Exhibit 10.1

 

Addendum to Employment Agreement

 

This Addendum (the “Addendum”) to Employment Agreement is entered into between
Medgenics, Inc. (“Medgenics”), its wholly owned subsidiary, Medgenics Medical
Israel, Ltd. (the “Company”) and Phyllis Bellin (the “Employee”) as of July 15,
2014.

 

WHEREAS as of November 1, 2005 the Employee has been employed by the Company;

 

WHEREAS, the Employee, the Company and Medgenics are parties to that certain
Employment Agreement dated July 1, 2007 (the “Employment Agreement”).
Capitalized terms in this Addendum have the same meaning attributed to them in
the Employment Agreement, unless otherwise stated;

 

WHEREAS, with effect as of and from July 1, 2014 (the “Determining Date”), the
Employee, the Company and Medgenics desire to amend the Employment Agreement to
reflect certain changes; and

 

WHEREAS, pursuant to Section 14.8 of the Employment Agreement, the Employment
Agreement may be amended by written agreement of the Employee and the CEO, with
the approval of the Board;

 

NOW THEREFORE, in consideration of the foregoing and the mutual promises and
covenants of the parties set forth in this Addendum, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledge, the parties, intending to be legally bound, hereby expressly
covenant, consent, and agree as follows:

 

1.The recitals to this Addendum constitute an integral part hereof.

 

2.Commencing as of and from the Determining Date, the following changes to the
Employment Agreement shall come into force:

 

2.1.Amendment to Section 1 of the Employment Agreement. Section 1 of the
Employment Agreement shall be deleted in its entirety and replaced with the
following:

 

“Position. The Employee shall serve as an officer of the Company with the title
Vice President of Administration, Misgav and, in such capacity, the Employee
shall jointly report to the Chief Financial Officer of Medgenics (“CFO”),
currently John Leaman, and the Senior Vice President, Research & Development of
Medgenics (“Site Head”), currently Nir Shapir.”

 

2.2.Amendment to Section 2.1 of the Employment Agreement. Section 2.1 of the
Employment Agreement shall be deleted in its entirety and replace with the
following:

 

“The Employee shall be employed on a part time basis as 60% of full time, at
least three days a week, 8.5 hours per day and shall perform her duties
faithfully, honestly, diligently and with due skill, care and attention. The
Employee may not be employed by or provide services to any other entity, nor
engage directly or indirectly in any other work or business, without the prior,
express, written permission of the Company.

 

 

 

 

The Employee shall be responsible for supporting the Site Head in the management
of the Misgav site. Under the direction of the Site Head, the Employee will
direct, promote, and coordinate the operations of the Misgav site in a manner
that will support the R&D activities that are the primary function of the
Company, and to help achieve the Company’s and Medgenics’ mission, goals, and
objectives. The Employee’s areas of activity related to the Misgav site shall
include:

 

(a)Serve as member of the Misgav site leadership team

 

(b)Finance activities including:

 

Bank relations in Israel

Currency management

Israeli option plan and laws

Payroll

Local budget process

Office of Chief Scientist relations

 

(c)Administrative functions, including purchasing and logistics, vendor
relations

 

(d)Codification and implementation of Company procedures manual

 

(e)IT systems

 

(f)Legal affairs and relations with Israeli income tax authorities and Israel
Social Security.

 

(g)Building and facility management.

 

(h)Relationship with municipality and other regulators (other than Health
Ministry) business license, etc.

 

(i)Insurance

 

(j)Preparation of financial reports of the Company and relations with auditors

 

(k)Oversight support in connection with financial controls (SOX)

 

(l)Accounting for the Company

 

(m)Tax planning, insurance, transfer pricing for the Company

 

(n)Support Medgenics fundraising with due diligence, documentation, etc.

 

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(o)Board Member of MMI”

 

2.3.Amendment to Section 2.5 of the Employment Agreement: Section 2.5 of the
Employment Agreement shall be amended by adding the following sentence at the
beginning of such Section 2.5:

 

“The Company and the Employee shall mutually agree on which days the Employee
shall work and the parties acknowledge and agree that the particular days may
vary from week to week.”

 

2.4.Amendment to Section 4.1 of the Employee Agreement. Section 4.1 shall be
amended to delete “$9,000 per month (payable on the ninth day of each month)”
with “$100,000 per annum (payable in monthly installments on the ninth day of
each month)”. Unless specifically stated otherwise, all the Employee’s social
benefits which are salary-based, will be calculated according to this new salary
at a rate of $100,000 per annum, or $8,333.33 per month. All references to the
Salary in the Employment Agreement, as amended by this Addendum, shall apply to
this new salary, including without limitation the references to “annual Salary”
in Section 4.3 (as amended below), the references to “Salary” in Sections 5.1
and 5.3, the reference to “full salary” in Section 5.2 and the reference to
“salary” in Section 7.2.

 

2.5.Amendments to Section 4.3 and 4.4 of Employment Agreement. Sections 4.3 and
4.4 of the Employment Agreement shall be deleted in their entirety and Section
4.3 shall be replaced with the following:

 

“Notwithstanding anything to the contrary, any bonus paid to the Employee
hereunder shall not constitute Salary for purposes of social benefits, severance
pay or otherwise. The Employee may be entitled to receive an annual
discretionary bonus up to 35% of annual Salary, the terms and conditions of
which shall be determined jointly by the CFO and Site Head and recommended to
the Board for approval. Any bonus paid shall be subject to all applicable
statutory deductions. Notwithstanding anything to the contrary contained herein,
in the event that the Board determines to grant the Employee a bonus for
calendar year 2014, such bonus shall be calculated as if the Employee has worked
on a full time basis throughout 2014 at an annual salary of $152,500.”

 

2.6.Amendment to Section 5.1 of Employment Agreement. Section 5.1 of the
Employment Agreement shall be deleted in its entirety and be replaced with the
following:

 

“The Employee shall continue to be entitled to contributions to a Managers
Insurance Policy (the “Policy”) or to a comprehensive pension plan (the “Pension
Plan”), or a combination of the two [at the Employee’s discretion], at the
following monthly rates:

 

In the event the Employee chooses a Policy, the Company will pay (i) an amount
equal to 8.33% of the monthly Salary towards severance pay component; and (ii)
an amount equal to 5% of the monthly Salary towards the savings and risk
component. In addition, the Company shall also make provision for the loss of
the earning capacity component at the lower of 2.5% of the monthly Salary or a
rate which is required to ensure 75% of the monthly Salary. The Company shall
also deduct 5% of the monthly Salary to be paid on the Employee’s account
towards the Policy.

 

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In the event the Employee chooses a Pension Plan, the Company will pay (i) an
amount equal to 8.33% of the monthly Salary towards severance pay component; and
(ii) an amount equal to 6% of the monthly Salary towards the savings and risk
component. The Company shall also deduct 5.5% of the monthly Salary to be paid
on the Employee’s account towards the Pension Plan.

 

As of the Determining Date, the settlement regulated in the General Order as
amended (attached as Appendix A), published under section 14 of the Severance
Pay Law 1963 applies. The Company’s contributions to the Employee’s pension
arrangement pursuant to this Section 5.1 will therefore constitute the
Employee’s entire entitlement to severance pay in respect of the paid salary, in
place of any severance pay to which the Employee otherwise may have become
entitled at law.

 

The Company waives all rights to have its payments refunded, unless the
Employee’s right to severance pay is denied by a judgment according to sections
16 or 17 of the Severance Pay Law or in the event that the Employee withdraws
monies from the pension arrangement in circumstances other than an Entitling
Event, where an “Entitling Event” means death, disablement or retirement at the
age of 60 or over.”

 

2.7.Amendment to Section 6.2 of the Employment Agreement. The parties agree and
acknowledge that as of the Determining Date the Employee has accrued 77.06 days
of paid vacation, representing $33,780 in benefits based on her past salary (the
“Accrued Vacation Amount”), the Accrued Vacation Amount shall be paid to the
Employee upon the termination of the Employment Agreement, unless the Employment
Agreement is terminated for cause as provided in Section 7.3 of the Employment
Agreement. Section 6.2 of the Employment Agreement shall be deleted in its
entirety and replaced with the following:

 

“The Employee shall be entitled to (cumulative) paid vacation of 17.6 days for
calendar year 2014. For all calendar years, commencing on or after January 1,
2015, the Employee shall be entitled to (cumulative) paid vacation of the
greater of 13 days or the number of days required by applicable law. Paid
vacation days are accrued pro rata through the year.”

 

2.8.Amendment to Section 7.1 of the Employment Agreement. Section 7.1 of the
Employment Agreement shall be deleted in its entirety and replaced with the
following:

 

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“Term. The term (the “Term”) of the Employee’s employment under this Agreement
shall commence as of the Effective Date and end on June 30, 2015, unless sooner
terminated as provided herein. The Term shall be extended for one (1) additional
year beginning on July 1, 2015 and on each July 1 hereafter in the event that
the parties agree in writing to so extend no later than ninety (90) days prior
to such July 1st. In the event that the parties do not so agree, then the Term
shall not be extended for an additional year and the Agreement will end without
any requirement for further prior notice. Upon the termination of Term for any
reason, the Employee agrees to resign, effective upon such termination, from the
board of directors of the Company. Notwithstanding the above, during the Term or
any extended term, each party may terminate this Agreement by providing the
other party written notice as provided in Section 7.2 below.”

 

2.9.Amendment to Section 7.2 of the Employment Agreement. Section 7.2 of the
Employment Agreement shall be amended by adding the following to the end of such
Section 7.2:

 

“The Employee’s social benefits provided above shall be pro-rated to Employee’s
scope of employment through the effective termination date, all in accordance
with applicable law. In the event of a termination of employment by the Company
(other than for cause as provided in Section 7.3), the Employee shall be
entitled to receive an amount (the “Special Payment”) equal to the product of
(x) three (3), multiplied by (y) the sum of (I) the result of $13,333, less
Employee’s then current monthly Salary (the “Extra Payment”), plus (II) an
amount equal to 21.83% of the Extra Payment. In the event that the Company does
not agree to extend the Term for an additional one-year period as provided in
Section 7.1, then the Employee shall also be entitled to receive the Special
Payment. For the avoidance of doubt, the Special Payment shall not constitute
Salary for purposes of social benefits, severance pay or otherwise.”

 

2.10.Amendment to Section 11 of the Employment Agreement. Section 11 of the
Employment Agreement shall be deleted in its entirety and replaced with the
following:

 

“Upon termination of this Agreement by the Company for any reason whatsoever
other than by death, disability or cause, as defined in Section 7.3 above, the
Employee shall be entitled to receive the following (the “Termination Payment”):
(i) the Accrued Severance Amount (as defined below), and (ii) an amount equal to
the product of (x) the number of full 12 month periods occurring during the
period commencing the Determining Date and ending the effective termination
date, multiplied by (y) an amount equal to her monthly salary and the value of
the social contributions set forth in Section 5.1 and 5.3 above, each as in
effect as of the effective termination date. The amount of any severance amounts
due to the Employee from any source (including the amounts accumulated in the
Employee's severance fund in her pension arrangements) with respect to her
entire period of work and under applicable law shall be applied against the
Termination Payment such that the Employee does not receive severance pay
(whether a lump sum payment or in the framework of the release of the amounts
accrued in her severance fund) in excess of the Termination Payment. The
Termination Payment (after the said deduction of applicable severance pay) shall
be paid on or about the effective termination date. Upon a termination by the
Company for death, disability or cause as defined in Section 7.3 or a
termination by the Employee, the Employee shall not be entitled to receive any
severance or other amounts, except if and as required under Section 5.1 above.

 

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In addition to the Termination Payment, upon termination of employment the
Employee shall receive the Accrued Vacation Amount, plus redemption of all
vacation days lawfully accrued and unused after the Determining Date through the
effective termination date and any outstanding recuperating pay (if any)
pursuant to Section 6.3, all paid in a lump sum on or about the effective
termination date.

 

The parties agree and acknowledge that, as of the Determining Date, the Company
has accrued for the benefit of the Employee, an amount of $187,041 (the “Accrued
Severance Amount”), which amount represents what the Employee would be entitled
to receive as a special payment (prior to the deduction of any statutory
severance pay required to be paid under applicable law) pursuant to Section 11
(in effect prior to the date of this Addendum) if her employment had been
terminated by the Company as of the Determining Date.”

 

2.11.Options.

 

Medgenics shall recommend to the Compensation Committee of the Board of
Directors of Medgenics approval of the following, subject to the provisions of
the Medgenics Stock Incentive Plan, as amended:

 

2.11.1.Acceleration of vesting: the vesting schedule of all options granted to
the Employee by Medgenics and held by the Employee as of the date of this
Addendum (the “Options”) shall be accelerated upon the termination of the
Employee’s employment by the Company, unless termination of employment was for
Cause as defined in the Israeli Award Agreements executed between the Employee
and Medgenics (the “Award Agreement”).

 

2.11.2.Post termination exercise: Notwithstanding any provisions of the
Medgenics Stock Incentive Plan and the relevant Award Agreements to the
contrary, upon the termination of the Employee’s employment by the Company,
except in the event of termination of employment for Cause as defined in the
Award Agreements, the Options shall be exercisable until their stated expiration
dates.

 

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3.General

 

3.1.For the avoidance of doubt, the Employee was and will continue to be
employed solely by the Company (and not by any other entity, including
Medgenics).

 

3.2.By signing this Addendum, the parties hereby agree and confirm that the
Employment Agreement has been duly modified by this Addendum.

 

3.3.Except as set forth herein, this Addendum shall not affect any provisions in
the Employment Agreement, which shall remain in full force and effect.

 

3.4.For the avoidance of doubt, all of the payments and benefits provided to the
Employee under the Agreement and this Addendum are gross amounts and shall be
subject to the withholding of all applicable taxes and deductions required by
any applicable law.

 

3.5.In the event of any inconsistency between the provisions of this Addendum
and the terms of the Employment Agreement, the provisions of this Addendum shall
prevail.

 

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IN WITNESS WHEREOF the parties have duly executed this Addendum:

 

 

            /s/ Phyllis Bellin     7/15/2014 Phyllis Bellin     Dated          
              Medgenics Medical Israel Ltd.                               By:
/s/ Michael Cola     7/15/2014   Its: Director     Dated                        
Medgenics, Inc.                               By: /s/ Michael Cola     7/15/2014
  Its: President and CEO     Dated            

 

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Appendix A
General Order and Confirmation Regarding Payments of Employers to Pension Funds
and Insurance Funds instead of Severance Pay

 

Pursuant to the power granted to me under section 14 of the Severance Pay Law
5723-1963 (“Law”) I hereby confirm that payments paid by an employer, commencing
the date hereof, to an employee’s comprehensive pension fund into a provident
fund which is not an insurance fund, as defined in the Income Tax Regulations
(Registration and Management Rules of a Provident Fund) 5724-1964 (“Pension
Fund”), or to a Manager’s Insurance Fund that includes the possibility of an
allowance or a combination of payments to an Allowance Plan and to a plan which
is not an Allowance Plan in an Insurance Fund (“Insurance Fund”), including
payments which the employer paid by combination of payments to a Pension Fund
and to an Insurance Fund whether there exists a possibility in the Insurance
Fund to an allowance plan (“Employer Payments”), will replace the severance pay
that the employee is entitled to for the salary and period of which the payments
were paid (“Exempt Wages”) if the following conditions are satisfied:

 

(1)Employer Payments –

 

(A)for Pension Funds are not less than 14.33 % of the Exempt Wages or 12% of the
Exempt Wages, if the employer pays for his employee an additional payment on
behalf of the severance pay completion for a providence fund or Insurance Fund
at the rate of 2.33% of the Exempt Wages. If an employer does not pay the
additional 2.33% on top of the 12%, then the payment will constitute only 72% of
the Severance Pay.

 

(B)to the Insurance Fund are not less than one of the following:

 

(1)13.33% of the Exempt Wages if the employer pays the employee additional
payments to insure his monthly income in case of work disability, in a plan
approved by the Supervisor of the Capital Market, Insurance and Savings in the
Finance Ministry, at the lower of, a rate required to insure 75% of the Exempt
Wages or 2.5% of the Exempt Wages (“Disability Payment”).

 

(2)11% of the Exempt Wages if the employer pays an additional Disability Payment
and in this case the Employer Payments will constitute only 72% of the
employee’s severance pay; if, in addition to the abovementioned sum, the
employer pays 2.33% of the Exempt Wages for the purpose of Severance Pay
completion to providence fund or Insurance Funds, the Employer Payments will
constitute 100% of the severance pay.

 

(2)A written agreement must be made between the employer and employee no later
than 3 months after the commencement of the Employer Payments that include –

 

(A)the agreement of the employee to the arrangement pursuant to this
confirmation which details the Employer Payments and the name of the Pension
Fund or Insurance Fund; this agreement must include a copy of this confirmation;

 

 

 

 

(B)an advanced waiver of the employer for any right that he could have to have
his payments refunded unless the employee’s right to severance pay is denied by
judgment according to sections 16 or 17 of the Law, or in case the employee
withdrew monies from the Pension Fund or Insurance Fund not for an Entitling
Event; for this matter, Entitling Event or purpose means death, disablement or
retirement at the age of 60 or over.

 

(3)This confirmation does not derogate from the employee’s entitlement to
severance pay according to the Law, Collective Agreement, Extension Order or
personal employment agreement, for any salary above the Exempt Wages.