NOTE 8 - COMMITMENTS AND CONTINGENT LIABILITIES

Lease commitments:

On December 13, 2011, the Company entered into a lease agreement for a facility in Israel, which expires in December 2014. The Company has the option, under the agreement, to extend the agreement for two additional two year periods, for a total of four years.

On March 13, 2012, the Company entered into a lease agreement for another facility in Israel, which expires in March 2014. The Company has the option, under the agreement, to extend the agreement for two additional two year periods, for a total of four years. On February 27, 2013, the Company gave a 90 days' notice period as stipulated in the agreement which was extended until June 30, 2013, to cancel its lease agreement for the Company's existing production facilities.

On January 2013, the Company engaged in a lease agreement for its facilities in the U.S which expires in January 2014.

Rent expense included in the consolidated statements of operations totaled approximately $383,000 and $220,000 for the years ended June 30, 2013 and 2012.

As of June 30, 2013, the aggregate future minimum lease obligations for office rent under non-cancelable operating lease agreements were as follows:

	($ in thousands)
Year Ended June 30:
2014	$	296
2015		126

	$	422

The Company leases its motor vehicles under operating lease agreements. As of June 30, 2013, the aggregate non-cancelable future minimum lease obligations for motor vehicles were approximately $42,000.

License Agreement:

In March 2010, the Company entered into a license agreement to use a stent design developed by an American company owned by a former director of InspireMD Ltd. ("MGuard PrimeTM"). Pursuant to the agreement, the licensor was entitled to receive royalty payments of 7% of net sales outside the United States and, for sales within the United States, royalty payments as follows: 7% of net sales for the first $10,000,000 of net sales and 10% of net sales for net sales exceeding $10,000,000.

On October 20, 2012, the Company, InspireMD Ltd. and the licensor entered into an amendment, (the "First Amendment") to License Agreement, which amended the license agreement described above. Pursuant to the First Amendment, amongst other things, the licensor agreed to reduce the royalty owed with respect to sales of MGuard Prime to 2.9% of all net sales both inside and outside the U.S. in exchange for (i) InspireMD Ltd. waiving $85,000 in regulatory fees for the CE Mark that were owed by the licensor to InspireMD Ltd., (ii) InspireMD Ltd. making full payment of royalties in the amount of $205,587 due to the licensor as of September 30, 2012 and (iii) 215,000 shares of the Company's common stock, that were valued at the closing price of the common stock on October 19, 2012 at $8.20 per share. The total amount paid to the licensor was valued at $1,848,000, inclusive of the shares issued as well as the $85,000 waiver, and was allocated as follows: approximately $930,000 was allocated to royalties' buyout and approximately $918,000 was allocated to "research and development" expenses based on the MGuard Prime registration status in the various territories. The royalties' buyout amortization is calculated using the economic pattern of the Company's estimated future revenues over the estimated useful life of the royalties' buyout. The amortization is recorded in "Cost of Revenues" in the consolidated statements of operations.

Royalties accrued for these sales are included in "Accounts payable and accruals -Other." Royalties expenses for the years ended June 30, 2013 and 2012 amounted to approximately $132,000 and $201,000, respectively.

On August 22, 2013, the Company, InspireMD Ltd. and the licensor entered into the Second Amendment (as defined in Note 13) to the License Agreement.

Liens and pledges

The Company's obligations under the 2012 Convertible Debentures (as defined in Note 6) were secured by a first priority perfected security interest in all of the assets and properties of the Company and InspireMD Ltd., including the stock of InspireMD Ltd. and InspireMD GmbH. In connection with the Exchange (as defined in Note 6), all of these security interests were terminated.

As of June 30, 2013, the Company had fixed liens amounting to $93,000 to Bank Mizrahi in connection with the Company's credit cards.

Litigation:

In February 2011, a service provider filed a claim against the Company for $327,000 in the Magistrate's Court in Tel Aviv, claiming a future success fee and commission for assistance in finding the Company's distributor in Brazil. The Company's management, after considering the views of its legal counsel as well as other factors, recorded a provision of $327,000 in the financial statements in the first quarter of 2011. The related expense has been recorded to "General and administrative" within the Consolidated Statements of Operations. On October 5, 2011, the Company filed a counter claim against the plaintiff in the amount of $29,000. Following the first court evidence hearing held on January 20, 2013, the parties reached a settlement agreement which provides that in consideration of the mutual waiver by the parties of all their claims against each other and their shareholders, officers and employees, the Company shall pay to the plaintiff $50,000. Following a payment by the Companyof $25,000 to the plaintiff, the provision amounted to $25,000 as of June 30, 2013. After the balance sheet date, during July 2013, the Company paid the plaintiff the remaining $25,000.

In August 2011, a former senior employee submitted to the Regional Labor Court in Tel Aviv a claim against the Company for (i) compensation of $118,000 and (ii) a declaratory ruling that he is entitled to exercise 121,742 options to purchase shares of the Company's common stock at an exercise price of $0.004 per share, 20,290 of which options were not disputed by the Company. On October 21, 2012, the former senior employee exercised 20,290 options. On June 24, 2013, the Company and the former senior employee accepted a settlement agreement pursuant to which the claim was removed and the plaintiff waived their entire claim against the Company, in consideration of the Company's consent to allow them to exercise 71,016 options of the Company's shares of common stock. The labor court approved such settlement on June 26, 2013.

In November 2011, a previous service provider of InspireMD Ltd. submitted to the Magistrate Court in Tel Aviv a claim against the Company, InspireMD Ltd. and the Company's former President and CEO for a declaratory ruling that he is entitled to convert options to purchase 13,650 of InspireMD Ltd.'s ordinary shares at an exercise price of $3.67 per share into options to purchase 27,696 shares of the Company's common stock at an exercise price of $1.80 per share, and to convert options to purchase 4,816 of InspireMD Ltd.'s ordinary shares at an exercise price of $10 per share into options to purchase 9,772 shares of the Company's common stock at an exercise price of $4.92 per share. On July 30, 2012, the parties held a mediation which resulted in a settlement agreement, according to which, the Company paid $7,000 plus value added taxes to the plaintiff and the plaintiff waived all of their claims to any options and agreed to the irrevocable dismissal of the above mentioned claim. On August 5, 2012, the court approved the settlement and dismissed the claim.

In December 2011, a statement of claim against the Company was submitted by an alleged finder of the Company, regarding options to purchase 146,089 shares of the Company's common stock. The Company filed its defense in this case on March 11, 2012. In April 2013, the parties accepted a settlement proposal made by the judge, according to which, the court would rule that the Company shall compensate the plaintiff by way of issuance of the Company's shares of common stock in an amount which will be between $50,000 and $200,000 at a price per share which will be determined by the court. It was also agreed by the parties that such judgment would settle all the parties' current and future claims against each other. On May 9, 2013, the court ruled that the Company's compensation to the plaintiff should be valued at $200,000 payable in shares of common stock at a price per share of $2.95, totaling 67,797 shares of common stock of the Company. On June 25, 2013, the Company issued the plaintiff 67,797 shares of common stock.

In July 2012, a purported assignee of options in InspireMD Ltd. submitted a statement of claim against the Company, InspireMD Ltd., and the Company's former CEO and President for a declaratory and enforcement order that it is entitled to options to purchase 83,637 shares of the Company's common stock at an exercise price of $0.76 per share. In January, 2013, the defendants submitted a motion to dismiss the claim or move it to the Economic Department to the Tel Aviv District Court due to the lack of material jurisdiction of the court where the claim was filed. The court accepted such motion and transferred the case to the Economic Department to the Tel Aviv District Court. In April, 2013, the Company's former CEO and President submitted a motion to dismiss the claim against them on the grounds that the letter of claims does not present any legal case against any of them. The first hearing in the case was held on April 23, 2013, during which, the judge suggested the parties try to solve the dispute through mediation. On July 3, 2013 the parties held a first mediation meeting. After considering the views of its legal counsel as well as other factors, the Company's management believes that a loss to the Company is neither probable nor in an amount or range of loss that is estimable.

In December 2012, a former service provider of InspireMD GmbH filed a claim with the Labor Court in Buenos Aires, Argentina in the amount of $193,378 plus interest (6% in dollars or 18.5% in pesos), social benefits, legal expenses and fees (25% of the award) against InspireMD Ltd. and InspireMD GmbH. The court dismissed the claim based on a lack of jurisdiction. Following this dismissal, the plaintiff appealed the ruling. The Company's management, after considering the views of its legal counsel as well as other factors, recorded a provision of $250,000 in the financial statements for the quarter ended December 31, 2012. The related expense has been recorded to "General and administrative" within the consolidated statements of operations. The Company's management estimates that the ultimate resolution of this matter could result in a loss of up to $80,000 in excess of the amount accrued.

In December 2012, the State of Israel filed a complaint against InspireMD Ltd., the Company's former CEO, former President, and Vice President of Research and Development (the ''Managers''), alleging that InspireMD Ltd. failed to operate its production facilities under a proper business license. InspireMD Ltd. received its required business license on January 31, 2013. On February 13, 2013, all claims against the Managers were dropped and InspireMD Ltd. settled its claim with the State of Israel for less than $2,000.