Document:

EXHIBIT 10.10

    

      
        Personal Employment
Agreement

      

      
        

      

      
        

      

      
        

      

      
        This
Personal Employment Agreement (the “Agreement”) is entered as of
this 1st day of
July, 2007 (the “Effective
Date”), by and between Medgenics, Inc., a company organized under the
laws of the State of Delaware, USA (“Medgenics”), its wholly owned
Israeli subsidiary, Medgenics Medical Israel, Ltd., a company organized under
the laws of the State of Israel (the “Company”), having its
principal office at Hanapach 12, Karmiel 20101, Israel and Phyllis Bellin of
Shorashim, Israel (Israeli I.D. No. 13009873) (the “Employee”).

      

      
        

      

      
        WITNESSETH

      

      
        

      

      
        
          	
                  WHEREAS,

                	
                  the
      Company was established for the purpose of engaging in the research and
      development, production and sale of products and/or services in the areas
      of life sciences, biotechnology and/or medical devices;
  and

                

        

      

      
        

      

      
        
          	
                  WHEREAS,

                	
                  Medgenics
      was established for the purposes of holding all of the entire issued
      capital stock of the Company;
and

                

        

      

      
        

      

      
        
          	
                  WHEREAS,

                	
                  the
      Employee has been employed by the Company since November 1, 2005 (the
      “start date”) and
      the parties now desire to formalize the terms of such employment pursuant
      to the terms of this
Agreement;

                

        

      

      
        

      

      
        
          	
                  WHEREAS,

                	
                  the
      parties desire that the Employee continue to serve in the capacity of
      Director of Finance and Administration of both Medgenics and the Company,
      all on the terms and conditions set forth herein;
  and

                

        

      

      
        

      

      
        
          	
                  WHEREAS,

                	
                  and
      the Employee represents that she has the requisite skill and knowledge to
      serve as such; and

                

        

      

      
        

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        NOW THEREFORE, in
consideration of the mutual promises, covenants, conditions, representations and
warranties set forth herein, and intending to be legally bound hereby, the
parties agree as follows:

      

      
        

      

      
        
          	
                  1.

                	
                  Appointment;
      Position – Director
      of Finance and Administration

                
	 	 
	 	      
                  The
      Employee shall serve as Director of Finance and Administration each of the
      Company and Medgenics and, in such capacity, the Employee shall be subject
      to the direction and control of the Chief Executive Office (“CEO”) and the Board of
      Directors of Medgenics (the “Board”)..

                

        

      

      
         

      

      
        
          	
                  2.

                	
                  Position

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  During
      the term of this Agreement:

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  2.1

                	
                  The
      Employee shall be employed on a full-time basis and shall faithfully,
      honestly, diligently and with due skill, care and attention devote her
      entire business time, attention, skills and efforts to the performance of
      her duties and responsibilities under this Agreement and the business and
      affairs of the Company. 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 finance and administration. The
      Employee’s areas of activity shall
include:

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  a)

                	
                  Managing
      accounting, banking relationships, budget, cashflow reporting, control,
      OCS reporting, payroll,
insurance;

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  b)

                	
                  outside
      contracts, Board relations, strategic planning, facilities, payroll;
      and

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  c)

                	
                  website,
      investor materials.

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  2.3

                	
                  The
      duties, responsibilities, authority and position of the Employee and the
      organizational structures implicit in them may be changed by the Company
      from time to time, as it deems necessary, and reasonable efforts to work
      with and accommodate the Employee with such changes will be made; however,
      the Company retains the right of sole discretion to make such
      changes.

                

        

      

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      
        

      

      
        
          	
                   
      

                	
                  2.4

                	
                  The
      Employee acknowledges hereby that the terms of her employment, the
      circumstances thereof, and the nature of her work require an unusual
      amount of personal trust as set out in the law governing Hours of
      Employment and Rest Law; 5711-1951, and therefore said law shall not apply
      to her employment with the
Company.

                

        

      

       

      
        
          	
                   
      

                	
                  2.5

                	
                  The
      Employee’s weekly day of rest shall be Saturday. The Employee shall not
      perform any work on the Jewish Sabbath (beginning Friday evening) or
      Jewish holidays unless authorized to do so by the Company in
      advance.

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  2.6

                	
                  The
      Employee undertakes to notify the Company, immediately and without delay,
      of any interest or matter in respect of which she may have a personal
      interest or is likely to create a conflict of interest with her role in
      the Company.

                

        

      

      
        

      

      
        
          	
                  3.

                	
                  Place of
      Work

                
	 	 
	 	      
                  In
      connection with the Employee’s employment by the Company, the Employee
      shall be based at the current principal offices of the Company in Israel,
      or at such other place as is otherwise appropriate to the functions being
      performed by the Company.   The Employee acknowledges that
      the performance of her duties hereunder may require domestic or
      international travel.

                

        

      

      
         

      

      
        
          	
                  4.

                	
                  Salary

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  4.1

                	
                  The
      Company shall pay the Employee as compensation for the employment services
      hereunder a monthly gross salary (“bruto”) of $9,000 per month (payable on
      the ninth day of each month), during the term of the Employee’s engagement
      hereunder (the “Salary”), subject to
      all applicable statutory
deductions.

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  4.2

                	
                  The
      Salary and additional benefits to which the Employee shall be entitled
      hereunder (including bonuses) shall be reviewed by the CEO on an annual
      basis; and, if in the CEO’s discretion the circumstances justify the same,
      the Employee’s Salary shall be adjusted and/or additional benefits shall
      be granted to the Employee
hereunder.

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  4.3

                	
                  Potential
      Bonus Related to Achievement of Company Goals. The Employee shall be
      eligible to receive an annual cash bonus with respect to each 12-month
      period commencing the Effective Date during the Term of up to $10,000 on
      an annualized basis, as determined by the Board, in its sole discretion,
      which shall be based upon corporate and personal performance criteria as
      established by the CEO and the Board (the “Goal Bonus”). If
      awarded, the Goal Bonus shall be payable within ninety (90) days after the
      end of the 12-month period to which it relates, or earlier if the CEO and
      Board so agree. The performance criteria for the Goal Bonus for the period
      to June 30, 2008 is set forth on Exhibit A attached
  hereto.

                

        

      

      
         

      

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      
        
          
 

        

      

      
        
          	
                   
      

                	
                  4.4

                	
                  Potential
      Bonus Related to Team Leadership. The Employee shall be
      eligible to receive an annual cash bonus with respect to each 12-month
      period commencing the Effective Date during the Term of up to $5,000 on an
      annualized basis, as determined by the Board, in its sole discretion,
      which shall be based upon personal and team leadership performance
      criteria as established by the CEO and the Board (the “Team Leadership
      Bonus”). If awarded, the Team Leadership Bonus shall be payable
      within ninety (90) days after the end of the 12-month period to which it
      relates. The criteria for the Team Leadership Bonus for the period to June
      30, 2008 is set forth on Exhibit B attached
  hereto.

                

        

      

      
        

      

      
        
          	
                  5.

                	
                  Social Insurance and
      Benefits

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  5.1

                	
                  The
      Company shall insure the Employee under an accepted “Manager’s Insurance
      Scheme” and/or a comprehensive financial arrangement, at the election of
      the Employee, including insurance in the event of illness or loss of
      capacity for work (hereinafter referred to as the “Managers
      Insurance”) as follows: (a) the Company shall pay an amount equal
      to 5% of the Employee’s Salary towards the Managers Insurance for the
      Employee’s benefit and shall deduct 5% from the Employee’s Salary and pay
      such amount towards the Managers Insurance for the Employee’s benefit (the
      various components of the Managers Insurance shall be fixed at the
      discretion of the Employee); (b) the Company shall pay up to 2.5% of the
      Employee’s Salary towards disability insurance; and (c) the Company shall
      pay an amount equal to 8 1/3% of the Employee’s Salary towards a fund for
      severance compensation which shall be payable to the Employee upon
      severance, but subject to the provisions of section
  7.3.

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  5.2

                	
                  The
      Company shall pay the full salary of the Employee, including insurance,
      social benefits and fringe benefits, during the period of the Employee’s
      military reserve service. National Insurance Institute transfers in
      connection with such military reserve duty shall be retained by the
      Company.

                

        

      

      
        

      

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      
        
          	
                   
      

                	
                  5.3

                	
                  The
      Company and the Employee shall open and maintain a Keren Hishtalmut Fund.
      The Company shall contribute to such Fund an amount equal to 7.5% of each
      monthly Salary payment, but not more than the amount for which the
      Employee is exempt from tax payment, and the Employee shall contribute to
      such Fund an amount equal to 2-1/2% of each monthly Salary payment. The
      Employee hereby instructs the Company to transfer to such Fund the amount
      of the Employee’s and the Company’s contribution from each monthly Salary
      payment.

                

        

      

      
        

      

      
        
          	
                  6.

                	
                  Additional
      Benefits

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  6.1

                	
                  The
      Employee shall be entitled to be reimbursed for all normal, usual and
      necessary actual business expenses arising out of travel, lodging, meals
      and entertainment whether in Israel or abroad, provided Employee provides
      proper documentation and provided further that such business expenses are
      within an expense policy approved by the CEO of the
    Company.

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  6.2

                	
                  The
      Employee shall be entitled to (cumulative) paid vacations of 22 days per
      year.

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  6.3

                	
                  Employee
      shall be entitled to sick leave and Recreation Pay (Dmei Havra-ah)
      according to applicable law.

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  6.4

                	
                  The
      Employee will be entitled at the Company’s expense to the use of a company
      car, of a type and under other conditions to be determined by the Company.
      For avoidance of doubt, all income taxes associated with such car’s “value
      equivalent” for tax purposes (the value of the car usage as determined by
      the tax authorities) shall be borne by the Employee and deducted from the
      salary. Employee shall at all times comply with any Company rules with
      respect to the use of the company vehicle. Any driving and/or parking
      fines incurred while the vehicle was provided for the use of the Employee
      shall be the sole responsibility of the Employee, and Employee hereby
      empowers the Company to sign any documents necessary to formally assign
      any such fines and/or tickets to Employee’s
  name.

                

        

      

      
         

      

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      
        

      

      
        
          	
                   
      

                	
                  6.5

                	
                  The
      parties acknowledge that the Employee has previously been granted options
      to purchase 48,850 shares of common stock of Medgenics at an exercise
      price of $1.516 per share, all pursuant to the terms of an option grant
      agreement entered into between Medgenics and the Employee. Subject to
      Admission occurring prior to December 31, 2007 and the approval of the
      stockholders of Medgenics’ approval of an expansion of Medgenics’ 2006
      Stock Option Plan, Medgenics agrees to grant to the Employee options to
      purchase 22,858 shares of common stock of Medgenics at an exercise price
      equal to the share price upon Admission. Such new options shall be subject
      to vesting over a four-year period and shall be pursuant to the terms and
      conditions of the applicable stock option plan and pursuant to the
      standard form of option agreement which Medgenics
  uses.

                

        

      

      
         

      

      
        
          	
                   
      

                	
                  6.6

                	
                  Any
      tax liability in connection with the options (including with respect to
      the grant, exercise, sale of the options or the shares receivable upon
      their exercise) shall be borne solely by the
  Employee.

                

        

      

      
        

      

      
        
          	
                  7.

                	
                  Term and
      Termination

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  7.1

                	
                  This
      Agreement shall commence as of the Effective Date and shall continue
      unless this Agreement is terminated as hereafter
  provided.

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  7.2

                	
                  The
      Company may terminate this Agreement and the employment relationship
      hereunder at its discretion and at any time by giving Employee 3 (three)
      months prior written notice (the “Notice Period”). The
      Employee may terminate this Agreement and the employment relationship
      hereunder at her discretion and at any time by giving the Company 3
      (three) months prior written notice (also the “Notice
      Period”).

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  In
      the event of termination of employment by the Company, the Company may, at
      its discretion, determine that the Employee’s employment shall cease
      immediately or at any time prior to expiration of the Notice Period, and
      in such event the Company shall pay the Employee an amount equal to the
      salary which would have been paid during the remaining prior Notice
      Period.

                

        

      

      
         

      

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      
        

      

      
        
          	
                   
      

                	
                  7.3

                	
                  Termination
      With Cause – The Company
      may terminate the Employee’s employment effective immediately upon
      delivery of written notice for cause. For purposes of this Agreement,
      termination for “cause” shall mean and include: (a) conviction of a felony
      involving moral turpitude or affecting the Company, Medgenics or its
      subsidiaries; (b) any refusal to carry out a reasonable directive of her
      CEO or such other officer appointed by the CEO which involves the business
      of the Company, Medgenics or its subsidiaries and was capable of being
      lawfully performed; (c) embezzlement of funds of the Company, Medgenics or
      its subsidiaries; (d) any breach of the Employee’s fiduciary duties or
      duties of care to the Company (except for conduct taken in good faith);
      (e) any breach of this Agreement by the Employee; (f) any conduct (other
      than in good faith) materially detrimental to the Company, including, but
      not limited to, sexual harassment and violence. If the employment of the
      Employee is terminated for cause, then the Employee shall only be entitled
      to: severance pay in the amount required by law, if required; and that
      portion of the policy that was contributed to by the
    Employee.

                

        

      

      
         

      

      
        
          	
                   
      

                	
                  7.4

                	
                  Termination Upon Death or
      Disability - The Company may terminate the Employee’s employment effective immediately
      upon delivery of written notice upon the death of the Employee or after having
      established the Employee’s disability. For purposes of this Agreement, “disability” means a
      physical or mental infirmity that impairs the Employee’s ability to
      substantially perform her duties under the Agreement that continues for a
      period of at least ninety (90) consecutive
  days.

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  7.5

                	
                  During
      the period following notice of termination by either the Employee or the
      Company, the Employee shall cooperate with the Company and use her best
      efforts to assist in the integration into the Company’s organization the
      person or persons who will assume the Employee’s
      responsibilities.

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  7.6

                	
                  During
      any applicable Notice Period this Agreement shall remain in full force and
      effect and there shall be no change in the Employee’s position with the
      Company or any obligations hereunder, unless otherwise determined by the
      Company in a written notice to
Employee.

                

        

      

      
         

      

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

      
        

      

      
        
          	
                  8.

                	
                  Proprietary
      Information

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  8.1

                	
                  The
      Employee acknowledges and agrees that he will have access to information
      whether or not proprietary or protected, or capable of protection, by
      intellectual property rights concerning (a) the business, financial,
      marketing and technical activities of each of Medgenics and the Company
      and any other company from time to time within the same group of companies
      (the “Group”)
      (including without limitation, accounts, financial information, operating
      statistics, production and marketing records, forecasts, analyses,
      compilations and studies, notes, contacts and personnel data, information
      or opinions as to the affairs of the companies within the Group) and (b)
      scientific, medical, regulatory information, including regarding product
      research and development, including without limitation, designs, plans,
      formulae, know-how, development, regulatory production, and other
      scientific and technical techniques used by or known to companies within
      the Group and (c) Medgenics’, the Company’s and/or the Group’s banking,
      investments, investors, properties, employees, marketing plans, customers,
      trade secrets, test results, processes, data and know-how, improvements,
      inventions, techniques and products (actual or planned). Such information,
      whether documentary, written, oral or computer generated, shall be deemed
      to be and is referred to as
“Information”.

                

        

      

      
         

      

      
        
          	
                   
      

                	
                  8.2

                	
                  Information
      shall be deemed to include any and all proprietary information disclosed
      by or on behalf of Medgenics, the Company and/or the Group and
      irrespective of form, but excluding information that (a) was known to the
      Employee prior to her association with the Company and can be so proven;
      (b) shall have appeared in any printed publication or patent or shall have
      otherwise become a part of the public knowledge except as a result of a
      breach of this Agreement by the Employee; or (c) shall have been received
      by the Employee from a third party having no obligation of confidentiality
      to any company within the
Group.

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  8.3

                	
                  The
      Employee agrees and declares that all Information, patents and other
      rights in connection therewith shall be the sole property of the Group (or
      its applicable member) and its assigns. At all times, both during her
      engagement by the Company and after its termination, the Employee will
      keep in confidence and trust all Information, and the Employee will not
      use or disclose any Information or anything relating to it without the
      written consent of the Company, except during the term of this Agreement
      as may be necessary in the ordinary course of performing the Employee’s
      duties hereunder and in the best interests of the
  Group.

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  8.4

                	
                  Upon
      termination of her employment with the Company, the Employee will promptly
      deliver to the Company or to another company within the Group all
      documents and materials of any nature pertaining to her work with
      Medgenics and/or companies within the Group, and she will not take with
      her any documents or materials or copies thereof containing any
      Information.

                

        

      

      
        

      

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

      
         

      

      
        
          	
                   
      

                	
                  8.5

                	
                  The
      Employee recognizes that Medgenics and/or companies within the Group
      received and will receive confidential or proprietary information from
      third parties subject to a duty on Medgenics and/or the Company’s part to
      maintain the confidentiality of such information and to use it only for
      certain limited purposes. At all times, both during her employment and
      after its termination, the Employee undertakes to keep and hold all such
      information in strict confidence and trust, and she will not use or
      disclose any of such information without the prior written consent of the
      Company, except as may be necessary to perform her duties as an employee
      of the Company during the term of this Agreement and consistent with
      Medgenics’ and/or companies within the Group’s agreement with such third
      party. Upon termination of her employment with Medgenics or the Company,
      Employee shall act with respect to such information as set forth in
      Section 8.4, mutatis
      mutandis.

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  8.6

                	
                  The
      Employee’s undertakings in this Section 8 shall remain in full force and
      effect after termination of this Agreement or any renewal
      thereof.

                

        

      

      
        

      

      
        
          	
                  9.

                	
                  Disclosure and
      Assignment of
Inventions

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  9.1

                	
                  The
      Employee understands that the Company is engaged in a continuous program
      of research, development, production and marketing in connection with its
      business and that, as an essential part of her employment with the
      Company, she is expected to make new contributions to and create
      inventions of value for the Company. Employee agrees to share with the
      Company all her knowledge and experience, provided however that Employee
      shall not disclose to the Company any information which Employee has prior
      to the date hereof or (if after) with the prior approval of the CEO
      undertaken to third parties to keep
confidential

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  9.2

                	
                  As
      of the Effective Date of this Agreement, the Employee undertakes and
      covenants that she will promptly and fully disclose in confidence to the
      Company all inventions, improvements, designs, original works of
      authorship, formulas, concepts, techniques, methods, systems, processes,
      compositions of matter, computer software programs, databases, mask works,
      and trade secrets, related, directly or indirectly, to the Company’s
      business or current or anticipated research and development, whether or
      not patentable, copyrightable or protectible as trade secrets, that are
      made or conceived or first reduced to practice or created by her, either
      alone or jointly with others, during the period of her employment, whether
      or not in the course of her employment (“Company
      Inventions”).

                

        

      

      
        

      

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      
        
           

        

      

      
        
          	
                   
      

                	
                  9.3

                	
                  The
      Employee agrees that all Company Inventions will be the sole and exclusive
      property of the Company.

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  9.4

                	
                  Entirely
      without prejudice of the foregoing, the Employee hereby irrevocably
      transfers and assigns to the Company (including any future rights): (a)
      all worldwide patents, patent applications, copyrights, mask works, trade
      secrets and other intellectual property rights in any Company Invention;
      and (b) to the extent permissible by law any and all “Moral Rights” (as
      defined below) that she may have in or with respect to any Company
      Invention. She also hereby forever waives and agrees never to assert any
      and all Moral Rights she may have in or with respect to any Company
      Invention, even after termination of her work on behalf of the Company.
      “Moral Rights” mean any rights of paternity or integrity, any right to
      claim authorship of an invention, to object to any distortion, mutilation
      or other modification of, or other derogatory action in relation to, any
      invention, whether or not such would be prejudicial to her honor or
      reputation, and any similar right, existing under judicial or statutory
      law of any country in the world, or under any treaty, regardless of
      whether or not such right is denominated or generally referred to as a
      “moral right”. The Employee will not file any patent applications for
      Company Inventions other than in the name of the Company (other than such
      patent applications which are required by law to be filed by such Employee
      but which shall immediately thereafter be assigned for no or nominal
      consideration to the
Company).

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  9.5

                	
                  The
      Employee agrees to assist the Company in every proper way to obtain and
      enforce for Medgenics and/or the Company, as the case may be, patents,
      copyrights, mask work rights, and other legal protections for the
      Company’s Inventions in any and all countries. He will execute any
      documents that Medgenics or the Company may reasonably request for use in
      obtaining or enforcing such patents, copyrights, mask work rights, trade
      secrets and other legal protections. Her obligations under this Section
      9.5 will continue beyond the termination of her employment with the
      Company, provided that the Company will compensate her at a reasonable
      rate after such termination for time or expenses actually spent by her at
      the Company’s request on such assistance. The Employee hereby irrevocably
      appoints the CEO of the Company as her attorney-in-fact to execute
      documents on her behalf for this
purpose.

                

        

      

      
        

      

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

      
        

      

      
        
          	
                   
      

                	
                  9.6

                	
                  The
      Employee’s undertakings in this Section 9 shall remain in full force and
      effect after termination of this Agreement or any renewal
      thereof.

                

        

      

      
         

      

      
        
          	
                  10.

                	
                  Non-Competition

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  10.1

                	
                  The
      Employee agrees and undertakes that she will not, so long as she is
      employed by the Company and for a period of 12 months following
      termination of her employment for whatever reason (the “Covenant Period”),
      directly or indirectly, as owner, partner, joint venturer, stockholder,
      employee, broker, agent, principal, corporate officer, director, licensor
      or in any other capacity whatever engage in, become financially interested
      in, be employed by, or have any connection with any business or venture
      that is engaged in any activities competing with products or services
      offered or reasonably anticipated to be offered or under active research
      and development by Medgenics or the Company; provided, however, that the
      Employee may own securities of any corporation which is engaged in such
      business and is publicly owned and traded but in an amount not to exceed
      at any one time one percent of any class of stock or securities of such
      company, so long as she has no active role in the publicly owned and
      traded company as director, employee, consultant or
    otherwise.

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  10.2

                	
                  The
      Employee agrees and undertakes that during the Covenant Period, she will
      not, directly or indirectly, including personally or in any business in
      which she is an officer, director or shareholder, for any purpose or in
      any place:

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  (a)

                	
                  employ
      any person employed by the Company or retained by Medgenics or the Company
      as a consultant on the date of Employee’s termination of her employment
      with the Company or during the preceding five months;
  or

                

        

      

      
         

      

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

      
        
          	
                   
      

                	
                  (b)

                	
                  seek
      to entice away from the Company or interfere with the relationship or the
      terms of business applying between the Company and any customer, supplier,
      collaborator or licensor of any intellectual property rights to Medgenics’
      or the Company with which the Employee dealt within six months of
      Employee’s termination of her employment with the
  Company.

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  10.3

                	
                  If
      any one or more of the terms contained in this Section 10 shall for any
      reason be held to be excessively broad with regard to time, geographic
      scope or activity, the term or scope shall be construed in a manner to
      enable it to be enforced to the extent compatible with applicable
      law.

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  10.4

                	
                  The
      Employee’s undertakings in this Section 10 shall remain in full force and
      affect after termination of this Agreement or any renewal
      thereof.

                

        

      

      
        

      

      
        
          	
                  11.

                	
                  Rights Upon
  Termination

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  Upon
      termination of this Agreement by the Company for any reason whatsoever
      other than by death, disability or justifiable cause, as defined herein,
      the Employee shall be entitled to the payment of her full salary,
      including insurance and social benefits as set for in Sections 4-6 above,
      during a period of 6 months if her employment is terminated with the first
      12 months of the beginning of the Start Date, and an additional month for
      each 12 months of employment thereafter. Any severance amounts required to
      be paid under applicable law shall be applied against amounts payable as
      severance under the preceding sentence such that the Employee shall not
      receive, from any source, in excess of her full salary, including
      insurance and social benefits, for the applicable severance period- Upon a
      termination by the Company for death, disability or justifiable cause or a
      termination by the Employee, the Employee shall not be entitled to receive
      any severance or other amounts, except such severance as required under
      applicable law, the severance fund maintained up to the date of
      termination pursuant to Section 5.1 and such payouts on life and
      disability insurance policies (including the life and disability amounts
      referenced in Section 5.1).

                

        

      

      
         

      

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

      
        

      

      
        
          	
                  12.

                	
                  Mutual
      Representations

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  12.1

                	
                  The
      Employee represents and warrants to Medgenics and the Company that the
      execution and delivery of this Agreement and the fulfillment of the terms
      hereof (a) will not constitute a default under or conflict with any
      agreement or other instrument to which she is a party or by which she is
      bound, and (b) do not require the consent of any person or
      entity.

                

        

      

      
         

      

      
        
          	
                   
      

                	
                  12.2

                	
                  The
      Company represents and warrants to the Employee that this Agreement has
      been duly authorized, executed and delivered by the Company and that the
      fulfillment of the terms hereof (a) will not constitute a default under or
      conflict with any agreement or other instrument to which it is a party or
      by which it is bound, and (b) do not require the consent of any person or
      entity.

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  12.3

                	
                  Each
      party hereto warrants and represents to the other that this Agreement
      constitutes the valid and binding obligation of such party enforceable
      against such party in accordance with its terms subject to applicable
      bankruptcy, insolvency, moratorium and similar laws affecting creditors’
      rights generally, and subject, as to enforceability, to general principles
      of equity (regardless if enforcement is sought in proceeding in equity or
      at law).

                

        

      

      
        

      

      
        
          	
                  13.

                	
                  Notice;
      Addresses

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  13.1

                	
                  The
      addresses of the parties for purposes of this Agreement shall be the
      addresses set forth above, or any other address which shall be provided by
      due notice.

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  13.2

                	
                  All
      notices in connection with this Agreement shall be sent by registered mail
      or delivered by hand to the addresses set forth above, and shall be deemed
      to have been delivered to the other party at the earlier of the following
      two dates: if sent by registered mail, as aforesaid, three business days
      from the date of mailing; if delivered by hand, upon actual delivery or
      proffer of delivery (in the event of a refusal to accept it) at the
      address of the addressee. Delivery by facsimile or other electronic mail
      shall be sufficient and be deemed to have occurred upon electronic
      confirmation of receipt.

                

        

      

      
        
          
            

          

          
            
              	
                      14.

                    	
                      Miscellaneous

                    

            

          

           

        

      

      
        
          	
                   
      

                	
                  14.1

                	
                  The
      preamble to this Agreement constitutes an integral part
      hereof.

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  14.2

                	
                  Headings
      are included for reference purposes only and are not to be used in
      interpreting this Agreement.

                

        

      

      
        

      

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

      
        
          	
                   
      

                	
                  14.3

                	
                  The
      provisions of this Agreement are in lieu of the provisions of any
      collective bargaining agreement, and therefore, no collective bargaining
      agreement shall apply with respect to the relationship between the parties
      hereto (subject to the applicable provisions of
  law).

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  14.4

                	
                  No
      failure, delay or forbearance of either party in exercising any power or
      right hereunder shall in any way restrict or diminish such party’s rights
      and powers under this Agreement, or operate as a waiver of any breach or
      nonperformance by either party of any terms or conditions
      hereof.

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  14.5

                	
                  Any
      determination of the invalidity or unenforceability of any provision of
      the Agreement shall not affect the remaining provisions hereof unless the
      business purpose of this Agreement is substantially frustrated
      thereby.

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  14.6

                	
                  This
      Agreement is personal and non-assignable by the Employee. It shall inure
      to the benefit of any corporation or other entity with which Medgenics or
      the Company shall merge or consolidate or to which Medgenics or the
      Company shall lease or sell all or substantially all of its assets, and
      may be assigned by Medgenics or the Company to any affiliate of Medgenics
      or the Company or to any corporation or entity with which such affiliate
      shall merge or consolidate or which shall lease or acquire all or
      substantially all of the assets of such affiliate. Any assignee must
      assume all the obligations of Medgenics or the Company, as the case may
      be, hereunder, but such assignment and assumption shall not serve as a
      release of Medgenics or the
Company.

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  14.7

                	
                  The
      Employee is obligated to keep all the terms and covenants of this
      Agreement under strict
confidentiality.

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  14.8

                	
                  This
      Agreement sets forth the entire agreement of the parties hereto in respect
      of the subject matter contained herein and supersedes all negotiations,
      undertakings, agreements, representations or warranties, whether oral or
      written, by any officer, employee or representative of Medgenics or the
      Company or any party thereto; and any prior agreement of the parties
      hereto or of the Employee and Medgenics and/or the Company in respect of
      the subject matter contained herein is hereby terminated and cancelled.
      Any modification to the Agreement can only be made in writing, signed by
      the Employee and the CEO, with the approval of the
  Board.

                

        

      

      
        

      

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

      
        
          	
                   
      

                	
                  14.9

                	
                  It
      is hereby agreed between the parties that the laws of the State of Israel
      shall apply to this Agreement and that the sole and exclusive place of
      jurisdiction in any matter arising out of or in connection with this
      Agreement shall be the applicable Tel-Aviv
  court.

                

        

      

      
        

      

      
        

      

      
        

      

      
        

      

      
        IN WITNESS WHEREOF, the
parties have executed this Agreement as of the Effective Date first above
written.

      

      
        

      

      
        	
                /s/ Andrew
      Pearlman

              	 
      	
                /s/ Phyllis
      K. Bellin

              
	
                MEDGENICS
      MEDICAL ISRAEL, LTD.

              	 
      	
                Phyllis
      K. Bellin

              
	
                By: Dr. Andrew L. Pearlman,
      CEO

              	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                /s/ Andrew
      Pearlman

              	 
      	 
      
	
                MEDGENICS,
      INC.

              	 
      	 
      
	
                By: Dr. Andrew L. Pearlman,
      CEO

              	 
      	 
      

      

      
        

      

      
        

      

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

      
        EXHIBIT
A

      

      
        

      

      
        Goal Bonus Criteria Through
June 30, 2008

      

      
        

      

      
        The total Goal Bonus of $10,000
shall be allocated to the achievement of the following by June 30,
2008:

      

      
        

      

      
        
          	
                   
      

                	
                  1.

                	
                  50% for Listing on AIM
      Exchange

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  2.

                	
                  10% for Move to new
      facilities:

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  3.

                	
                  30% for implementing agreed AIM
      compatible governance procedures:   adoption of ethics and other standards,
      implementation of updated accounting and budget controls, file and
      office organization,

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  4.

                	
                  10% for expansion of
      Staff

                

        

      

      
        

      

      
        
           

        

        
          16

          
            

          

        

        
           

        

      

      
        EXHIBIT
B

      

      
        

      

      
        Team Leadership Bonus
Criteria for the period from the Effective Date through June 30,
2008

      

      
        

      

      
        The CEO
and the Board will
evaluate the Employee’s performance from the Effective Date
through June 30, 2008 and the Team Leadership Bonus of $5,000 will be awarded
based on the overall average score (as determined by the CEO and the Board)
earned by Employee in the areas listed below.

      

      
        

      

      

      
        	 
      	
                
                  5
      (exceeds expectations) =

                

              	
                
                  110%
      bonus

                

              
	 
      	
                
                  4
      (very good) =

                

              	
                
                  100%
      bonus

                

              
	 
      	
                
                  3
      (OK) =

                

              	
                
                   80%
      bonus

                

              
	 
      	
                
                  2
      (needs improvement) =

                

              	
                
                   50%
      bonus

                

              
	 
      	
                
                  1
      (seriously deficient) =

                

              	
                
                   20%
      bonus

                

              

      

      
        

      

      
        
          	
                   
      

                	
                  1.

                	
                  Teamwork:
      Helping to organize and maintain a team spirit, with good communication,
      and fruitful cooperation among the team — both in Employee’s own area of
      responsibility and with other parts of the organization — and put team
      success ahead of Employee’s own personal ambitions/parochial
      objectives

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  2.

                	
                  Proactive
      orientation: Having eyes always open to optimize the plan, to seize
      opportunities to achieve goals, to spot ways to avoid problems and delays,
      and to prevent mistakes or minimize downside if
    unavoidable.

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  3.

                	
                  Advocate
      for Company/strategy: vigorous supporter of the Company, its leadership,
      its technology, its strategy, speaking both internally and externally to
      enhance support

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  4.

                	
                  Energy:
      Devoting vigorous effort, dedication, and great energy to the
      tasks

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  5.

                	
                  Courage:
      Confronting and deal with thorny or uncomfortable issues that need to be
      dealt, to make “out of the box” proposals that will have a positive impact
      on company timelines AND quality of the work
  product

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  6.

                	
                  Improvisation/creative
      problem-solving: Finding ways around or through a “no” and not accept it
      as an answer, to seek ways to move up schedules by suppliers and by the
      Company; Engineer and optimize the GANTT and its execution on an ongoing
      basis, to achieve goals earlier and
better

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  7.

                	
                  Transparency
      — Admitting when there are difficulties, problems or mistakes so there are
      no “unpleasant surprises” or embarrassments and so other colleagues can
      weigh in and collaborate in problem
solving

                

        

      

      
        

      

      
        
           

        

        
          17

          
            

          

        

        
           

        

      

      
        
          	
                   
      

                	
                  8.

                	
                  Business
      acumen — Understanding the impact of Employee’s decisions on business as
      well as scientific success and understands “big picture” implications of
      actions, communication and decisions on business success and strategy
      execution

                

        

      

      
        

      

      
        
          	
                   
      

                	
                  9.

                	
                  Continuous
      learning — Willing to challenge self and keep stretching/learning, look
      for new methods/techniques

                

        

      

      
        

      

      
        
          	
                	
                  10.

                	
                  Data-driven
      decision-making — Striving to make decisions based on factual assessments
      of impact on goals, not solely on conjecture or “gut feeling”, and not on
      ego

                

        

      

      
        
           

        

        
          18EXHIBIT
10.11

     

    

     

    Dr.
Andrew L. Pearlman

    Moshav
Shorashim

    D.N.
Misgav 20164

    Israel

    

    As of
June 1, 2007

    

    RE: Medgenics, Inc. (the
“Company”)

    

    Dear Dr.
Pearlman:

    

    I am
writing to you on behalf of the board of directors of the Company to confirm
arrangements with regard to the terms of your continuation in office as a
director of the Company from the date of this letter.

    

    
      	
              1

            	
              Definitions

            

    

    

    For the
purposes of this Letter, the following words or expressions shall have the
following meanings respectively:

    

    
      
        
          
            	
                    “AIM”

                  	 
      	 
      	
                    means
      the AIM Market of London Stock Exchange plc;

                  
	 
      	 
      	 
      	 
      
	
                    “Biopump”

                  	 
      	 
      	
                    means
      a micro organ which has undergone ex-vivo transduction with a vector such
      that it produces and secretes a desired therapeutic
    protein;

                  
	 
      	 
      	 
      	 
      
	
                    “Board”

                  	 
      	 
      	
                    means
      the board of directors of the Company, including any committee of the
      Board duly constituted by it;

                  
	 
      	 
      	 
      	 
      
	
                    “Businesses”

                  	 
      	 
      	
                    means:

                  
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                    (a)

                  	
                    the
      business of the research, development, design, production, manufacturing,
      marketing, sale, distribution and other commercial activities of any Group
      Company in relation to the Group's proprietary and/or licensed technology
      concerning a platform technology for the treatment of various diseases
      and/or chronic disorders and conditions whereby a sliver of human dermal
      tissue is converted into an internal protein production plant, through
      ex
      vivo transduction with a viral or non-viral vector, and the
      processed tissue is re-implanted under the human donor's skin to provide
      therapeutic levels of protein delivery; and

                  
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                    (b)

                  	
                    any
      other business that any Group Company shall at the relevant
      date;

                  

          

        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      
        
          
            	 
      	 
      	 
      	
                    (i)

                  	
                    be
      engaged in and with which you shall have been concerned or involved to any
      material extent at any time during Your Appointment; or

                  
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                    (ii)

                  	
                    have
      determined to carry on with a view to developing any other biotechnical
      technology for commercial exploitation in the future and in relation to
      which determination you shall at the Termination Date possess any material
      Confidential Business Information;

                  
	 
      	 
      	 
      	 
      	 
      
	
                    “Confidential
      Business Information”

                  	 
      	 
      	 
      	
                    means
      all and any Corporate Information, Marketing Information, Technical
      Information and other information (whether or not recorded in documentary
      form or on computer disk or tape) which the Company or any Group Company
      treats as confidential or in respect of which it owes an obligation of
      confidentiality to any third party, which is not in the public
      domain:

                  
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                    (a)

                  	
                    which
      you shall have acquired or shall hereafter acquire at any time during Your
      Appointment but which does not form part of your own stock in trade;
      and

                  
	 
      	 
      	 
      	 
      
	 
      	 
      	
                    (b)

                  	
                    which
      is not readily ascertainable to persons not connected with the Company or
      any Group Company;

                  
	 
      	 
      	 
      	 
      
	
                    “Corporate
      Information”

                  	 
      	
                    means
      all and any information (whether or not recorded in documentary form or on
      computer disk or tape) relating to the business methods, corporate plans,
      management systems, finances, maturing new business opportunities or
      research and development projects of the Company or any Group
      Company;

                  
	 
      	 
      	 
      
	
                    “DGCL”

                  	 
      	
                    means
      Delaware General Corporation Law;

                  
	 
      	 
      	 
      
	
                    “Group”

                  	 
      	
                    means
      the Company and its affiliates, including any company that controls, is
      controlled by, or is under common control with the Company, as defined in
      Rule 3b-18 of the Securities Exchange Act of 1934, as amended from time to
      time, including, without limitation to the generality of the foregoing,
      Medgenics Medical (Israel) Limited;

                  
	 
      	 
      	 
      
	
                    “Group
      Company”

                  	 
      	
                    means
      a member of the Group and “Group
      Companies” shall be interpreted accordingly;

                  
	 
      	 
      	 
      
	
                    “Marketing
      Information”

                  	 
      	
                    means
      all and any information (whether or not recorded in documentary form or on
      computer disk or tape) relating to the marketing or sales of any past
      present or future product or service of the Company or any Group Company
      including, without limitation, sales targets and statistics, market share
      and pricing statistics, marketing surveys and plans, market research
      reports, sales techniques, price lists, discount structures, advertising
      and promotional material, the names, addresses, telephone numbers, contact
      names and identities of customers and potential customers of and suppliers
      and potential suppliers to the Company or any Group Company, the nature of
      their business operations, their requirements for any product or service
      sold to or purchased by the Company or any Group Company and all
      confidential aspects of their business relationship with the Company or
      any Group
Company;

                  

          

        

      

    

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    
      
        
          	
                  “Material
      Interest”

                	 
      	
                  means:

                
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                  (a)

                	 
      	
                  the
      holding of any position as director, officer, employee, consultant,
      partner, principal or agent;

                
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                  (b)

                	 
      	
                  the
      direct or indirect control or ownership (whether jointly or alone) of any
      shares (or any voting rights attached to them) or debentures save for the
      ownership for investment purposes only of not more than five percent (5%)
      of the issued shares of any company whose shares are listed on any
      national securities exchange (as defined in Section 3(a)(1) of the
      Securities Exchange Act of 1934, as amended from time to time), or any
      similar exchange in jurisdictions outside the United States, including
      AIM; or

                
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                  (c)

                	 
      	
                  the
      direct or indirect provision of any finance;

                
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                  other
      than on behalf of any Group Company for the legitimate purposes of that
      Group Company;

                
	 
      	 
      	 
      
	
                  “Technical
      information”

                	 
      	
                  means
      all and any trade secrets, secret formulae, processes, inventions,
      designs, know-how discoveries, technical specifications and other
      technical information (whether or not recorded in documentary form or on
      computer disk or tape) relating to the creation, production or supply of
      any past, present or future product or service of the Company or any Group
      Company;

                
	 
      	 
      	 
      
	
                  “Termination
      Date”

                	 
      	
                  means
      the date of the termination of Your Appointment; and

                
	 
      	 
      	 
      
	
                  “Your
      Appointment”

                	 
      	
                  means
      your appointment to and holding of office as a director of the Company as
      confirmed by this
letter.

                

        

      

    

    

    
      	
              2

            	
              Duties

            

    

    

    
      	
              2.1

            	
              As
      a director of the Company you will be expected to exercise the general
      fiduciary duties and duties of care and loyalty as provided under the DGCL
      and provide such advice and services as the Board may reasonably
      require.

            

    

    

    
      	
              2.2 

            	
              The
      Board as a whole is collectively responsible for the success of the
      Company. The Board's role is to:

            

    

    

    
      	
            	
              2.2.1

            	
              provide
      entrepreneurial leadership of the Company within a framework of prudent
      and effective controls, which enable risk to be assessed and
      managed;

            

    

    

    
      	
            	
              2.2.2

            	
              set
      the Group's strategic aims, ensure that the necessary financial and human
      resources are in place for the Company to meet its objectives and review
      management performance; and

            

    

    

    
      	
            	
              2.2.3

            	
              set
      the Company's values and standards and ensure that its obligations to its
      shareholders and others are understood and
met.

            

    

    

    
      	
              2.3 

            	
              In
      your role as an executive director, you shall be required
    to:

            

    

    

    
      	
            	
              2.3.1

            	
              satisfy
      yourself that financial information is accurate and that financial
      controls and
      systems of risk management are appropriate, robust and
      defensible;

            

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    
      	
            	
              2.3.2

            	
              at
      all times comply with the certificate of incorporation and bylaws of the
      Company, each as the same may be amended or restated from time to
      time;

            

    

    

    
      	
            	
              2.3.3

            	
              abide
      by your fiduciary duties as a director of the Company;
  

            

    

     

    
      
        	
              	
                2.3.4

              	
                diligently
      perform your duties as a director;

              

      

       

    

    
      	
            	
              2.3.5

            	
              immediately
      report your own wrongdoing or the wrongdoing or proposed wrongdoing of any
      other employee or director of the Company of which you become aware to the
      Chairman of the Company; and

            

    

    

    
      	
            	
              2.3.6

            	
              comply
      with the terms of the “Model Code of Practice
      relating to securities dealings by Company directors and certain employees
      of the Company” adopted by
      the Board this day (a copy of which is annexed hereto) and any code of
      practice issued by the Company from time to time relating to dealing in
      the Company's securities.

            

    

    
    

    
      
        	 	 
	
                2.4 

              	
                In
      addition, your duties shall require that you
  shall:

              

      

    

       

    
      	
            	
              2.4.1

            	
              promote
      the highest standards of integrity, probity and corporate governance
      throughout the Company, particularly at Board
  level;

            

    

    

    
      	
            	
              2.4.2

            	
              use
      your best endeavours to ensure that the Board receives accurate, timely
      and clear information;

            

    

    

    
      	
            	
              2.4.3

            	
              use
      your best endeavours to ensure effective communication with shareholders;
      and

            

    

    

    
      	
            	
              2.4.4

            	
              use
      your best endeavours to facilitate the effective contribution of
      non-executive directors and to ensure constructive relations are
      maintained between the executive and non-executive
    directors;

            

    

    

    
      	
              3

            	
              FEES

            

    

    

    Because
you are an executive director and receive compensation for your role as
President and Chief Executive Officer, no additional compensation will be owing
to you for your role as a director of the Company.

    

    
      	
              4 

            	
              Term
      of office

            

    

    

    Your
Appointment commenced on February 1, 2000 and shall continue following the date
of this letter unless or until your successor is elected and qualified or until
your earlier resignation or removal. You agree that you will given not less than
sixty (60) days' (or such lesser period if agreed by the Board) prior notice in
writing to the Company in the event you wish to resign prior to the expiration
of your term or in the event you do not wish to stand for re-election at the
Company's annual meeting of stockholders.

    

    For the
avoidance of doubt, by your counter-signature hereto, you acknowledge that your
continuation in office is subject to the DGCL and the certificate of
incorporation and bylaws of the Company, each as the same may be amended or
restated from time to time.

    

    On
termination of Your Appointment for whatever reason you will promptly return to
the Company all documents, records, keys, correspondence or other items in your
possession or under your control which relate in any way to the business or
affairs of, or are the property of, the Company or any Group Company and all
copies thereof, regardless of the medium upon or in which such copies are stored
or held. In addition, you will cease to use the Company's facilities and cease
to hold yourself out as being a director of the Company.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    
      	
              5 

            	
              Confidentiality

            

    

    

    
      	
              5.1

            	
              Both
      during the currency and after the Termination Date, you will treat all
      Confidential Business Information as confidential and not use or disclose
      the same to any other party except:

            

    

    

    
      	
            	
              5.1.1

            	
              insofar
      as may be necessary for the proper and effective performance of your
      duties as a director of the Company and then only to a person who shall be
      subject to equivalent, express, written confidentiality obligations to the
      Company or a Group Company;

            

    

    

    
      	
            	
              5.1.2

            	
              to
      the extent that such information is or (without default of your part)
      becomes generally available to the public;
or

            

    

    

    
      	
            	
              5.1.3

            	
              to
      the extent that you shall be required to disclose the same by any
      applicable law or legally binding order of any court, government,
      semi-governmental authority, administrative
      or judicial body, or a
      legally binding requirement of a stock exchange
      or regulator.

            

    

    

    
      	
              5.2 

            	
              If
      you are required to make a disclosure as contemplated in clause
      5.1.3:

            

    

    

    
      	
            	
              5.2.1

            	
              you
      must disclose only the
      minimum Confidential Business Information required to comply with the
      applicable law, order or requirement;
and

            

    

    

    
      	
            	
              5.2.2

            	
              before
      making such disclosure, you must:

            

    

    

    
      	
            	
              (a)

            	
              give
      the Company reasonable written notice
of:

            

    

    

    
      	
            	
              (i)

            	
              the
      full circumstances of the requirement for disclosure arising;
      and

            

    

    

    
      	
            	
              (ii)

            	
              the
      Confidential Business Information which you propose to disclose;
      and

            

    

    

    
      	
            	
              (b)

            	
              consult
      with the Company as to the form of the
  disclosure.

            

    

    

    
      	
              5.3 

            	
              By
      your counter-signature hereto, you acknowledge
  that:

            

    

    

    
      	
            	
              5.3.1

            	
              the
      Company and each Group Company possess a valuable body of Confidential
      Business Information;

            

    

    

    
      	
            	
              5.3.2

            	
              the
      Company has given and will continue to give you access to Confidential
      Business Information in order that you may carry out your duties
      hereunder;

            

    

    

    
      	
            	
              5.3.3

            	
              your
      duties include, without limitation, a duty of care and a duty of loyalty
      as provided under the DGCL; and

            

    

    

    
      	
            	
              5.3.4

            	
              the
      disclosure of any Confidential Business Information other than for the
      legitimate business purposes of the Company or any Group Company,
      including (without limitation) to an actual or potential competitor of the
      Company or any Group Company could place such company at a serious
      competitive disadvantage and could cause immeasurable (financial and
      other) damage to the Businesses

            

    

    

    and that
the obligations of confidentiality assumed under the provisions of this clause 5
are reasonable and necessary for the protection of the Group, the Businesses and
the Confidential Business Information.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    
      	
              6 

            	
              Other
      Interests and Restrictions

            

    

    

    
      	
              6.1

            	
              Except
      as otherwise required by your employment agreement with the Company, it is
      accepted and acknowledged that you have business interests other than
      those of the Company and that you have declared any potential conflicts
      that are apparent at present. If you become aware of any potential
      conflicts of interest after the date hereof, these should be disclosed to
      the Chairman of the Company and company secretary as soon as you become
      aware thereof.

            

    

    

    
      	
              6.2

            	
              By
      your counter-signature hereto, you agree and undertake that, during the
      term of Your Appointment, you shall not, without the Company's prior
      written permission, assume or hold any Material Interest in any person,
      firm or company which:

            

    

    

    
      	
            	
              6.2.1

            	
              impairs
      or might reasonably be thought by the Board to impair your ability to act
      at all times in the best interests of the Company;
  or

            

    

    

    
      	
            	
              6.2.2

            	
              requires
      or might reasonably be thought by the Board to require you to disclose any
      Confidential Business Information in order properly to discharge your
      duties to or to further your interest in such person, firm or
      company.

            

    

    

    
      	
              6.3 

            	
              By
      your counter-signature hereto, you agree and undertake that you will not
      during the term of Your Appointment, in any part of the world, whether
      directly or indirectly:

            

    

    

    
      	
            	
              6.3.1

            	
              solicit,
      or by any other means induce or seek to induce, any person, firm or
      company with whom or which any Group Company transacts business (whether
      as customer, supplier, contractor, licensor, adviser or otherwise in
      relation to the Business) to cease dealing with such Group Company or to
      restrict or vary the terms upon which it deals with such Group Company;
      or

            

    

     

    
      	
            	
              6.3.2

            	
              solicit
      or entice away or employ or engage or seek to entice away from any Group
      Company any person who is and was at the Termination Date or at any time
      during the three (3) months prior to the Termination Date a director,
      scientific adviser, regulatory adviser, bioscience engineer or other
      scientific, program, product development, marketing, sales, licensing,
      research and development and/or other senior manager, key salesperson or
      secretary (if any) assigned to you.

            

    

     

    
      	
              6.4

            	
              By
      your counter-signature hereto, you agree and undertake that you will not
      at any time after the Termination Date, represent or hold yourself out or
      permit yourself to be represented or held out by any person, firm or
      company as being in any way then currently connected with or interested in
      the Company or any Group Company other than (if such be the case) as the
      holder of shares, options and/or warrants in the
  Company;

            

    

    

    
      	
              6.5

            	
              Each
      of the provisions of clauses 6.2, 6.3 and 6.4 and (where applicable) the
      sub-clauses thereof is independent and severable from the remaining
      provisions and enforceable accordingly. If any provision of the said
      clauses/sub-clauses shall be unenforceable for any reason but would be
      enforceable if part of the wording thereof were deleted, it shall apply
      with such deletions as may be necessary to make it
      enforceable.

            

    

    

    
      	
              6.6

            	
              You
      have given the undertakings contained in this clause 6 to the Company
      itself and to the Company as trustee for the benefit of each Group Company
      and will, at the request and cost of the Company, promptly enter into
      direct undertakings with any Group Company which correspond to the
      undertakings in this clause 6.

            

    

    

    
      	
              6.7 

            	
              The
      Company agrees that each Material Interest that you assume or hold as of
      the date hereof is hereby
permitted.

            

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    
      	
              7

            	
              Independent
      Legal Advice

            

    

    

    Occasions
may arise when you consider that you will need professional advice in connection
with the performance of your duties as a director of the Company and you will be
able to consult the Company's advisors for this purpose. Exceptional
circumstances may occur when it may be appropriate for you to seek such advice
from independent advisors, at the Company's expense. In such an event, you
should, where reasonably practical and not (in your reasonable judgment)
prejudicial to the interests of the Company, consult with the Board or, if you
consider appropriate, the non-executive directors, prior to such advice being
sought or expense being incurred.

    

    
      	
              8

            	
              Governing law
      and jurisdiction

            

    

    

    This
Letter shall be governed by and shall be interpreted in accordance with the
DGCL. The parties irrevocably submit to the non-exclusive jurisdiction of the
state courts of Delaware, USA in relation to all matters arising out of or in
connection with this appointment letter.

    

    To the
extent that the provisions of this Agreement conflict with the provisions set
forth in any employment agreement between you and the Company or its
subsidiaries, the terms of this Agreement shall control.

    

    We look
forward to your continued contribution as a director and I should be grateful if
you would please confirm your acceptance of the terms of your appointment by
signing and returning the duplicate of this Letter.

    

    Yours
sincerely

    

    
      
        
          
            	/s/
      Eugene A. Bauer
	
                    Dr.
      Eugene A. Bauer

                  

          

        

      

    

     

    Chairman,
duly authorised for
and on behalf of the Board)

     

    I hereby
acknowledge the above terms and agree and undertake in the above
terms.

    

    
      
        
          	
                  SIGNED
      AS A DEED

                	
                  )

                	 
      	 
      	 
	
                  by
      Andrew L. Pearlman

                	
                  )

                	 
      	 
      	 
	
                  in
      the presence of:­

                	
                  )

                	 
      	 
      	 
	 
      	 
      	 
      	
                  Andrew
      L. Pearlman

                	 

        

      

    

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	
                                    Witness
      Signature:

                                  	 
      	 
      	 
	 
      	 
      	 
      	 
	
                                    Name:

                                  	 
      	 
      	 
	 
      	 
      	 
      	 
	
                                    Address:

                                  	 
      	 
      	 
	 	 	 	 
	 
      	 
      	 
      	 
	 	 	 	 
	 
      	 
      	 
      	 
	  	 
      	  
      	 
	
                                    Occupation:

                                  	 	 	 

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    

    Annex

     

    July
2007

      
 

    
      

    

     

    MODEL
CODE OF PRACTICE

     

    RELATING
TO

     

    SECURITIES
DEALINGS

     

    BY
COMPANY DIRECTORS AND CERTAIN EMPLOYEES

     

    OF
MEDGENICS, INC.

     

    
      
  

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    

    Medgenics,
Inc. (the “Company”) has adopted the following code
for transactions in securities by directors, applicable employees and persons
connected with them (the “Code”). Directors, applicable employees
and persons connected with them should consider carefully the application of the
Code prior to any dealings in the securities in the Company. Directors,
applicable employees and persons connected with them should note however
that:

    

    
      	
              (a)

            	
              Under
      the Criminal Justice Act 1993, it is a criminal offence for an individual
      who has information as an insider to deal on a regulated market, or
      through or as a professional intermediary, in securities whose price would
      be significantly affected if the inside information were made public. It
      is also an offence to encourage insider dealing and to disclose inside
      information with a view to others profiting from
  it.

            

    

    

    
      	
              (b)

            	
              The
      Financial Services and Markets Act 2000 (“FSMA”) introduced a civil
      offence regime relating to market abuse, which supplements the existing
      offences of insider dealing and market manipulation/misleading statements
      offences under the FSMA. The offence, which also applies to securities
      traded on AIM, applies:­

            

    

    

    
      	
               
      

            	
              (i)

            	
              where
      there is behaviour (including anything said, done or written, or not)
      including misuse of non public information, misleading the market or
      distorting the market; and

            

    

    

    
      	
               
      

            	
              (ii)

            	
              which
      falls below the standard of behaviour that a regular user of the relevant
      market would reasonably expect of a person in the same position as whoever
      is committing the offence in relation to that
  market.

            

    

    

    
      	
              (c)

            	
              Encouraging
      someone else to engage in market abuse is also an offence. The offence
      applies to any person (corporates as well as individuals), it can catch
      behaviour outside the UK, it is purely effect-based (no intention is
      required) and no transaction is
required.

            

    

    

    
      	
              (d)

            	
              The
      Financial Services Authority (“FSA”) has powers
      to impose an unlimited fine or make a public statement about market abuse
      and to apply for court orders to remedy instances of market abuse. The FSA
      Code of Conduct sets out the FSA's opinion on behaviour it considers is/is
      not, market abuse and the facts it will take into account when determining
      the question.

            

    

    

    
      	
              (e)

            	
              You
      must take care before any form of dealing in the Company's securities and
      where appropriate, consult the Company's nominated adviser or solicitors.
      For example, a dealing which may fall outside the Code might still
      constitute an offence under insider dealing or market abuse
      legislation.

            

    

    

    
      	
              (f)

            	
              This
      document addresses the share dealing restrictions set out in the AIM Rules
      for Companies alone. Its purpose is to ensure that Directors, applicable
      employees and their families do not abuse, or place themselves under
      suspicion of abusing, price-sensitive information that they may have or be
      thought to have, especially in periods leading up to an announcement of
      results.

            

    

    

    
      	
              (g)

            	
              A
      Director is also under an obligation to notify the Company in writing of
      his or her interests (and of the interests of persons connected with him
      or her) from time to time in its securities (within the meaning of the AIM
      Rules for Companies). A Director must disclose to the Company all
      information known to him or her (or which he or she could with reasonable
      diligence ascertain) which it needs in order to comply with that
      obligation. You must take care and where appropriate consult the Company's
      nominated adviser or solicitor. For example, a dealing which may fall
      outside the Code might still need to be disclosed to the
      Company.

            

    

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    
      	
              (h)

            	
              The preceding introduction and
      the paragraph headings in this document, do not form part
      of the Code, are for guidance and ease of reference only and are
      not to be construed as affecting the substance or interpretation of the
      Code.

            

    

    

    
      	
              (i)

            	
              Compliance
      with the Code may not constitute a defence to any charge under applicable
      law.

            

    

     

    If
there is any doubt as to the application of the Code, the Company's nominated
adviser should be consulted by the Company at an early stage.

     

    Definitions

    

    
      	
              I

            	
              In
      this Code the following definitions, in addition to those contained in the
      Rules, apply unless the context otherwise
  requires:

            

    

    

    
      
        	
                “AIM”

              	 
      	
                means
      the AIM Market operated by the Exchange;

              
	 
      	 
      	 
      
	
                “AIM
      Rules for Companies” or “Rules”

              	 
      	
                means
      the AIM Rules for Companies published by the Exchange (as amended from
      time to time);

              
	 
      	 
      	 
      
	
                “AIM
      Securities”

              	 
      	
                means
      securities of a class which have been admitted to AIM effected by a
      dealing notice under rule 6 of the AIM Rules for
  Companies;

              
	 
      	 
      	 
      
	
                “applicable
      employee”

              	 
      	
                means
      any employee of the Company or of a subsidiary undertaking or parent
      undertaking of the Company who, because of his office or employment in the
      Company or subsidiary undertaking or parent undertaking, is likely to be
      in possession of unpublished price-sensitive information in relation to
      the Company;

              
	 
      	 
      	 
      
	
                “close
      period”

              	 
      	
                means
      any of the periods when a director is prohibited from dealing as specified
      in paragraph 3 of this Code;

              
	 
      	 
      	 
      
	
                the
      “Company”

              	 
      	
                means
      Medgenics, Inc., (registered in the State of Delaware whose registered
      office is at 2711 Centreville Road, Suite 400, in the City of Wilmington,
      19808, County of New Castle, Delaware USA);

              
	 
      	 
      	 
      
	
                “dealing”

              	 
      	
                means
      any change whatsoever to the holding of securities of the Company where
      the holder is a director, applicable employee or person connected with
      them and includes any acquisition or disposal of, or agreement to acquire
      or dispose of any securities of the Company and the grant, acceptance,
      acquisition, disposal, exercise or discharge of any option (whether for
      the call, or put, or both) or other right or obligation, present or
      future, conditional or unconditional, to acquire or dispose of securities,
      or any interest in securities, of the Company and “deal” shall be construed
      accordingly;

              
	 
      	 
      	 
      
	
                “Exchange”

              	 
      	
                means
      London Stock Exchange Plc;

              
	 
      	 
      	 
      
	
                “Holdings”

              	 
      	
                means
      any legal or beneficial interest, direct or indirect;

              
	 
      	 
      	 
      
	
                “prohibited
      period”

              	 
      	
                means
      any period to which paragraph 6 of this Code
  applies;

              

      

    

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    

    
      
        
          
            
              	
                      “securities”

                    	 
      	
                      means
      any AIM Securities or any securities that are convertible into AIM
      Securities and, where relevant, securities which have been quoted in a
      member state or admitted to dealing on, or have their prices quoted on or
      under the rules of, any regulated market, or any unquoted securities that
      are convertible into such securities;

                    
	 
      	 
      	 
      
	
                      “unpublished
      price-sensitive information”

                    	 
      	
                      means
      information which:

                    
	 
      	 
      	
                      (i)

                    	
                      relates
      to particular securities or to a particular issuer or to particular
      issuers of securities and not to securities generally or issuers of
      securities generally (and, for these purposes, information shall be
      treated as relating to an issuer of securities which is a company not only
      where it is about the Company but also where it may affect the Company's
      business prospects);

                    
	 
      	 
      	 
      	 
      
	 
      	 
      	
                      (ii)

                    	
                      is
      specific or precise;

                    
	 
      	 
      	 
      	 
      
	 
      	 
      	
                      (iii)

                    	
                      has
      not been made public within the meaning of section 58 of the Criminal
      Justice Act 1993; and

                    
	 
      	 
      	 
      	 
      
	 
      	 
      	
                      (iv)

                    	
                      if
      it were made public would be likely to have a significant effect on the
      price or value of any securities,

                    
	 
      	 
      	 
      	 
      
	 
      	 
      	
                      and,
      without prejudice to the generality of the above, it should be considered
      whether any unpublished information regarding transactions required to be
      notified to the Regulatory Information Service in accordance with the
      Rules and unpublished information of the kind referred to in the
      paragraphs of the Rules set out below is
  price-sensitive:

                    
	 
      	 
      	 
      	 
      
	 
      	 
      	
                      11

                    	
                      General
      disclosure of price sensitive information

                    
	 
      	 
      	 
      	 
      
	 
      	 
      	
                      12 to 16

                    	
                      Disclosure
      of corporate transactions

                    
	 
      	 
      	 
      	 
      
	 
      	 
      	
                      17

                    	
                      Disclosure
      of miscellaneous information

                    
	 
      	 
      	 
      	 
      
	
                      “regulated
      market”

                    	 
      	
                      means
      any regulated market defined as such in the Insider Dealing (Securities
      and Regulated Markets) Order 1994, as amended or supplemented by any
      further order made under section 60(1) of the Criminal Justice Act
      1993.

                    

            

          

        

      

    

     

    Dealings
by directors and applicable employees 

      

    Purpose
of dealing

    

    
      
        	
                2

              	
                A
      director or applicable employee must not deal in any securities of the
      Company on considerations of a short term nature. A director must take
      reasonable steps to prevent any dealings by or on behalf of any person
      connected with him in any securities of the Company on considerations of a
      short term nature.

              

      

    

    

    Dealing
in close periods

    

    
      	
              3

            	
              A director or applicable employee
      or persons connected with them must not deal in any securities of
      the Company during a “close period”.

            

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    A close
period is:

     

    
      	
               
      

            	
              3.1

            	
              the
      period of two months immediately preceding the publication of the
      Company's annual results or, if shorter, the period from its financial
      year end up to and including the time of publication;
  and

            

    

    

    
      
        	
              	
                3.1.1

              	
                if
      the Company reports on a half-yearly basis the period of two months
      immediately preceding the notification of its half-yearly report in
      accordance with Rule 18 of the Rules to the Regulatory Information Service
      or, if shorter, the period from the relevant financial period end up to
      and including the time of such notification;
or

              

      

    

    

    
      
        	
              	
                3.1.2

              	
                if
      the Company reports on a quarterly basis, the period of one month
      immediately preceding the notification of its quarterly results or, if
      shorter, the period from the relevant financial period end up to and
      including the time of the notification (save that for the final quarter
      paragraph 3.1 of this Code applies);
or

              

      

    

    

    
      	
               
      

            	
              3.2

            	
              any
      other period when the Company is in possession of unpublished price
      sensitive information; or

            

    

    

    
      	
               
      

            	
              3.3

            	
              any
      time it has become reasonably probable that such information will be
      required by this Code and/or the Rules to be
  notified.

            

    

    

    
      	
              4

            	
              A
      director or applicable employee must not deal in any securities of the
      Company at any time when he is in possession of unpublished
      price-sensitive information in relation to those securities, or otherwise
      where clearance to deal is not given under paragraph 5 of this
      Code.

            

    

    

    Clearance
to deal

    

    
      	
              5

            	
              A
      director or applicable employee or persons connected with them must not
      deal in any securities of the Company without advising the chairman (or
      one or more other directors designated for this purpose) in advance and
      receiving clearance. In his own case, the chairman, or other designated
      director, must advise the board in advance at a board meeting, or advise
      another designated director, and receive clearance from the board or
      designated director, as
appropriate.

            

    

    

    Circumstances
for refusal

    

    
      	
              6

            	
              A
      director or applicable employee or persons connected with them must not be
      given clearance (as required by paragraph 5 of this Code) to deal in any
      securities of the Company during a prohibited
  period.

            

    

    

    A
“prohibited period” means:

     

    
      	
            	
              6.1

            	
              any
      close period;

            

    

    

    
      	
               
      

            	
              6.2

            	
              any
      period when there exists any matter which constitutes unpublished price
      sensitive information in relation to the Company's securities (whether or
      not the director has knowledge of such matter) and the proposed dealing
      would (if permitted) take place after the time when it has become
      reasonably probable that an announcement will be required in relation to
      that matter; or

            

    

    

    
      	
               
      

            	
              6.3

            	
              any
      period when the person responsible for the clearance otherwise has reason
      to believe that the proposed dealing is in breach of this
      Code.

            

    

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    
      	
              7

            	
              A
      written record must be maintained by the Company of the receipt of any
      advice received from a director or applicable employee pursuant to
      paragraph 5 of this Code and of any clearance given. Written confirmation
      from the Company that such advice and clearance (if any) have been
      recorded must be given to the director or applicable employee
      concerned.

            

    

    

    Dealing
in exceptional circumstances

    

    
      	
              8

            	
              Pursuant
      to Rule 21, the Exchange may give clearance to a director or applicable
      employee to sell (but not to purchase) securities when he would otherwise
      be prohibited from doing so in order to alleviate severe personal
      hardship.

            

    

    

    Director
acting as trustee

    

    
      	
              9

            	
              Where
      a director or applicable employee is a sole trustee (other than a bare
      trustee), the provisions of this Code will apply, as if he were dealing on
      his own account. Where a director or applicable employee is a co-trustee
      (other than a bare trustee), he must advise his co-trustees of the name of
      the company of which he is a director or applicable employee. If the
      director or applicable employee is not a beneficiary, a dealing in his
      company's securities undertaken by that trust will not be regarded as a
      dealing by the director or applicable employee for the purposes of this
      Code, where the decision to deal is taken by the other trustees acting
      independently of the director or applicable employee or by investment
      managers on behalf of the trustees. The other trustees or the investment
      managers will be assumed to have acted independently of the director or
      applicable employee for this purpose where
they:

            

    

    

    
      	
               
      

            	
              9.1

            	
              have
      taken the decision to deal without consultation with, or other involvement
      of, the director or applicable employee concerned;
  or

            

    

    

    
      	
               
      

            	
              9.2

            	
              if
      they have delegated the decision making to a committee of which the
      director or applicable employee is not a
member.

            

    

    

    Dealings by connected persons
and investment managers

    

    
      	
              10

            	
              A
      director or applicable employee must (so far as is consistent with his
      duties of confidentiality to his company) seek to prohibit (by taking the
      steps set out in paragraph 11 of this Code) any dealing in securities of
      the Company during a close period or at a time when the director or
      applicable employee is in possession of unpublished price sensitive
      information in relation to those securities and would be prohibited from
      dealing under paragraph 6.1.2 of this
Code:

            

    

    

    
      	
            	
              10.1 

            	
              by
      or on behalf of any person connected with him;
  or

            

    

    

    
      	
               
      

            	
              10.2

            	
              by
      an investment manager on his behalf or on behalf of any person connected
      with him where either he or any person connected with him has funds under
      management with that investment manager, whether or not discretionary
      (save as provided in paragraphs 9 and 17 of this
  Code).

            

    

    

    
      	
              11

            	
              For
      the purposes of paragraph 10 of this Code, a director or applicable
      employee must advise all such connected persons and investment
      managers:

            

    

    

    
      	
               
      

            	
              11.1

            	
              of
      the name of the Company of which he is a director or applicable
      employee;

            

    

     

    
      	
            	
              11.2 

            	
              of
      the close periods during which they cannot deal in the Company's
      securities;

            

    

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              11.3

            	
              of
      any other periods when the director or applicable employee knows he is not
      himself free to deal in securities of the Company under the provisions of
      this Code unless his duty of confidentiality to the Company prohibits him
      from disclosing such periods; and

            

    

    

    
      	
               
      

            	
              11.4

            	
              that
      they must advise him immediately after they have dealt in securities of
      the Company (save as provided in paragraphs 9 and 17 of this
      Code).

            

    

    

    Special
circumstances

    

    Awards
of securities and options

    

    
      	
              12

            	
              Subject
      to paragraph 13 below, the award of securities, the grant of options and
      the grant of rights (or other interests) to acquire securities in the
      Company to directors and/or applicable employees of the Company is
      permitted in a prohibited period
if:

            

    

    

    
      	
               
      

            	
              12.1

            	
              the
      award or grant is made under the terms of an employees` share
      scheme;

            

    

    
      
        	 	 	 
	
                 
      

              	
                12.2

              	
                the
      terms of such employees' share scheme set
out:

              

      

    

     

    
      	
            	
              12.2.1

            	
              the
      timing of the award or grant and such terms have
  either:

            

    

    

    
      
        	
              	
                12.2.1.1

              	
                previously
      been approved by shareholders or summarised or described in a document
      sent to shareholders, or

              

      

    

    

    
      
        	
              	
                12.2.1.2

              	
                the
      timing of the award or grant is in accordance with the timing of previous
      awards or grants under the scheme;
and

              

      

    

    

    
      	
               
      

            	
              12.2.2

            	
              the
      amount or value of the award or grant or the basis on which the amount or
      value of the award or grant is calculated;
and

            

    

    

    
      	
               
      

            	
              12.3

            	
              the
      failure to make the award or grant would be likely to indicate that the
      Company is in a prohibited period.

            

    

    

    In
cases of doubt the Company's nominated adviser should be consulted.

    

    
      	
              13

            	
              The
      following dealings are not covered by paragraph 12 and are consequently
      subject to the provisions of this Code, unless they fall within paragraph
      20.8 below:

            

    

    

    
      	
               
      

            	
              13.1

            	
              a
      discretionary award or grant under an employees' share scheme, which would
      not otherwise have been made but for the event that led to the
      commencement of the prohibited period;
and

            

    

    

    
      	
               
      

            	
              13.2

            	
              an
      award or grant under an employees' share scheme which is made in a
      prohibited period during which the relevant scheme was introduced, or in
      the case of an existing scheme, the relevant scheme was
      amended.

            

    

     

    Exercise
of options

    

    
      
        	
                14

              	
                The
      chairman or other designated director may allow the exercise of an option
      or right under an employees' share scheme, or the conversion of a
      convertible security, where the final date for the exercise of such option
      or right, or conversion of such security, falls during any prohibited
      period and the director could not reasonably have been expected to
      exercise it at an earlier time when he was free to deal (see also
      paragraph 20.8).

              

      

    

    

    
      	
              15

            	
              Where
      an exercise or conversion is permitted pursuant to paragraph 14 or 20.8 of
      this Code, the chairman or other designated director may not, however,
      give clearance for the sale of securities acquired pursuant to such
      exercise or conversion.

            

    

    

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    
      Qualification
shares

    

    

    
      	
              16

            	
              The
      chairman or other designated director may allow a director to acquire
      qualification shares without regard to the provisions of this Code where,
      under the Company's articles of association, the final date for acquiring
      such shares falls during a prohibited period and the director could not
      reasonably have been expected to acquire those shares at another
      time.

            

    

    

    Saving
schemes

    

    
      	
              17

            	
              A
      director or applicable employee may enter into a scheme in which only the
      securities of the Company are purchased pursuant to a regular standing
      order or direct debit or by regular deduction from the director or
      applicable employee's salary, or where such securities are acquired by way
      of a standing election to re-invest dividends or other distributions
      received, or are acquired as part payment of a director or applicable
      employee's remuneration without regard to the provisions of the Code, if
      the following provisions are complied
with:

            

    

    

    
      	
               
      

            	
              17.1

            	
              the
      director or applicable employee does not enter into the scheme during a
      prohibited period, unless the scheme involves the part payment of
      remuneration in the form of securities and is entered into upon the
      director's appointment to the board or the commencement of the applicable
      employee's employment;

            

    

    

    
      	
               
      

            	
              17.2

            	
              the
      director or applicable employee does not carry out the first purchase of
      securities of the Company under the scheme during a prohibited period,
      unless the director or applicable employee is irrevocably bound under the
      terms of the scheme to carry out the first purchase of securities at a
      fixed point in time which falls in a prohibited
  period;

            

    

    

    
      	
               
      

            	
              17.3

            	
              the
      director or applicable employee does not cancel or vary the terms of his
      participation, or carry out sales of the securities of the Company within
      the scheme during a prohibited period;
and

            

    

    

    
      	
               
      

            	
              17.4

            	
              before
      entering into the scheme or cancelling the scheme or varying the terms of
      his/her participation or carrying out sales of the securities of the
      Company within the scheme, the director or applicable employee obtains
      clearance under paragraph 5 of this
Code.

            

    

    

    
      	
              18

            	
              The
      provisions of this Code do not apply to an investment by a director or
      applicable employee in a scheme or arrangement where the assets of the
      scheme or arrangement are invested at the discretion of a third party or
      to a dealing by the director or applicable employee in the units of an
      authorised unit trust or in shares in an open ended investment company. In
      the case of a scheme investing only in the securities of the Company the
      provisions of paragraph 17 of this Code
apply.

            

    

     

    Guidance
on other dealings

    

    
      	
              19

            	
              For
      the avoidance of doubt, and subject to the specific exceptions set out in
      paragraph 20 below, the following constitute dealings for the purposes of
      this Code and are consequently subject to the provisions of this
      Code:

            

    

    

    
      	
            	
              19.1

            	
              dealings
      between directors and/or applicable
employees;

            

    

    

    
      	
            	
              19.2

            	
              off-market
      dealings;

            

    

    

    
      	
            	
              19.3 

            	
              transfers
      for no consideration by a director or applicable employee other than
      transfers where the director or applicable employee retains a beneficial
      interest

            

    

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              19.4

            	
              entering
      into, or terminating, assigning or novating any stock lending agreement in
      respect of securities of the
Company;

            

    

    

    
      	
               
      

            	
              19.5

            	
              using
      as security, or otherwise granting a charge, lien or other encumbrance
      over, securities of the Company;
and

            

    

    

    
      	
               
      

            	
              19.6

            	
              any
      transaction, or the exercise of any power or discretion, effecting a
      change in the ownership of a beneficial interest in securities of the
      Company.

            

    

    

    
      	
              20

            	
              For
      the avoidance of doubt, and notwithstanding the definition of dealing
      contained in paragraph I of this Code, the following dealings are not
      subject to the provisions of this
Code:

            

    

    

    
      	
               
      

            	
              20.1

            	
              undertakings
      or elections to take up entitlements under a rights issue or other offer
      (including an offer of shares in lieu of a cash
  dividend);

            

    

    

    
      	
               
      

            	
              20.2

            	
              the
      take up of entitlements under a rights issue or other offer (including an
      offer of shares in lieu of a cash
dividend);

            

    

    

    
      	
               
      

            	
              20.3

            	
              allowing
      entitlements to lapse under a rights issue or other offer (including an
      offer of shares in lieu of a cash
dividend);

            

    

    

    
      	
               
      

            	
              20.4

            	
              the
      sale of sufficient entitlements nil-paid to allow take up of the balance
      of the entitlements under a rights
issue;

            

    

    

    
      	
            	
              20.5 

            	
              undertakings
      to accept, or the acceptance of, a takeover
  offer;

            

    

    

    
      	
               
      

            	
              20.6

            	
              transfers
      of shares arising out of the operation of an employees' share scheme into
      a saving scheme investing only in securities of the Company
      following:

            

    

    

    
      	
            	
              20.6.1

            	
              exercise
      of an option under a savings related share option scheme;
    or

            

    

    
      
        	 	 	 
	 	
                20.6.2

              	
                release
      of shares from a profit sharing
scheme;

              

      

    

    

    
      	
               
      

            	
              20.7

            	
              with
      the exception of a disposal of securities received by a director or
      applicable employee
      as a
      participant,
      dealings in connection with an Inland Revenue approved “Save-as-you-earn” share
      option scheme, or any other employees' share scheme under which
      participation is extended, on similar terms to those contained in an
      Inland Revenue approved “Save-as-you-earn” share option scheme, to all or
      most employees of the participating companies in that
    scheme;

            

    

    

    
      	
               
      

            	
              20.8

            	
              with
      the exception of a disposal of securities received by a director or
      applicable employee as a participant, dealings in connection with an
      Inland Revenue approved profit share scheme, or any similar profit share
      scheme under which participation is extended, on similar terms to those
      contained in an Inland Revenue approved profit share scheme, to all or
      most employees of the participating companies in that
    scheme;

            

    

    

    
      	
            	
              20.9 

            	
              the
      cancellation or surrender of an option under an employees' share
      scheme;

            

    

    

    
      	
            	
              20.10

            	
              transfers
      of securities by an independent trustee of an employees' share scheme to a
      beneficiary who is not a director or an applicable employee;
      and

            

    

    

    
      	
            	
              20.11

            	
              bona
      fide gifts to a director or applicable employee by a third
      party.

            

    

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    Applicable
employees

    

    
      	
              21

            	
              If
      not specifically included in a provision of this Code applicable employees
      must comply with the terms of this Code as though they were
      directors.

            

    

    
      
         

      

      
        17

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