not state any reason for termination and such termination can be for any
reason or no reason. The date of termination shall be the date set forth in the
Notice of Termination.

 

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4.6 Cause. The Company may terminate the Executive’s employment at any time
during or after the Term for Cause by delivering a Notice of Termination to the
Executive. The Notice of Termination shall include a copy of a resolution duly
adopted by the affirmative vote of not less than a majority of the entire
membership of the Board, at a meeting of the Board called and held for such
purpose, finding that in the good faith opinion of the Board an event
constituting Cause has occurred and specifying the particulars thereof. A Notice
of Termination for Cause may not be delivered unless in conjunction with such
Board meeting the Executive was given reasonable notice and the opportunity for
the Executive, together with the Executive’s counsel, to be heard before the
Board prior to such vote. If the event constituting Cause for termination is
other than as a result of a breach or violation by the Executive of any
provision of Article VI and only if the event constituting Cause is curable,
then the Executive shall have 30 days from the date of the Notice of Termination
to cure such event described therein to the reasonable satisfaction of the Board
in its sole discretion and, if such event is cured by the Executive within the
cure period, such event shall no longer constitute Cause for purposes of this
Agreement and the Company shall thereafter have no further right to terminate
the Executive’s employment for Cause as a result of such event. The Executive
shall have no other rights under this Agreement to cure an event that
constitutes Cause. Unless the Company provides written notification of an event
described in the definition of Cause within 90 days after the Company knows or
has reason to know of the occurrence of any such event, the Company may not
terminate the Executive for Cause unless such event is recurring or uncurable.
Knowledge shall mean actual knowledge of any member of the Board or any of the
Company’s senior executives.

 

4.7 Voluntary Termination by the Executive. The Executive may voluntarily
terminate his employment at any time during or after the Term by delivering to
the Company a Notice of Termination 30 days in advance of the date of
termination (a “Voluntary Termination”). For purposes of this Agreement, a
Voluntary Termination shall not include a termination of the Executive’s
employment by reason of death or for Good Reason. A Voluntary Termination shall
not be considered a breach or other violation of this Agreement.

 

4.8 Notice of Termination. Any termination of employment under this Agreement by
the Company or the Executive requiring a notice of termination shall require
delivery of a written notice by one party to the other party (a “Notice of
Termination”). A Notice of Termination must indicate the specific termination
provision of this Agreement relied upon and the date of termination. It must
also set forth in reasonable detail the facts and circumstances claimed to
provide a basis for such termination, other than in the event of a Voluntary
Termination or termination without Cause. The date of termination specified in
the Notice of Termination shall comply with the time periods required under this
Article IV, and may in no event be earlier than the date such Notice of
Termination is delivered to or received by the party getting the notice. If the
Executive fails to include a date of termination in any Notice of Termination he
delivers, the Company may establish such date in its sole discretion. No Notice
of Termination under Section 4.4 or 4.6 shall be effective until the applicable
cure period, if any, shall have expired without the Company or the Executive,
respectively, having corrected the event or events subject to cure to the
reasonable satisfaction of the other party. The terms “termination” and
“termination of employment,” as used herein are intended to mean a termination
of employment which constitutes a “separation from service” under Section 409A.

 

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4.9 Resignations. Upon ceasing to be an employee of the Company for any reason,
or earlier upon request by the Company pursuant to Sections 4.5 or 4.6, the
Executive agrees to immediately tender written resignations to the Company with
respect to all officer and director positions he may hold at that time with any
member of the Company or Subsidiary.

 

V. PAYMENTS ON TERMINATION

 

5.1 Death; Disability; Resignation for Good Reason; Termination without Cause.
If at any time during the Term the Executive’s employment with the Company is
terminated pursuant to Section 4.2, 4.3, 4.4 or 4.5, the Executive shall be
entitled to the payment and benefits set forth below only. If at any time after
the Term the Executive’s employment with the Company is terminated pursuant to
Section 4.2, 4.3, 4.4 or 4.5, the Executive shall be entitled to the payment and
benefits set forth in (a), (b) and the specified provisions of (c) only.

 

(a) any unpaid base salary and accrued unpaid vacation (notwithstanding any
Company policy to the contrary) then owing through the date of termination or
Incentive Compensation that is as of such date actually earned or owing under
Article II, but not yet paid to the Executive, which amounts shall be paid to
the Executive on the next regularly scheduled Company payroll date following the
date of termination or earlier if required by applicable law; provided, however,
that the Executive shall be entitled to receive the pro rata amount of any Bonus
Plan Incentive Compensation for the fiscal year of his termination of employment
(based on the number of business days he was actually employed by the Company
during the fiscal year in which the termination of employment occurs and
assuming full achievement of all applicable goals under the Bonus Plan) that he
would have received had his employment not been terminated during such year.
Nothing in the foregoing sentence is intended to give the Executive greater
rights to such Incentive Compensation than a pro rata portion of what he would
ordinarily be entitled to under the Bonus Plan Incentive Compensation that would
have been applicable to him had his employment not been terminated (assuming
full achievement of all applicable goals under the Bonus Plan), it being
understood that the Executive’s termination of employment shall not be used to
disqualify the Executive from or make him ineligible for a pro rata portion of
the Bonus Plan Incentive Compensation to which he would otherwise have been
entitled (assuming full achievement of all applicable goals under the Bonus
Plan). The pro rata portion of Bonus Plan Incentive Compensation shall, subject
to Section 7.16, be paid at the time such Incentive Compensation is paid to
senior executives of the Company (“Severance Bonus Payment Date”) but in no
event later than two and one-half months after the end of such fiscal year.

 

(b) a one-time lump sum severance payment in an amount equal to $850,000. The
lump sum severance payment shall be paid on the Company’s first payroll date
after the Executive’s signing the release described in Section 5.4 and the
expiration of any applicable revocation period, subject, in the case of
termination other than as a result of the Executive’s death, to Section 7.16;
provided, however, that in the event that the time period for return of the
release and expiration of the applicable revocation period begins in one taxable
year and ends in a second taxable year, such payment shall not be made until the
second taxable year if necessary to comply with Section 409A of the Code.

 

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(c) one hundred percent (100%) of all unvested stock options, restricted stock
shares, restricted stock units, stock appreciation rights or similar stock-based
rights granted to the Executive shall vest and, if applicable, be immediately
exercisable and any risk of forfeiture included in such restricted or other
stock grants previously made to the Executive shall immediately lapse. In
addition, if the Executive’s employment is terminated pursuant to Section 4.2,
4.3, 4.4 or 4.5 during or after the Term, the Executive shall have two (2) years
from the date of termination to exercise any outstanding stock options or stock
appreciation rights. The extension of the exercise period set forth in this
Section 5.1(c) shall occur notwithstanding any provision in any Plans or related
grant documents which provides for a lesser vesting or shorter period for
exercise upon termination by the Company without Cause (which for this purpose
will include a termination for Good Reason), notwithstanding anything to the
contrary in any Plans or grant documents; provided, however, and for the
avoidance of doubt, nothing in this Agreement shall be construed as or imply
that this Agreement does or can grant greater rights than are allowed under the
terms and conditions of the Plans.

 

(d) to the fullest extent permitted by the Company’s then-current benefit plans,
continuation of health, dental, vision and life insurance coverage, (but not
pension, retirement, profit-sharing, severance or similar compensatory
benefits), for the Executive and the Executive’s eligible dependents
substantially similar to coverage they were receiving or which they were
entitled to immediately prior to the termination of the Executive’s employment
for the lesser of eighteen (18) months after termination or until the Executive
secures coverage from new employment and the period of COBRA health care
continuation coverage provided under Section 4980B of the Code shall run
concurrently with the foregoing 18 month period. In order to receive such
benefits, the Executive or his eligible dependents must continue to make any
required co-payments, deductibles, premium sharing or other cost-splitting
arrangements the Executive was otherwise paying immediately prior to the date of
termination and nothing herein shall require the Company to be responsible for
such items. If the Executive is a “specified employee” under Section 409A, the
full cost of the continuation or provision of employee group welfare benefits
(other than medical or dental benefits) shall be paid by the Executive until the
earliest to occur of (i) the Executive’s death or (ii) the first day of the
seventh month following the Executive’s termination of employment, and such cost
shall be reimbursed by the Company to, or on behalf of, the Executive in a lump
sum cash payment on the earlier to occur of the Executive’s death or the first
day of the seventh month following the Executive’s termination of employment,
except that, as provided above, the Executive shall not receive reimbursement
for any required co-payments, deductibles, premium sharing or other
cost-splitting arrangements the Executive was otherwise paying immediately prior
to the date of termination.

 

(e) a cash payment to the Executive in the amount of $25,000 which Executive may
use towards the costs and expenses of executive outplacement services or an
education program selected by the Executive. The payment shall be paid on the
Company’s first regularly scheduled payroll date after the Executive’s signing
the release described in Section 5.4 and the expiration of any applicable
revocation period, subject, in the case of termination other than as a result of
the Executive’s death, to Section 7.16, provided, however, that in the event
that the time period for return of the release and expiration of the applicable
revocation period begins in one taxable year and ends in a second taxable year,
such payment shall not be made until the second taxable year if necessary to
comply with Section 409A of the Code.

 

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(f) In the event that the Term and/or the Executive’s employment is not extended
beyond December 31, 2020, the Executive shall be entitled to the consideration
set forth in this Section 5.1 under the terms set forth herein. Notwithstanding
the foregoing, in the event that the Executive shall not agree to an extension
of the Agreement beyond December 31, 2020 even though the Company has offered to
extend the Agreement beyond that date on terms that are no less favorable to the
Executive than the terms and conditions of this Agreement, the one-time lump sum
severance payment set forth in Section 5.1(b) shall instead be in the amount of
$600,000.

 

(g) Any payments by the Company under Section 5.1(b) above pursuant to a
termination under Section 4.2 or 4.3 shall be reduced by any payments received
by the Executive pursuant to any of the Company’s employee welfare benefit plans
providing for payments in the event of death or Disability to the extent such
reduction is permitted by, and does not trigger an impermissible change in time
or form of payment under, Section 409A of the Code.

 

5.2 Termination for Cause; Voluntary Termination. If at any time during or after
the Term the Executive’s employment with the Company is terminated for Cause
under Section 4.6 or upon a Voluntary Termination under Section 4.7, the
Executive shall be entitled to only the following:

 

(a) any unpaid base salary and accrued unpaid vacation (notwithstanding any
Company policy to the contrary) then owing through the date of termination or
Incentive Compensation that is as of such date actually earned or owing under
Article II, but not yet paid to the Executive, which amounts shall be paid to
the Executive within 30 days of the date of termination. Nothing in this
provision is intended to imply that the Executive is entitled to any partial or
pro rata payment of Incentive Compensation on termination unless the Bonus Plan
expressly provides as much under its specific terms.

 

(b) whatever rights, if any, that are available to the Executive upon such a
termination pursuant to the Plans or any award documents related to any
stock-based compensation such as stock options, stock appreciation rights or
restricted stock grants. This Agreement does not grant any greater rights with
respect to such items than provided for in the Plans or the award documents in
the event of any termination for Cause or a Voluntary Termination.

 

5.3 Termination following a Change in Control. The Executive shall have no
specific right to terminate this Agreement or right to any severance payments or
other benefits solely as a result of a Change in Control. If during a Change in
Control Period during or after the Term, (a) the Executive terminates his
employment with the Company due to a termination for Good Reason pursuant to
Section 4.4, or (b) the Company terminates the Executive’s employment pursuant
to Section 4.5, the Executive shall be entitled to those payments that are set
forth in Section 5.1. No other rights result from termination during a Change in
Control Period; provided, however, that nothing in this Section 5.3 is intended
to limit or impair the rights of the Executive under the Plans or any documents
evidencing any stock-based compensation awards in the event of a Change in
Control if such Plans or award documents grant greater rights than are set forth
herein.

 

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5.4 Release. The Company’s obligation to pay or provide any benefits to the
Executive following termination (other than in the event of death pursuant to
Section 4.2) is expressly subject to the requirement that he execute and not
breach or rescind a release relating to employment matters and the circumstances
surrounding his termination in favor of the members of the Company Group and
their officers, directors and related parties and agents, in a form reasonably
acceptable to the Company at the time of Executive’s termination of employment.
The Company shall deliver such release to the Executive within three business
days following his termination of employment and the Executive shall be
obligated to sign and return the release to the Company within 45 days of
receipt of such release to receive any benefits or payments following
termination.

 

5.5 Other Benefits. Except as expressly provided otherwise in this Article V,
the provisions of this Agreement shall not affect the Executive’s participation
in, or terminating distributions and vested rights under, any pension,
profit-sharing, insurance or other employee benefit plan of the Company Group to
which the Executive is entitled pursuant to the terms of such plans, or expense
reimbursements he is otherwise entitled to under Section 3.4.

 

5.6 No Mitigation. It will be difficult, and may be impossible, for the
Executive to find reasonably comparable employment following the termination of
the Executive’s employment, and the protective provisions under Article VI
contained herein will further limit the employment opportunities for the
Executive. In addition, the Company’s severance pay policy applicable in general
to its salaried employees does not provide for mitigation, offset or reduction
of any severance payment received thereunder. Accordingly, the parties hereto
expressly agree that the payment of severance compensation in accordance with
the terms of this Agreement will be liquidated damages, and that the Executive
shall not be required to seek other employment, or otherwise, to mitigate any
payment provided for hereunder.

 

5.7 Limitation; No Other Rights. Any amounts due or payable under this Article V
are in the nature of severance payments or liquidated damages, or both, and the
Executive agrees that such amounts shall fully compensate the Executive, his
dependents, heirs and beneficiaries and the estate of the Executive for any and
all direct damages and consequential damages that they do or may suffer as a
result of the termination of the Executive’s employment, or both, and are not in
the nature of a penalty. Notwithstanding the above, no member of the Company
Group shall be liable to the Executive under any circumstances for any
consequential, incidental, punitive or similar damages. The Executive expressly
acknowledges that the payments and other rights under this Article V shall be
the sole monies or other rights to which the Executive shall be entitled to and
such payments and rights will be in lieu of any other rights or remedies he
might have or otherwise be entitled to. In the event of any termination under
this Article V, the Executive hereby expressly waives any rights to any other
amounts, benefits or other rights, including without limitation whether arising
under current or future compensation or severance or similar plans, agreements
or arrangements of any member of the Company Group (including as a result of
changes in (or of) control or similar Change in Control events), unless the
Executive’s entitlement to participate or receive benefits thereunder has been
expressly approved by the Board. Similarly, no one in the Company Group shall
have any further liability or obligation to the Executive following the date of
termination, except as expressly provided in this Agreement.

 

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5.8 No Right to Set Off. The Company shall not be entitled to set off against
amounts payable to the Executive hereunder any amounts earned by the Executive
in other employment, or otherwise, after termination of his employment with the
Company, or any amounts which might have been earned by the Executive in other
employment had he sought such other employment.

 

5.9 Adjustments Due to Excise Tax.

 

(a) If it is determined that any amount or benefit to be paid or payable to the
Executive under this Agreement or otherwise in conjunction with his employment
(whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise in conjunction with his employment) would give
rise to liability of the Executive for the excise tax imposed by Section 4999 of
the Code, as amended from time to time, or any successor provision (the “Excise
Tax”), then the amount or benefits payable to the Executive (the total value of
such amounts or benefits, the “Payments”) shall be reduced by the Company to the
extent necessary so that no portion of the Payments to the Executive is subject
to the Excise Tax. Such reduction shall only be made if the net amount of the
Payments, as so reduced (and after deduction of applicable federal, state, and
local income and payroll taxes on such reduced Payments other than the Excise
Tax (collectively, the “Deductions”)) is greater than the excess of (1) the net
amount of the Payments, without reduction (but after making the Deductions) over
(2) the amount of Excise Tax to which the Executive would be subject in respect
of such Payments.

 

(b) In the event it is determined that the Excise Tax may be imposed on the
Executive prior to the possibility of any reductions being made pursuant to
Section 5.9(a), the Company and the Executive agree to take such actions as they
may mutually agree in writing to take to avoid any such reductions being made
or, if such reduction is not otherwise required by Section 5.9(a), to reduce the
amount of Excise Tax imposed.

 

(c) The independent public accounting firm serving as the Company’s auditing
firm, or such other accounting firm, law firm or professional consulting
services provider of national reputation and experience reasonably acceptable to
the Company and Executive (the “Accountants”) shall make in writing in good
faith all calculations and determinations under this Section 5.9, including the
assumptions to be used in arriving at any calculations. For purposes of making
the calculations and determinations under this Section 5.9, the Accountants and
each other party may make reasonable assumptions and approximations concerning
the application of Section 280G and Section 4999. The Company and Executive
shall furnish to the Accountants and each other such information and documents
as the Accountants and each other may reasonably request to make the
calculations and determinations under this Section 5.9. The Company shall bear
all costs the Accountants incur in connection with any calculations contemplated
hereby.

 

 10 

 

 

VI. PROTECTIVE PROVISIONS

 

Since the Executive will be serving as President and Chief Executive Officer and
will have access to Confidential Information of the Company Group, the Executive
agrees to the following restrictive covenants.

 

6.1 Noncompetition. Without the prior written consent of the Board (which may be
withheld in the Board’s sole discretion), so long as the Executive is an
employee of the Company or any other member of the Company Group and for a
one-year period thereafter (the “Restricted Period”), the Executive agrees that
he shall not anywhere in the Prohibited Area, for his own account or the benefit
of any other, engage or participate in or assist or otherwise be connected with
a Competing Business. For the avoidance of doubt, the Executive understands that
this Section 6.1 prohibits the Executive from acting for himself or as an
officer, employee, manager, operator, principal, owner, partner, shareholder,
advisor, consultant of, or lender to, any individual or other Person that is
engaged or participates in or carries out a Competing Business or is actively
planning or preparing to enter into a Competing Business. The parties agree that
such prohibition shall not apply to the Executive’s passive ownership of not
more than 5% of a publicly-traded company.

 

6.2 No Solicitation or Interference. During the Restricted Period (other than
while an employee acting solely for the express benefit of the Company Group),
the Executive shall not, whether for his own account or for the account or
benefit of any other Person, throughout the Prohibited Area:

 

(a) request, induce or attempt to influence (i) any customer of any member of
the Company Group who was a customer of any member of the Company Group at any
time during the two-year period prior to the Executive’s date of termination, to
limit, curtail, cancel or terminate any business it transacts with, or products
or services it receives from or sells to, or (ii) any Person employed by (or
otherwise engaged in providing services for or on behalf of) any member of the
Company Group to limit, curtail, cancel or terminate any employment, consulting
or other service arrangement, with any member of the Company Group. Such
prohibition shall expressly extend to any hiring or enticing away (or any
attempt to hire or entice away) any employee of the Company Group;

 

(b) solicit from or sell to any customer any products or services that any
member of the Company Group provides or is planning to provide to such customer
and that are the same as or substantially similar to the products or services
that any member of the Company Group, sold or provided while the Executive was
employed with, or providing services to, any member of the Company Group;

 

 11 

 

 

(c) contact or solicit any customer for the purpose of discussing (i) services
or products that are competitive with and the same or closely similar to those
offered by any member of the Company Group during the two-year period prior to
the Executive’s date of termination, or (ii) any past or present business of any
member of the Company Group;

 

(d) request, induce or attempt to influence any supplier, distributor or other
Person with which any member of the Company Group has a business relationship or
to limit, curtail, cancel or terminate any business it transacts with any member
of the Company Group; or

 

(e) otherwise interfere with the relationship of any member of the Company Group
with any Person which is, or within one-year prior to the Executive’s date of
termination was, doing business with, employed by or otherwise engaged in
performing services for, any member of the Company Group.

 

6.3 Confidential Information. During the period of the Executive’s employment
with the Company or any member of the Company Group and at all times thereafter,
the Executive shall hold in secrecy for the Company all Confidential Information
that may come to his knowledge, may have come to his attention or may have come
into his possession or control while employed by the Company (or otherwise
performing services for any member of the Company Group). Notwithstanding the
preceding sentence, the Executive shall not be required to maintain the
confidentiality of any Confidential Information which (a) is or becomes
available to the public or others in the industry generally (other than as a
result of inappropriate disclosure or use by the Executive in violation of this
Section 6.3) or (b) the Executive is compelled to disclose under any applicable
laws, regulations or directives of any government agency, tribunal or authority
having jurisdiction in the matter or under subpoena. Except as expressly
required in the performance of his duties to the Company under this Agreement,
the Executive shall not use for his own benefit or disclose (or permit or cause
the disclosure of) to any Person, directly or indirectly, any Confidential
Information unless such use or disclosure has been specifically authorized in
writing by the Company in advance. During the Executive’s employment and as
necessary to perform his duties under Section 1.1, the Company will provide and
grant the Executive access to the Confidential Information. The Executive
recognizes that any Confidential Information is of a highly competitive value,
will include Confidential Information not previously provided the Executive and
that the Confidential Information could be used to the competitive and financial
detriment of any member of the Company Group if misused or disclosed by the
Executive. The Company promises to provide access to the Confidential
Information only in exchange for the Executive’s promises contained herein,
expressly including the covenants in Sections 6.1, 6.2 and 6.4.

 

6.4 Inventions.

 

(a) The Executive shall promptly and fully disclose to the Company any and all
ideas, improvements, discoveries and inventions, whether or not they are
believed to be patentable (“Inventions”), that the Executive conceives of or
first actually reduces to practice, either solely or jointly with others, during
the Executive’s employment with the Company or any other member of the Company
Group, and that relate to the business now or thereafter carried on or
contemplated by any member of the Company Group or that result from any work
performed by the Executive for any member of the Company Group.

 

 12 

 

 

(b) The Executive acknowledges and agrees that all Inventions shall be the sole
and exclusive property of the Company (or member of the Company Group) and are
hereby assigned to the Company (or applicable member of the Company Group).
During the term of the Executive’s employment with the Company (or any other
member of the Company Group) and thereafter, whenever requested to do so by the
Company, the Executive shall take such action as may be requested to execute and
assign any and all applications, assignments and other instruments that the
Company shall deem necessary or appropriate in order to apply for and obtain
Letters Patent of the United States and/or of any foreign countries for such
Inventions and in order to assign and convey to the Company (or any other member
of the Company Group) or their nominees the sole and exclusive right, title and
interest in and to such Inventions.

 

(c) The Company acknowledges and agrees that the provisions of this Section 6.4
do not apply to an Invention: (i) for which no equipment, supplies, or facility
of any member of the Company Group or Confidential Information was used; (ii)
that was developed entirely on the Executive’s own time and does not involve the
use of Confidential Information; (iii) that does not relate directly to the
business of any member of the Company Group or to the actual or demonstrably
anticipated research or development of any member of the Company Group; and (iv)
that does not result from any work performed by the Executive for any member of
the Company Group.

 

6.5 Return of Documents and Property. Upon termination of the Executive’s
employment for any reason, the Executive (or his heirs or personal
representatives) shall immediately deliver to the Company (a) all documents and
materials containing Confidential Information (including without limitation any
“soft” copies or computerized or electronic versions thereof) or otherwise
containing information relating to the business and affairs of any member of the
Company Group (whether or not confidential), and (b) all other documents,
materials and other property belonging to any member of the Company Group that
are in the possession or under the control of the Executive.

 

6.6 Reasonableness; Remedies. The Executive acknowledges that each of the
restrictions set forth in this Article VI are reasonable and necessary for the
protection of the Company’s business and opportunities (and those of the Company
Group) and that a breach of any of the covenants contained in this Article VI
would result in material irreparable injury to the Company and the other members
of the Company Group for which there is no adequate remedy at law and that it
will not be possible to measure damages for such injuries precisely.
Accordingly, the Company and any member of the Company Group shall be entitled
to the remedies of injunction and specific performance, or either of such
remedies, as well as all other remedies to which any member of the Company Group
may be entitled, at law, in equity or otherwise, without the need for the
posting of a bond or by the posting of the minimum bond that may otherwise be
required by law or court order.

 

 13 

 

 

6.7 Extension; Survival. The Executive and the Company agree that the time
periods identified in this Article VI, including, without limitation, the
Restricted Period, will be stayed, and the Company’s obligation to make any
payments or provide any benefits under Article V shall be suspended, during the
period of any breach or violation by the Executive of the covenants contained
herein. The parties further agree that this Article VI shall survive the
termination or expiration of this Agreement for any reason. The Executive
acknowledges that his agreement to each of the provisions of this Article VI is
fundamental to the Company’s willingness to enter into this Agreement and for it
to provide for the severance and other benefits described in Article V, none of
which the Company was required to do prior to the date hereof. Further, it is
the express intent and desire of the parties for each provision of this Article
VI to be enforced to the fullest extent permitted by law. If any part of this
Article VI, or any provision hereof, is deemed illegal, void, unenforceable or
overly broad (including as to time, scope and geography), the parties express
desire is that such provision be reformed to the fullest extent possible to
ensure its enforceability or if such reformation is deemed impossible then such
provision shall be severed from this Agreement, but the remainder of this
Agreement (expressly including the other provisions of this Article VI) shall
remain in full force and effect.

 

VII. MISCELLANEOUS

 

7.1 Notices. Any notice required or permitted under this Agreement shall be
given in writing and shall be deemed to have been effectively made or given if
personally delivered, or if sent via U.S. mail or recognized overnight delivery
service or sent via confirmed e-mail or facsimile to the other party at its
address set forth below in this Section 7.1, or at such other address as such
party may designate by written notice to the other party hereto. Any effective
notice hereunder shall be deemed given on the date personally delivered, three
business days after mailed via U.S. mail or one business day after it is sent
via overnight delivery service or via confirmed e-mail or facsimile, as the case
may be, to the following address:

 

If to the Company:

 

InspireMD, Inc.

Menorat Hamaor 4

Tel Aviv, Israel 67448

Attn: Board of Directors

Telephone:

Facsimile:

 

With a copy which shall not constitute notice to:

 

Haynes and Boone, LLP

30 Rockefeller Plaza, 26th Floor

New York, NY 10112-0015

Attn: Rick A. Werner, Esq.

Telephone No.: (212) 659-4974

Facsimile No.: (212) 884-8234

Email: rick.werner@haynesboone.com

 

If to the Executive, at the most recent address on file with the Company.

 

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7.2 Legal Fees.

 

(a) It is the intent of the Company that the Executive not be required to bear
the legal fees and related expenses associated with the enforcement or defense
of the Executive’s rights under this Agreement by litigation, arbitration or
other legal action because having to do so would substantially detract from the
benefits intended to be extended to the Executive hereunder. Accordingly, the
parties hereto agree that any dispute or controversy arising under or in
connection with this Agreement shall be resolved exclusively and finally by
binding arbitration in Boston, Massachusetts, in accordance with the rules of
the American Arbitration Association then in effect. Judgment may be entered on
the arbitrator’s award in any court having jurisdiction. The Company shall be
responsible for its own fees, costs and expenses and shall pay to the Executive
an amount equal to all reasonable attorneys’ and related fees, costs and
expenses incurred by the Executive in connection with such arbitration unless
the arbitrator determines that the Executive (a) did not commence or engage in
the arbitration with a reasonable, good faith belief that his claims were
meritorious or (b) the Executive’s claims had no merit and a reasonable person
under similar circumstances would not have brought such claims. If there is any
dispute between the Company and the Executive as to the payment of such fees and
expenses, the arbitrator shall resolve such dispute, which resolution shall also
be final and binding on the parties, and as to such dispute only the burden of
proof shall be on the Company.

 

7.3 Severability. If an arbitrator or a court of competent jurisdiction
determines that any term or provision hereof is void, invalid or otherwise
unenforceable, (a) the remaining terms and provisions hereof shall be unimpaired
and (b) such arbitrator or court shall replace such void, invalid or
unenforceable term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the void,
invalid or unenforceable term or provision. For the avoidance of doubt, the
parties expressly intend that this provision extend to Article VI of this
Agreement.

 

7.4 Entire Agreement. This Agreement represents the entire agreement of the
parties with respect to the subject matter hereof and shall supersede any and
all previous contracts, arrangements or understandings between the Company, the
Subsidiary and the Executive relating to the Executive’s employment by the
Company. Nothing in this Agreement shall modify or alter the Indemnity Agreement
or alter or impair any of the Executive’s rights under the Plans or related
award agreements. In the event of any conflict between this Agreement and any
other agreement between the Executive and the Company (or any other member of
the Company Group), this Agreement shall control.

 

7.5 Amendment; Modification. Except for increases in base salary, and
adjustments with respect to Incentive Compensation, made as provided in Article
II, or changes that are expressly required by applicable law, this Agreement may
be amended at any time only by mutual written agreement of the Executive and the
Company; provided, however, that, notwithstanding any other provision of this
Agreement or the Plans (or any award documents under the Plans), or Indemnity
Agreement, the Company may reform this Agreement, the Plans (or any award
documents under the Plans), or any provision thereof (including, without
limitation, an amendment instituting a six-month waiting period before a
distribution) or otherwise as contemplated by Section 7.16 below.

 

 15 

 

 

7.6 Withholding. The Company shall be entitled to withhold, deduct or collect or
cause to be withheld, deducted or collected from payment any amount of
withholding taxes required by law, statutory deductions or collections with
respect to payments made to the Executive in connection with his employment,
termination (including Article V) or his rights hereunder, including as it
relates to stock-based compensation.

 

7.7 Representations.

 

(a) The Executive hereby represents and warrants to the Company that (i) the
execution, delivery and performance of this Agreement by the Executive do not
and shall not conflict with, breach, violate or cause a default under any
contract, agreement, instrument, order, judgment or decree to which the
Executive is a party or by which he is bound, and (ii) upon the execution and
delivery of this Agreement by the Company, this Agreement shall be the valid and
binding obligation of the Executive, enforceable in accordance with its terms.
The Executive hereby acknowledges and represents that he has consulted with
legal counsel regarding his rights and obligations under this Agreement and that
he fully understands the terms and conditions contained herein.

 

(b) The Company hereby represents and warrants to the Executive that (i) the
execution, delivery and performance of this Agreement by the Company do not and
shall not conflict with, breach, violate or cause a default under any material
contract, agreement, instrument, order, judgment or decree to which the Company
is a party or by which it is bound and (ii) upon the execution and delivery of
this Agreement by the Executive, this Agreement shall be the valid and binding
obligation of the Company, enforceable in accordance with its terms.

 

7.8 Governing Law; Jurisdiction. This Agreement shall be construed, interpreted,
and governed in accordance with the laws of the Commonwealth of Massachusetts
without regard to any provision of that State’s rules on the conflicts of law
that might make applicable the law of a jurisdiction other than that of the
Commonwealth of Massachusetts. Except as otherwise provided in Section 7.2, all
actions or proceedings arising out of this Agreement shall exclusively be heard
and determined in state or federal courts in the Commonwealth of Massachusetts
having appropriate jurisdiction. The parties expressly consent to the exclusive
jurisdiction of such courts in any such action or proceeding and waive any
objection to venue laid therein or any claim for forum nonconveniens.

 

7.9 Successors. This Agreement shall be binding upon and inure to the benefit
of, and shall be enforceable by the Executive, the Company, and their respective
heirs, executors, administrators, legal representatives, successors, and
assigns. In the event of a Change in Control, the provisions of this Agreement
shall be binding upon and inure to the benefit of the Company or entity
resulting from such Change in Control or to which the assets shall be sold or
transferred, which entity from and after the date of such Change in Control
shall be deemed to be the Company for purposes of this Agreement. In the event
of any other assignment of this Agreement by the Company, the Company shall
remain primarily liable for its obligations hereunder; provided, however, that
if the Company is financially unable to meet its obligations hereunder, the
Subsidiary shall assume responsibility for the Company’s obligations hereunder
pursuant to the guaranty provision following the signature page hereof. The
Executive expressly acknowledges that the Subsidiary and other members of the
Company Group (and their successors and assigns) are third party beneficiaries
of this Agreement and may enforce this Agreement on behalf of themselves or the
Company. Both parties agree that there are no third party beneficiaries to this
Agreement other than as expressly set forth in this Section 7.9.

 

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7.10 Nonassignability. Neither this Agreement nor any right or interest
hereunder shall be assignable by the Executive, his beneficiaries, dependents or
legal representatives without the Company’s prior written consent; provided,
however, that nothing in this Section 7.10 shall preclude (a) the Executive from
designating a beneficiary to receive any benefit payable hereunder upon his
death or (b) the executors, administrators or other legal representatives of the
Executive or his estate from assigning any rights hereunder to the Person(s)
entitled thereto.

 

7.11 No Attachment. Except as required by law, no right to receive payments
under this Agreement shall be subject to anticipation, commutation, alienation,
sale, assignment, encumbrance, charge, pledge or hypothecation in favor of any
third party, or to execution, attachment, levy or similar process or assignment
by operation of law in favor of any third party, and any attempt, voluntary or
involuntary, to effect any such action shall be null, void and of no effect.

 

7.12 Waiver. No term or condition of this Agreement shall be deemed to have been
waived, nor there be any estoppel against the enforcement of any provision of
this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future or as to any act other than that
specifically waived.

 

7.13 Construction. The headings of articles or sections herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement. References to days
found herein shall be actual calendar days and not business days unless
expressly provided otherwise.

 

7.14 Counterparts. This Agreement may be executed by any of the parties hereto
in counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.

 

7.15 Effectiveness. This Agreement shall be effective as of the Effective Date
when signed by the Executive and the Company.

 

7.16 Section 409A of the Code.

 

(a) It is the intent of the parties that payments and benefits under this
Agreement are exempt from the provisions of Section 409A of the Code and, to the
extent not so exempt, comply with Section 409A of the Code and, accordingly, to
interpret, to the maximum extent permitted, this Agreement to be in compliance
therewith. If the Executive notifies the Company in writing (with specificity as
to the reason therefore) that the Executive believes that any provision of this
Agreement (or of any award of compensation, including equity compensation or
benefits) would cause the Executive to incur any additional tax or interest
under Section 409A of the Code and the Company concurs with such belief or the
Company (without any obligation whatsoever to do so) independently makes such
determination, the parties shall, in good faith, reform such provision to try to
comply with Section 409A of the Code through good faith modifications to the
minimum extent reasonably appropriate to conform with Section 409A of the Code.
To the extent that any provision hereof is modified by the parties to try to
comply with Section 409A of the Code, such modification shall be made in good
faith and shall, to the maximum extent reasonably possible, maintain the
original intent of the applicable provision without violating the provisions of
Section 409A of the Code. Notwithstanding the foregoing, the Company shall not
be required to assume any economic burden in connection therewith.

 

 17 

 

 

(b) If the Executive is deemed on the date of “separation from service” to be a
“specified employee” within the meaning of that term under Section
409A(a)(2)(B), then with regard to any payment or the provision of any benefit
that is specified as subject to this Section, such payment or benefit shall be
made or provided at the date which is the earlier of (A) the expiration of the
six (6)-month period measured from the date of such “separation from service” of
the Executive, and (B) the date of the Executive’s death (the “Delay Period”).
Upon the expiration of the Delay Period, all payments and benefits delayed
pursuant to this Section 7.16 (whether they would have otherwise been payable in
a single sum or in installments in the absence of such delay) shall be paid or
reimbursed to the Executive in a lump sum, and any remaining payments and
benefits due under this Agreement shall be paid or provided in accordance with
the normal payment dates specified for them herein. If a payment is to be made
promptly after a date, it shall be made within sixty (60) days thereafter.

 

(c) Any expense reimbursement under this Agreement shall be made promptly upon
Executive’s presentation to the Company of evidence of the fees and expenses
incurred by the Executive and in all events on or before the last day of the
taxable year following the taxable year in which such expense was incurred by
the Executive, and no such reimbursement or the amount of expenses eligible for
reimbursement in any taxable year shall in any way affect the expenses eligible
for reimbursement in any other taxable year, except for (i) the limit on the
amount of outplacement costs and expenses reimbursable pursuant to Section
5.1(e) and (ii) any limit on the amount of expenses that may be reimbursed under
an arrangement described in Section 105(b) of the Code. If necessary to comply
with Section 409A of the Code, the Executive will not be deemed to terminate
employment unless such termination of employment also qualifies as a “separation
from service” under Treasury Regulation Section 1.409A-1(h). Each payment of
severance of other benefits that is subject to Section 409A of the Code is
considered a separate payment under Treasury Regulation Section 1.409A-2(b).

 

7.17 Survival. As provided in Section 1.3 with respect to expiration of the
Term, Articles VI and VII and specified parts of Articles IV and V, including
parts relating to the Company’s obligations to provide payments or benefits to
the Executive upon termination of employment or expiration of the Term, shall
survive the termination or expiration of this Agreement for any reason.

 

[Signature Page Follows]

 

 18 

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
Date.

 

INSPIREMD, INC.   EXECUTIVE         /s/ Craig Shore   /s/ James J. Barry Name:
Craig Shore   James J. Barry PhD, an individual Title: CFO    

 

Guaranty by Subsidiary

 

Subsidiary (InspireMD, Ltd.) is not a party to this Agreement, but joins in this
Agreement for the sole purpose of guaranteeing the obligations of the Company to
pay, provide, or reimburse the Executive for all cash or other benefits provided
for in this Agreement, including the provision of all benefits in the form of,
or related to, securities of Subsidiary and to elect or appoint the Executive to
the positions with Subsidiary and provide the Executive with the authority
relating thereto as contemplated by Section 1.1 of this Agreement, and to ensure
the Board will take the actions required of it hereby.

 

INSPIREMD, LTD.

 

/s/ Craig Shore   Name: Craig Shore   Title: CFO  

 

 19 

 

 

EXHIBIT A

 

Definitions

 

For purposes of this Agreement, the following capitalized terms have the
meanings set forth below:

 

“Board” shall mean the Board of Directors of the Company. Any obligation of the
Board other than termination for Cause under this Agreement may be delegated to
an appropriate committee of the Board, including its compensation committee, and
references to the Board herein shall be references to any such committee, as
appropriate.

 

“Cause” shall mean termination of the Executive’s employment because of the
Executive’s: (i) commission of fraud, misappropriation or embezzlement related
to the business or property of the Company; (ii) conviction for, or guilty plea
to, or plea of nolo contendere to, a felony or crime of similar gravity in the
jurisdiction in which such conviction or guilty plea occurs; (iii) a material
breach by the Executive of this Agreement, and the duties described therein, or
any other agreement to which the Executive and the Company or a member of the
Company Group are parties, including, without limitation, wrongful disclosure of
Confidential Information or violation of Article VI of this Agreement; (iv)
commission by the Executive of acts that are dishonest and demonstrably
injurious to a member of the Company Group, monetarily or otherwise; (v) any
violation by the Executive of any fiduciary duties owed by him to the Company or
a member of the Company Group that causes injury to the Company, other than
breaches of fiduciary duty also committed by other officers and members of the
Board of Directors based on actions taken after consultation with, and the
advice of, legal counsel; and (vii) willful or material violation of, or willful
or material noncompliance with, any securities law, rule or regulation or stock
exchange listing rule adversely affecting the Company Group.

 

“Change in Control” means the first to occur of the following events:

 

(i) A change in ownership of the Company. On the date any “Person” (as defined
in subparagraph (iv) below) acquires ownership of stock of the Company that,
together with stock held by such Person, constitutes more than fifty percent
(50%) of the total fair market value or total voting power of the stock of the
Company; provided, however, that there shall be no Change in Control and this
subparagraph (i) shall not apply if such acquiring Person is a corporation and
2/3’s of the Board of Directors of the acquiring Person immediately after the
transaction consists of individuals who constituted a majority of the Board
immediately prior to the acquisition of such fifty percent (50%) or more total
fair market value or total voting power; and provided, further, that if any
Person is considered to own more than fifty percent (50%) of the total fair
market value or total voting power of the stock of the Company, the acquisition
of additional stock by the same Person is not considered to be a Change in
Control; or

 

(ii) A change in the effective control of the Company. On the date that either:
(a) any Person acquires (or has acquired during the twelve (12)-month period
ending on the date of the most recent acquisition by such Person) ownership of
stock of the Company possessing thirty-five percent (35%) or more of the total
voting power of the stock of the Company; or on the date a majority of members
of the Board is replaced during any twelve (12)-month period by directors whose
appointment or election is not endorsed by a majority of the Board before the
date of the appointment or election; provided, however, that any such director
shall not be considered to be endorsed by the Board if his or her initial
assumption of office occurs as a result of an actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board.

 

 20 

 

 

(iii) A change in the ownership of a substantial portion of the Company’s
assets. On the date any Person acquires (or has acquired during the twelve
(12)-month period ending on the date of the most recent acquisition by such
Person) assets from the Company that have a total gross fair market value equal
to or more than eighty percent (80%) of the total gross fair market value of all
of the assets of the Company immediately before such acquisition or
acquisitions. For this purpose, gross fair market value means the value of the
assets of the Company or the value of the assets being disposed of, determined
without regard to any liabilities associated with such assets. However, there is
no Change in Control when there is such a sale or transfer to (i) a shareholder
of the Company (immediately before the asset transfer) in exchange for or with
respect to the Company’s then outstanding stock; (ii) an entity, at least fifty
percent (50%) of the total value or voting power of the stock of which is owned,
directly or indirectly, by the Company; (iii) a Person that owns directly or
indirectly, at least fifty percent (50%) of the total value or voting power of
the outstanding stock of the Company; or (iv) an entity, at least fifty percent
(50%) of the total value or voting power of the stock of which is owned,
directly or indirectly, by a Person that owns, directly or indirectly, at least
fifty percent (50%) of the total value or voting power of the outstanding stock
of the Company.

 

(iv) For purposes of subparagraphs (i), (ii) and (iii) above, “Person” shall
have the meaning given in Code Section 7701(a)(1). Person shall include more
than one Person acting as a group as defined by the final Treasury Regulations
issued under Section 409A of the Code.

 

“Change in Control Date” shall mean the date on which a Change in Control
occurs.

 

“Change in Control Period” shall mean the 24 month period commencing on the
Change in Control Date; provided, however, if the Company terminates the
Executive’s employment with the Company prior to the Change in Control Date, and
it is reasonably demonstrated that the Executive’s (i) employment was terminated
at the request of an unaffiliated third party who has taken steps reasonably
calculated to effect a Change in Control or (ii) termination of employment
otherwise arose in connection with or in anticipation of the Change in Control,
then the “Change in Control Period” shall mean the 24 month period beginning on
the date immediately prior to the date of the Executive’s termination of
employment with the Company.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended.

 

“Company Group” shall mean the Company, together with its subsidiaries including
the Subsidiary.

 

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“Competing Business” means any business or activity that (i) competes with any
member of the Company Group for which the Executive performed services or the
Executive was involved in for purposes of making strategic or other material
business decisions and (ii) involves products or services concerning mesh
covered vascular implants for the purposes of preventing embolization.

 

“Confidential Information” shall include Trade Secrets and confidential and
proprietary information acquired by the Executive in the course and scope of his
activities under this Agreement, including information acquired from third
parties, that (i) is not generally known or disseminated outside the Company
Group (such as non-public information), (ii) is designated or marked by any
member of the Company Group as “confidential” or reasonably should be considered
confidential or proprietary, or (iii) any member of the Company Group indicates
through its policies, procedures, or other instructions should not be disclosed
to anyone outside the Company Group. Without limiting the foregoing definitions,
some examples of Confidential Information under this Agreement include (a)
matters of a technical nature, such as scientific, trade or engineering secrets,
“know-how”, formulae, secret processes, inventions, and research and development
plans or projects regarding existing and prospective customers and products or
services, (b) information about costs, profits, markets, sales, customer lists,
customer needs, customer preferences and customer purchasing histories, supplier
lists, internal financial data, personnel evaluations, non-public information
about medical devices or products of any member of the Company Group (including
future plans about them), information and material provided by third parties in
confidence and/or with nondisclosure restrictions, computer access passwords,
and internal market studies or surveys and (c) and any other information or
matters of a similar nature.

 

“Disability” as used in this Agreement shall have the meaning given that term by
any disability insurance the Company carries at the time of termination that
would apply to the Executive. Otherwise, the term “Disability” shall mean the
inability of the Executive to perform his duties and responsibilities under this
Agreement as a result of a physical or mental illness, disease or personal
injury he has incurred. Any dispute as to whether or not the Executive has a
“Disability” for purposes of this Agreement shall be resolved by a physician
reasonably satisfactory to the Board and the Executive (or his legal
representative, if applicable). If the Board and the Executive (or his legal
representative, if applicable) are unable to agree on a physician, then each
shall select one physician and those two physicians shall pick a third physician
and the determination of such third physician shall be binding on the parties.

 

“Good Reason” shall mean the occurrence of any of the following without the
written consent of the Executive: (i) any duties, functions or responsibilities
are assigned to the Executive that are materially inconsistent with the
Executive’s duties, functions or responsibilities with the Company or the
Subsidiary as contemplated or permitted by Section 1.1; (ii) material diminution
in Executive’s duties; (iii) the base salary of the Executive is materially
reduced, unless a reduction in accordance with Section 2.2; (iv) there is a
material adverse change or termination of the Executive’s right to participate,
on a basis substantially consistent with practices applicable to senior
executives of the Company generally, in any bonus, incentive, profit-sharing,
stock option, stock purchase, stock appreciation, restricted stock,
discretionary pay or similar policy, plan, program or arrangement of the
Company, or any material adverse failure to provide the compensation and
benefits contemplated by Sections 2.3, 2.4 and Article III, except where
necessary to avoid the imposition of any additional tax under Section 409A of
the Code; (v) there is a material termination or denial of the Executive’s
right, on a basis substantially consistent with practices applicable generally
to senior executives of the Company, to participate in and receive service
credit for benefits as provided under, all life, accident, medical payment,
health and disability insurance, retirement, pension, salary continuation,
expense reimbursement and other employee and perquisite policies, plans,
programs and arrangements that generally are made available to senior executives
of the Company, except for any arrangements that the Board adopts for select
senior executives to compensate them for special or extenuating circumstances or
as needed to comply with applicable law or as necessary to avoid the imposition
of any additional tax under Section 409A; (vi) any material breach by the
Company of its representations under Section 7.7(b), or the guaranty by
Subsidiary on the signature page of the Agreement; or (vii) a majority of the
members of the Board is replaced during any three (3) month period.

 

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“Indemnity Agreement” means that certain Indemnity Agreement dated January 30,
2012 by and between the Company and the Executive, the terms of which shall not
be superseded by this Agreement.

 

“Person” shall include individuals or entities such as corporations,
partnerships, companies, firms, business organizations or enterprises, and
governmental or quasi-governmental bodies.

 

“Prohibited Area” means North America, South America and the European Union,
which Prohibited Area the parties have agreed to as a result of the fact that
those are the geographic areas in which the members of the Company Group conduct
a preponderance of their business and in which the Executive provides
substantive services to the benefit of the Company Group.

 

“Section 409A” shall mean Section 409A of the Code and regulations promulgated
thereunder (and any similar or successor federal or state statute or
regulations).

 

“Trade Secrets” are information of special value, not generally known to the
public that any member of the Company Group has taken steps to maintain as
secret from Persons other than those selected by any member of the Company
Group.

 

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