DEVELOPMENT AGREEMENT

This Agreement (the “Agreement”) is made and entered on the 15 day of January
2007 (the “Effective Date”), by and between InspireMD Ltd., a company duly
organized and existing under the laws of the State of Israel having a principal
place of business at 4 Derech Hashalom St. Tel Aviv, Israel (“Inspire”), and
Qualimed Innovative Medizinprodukte GmbH having a principal place of buisness at
Boschstraße 16, 21423 Winsenan, Germany (”Qualimed”).

 
WHEREAS
Inspire is engaged in the research, development, manufacturing and marketing of
a new technology for “Laminar Angiographic Protective Device for Stents” (the
“Sleeve”) defined in Exhibit A to this Agremeent); and

WHEREAS
Qualimed wishes to obtain the Sleeve from Inspire for the purpose of its
integration into the Product, all under the terms set forth in this Agreement;
and

WHEREAS
Qualimed is engaged in the production of stents, and shall produce the stent
under the terms of this Agreement per the specifications defined in Exhibit B to
this Agreement;

WHEREAS
Qualimed is further engaged in the integration of the stent, Sleeve and the
delivery system (collectively reffered to as “Product”) defined in Exhibit C  to
this Agreement, and further wishes to obtain a CE mark for the Product; and

WHEREAS
The parties wish to develop, market, distribute and sell the Product under
InspireMD brand name;

NOW THEREFORE, in consideration of the mutual promises and covenants contained
herein, the parties hereto hereby agree as follows:

 
 
1.
Preamble and Exhibits: The preamble to this Agreement and the Exhibit form an
integral part of this Agreement.

 
2.
Qualimed Representations and Undertakings:

a.     Qualimed hereby represents and warrants to Inspire that it possesses and
will maintain throughout the term of this Agreement, the means, experience,
know-how, skill, facilities and personnel to properly fulfill its obligations
under this Agreement in a timely manner and that it will use its best efforts to
peform its obligations under this Agreement. Further, Qualimed represents and
warrants that it is duly licensed to execute its obligations under this
Agreement.
b.     Qualimed shall comply with any and all national German safety regulations
and standards and such other regulations or requirements as are or may be
promulgated by authorized national German governmental authorities and required
in order to carry out the terms of this Agreement and all other regulations
applicable to the sale of the Product per territory where Product is
sold.  Qualimed shall provide Inspire information of adverse events or any
information that alleges Product deficiencies may related to safety, within
three working days from the time that Qualimed becomes aware of such
information. Qualimed shall provide Inspire, in timely manner, information that
alleges Product deficiencies related to the identity, quality, durability,
reliability, effectiveness, or performance all in accordance with the standards
listed in Exhibit D to this Agreement (“Standards”).
 
 
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c.     Qualimed undertakes that is shall be responsible for obtaining any and
all permits, approvals, licenses, authorizations and clearances from local,
state, municipal, governmental, quasi-governmental and other authorities,
required per the Standards necessary or desirable for the sake of manufacturing
the Product and for the performance of the manufacturing according to the
Manufacturing Agreement attached as Exhibit H to this Agreement.
d.     Qualimed undertakes to refrain from manufacturing, producing, marketing,
handling or selling (the “Activities”), directly or indirectly, products which
compete, or may compete, with the Product, specifically,  with respect to stents
covered with a mesh equal or similar to the Sleeve for the term of this
Agreement and for a period of 3 years thereafter. For the purpose of clarity, it
is noted that Qualimed may engage in the Activities using any form of stents
and/or delivery systems, as well as other stent cover materials, so long as the
Sleeve or similar material is not used in such Activities.
e.     Qualimed undertakes for the purpose of this Agreement to audit Inspire in
all matters relating to Inspire’s manufacruting of the Sleeve, as well as its
facility and capabilities, including, but not limited to all requirements
Inspire must meet in order to be considered an approved subcontractor of the
Product to be marketed, distributed and sold as a medical device world wide.
f.     Qualimed represents that it is duly insured with all relevant insurance
policies covering all of its activities under this Agreement and damages that
may result of this Agreement, or use of the Product.
g.     Qualimed represents that it has independently developed and it is the
rightful owner of all of Qualimed’s intellectual property detailed in Exhibit J
to this Agreement that is embedded and/or used, and/or integrated in the
Product, and that use and/or integration of said intellectual property does not
infringe the intellectual property or contractual rights of third parties.

 
3.
Inspire Representations and Undertakings:

a.     Inspire hereby represents and warrants to Qualimed that it possesses and
will maintain throughout the term of this Agreement, the means, experience,
know-how, skill, facilities and personnel to properly fulfill its obligations
under this Agreement in a timely manner and that it will use its best efforts to
peform its oblitgations under this Agreement. Further, Inspire represents and
warrants that it is duly licensed to execute its obligations under this
Agreement.
b.     Inspire shall provide Qualimed with all information relating to the
Sleeve which may be required by Qualimed for the productions of the Product all
under the terms of this Agreement.
c.     Inspire shall provide Qualimed with Sleeve Warranty as detailed in
Exhibit F to this Agreement.

 
4.
Specifictions listed in this Agreement for the prupose of manufacturing of the
Product, including all of its components shall be the responsilibty of the party
listed in the table below. Each party undertakes to use its best effort to
provide all information required for the definition of the specifications
defined below:

Product Component
Specification Definition
Producer/ Integrator
Sleeve
Qualimed
Inspire
Stent
Qualimed & Inspire
Qualimed
Stent Compatible Delivery System
Qualimed
Qualimed
Integrated Product
Qualimed & Inspire
Qualimed

  
 
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Qualimed expenses incurred with respect to drafting of the Specifications listed
above shall be borne by Inspire as provided for in Exhibit G to this Agreement.

 
5.
Qualimed shall manufacture the stent in accordance with the specifications
listed in Exhibit B to this Agreement and subject to the requirements of the
Standards applicable to such products.

 
6.
Qualimed shall manufacture the delivery system in accordance with the
specifications listed in Exhibit E to this Agreement and subject to the
requirements of the Standard applicable to such products.

 
7.
Inspire shall manufacture the Sleeve in accordance with the specifications
specified in Exhibit A for the purpose of integrating the Sleeve with the
Product. Upon completion of the manufcaturing of the Sleeve by Inspire, it shall
preform quality assurance and quallity control tests to the Sleeve manufactured,
based on its self established procedures. Tested Sleeve shall be then
transferred to Qualimed by Inspire at Inspire’s cost. For the purpose of this
section, Inspire shall exercise its best effort obtain ISO approval for the
Sleeve mesh manufacturing within 5 months from the Effective Date of this
Agreement. Delays that are not a result of Inspire actions or that are out of
Inspire’s control shall not be considered Inspire’s failure to preform under
this Section. Upon receipt of said ISO approval, Inspire shall forward Qualimed
a copy of the documents demonstrating receipt of said approval.

 
8.
Upon receipt of the Sleeve by Qualimed,  it shall preform quality Assurance
(“QA”) and Quality Control (“QC”) tests as well as the required bench tests to
the Sleeve per pre defined procedured to be furnished by Qualimed to Inspire in
writing. Further, Qualimed shall audit Inspire as manufacturer of the Sleeve and
provide Inspire with written reports summarizing its conclusions. Said QA and QC
tests are attached as Exhibit I to this Agreement. Should defects be found in
the Sleeve, Inspire shall have 10 days to evaluate the claimed defect and
suggest a solution which shall be forwarded to Qualimed for its approval and/or
for further dicussion. Once the solution is jointly approved of by the parties,
the parties shall jointly determine the number of days Inspire shall have to
implement said solution. Once Qualimed has established that said Sleeve has
completed the QA and QC stage successfully (the “Approved Sleeve”), it shall
furnish Inspire with an audit report, and Inspire shall be deemed to have
fullfilled its obligations under this Agreement.

 
For the purpose of this section Qualimed shall be responsible and liable for
executing the required QA and QC tests, all in accorance with the required
Standards and Product requirements.

 
9.
Qualimed as the manufacturer of the Product, shall obtain a CE Mark for the
Product, under its name, subject to the terms set herein:

a.     For the purpose of pefroming its obligation under this Section, Qualimed
shall render the services of Dekra Certification. Inspire shall provide all
assistance and documentation required for obtaining such CE Mark.
 
 
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b.     Qualimed shall obtain the CE Mark 8 months from the Effective Date of
this Agreement. Inspire may terminate this Agreement if the CE Mark is not
obtained within a 10 months period, in which case each party shall be the owner
of its property and rights as was prior to the Effective Date of this Agreement.
c.      Qualimed shall furnish Inspire with all required documentation
demonstrating that the Product has obtained a CE Mark.
d.      In consideration for Qualimed’s completion of all of its obligations
under this Section 9, Inspire shall pay Qualimed the consideration as detailed
in Exhibit  G to this Agreement.

 
10.
Qualimed shall manufacture the Product by integrating the Approved Sleeve with
the Stent and the Delivery System. The completed fully integrated Product will
be distributed worldwide exclusively by Inspire under its brandname, all under
the terms and conditions of a Manufacturing Agreement to be agreed upon by the
parties and attached to this Agreement as Exhibit H.

11.           Inspire shall place orders with Qualimed for the Product, as per
Exhibit H to this Agreement.

12.           Qualimed and Inspire shall each idetify key persons which will
serve as coordinators for the purpose of this Agreement including the execution
of its exhibits. Each party undertakes to assign the identified key person, or
person of equal skills for said purpose. Qualimed key person shall provide
Inspire with progress reports detailing the work performed with respect to the
work plan as defined in the Manufacturing Agreement or as part of this
Agreement. Said reports shall be provided in writing upon Inspire’s request and
at least on a quarterly basis.

13.           It is agreed upon between the parties that all rights related to
the Product, including, but not limited to the right to manufacture, distribute,
market and sell the product shall be exclusively owned by Inspire. Further, it
is agreed upon between the parties that:

a. All intellectual property rights subsisting in or related to the Product,
excluding Qualimed’s pre-existing intellectual property as defined in Exhibit J
to this Agreement, including but not limited to patents and other know-how and
copyright, both registered and unregistered, owned and/or otherwise used by
Inspire and all goodwill related thereto (collectively, the “IP Rights”) are and
shall remain at all times, as between Inspire and Qualimed, the exclusive
property of Inspire and may not be exploited, reproduced or used by Qualimed
except as expressly permitted in this Agreement;

b. Qualimed shall not have or acquire any right, title or interest in or
otherwise become entitled to any IP Rights by taking delivery of, making payment
for, distributing and/or selling or otherwise using or transferring the Product;
and

c. Qualimed shall take all reasonable measures to ensure that all IP Rights of
Inspire shall remain with Inspire, including promptly notifying Inspire of any
possible infringement by third parties of Inspire’s IP Rights and participating
with Inspire, at Inspire’s expense, regarding any legal action against such
infringement that, in Supplier’s sole judgment, is necessary.
 
 
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d. Inspire may at any time affix in any manner its trade name, service marks or
trademarks or any of them (the “Trademarks”) to the Product and use the
Trademarks in relation to any services or product Inspire provides;

e. Qualimed shall not have or acquire any right, title or interest in or
otherwise become entitled to use any Trademarks, either alone or in conjunction
with other words or names, or in the goodwill thereof, without the express
written consent of Inspire in each instance. Further, Qualimed agrees not to
apply for or oppose registration of any trademarks, including the Trademarks,
used by Inspire.

f.  Qualimed acknowledges that no license or right is granted hereby with
respect to Inspires’s intellectual property other than a license to use the
Sleeve for integration in the Product to be distributed by Inspire.

g. Qualimed shall not during the term of this Agreement, or upon its expiration,
challenge the validity of Inspire’s Intellectual Property Rights.
 
14.           The Parties agree that nothing contained in this Agreement shall
be construed as conferring on either party any right or imposing any obligation
to use in advertising, publicity or otherwise any trademark, name or symbol of
the other party, or any contraction, abbreviation or simulation thereof, except
as expressly provided for in this Agreement.

15.           Without the written consent of the other party, neither party
shall disclose to any third party, or use for its own benefit or the benefit of
others, either during or after the Term of this Agreement, any confidential or
proprietary business or technical information of the other party that has been
identified as confidential or proprietary by the disclosing party.

a. To be considered proprietary information, the information must be (i)
disclosed in writing or other tangible form and marked confidential or
proprietary, or (ii) disclosed orally or visually, identified as confidential at
the time of disclosure and reduced to writing and marked confidential or
proprietary within thirty (30) days of the disclosure thereof.

b. Proprietary information shall not include information which (i) is already
rightfully known or becomes rightfully known to the receiving party independent
of proprietary information disclosed hereunder; (ii) is or becomes publicly
known through no wrongful act of the receiving party; (iii) is rightfully
received from a third party without similar restrictions and without breach of
this Agreement; or (iv) in the opinion of counsel, is required to be disclosed
to comply with any applicable law, regulation or order of a government authority
or court of competent jurisdiction, which event the receiving party shall, prior
to such disclosure, advise the other party in writing of the need for such
disclosure and use its reasonable best efforts to obtain confidential treatment
of such information.
c. The parties agree to keep this Agreement, including all its Exhibits
confidential.
 
16.
It is understood by the parties hereto that the confidentiality, development
rights and non-competition undertaking shall be valid as of the date hereof and
shall survive the termination of the Agreement.

 
 
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17.           The parties agree that each does not have the right or the power
to bind the other in any way. Further, this Agreement shall not be deemed to
create any employer-employee relationship between the parties, nor any agency,
franchise, joint venture or partnership relationship between them.

18.           may assign its rights under this Agreement provided that the
Product to be manufactured under this Agreement is not effected by such change.

19.           Qualimed shall indemnify, hold harmless and defend Inspire, its
successors and assigns for all losses, claims and defense costs claimed by any
third party for any injury, death or property damage suffered by such third
party to the extent resulting from a defect in the manufacturing of the Product
supplied hereunder, unless such injury, death or property damage is the result
of Inspire’s negligence or willful misconduct.

20.           Inspire assumes no liability for infringement claims arising from
(i) the combination of the Sleeve with Qualimed products where such claim would
not have arisen from the use of the Sleeve standing alone (ii) any modification
of the Sleeve not made by or under the authority of Inspire, where such
infringement would not have occurred but for such modifications; (iii) from any
continued use by Qualimed of the allegedly infringing Sleeve after being
provided modifications that would have avoided the infringement and (iv)
Qualimed’s use of the allegedly infringing Sleeve in violation of this
Agreement.

21.           The term of this agreement shall be for 10 years Inspire may
terminate this agreement with a written 30 days notice, should any one of the
following occur:  (i) interruption of supply on part of Qualimed; (ii)
Production of Product by Qualimed not accordance with the Product Specifications
listed in Exhibit C to this Agreement (iii) Production of the Stent by Qualimed
not accordance with the Stent Specifications listed in Exhibit B to this
Agreement (iv)an adverse change in Qualimed’s financial situation which leads to
its inability to preform its obligations under this Agreement;
 
Upon termination, all rights and licenses granted hereunder shall immediately
terminate and automatically revert to their owner. In case of either Party’s
uncured material breach, the Party in breach shall return to the non-breaching
Party or destroy the Intellectual Property including all copies and
documentation, and shall provide written notice to non-breaching Party of such
return or destruction to within 60 days of termination.

 
22.           The following Sections will survive expiration or termination of
this Agreement: 2,3,13,15,16,18,19,20,24 and 25.

23.           This Agreement, and Qualimed’s rights and obligations hereunder,
shall not be assigned in whole or in part by Qaulimed without the prior written
consent of Inspire.  Any attempted assignment or delegation without such consent
shall be void and of no effect.

24.           This Agreement shall be governed by, and construed in accordance
with, the laws of Switzerland applicable to contracts made and to be performed
therein, without giving effect to the principles of conflicts of law.
 
 
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25.           All disputes arising directly under the express terms of this
Agreement or the grounds for termination thereof shall be resolved as follows:
The senior management of both Parties shall meet to attempt to resolve such
disputes.  If the disputes cannot be resolved by the senior management, either
Party may make a written demand for formal dispute resolution and specify
therein the scope of the dispute.  Within thirty days after such written
notification, the Parties agree to meet for one day with an impartial mediator
and consider dispute resolution alternatives other than litigation.  If an
alternative method of dispute resolution is not agreed upon within thirty days
after the one day mediation, either Party may begin litigation proceedings
subject to section 26 below.

26.           The parties hereto irrevocably submit to the exclusive
jurisdiction of the courts of the defending party, with respect to any dispute
or matter arising out of, or connected with, this Agreement.

27.           The failure of the party to enforce at any time any provisions of
this Agreement shall in no way be construed to be a waiver of such provision or
any other provision hereof.

28.           This Agreement shall be binding upon the heirs, executors,
administrators and successors of the parties hereof.

29.           This Agreement may be executed in counterparts, and all such
counterparts together shall be deemed to be the original and will constitute one
and the same instrument. A facsimile signature shall be deemed as an original
for all purposes.

30.           All notices and other communications required or permitted
hereunder to be given to a party to this Agreement shall be in writing and shall
be telecopied or mailed by registered or certified mail, postage prepaid, or
otherwise delivered by hand or by messenger, addressed to such party’s address
as set forth in the preamble above or at such other address as the party shall
have furnished to the other party in writing in accordance with this provision.

31.           Any notice sent in accordance with Section 22 shall be effective
(i) if mailed, seven (7) business days after mailing, (ii) if sent by messenger,
upon delivery, and (iii) if sent by telecopier, upon transmission and electronic
confirmation of receipt or, if transmitted and received on a non-business day,
on the first business day following transmission and electronic confirmation of
receipt.  Any notice of change of address shall only be valid upon receipt.

32.           This Agreement constitutes the entire understanding between the
parties hereto.  Any prior agreement, arrangements or understandings, verbally
or in writing, between the Consultant and the Company, and any right generated
from such is hereby void.  Any change of any kind to this Agreement will be
valid only if made in writing, signed by both the Consultant and the Company's
authorized member and approved by the Board.

 
 
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IN WITNESS WHEREOF THE PARTIES HERETO HAVE SIGNED THIS AGREEMENT AS OF THE DATE
HEREINABOVE SET FORTH:
 
 

 
InspireMD Ltd.
 
Qualimed Innovative
Medizinprodukte GmbH
          __________________________    __________________________  By:
__________________________ By: __________________________ 

 
Agreement Exhibits:
Exhibit A: Sleeve Product Specifications (Defined by Qualimed)
Exhibit B: Stent Specifications (Defined jointly by Inspire and Qualimed)
Exhibit C: Product Specifications (Defined jointly by Inspire and Qualimed)
Exhibit D: Product Standards
Exhibit E: Delivery System Specifictions (Defined by Qualimed)
Exhibit F:  Sleeve Product Warranty (Provided by Inspire)
Exhibit G: Qualimed Consideration
Exhibit H: Manufactruing Agreement Inspire-Qualimed
Exhibit I: QA and QC testing for the Sleeve provided by Qualimed.
Exhibit J: Qualimed Pre existing IP
 
 
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EXHIBIT A

Sleeve Product Specifications to be provided by Inspire
 
 
 
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EXHIBIT B
Stent Specifications
 
 
 
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EXHIBIT C
Product Specifications
The product is comprize from :
 
a.
a mesh as per specification submited from time to time by inspiremd

 
b.
a delivary catheter (BTM) the new genaration cat number …….. series

 
c.
stent design low profile compitable with new genaration ballons up to 6mm
diameter

 
 
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EXHIBIT D
Product Standards
 
1.
Essential Requirements list according to MDD 93/45.

 
2.
ISO 10993 Biological evaluation of medical devices

 
3.
ISO 14971-2000 Risk Management

 
4.
ISO 13485-2003 Quality Systems

 
5.
ISO 14644 Clean Rooms

 
6.
ISO 980 Labeling

 
7.
ISO 11135 – Medical Devices – Validation and routine control of ethylene oxide
sterilization.

 
8.
EN 550– Sterilization of medical devices – Validation and routine control of
ethylene oxide sterilization.

 
9.
ASTM 868 Packaging

 
10.
EN 1041 – Instructions for Use – Medical Devices

 
11.
ISO 14155 Clinical Investigation of Medical Devices

 
12.
ISO 9001

 
13.
ISO 13485

 
14.
MMD 93/42/EEC

 
 
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EXHIBIT E
Delivery System Specifictions
 
 
 
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EXHIBIT F
Sleeve Product Warranty
 
 
 
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EXHIBIT G

Qualimed consideration for the successful execution of its obligations under
this Agreement shall be:

(i) 70,000 Euro (the “Cash Consideration”), payable against invoices to be
furnished to Inspire for review. The Cash Consideration shall be paid 30 days
from date of approval for payment by Inspire. The Cash Consideration shall be
the sole and exclusive consideration Qualimed shall be entitled to under this
Agreement for any and all expenses it shall incurr. Qualimed shall bear all
expenses exceeing the amount of the Cash Consideration.

(ii) In addition to section (i) above, upon obtaining the CE Mark for the
Product and the Improved Product (collectively referred to as the “Marks”) and
the transfer of Marks under Inspire’s name, Inspire shall grant Qualimed 1,000
Ordinary Shares of Inspire, 45 days from the date on which the documents
confirming Mark/s was obtained and transferred were actually received by
Inspire. For the sake of clarity it is noted that Qualimed shall not be entitled
for any fraction payments under this section (ii) even if it has preformed some
of the work or actions required for obtaining and/or transferring the Marks.
Qualimed shall bear all tax liability imposed in connection with this section
(ii).
 
 
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  EXHIBIT H
  Manufactruing Agreement Inspire-Qualimed
 
 
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EXHIBIT I
QA and QC testing for the Sleeve to be composed of :
 
1.
Visual Inspection

 
2.
Detailed inspection after crimping

 
 
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  EXHIBIT J
  Qualimed Pre Exising IP

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