NOTE 7 - RELATED PARTIES TRANSACTIONS

In January 2009, InspireMD Ltd. signed a sub-lease agreement with a company controlled by a former officer and director, for a period of 12.5 months, for a monthly rent payment of approximately $1,000. In 2010, the rent period was extended for an additional year, and the rent payments increased by 10%. In 2011, the rent period was extended for an additional year, through February 2012. The sub-lease agreement was not renewed.

Prior to December 1, 2011, the Company's CEO and president were treated as consultants. At the request of the compensation committee, the Company's CEO and president at the time agreed, effective as of December 1, 2011, to be treated as employees for purposes of paying their salary and benefits, rather than as consultants under their consulting agreements. In addition, the Company's CEO and president agreed to formally terminate their consulting agreement upon the execution of an employment agreement with the Company on substantially the same terms as their consultancy agreements. A new employment agreement, however, was never executed with either party.

On June 1, 2012, the Company's former president resigned. Following his resignation, as president, effective June 1, 2012, the Company's former president remained on the Company's board of directors. In connection with the resignation, the Company and its former president entered into a consulting agreement, pursuant to which, among other things, the former president agreed to provide the Company with consulting services for a period of six months, terminating on November 30, 2012, in exchange for payments by the Company of approximately $20,000 per month. The consulting agreement was subsequently extended until February 2013.

On January 3, 2013, the Company's CEO at the time resigned as CEO (the "Former CEO"). The Former CEO subsequently continued to serve as a member of the Company's board of directors. In accordance with the terms of a Separation Agreement and Release, the Company paid the Former CEO $21,563 for six months.

On January 3, 2013 and in connection with the Former CEO's resignation, the Company appointed a new CEO.

In connection with the appointment of the CEO, the Company entered into an Employment Agreement (the "Employment Agreement") with the CEO. Under the Employment Agreement, the CEO is entitled to an annual base salary of at least $450,000. The CEO is also eligible to receive an annual bonus of at least $275,000 upon the achievement of reasonable target objectives and performance goals, to be determined by the board of directors (see Note 14). In accordance with the Employment Agreement, on January 3, 2013, the Company granted the new CEO a nonqualified stock option to purchase 525,927 shares of the Company's common stock, made pursuant to a Nonqualified Stock Option Agreement, an incentive stock option to purchase 74,073 shares of the Company's common stock, made pursuant to an Incentive Stock Option Agreement, and 400,000 shares of restricted stock, which are subject to forfeiture until the vesting of such shares, made pursuant to a Restricted Stock Award Agreement (the "Restricted Stock Agreement"). The options have an exercise price of $4.05, which was the fair market value of the Company's common stock on the date of grant. Both the options and the restricted stock were originally subject to a three-year vesting period subject to the CEO's continued service with the Company, with one-thirty-sixth (1/36th) of such awards vesting each month. See Note 9b(13).

On April 24, 2013, the Company and the CEO amended each of (i) Employment Agreement and (ii) Restricted Stock Award Agreement in order to change the vesting of the restricted stock awarded to the CEO thereunder from monthly vesting to annual vesting.

The CEO has an option to deliver a number of shares with an aggregate fair market value that equals or exceeds (to avoid the issuance of fractional shares) the required tax withholding payment resulted from the vesting of the restricted stock or from the exercise of the options. As of December 31, 2013, 9,506 shares were withheld by the Company to satisfy tax withholding obligations. The payment, amounting to $27,685, was deducted from equity.

On or before December 31 of each calendar year, the CEO will be eligible to receive an additional grant of equity awards equal, in the aggregate, to up to 0.5% of the Company's actual outstanding shares of common stock on the date of grant, provided that the actual amount of the grant will be based on his achievement of certain performance objectives as established by the board, in its reasonable discretion, for each such calendar year.

If, during the term of the Employment Agreement, the CEO's employment is terminated upon certain conditions as stipulated in the agreement, the CEO will be entitled to receive certain benefits as stipulated in the agreement.

On April 25, 2013, the CEO was granted options to purchase shares of the Company's common stock as well as restricted shares. See Note 9b.

On January 29, 2014, the Company's board of directors approved an annual bonus for 2013 to the CEO in the amount of $275,000 and granted the CEO options to purchase 399,675 shares of the Company's common stock as well as 182,725 restricted shares, See Note 14.

A director of the Company was granted 125,000 options to purchase shares of the Company's common stock in the six month period ended December 31, 2013. See Note 9b.

Balances with related parties:

	December 31,		June 30,
	2013		2013		2012
	($ in thousands)
Current liabilities:
Trade payable			$	22
Other accounts payable	$	355	$	250	$	45

Transactions with related parties:

	6 month period ended December 31,		Year ended June 30,
	2013		2013		2012
	($ in thousands)
Expenses:
Share-based compensation	$	1,293	$	2,973	$	9,517
Salaries and related expenses		557		531		305
Consulting fees		82		400		393
Rent income						(21	)