EXHIBIT 10.2

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

This Amended and Restated Employment Agreement (the “Agreement”), entered into
as of May 5, 2014 (the “Effective Date”), is by and between InspireMD, Inc., a
Delaware corporation (the “Company”), and Craig Shore, an individual (the
“Executive”). This Agreement amends and restates, in its entirety, the
Employment Agreement entered into on November 24, 2010 (the “Prior Agreement”),
by and between the Executive and InspireMD Ltd., a wholly owned subsidiary of
the Company (“Subsidiary”).

 

PRELIMINARY STATEMENTS

 

A.         The Company desires to employ the Executive as its Chief Financial
Officer and Chief Administrative Officer and the Executive desires to be
employed by the Company as its Chief Financial Officer and Chief Administrative
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 Chief Financial Officer and Chief
Administrative 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 the Chief Financial Officer and Chief Administrative
Officer of the Company, and be appointed to serve as the Chief Financial Officer
and Chief Administrative Officer of Subsidiary. The Executive shall be the
senior most financial and administrative officer of the Company and Subsidiary,
shall report to the Chief Executive Officer of the Company, and shall have such
power and authority and perform such duties, functions and responsibilities as
are associated with an incident to such positions, and as the Chief Executive
Officer 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
Chief Financial Officers and Chief Administrative Officers of public companies
which are similar in size and nature to, and the financial position of, the
Company, including, but not limited to, appropriate involvement in meetings of
and exposure to the Board and its committees. The Chief Executive Officer shall
be entitled to change the Executive’s duties in accordance with the Company’s
needs, as determined in the Chief Executive Officer’s sole discretion, and such
changes shall not be deemed to cause an adverse change in the Executive’s terms
of employment and shall not give rise to any claim by the Executive against the
Company in this regard. The Executive also agrees to serve, if elected, as an
officer of any other direct or indirect subsidiary of the Company or 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 (including
for purposes of the definition of Good Reason). The Executive acknowledges and
agrees that his duties shall include travel outside of Israel as may be
necessary in order to fulfill his duties hereunder, as determined by the Chief
Executive Officer in his sole discretion. The Company and the Executive confirm
and agree that this Agreement is a personal employment contract and that the
relationship between the parties hereto shall not be subject to any general or
special collective employment agreement or any custom or practice of the Company
in respect of any of its other employees or contractors.

 

 

 

 

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 at any one time (provided that
such activities do not create a conflict with Executive’s employment hereunder
as determined by the Chief Executive Officer in his 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 Chief Executive Officer’s prior written consent to
serve on a corporate board, which consent shall be at the Chief Executive
Officer’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. The term of this Agreement shall commence on the
Effective Date and shall continue until 11:59 p.m. Eastern Time on April 20,
2017 (the “Initial Term”) unless sooner terminated or extended as provided
hereunder. This Agreement shall automatically renew for additional one-year
periods on April 21, 2017 and on each and every April 21st thereafter (each such
extension, the “Renewal Term”) unless either party gives the other party written
notice of its or his election not to extend such employment at least six months
prior to the next April 21st renewal date. Further, if a Change in Control
occurs when less than two full years remain in the Initial Term or during any
Renewal Term, this Agreement shall automatically be extended for two years only
from the Change in Control Date and thereafter shall terminate on the second
anniversary of the Change in Control Date in accordance with its terms. The
Initial Term, together with any Renewal Term or extension as a result of a
Change in Control, are collectively referred to herein as the “Term.” In the
event that the Executive continues to be employed by the Company after the Term,
unless otherwise agreed by the parties in writing, such continued employment
shall be on an at-will, month-to-month basis upon terms agreed upon at such time
without regard to the terms and conditions of this Agreement (except as
expressly provided herein) and this Agreement shall be deemed terminated at the
end of the Term, regardless of whether such employment continues at-will, other
than Articles VI and VII, plus specified provisions of Articles IV and V to the
extent they relate to termination of employment after expiration of the Term,
which shall survive the termination or expiration of this Agreement for any
reason.

 

1.4         Use of Company Property. The Company shall provide the Executive
with a computer or laptop computer as well as an email account for his use in
fulfilling his duties under this Agreement. The Executive acknowledges that such
computers and email account are the sole property of the Company. Therefore, the
Executive shall (i) not use such computers and email account for personal use;
and (ii) irrevocably empower and authorize the Company to monitor and/or save
any communication made by the Executive through such computers and email
account. Accordingly, such monitoring shall not be considered to be a breach of
the Executive’s right for privacy under any circumstances.

 

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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 Company’s Amended and Restated
2011 Umbrella Option Plan or other stock-based compensation plans as the Company
may establish from time to time (collectively, the “Plans”). 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.

 

(a)          The Executive shall be paid a base salary of no less than US$18,350
per month (US$220,200 on an annualized basis) while he is employed by the
Company during the Term, retroactive to January 1, 2014; provided, however, that
nothing shall prohibit the Company, to the extent permitted by law, 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 Executive’s base
salary shall be reviewed annually by the Chief Executive Officer for increase
(but not decrease, except as permitted above) as part of the Company’s annual
compensation review.

 

(b)          As the Executive is employed by the Company in a senior managerial
position involving a fiduciary relationship between the Executive and the
Company, the Work and Rest Law (5711-1951), and any other law amending or
replacing such law, shall not apply to the Executive or to his employment with
the Company, and the Executive shall not be entitled to any compensation in
respect of such law. The Executive acknowledges that the compensation set for
him under this Agreement includes compensation that would otherwise be due to
the Executive pursuant to such law.

 

(c)          Subject to Sections 3.3 and 3.5 below, the base salary shall be
comprehensive and all-inclusive in that it shall be deemed to represent the
Executive’s entire compensation for his employment and work under this
Agreement, including those social benefits which can be embodied under law in
his base salary, except where it is otherwise specifically set forth in 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 45% of his then-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”). The Goals shall be
based 40% on financial target objectives, 20% on pipeline target objectives (by
way of example, for 2014, the Carotid launch, DES project definition, and
Peripheral CE Mark), 20% on clinical target objectives (by way of example, for
2014, MASTER II enrollment and Carotid CARE study enrollment), and 20% on
partnership target objectives (by way of example, for 2014, the execution of two
partnership agreements). Further, the financial target objectives shall be based
75% on the Company’s revenues and 25% on cash management. The Executive shall
receive 100% of the Annual Bonus if he achieves 100% of the Goals. If the
Executive achieves less than 100% but at least 70% of the Goals, then the
Executive shall receive the corresponding percentage of the Annual Bonus. By way
of example and for illustrative purposes only, if the Executive achieves 85% of
the Goals, then he would receive 85% of the Annual Bonus. If the Executive
achieves less than 70% of the Goals, then he will not receive the Annual Bonus.
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. In addition to the Annual Bonus, the
Executive shall be eligible to receive such additional bonus or incentive
compensation as the Board may establish from time to time in its sole
discretion. 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 taxes and any other withholding obligations required by applicable law.
Payment of Incentive Compensation with respect to a particular calendar year
during the Term does not guarantee the award or payment of Incentive
Compensation in any subsequent calendar year.

 

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2.4         Stock Compensation. The Executive shall be considered for grants
under the Plans no less often than annually as part of the Board’s annual
compensation review, but any such grants shall be at the sole discretion of the
Board. Each grant will be subject to a separate award agreement between the
Company and the Executive under the Plans, and, with respect to any awards that
are options, will have an exercise price equal to the fair market value of the
Company’s common stock as determined by the Board as of the date of grant under
the Plans and will be subject to a three-year vesting period subject to the
Executive’s continued service with the Company (as defined in the Plans), with
one-third of each additional grant vesting equally on the first, second, and
third anniversary of the date of grant for such awards.

 

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.

 

3.3         Vacation. The Executive shall be entitled to 21 Business Days
vacation for each calendar year of work or as prescribed by the Annual Leave Law
(5711-1951), whichever is more beneficial to the Executive.

 

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.

 

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3.5         Manager’s Insurance.

 

(a)          The Company shall purchase a Manager’s Insurance Policy (the
“Policy”) for the Executive through an insurance company chosen by the
Executive, and shall pay a sum equal to 15.83% of the Executive’s base salary
towards such Policy, of which 8.33% shall be on account of severance pay and
5.0% on account of pension fund payments, and up to a further 2.5% of the
Executive’s base salary on account of disability pension payments. The Company
shall deduct 5.0% from the Executive’s base salary to be paid on the Executive’s
behalf toward such Policy.

 

The parties further agree that during the Term, the Company shall be the sole
owner of the Policy. Upon the termination of the Executive’s employment with the
Company for any reason other than for Cause, the Company shall transfer title to
the Policy to the Executive.

 

(b)          The amounts which the Executive is entitled to receive from the
Policy accruing from disbursements paid by the Company towards the Policy on
account of the severance pay portion shall be credited against any obligation
the Company may have to pay severance pay under the law. Notwithstanding the
foregoing, no amount which the Executive is entitled to receive from the Policy
shall be credited against any amounts due to the Executive pursuant to Section
5.1, 5.2 or 5.3 below.

 

3.6            Education Fund. The Company shall pay an amount equal to 7.5% of
the Basic Salary for the preceding month to an Education Fund (Keren Hishtalmut)
designated by the Executive (the “Education Fund”), and shall deduct from the
Basic Salary an amount equal to 2.5% of the Basic Salary for the preceding month
and pay the same to the Education Fund Use of these funds shall be in accordance
with the by-laws of the Education Fund. The Executive acknowledges and
understands that Company’s contributions to the Education Fund exceeding the
highest amount recognized as tax free by the tax authorities shall be an income
of the Executive and shall be taxed accordingly, and all taxes and mandatory
payments imposed on such additional income shall be exclusively born by the
Executive.

 

3.7         Recuperation Pay (Dmei Ha’vraa). The Executive shall be entitled to
recuperation pay for a certain number of days, as provided by law.

 

3.8         Sick Leave. The Executive shall be entitled to paid sick leave as
provided by law.

 

3.9         Taxes. Any taxes imposed on the benefits granted to the Executive
under this Article III or upon other perquisites provided by the Company to the
Executive, including, without limitation, the use of an automobile purchased or
rented by the Company or the use of a cellular telephone, shall be paid solely
by the Executive and such taxes may be withheld by the Company pursuant to
Section 7.6.

 

3.10       Company Automobile. The Company shall provide the Executive an
automobile, either purchased or rented by the Company, for the Executive’s use
in connection with the performance of his duties hereunder and for his
reasonable personal use. The Company shall pay all maintenance, repair,
gasoline, and operating expenses attributable to the reasonable use of such
automobile for up to 25,000 kilometers per year, and the Executive shall pay the
Company US$0.10 per kilometer thereafter, which amount the Company may deduct
from other compensation payable to the Executive under this Agreement. The
Executive shall be liable for all traffic or parking fines or penalties assessed
on such automobile and shall reimburse the Company for any such fines or
penalties paid by the Company, which amount the Company may deduct from other
compensation payable to the Executive under this Agreement. The Executive shall
return the automobile to the Company immediately upon the Executive’s
termination of employment.

 

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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 4.7) to the Executive 30 days in advance of
the date of termination.

 

4.4         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 90 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 4.8
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.

 

4.5         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.

 

4.6         Termination by the Executive. The Executive may 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”). The Executive may also terminate his employment within
the Change in Control Period for Good Reason (a “Good Reason Termination”). For
purposes of this Agreement, neither a Voluntary Termination nor a Good Reason
Termination shall include a termination of the Executive’s employment by reason
of death. Neither a Voluntary Termination nor a Good Reason Termination shall be
considered a breach or other violation of this Agreement.

 

4.7         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. 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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4.8         Resignations. Upon ceasing to be an employee of the Company for any
reason, or earlier upon request by the Company pursuant to Section 4.4, 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 Group.

 

4.9         Advance Notice Law. Subject to any provision under this Article IV
which is more favorable to the Executive than any other right prescribed by law,
each party shall assume all rights and obligations under the Law for Advance
Notice on Dismissal and Resignation (5752-2001) (the “Advance Notice Law”).
During the notice period required by the Advance Notice Law, the Executive, if
so requested by the Company, shall continue to perform his duties, cooperate
with the Company, and use his best efforts to assist in the integration into the
Company’s organization the person or persons who will assume the Executive’s
responsibilities. If, however, the Company does not require the Executive to
continue to perform his duties, whether in whole or in part, during the notice
period required by the Advance Notice Law, the Company’s obligation to pay the
Executive’s base salary through the end of such advance notice period shall
terminate upon the Executive’s employment or engagement in any manner that would
not be permitted under this Agreement while the Executive is still employed by
the Company.

 

V. PAYMENTS ON TERMINATION

 

5.1         Death; Disability; 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, or 4.4, in addition to any amounts the Executive is entitled
to receive under the Policy pursuant to Section 3.5, 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, or 4.4, in addition to any amounts the Executive is entitled
to receive under the Policy pursuant to Section 3.5, 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 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 based on the percentage of the
Goals actually achieved by the Executive as described in Section 2.3) 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 (based on the
percentage of the Goals actually achieved by the Executive as described in
Section 2.3), 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 (based on the percentage of the Goals actually
achieved by the Executive as described in Section 2.3). 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.

 

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(b)          a one-time lump sum severance payment in an amount equal to the sum
of (i) 100% of the Executive’s Base Amount and (ii) the cost to the Company of
providing the automobile to the Executive, as provided in Section 3.9, for the
12 months immediately preceding the date of termination. 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.

 

(c)          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 12 months after termination or until the Executive
secures coverage from new employment. The period of COBRA health care
continuation coverage provided under Section 4980B of the Code shall run
concurrently with the foregoing 12-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.

 

(d)          reimbursement of reasonable, documented outplacement expenses
actually incurred by the Executive and directly related to the termination of
the Executive’s employment with the Company, provided that (i) such expenses are
incurred within the taxable year of the Executive’s termination of employment;
(ii) the aggregate amount of reimbursement available for such outplacement
expenses shall be $30,000; and (iii) reimbursement of such expenses shall be
made by the Company within 10 business days after it receives documentation of
such expenses from the Executive, provided that no reimbursements shall be made
after the end of the taxable year following the taxable year in which the
Executive’s employment with the Company ended.

 

(e)          50% of all unvested stock options granted to the Executive under
the Plans shall vest on the date of termination and become immediately
exercisable, and all vested stock options granted to the Executive under the
Plans, including such stock options that become vested pursuant to this Section
5.1(e), shall remain exercisable until the earlier of (i) two years from the
date of termination or (ii) the latest date that each stock option would
otherwise expire pursuant to the terms of the applicable award agreement had the
Executive’s employment with the Company not terminated. The extension of the
exercise period set forth in this Section 5.1(e) shall occur notwithstanding any
provision in the Plans or any related award agreements that provide for a lesser
vesting or shorter period for exercise upon termination by the Company without
Cause; 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.

 

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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 4.5 or upon a Voluntary Termination under Section 4.6, the
Executive shall be entitled to only the following:

 

(a)          any unpaid base salary and accrued unpaid vacation 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. However, if during
a Change in Control Period during or after the Term, (a) the Executive
terminates his employment with the Company due to a Good Reason Termination
under Section 4.6, or (b) the Company terminates the Executive’s employment
pursuant to Section 4.4, in addition to any amounts the Executive is entitled to
receive under the Policy pursuant to Section 3.5, the Executive shall be
entitled to the lump sum severance payment under Section 5.1 and all stock
options, stock appreciation rights or similar stock-based rights granted to the
Executive shall vest in full and be immediately exercisable and any risk of
forfeiture included in restricted or other stock grants previously made to the
Executive shall immediately lapse. The terms and rights with respect to such
payments shall otherwise be governed by 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 the 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.

 

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.

 

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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.

 

VI.          PROTECTIVE PROVISIONS

 

Since the Executive will be serving as the Chief Financial Officer and Chief
Administrative 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:

 

11

 

 

(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;

 

(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
to 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.

 

12

 

 

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.

 

(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.

Attn: Chief Executive Officer

4 Menorat Hamaor St.

Tel Aviv, Israel 67448

Telephone: +972 3 691 7691

Facsimile: +972 3 691 7692

 

With a copy which shall not constitute notice to:

 

Haynes and Boone, LLP

Attn: Rick A. Werner, Esq.

30 Rockefeller Plaza, 26th Floor

New York, NY 10112-0015

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

 

7.2         Legal Fees. 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 New York, New York, 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
and the Executive each shall be responsible for their own fees, costs and
expenses.

 

14

 

 

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 and the Indemnity Agreement by and
between the Company and the Executive dated March 31, 2011 (the “Indemnity
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, including,
without limitation the Prior Agreement. 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, the Plans (or any award documents under the Plans) or the Indemnity
Agreement, the Company may reform this Agreement, the Plans (or any award
documents under the Plans), the Indemnity Agreement, 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.

 

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.

 

15

 

 

7.8         Governing Law; Jurisdiction. This Agreement shall be construed,
interpreted, and governed in accordance with the laws of the State of New York
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
State of New York. 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 State of New York 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.

 

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.

 

16

 

 

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.

 

(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 (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).

 

17

 

 

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           By: /s/ Alan W. Milinazzo   /s/ Craig
Shore     Alan W. Milinazzo   Craig Shore, an individual   Its: President and
Chief Executive Officer      

 

19

 

 

EXHIBIT A

 

Definitions

 

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

 

“Base Amount” shall mean an amount equal to the sum of:

 

(i)          the Executive’s annual base salary at the highest annual rate in
effect at any time during the Term; and

 

(ii)         the greater of (i) the Executive’s target bonus under Section 2.3
in effect during the fiscal year in which termination of employment occurs, or
(ii) the average of the Incentive Compensation (as defined in Section 2.3)
actually earned by the Executive (A) with respect to the two consecutive annual
Incentive Compensation periods ending immediately prior to the year in which
termination of the Executive’s employment with the Company occurs or, (B) if
greater, with respect to the two consecutive annual Incentive Compensation
periods ending immediately prior to the Change in Control Date; provided,
however, that if the Executive was not eligible for Incentive Compensation for
such two consecutive Incentive Compensation periods, the amount included
pursuant to this clause (ii) shall be the Incentive Compensation paid to the
Executive for the most recent annual Incentive Compensation period. In the event
the Incentive Compensation paid to the Executive for any such prior Incentive
Compensation period represented a prorated full-year amount because the
Executive was not employed by the Company for the entire Incentive Compensation
period, the Incentive Compensation paid to the Executive for such period for
purposes of this clause (ii) shall be an amount equal to such prorated full-year
amount.

 

“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) involvement in 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; (vi) the Executive’s failure or refusal to
satisfactorily perform the duties and responsibilities required to be performed
by the Executive under the terms of this Agreement or necessary to carry out the
Executive’s job duties; 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, including, without
limitation (a) if the Executive has undertaken to provide any chief financial
officer certification required under the Sarbanes-Oxley Act of 2002, including
the rules and regulations promulgated thereunder (the “Sarbanes-Oxley Act”), and
he willfully fails to take reasonable and appropriate steps to determine whether
or not the certificate was accurate or otherwise in compliance with the
requirements of the Sarbanes-Oxley Act or (b) the Executive’s willful failure to
establish and administer effective systems and controls applicable to his area
of responsibility necessary for the Company to timely and accurately file
reports pursuant to Section 13 or 15(d) of the Exchange Act.

 

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“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.

 

(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.

 

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“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.

 

“Comparable Offer of Employment” shall mean: (i) that the proposed compensation,
severance and benefits, in the aggregate, to be paid by the Company or any
successor to the Company in a Change in Control (including, without limitation
the purchaser of all or substantially all of the Company’s assets) offering
employment are commensurate with the compensation, severance and benefits
payable to the Executive pursuant to this Agreement; (ii) the Executive incurs
no demotion to his position with the Company from the position the Executive
held immediately prior to the Change in Control Date; or (iii) the Executive’s
principal place of employment has not changed to any location that is more than
fifty (50) miles from his principal place of work immediately prior to the
Change in Control Date, without the prior written consent of the Executive.

 

“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 (A) the same or substantially similar types
of products or services (individually or collectively) manufactured, marketed or
sold by any member of the Company Group during Term or (B) products or services
so similar in nature to that of any member of the Company Group during Term (or
that any member of the Company Group will soon thereafter offer) that they would
be reasonably likely to displace substantial business opportunities or customers
of the Company Group. Competing Business shall include, but not be limited to,
any entity or person engaged in the business of manufacturing and selling
medical devices for the intravascular or intra coronary treatment of vascular
diseases, including stents and mesh technologies, and any other business the
Company Group is engaged in during Executive’s employment or that was seriously
considered by the Company Group within the two years preceding the termination
of this Agreement.

 

“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.

 

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“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 Chief Executive Officer and the Executive (or his
legal representative, if applicable). If the Chief Executive Officer 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 purchaser of the Company’s assets or common stock
in a Change in Control or the surviving entity of a Change in Control does not
offer the Executive a Comparable Offer of Employment. The Executive shall not
have “Good Reason” for purposes of this Agreement if the Executive receives a
Comparable Offer of Employment, but refuses to accept such offer. Further, “Good
Reason” shall only exist if the Executive provides written notice to the Company
(or its successor in interest in a Change in Control) of the terms that the
Executive alleges cause the offer to fail to be a Comparable Offer of Employment
within thirty (30) days of the Executive’s receipt of such offer, the Company
(or its successor in interest) fails to modify the offer to be a Comparable
Offer of Employment within thirty (30) days of its receipt of such notice, and
the Executive terminates his employment no later than thirty (30) days following
the end of such cure period.

 

“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).

 

“Subsidiary” shall mean InspireMD Ltd., a wholly-owned subsidiary of the
Company.

 

“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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