EXHIBIT 10.47

     

    
       

      FORM
OF CONVERTIBLE DEBENTURE

       

      NEITHER THE ISSUANCE AND SALE OF THIS
DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT.


      


      Medgenics,
Inc.

      


      Convertible
Debenture

      


      
        
          	
                  Issuance
      Date: __________ _, 2009

                	
                  Original
      Principal Amount: U.S.
$________

                


        

      

      


      FOR VALUE RECEIVED, MEDGENICS,
INC., a Delaware corporation (the “Company”), hereby promises to pay to the order
of [NAME OF BUYER] or registered assigns (“Holder”) on the Maturity Date (as defined in
Section 1 below) the Original Principal Amount set forth above (the “Principal”) together with interest thereon (“Interest”) at the rate of ten percent (10%) per
annum (as the same may be increased pursuant to Section 3 below, the “Interest Rate”), in accordance with Section 3 below.
This Convertible Debenture (including all Convertible Debentures issued in
exchange or as a replacement for this Debenture, or upon transfer hereof, this
“Debenture”) is one of an issue of Convertible
Debentures (collectively, the “Debentures” and such other
Convertible Debentures, the “Other Debentures”) issued pursuant to the Securities
Purchase Agreement (as defined below). Certain capitalized terms are defined in
Section 23.

      


      (1)            MATURITY. Unless earlier converted in accordance with the
provisions of this Debenture, on the Maturity Date, the Holder shall surrender
this Debenture to the Company and the Company shall pay to the Holder an amount
in cash representing all outstanding Principal and accrued and unpaid Interest
thereon; provided that,
the Holder shall not be required to surrender this Debenture to the
Company and shall continue to have the right to convert this Debenture in
accordance with Section 4(a) of this Debenture (i) if a Default or Event of
Default shall exist on the Maturity Date, for so long as a Default or Event of
Default shall exist and (ii) if a Change of Control is publicly announced prior
to the Maturity Date, through the date that is ten (10) Business Days after the
consummation of a Change of Control. The “Maturity Date” shall be
________ __, 2011, as such date may be accelerated pursuant to Section
5.


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      (2)           NO PREPAYMENT. This Debenture may not be prepaid.

      


      (3)          
INTEREST; INTEREST
RATE. Interest on this Debenture (i)
shall accrue during the period from and including the Issuance Date set forth
above (the “Issuance Date”) through and including the earlier of
the date on which (a) all outstanding Principal and accrued and unpaid Interest
thereon are paid in full and (b) this Debenture is converted in accordance with
the provisions hereof, (ii) shall be computed on the basis of a 365-day year and
actual days elapsed and (iii) shall be payable in arrears on (a) the last day of
each September, December, March and June (each, an “Interest Date”), commencing June 30, 2009, (b)
unless earlier converted in accordance with the provisions of this Debenture,
the Maturity Date and (c) if converted in accordance with the provisions of this
Debenture, as set forth in Section 4(d). Interest shall be payable in cash
(except as otherwise provided in Section 4(d)). During any period when an Event
of Default exists (the “Default
Period”), the Interest Rate
shall automatically increase by two percent (2%) per month up to a maximum of
eighteen percent (18%) per annum and all computations of interest during a
Default Period shall be based on such increased rate. In the event that such
Event of Default is subsequently cured, the Interest Rate shall revert back to
the pre-default rate effective from and after the date of such
cure.

      


      (4)           CONVERSION OF
NOTES. This Debenture shall be
convertible into shares of Common Stock of the Company, on the terms and
conditions set forth in this Section 4.

      


      (a)           Optional
Conversion. Subject to the
provisions of Section 4(d), at any time on or after the Issuance Date, the
Holder shall be entitled to convert all but not less than all of the Conversion
Amount (as defined below) into fully paid and nonassessable shares of Common
Stock in accordance with Section 4(d), at the Conversion Rate (as defined
below). The Company shall not issue any fraction of a share of Common Stock upon
any optional conversion. If the issuance would result in the issuance of a
fraction of a share of Common Stock, the Company shall round such fraction of a
share of Common Stock up to the nearest whole share. The Company shall pay any
and all taxes that may be payable with respect to the issuance and delivery of
Common Stock upon conversion of any Conversion Amount (other than taxes on or
measured by the net income of the Holder).

      


      (b)           Mandatory
Conversion. Upon the consummation of
a Qualified
Transaction at any time on or after the Issuance Date, the Holder
shall be required to convert all of the Conversion Amount (as defined below)
into fully paid and nonassessable shares of Common Stock in accordance with
Section 4(d), at the Conversion Rate (as defined below). The Company shall not
issue any fraction of a share of Common Stock upon any mandatory conversion. If
the issuance would result in the issuance of a fraction of a share of Common
Stock, the Company shall round such fraction of a share of Common Stock up to
the nearest whole share. The Company shall pay any and all taxes that may be
payable with respect to the issuance and delivery of Common Stock upon
conversion of any Conversion Amount (other than taxes on or measured by the net
income of the Holder). Upon the consummation of a Qualified Transaction, this
Debenture shall represent the right to receive Common Stock in accordance with
the provisions of this Debenture and shall cease to evidence
Indebtedness.

      


      (c)            Conversion
Rate. The number of shares of Common Stock
issuable upon conversion of any Conversion Amount pursuant to Section 4(a) or
4(b) shall be determined by dividing (x) such Conversion Amount by (y)
the Conversion Price (the “Conversion Rate”).


      
        
           


        

        
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      (i)          “Conversion Amount” means on
any date the outstanding Principal amount of this Debenture on such
date.

      


      (ii)       
 “Conversion Price”
shall be determined as follows: (i) prior to the consummation of a
Qualified Transaction, the Conversion Price shall be $0.12, (ii) upon the
consummation of a Qualified Transaction, (a) in the event the offering price or
merger consideration (as applicable) per share in the Qualified Transaction is
equal to or greater than $0.12, the Conversion Price shall be the lesser of
$0.12 and 40% of the offering price or merger consideration (as applicable) per
share in the Qualified Transaction, (b) in the event the offering price or
merger consideration (as applicable) per share in the Qualified Transaction is
equal to or greater than $0.07, but less than $0.12, the Conversion Price shall
be $0.07, (c) in the event the offering price or merger consideration (as
applicable) per share in the Qualified Transaction is less than $0.07, the
Conversion Price shall be the offering price or merger consideration (as
applicable) per share in the Qualified
Transaction, in each case subject to adjustment as provided
herein.

      


      (iii)       
“Qualified Acquisition”
means the acquisition of all of the issued and outstanding common stock
of the Company by a public company the common stock of which is traded on a U.S.
Stock Market or on the OTC Bulletin Board in a transaction where the holders of
the common stock of the Company receive, in exchange for such common stock,
common stock of such public company and, after giving effect to such transaction
and any capital-raising transaction completed prior to or at the time of such
transaction, such public company has available cash of not less than
$5,000,000.

      


      (iv)      
 “Qualified Merger”
means a merger or reverse merger between the Company and a public company
the common stock of which is traded on a U.S. Stock Market or on the OTC
Bulletin Board, the survivor of which is a public company having available cash
of not less than $5,000,000 after giving effect to such merger and any
capital-raising transaction completed prior to or at the time of such
merger.

      


      (v)         “Qualified Transaction” means
any of (i) an underwritten
public offering of the Company’s common stock on a U.S. Stock Market resulting
in gross proceeds to the Company of not less than $5,000,000, (ii) a Qualified
Merger or (iii) a Qualified Acquisition.

      


      (vi)        “U.S. Stock Market” means the NYSE,
the NYSE Amex or the Nasdaq Stock Market.


      
        
           


        

        
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      (d)         
Mechanics of
Conversion. To convert the
Conversion Amount into shares of Common Stock on any date (a “Conversion Date”), the Holder shall (A) transmit by
facsimile (or otherwise deliver) to the Company, for receipt on or prior to
11:59 p.m., Eastern Time, on such date, a copy of an executed notice of
conversion in the form attached hereto as Exhibit I (the “Conversion Notice”) and (B) surrender this Debenture to
a common carrier for delivery to the Company as soon as practicable on or
following such date (or provide to the Company an indemnification undertaking
in accordance with Section 15(b) in the case of the loss, theft or destruction
of this Debenture). On or before the second (2nd) Business Day following the date of
receipt of a Conversion Notice, the Company shall transmit by facsimile a
confirmation of receipt of such Conversion Notice to the Holder (and, if such
conversion occurs after a Qualified Transaction, the Company’s transfer agent,
(the “Transfer
Agent”)). On or before the fifth (5th) Business
Day following the date of receipt of a Conversion Notice (the “Share Delivery
Date”), the Company shall, or shall cause the
Transfer Agent to, issue and deliver to the address specified in the Conversion
Notice, a certificate, registered in the name of the Holder or its designee, for
the number of shares of Common Stock to which the Holder shall be entitled. Any
interest accrued since the Interest Payment Date immediately preceding the
Conversion Date on any Conversion Amount converted hereunder shall be added to
Principal and shall increase the Conversion Amount as of the Conversion Date.
Any other accrued and unpaid interest shall be paid to the Holder on the
Conversion Date. The Person or Persons entitled to receive the shares of Common
Stock issuable upon a conversion of this Debenture shall be treated for all
purposes as the record holder or holders of such shares of Common Stock on the
Conversion Date.

      


      (5)          
RIGHTS UPON EVENT OF
DEFAULT.

      


      (a)         
Event of
Default. The occurrence of any one
or more of the following events (regardless of the reason therefor) shall
constitute an “Event of
Default” hereunder:

      


      (i)         
the failure of the Company to make any payment of Principal on this Debenture as
and when due and payable;

      


      (ii)         the
failure of the Company to make any payment of Interest or other amounts as and
when due and payable under this Debenture or any other Transaction Document or
any other agreement, document, certificate or other instrument delivered in
connection with the transactions contemplated hereby and thereby to which the
Holder is a party, and such failure shall continue for a period of ten (10)
Business Days;

      


      (iii)        The
failure of the Company to observe or perform any other term, covenant, or
agreement contained in this Debenture and, in the case of a failure which is
susceptible of cure, such failure shall have continued unremedied for a period
of 20 Business Days;

      


      (iv)        any
representation or warranty made by the Company in any Transaction Document shall
prove to have been incorrect or misleading (whether because of misstatement or
omission) in any material respect when made;

      


      (v)        
any event or condition occurs that results in any Material Indebtedness becoming
or being declared to be due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder of Material Indebtedness or any trustee or agent on its or their behalf
to cause any Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled maturity
(in each case after giving effect to any applicable grace
period);


      
        
           


        

        
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      (vi)        the
Company or any of its Subsidiaries shall (A) make an assignment for the benefit
of creditors, (B) admit in writing its inability to pay its debts as they become
due, (C) file a voluntary petition in bankruptcy, (D) file any petition or
answer seeking for itself any reorganization, arrangement, composition,
readjustment of debt, liquidation or dissolution or similar relief under any
present or future statute, law or regulation of any jurisdiction, (E) petition
or apply to any tribunal for any receiver, custodian or any trustee for any
substantial part of its property, (F) be the subject of any such proceeding
filed against it which remains unstayed or undismissed for a period of 60 days,
(G) file any answer admitting or not contesting the material allegations of any
such petition filed against it or any order, judgment or decree approving such
petition in any such proceeding, (H) seek, approve, consent to, or acquiesce in
any such proceeding, or in the appointment of any trustee, receiver,
sequestrator, custodian, liquidator, or fiscal agent for it, or any substantial
part of its property, or, if an order is entered appointing any such trustee,
receiver, custodian, liquidator or fiscal agent, such order remains in effect
for 60 days, or (I) take any formal action for the purpose of effecting any of
the foregoing or looking to the liquidation or dissolution of the Company or any
such Subsidiary;

      


      (vii)     
 an (A) order or decree is entered by a court having jurisdiction (1)
adjudging the Company or any of its Subsidiaries bankrupt or insolvent, (2)
approving as properly filed a petition seeking reorganization, liquidation,
arrangement, adjustment or composition of or in respect of the Company or any of
its Subsidiaries under the bankruptcy or insolvency laws of any jurisdiction,
(3) appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Company or any of its
Subsidiaries or of any substantial part of the property of any thereof, or (4)
ordering the winding up or liquidation of the affairs of the Company or any of
its Subsidiaries, and any such decree or order continues unstayed and in effect
for a period of 60 days or (B) order for relief is entered under the bankruptcy
or insolvency laws of any jurisdiction;

      


      (viii)     
The failure of the Company to observe or perform any other term, covenant, or
agreement contained in any
Transaction Document to which it is a party and, in the case of a failure which
is susceptible of cure, such failure shall have continued unremedied for a
period of 20 Business Days after the earliest of (A) the Company’s obtaining
actual knowledge of such failure, (B) the date on which the Company in the
exercise of reasonable diligence would have obtained actual knowledge of such
failure and (C) the Company’s receipt of written notice of such failure from the
Holder or any holder of Other Debentures;

      


      (ix)       
Judgments or decrees against the Company or any of its Subsidiaries aggregating
in excess of $250,000 (unless adequately insured by a solvent unaffiliated
insurance company which has acknowledged coverage) shall remain unpaid, unstayed
on appeal, undischarged, unbonded or undismissed for a period of 30
days;

      


      (x)          any
Event of Default (as defined in the Other Debentures) occurs with respect to any
Other Debentures; and


      
        
           


        

        
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      (xi)        
the Company fails either to (A) register the Common Stock under the Securities
Exchange Act of 1934, as amended, and cause the Common Stock to be listed on a
U.S. Stock Market or (B) consummate a Qualified Transaction, in either case
within 12 months after the date as of which $2,500,000 in aggregate principal
amount of Debentures have been sold.

      


      (xii)     
 the Company makes any severance payments to an employee, whether pursuant
to contract, applicable law or otherwise, unless such severance payments are
adequately covered by insurance issued by a solvent unaffiliated insurance
company which has acknowledged coverage; provided that
from and after the date on which the Company shall have issued Debentures
to Investors (as defined in the Securities Purchase Agreement) in an aggregate
principal amount of at least $400,000, this clause (xii) shall terminate and be
of no further force and effect.

      


      (b)         
Remedies. Upon the occurrence of an Event of Default
(other than an event described in Section 5(a)(vi) or (vii)), and at any time
thereafter during the continuance of such event, the Holder may, by notice to
the Company, declare the Principal then outstanding to be due and payable in
whole (or in part, in which case any principal not so declared to be due and
payable may thereafter be declared to be due and payable) and thereupon the
Principal so declared to be due and payable, together with accrued Interest
thereon and all fees and other obligations of the Company accrued under the
Transaction Documents, shall become due and payable immediately , without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Company; and in case of any event described in Section
5(a)(vi) or (vii), the Principal then outstanding, together with accrued
Interest thereon and all fees and other obligations of the Company accrued under
the Transaction Documents shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Company.

      


      (6)          
RIGHTS UPON
FUNDAMENTAL TRANSACTION AND CHANGE OF CONTROL. Unless otherwise consented to by the Required
Holders (which consent shall not be unreasonably withheld or delayed), the
Company shall not become party to a Fundamental Transaction unless (i) the
Successor Entity assumes in writing all of the obligations of the Company under
this Debenture and the other Transaction Documents in accordance with the
provisions of this Section 6 pursuant to written agreements approved by the
Required Holders prior to the consummation of such Fundamental Transaction (such
approval not to be unreasonably withheld or delayed), including agreements to
deliver to each holder of Debentures in exchange for such Debentures a security
of the Successor Entity evidenced by a written instrument substantially similar
in form and substance to the Debentures (which shall include having a principal
amount and interest rate equal to the principal amounts and the interest rates
of the Debentures held by such holders and having a ranking on parity with the
Debentures), and otherwise satisfactory to the Required Holders and (ii) the
Successor Entity (including its Parent Entity) is a publicly traded corporation
whose common stock is quoted on or listed for trading on an U.S. Stock Market.
Upon the occurrence of any Fundamental Transaction, the Successor Entity shall
succeed to and be substituted for, may exercise every right and power of, and
shall assume all of the obligations of, the Company under this Debenture with
the same effect as if such Successor Entity had been named as the Company
herein. Upon consummation of the Fundamental Transaction, the Successor Entity
shall deliver to the Holder confirmation that upon conversion of this Debenture
at any time after such consummation, in lieu of the shares of the Company’s
Common Stock purchasable upon the conversion of the Debentures prior to such
Fundamental Transaction, there shall be issued shares of publicly traded common
stock (or their equivalent) of the Successor Entity, as adjusted in accordance
with the provisions of this Debenture. The provisions of this Section shall
apply similarly and equally to successive Fundamental Transactions and shall be
applied without regard to any limitations on the conversion of this
Debenture.


      
        
           


        

        
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      (7)         
 RIGHTS UPON
OTHER CORPORATE EVENTS. In addition
to and not in substitution for any other rights hereunder, prior to the
consummation of any Fundamental Transaction pursuant to which holders of shares
of Common Stock are entitled to receive securities or other assets with respect
to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate
provision to insure that the Holder will thereafter have the right to receive
upon a conversion of this Debenture, (i) in addition to the shares of Common
Stock receivable upon such conversion, such securities or other assets to which
the Holder would have been entitled with respect to such shares of Common Stock
had such shares of Common Stock been held by the Holder upon the consummation of
such Corporate Event (without taking into account any limitations or
restrictions on the convertibility of this Debenture) or (ii) in lieu of the
shares of Common Stock otherwise receivable upon such conversion, such
securities or other assets received by the holders of shares of Common Stock in
connection with the consummation of such Corporate Event in such amounts as the
Holder would have been entitled to receive had this Debenture initially been
issued with conversion rights for the form of such consideration (as opposed to
shares of Common Stock) at a conversion rate for such consideration commensurate
with the Conversion Rate. Provision made pursuant to the preceding sentence
shall be in a form and substance satisfactory to the Required Holders. The
provisions of this Section shall apply similarly and equally to successive
Corporate Events and shall be applied without regard to any limitations on the
conversion or redemption of this Debenture.

      


      (8)         
 ADJUSTMENT OF
CONVERSION PRICE UPON SUBDIVISION OR COMBINATION OF COMMON
STOCK. If the Company at any time on
or after the Closing Date subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the Conversion Price in effect
immediately prior to such subdivision will be proportionately reduced. If the
Company at any time on or after the Closing Date combines (by combination,
reverse stock split or otherwise) one or more classes of its outstanding shares
of Common Stock into a smaller number of shares, the Conversion Price in effect
immediately prior to such combination will be proportionately
increased.

      


      (9)          
NON-CIRCUMVENTION. The Company hereby covenants and agrees that
the Company will not, by amendment of its Certificate of Incorporation, Bylaws
or through any reorganization, transfer of assets, consolidation, merger, scheme
of arrangement, dissolution, issue or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of this Debenture, and will at all times in good faith carry out all of the
provisions of this Debenture and take all action as may be required to protect
the rights of the Holder of this Debenture.


      
        
           


        

        
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      (10)        
RESERVATION OF AUTHORIZED
SHARES.

      


      (a)         
Reservation. The Company
initially shall reserve out of its authorized and unissued Common Stock a number
of shares of Common Stock for each of the Debentures equal to at least 110% of
the Conversion Rate with respect to the Conversion Amount of each such Debenture
as of the Issuance Date. So long as any of the Debentures are outstanding, the
Company shall take all action necessary to reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of effecting the
conversion of the Debentures, 110% of the number of shares of Common Stock as
shall from time to time be necessary to effect the conversion of all of the
Debentures then outstanding (the “Required
Reserve Amount”). The initial number of shares of Common Stock reserved
for conversions of the Debentures and each increase in the number of shares so
reserved shall be allocated pro rata among the holders of the Debentures based
on the principal amount of the Debentures held by each holder at the Closing (as
defined in the Securities Purchase Agreement) or as increased in accordance
herewith, as the case may be (the “Authorized
Share Allocation”). In the event that a holder shall sell or otherwise
transfer any of such holder’s Debentures, each transferee shall be allocated a
pro rata portion of such holder’s Authorized Share Allocation. Any shares of
Common Stock reserved and allocated to any Person which ceases to hold any
Debentures shall be allocated to the remaining holders of Debentures, pro rata
based on the principal amount of the Debentures then held by such
holders.

      


      (b)         
Insufficient Authorized Shares.
If at any time while any of the Debentures remain outstanding the Company does
not have a sufficient number of authorized and unreserved shares of Common Stock
to satisfy its obligation to reserve for issuance upon conversion of the
Debentures at least a number of shares of Common Stock equal to the Required
Reserve Amount (an “Authorized Share
Failure”), then the Company shall immediately take all action necessary
to increase the Company’s authorized shares of Common Stock to an amount
sufficient to allow the Company to reserve the Required Reserve Amount for the
Debentures then outstanding. Without limiting the generality of the foregoing
sentence, as soon as practicable after the date of the occurrence of an
Authorized Share Failure, but in no event later than 60 days after such
occurrence, the Company shall obtain stockholder approval for an increase in the
number of authorized shares of Common Stock. In connection with obtaining such
approval, the Company shall use its best efforts to solicit its stockholders’
approval of such increase in authorized shares of Common Stock and to cause its
board of directors to recommend to the stockholders that they approve such
proposal.

      


      (11)        
VOTING RIGHTS. The Holder shall
have no voting rights as the holder of this Debenture, except as required by
law, including but not limited to the General Corporation Law of Delaware, and
as expressly provided in this Debenture.

       

      (12)        
COVENANTS.

      


      (a)           Rank. The Indebtedness evidence by
this Debenture shall rank pari passu
with all Other Debentures.


      
        
           


        

        
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      (b)          Incurrence of Indebtedness. So long as
this Debenture is outstanding, the Company shall not, and the Company shall not
permit any of its Subsidiaries to, directly or indirectly, incur or
guarantee, assume or suffer to exist any Indebtedness, other than the (i)
Indebtedness evidenced by this Debenture and the Other Debentures and (ii) other
unsecured Indebtedness in a principal amount not to exceed $__ at any one time
outstanding.

      


      (c)         
Existence of
Liens. So long as this Debenture is
outstanding, the Company shall not, and the Company shall not permit any of its
Subsidiaries to, directly or indirectly, grant or suffer to exist any Lien on
any property or assets (including accounts and contract rights) of the Company
or any of its Subsidiaries, other than Permitted Liens.

      


      (d)         
Restricted
Payments. The Company will not, and
will not permit any of its Subsidiaries to, (i) declare or make, or agree to pay
for or make, directly or indirectly, any Restricted Payment, or (ii) be or
become liable in respect of any obligation (contingent or otherwise) to
purchase, redeem, retire, acquire or make any other payment in respect of its
equity securities or any option, warrant (other than the Warrants and other
options and warrants of the Company outstanding on the date hereof, including
the payment of cash in lieu of the issuance of fractional shares in respect of
any of the foregoing) or other right to acquire any such shares of equity
securities, except that any Subsidiary of the Company may declare and pay
dividends with respect to its equity securities to the Company.

      


      (e)          Sale of Stock. The Company shall not, so long as this
Debenture is outstanding, sell or offer for sale any Common Stock for a price of
less than $0.03 per share without the prior written consent of the Required
Holders, which consent may be withheld by them in their sole
discretion.

      


      (13)        
AMENDMENTS TO TERMS OF
DEBENTURES. The affirmative vote at
a meeting duly called for such purpose or the written consent without a meeting
of the Required Holders shall be required for any change or amendment to terms
of this Debenture or the Other Debentures. Any change or amendment so approved
shall be in writing and shall be binding upon all existing and future holders of
this Debenture and any Other Debentures.

      


      (14)        TRANSFER. Subject to compliance with all applicable
securities laws. this Debenture may be offered, sold, assigned or transferred by
the Holder without the consent of the Company. This Debenture may be transferred
in full, but not in part.

      


      (15)       
 REISSUANCE OF
THIS DEBENTURE.

      


      (a)         
Transfer. If this Debenture is to be transferred, the
Holder shall surrender this Debenture to the Company, whereupon the Company will
forthwith issue and deliver upon the order of the Holder a new Debenture (in
accordance with Section 15(c)), registered as the Holder may request,
representing the outstanding Principal being transferred by the
Holder.

      


      (b)        
 Lost,
Stolen or
Mutilated Debenture. Upon receipt by
the Company of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Debenture, and, in the case of loss,
theft or destruction, of any indemnification undertaking by the Holder to the
Company in customary form and, in the case of mutilation, upon surrender and
cancellation of this Debenture, the Company shall execute and deliver to the
Holder a new Debenture (in accordance with Section 15(c)) representing the
outstanding Principal.


      
        
           


        

        
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      (c)         
Issuance of New
Debentures. Whenever the Company is
required to issue a new Debenture pursuant to the terms of this Debenture, such
new Debenture (i) shall be of like tenor with this Debenture, (ii) shall
represent, as indicated on the face of such new Debenture, the Principal
remaining outstanding together with accrued and unpaid Interest thereon, (iii)
shall have an issuance date, as indicated on the face of such new Debenture,
which is the same as the Issuance Date of this Debenture and (iv) shall have the
same rights and conditions as this Debenture.

      


      (16)      
 CONSTRUCTION;
HEADINGS. The Company and all the
Investors (as defined in the Securities Purchase Agreement) having been
represented by counsel in connection with this Debenture and the transactions
contemplated hereby and having had adequate opportunity to negotiate the terms
hereof, the principle that agreements are to be construed against the party
drafting same shall be inapplicable. The headings of this Debenture are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Debenture.

      


      (17)       
 FAILURE OR
INDULGENCE NOT WAIVER. No failure or
delay on the part of the Holder in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.

      


      (18)         DISPUTE
RESOLUTION. In the case of a dispute
as to the arithmetic calculation of the Conversion Rate, the Company shall
submit the disputed arithmetic calculations via facsimile within two (2)
Business Days after (i) receipt of the Conversion Notice (in the case of an
optional conversion pursuant to Section 4(a)), (ii) a Qualified Transaction (in
the case of a mandatory conversion pursuant to Section 4(b)) or (iii) such other
event giving rise to such dispute, as the case may be, to the Holder. If the
Holder and the Company are unable to agree upon such determination or
calculation within one (1) Business Day thereafter, then the Company shall,
within two (2) Business Days thereafter submit via facsimile the disputed
arithmetic calculation of the Conversion Rate to the Company’s independent,
outside accountant. The Company, at the Company’s expense, shall cause the
accountant to perform the determinations or calculations and notify the Company
and the Holder of the results no later than five (5) Business Days from the time
such accountant receives the disputed determinations or calculations. Such
accountant’s determination or calculation shall be binding upon all parties
absent demonstrable error.

      


      (19)        NOTICES;
PAYMENTS.

      


      (a)        
 Notices. Whenever notice is required to be given under
this Debenture, unless otherwise provided herein, such notice shall be given in
accordance with Section 9.4 of the Securities Purchase Agreement. The Company
shall provide the Holder with prompt written notice of all actions taken
pursuant to this Debenture, including a reasonably detailed description of such
action and the reason therefor. Without limiting the generality of the
foregoing, the Company will give written notice to the Holder (i) as soon as
practicable upon any adjustment of the Conversion Price, setting forth in
reasonable detail, and certifying, the calculation of such adjustment and (ii)
at least twenty days prior to the date on which the Company closes its books or
takes a record for determining rights to vote with respect to any Fundamental
Transaction, dissolution or liquidation, provided in each case that such
information shall be made known to the public prior to or in conjunction with
such notice being provided to the Holder.


      
        
           


        

        
          -10-

          
            

          

        

        
           


        

      

      


      (b)         
Payments. Whenever any payment of cash is to be made by
the Company to any Person pursuant to this Debenture, such payment shall be made
in lawful money of the United States of America by a check drawn on the account
of the Company and sent via overnight courier service to such Person at such
address as previously provided to the Company in writing (which address, in the
case of each of the Investors, shall initially be as set forth on the applicable
signature page attached to the Securities Purchase Agreement); provided that
the Holder may elect to receive a payment of cash via wire transfer of
immediately available funds by providing the Company with prior written notice
setting out such request and the Holder’s wire transfer instructions. Whenever
any amount expressed to be due by the terms of this Debenture is due on any day
which is not a Business Day, the same shall instead be due on the next
succeeding day which is a Business Day and, in the case of any Interest Date
which is not the date on which this Debenture is paid in full, the extension of
the due date thereof shall not be taken into account for purposes of determining
the amount of Interest due on such date.

      


      (20)        
CANCELLATION. After all Principal, accrued Interest and other
amounts at any time owed on this Debenture have been paid in full, this
Debenture shall automatically be deemed canceled, shall be surrendered to the
Company for cancellation and shall not be reissued.

      


      (21)      
 WAIVER OF
NOTICE. To the extent permitted by
law, the Company hereby waives demand, notice, protest and all other demands and
notices in connection with the delivery, acceptance, performance, default or
enforcement of this Debenture and the Securities Purchase
Agreement.

      


      (22)        
GOVERNING
LAW. This Debenture shall be
construed and enforced in accordance with, and all questions concerning the
construction, validity, interpretation and performance of this Debenture shall
be governed by, the internal laws of the State of Delaware, without giving
effect to any choice of law or conflict of law provision or rule that would
cause the application of the laws of any jurisdictions other than the State of
Delaware.

      


      (23)        
CERTAIN
DEFINITIONS. For purposes of this
Debenture, the following terms shall have the following meanings:

      


      (a)          
“Business Day” means any
day other than Saturday, Sunday or other day on which commercial banks in the
City of New York and the nation of Israel are authorized or required by law to
remain closed.

      


      (b)         
 “Capital Lease
Obligations” of any Person means the obligations of such Person to pay
rent or other amounts under any lease of (or other arrangement conveying the
right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of such Person under GAAP, and the amount of such obligations
shall be the capitalized amount thereof determined in accordance with
GAAP.


      
        
           


        

        
          -11-

          
            

          

        

        
           


        

      

      


      (c)         
 “Change of Control”
means any Fundamental Transaction other than (A) any reorganization,
recapitalization or reclassification of the Common Stock in which holders of the
Company’s voting power immediately prior to such reorganization,
recapitalization or reclassification continue after such reorganization,
recapitalization or reclassification to hold publicly traded securities and,
directly or indirectly, the voting power of the surviving entity or entities
necessary to elect a majority of the members of the board of directors (or their
equivalent if other than a corporation) of such entity or entities, or (B)
pursuant to a migratory merger effected solely for the purpose of changing the
jurisdiction of incorporation of the Company.

      


      (d)          
“Closing Date” shall
have the meaning set forth in the Securities Purchase Agreement, which is the
date the Company initially issued this Debenture pursuant to the terms of the
Securities Purchase Agreement.

      


      (e)          
 “Common Stock”
means the shares of common stock, par value $0.0001 per share, of the
Company.

      


      (f)           
“Default” means an event
which with the giving of notice and/or the passage of time would result in an
Event of Default.

       

      (g)          
“Event of Default” is
defined in Section 5(a).

      


      (h)          
“Fundamental Transaction”
means that the Company shall, directly or indirectly, in one or more
related transactions, (i) consolidate or merge with or into (whether or not the
Company is the surviving corporation) another Person, or (ii) sell, assign,
transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of the Company to another Person, or (iii) allow another
Person to make a purchase, tender or exchange offer that is accepted by the
holders of more than the 50% of the outstanding shares of Common Stock (not
including any shares of Common Stock held by the Person or Persons making or
party to, or associated or affiliated with the Persons making or party to, such
purchase, tender or exchange offer), or (iv) consummate a stock purchase
agreement or other business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of arrangement) with
another Person whereby such other Person acquires more than the 50% of either
the outstanding shares of Common Stock or the outstanding shares of Common Stock
(not including any shares of Common Stock held by the other Person or other
Persons making or party to, or associated or affiliated with the other Persons
making or party to, such stock purchase agreement or other business combination)
or (v) reorganize, recapitalize or reclassify its Common Stock (other than a
reverse or forward stock split) or (vi) any “person” or “group”
(as these terms are used for purposes of Sections 13(d) and 14(d) of the
Exchange Act) is or shall become the “beneficial owner” (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate
ordinary voting power represented by issued and outstanding Common Stock; provided however,
that a Qualified Transaction shall not constitute a Fundamental
Transaction.

      


      (i)            “GAAP” means United States generally accepted
accounting principles, consistently applied.


      
        
           


        

        
          -12-

          
            

          

        

        
           


        

      

      


      (j)           
“Guarantee”
of or by any Person (the “guarantor”)
means any obligation, contingent or otherwise, of the guarantor guaranteeing or
having the economic effect of guaranteeing any Indebtedness or other obligation
of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation, provided
that the term “Guarantee” shall not include endorsements for collection
or deposit in the ordinary course of business. The amount of any Guarantee of a
Person shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Guarantee is given or,
if not stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by such Person in good faith.

      


      (k)          
“Indebtedness” means of
any Person means, without duplication, (a) all obligations of such Person for
borrowed money or with respect to deposits or advances of any kind, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such Person upon which interest charges are
customarily paid, (d) all obligations of such Person under conditional sale or
other title retention agreements relating to property acquired by such Person,
(e) all obligations of such Person in respect of the deferred purchase price of
property or services (excluding current accounts payable incurred in the
ordinary course of business), (f) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed, (g)
all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease
Obligations of such Person, (i) all obligations, contingent or otherwise, of
such Person as an account party in respect of letters of credit and letters of
guaranty, and (j) all obligations, contingent or otherwise, of such Person in
respect of bankers’ acceptances. The Indebtedness of any Person shall include
the Indebtedness of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person is liable therefor as a
result of such Person’s ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide that such
Person is not liable therefor.

      


      (1)          
“Lien” means any mortgage, pledge,
hypothecation, assignments deposit or preferential arrangement, encumbrance,
lien (statutory or other), or other security
agreement or security interest of any kind or nature whatsoever,
including any conditional sale or other title retention
agreement and any capital or financing lease having substantially the
same economic effect as any of the foregoing.

      


      (m)        
 “Material Indebtedness”
means, on any date, with respect to the Company, any of its Subsidiaries
or any combination thereof, Indebtedness (other than Indebtedness under the
Transaction Documents) in an aggregate principal amount exceeding
$250,000.


      
        
           


        

        
          -13-

          
            

          

        

        
           


        

      

      


       (n)         
“Parent Entity” of a
Person means an entity that, directly or indirectly, controls the applicable
Person and whose common stock or equivalent equity security is quoted or listed
on a U.S. Stock Market, or, if there is more than one such Person or Parent
Entity, the Person or Parent Entity with the largest public market
capitalization as of the date of consummation of the Fundamental
Transaction.

      


      (o)          
“Permitted Liens” means
(i) any Lien for taxes not yet due or delinquent or being contested in good
faith by appropriate proceedings diligently
conducted for which adequate reserves have been established in
accordance with GAAP, provided that
enforcement of such Lien is stayed pending such contest, (ii) landlords’,
carriers’, warehousemen’s, mechanics’,
workers’, suppliers’, materialmen’s, repairmen’s or other like Liens arising in
the ordinary course of business with respect to a liability that is not yet due
or delinquent or that are being contested in good faith by appropriate
proceedings diligently conducted and with respect to which adequate reserves
have been established in accordance with GAAP, provided that enforcement of such
Lien is stayed pending such contest, (iii) Liens (if any) securing the Company’s
obligations under the Debentures, (iv) leases or subleases and licenses and
sublicenses granted to others in the ordinary course of the Company’s business,
not interfering in any material respect with the business of the Company and its
Subsidiaries taken as a whole, (v) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payments of custom duties in
connection with the importation of goods, (vi) judgment Liens in respect of
judgments that would not cause an Event of Default under Section 5(a)(ix), (vii)
Liens arising or pledges or deposits made in the ordinary course of business in
connection with workers’ compensation, unemployment insurance and other social
security or public liability laws or similar legislation, other than any Lien
imposed by the Employee Retirement Income Security Act of 1974, as amended,
(viii) customary rights of set off, bankers’ liens, refunds or charge backs,
under deposit agreements, the Uniform Commercial Code or common law, of banks or
other financial institutions where the Company or any of its Subsidiaries
maintains deposits (other than deposits intended as cash collateral) in the
ordinary course of business, (ix) Liens which arise under Article 4 of the
Uniform Commercial Code in any applicable jurisdictions on items in collection
and documents and proceeds related thereto and (x) deposits of cash with the
owner or lessor of premises leased and operated by the Company or any of its
Subsidiaries in the ordinary course of business to secure the performance by the
Company or such Subsidiary of its obligations under the terms of the lease of
such premises.

      


      (p)          
“Person” means an
individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization, any other entity and a
government or any department or agency thereof.

      


      (q)           “Required Holders” means the
holders of Debentures representing at least 51% of the aggregate Principal
amount of the Debentures then outstanding.

      


      (r)          
 “Restricted Payments”
means, as to any Person, any dividend or other distribution by such
Person (whether in cash, securities or other property) with respect to any
shares or units of any class of equity securities of such Person, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such shares or units or any
option, warrant or other right to acquire any such shares or
units.


      
        
           


        

        
          -14-

          
            

          

        

        
           


        

      

      


      (s)         
 “SEC” means the
United States Securities and Exchange Commission.

      


      (t)           
“Securities Purchase Agreement”
means that certain securities purchase agreement by and among the Company
and the initial holders of the Debentures pursuant to which the Company issued
the Debentures.

      


      (u)          
“Successor Entity” means
the Person, which may be the Company, formed by, resulting from or surviving any
Fundamental Transaction or the Person with which such Fundamental Transaction
shall have been made, provided that
if such Person is not a publicly traded entity whose common stock or
equivalent equity security is quoted or listed for trading on a U.S. Stock
Market, Successor Entity shall mean such Person’s Parent Entity.

      


      (v)           “Transaction Documents” has
the meaning ascribed to such term in the Securities Purchase
Agreement.

      


      (w)         
“Warrants” has the
meaning ascribed to such term in the Securities Purchase Agreement, and shall
include all warrants issued in exchange therefor or replacement
thereof.

      


      [Signature
Page Follows]


      
        
           


        

        
          -15-

          
            

          

        

        
           


        

      

      


      IN
WITNESS WHEREOF, the Company has caused this Debenture to be duly executed as of
the Issuance Date set out above.

      


      
        
          
            	
                    MEDGENICS,
      INC.

                  
	 
      	 
      
	
                    By:

                  	 
      
	 
      	
                    Name:

                  
	 
      	
                    Title:

                  


          

        

      

      
         

        [Signature
Page to Convertible Debenture]

         

        
          
            
               


            

            
               


              
                

              

            

            
               


            

          

        

        


      

      EXHIBIT
I

      


      MEDGENICS,
INC.

      CONVERSION
NOTICE

       

      Reference
is made to the Convertible Debenture (the “Debenture”)
issued to the undersigned by Medgenics, Inc. (the “Company”).
In accordance with and pursuant to the Debenture, the undersigned
hereby elects to convert the Conversion Amount (as defined in the Debenture) of
the Debenture (as indicated below) into shares of Common Stock (as defined in
the Debenture), as of the date specified below.

       

      


      
        
          
            
              	
                      Date of Conversion:

                    	
                       

                    


            

          

        

      

       

      
        
          
            
              	
                      Aggregate Conversion Amount to be converted:

                    	
                       

                    


            

          

        

      

       

      Please confirm the following information:

      


      
        
          
            
              	
                      Conversion Price:

                    	
                       

                    


            

          

        

      

       

      
        
          
            
              	
                      Number of shares of Common Stock to be issued:

                    	
                       

                    


            

          

        

      

       

      Please issue
the Common Stock into which the Debenture is being converted in the following
name and to the following address:

      


      
        
          
            
              
                
                  
                    
                      
                        	
                                Issue to:

                              	  
	 	 
	  	  
	 	 
	  	  


                      

                    

                  

                

              

            

          

        

      

      


      
        
          
            	
                    Facsimile
      Number:

                  	
                     

                  


          

        

        


        
          
            	
                    Authorization:

                  	
                     

                  


          

        

        


        
          
            	
                    By:

                  	
                     

                  


          

        

        


        
          
            	
                    Title:

                  	
                     

                  


          

        

        


        
          
            	
                    Dated:

                  	
                     

                  


          

        

      

       

      
        
          
            
              	
                      Account Number:

                    	  
	
                      (if electronic book entry transfer)

                    
	  
	
                      Transaction Code Number:

                    	  
	
                      (if electronic book entry transfer)

                    


            

          

        

      


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      ACKNOWLEDGMENT

      


      The
Company hereby acknowledges this Conversion Notice and hereby [agrees] [directs
[Insert Name of Transfer
Agent]] to issue the above indicated number of shares of Common Stock [in
accordance with the Transfer Agent Instructions dated _____________ from the
Company and acknowledged and agreed to by [Insert Name of Transfer
Agent]].

      


      
        
          
            	
                    MEDGENICS,
      INC.

                  
	 
      
	
                    By:

                  	 
      
	 
      	
                    Name:

                  
	 
      	
                    Title: