FIFTH AMENDMENT TO EMPLOYMENT AGREEMENT

 

This FIFTH Amendment to Employment Agreement (this “Amendment”) is made and
entered as of this 5th day of September, 2017, (the “Amendment Effective Date”)
by and between InspireMD, Inc., a Delaware corporation (the “Company”), and
James J. Barry, PhD (the “Executive”) for purposes of amending that certain
Employment Agreement dated as of July 14, 2014 and further amended as of January
5, 2015, February 22, 2015, March 28, 2016 and June 6, 2016, by and between the
Company and the Executive (the “Agreement”). Terms used in this Amendment with
initial capital letters that are not otherwise defined herein shall have the
meanings ascribed to such terms in the Agreement.

 

WHEREAS, Section 7.5 of the Agreement provides that the parties to the Agreement
may amend the Agreement in a writing signed by the parties; and

 

WHEREAS, the parties hereto desire to amend the Agreement in certain respects.

 

NOW THEREFORE, pursuant to Section 7.5 of the Agreement, and for good and
valuable consideration, the sufficiency of which is hereby acknowledged, the
Company and the Executive agree as follows:

 

1. Section 1.3 of the Agreement is hereby amended by deleting said section in
its entirety and substituting in lieu thereof the following new Section 1.3:

 

1.3 Term of Employment. Unless sooner terminated by either party as provided in
Articles IV and V hereunder, or extended upon the mutual agreement of the
parties, the term of this Agreement shall continue until July 31, 2018 (the
“Term”). The Executive shall resign as a member of the Board at the end of the
Term if requested by the Company. In the event that (i) the Term is not extended
beyond July 31, 2018 upon the mutual agreement of the parties; and (ii) the
Company does not offer the Executive a position as Chief Executive Officer on
terms and conditions that are no less favorable to the Executive than the terms
and conditions of this Agreement (including, to the extent the Financing Equity
Grant has not been made to the Executive as of such time, providing for an
equity award substantially similar to the Financing Equity Grant) with an annual
base salary that is at least $400,000, the Executive’s termination shall be
deemed a termination pursuant to Section 4.5.

 

2. Section 2.2 of the Agreement is hereby amended by deleting said section in
its entirety and substituting in lieu thereof the following new Section 2.2:

 

2.2 Base Salary. The Executive shall be paid a base salary of no less than
$30,416.67 per month ($365,000 on an annualized basis) while he is employed by
the Company during the Term; provided, however, that nothing shall prohibit the
Company from reducing the base salary as part of an overall cost reduction
program that affects all senior executives of the Company Group and does not
disproportionately affect the Executive, so long as such reductions do not
reduce the base salary to a rate that is less than 90% of the minimum base
salary amount set forth above (or, if the minimum base salary amount has been
increased during the Term, 90% of such increased amount). The base salary shall
be reviewed annually by the Board for increase (but not decrease, except as
permitted above) as part of the Company’s annual compensation review, and any
increased amount shall become the base salary under this Agreement.
Notwithstanding the foregoing, the Executive and the Company agree that in the
event of the closing of a transaction or series of related transactions with
investors where the Company raises an aggregate of $7 million from such
investors (the “Financing”), the Executive’s base salary shall increase to at
least $33,333.33 per month ($400,000 on an annualized basis), commencing on the
pay period immediately following the applicable closing for the remainder of the
Term.

 

   

 

 

3. Section 2.6 of the Agreement is hereby amended by deleting said section in
its entirety and substituting in lieu thereof the following new section 2.6:

 

2.6 Financing Equity Grant. On or within twenty (20) business days of the
closing of the Financing (the “Date of Grant”), the Executive shall be eligible
to receive, provided that the Executive is employed by the Company on the Date
of Grant, (x) a nonqualified stock option relating to the number of shares of
the Company’s common stock equal to 2% of the Company’s outstanding common stock
on the date of the closing of the Financing (the “Financing Option”), and (y) an
award of a number of restricted shares of the Company’s common stock equal to 2%
of the Company’s outstanding common stock on the date of the closing of the
Financing (the “Financing Restricted Stock Award” and together with the
Financing Option, the “Financing Equity Grant”), in each case, subject to the
availability of shares for grant under the InspireMD, Inc. 2013 Long-Term
Incentive Plan (the “2013 LTIP”), together with the 2013 Employee Stock
Incentive Plan (the “2013 Israeli Appendix”), which is a sub-plan to the 2013
LTIP (collectively, the 2013 LTIP and the 2013 Israeli Appendix being referred
to herein as, the “Incentive Plan”). To the extent shares are not available for
grant under the Incentive Plan for the full amount of the Financing Equity Grant
on the Date of Grant, the Financing Option shall be for 50% of the maximum
number of shares that remain available on the Date of Grant for grant under the
Incentive Plan, and the Financing Restricted Stock Award shall be for 50% of the
maximum number of shares that remain available on the Date of Grant for grant
under the Incentive Plan. The Financing Equity Grant shall be subject to the
terms and conditions of separate award agreements between the Company and the
Executive (which agreements shall include, without limitation, provisions
regarding vesting and forfeiture of such grant), and the terms and conditions of
the Incentive Plan.

 

4. Section 2.7 of the Agreement is hereby amended by deleting said section in
its entirety.

 

5. Section 5.1 of the Agreement is hereby amended by deleting said section in
its entirety and substituting in lieu thereof the following new Section 5.1:

 

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

 

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

 

   

 

 

(b) a one-time lump sum severance payment in an amount equal to two hundred
percent (200%) of the Executive’s Base Amount calculated with a base salary
amount at the annual rate of $425,000. The lump sum severance payment shall be
paid on the Company’s first payroll date after the Executive’s signing the
release described in Section 5.4 and the expiration of any applicable revocation
period, subject, in the case of termination other than as a result of the
Executive’s death, to Section 7.16; provided, however, that in the event that
the time period for return of the release and expiration of the applicable
revocation period begins in one taxable year and ends in a second taxable year,
such payment shall not be made until the second taxable year if necessary to
comply with Section 409A of the Code.

 

(c) one hundred percent (100%) of all unvested stock options, restricted stock
shares, restricted stock units, stock appreciation rights or similar stock based
rights granted to the Executive shall vest and, if applicable, be immediately
exercisable and any risk of forfeiture included in such restricted or other
stock grants previously made to the Executive shall immediately lapse. In
addition, if the Executive’s employment is terminated pursuant to Section 4.2,
4.3, 4.4 or 4.5 during or after the Term, the Executive shall have until the
earlier of (i) eighteen (18) months from the date of termination, or (ii) the
latest date that each stock option or stock appreciation right would otherwise
expire by its original terms had the Executive’s employment not terminated to
exercise any outstanding stock options or stock appreciation rights. The
extension of the exercise period set forth in this Section 5.1(c) shall occur
notwithstanding any provision in any Plans or related grant documents which
provides for a lesser vesting or shorter period for exercise upon termination by
the Company without Cause (which for this purpose will include a termination for
Good Reason), notwithstanding anything to the contrary in any Plans or grant
documents; provided, however, and for the avoidance of doubt, nothing in this
Agreement shall be construed as or imply that this Agreement does or can grant
greater rights than are allowed under the terms and conditions of the Plans.

 

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

 

   

 

 

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

 

(f) 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. Section 5.3 of the Agreement is hereby amended by deleting said section in
its entirety and substituting in lieu thereof the following new Section 5.3:

 

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

 

6. The definition of “Good Reason” set forth in Exhibit A of the Agreement is
hereby amended by deleting said definition in its entirety and substituting in
lieu thereof the following new definition:

 

   

 

 

“Good Reason” shall mean the occurrence of any of the following without the
written consent of the Executive: (i) any duties, functions or responsibilities
are assigned to the Executive that are materially inconsistent with the
Executive’s duties, functions or responsibilities with the Company or the
Subsidiary as contemplated or permitted by Section 1.1; (ii) material diminution
in Executive’s duties; (iii) the base salary of the Executive is materially
reduced, unless a reduction in accordance with Section 2.2; (iv) there is a
material adverse change or termination of the Executive’s right to participate,
on a basis substantially consistent with practices applicable to senior
executives of the Company generally, in any bonus, incentive, profit-sharing,
stock option, stock purchase, stock appreciation, restricted stock,
discretionary pay or similar policy, plan, program or arrangement of the
Company, or any material adverse failure to provide the compensation and
benefits contemplated by Sections 2.3, 2.4 and Article III, except where
necessary to avoid the imposition of any additional tax under Section 409A of
the Code; (v) there is a material termination or denial of the Executive’s
right, on a basis substantially consistent with practices applicable generally
to senior executives of the Company, to participate in and receive service
credit for benefits as provided under, all life, accident, medical payment,
health and disability insurance, retirement, pension, salary continuation,
expense reimbursement and other employee and perquisite policies, plans,
programs and arrangements that generally are made available to senior executives
of the Company, except for any arrangements that the Board adopts for select
senior executives to compensate them for special or extenuating circumstances or
as needed to comply with applicable law or as necessary to avoid the imposition
of any additional tax under Section 409A; (vi) any material breach by the
Company of its representations under Section 7.7(b), or the guaranty by
Subsidiary on the signature page of the Agreement; (vii) relocation of the
Executive’s principal place of employment to a place that increases his one-way
commute by more than fifty (50) miles as compared to the Executive’s
then-current principal place of employment immediately prior to such relocation;
or (viii) a majority of the members of the Board is replaced during any three
(3) month period.

 

7. Except as expressly amended by this Amendment, the Agreement shall continue
in full force and effect in accordance with the provisions thereof.

 

8. In the event of a conflict between the Agreement and this Amendment, this
Amendment shall govern.

 

* * * * * * * * * *

[Remainder of Page Intentionally Left Blank

Signature Page Follows.]

 

   

 

 

IN WITNESS WHEREOF, the parties have executed this Fifth Amendment to Employment
Agreement as of the Amendment Effective Date.

 

THE COMPANY:   INSPIREMD, INC.     By: /s/ Paul Stuka Name: Paul Stuka Title:
Chairman of Board of Directors     EXECUTIVE:   /s/ James J. Barry   James J.
Barry PhD