Delaware
|
2836
|
98-0217544
|
||
(State
or other jurisdiction of
incorporation
or organization)
|
(Primary
Standard Industrial
Classification
Code Number)
|
(I.R.S.
Employer
Identification
Number)
|
Gretchen
Anne Trofa, Esq.
|
Steven
M. Skolnick, Esq.
|
Barack
Ferrazzano Kirschbaum & Nagelberg LLP
|
Lowenstein
Sandler PC
|
200
West Madison Street
|
65
Livingston Avenue
|
Suite
3900
|
Roseland,
New Jersey 07068
|
Chicago,
Illinois 60606
|
(973)
597-2500
|
(312)
984-3100
|
Large accelerated
filer
¨
|
Ac
celerated
filer
¨
|
|
Non-accelerated
filer
¨
|
(Do not check if a smaller reporting company) |
Smaller reporting
company
þ
|
Title
of Each Class of
Securities
to be Registered
|
Proposed
Maximum
Aggregate
Offering Price
(1)
|
Amount
of Registration Fee
|
||||||
Common
stock, $0.0001 par value per share
|
$ | 17,250,000 | $ | 1,230 | ||||
Underwriter
Warrants
|
— |
(2)
|
||||||
Common
stock underlying Underwriter Warrants
(3)
|
$ | 1,650,000 | (4) | $ | 118 | |||
Total
|
$ | 18,900,000 | $ | 1,348 |
(1)
|
Estimated
solely for the purpose of calculating the registration fee in accordance
with Rule 457(o) promulgated under the Securities Act of 1933. Includes
shares that the underwriters have the option to purchase to cover
over-allotments, if any.
|
(2)
|
No
separate registration fee is required pursuant to Rule 457(g) promulgated
under the Securities Act of
1933.
|
(3)
|
Pursuant
to Rule 416 promulgated under the Securities Act of 1933, there are also
being registered such additional shares of common stock as may become
issuable pursuant to anti-dilution provisions of the underwriter
warrants.
|
(4)
|
Estimated
solely for the purpose of calculating the registration fee pursuant to
Rule 457(g) promulgated under the Securities Act of 1933. We
have agreed to issue warrants to purchase a number of shares of common
stock equal to 10% of the number of shares of common stock offered hereby
(excluding any over-allotment), at an exercise price per share equal to
110% of the price of the common stock offered
hereby.
|
The
information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and is not soliciting an offer to buy these
securities in any jurisdiction where an offer or sale is not
permitted.
|
Per Share
|
Total
|
|||||||
Public
offering price
|
$ | $ | ||||||
Underwriting
discounts and commissions
(1)
|
$ | $ | ||||||
Proceeds
to us before expenses
|
$ | $ |
ROTH
CAPITAL PARTNERS
|
MAXIM
GROUP LLC
|
Page
|
|
Prospectus
Summary
|
1
|
Risk
Factors
|
9
|
Special
Note Regarding Forward-Looking Statements
|
25
|
Use
of Proceeds
|
26
|
Dividend
Policy
|
27
|
Capitalization
|
28
|
Dilution
|
30
|
Selected
Financial Data
|
32
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
34
|
Business
|
44
|
Management
|
70
|
Executive
Compensation
|
74
|
Certain
Relationships and Related Transactions
|
87
|
Principal
Stockholders
|
88
|
Description
of Capital Stock
|
91
|
Shares
Eligible for Future Sale
|
93
|
Underwriting
|
96
|
Legal
Matters
|
99
|
Experts
|
99
|
Where
You Can Find More Information
|
99
|
Glossary
|
100
|
Index
to Consolidated Financial Statements
|
F-1
|
|
·
|
lower
treatment costs;
|
|
·
|
improved
safety;
|
|
·
|
reduced
side effects;
|
|
·
|
elimination
of frequent injections;
|
|
·
|
increased
efficacy in chronic disease
management;
|
|
·
|
reversible
treatment;
|
|
·
|
personalized
medicine; and
|
|
·
|
extended
treatment to under treated
populations.
|
(a)
|
Harvesting Patient’s
Micro-organs (MOs)
– our proprietary device, the DermaVac, is used
to extract a small piece of tissue from the skin’s lower level, the dermis
of the patient. The DermaVac positions the skin and guides a
high-speed rotating hollow core needle, providing a straightforward
removal of the tissue. This procedure is intended to be
performed in a physician’s office under a local anesthetic. It is
minimally invasive to enable rapid healing with little or no
scarring.
|
(b)
|
Transfer to processing
station
– after harvesting, the MOs are transferred to a Biopump
processing center for processing into
Biopumps.
|
(c)
|
Viral vector fluid
– a
small amount of fluid containing the appropriate concentration of viral
vector, which specific vector has been engineered to contain
the gene necessary for production of a selected protein and to effectively
transfer the gene to the nuclei of the cells in the MO without integrating
into the chromosomes.
|
(d)
|
and
(e)
Processing each MO
into a Biopump
– in the Biopump processing center, MO (d) is
processed using the viral vector fluid, whereby the vector particles
transfer the genes into the cells of the MO (transduction), thereby
converting the intact tissue MO into a Biopump protein production unit
(e). The MOs are transferred at the harvest site in a sealed
cassette and transported to local or regional Biopump processing
centers. While processing is currently performed manually, we
are developing semi-automated processing
stations.
|
(e)
|
Biopump producing desired
protein
|
(f)
|
Measure daily protein
production per Biopump for dosing
– protein production levels of
the Biopumps are measured to determine the correct number of Biopumps to
implant to deliver the intended aggregate dose to the subject
patient.
|
(g)
|
Washing and release
testing
– prior to being released for use, the Biopumps undergo a
washing protocol to remove most, if not all, of the residual unabsorbed
vector, and undergo testing to verify they meet the release criteria for
use, generally between one and two weeks after
harvesting.
|
(h)
|
Transport to the treatment
center
– the Biopumps are transported to treatment center for
implantation in the patient.
|
(i)
|
Implantation of the required
number of Biopumps
– the calculated number of Biopumps are
implanted back into the patient where they produce and deliver the
required protein to the subject patient’s
body. Additional MOs or Biopumps not implanted in the
patient can be cryostored for future
use.
|
|
·
|
EPODURE
Biopump producing EPO to treat anemia: injected EPO sold $9.6
billion in 2009;
|
|
·
|
INFRADURE
Biopump producing
IFN-α
to
treat hepatitis C and certain
cancers: injected
IFN-α
sold $2.6 billion in 2009;
and
|
|
·
|
Factor
VIII Biopump producing Factor VIII for treating
hemophilia: injected Factor VIII sold $4.0 billion in
2009.
|
Securities
offered by us
|
shares
|
|
Common
stock to be outstanding after this offering
|
shares
|
|
Over-allotment
option
|
shares
|
|
Use
of proceeds
|
We
estimate that our net proceeds from this offering, without exercise of the
over-allotment option, will be approximately
$ million. We intend to use these
proceeds for product development activities, including clinical trials for
our most advanced product candidates; for patent maintenance fees and
intellectual property support; and for general corporate purposes and
working capital. See “Use of
Proceeds.”
|
|
AIM
Market symbols
|
MEDU
and MEDG
|
|
Proposed
NYSE Amex symbol
|
|
·
|
shares
of our common stock issuable upon the exercise of stock options
outstanding under our 2006 stock option plan as
of ,
2010, at a weighted-average exercise price of
$ per
share;
|
|
·
|
shares
of our common stock issuable upon the exercise of outstanding warrants as
of September , 2010, at a
weighted-average exercise price of
$ per
share;
|
|
·
|
shares
of our common stock issuable upon exercise of warrants issued to the
underwriters and others in connection with this offering;
and
|
|
·
|
shares
of our common stock to be reserved for future issuance under our equity
incentive plans following this
offering.
|
|
·
|
a -for- reverse
stock split of our common stock that we will complete prior to the closing
of this offering;
|
|
·
|
the
automatic conversion of all of our outstanding 2010 Debentures
into shares
of common stock (based on the currency exchange ratio
of U.S.
dollars to one British Pound sterling as
of ,
2010); and
|
|
·
|
the
automatic conversion of all of our outstanding 2009 Debentures
into shares
of common stock and the issuance of warrants to
purchase shares
of common stock at an exercise price of
$ per
share in connection therewith.
|
Period
Ended
June
30,
2009
(unaudited)
|
Period
Ended
June
30,
2010
(unaudited)
|
Year
Ended
December
31,
2008
|
Year
Ended
December
31,
2009
|
|||||||||||||
(In
thousands, except per share and share amounts)
|
||||||||||||||||
STATEMENT
OF OPERATIONS DATA:
|
||||||||||||||||
Operating
expenses:
|
||||||||||||||||
Research
and development
|
$ | 1,283 | $ | 1,366 | $ | 3,518 | $ | 2,267 | ||||||||
Less:
Participation by the Office of the Chief Scientist
|
(293 | ) | (238 | ) | (1,336 | ) | (488 | ) | ||||||||
Participation
by third party
|
- | (432 | ) | - | (90 | ) | ||||||||||
Research
and development, net
|
990 | 696 | 2,182 | 1,689 | ||||||||||||
General
and administrative
|
1,199 | 1,111 | 2,819 | 2,534 | ||||||||||||
Other
Income
|
- | (1,292 | ) | - | (327 | ) | ||||||||||
Loss
from operations
|
2,189 | 515 | 5,001 | 3,896 | ||||||||||||
Interest
income
|
(8 | ) | (72 | ) | (166 | ) | (10 | ) | ||||||||
Interest
expense, including amortization of deferred financing costs and debt
discounts
|
45 | 105 | 153 | 553 | ||||||||||||
Loss
|
$ | 2,226 | $ | 548 | $ | 4,992 | $ | 4,440 | ||||||||
Basic
and diluted net loss per common share
|
$ | 0.02 | $ | 0.004 | $ | 0.05 | $ | 0.04 | ||||||||
Weighted
average common shares outstanding – basic and diluted
|
111,249,104 | 135,958,955 | 106,447,604 | 117,845,867 |
As of December 31,
|
As of June 30, 2010
|
|||||||||||||||||||
2008
|
2009
|
Actual
(Unaudited)
|
Proforma
|
Proforma
As Adjusted
|
||||||||||||||||
Cash
and cash equivalents
|
$ | 1,043 | $ | 470 | $ | 1,363 | ||||||||||||||
Total
Assets
|
1,781 | 1,084 | 2,216 | |||||||||||||||||
Total
Liabilities
|
2,829 | 5,424 | 4,686 | |||||||||||||||||
Deficit
Accumulated During the Development Stage
|
(30,317 | ) | (34,760 | ) | (35,308 | ) | ||||||||||||||
Total
Stockholders’ Equity (Deficiency)
|
(1,048 | ) | (4,340 | ) | (2,470 | ) |
|
·
|
on
an actual basis;
|
|
·
|
on
a pro forma basis to give effect
to:
|
|
·
|
our
issuance of shares
of our common stock upon the exercise for cash of warrants prior
to , 2010 and
our receipt of an aggregate of
$ in proceeds from
these exercises;
|
|
·
|
a -for- reverse
stock split of our common stock that we will complete prior to the closing
of this offering;
|
|
·
|
the
automatic conversion of outstanding principal and accrued interest on the
2009 Debentures and the issuance of an aggregate of
shares of our
common stock upon such conversion and the issuance of warrants to
purchase shares
of common stock at an exercise price of
$ per
share in connection therewith; and
|
|
·
|
the
automatic conversion of outstanding principal and accrued interest on the
2010 Debentures and the issuance of an aggregate of
shares of our
common stock upon such conversion (based on the currency exchange ratio
of U.S. dollars to one British
Pound sterling as
of ,
2010).
|
|
·
|
on
a pro forma as adjusted basis to give further effect to our sale of
shares of common
stock in this offering at an assumed initial public offering price of
$ per share, which
is the midpoint of the range set forth on the cover page of this
prospectus, after deducting estimated underwriting discounts and
commissions and estimated offering expenses payable by
us.
|
|
·
|
successful
completion of necessary medical trials which have not advanced beyond
phase I/II stage;
|
|
·
|
regulatory
approval;
|
|
·
|
commercialization
(through partnership or licensing deals or through internal development)
and market acceptance of new technologies and product candidates under
development;
|
|
·
|
medical
community awareness; and
|
|
·
|
changes
in regulation or regulatory policy.
|
·
|
the level of patient recruitment in our current clinical trial of EPODURE and the continuing results of such trial; | |
|
·
|
the
level of research and development investment required to develop our first
product candidates, and maintain and improve the Biopump Platform
Technology;
|
|
·
|
changes
in product development plans needed to address any difficulties that may
arise in manufacturing, preclinical activities, clinical studies or
commercialization;
|
|
·
|
our
ability and willingness to enter into new agreements with strategic
partners, and the terms of these agreements;
|
·
|
our
success rate in preclinical and clinical efforts associated with
milestones and royalties;
|
|
·
|
the
costs of recruiting and retaining qualified personnel;
|
|
·
|
the
time and costs involved in obtaining regulatory approvals;
and
|
|
·
|
the
costs of filing, prosecuting, defending, and enforcing patent claims and
other intellectual property
rights.
|
|
·
|
difficulties
related to large-scale
manufacturing;
|
|
·
|
lack
of familiarity of health care providers and
patients;
|
|
·
|
low
market acceptance as a result of lower demonstrated clinical safety or
efficacy compared to other products or other potential disadvantages
relative to alternative treatment
methods;
|
|
·
|
insufficient
or unfavorable levels of reimbursement from government or third-party
payors;
|
|
·
|
infringement
on proprietary rights of others for which we (or our licensees, if any)
have not received licenses;
|
|
·
|
incompatibility
with other therapeutic products;
|
|
·
|
potential
advantages of alternative treatment
methods;
|
|
·
|
ineffective
marketing and distribution support;
|
|
·
|
lack
of costs-effectiveness; or
|
|
·
|
timing
of market introduction of competitive
products.
|
|
·
|
delays
in obtaining regulatory approvals to commence a clinical
trial;
|
|
·
|
slower
than anticipated patient recruitment and
enrollment;
|
|
·
|
negative
or inconclusive results from clinical
trials;
|
|
·
|
unforeseen
safety issues;
|
|
·
|
an
inability to monitor patients adequately during or after treatment;
and
|
|
·
|
problems
with investigator or patient compliance with the trial
protocols.
|
·
|
the
FDA or other health regulatory authorities, or instructional review boards
(IRBs), do not approve a clinical trial protocol or place a clinical trial
on hold;
|
·
|
suitable
patients do not enroll in a clinical trial in sufficient numbers or at the
expected rate, for reasons such as the size of the patient population, the
proximity of patients to clinical sites, the eligibility criteria for the
trial, the perceptions of investigators and patients regarding safety, and
the availability of other treatment
options;
|
·
|
clinical
trial data are adversely affected by trial conduct or patient withdrawal
prior to completion of the
trial;
|
·
|
there
is competition with ongoing clinical trials and scheduling conflicts with
participating clinicians;
|
·
|
patients
experience serious adverse events, including adverse side effects of our
drug candidates, for a variety of reasons that may or may not be related
to our product candidates, including the advanced stage of their disease
and other medical problems;
|
·
|
patients
in the placebo or untreated control group exhibit greater than expected
improvements or fewer than expected adverse
events;
|
·
|
third-party
clinical investigators do not perform the clinical trials on the
anticipated schedule or consistent with the clinical trial protocol and
good clinical practices, or other third-party organizations do not perform
data collection and analysis in a timely or accurate
manner;
|
·
|
service
providers, collaborators or co-sponsors do not adequately perform their
obligations in relation to the clinical trial or cause the trial to be
delayed or terminated;
|
·
|
we
are unable to obtain a sufficient supply of manufactured clinical trial
materials;
|
·
|
regulatory
inspections of manufacturing facilities require us or a co-sponsor to
undertake corrective action or suspend the clinical
trials;
|
·
|
the
interim results of the clinical trial are inconclusive or
negative;
|
·
|
the
clinical trial, although approved and completed, generates data that are
not considered by the FDA or others to be sufficient to demonstrate safety
and efficacy; and
|
·
|
changes
in governmental regulations or administrative actions affect the conduct
of the clinical trial or the interpretation of its
results.
|
|
·
|
warning
letters, fines, injunctions, consent decrees and civil
penalties;
|
|
·
|
repair,
replacement, refunds, recall or seizure of our
products;
|
|
·
|
operating
restrictions or partial suspension or total shutdown of
production;
|
|
·
|
refusing
our requests for 510(k) clearance or premarket approval of new products,
new intended uses, or modifications to existing
products;
|
|
·
|
withdrawing
510(k) clearance or premarket approvals that have already been granted;
and
|
|
·
|
criminal
prosecution.
|
|
·
|
restrictions
on such product, manufacturer or manufacturing
process;
|
|
·
|
warning
letters from the FDA or other regulatory
authorities;
|
|
·
|
the
withdrawal of the product from the
market;
|
|
·
|
the
suspension or withdrawal of regulatory
approvals;
|
|
·
|
a
refusal by such regulator to approve pending applications or supplements
to approved applications that we or our licensees (if any)
submit;
|
|
·
|
a
voluntary or mandatory recall;
|
|
·
|
fines;
|
|
·
|
a
refusal to permit the import or export of our
product;
|
|
·
|
product
seizures or detentions;
|
|
·
|
injunctions
or the imposition of civil or criminal penalties;
and
|
|
·
|
adverse
publicity.
|
|
·
|
the
timing and receipt of marketing
approvals;
|
|
·
|
the
safety and efficacy of the
products;
|
|
·
|
the
emergence of equivalent or superior
products;
|
|
·
|
the
cost-effectiveness of the products;
and
|
|
·
|
ineffective
marketing.
|
|
·
|
the
federal Anti-Kickback Statute, which prohibits, among other things,
persons from knowingly and willfully soliciting, offering, receiving or
providing remuneration, directly or indirectly, in cash or in kind, to
induce or reward either the referral of an individual for, or the
purchase, order or recommendation of, any good or service, for which
payment may be made under federal healthcare programs such as Medicare and
Medicaid;
|
|
·
|
the
federal False Claims Act, which prohibits, among other things, individuals
or entities from knowingly presenting, or causing to be presented, to the
federal government, claims for payment that are false or fraudulent
or making a false statement to avoid,
decrease, or conceal an obligation to pay money to the federal
government;
|
|
·
|
the
federal Health Insurance Portability and Accountability Act of 1996
(HIPAA), which creates federal criminal laws that prohibit executing a
scheme to defraud any healthcare benefit program and which also imposes
certain obligations on entities with respect to the privacy, security and
transmission of individually identifiable health
information;
|
|
·
|
the
federal False Statements Statute, which prohibits knowingly and willfully
falsifying, concealing or covering up a material fact or making any
materially false statement in connection with the delivery of or payment
for healthcare benefits, items or services;
and
|
|
·
|
state
laws that are analogous to each of the above federal laws, such as state
anti-kickback and false claims laws (some of which may apply to healthcare
items or services reimbursed by any third-party payor, including
commercial insurers), as well as certain state laws that require
pharmaceutical and medical device companies to comply with industry
voluntary compliance guidelines and the relevant compliance guidance
promulgated by the federal
government.
|
|
·
|
stockholders
will not be entitled to remove directors other than by a 66 2/3% vote and
only for cause;
|
|
·
|
stockholders
will not be permitted to take actions by written
consent;
|
|
·
|
stockholders
cannot call a special meeting of stockholders;
and
|
|
·
|
stockholders
must give advance notice to nominate directors or submit proposals for
consideration at stockholder
meetings.
|
|
·
|
our
ability to obtain additional funding to develop our product
candidates;
|
|
·
|
the
need to obtain regulatory approval of our product
candidates;
|
|
·
|
the
success of our clinical trials through all phases of clinical
development;
|
|
·
|
any
delays in regulatory review and approval of product candidates in clinical
development;
|
|
·
|
our
ability to commercialize our product
candidates;
|
|
·
|
market
acceptance of our product
candidates;
|
|
·
|
competition
from existing products or new products that may
emerge;
|
|
·
|
regulatory
difficulties relating to products that have already received regulatory
approval;
|
|
·
|
potential
product liability claims;
|
|
·
|
our
dependency on third-party manufacturers to supply or manufacture our
products;
|
|
·
|
our
ability to establish or maintain collaborations, licensing or other
arrangements;
|
|
·
|
our
ability and third parties’ abilities to protect intellectual property
rights;
|
|
·
|
compliance
with obligations under intellectual property licenses with third
parties;
|
|
·
|
our
ability to adequately support future growth;
and
|
|
·
|
our
ability to attract and retain key personal to manage our business
effectively.
|
|
·
|
approximately
$ for
EPODURE development to include the
following:
|
|
·
|
completion
of the Phase I/II trial, and
|
|
·
|
preIND
and IND for EPODURE and/or other
indications;
|
|
·
|
preparations
and approval to commence phase 2b (dose ranging clinical
trial);
|
|
·
|
approximately
$ for
INFRADURE development in preparation for phase I trial in
humans;
|
|
·
|
approximately
$ for
research and development of core technology and other product
candidates;
|
|
·
|
approximately
$ for
patent maintenance fees and other intellectual property support;
and
|
|
·
|
approximately
the balance to fund working capital and other general corporate purposes,
which may include the acquisition or licensing of complementary
technologies, products or business.
|
·
|
complete
phase I/II clinical trials program for EPODURE in anemic patients with
chronic kidney disease;
|
·
|
prepare,
launch and obtain initial data from a phase I/II clinical trials program
for INFRADURE in patients with hepatitis
C;
|
·
|
pursue
strategic alliances, including the license of our
technologies;
|
·
|
further
develop our core technology;
and
|
·
|
initiate
development of additional applications with other
proteins.
|
|
·
|
on
an actual basis;
|
|
·
|
on
a pro forma basis to reflect the
following:
|
|
·
|
our
issuance
of shares
of our common stock upon the exercise of warrants prior
to ,
2010 and our receipt of an aggregate of
$ in
proceeds from these exercises;
|
|
·
|
a -for- reverse
stock split of our common stock that we will complete prior to the closing
of this offering;
|
|
·
|
the
automatic conversion of all of our outstanding 2009 Debentures and related
accrued interest
into shares
of common stock upon the completion of this offering and the issuance of
warrants to
purchase shares
of common stock at an exercise price of
$ per
share in connection therewith; and
|
|
·
|
the
automatic conversion of all of our outstanding 2010 Debentures and related
accrued interest
into shares of common
stock upon the completion of this offering (based on the currency exchange
ratio of U.S.
dollars
to British
Pound sterling as
of ,
2010); and
|
|
·
|
on
a pro forma as adjusted basis to reflect our sale
of shares
of common stock in this offering, at an assumed initial public offering
price of
$ per
share, which is the mid-point of the price range set forth on the cover
page of this prospectus, after deducting the estimated underwriting
discounts and commissions and estimated offering expenses payable by
us.
|
June 30, 2010
|
||||||||||||
Actual
|
Pro Forma
|
Pro Forma As
Adjusted
|
||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
||||||||||
(In
thousands)
|
||||||||||||
Cash
and cash equivalents
|
$ | 1,363 | $ | $ | ||||||||
Convertible
debentures
|
992 | |||||||||||
Stockholders’
deficiency:
|
||||||||||||
Common
stock - $.0001 par value; 500,000,000 shares authorized; 154,727,554
issued
|
14 | |||||||||||
Additional
paid-in capital
|
32,824 | |||||||||||
Deficit
accumulated during the development stage
|
(35,308 | ) | ||||||||||
Total
Stockholders’ equity (deficiency)
|
(2,407 | ) | ||||||||||
Total
capitalization
|
|
·
|
40,106,072
shares of common stock issuable upon exercise of outstanding stock options
as of June 30, 2010 at a weighted-average exercise price of $0.13 per
share, 30,595,189 of which are currently
exercisable;
|
|
·
|
116,225,709
shares of common stock issuable upon exercise of outstanding warrants as
of June 30, 2010 at a weighted-average exercise price of $0.09 per share,
all of which are currently
exercisable;
|
|
·
|
shares
of our common stock issuable upon exercise of warrants issued to the
underwriters and others in connection with this offering;
and
|
|
·
|
9,469,284
additional shares of common stock reserved for issuance under our equity
incentive plans.
|
Assumed
initial public offering price per share
|
$ | |||||||
Historical
net tangible book value per share
|
$ | |||||||
Increase
attributable to the conversion of 2009 Debentures
|
$ | |||||||
Increase
attributable to the conversion of 2010 Debentures
|
$ | |||||||
Pro
Forma net tangible book value per share before this
offering
|
$ | |||||||
Increase
per share attributable to new investors
|
$ | |||||||
Pro
Forma net tangible book value per share after this
offering
|
$ | |||||||
Dilution
per share to new investors
|
$ |
|
·
|
40,106,072
shares of common stock issuable upon exercise of outstanding stock options
as of June 30, 2010, at a weighted-average exercise price of
$0.13 per share, 30,595,189 of which are currently
exercisable;
|
|
·
|
116,225,709
shares of common stock issuable upon the exercise of outstanding warrants
as of June 30, 2010, at a weighted-average exercise price of $0.09 per
share, all of which are currently exercisable;
and
|
|
·
|
9,469,284
additional shares of common stock reserved for future issuance under our
equity incentive plans.
|
Shares
Purchased
|
Total Consideration
|
|||||||||||||||||||
Number
|
Percent
|
Amount
|
Percent
|
Weighted
Average Price
Per Share
|
||||||||||||||||
Existing
Stockholders
|
$ | % | $ | % | $ | |||||||||||||||
New
Stockholders
|
||||||||||||||||||||
Total
|
|
% |
|
% |
(In
thousands, except per share data)
|
Six
Months
Ended
June 30,
2009
|
Six
Months
Ended
June 30,
2010
|
Year
Ended
December
31,
2008
|
Year
Ended
December
31,
2009
|
Period
From
January
27, 2000
to
June 30, 2010
|
|||||||||||||||
Operating
Expenses:
|
|
|||||||||||||||||||
Research
& Development, Net
|
990 | 696 |
$
|
2,182
|
$ | 1,689 | $ | 17,956 | ||||||||||||
General
& Administrative
|
1,199 | 1,111 |
2,819
|
2,543 | 18,180 | |||||||||||||||
Other
(income) expenses:
|
|
|||||||||||||||||||
Excess
amount of
Participation in research and developments from
third party
|
(1,292 | ) |
—
|
(327 | ) | (1,619 | ) | |||||||||||||
Loss
from operations
|
2,189 | 515 | 5,001 | 3,896 | 34,517 | |||||||||||||||
Interest
income
|
(8 | ) | (72 | ) | (166 | ) | (10 | ) | (565 | ) | ||||||||||
Interest
expense, including amortization of deferred financing costs and
debt discounts
|
45 | 105 | 153 | 553 | 1,716 | |||||||||||||||
Loss before
taxes on income
|
2,226 | 548 | $ | 4,988 | $ | 4,439 | 35,668 | |||||||||||||
Taxes
on income
|
— | — | 4 | 1 | 71 | |||||||||||||||
Loss
|
2,226 | 548 | $ | 4,922 | $ | 4,440 | 35,739 | |||||||||||||
Basic
and diluted net loss per common share
|
$ | 0.02 | $ | 0.004 | $ | 0.05 | $ | 0.04 | ||||||||||||
Weighted
average common shares outstanding – basic and diluted
|
111,249,104 | 135,958,955 | 106,447,604 | 117,845,867 |
June 30,
2010
|
December 31,
2008
|
December 31,
2009
|
||||||||||
(In
thousands)
|
||||||||||||
Cash
|
$ | 1,363 | $ | 1,043 | $ | 470 | ||||||
Total
Assets
|
2,216 | 1,781 | 1,084 | |||||||||
Total Liabilities
|
4,686 | 2,829 | 5,424 | |||||||||
Deficit
Accumulated During the Development Stage
|
35,308 | 30,317 | 34,760 | |||||||||
Total
Stockholders’ Equity (Deficiency)
|
(2,470 | ) | (1,048 | ) | (4,340 | ) |
Year Ended December 31,
|
Period From
January 27, 2000
(Inception)
through
December 31,
|
|||||||||||
2008
|
2009
|
2009
|
||||||||||
EPODURE
Biopump
|
100 | % | 70 | % | 94 | % | ||||||
INFRADURE
Biopump
|
- | 25 | % | 5 | % | |||||||
Other
Product Candidates
|
- | 5 | % | 1 | % |
|
·
|
Non-refundable
license fee of $0.4 million to be paid in three installments, as
follows:
|
|
·
|
$0.05
million when the accrued investments in us by any third party after May
23, 2005 equal at least $3 million;
|
|
·
|
$0.15
million when the accrued investments in us by any third party after May
23, 2005 equal at least $12 million;
and
|
|
·
|
$0.2
million when the accrued investments in us by any third party after May
23, 2005 equal at least $18
million.
|
|
·
|
Royalties
at a rate of 5% of net sales of product incorporating the licensed
technology; and
|
|
·
|
Sub-license
fees at a rate of 9% of sublicense considerations received by
us.
|
|
·
|
Non-refundable
license fee of $0.4 million to be paid in three installments, as
follows:
|
|
·
|
$0.05
million when the accrued investments in us by any third party after May
23, 2005 equal at least $3 million (paid in
2007);
|
|
·
|
$0.15
million when the accrued investments in us by any third party after May
23, 2005 equal at least $12 million (paid in second quarter of 2010);
and
|
|
·
|
$0.2
million when the accrued investments in us by any third party after May
23, 2005 equal at least
$18 million.
|
|
·
|
Royalties
at a rate of 5% of net sales of product incorporating the licensed
technology; and
|
|
·
|
Sub-license
fees at a rate of 9% of sublicense considerations received by
us.
|
|
·
|
a
one time, non-refundable license fee of $25,000 which was paid in
2007;
|
|
·
|
an
annual non-refundable maintenance fee of
$20,000;
|
|
·
|
a
one-time milestone payment of $75,000 upon FDA clearance or equivalent of
clearance for therapeutic use. As of the balance sheet date, we have not
achieved FDA clearance; and
|
|
·
|
an installment
of $25,000 upon our executing any sub-licenses in respect of the BCM
technology.
|
(a)
|
Harvesting Patient’s
Micro-organs (MOs)
– our proprietary device, the DermaVac, is used
to extract a small piece of tissue from the skin’s lower level, the dermis
of the patient. The DermaVac positions the skin and guides a
high-speed rotating hollow core needle, providing a straightforward
removal of the tissue. This procedure is intended to be
performed in a physician’s office under a local anesthetic. It is
minimally invasive to enable rapid healing with little or no
scarring.
|
(b)
|
Transfer to processing station
–
after harvesting, the MOs are transferred to a Biopump processing
center for processing into
Biopumps.
|
(c)
|
Viral vector fluid
– a
small amount of fluid containing the appropriate concentration of viral
vector, which specific vector has been engineered to contain the gene
necessary for production of a selected protein and to effectively transfer
the gene to the nuclei of the cells in the MO without integrating into the
chromosomes.
|
(d)
|
and
(e)
Processing each MO
into a Biopump –
in the Biopump processing center, MO (d) is
processed using the viral vector fluid, whereby the vector particles
transfer the genes into the cells of the MO (transduction), thereby
converting the intact tissue MO into a Biopump protein production unit
(e). The MOs are transferred at the harvest site in a sealed
cassette and transported to local or regional Biopump processing
centers. While processing is currently performed manually, we
are developing semi-automated processing
stations.
|
(e)
|
Biopump
producing desired
protein
|
(f)
|
Measure daily protein
production per Biopump for dosing –
protein production levels of
the Biopumps are measured to determine the correct number of Biopumps to
implant to deliver the intended aggregate dose to the subject patient
.
|
(g)
|
Washing and release testing –
prior to being released for use, the Biopumps undergo a
washing protocol to remove most, if not all, of the residual unabsorbed
vector and undergo testing to verify they meet the release criteria for
use, generally between one and two weeks after
harvesting.
|
(h)
|
Transport to the treatment
center
– the Biopumps are transported to treatment center for
implantation in the patient.
|
|
(i)
|
Implantation of the required
number of Biopumps
– the calculated number of Biopumps are
implanted back into the patient where they produce and deliver the
required protein to the subject patient’s
body. Additional MOs or Biopumps not implanted in the
patient can be cryostored for future
use.
|
|
·
|
Lower
treatment
costs
– We believe
that the Biopump Platform Technology will offer cost-effective protein
therapy. The Biopump Platform Technology does not require a
protein production facility to produce the desired protein currently used
in protein therapy, thereby eliminating the need to incur substantial
construction and operations costs in connection with such a
facility. We expect that, once fully developed, the devices and
materials used in the Biopump production, such as sealed cartridges and
other single-use items, will be sufficiently automated and low in
cost to enable the practical and reliable implementation of Biopump
therapy and enable lower the per-patient cost of protein
therapy. We also believe that automation of the process will
allow for efficient manufacture of Biopumps in regional centers, while
allowing the local physicians to harvest and administer the Biopump
therapy.
|
|
·
|
Improved safety
– We
believe that the protein produced by Biopumps should be safer than
currently used therapeutic proteins since it is produced from the
patient’s own tissue instead of from animal cells. Recombinant proteins
from non-human mammalian cells may have different glycosylation patterns
from those of human cells, causing the formation of antibodies in some
patients that can result in immune rejection of the protein, even against
the patient’s own native proteins, such as in the autoimmune response PRCA
in EPO therapy. By contrast, producing protein from the patient’s own
cells is expected to reduce the risk of immune responses, since these
proteins are produced as closely as possible to the natural proteins,
which the patient lacks in sufficient quantity.
|
|
·
|
Reduced side
effects
– We believe that treatment using the Biopump
Platform Technology will cause fewer and less severe side effects than are
associated with current recombinant protein production and delivery
methods. In contrast to bolus injections, we believe the
Biopump Platform Technology will provide efficient, sustained therapeutic
protein delivery within the desired range and should reduce the health
risks and side effects associated with the transient peak of the
concentration of the therapeutic protein in the patient’s circulation
typical immediately after each bolus injection, which often overshoots the
desired range of concentration.
Overshoots
with proteins such as IFN-α
are typically
associated with
unpleasant flu-like symptoms and can cause other
serious side effects.
|
|
·
|
Elim
ination of frequent
injections
– The sustained-action Biopump typically requires only
two clinic visits: one for the harvesting of the MOs and the second for
the implantation of the sustained-action
Biopumps. Cryopreservation of harvested MOs may allow a single
harvest procedure for multiple implantation procedures if needed to
increase dosage. Conventional protein therapy requires extended
periods of frequent injections, which can decrease both patient compliance
and quality of life and increase
cost.
|
|
·
|
Increased efficacy
in chronic disease
managem
ent
– We
believe that the sustained production and delivery, for six months or
more, of protein obtained through a single administration of Biopumps is
likely to be a more efficacious form of the desired protein treatment than
currently offered by an extended series of repeat bolus
injections. The serum concentration between bolus injections
often drops to levels that are not sufficient to be effective, due to the
short half lives of many proteins, and these undershoots can under-treat
the patient’s illness. By contrast, Biopump therapy can help
maintain the serum concentration at effective concentrations on a
sustained basis for months. Members of our Strategic Advisory
Board believe that maintaining effective levels of protein within the
therapeutic window in the patient optimizes efficiency and eliminates
overshoot and undershoot (and their respective side effects and
under-treatment downsides).
|
|
·
|
Reversible
treatment
–
Unlike gene therapy, the Biopump procedure is reversible. Tests
have demonstrated that Biopumps can be ablated by laser, radiofrequency
needle, or (if necessary) local surgical removal to reduce or halt protein
production and secretion by a Biopump. We are working on
refining our techniques to facilitate locating Biopumps after insertion to
enable the ablation of the protein production properties and secretion of
the Biopumps when required. In conventional gene therapy, once
the vectors carrying the genes have been injected into the blood stream,
it is difficult to predict or detect where they have gone or to know which
or how many cells they have transfected. Accordingly, in
conventional gene therapy, if too much protein is being produced by the
transfected cells, there is no accepted reliable way to reduce or stop the
process.
|
|
·
|
Personalized medicine
— Because therapeutic proteins from Biopumps are
produced using the patient’s own tissue, they are believed by experts on
our Strategic Advisory Board to more closely resemble the proteins
produced by the patient’s own body than proteins mass produced in animal
cells. As a result, we view our Biopumps as truly “personalized
medicine”.
|
|
·
|
Extended treatment to under
treated populations
– the Biopump Platform Technology could enable
extension of treatment to under-treated populations. For
example, we believe that patients who are deterred from or cannot continue
hepatitis C treatment because of the side effects of conventional
injections are more likely to be amenable to the sustained-action
Biopump. Likewise, we believe that those patients with chronic
kidney disease, who are deterred from sustained EPO treatment of their
anemia due to the frequent office visits needed for EPO injections, will
find the EPODURE sustained treatment more amenable. The Biopump
Platform Technology may also enable the treatment of conditions which are
not possible today due to problems of
ex-vivo
stability of
manufactured proteins or excessive
costs.
|
|
·
|
R
educing costs while not
reducing care
– The inherent cost-effectiveness of the
Biopump can offer same or superior clinical efficacy at lower cost than
standard of care or alternative
treatments.
|
|
·
|
P
reventative
medicine
– By enabling practical and affordable protein
therapy in applications such as anemia in pre-dialysis patients, the
increased morbidity these patients often suffer from untreated anemia or
the risks of current bolus injection treatment can be reduced or
prevented. We believe Biopump technology can make a significant
contribution in other areas such as management of obesity and diabetes,
where control can help prevent deterioration and further health
issues.
|
|
·
|
P
ersonalized medi
cine
– Biopump
produces the patient’s own protein, which extends the concept of
personalized medicine from diagnosis to
therapy.
|
|
·
|
12
patients have now received their implanted EPODURE Biopumps in our phase
I/II clinical trial, with five patients receiving the mid-range dose level
(40 IU/kg/day), and seven receiving the low dose level (20
IU/kg/day).
|
|
·
|
One
patient has now remained free of anaemia for a full two years following
his single low dose treatment with EPODURE Biopumps in 2008. His
hemoglobin levels have remained continuously within the target range of
10-12 g/dl throughout this period without any related adverse events and
without receiving any EPO injections, whereas he was receiving EPO
injections before his EPODURE
treatment.
|
|
·
|
Another
patient, whose hemoglobin level had responded positively to the low dose
of EPODURE, but only reached the low end of the target range of 10-12
g/dl, became the first patient approved to receive an
additional administration of low dose EPODURE Biopumps to increase
hemoglobin level. All other patients have received only a
single administration of a fixed dose, without subsequent
adjustment. We believe it is significant that approval was
given for a second administration of Biopumps in a patient, and will be
closely monitoring to see if this assists further hemoglobin
elevation. We believe that Biopumps provide the opportunity to
adjust dose such that if there is insufficient hemoglobin response to an
initial dose of Biopumps, additional Biopumps would be administered to
further increase the hemoglobin level to reach the desired
range.
|
|
·
|
Addressing the FDA Black Box
warning
— The FDA recently issued its strongest level drug warning
in connection with the use of EPO, cautioning physicians to avoid
excessive use of EPO and to keep hemoglobin levels within the moderate
specified range (10-12g/dl) for patients with kidney
failure. We believe that the EPODURE Biopump will be able to
stabilize hemoglobin levels and avoid excessive EPO in the
body.
|
|
·
|
Minimizing hemoglobin cycling
—
Results from our phase I/II clinical trial of the
EPODURE Biopump appear to confirm the EPODURE Biopump helps to stabilize
hemoglobin levels and, in the correct dose, elevating and stabilizing
those levels within range for several months. Hemoglobin
cycling was not experienced with the EPODURE Biopump as compared to the
cycling experienced with periodic injections of
EPO.
|
|
·
|
Avoiding injection peak EPO
risks (overshoot)
— Our EPODURE Biopump has been shown
to avoid overshoot. To date, in all patients treated with
EPODURE Biopumps, the serum EPO concentration rises only by 10-60 mU/ml,
and does not approach levels near 1,000 mU/ml, and thus would appear to
have less risk of stimulating the cell linings or increasing the risk of
hypertension or emboli.
|
|
·
|
Non-interrupted therapy versus
undershoot between injections
– Sustained production and delivery
of the therapeutic protein can maintain sustained effective treatment
without the “dropout” periods in between injections of short-acting EPO or
other ESAs, and avoids dependence upon patient
compliance.
|
|
·
|
Reliability of sustained
treatment
– Current treatments rely upon adherence to a strict
schedule of frequent injections, and effectiveness of treatment is
impacted when scheduled injections are missed, as can often
occur. With our Biopump, therapy continues regardless of
compliance with visit schedule.
|
|
·
|
Low projected inherent
costs
– EPODURE will not require a protein production facility,
since it produces its own EPO, thereaby eliminating the need to incur
substantial construction and operations costs in connection with such a
facility. We expect that, once fully developed, the devices and
materials used in the EPODURE Biopump production, such as sealed
cartridges and other single-use items, will be sufficiently automated and
low in cost to enable the practical and reliable implementation of Biopump
therapy and enable lower per-patient costs of protein
therapy. We believe that EPODURE will offer a cost savings in
providing comparable or superior anemia treatment per year versus injected
EPOs such as EPOGEN and Procrit, or
EPO-biosimilars.
|
|
·
|
Fewer treatment visits
needed
– By providing many months of sustained anemia treatment
from a single administration of EPODURE Biopumps, we believe this reduce
clinic visits and could reduce health-care
costs.
|
|
·
|
Answer to bundling in
dialysis
– We believe that EPODURE Biopumps will directly address
the opportunity for a cost effective alternative to deliver better
hemoglobin control in connection with dialysis at a lower cost than
current anemia treatments such as EPOGEN, or
biosimilars.
|
|
·
|
Positive initial response from
payors
– The EPODURE Biopump received positive responses in initial
discussions with current and former officers from the major government
reimbursement payor, Center for Medicare and Medicaid Services (CMS), in
which the potential advantages in safety, efficacy and cost-savings were
noted.
|
Feature
|
Advantage
|
|
Treatment
interval of six months
|
Fewer
required clinic visits, increased throughput to larger patient
population
|
|
“Plug
& Play”
|
Easy
delivery, preferable to patients as well as physicians
|
|
No
“storage” or administration risks
|
Favors
home dialysis
|
|
Accurate,
consistent delivery
|
Compliance
is not dependent on patient action
|
|
Better
Hb control, lower risks
|
Better
outcomes and greater likelihood of hitting CMS quality targets. Could
improve quality of life compared to current EPO therapy
|
|
Reduced
overhead
|
Lower
cost-per-patient, no inventory of EPO to
maintain
|
|
·
|
injections
of interferon alone (e.g., Roferon
®
-A,
Intron
®
A
or Infergen
®
)
or with ribavirin (e.g., Rebetron
®
) with IFN-α
admini
stered three times per week. This therapy is
costly and may cause considerable side effects, particularly as a result
of overdosing triggered by the administration of bolus
injections. Common side effects include flu-like symptoms,
psychiatric symptoms (depression, irritability and/or sleep disturbance),
rash and reduction of all blood cell counts, including white blood cell
count, hemoglobin and platelets. This therapy is generally only
effective in achieving a sustained virologic response (“cure”) in a
pproximately 10% to
20% of patients using IFN-α alone and in 40% to 50% of patients if
combined with Rebetron
®
;
and
|
|
·
|
injections
of pegylated interferon (PegIFN) proteins (e.g. PEG-INTRON
®
or
Pegasys
®
),
typically along with ribavirin. PegIFN stays in the patient’s
body longer and is injected once a week. This treatment regimen
is now standard and treatment duration depends upon the genotype of the
individual case of HCV infection.
|
|
·
|
By
avoiding
high peak IFN-α levels in the blood the INFRADURE Biopump could provide a
safer treatment with fewer side effects, while still providing effective
interferon therapy which can be used instead of IFN-α injections
in combination with
antiviral agents and other drugs typically used in managing hepatitis
C.
|
|
·
|
The
single-administration “Plug & Play” aspect can potentially deliver
IFN-α for
six
months without need for patient
compliance.
|
|
·
|
A patient with an
INFRADURE Biopump will manufacture and deliver his
own
IFN-α. Conversely, the other approaches use mass manufactured
IFN-α or derivatives, which may have a higher risk of causing immunogenic
or other negative reaction.
|
|
·
|
The
INFRADURE Biopump may provide comparable or better HCV RNA reduction with
fewer side effects compared to current standard of care, thus enabling
more patients to tolerate and complete the full treatment regimen, rather
than quit due to discomfort or side
effects.
|
|
·
|
The
INFRADURE Biopump may provide better HCV RNA control because it will
continuously provide the therapeutic effect, without the “drop out”
periods between scheduled injections, which can be
missed.
|
|
·
|
The
INFRADURE Biopump may provide longer lasting HCV RNA reduction,
particularly if the production of
IFN-α continues at
tolerable levels beyond
six
months.
|
|
·
|
With
low inherent costs and without needing a protein production plant to
provide manufactured injected interferons as used in Pegasys and
Peg-Intron, we believe the INFRADURE Biopump will be able to offer a
significant cost savings in providing a comparable or superior treatment
to these or to Medtronic’s mini-infusion pump which requires refilling of
expensive interferon.
|
|
·
|
The INFRADURE
Biopump may require only a single treatment to provide at least six months
of INF-α therapy, instead of multiple treatments, which could
reduce clinic visits and save attendant
costs.
|
|
·
|
DAAs projected to be very
expensive
- New DAAs are expected to far more expensive than
current treatment based on IFN-
α
.
|
|
·
|
Doubt that DAAs alone can
eradicate HCV
– Members of our Strategic Advisory Board report a
growing skepticism among hepatology experts that DAAs alone will eradicate
HCV in most patients without immune support by IFN-
α
. An
immunomodulatory role is likely needed, to be provided by some form of
IFN-
α
therapy.
|
|
·
|
Additional side effects,
concerns over possible new mutant strains of HCVs
- DAAs can cause
new side effects including severe burns and itching, and could “select”
for new mutant HCV virus that survive the DAAs, like bacterial “superbugs”
that survive antibiotics.
|
|
·
|
INFRADURE Biopump could be
preferred by payors
- Combined with today’s antiviral agent
Ribavirin, we believe the INFRADURE Biopump could potentially provide
first-line treatment preferred by CMS and other payors if clinical studies
show it is safer and more tolerable with same or better efficacy than
currently by administering IFN-
α
therapy. DAAs could then be a supportive secondary line
treatment, possibly as add-on to the INFRADURE
Biopump.
|
|
·
|
DAAs are not being tested as
monotherapy, but together with IFN-
α
- DAA developers have focused on co-administration with IFN-
α
with their
clinical trials.
|
|
·
|
INFRADURE Biopump fits most of
the hepatitis C market
– The INFRADURE Biopump has greater
potential for use in most countries where hepatitis C is rampant, due to
its potentially much lower cost than current standard of
care.
|
|
1.
|
Select
disease condition and protein therapeutic for application for FDA
approval
|
|
2.
|
Conduct
pre-pre-IND (Investigative New Drug application) meeting with FDA to
clarify preclinical requirements and outline of the clinical
protocol
|
|
3.
|
Collect
preclinical data, and pursue either
|
|
a.
|
Non-U.S.
phase I/II: obtain approval by Israeli Ministry of Health, or
equivalent in other country
|
|
b.
|
U.S.
phase I/II: present at pre-IND meeting, complete IND and obtain
FDA approval to conduct Phase I/II for that selected disease
condition
|
|
4.
|
Conduct
the phase I/II study, with preference generally in Israel, where Medgenics
can provide maximal support
|
|
5.
|
Submit
IND for phase IIb in U.S. based on data of the phase I/II for the selected
disease condition, supportive data from previous Biopump clinical trials,
and preclinical and
in
vitro
data
|
|
6.
|
Obtain
IND approval, conduct phase IIb in
U.S.
|
|
7.
|
Complete
review, obtain IND to conduct phase III in
U.S.
|
|
8.
|
Submit
BLA (Biologic License Application) for product
sales
|
|
·
|
reliable
preparation of Biopumps processed in sealed
cassettes;
|
|
·
|
titration
of the administered dose as needed to reach the desired therapeutic effect
in each patient, like in intended clinical use, whether increasing dose by
addition of further Biopumps, or reducing it via ablation of one of more
of those implanted;
|
|
·
|
demonstration
of same or better maintenance of hemoglobin within specified range;
and
|
|
·
|
fewer
interventions during the specified time interval (currently planning for
six-month duration).
|
Type
|
Number
|
Jurisdiction
|
Owner/Licensee
status
|
|||
Issued
patent
|
1
|
US
|
Yissum
*
|
|||
Issued
patent
|
3
|
Korea,
Singapore and Australia
|
Yissum
*
|
|||
Issued
patent
|
1
|
US
|
Medgenics
|
|||
Issued
patent
|
8
|
Non-US**
|
Medgenics
|
|||
Allowed
patent
|
1
|
Non-US**
|
Medgenics
|
|||
Patent
application
|
5
|
US
|
Yissum
*
|
|||
Patent
application
|
14
|
Non-US**
|
Yissum
*
|
|||
Patent
application
|
6
|
US
|
Medgenics
|
|||
Patent
application
|
26
|
Non-US**
|
Medgenics
|
*
|
licensed
exclusively (within the defined scope) to
us.
|
**
|
Variously,
Patent Co-operation Treaty signatory States, European Patent Organization
member States, Peoples’ Republic of China, Singapore, India, Australia,
Canada, Japan, Israel and/or South
Korea.
|
|
·
|
20
years from the date of making the first commercial sale of any product
utilizing Yissum’s technology under the License Agreement;
and
|
|
·
|
the
expiration of the last Yissum patent licensed to Medgenics, which is
expected to be approximately July
2022.
|
|
·
|
Preclinical
laboratory and animal tests performed under the FDA’s, usually in
compliance with FDA’s Good Laboratory Practices (GLP)
regulations;
|
|
·
|
Submissions
to the FDA of an Investigational New Drug (IND) application, which must
become effective before clinical trials may commence in the United
States;
|
|
·
|
Preliminary
clinical studies to evaluate the drug’s safety and effectiveness for its
intended uses under an IND, if conducted in the United
States;
|
|
·
|
FDA
review of whether the facility in which the product is manufactured,
processed, packed, or held meets standards designed to assure the
product’s continued quality; and
|
|
·
|
Submission
of a marketing application to FDA,
and
|
|
·
|
Approval
of the marketing application by the
FDA.
|
|
·
|
Fast
Track is a process designed to facilitate the development, and expedite
the review of biological products to treat serious diseases and fill an
unmet medical need by providing (1) more frequent meetings with FDA to
discuss product development, (2) more frequent written correspondence from
FDA about such things as the design of the proposed clinical trials, (3)
eligibility for Accelerated Approval, and (4) Rolling Review, allowing a
company to submit sections of its application for review by FDA, rather
than waiting until every section of the application is completed before
the entire application can be submitted for
review.
|
|
·
|
Accelerated
Approval allows earlier approval of biological products to treat serious
diseases, and that fill an unmet medical need based on a surrogate
endpoint, which can potentially reduce the time needed to conduct
trials. Where the FDA approves a product on the basis of a surrogate
marker, it requires the sponsor to perform post-approval, studies as a
condition of approval, and may withdraw approval if post-approval studies
do not confirm the intended clinical benefit or safety of the
product. Special rules would also apply to the submission to
the FDA of advertising and promotional materials prior to
use.
|
|
·
|
Priority
Review designation is given to biological products that offer major
advances in treatment, or provide a treatment where no adequate therapy
exists. A Priority Review means that the time it takes FDA to review
an application is reduced. The goal for completing a Priority Review
is six months. Priority Review
status can apply
both to products that are used to treat serious diseases and to products
for less serious illnesses.
|
Name
|
Age
|
Position
|
||
Eugene
Andrew Bauer, M.D.
|
68
|
Executive
Chairman of the Board of Directors
|
||
Andrew
Leonard Pearlman, Ph.D.
|
59
|
Chief
Executive Officer, President and Director
|
||
Stephen
Bellomo
|
42
|
Chief
Operating Officer
|
||
Baruch
Stern
|
51
|
Chief
Scientific Officer
|
||
Phyllis
Bellin
|
61
|
Director
of Finance and Administration, Treasurer and Secretary
|
||
Joel
Stephen Kanter
|
53
|
Director
|
||
Gary
Allan Brukardt
|
64
|
Director
|
||
Stephen
Devon McMurray, M.D.
|
63
|
Director
|
||
Alastair
Clemow, Ph.D.
|
59
|
Director
|
Name and Principal
Position
|
Year
|
Salary(*)
($)
|
Bonus(**)
($)
|
All other
Compensation
|
Total
($)
|
|||||||||||||
Andrew
L. Pearlman
|
2009
|
198,600 | 62,500 | 34,489 | 1 | 295,589 | ||||||||||||
President
and Chie
f
Executive Officer
|
2008
|
331,076 | 62,500 | 42,972 | 2 | 436,548 | ||||||||||||
Stephen
Bellomo
|
2009
|
99,146 | 17,500 | 31,228 | 3 | 147,874 | ||||||||||||
Chief
Operating Officer
|
2008
|
129,418 | 17,500 | 39,496 | 4 | 186,414 | ||||||||||||
Baruch
Stern
|
2009
|
95,673 | 15,000 | 37,544 | 5 | 148,217 | ||||||||||||
Chief
Scientific Officer
|
2008
|
136,568 | 15,000 | 40,480 | 6 | 192,048 | ||||||||||||
Phyllis
Bellin
|
2009
|
90,378 | 15,000 | 27,801 | 7 | 133,180 | ||||||||||||
Director
of Finance and
Administration
|
2008
|
110,678 | 15,000 | 34,270 | 8 | 159,948 |
*
|
In
2009, the employees took a voluntary pay cut from March through
September.
|
**
|
Bonuses
had been accrued as of December 31, 2009 and were paid in
2010.
|
1
|
Includes
$26,010 for managers insurance, $4,878 for disability insurance and $3,601
for the advanced study fund.
|
2
|
Includes
$33,248 for managers insurance, $5,759 for disability insurance, and
$3,965 for the advanced study fund.
|
3
|
Includes
$13,031 for managers insurance, $606 for disability insurance, $3,601 for
the advanced study fund and $13,990 for car
allowance.
|
4
|
Includes
$17,985 for managers insurance, $836 for disability insurance, $3,965 for
the advanced study fund and $16,710 for car
allowance.
|
5
|
Includes
$12,601 for managers insurance, $2,363 for disability insurance, $3,601
for the advanced study fund and $18,979 for car
allowance.
|
6
|
Includes
$16,819 for managers insurance, $3,154 for disability insurance, $3,965
for the advanced study fund and $16,542 for car
allowance.
|
7
|
Includes
$11,850 for managers insurance, $889 for disability insurance, $3,601 for
the advanced study fund and $11,462 for car
allowance.
|
8
|
Includes
$14,402 for managers insurance, $1,080 for disability insurance, $3,965
for the advanced study fund and $14,823 for car
allowance.
|
Option Awards
|
|||||||||||||||||
Name
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
Exercise Price
($)
|
Expiration Date
|
|||||||||||||
Andrew
L.
Pearlman
|
Options
|
6,398,216 | — | 0.071 |
03/30/2011*
|
||||||||||||
Options
|
1,599,549 | 1,599,548 | 0.21 |
11/14/2012
|
|||||||||||||
Warrants
|
31,681,652 | — | 0.071 |
03/31/2011*
|
|||||||||||||
Warrants
|
1,257,285 | — | 0.0000047 |
03/31/2011
|
|||||||||||||
Total
|
40,936,702 | 1,599,548 | |||||||||||||||
Stephen
Bellomo
|
Options
|
748,702 | 748,702 | 0.12 |
05/16/2012
|
||||||||||||
Options
|
18,595 | 15,594 | 0.21 |
11/14/2012
|
|||||||||||||
Total
|
764,297 | 764,296 | |||||||||||||||
Baruch
Stern
|
Options
|
1,283,489 | 427,830 | 0.071 |
05/11/2011
|
||||||||||||
Options
|
380,298 | 190,149 | 0.21 |
11/14/2012
|
|||||||||||||
Warrants
|
400,021 | — | 0.00047 |
03/31/2011
|
|||||||||||||
Total
|
2,063,808 | 617,979 | |||||||||||||||
Phyllis
Bellin
|
Options
|
1,066,366 | — | 0.071 |
05/11/2011
|
||||||||||||
Options
|
244,376 | 244,377 | 0.210 |
11/14/2012
|
|||||||||||||
Total
|
1,310.742 | 244,377 |
|
(a)
|
if
the termination of service was due to any reason other than death or
disability – for the shorter of 90 days from the date of termination of
service and the unexpired term of the
option;
|
|
(b)
|
if
the termination of service was due to death or disability of the option
holder – for the shorter of one year from the date of termination of
service and the unexpired term of the
option;
|
|
An
award agreement may (but need not) provide
that:
|
|
(a)
|
within
12 months of a change of control affecting us, in the case of an option or
an SAR; or
|
|
(b)
|
within
such period as the award agreement shall specify, in the case of a
restricted share award.
|
|
(a)
|
no
sale, assignment, transfer, pledging or other dealing with the relevant
common stock may be undertaken until the applicable restriction,
performance condition or other deferral period has
lapsed;
|
|
(b)
|
the
recipient of the award shall be entitled to receive interest, dividends or
dividend equivalents with respect to the underlying shares of common stock
or other securities covered by the
award;
|
|
If
the vesting of the award is conditional upon achievement of certain
performance measurements and a change of control shall occur in relation
to our company then:
|
|
(i)
|
if
the actual level of performance shall, by reference to the performance
measurement specified in the award agreement, be less than 50% at the time
of the change of control, then the award shall become vested and
exercisable in respect of a proportion of the award where the numerator
shall be equal to the percentage of attainment and the denominator shall
be 50%; and
|
|
(ii)
|
if
the actual level of performance shall be, by reference to the performance
measurement specified in the award agreement, at least 50% at the time of
the change of control, then such award shall become fully vested and
exercisable.
|
|
(a)
|
the
2006 Stock Plan and all awards granted under it shall be interpreted,
construed and enforced in accordance with the laws of the State of
Delaware;
|
|
(b)
|
the
Committee has power and authority to amend the 2006 Stock Plan, provided
that no termination or amendment of the 2006 Stock Plan may, without
consent of an award holder, materially and adversely affect the rights of
the holder nor may the amendment materially increase the aggregate number
of securities which may be issued under the 2006 Stock Plan (other than
under the adjustment provisions referred to above) or materially modify
the requirements for participation in the 2006 Stock Plan, unless the
relevant amendment is approved by a majority of the Shareholders;
and
|
|
(c)
|
the
Committee has the right to terminate the 2006 Stock Plan at any time for
any reason but the termination of the 2006 Stock Plan shall not affect any
awards outstanding at the time of
termination.
|
|
(a)
|
The
ISOP shall be governed by and construed and enforced in accordance with
the laws of Israel, provided that, to the extent required under law, all
matters concerning option holders and the grant of options under the ISOP
shall be subject to the tax laws of the state of Israel. The competent
courts for the purposes of the ISOP shall be the courts of Tel
Aviv-Jaffa.
|
|
(b)
|
With
regards to approved 102 Options, the provisions of the 2006 Stock Plan
and/or the ISOP and/or the relative award agreement shall be subject to
the provisions of the applicable Israeli tax ordinance, the tax assessing
officer’s permit and/or any pre-rulings obtained from the Israeli tax
authorities.
|
|
·
|
Any
transaction from which the director derived an improper personal
benefit;
|
|
·
|
Acts
of omissions not in good faith or which involve intentional misconduct or
a knowing violation of law; or
|
|
·
|
Voting
or assenting to unlawful payments of dividends or other
distributions.
|
Plan Category
|
Number of shares
to Be Issued Upon
Exercise of
Outstanding
Options
1
|
Weighted Average
Exercise Price of
Outstanding
Options
|
Number of Shares
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in Column(a))
|
||||||
(a)
|
(b)
|
I
|
|||||||
Equity
compensation plans approved
by
security holders
|
39,025,288
|
0.13
|
9,469,284
|
|
·
|
Each
of our directors and named executive
officers;
|
|
·
|
All
of our directors and executive officers as a group;
and
|
|
·
|
Each
person or group of affiliated persons, known to us to beneficially own 5%
or more of our outstanding common
stock.
|
|
·
|
The
automatic conversion of all of our outstanding 2009 Debentures into an
aggregate of 4,750,000 shares of common stock upon the completion of this
offering and the issuance of warrants to purchase 1,662,500 shares of
common stock in connection with such
conversion;
|
|
·
|
The
automatic conversion of all of our outstanding 2010 Debentures into an
aggregate of 20,000,000 shares of common stock upon the completion of this
offering (based on the currency exchange ratio of 1.58 U.S. dollar to 1
British Pound sterling as of September 30,
2010);
|
|
·
|
No
exercise of warrants or options outstanding on the date of this
prospectus, except as specifically set forth herein;
and
|
|
·
|
a
-for- reverse stock split of our common stock to be
effected prior to the completion of this
offering.
|
Shares Beneficially Owned
Prior to Offering
|
Shares Beneficially Owned
After the Offering
|
|||||||||||
Name
|
Number
|
Percentage
|
Number
|
Percentage
|
||||||||
Named
Executive Officers and Directors
|
||||||||||||
Eugene
Bauer
(1)
|
8,755,090 | 4.7 | % | |||||||||
Phyllis
Bellin
(2)
|
2,032,961 | 1.1 | % | |||||||||
Stephen
Bellomo
(3)
|
1,520,795 | * | ||||||||||
Gary
Brukardt
(4)
|
5,758,403 | 3.1 | % | |||||||||
Alastair
Clemow
|
-0- | * | ||||||||||
Joel
Kanter
(5)
|
7,018,203 | 3.8 | % | |||||||||
Stephen
McMurray
(6)
|
3,697,929 | 2.0 | % | |||||||||
Andrew
Pearlman
(7)
|
42,974,661 | 19.4 | % | |||||||||
Baruch
Stern
(8)
|
2,681,787 | 1.5 | % | |||||||||
Directors
and Executive Officers
as
a group
(9)
|
72,815,270 |
30.7
|
% | |||||||||
5%
Stockholders
|
||||||||||||
Estate
of Lord Leonard Steinberg (deceased)
(10)
Beryl
Steinberg
20
Carrwood,
Halebarns,
Cheshire WA15 0EE
|
24,285,049 | 13.2 | % | |||||||||
Platinum
Montaur Life Sciences I LLC
(11)
Carnegie
Hall Tower
152
West 57
th
Street, 54
th
Floor
New
York, New York 10019
|
10,398,932 | 5.7 | % | |||||||||
Vision
Opportunity Master Fund Ltd
(12)
20W
55
th
Street, 5
th
Floor
New
York, New York 10019
|
16,827,979 | 8.9 | % | |||||||||
River
Charitable Remainder
Unitrust
f/b/o Isaac Blech
(13)
75
Rockefeller Center
29
th
Floor
New
York, New York 10019
|
18,812,500 | 10.0 | % | |||||||||
CIBC
Trust Company (Bahamas) Limited
(14)
Goodman’s
Bay Corporate Centre
Ground
Floor
West
Bay Street
P.O.
Box N-3933
Nassau,
Bahamas
|
12,440,177 | 6.9 | % | |||||||||
Joshua
Kanter
(15)
7090
Union Park Avenue
Suite
460
Salt
Lake City, Utah 84047
|
22,727,871 | 12.6 | % | |||||||||
Chicago
Investments, Inc.
(16)
8000
Towers Crescent
Dr
ive
Suite
1300
Vienna
,
V
irginia
22182
|
22,101,866 | 12.3 | % |
*
|
Represents
less than 1%.
|
(1)
|
Includes
3,199,097 options at $0.071 per share expiring on 3/30/11 and 2,881,434
options at $0.210 per share expiring on
11/14/12.
|
(2)
|
Includes
1,066,366 options at $0.071 per share expiring on 5/11/11, 366,564 options
at $0.210 per share expiring on 11/14/12 and 600,031 warrants having an
exercise price of $0.071 per share and expiring on
3/31/11.
|
(3)
|
Includes
1,497,404 options at $0.117 per share expiring on 5/16/12, and 23,391
options at $0.210 per share expiring on
11/14/12.
|
(4)
|
Includes
1,599,549 options at $0.071 per share expiring on 9/18/11, 934,680 options
at $0.210 per share expiring on 11/14/12 and 2,117,758 warrants having an
exercise price of $0.071 per share and expiring on
6/21/11.
|
(5)
|
Included
in the interests of Joel Kanter are his interests
in:
|
|
(i)
|
2,497,233
shares of common stock, 168,750 shares issuable upon assumed conversion of
2009 Debentures and related warrants, 500,000 shares issuable upon assumed
conversion of 2010 Debentures, and 96,413 warrants having an exercise
price of $0.25 per share and expiring on 2/13/12 and 375,000 warrants
having an exercise price of 16 pence and expiring on 9/22/15 held by the
Kanter Family Foundation, an Illinois not-for-profit corporation of which
Joel Kanter is the President and is a Director and over which he exercises
sole voting and investment control, but he disclaims any and all
beneficial ownership of securities owned by such
entity;
|
|
(ii)
|
48,148
shares of common stock held by Windy City, Inc.
, a
closely-held corporation of which Joel Kanter is the President and is a
Director and over which he exercises sole voting and investment control,
but he disclaims any and all beneficial ownership of securities owned by
such entity
; and
|
|
(iii)
|
1,708,110
options at $0.210 per share expiring on
3/30/11.
|
(6)
|
Includes
1,156,830 options at $0.210 per share expiring on 11/14/12 and 56,250
shares issuable upon assumed conversion of 2009 Debentures and related
warrants.
|
(7)
|
Includes
6,398,216 options at $0.071 per share expiring on 3/30/16, 2,399,323
options at $0.210 per share expiring on 11/14/12 and 31,681,652 warrants
having an exercise price of $0.71 per share and expiring on 3/31/16 held
directly by Dr. Pearlman. Also includes 3,316 shares of common stock held
by Dr. Pearlman’s wife and 60,174 shares of common stock and 1,257,285
warrants having an exercise price of $0.0000047 per share expiring on
3/31/16 held by ADP Holding, an entity controlled by Dr.
Pearlman.
|
(8)
|
Includes
1,711,319 options at $0.071 per share expiring on 5/11/11, 570,447 options
at $0.21 per share expiring on 11/14/12, and 400,021 warrants having an
exercise price of $0.0005 per share and expiring on
3/31/11.
|
(9)
|
Footnotes
(1) through (8) are incorporated
herein.
|
(10)
|
Includes
570,445 options at 2.875 pence per share expiring on 12/1/13, 1,145,964
warrants having an exercise price of $0.164 per share and expiring on
5/31/12, 763,997 warrants having an exercise price of $0.164 per share and
expiring on 12/4/12, 832,423 warrants having an exercise price of $0.194
per share and expiring on 12/4/12, 450,000 warrants having an exercise
price of $0.25 per share and expiring on 1/30/12, and 1,912,500
shares issuable upon assumed conversion of 2009 Debentures and related
warrants.
|
(11)
|
Includes
1,604,362 warrants having an exercise price of $0.164 per share and
expiring on 8/13/12 and 1,604,362 warrants having an exercise price of
$0.164 per share and expiring on
12/4/12.
|
(12)
|
Includes
7,059,192 warrants having an exercise price of $0.071 per share and
expiring on 3/31/11 and 2,673,936 warrants having an exercise price of
$0.117 per share and expiring on
10/23/11.
|
(13)
|
Includes
10,750,000 shares issuable upon assumed conversion of 2010 Debentures and
8,062,500 warrants having an exercise price of 16 pence and expiring on
9/22/15.
|
(14)
|
Includes
10,655,177 shares of common stock, 450,000 shares issuable upon
assumed conversion of 2009 Debentures and related warrants, 500,000 shares
issuable upon assumed conversion of 2010 Debentures, 450,000 warrants
having an exercise price of $0.25 per share and expiring on 1/30/12 and
375,000 warrants having an exercise price of 16 pence and expiring on
9/22/15 held by CIBC Trust Company (Bahamas) Limited (“CIBC”), as trustee
of a trust (the “CIBC Trust”). Sole voting and investment control of
our common stock owned by the CIBC Trust is vested in CIBC as trustee of
the CIBC Trust.
|
(15)
|
Included
in the interests of Joshua Kanter are his interests
in:
|
|
(i)
|
20,933,116
shares of our common stock, 731,250 shares issuable upon assumed
conversion of 2009 Debentures and related warrants, 250,000 shares
issuable upon assumed conversion of 2010 Debentures, and 187,500 warrants
having an exercise price of 16 pence and expiring on 9/22/15 held by
Chicago Investments, Inc. (“CII”). Sole voting and investment
control of our common stock owned by CII is vested in Joshua Kanter (who
is the brother of Joel Kanter), as President and a director of CII,
but he disclaims any and all beneficial ownership of securities owned by
such entity; and
|
|
(ii)
|
197,917
shares of our common stock held by Chicago Private Investments, Inc
(“CPI”). Sole voting and investment control of our common stock
owned by CPI is vested in Joshua Kanter, as President and a director of
CPI, but he disclaims any and all beneficial ownership of securities owned
by such entity.
|
(16)
|
The
shares of common stock owned by CII are also included in the ownership of
Joshua Kanter described above.
|
|
·
|
before
the stockholder became interested, the Board of Directors approved either
the business combination or the transaction which resulted in the
stockholder becoming an interested
stockholder.
|
|
·
|
upon
completion of the transaction which resulted in the stockholder becoming
an interested stockholder, the interested stockholder owned at least 85%
of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding for purposes of determining the voting
stock outstanding shares owned by persons who are directors and also
officers, and employee stock plans, in some instances;
or
|
|
·
|
at
or after the time the stockholder became interested, the business
combination was approved by the Board of Directors of the corporation and
authorized at an annual or special meeting of the stockholders by the
affirmative vote of at least two-thirds of the outstanding voting stock
which is not owned by the interested
stockholder.
|
|
·
|
stockholders
will not be entitled to remove directors other than by a 66 2/3% vote and
only for cause;
|
|
·
|
stockholders
will not be permitted to take actions by written
consent;
|
|
·
|
stockholders
cannot call a special meeting of stockholders;
and
|
|
·
|
stockholders
must give advance notice to nominate directors or submit proposals for
consideration at stockholder
meetings.
|
|
·
|
116,439,050
shares for issuance in connection with warrants outstanding as of
September 30, 2010, which includes reservation of 133% of the number of
shares exercisable under the warrants issued in connection with the 2010
Debentures,
|
|
·
|
45,896,779
shares for issuance in connection with options outstanding as of September
30, 2010, of which options to purchase 28,137,388 shares were
exercisable as of such date,
|
|
·
|
shares
for issuance in connection with the warrants to be issued to the
underwriters in connection with this offering (see
“Underwriting—Underwriters’
Warrants”),
|
|
·
|
shares
for issuance in connection with the warrants to be issued to the holders
of the 2009 Debentures and to Newbridge Securities Corporation, the
placement agent in connection with the original issuance of the 2009
Debentures, as part of the automatic conversion of the 2009 Debentures
(see “—Convertible Notes”), and
|
|
·
|
14,603,221
shares available for issuance in connection with our 2006 Stock Incentive
Plan.
|
|
•
|
1%
of shares of our common stock then
outstanding; or
|
|
•
|
the
average weekly trading volume of shares of our common stock on the NYSE
Amex during the four calendar weeks preceding the date on which notice of
the sale is filed with the SEC.
|
Underwriters
|
Number of Shares
|
|||
Roth
Capital Partners, LLC
|
||||
Maxim
Group LLC
|
||||
Total
|
Fee per share
1
|
Total Without
Exercise of
Over-Allotment
|
Total With
Exercise of Over-
Allotment
|
||||||||||
Public
offering price
|
$ | $ | $ | |||||||||
Discount
|
$ | $ | $ |
|
·
|
Stabilizing
transactions permit bids to purchase the underlying security so long as
the stabilizing bids do not exceed a specified
maximum.
|
|
·
|
Over-allotment
involves sales by the underwriters of shares in excess of the number of
shares the underwriters are obligated to purchase, which creates a
syndicate short position. The short position may be either a covered short
position or a naked short position. In a covered short position, the
number of shares over-allotted by the underwriter is not greater than the
number of shares that it may purchase in the over-allotment option. In a
naked short position, the number of shares involved is greater than the
number of shares in the over-allotment option. The underwriter may close
out any covered short position by either exercising its over-allotment
option and/or purchasing shares in the open
market.
|
|
·
|
Syndicate
covering transactions involve purchases of shares of the
common stock
in the open market after the distribution has been completed in order to
cover syndicate short positions. In determining the source of shares to
close out the short position, the underwriters will consider, among other
things, the price of shares available for purchase in the open market as
compared to the price at which it may purchase shares through the
over-allotment option. If the underwriters sell more shares than could be
covered by the over-allotment option, a naked short position, the position
can only be closed out by buying shares in the open market. A naked short
position is more likely to be created if the underwriters are concerned
that there could be downward pressure on the price of the shares in the
open market after pricing that could adversely affect investors who
purchase in the offering.
|
|
·
|
Penalty
bids permit the representative to reclaim a selling concession from a
syndicate member when the
common stock
originally sold by the syndicate member is purchased in a stabilizing or
syndicate covering transaction to cover syndicate short
positions.
|
“ablated”
|
the
destruction of the function of a biological tissue
|
“adenoviral
vector”
|
a
non-replicating adeno virus genetically modified to include a therapeutic
gene, which it carries into the cells it infects. Adenoviral
vectors can be produced in high titers, efficiently infect a broad range
of cell types and can infect both dividing and non-dividing
cells. These vectors are also widely reported to have toxic
effects on the cells they infect and to be immunogenic due to the
production of immunogenic viral proteins by cells transduced with this
vector, which are recognized and attacked by the immune
system
|
“adeno
virus”
|
any
of a group of DNA-containing viruses that typically cause intestinal
infections, respiratory illnesses, conjunctivitis or upper respiratory
tract infections in humans
|
“assay”
|
the
analysis done to determine the presence of a substance and the amount of
that substance
|
“autologous”
|
derived
or transferred from the same individual's body
|
“BCM”
|
The
Baylor College of Medicine, Houston, Texas
|
“Biopump”
|
an
MO which has undergone
ex vivo
transduction
with a vector
|
“Biopump
Platform Technology”
|
collectively,
our technology to provide protein therapy using autologous Biopumps,
including the means to prepare and use them, harvesting tissue dermal
samples,
ex vivo
transduction of tissue samples into Biopumps, reinsertion, dosing and
ablation of Biopumps
|
“bolus
injection(s)”
|
the
injection of a drug(s) at high concentration/dosage level(s) in a brief
time interval
|
“capsid”
|
the
protein shell of a virus
|
“clean
room”
|
A
laboratory with a specially filtered air environment to reduce particle
count to meet applicable standards
|
“CBER”
|
the
FDA’s Center for Biologics Evaluation and Research
|
“Chief
Scientist” or “OCS”
|
the
office of the Chief Scientist of the Ministry of Industry, Trade and
Tourism of the State of Israel
|
“CKD”
|
chronic
kidney disease
|
“DNA”
|
deoxyribonucleic
acid
|
“dosing”
|
giving
of medicines in specific pre-measured quantities into a living being at
determined intervals
|
“EMEA”
|
the
European Medicines Agency, the European agency for the evaluation of
medicinal products
|
“EPO”
|
Erythropoietin,
a glycoprotein hormone that stimulates the production of red blood cells
by stem cells in bone marrow, produced mainly by the
kidneys
|
“EPODURE”
|
our
provisional trade name of our proprietary technology for sustained
production and delivery of EPO by means of a Biopump
|
“ESRD”
|
end
stage renal disease
|
“ex
vivo”
|
occurring
outside the body, e.g. in a laboratory, often referring to a portion of
the body, such as a tissue sample or organ that was removed from the
body
|
“FDA”
|
U.S.
Food and Drug Administration, the U.S. regulatory agency which grants
approvals to market drugs, biologics and medical
devices
|
“first
generation adenoviral vector”
|
an
adenoviral vector in which only a few viral genes have been deleted,
leaving most genes in place
|
“G-CSF”
|
granulocyte
colony-stimulating factor, a glycoprotein growth factor or cytokine
produced by a number of different body tissues, but most importantly by
white blood cells and bone marrow, to stimulate the bone marrow to produce
and proliferate certain types of white blood cells that are critical to
immune system function. G-CSF is frequently administered to
patients with immune systems that have been weakened by cancer therapy or
other disorders in order to bolster their immune system
|
“GLP”
|
Good
Laboratory Practice, as in compliance with requirements of the
FDA
|
“glycosylation”
|
the
addition of glycosyl groups to a protein to form a
glycoprotein. This natural process changes the three
dimensional structure of the protein, which can alter the activity of the
protein in the body
|
“GMP”
|
Good
Manufacturing Practice – regulation of the control and management of
manufacturing and quality control testing of foods and pharmaceutical
products. Compliance with GMP includes documentation of every
aspect of the process, activities and operations involved with drug and
medical device manufacture. GMP further requires that all
manufacturing and testing equipment have been qualified as suitable for
use and that all operational methodologies and procedures (such as
manufacturing, cleaning and analytical testing) utilized in the
manufacturing process have been validated according to predetermined
specifications in order to demonstrate that they can perform their
intended function(s)
|
“gutless
adenoviral vector”, “HDAd” or “Helper Dependent Adenoviral
vector”
|
an
adenoviral vector that has had all of the viral genes removed and
therefore cells transduced with this vector are not capable of producing
viral proteins. This vector is unable to replicate without a
helper virus because its replication machinery has been removed, along
with nearly everything else—save its ends, the therapeutic DNA and the DNA
sequence that enables it to package the newly replicated DNA into new
virus particles
|
“hematocrit”
|
the
ratio of the volume occupied by packed red blood cells to the volume of
the whole blood
|
“hemoglobin”
|
a protein
that gives red blood cells their color and combines reversibly with oxygen
and is thus very important in the transportation of oxygen to
tissues
|
“half-life”
|
the
time by which the concentration of a substance taken into the body has
lost one half its
concentration
|
“HCV”
|
hepatitis
C virus
|
“helper
virus”
|
a kind
of virus used during production of gutless vectors, such as the gutless
adenoviral vector. The helper virus produces missing viral
proteins needed to produce the gutless adenoviral vector, which lacks the
genes to make the proteins it needs
|
“hGH”
|
human
Growth Hormone
|
“IFN-α
”
|
Interferon
alpha – an interferon produced by white blood cells that inhibits viral
replication and suppresses cell proliferation
|
“IND”
|
investigational
new drug application process of the FDA
|
“INFRADURE”
|
our
provisional trade name of our proprietary technology for delivering
IFN-α
by
means of a Biopump
|
“interferons”
|
natural
proteins produced by the cells of the immune system in response to
challenges by foreign agents such as viruses, bacteria, parasites and
tumour cells
|
“in
vitro”
|
made
to occur in a laboratory vessel (e.g. test-tube) or other controlled
experimental environment rather than within a living organism or natural
setting
|
“in
vivo”
|
occurring
within the body of an animal or person
|
“MO”
|
micro
organ, in the context of this prospectus, a toothpick-size sliver of
dermal tissue that is harvested in such a way that it creates a unique
tissue structure with long-term viability
ex
vivo
. More generally, an MO can be made from other
tissues, and need not necessarily be limited to dermal
tissue
|
“neutropenia”
|
a
potentially life-threatening hematological disorder characterized by an
abnormally low number of a certain type of white blood
cells
|
“NIH”
|
United
States National Institute of Health
|
“NIS”
|
new
Israeli Shekels, the official currency of Israel
|
“PRCA”
|
pure
red cell aplasia; an autoimmune condition in which red blood cell
precursors in a person’s bone marrow are nearly absent
|
“prophylactic”
|
a
medication or a treatment designed and used to prevent a disease from
occurring
|
“recombinant
protein”
|
a
protein whose amino acid sequence is encoded by a cloned
gene
|
“reticulocyte”
|
an
immature red blood cell produced in the bone marrow; all red
blood cells arise from reticulocytes
|
“SCID
mice”
|
severe
combined immune deficiency mice, which are devoid of an active immune
system, and which are used to enable
in vivo
testing of
implanted or administered agents or drugs that otherwise would be rejected
by test animals whose immune system is
intact
|
“therapeutic
window”
|
the
desired range of concentration of a drug or agent in the patient’s blood,
below which the drug undershoots (i.e. is ineffective) and above which the
drug overshoots (i.e. there are safety issues)
|
“titer”
|
a
measurement of the amount or concentration of a substance in a
solution
|
“transduction”
|
the
transfer of genetic material from one cell to another by viral
infection
|
“vector”
|
a
molecular mechanism for transferring genetic material into cells to
transduce them, typically comprising genetically modified virus or
non-viral sequences of DNA
|
“viral
vector”
|
a
type of virus used in protein therapy and in cancer therapy, which has
been modified to include a gene of choice for transfer into target cells
or tissue
|
“washing”
|
in
the context of this prospectus,
ex vivo
processing of
Biopumps in order to reduce the number of free vector particles to near
zero, involving repeated cycles of agitation in the presence of fresh
medium
|
“Yissum”
|
Yissum
Research Development Company of the Hebrew University of
Jerusalem
|
Medgenics, Inc. Consolidated Financial Statements |
Page
|
|
Report
of Independent Registered Public Accounting Firm
|
F-2
|
|
Consolidated
Balance Sheets as of December 31, 2008 and 2009 and as of June 30, 2010
(unaudited)
|
F-3
- F-4
|
|
Consolidated
Statements of Operations for the years ended December 31, 2008 and 2009
and for the six months periods ended June 30, 2009 and 2010 (unaudited)
and for the period from January 27, 2000 (inception) through
June 30, 2010 (unaudited)
|
F-5
|
|
Statements
of Changes in Stockholders Equity (Deficit) for the period from January
27, 2000 (inception) through December 31, 2009 and for the six months
ended June 30, 2010 (unaudited)
|
F-6
- F-13
|
|
Consolidated
Statements of Cash Flows for the years ended December 31, 2008 and 2009
and for the six months periods ended June 30, 2009 and 2010 (unaudited)
and for the period from January 27, 2000 (inception) through June 30, 2010
(unaudited)
|
F-14
- F-15
|
|
Notes
to the Consolidated Financial Statements
|
|
F-16 - F-46
|
|
Kost
Forer Gabbay & Kasierer
2
Pal-Yam Ave.
Haifa
33095, Israel
Tel: 972 (4)8654000
Fax:
972 (3)5633434
www.ey.com/il
|
/s/
KOST FORER GABBAY & KASIERER
|
|
KOST
FORER GABBAY & KASIERER
|
|
A
Member of Ernst & Young
Global
|
CONSOLIDATED
BALANCE SHEETS
|
U.S.
dollars in thousands
|
|
December 31,
|
June 30,
|
|||||||||||||
Note
|
2008
|
2009
|
2010
|
||||||||||||
(Unaudited)
|
|||||||||||||||
ASSETS
|
|||||||||||||||
CURRENT
ASSETS:
|
|||||||||||||||
Cash
and cash equivalents
|
3
|
$ | 1,043 | $ | 470 | $ | 1,363 | ||||||||
Accounts
receivable and prepaid expenses
|
4
|
122 | 11 | 212 | |||||||||||
Total
current assets
|
1,165 | 481 | 1,575 | ||||||||||||
LONG-TERM
ASSETS:
|
|||||||||||||||
Restricted
lease deposit and prepaid expenses
|
8(e)
|
45 | 39 | 32 | |||||||||||
Severance
pay fund
|
171 | 261 | 247 | ||||||||||||
216 | 300 | 279 | |||||||||||||
PROPERTY
AND EQUIPMENT, NET
|
5
|
400 | 303 | 253 | |||||||||||
PREPAID
ISSUANCE EXPENSES
|
- | - | 109 | ||||||||||||
Total
assets
|
$ | 1,781 | $ | 1,084 | $ | 2,216 |
CONSOLIDATED
BALANCE SHEETS
|
U.S.
dollars in thousands (except share and per share
data)
|
|
December 31,
|
June 30,
|
||||||||||||
Note
|
2008
|
2009
|
2010
|
|||||||||||
(Unaudited)
|
||||||||||||||
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
||||||||||||||
CURRENT
LIABILITIES:
|
||||||||||||||
Short-term
bank credit
|
$ | 53 | $ | - | $ | - | ||||||||
Trade
payables
|
6
|
889 | 947 | 824 | ||||||||||
Advance
payment
|
1(c)
|
- | 783 | 678 | ||||||||||
Other
accounts payable and accrued expenses
|
7
|
1,068 | 1,690 | 1,197 | ||||||||||
Total
current liabilities
|
2,010 | 3,420 | 2,699 | |||||||||||
LONG-TERM
LIABILITIES:
|
||||||||||||||
Accrued
severance pay
|
819 | 991 | 995 | |||||||||||
Convertible
debentures
|
10
|
- | 1,013 | 992 | ||||||||||
Total
long-term liabilities
|
819 | 2,004 | 1,987 | |||||||||||
Total
liabilities
|
2,829 | 5,424 | 4,686 | |||||||||||
COMMITMENTS
AND CONTINGENCIES
|
8
|
|||||||||||||
STOCKHOLDERS'
DEFICIT:
|
9
|
|||||||||||||
Common
shares - $0.0001 par value; 500,000,000 shares authorized; 106,728,195
shares, 122,174,027 shares and 154,727,554 (unaudited) shares issued and
outstanding at December 31, 2008 and 2009 and June 30,
2010, respectively
|
10 | 11 | 14 | |||||||||||
Additional
paid-in capital
|
29,109 | 30,384 | 32,824 | |||||||||||
Receipts
on account of shares
|
150 | 25 | - | |||||||||||
Deficit
accumulated during the development stage
|
(30,317 | ) | (34,760 | ) | (35,308 | ) | ||||||||
Total
stockholders' deficit
|
(1,048 | ) | (4,340 | ) | (2,470 | ) | ||||||||
Total
liabilities and stockholders' deficit
|
$ | 1,781 | $ | 1,084 | $ | 2,216 |
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
U.S.
dollars in thousands (except share and per share
data)
|
Year ended December 31
|
Six months ended
June 30,
|
Period from January
27, 2000 (inception)
through
|
||||||||||||||||||||
Note
|
2008
|
2009
|
2009
|
2010
|
June 30, 2010
|
|||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||
Research
and development expenses
|
$ | 3,518 | $ | 2,267 | $ | 1,283 | $ | 1,366 | $ | 22,444 | ||||||||||||
Less
- Participation by the Office of the Chief Scientist
|
2(l)
|
(1,336 | ) | (488 | ) | (293 | ) | (238 | ) | (3,966 | ) | |||||||||||
Participation
in research and development from third party
|
1(c)
|
- | (90 | ) | - | (432 | ) | (522 | ) | |||||||||||||
Research
and development expenses, net
|
2,182 | 1,689 | 990 | 696 | 17,956 | |||||||||||||||||
General
and administrative expenses
|
2,819 | 2,534 | 1,199 | 1,111 | 18,180 | |||||||||||||||||
Other
income:
|
||||||||||||||||||||||
Excess
amount
of
participation
in
research and development from third party
|
1(c)
|
- | (327 | ) | - | (1,292 | ) | (1,619 | ) | |||||||||||||
Operating
income (loss)
|
(5,001 | ) | (3,896 | ) | (2,189 | ) | (515 | ) | (34,517 | ) | ||||||||||||
Financial
expenses
|
12
|
153 | 553 | 45 | 105 | 1,716 | ||||||||||||||||
Financial
income
|
12
|
(166 | ) | (10 | ) | (8 | ) | (72 | ) | (565 | ) | |||||||||||
Loss
before taxes on income
|
(4,988 | ) | (4,439 | ) | (2,226 | ) | (548 | ) | (35,668 | ) | ||||||||||||
Taxes
on income
|
11
|
4 | 1 | - | - | 71 | ||||||||||||||||
Loss
|
$ | (4,992 | ) | $ | (4,440 | ) | $ | (2,226 | ) | $ | (548 | ) | $ | (35,739 | ) | |||||||
Dividend
in respect of reduction in exercise price of certain
Warrants
|
7 | 3 | 3 | - | ||||||||||||||||||
Loss
attributable to Common
stockholders
|
$ | (4,999 | ) | $ | (4,443 | ) | $ | (2,229 | ) | $ | (548 | ) | ||||||||||
Basic
and diluted loss per share of Common stock
|
$ | (0.05 | ) | $ | (0.04 | ) | $ | (0.02 | ) | $ | (0.004 | ) | ||||||||||
Weighted
average number of shares of Common stock Used in computing basic and
diluted loss per share
|
106,447,604 | 117,845,867 | 111,249,104 | 135,958,955 |
STATEMENTS
OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
|
U.S.
dollars in thousands (except share
data)
|
Old Common stock
|
Series A
Preferred stock
|
Series B
Preferred stock
|
Additional
paid-in
capital
|
Deferred Stock
compensation
|
Deficit
accumulated
during the
development
stage
|
Total
stockholders'
equity
(deficit)
|
||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||||||||||||
Balance
as of January 27, 2000 (inception)
|
- | $ | - | - | $ | - | - | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||||||||||||
Issuance
of Old Common stock in January and March 2000 at par
value
|
2,069,677 | (* | ) | - | - | - | - | - | - | - | (* | ) | ||||||||||||||||||||||||||||
Issuance
of Old Common stock in August 2000 at $1.14 per share, net
|
437,936 | - | - | - | - | - | 500 | - | - | 500 | ||||||||||||||||||||||||||||||
Issuance
of Old Common stock in respect of license agreement in August
2000 at par value
|
940,950 | (* | ) | - | - | - | - | - | - | - | (* | ) | ||||||||||||||||||||||||||||
Loss
|
- | - | - | - | - | - | - | - | (681 | ) | (681 | ) | ||||||||||||||||||||||||||||
Balance
as of December 31, 2000
|
3,448,563 | (* | ) | - | - | - | - | 500 | - | (681 | ) | (181 | ) | |||||||||||||||||||||||||||
Stock
split effected as stock dividend
|
- | (* | ) | - | - | - | - | (* | ) | - | - | - | ||||||||||||||||||||||||||||
Issuance
of Preferred stock in January 2001 at $1.41 per share, net
|
- | - | 138,502 | (* | ) | - | - | 195 | - | - | 195 | |||||||||||||||||||||||||||||
Issuance
of Preferred stock in March and June 2001 at $1.67 per share,
net
|
- | - | 4,085,837 | (* | ) | - | - | 6,806 | - | - | 6,806 | |||||||||||||||||||||||||||||
Deferred
stock compensation
|
- | - | - | - | - | - | 248 | (248 | ) | - | - | |||||||||||||||||||||||||||||
Amortization
of deferred stock compensation
|
- | - | - | - | - | - | - | 41 | - | 41 | ||||||||||||||||||||||||||||||
Stock
based compensation expense related to options to
consultants
|
- | - | - | - | - | - | 511 | - | - | 511 | ||||||||||||||||||||||||||||||
Loss
|
- | - | - | - | - | - | - | - | (3,244 | ) | (3,244 | ) | ||||||||||||||||||||||||||||
Balance
as of December 31, 2001
|
3,448,563 | $ | (* | ) | 4,224,339 | $ | (* | ) | - | $ | - | $ | 8,260 | $ | (207 | ) | $ | (3,925 | ) | $ | 4,128 |
STATEMENTS
OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
|
U.S.
dollars in thousands (except share
data)
|
Old Common stock
|
Series A
Preferred stock
|
Series B
Preferred stock
|
Additional
paid-in
capital
|
Deferred Stock
compensation
|
Deficit
accumulated
during the
development
stage
|
Total
stockholders'
equity
|
||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||||||||||||
Balance
as of December 31, 2001
|
3,448,563 | $ | (* | ) | 4,224,339 | $ | (* | ) | - | $ | - | $ | 8,260 | $ | (207 | ) | $ | (3,925 | ) | $ | 4,128 | |||||||||||||||||||
Issuance
of Preferred stock In October 2002 at $1.97 per share, net
|
- | - | - | - | 2,676,674 | (* | ) | 5,264 | - | - | 5,264 | |||||||||||||||||||||||||||||
Deferred
stock compensation
|
- | - | - | - | - | - | 64 | (64 | ) | - | - | |||||||||||||||||||||||||||||
Amortization
of deferred stock compensation
|
- | - | - | - | - | - | - | 67 | - | 67 | ||||||||||||||||||||||||||||||
Stock
based compensation expenses related to options to
consultants
|
- | - | - | - | - | - | 371 | - | - | 371 | ||||||||||||||||||||||||||||||
Loss
|
- | - | - | - | - | - | - | - | (5,049 | ) | (5,049 | ) | ||||||||||||||||||||||||||||
Balance
as of December 31, 2002
|
3,448,563 | $ | (* | ) | 4,224,339 | $ | (* | ) | 2,676,674 | $ | (* | ) | $ | 13,959 | $ | (204 | ) | $ | (8,974 | ) | $ | 4,781 |
STATEMENTS
OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
|
U.S.
dollars in thousands (except share
data)
|
Old Common stock
|
Series A
Preferred stock
|
Series B
Preferred stock
|
Additional
paid-in
capital
|
Deferred Stock
compensation
|
Deficit
accumulated
during the
development
stage
|
Total
stockholders'
equity
|
||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||||||||||||
Balance
as of December 31, 2002
|
3,448,563 | $ | (* | ) | 4,224,339 | $ | (* | ) | 2,676,674 | $ | (* | ) | $ | 13,959 | $ | (204 | ) | $ | (8,974 | ) | $ | 4,781 | ||||||||||||||||||
Exercise
of stock options
|
19,443 | (* | ) | - | - | - | - | (* | ) | - | - | (* | ) | |||||||||||||||||||||||||||
Issuance
of Preferred stock in April and May 2003 at $2.00 per share,
net
|
- | - | - | - | 1,066,997 | (* | ) | 2,037 | - | - | 2, 037 | |||||||||||||||||||||||||||||
Deferred
stock compensation
|
- | - | - | - | - | - | 441 | (441 | ) | - | - | |||||||||||||||||||||||||||||
Amortization
of deferred stock compensation
|
- | - | - | - | - | - | - | 105 | - | 105 | ||||||||||||||||||||||||||||||
Stock
based compensation expenses related to options to
consultants
|
- | - | - | - | - | - | 475 | - | - | 475 | ||||||||||||||||||||||||||||||
Loss
|
- | - | - | - | - | - | - | - | (5,038 | ) | (5,038 | ) | ||||||||||||||||||||||||||||
Balance
as of December 31, 2003
|
3,468,006 | $ | (* | ) | 4,224,339 | $ | (* | ) | 3,743,671 | $ | (* | ) | $ | 16,912 | $ | (540 | ) | $ | (14,012 | ) | $ | 2,360 |
STATEMENTS
OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
|
U.S.
dollars in thousands (except share
data)
|
Old Common stock
|
Series A
Preferred stock
|
Series B
Preferred stock
|
Additional
paid-in
capital
|
Deferred stock
compensation
|
Deficit
accumulated
during the
development
stage
|
Total
stockholders'
equity (deficit)
|
||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||||||||||||
Balance
as of December 31, 2003
|
3,468,006 | $ | (* | ) | 4,224,339 | $ | (* | ) | 3,743,671 | $ | (* | ) | $ | 16,912 | $ | (540 | ) | $ | (14,012 | ) | $ | 2,360 | ||||||||||||||||||
Exercise
of stock options
|
12,750 | (* | ) | - | - | - | - | (* | ) | - | - | (* | ) | |||||||||||||||||||||||||||
Stock
issued to service providers
|
33,333 | (* | ) | - | - | - | - | 10 | - | - | 10 | |||||||||||||||||||||||||||||
Amortization
of deferred stock compensation
|
- | - | - | - | - | - | - | 540 | - | 540 | ||||||||||||||||||||||||||||||
Stock
based compensation expenses related to options to
consultants
|
- | - | - | - | - | - | 347 | - | - | 347 | ||||||||||||||||||||||||||||||
Loss
|
- | - | - | - | - | - | - | - | (4,516 | ) | (4,516 | ) | ||||||||||||||||||||||||||||
Balance
as of December 31, 2004
|
3,514,089 | $ | (* | ) | 4,224,339 | $ | (* | ) | 3,743,671 | $ | (* | ) | $ | 17,269 | $ | - | (18,528 | ) | $ | (1,259 | ) | |||||||||||||||||||
Loss
|
- | - | - | - | - | - | - | - | (776 | ) | (776 | ) | ||||||||||||||||||||||||||||
Balance
as of December 31, 2005
|
3,514,089 | $ | (* | ) | 4,224,339 | $ | (* | ) | 3,743,671 | $ | (* | ) | $ | 17,269 | $ | - | $ | (19,304 | ) | $ | (2,035 | ) |
STATEMENTS
OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
|
U.S.
dollars in thousands (except share
data)
|
Common stock
|
Old Common stock
|
Series A
Preferred stock
|
Series B
Preferred stock
|
Additional
paid-in
capital
|
Deficit
accumulated
during the
development
stage
|
Total
stockholders'
equity
(deficit)
|
||||||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||||||||||||||
Balance
as of December 31, 2005
|
- | $ | — | 3,514,089 | $ | (* | ) | 4,224,339 | $ | (* | ) | 3,743,671 | $ | (* | ) | $ | 17,269 | $ | (19,304 | ) | $ | (2,035 | ) | |||||||||||||||||||||
Conversion
of Old Common stock, Series A and Series B Preferred stock into Common
stock
|
9,885,842 | (* | ) | (3,514,089 | ) | (* | ) | (4,224,339 | ) | (* | ) | (3,743,671 | ) | (* | ) | (436 | ) | 436 | - | |||||||||||||||||||||||||
Conversion
of convertible Note into Common stock
|
11,982,914 | (* | ) | - | - | - | - | - | - | 1,795 | - | 1,795 | ||||||||||||||||||||||||||||||||
Issuance
of Common stock as settlement of debt in March
2006
|
2,633,228 | (* | ) | - | - | - | - | - | - | 96 | - | 96 | ||||||||||||||||||||||||||||||||
Issuance
of Common stock and warrants in March, April and June 2006 at $0.071 per
share and warrants, net
|
16,217,552 | (* | ) | - | - | - | - | - | - | 952 | - | 952 | ||||||||||||||||||||||||||||||||
Issuance
of Common stock and warrants in November and December 2006 at $0.117 per
share and warrants, net
|
16,685,790 | (* | ) | - | - | - | - | - | - | 1,615 | - | 1,615 | ||||||||||||||||||||||||||||||||
Stock
based compensation expense related to options and warrants granted to
consultants and employees
|
- | - | - | - | - | - | - | - | 1,161 | - | 1,161 | |||||||||||||||||||||||||||||||||
Loss
|
- | - | - | - | - | - | - | - | - | (2,599 | ) | (2,599 | ) | |||||||||||||||||||||||||||||||
Balance
as of December 31, 2006
|
57,405,326 | $ | (* | ) | - | $ | - | - | $ | - | - | $ | - | $ | 22,452 | $ | (21,467 | ) | $ | 985 |
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(DEFICIT)
|
U.S.
dollars in thousands (except share
data)
|
Common
stock
|
Additional
paid-in
capital
|
Deficit
accumulated
during
the
development
stage
|
Total
stockholders'
equity
|
|||||||||||||||||
Shares
|
Amount
|
|||||||||||||||||||
Balance
as of December 31, 2006
|
57,405,326 | $ | (* | ) | $ | 22,452 | $ | (21,467 | ) | $ | 985 | |||||||||
Issuance
of Common stock and warrants in January 2007 at $0.117 per share and
warrants, net
|
427,402 | (* | ) | 33 | - | 33 | ||||||||||||||
Issuance
of Common stock and warrants in
May,
July and August 2007 at $0.164 per share and warrants, net
|
7,647,436 | (* | ) | 835 | - | 835 | ||||||||||||||
Exercise
of warrants in July 2007
|
451,939 | (* | ) | - | - | (* | ) | |||||||||||||
Issuance
of Common stock to consultant in August 2007, net
|
122,232 | (* | ) | (* | ) | - | - | |||||||||||||
Stock
split effected as stock dividend in December 2007
|
- | 6 | (6 | ) | - | - | ||||||||||||||
Beneficial
conversion feature embedded in convertible note
|
- | - | 511 | - | 511 | |||||||||||||||
Issuance
of Common stock and warrants in December 2007 at $0.19 - $0.21per share
and warrants, where applicable, net, related to the admission to
AIM
|
38,039,082 | 4 | 4,494 | - | 4,498 | |||||||||||||||
Issuance
cost due to obligation to issue 142,609 Common stock for consultant,
net
|
- | - | (31 | ) | - | (31 | ) | |||||||||||||
Stock
based compensation expense related to options granted to consultants and
employees
|
- | - | 347 | - | 347 | |||||||||||||||
Loss
|
- | - | - | (3,851 | ) | (3,851 | ) | |||||||||||||
Balance
as of December 31, 2007
|
104,093,417 | $ | 10 | $ | 28,635 | $ | (25,318 | ) | $ | 3,327 |
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(DEFICIT)
|
U.S.
dollars in thousands (except share
data)
|
Common
stock
|
Additional
paid-in
capital
|
Receipts
on
account of shares |
Deficit
accumulated
during
the
development
stage
|
Total
stockholders'
equity
(deficit)
|
||||||||||||||||||||
Shares
|
Amount
|
|||||||||||||||||||||||
Balance
as of December 31, 2007
|
104,093,417 | $ | 10 | $ | 28,635 | $ | - | $ | (25,318 | ) | $ | 3,327 | ||||||||||||
Cashless
exercise of warrants in January 2008
|
2,462,050 | (* | ) | (* | ) | - | - | - | ||||||||||||||||
Issuance
of Common stock to consultant in April 2008 at $0.22 per
share
|
142,609 | (* | ) | 31 | - | - | 31 | |||||||||||||||||
Exercise
of warrants in December 2008
|
30,119 | (* | ) | (* | ) | - | - | - | ||||||||||||||||
Stock
based compensation related to options granted to consultants and
employees
|
- | - | 436 | - | - | 436 | ||||||||||||||||||
Receipts
on account of stock in respect to exercise of warrants in January
2009
|
- | - | - | 150 | - | 150 | ||||||||||||||||||
Dividend
in respect of reduction in exercise price of certain
warrants
|
- | - | 7 | - | (7 | ) | - | |||||||||||||||||
Loss
|
- | - | - | - | (4,992 | ) | (4,992 | ) | ||||||||||||||||
Balance
as of December 31, 2008
|
106,728,195 | 10 | 29,109 | 150 | (30,317 | ) | (1,048 | ) | ||||||||||||||||
Exercise
of warrants in January and February 2009
|
11,025,832 | 1 | 388 | (150 | ) | - | 239 | |||||||||||||||||
Stock
based compensation related to options granted to consultants and
employees
|
- | - | 520 | - | - | 520 | ||||||||||||||||||
Issuance
of Common stock in October 2009, net at $0.10 per share
|
4,420,000 | (* | ) | 364 | - | - | 364 | |||||||||||||||||
Receipts
on account of shares related to exercise of warrants in January
2010
|
- | - | - | 25 | - | 25 | ||||||||||||||||||
Dividend
in respect of reduction in exercise price of certain
warrants
|
- | - | 3 | - | (3 | ) | - | |||||||||||||||||
Loss
|
- | - | - | - | (4,440 | ) | (4,440 | ) | ||||||||||||||||
Balance
as of December 31, 2009
|
122,174,027 | $ | 11 | $ | 30,384 | $ | 25 | $ | (34,760 | ) | $ | (4,340 | ) |
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(DEFICIT)
|
U.S.
dollars in thousands (except share
data)
|
Common stock
|
Additional
paid-in
capital
|
Receipts on
account of
shares
|
Deficit
accumulated
during the
development
stage
|
Total
stockholders'
deficit
|
||||||||||||||||||||
Shares
|
Amount
|
|||||||||||||||||||||||
Balance
as of December 31, 2009
|
122,174,027 | $ | 11 | $ | 30,384 | $ | 25 | $ | (34,760 | ) | $ | (4,340 | ) | |||||||||||
Exercise
of warrants in January and May 2010
|
235,238 | (* | ) | 25 | (25 | ) | - | - | ||||||||||||||||
Stock
based compensation related to options granted to consultants and
employees
|
- | - | 200 | - | - | 200 | ||||||||||||||||||
Issuance
of Common stock in February 2010 at $0.125 per share as settlement of
debt
|
1,125,000 | (* | ) | 141 | - | - | 141 | |||||||||||||||||
Issuance
of Common stock in March 2010, net at $0.075 (GBP 0.05) per
share
|
14,273,000 | 1 | 942 | - | - | 943 | ||||||||||||||||||
Issuance
of Common stock in May 2010, net at $0.072 (GBP 0.05) per
share
|
16,727,698 | 2 | 1,113 | - | - | 1,115 | ||||||||||||||||||
Issuance
of Common stock in May 2010 at $0.098 (GBP 0.065) per
share
|
192,591 | (* | ) | 19 | - | - | 19 | |||||||||||||||||
Net
loss
|
- | - | - | - | (548 | ) | (548 | ) | ||||||||||||||||
Balance
as of June 30, 2010 (unaudited)
|
154,727,554 | $ | 14 | $ | 32,824 | $ | - | $ | (35,308 | ) | $ | (2,470 | ) |
CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
U.S.
dollars in thousands
|
CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
U.S.
dollars in thousands
|
Year ended December 31
|
Six months ended
June 30,
|
Period from
January 27,
2000 (inception)
through
|
||||||||||||||||||
2008
|
2009
|
2009
|
2010
|
June
30, 2010
|
||||||||||||||||
(unaudited)
|
(unaudited)
|
|||||||||||||||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||||||||||
Proceeds
from issuance of shares, net
|
(310 | ) | 364 | - | 2,077 | 24,112 | ||||||||||||||
Proceeds
from exercise of warrants, net
|
150 | 264 | 256 | - | 414 | |||||||||||||||
Repayment
of a long-term loan
|
- | - | - | - | (73 | ) | ||||||||||||||
Proceeds
from long term loan
|
- | - | - | - | 70 | |||||||||||||||
Proceeds
from a convertible Note
|
- | 570 | 265 | - | - | |||||||||||||||
Increase
(Decrease) in short-term bank credit
|
43 | (53 | ) | (40 | ) | - | 3,167 | |||||||||||||
Net
cash provided by (used in) financing activities
|
(117 | ) | 1,145 | 481 | 2,077 | 27,690 | ||||||||||||||
Increase
(Decrease) in cash and cash equivalents
|
(3,641 | ) | (573 | ) | (990 | ) | 893 | 1,363 | ||||||||||||
Balance
of cash and cash equivalents at the beginning of the
period
|
4,684 | 1,043 | 1,043 | 470 | - | |||||||||||||||
Balance
of cash and cash equivalents at the end of the period
|
$ | 1,043 | $ | 470 | $ | 53 | $ | 1,363 | $ | 1,363 | ||||||||||
Supplemental
disclosure of cash flow information:
|
||||||||||||||||||||
Cash
paid during the period for:
|
||||||||||||||||||||
Interest
|
$ | 1 | $ | 36 | $ | - | $ | 91 | $ | 167 | ||||||||||
Taxes
|
$ | 12 | $ | 13 | $ | 4 | $ | 11 | $ | 94 | ||||||||||
Supplemental
disclosure of non-cash flow information:
|
||||||||||||||||||||
Issuance
expenses paid with shares
|
- | - | - | - | $ | 310 | ||||||||||||||
Issuance
of Common stock upon conversion of a convertible Note
|
- | - | - | - | $ | 2,845 | ||||||||||||||
Issuance
of stock in settlement of debt
|
- | - | - | $ | 141 | $ | 238 | |||||||||||||
Purchase
of property and equipment in credit
|
$ | 8 | - | - | - | - | ||||||||||||||
Issuance
cost due to obligation to issues new common stock to
consultant
|
- | - | - | - | - | |||||||||||||||
Issuance
of common shares upon conversion of warrants
|
- | - | $ | 150 | - | - |
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
NOTE
1:-
|
GENERAL
|
|
a.
|
Medgenics,
Inc. ("the Company") was incorporated in January 2000 in Delaware. The
Company has a wholly-owned subsidiary, Medgenics Medical Israel Ltd.
(formerly Biogenics Ltd.) ("the Subsidiary"), which was incorporated in
Israel in March 2000. The Company and its subsidiary are engaged in the
research and development of products in the field of biotechnology and
associated medical equipment and are thus considered development stage
companies as defined in Accounting Standards Codification ("ASC") topic
number 915,
"Development
Stage Entities"
("ASC 915") (originally issued as "FAS
7").
|
b.
|
The
Company and its subsidiary are in the development stage. As reflected in
the accompanying financial statements, the Company incurred a loss during
the year ended December 31, 2009 of
$4,440
and had a shareholders’ deficit of $ 4,340 as of December 31, 2009.
These conditions
raise doubt about the Company's ability to continue as a going concern.
Management’s plans include seeking additional investments and commercial
agreements to continue the operations of the Company and its subsidiary.
However, there is no assurance that the Company will be successful in its
efforts to raise the necessary capital and/or reach such commercial
agreements to continue its planned research and development activities.
The consolidated financial statements do not include any adjustments with
respect to the carrying amounts of assets and liabilities and their
classification that might result from the outcome of this
uncertainty.
|
|
c.
|
On
October 22, 2009 ("Effective Date") the Company signed a preclinical
development and option agreement which was amended in December 2009 ("the
Agreement"), with a major international healthcare company ("the
Healthcare company") that is a market leader in the field of hemophilia.
The Agreement includes funding for preclinical development of the
Company’s Biopump protein technology to produce and deliver the clotting
protein Factor VIII ("FVIII") for the sustained treatment of
hemophilia.
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
NOTE
1:-
|
GENERAL
(CONT.)
|
c.
|
(cont.)
|
d.
|
During
2009 the Subsidiary received approval for an additional Research and
Development program from the Office of the Chief Scientist in Israel
("OCS") for the period April 2009 through August
2010.
|
e.
|
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
NOTE
2:-
|
SIGNIFICANT
ACCOUNTING POLICIES
|
a.
|
Use
of estimates
|
b.
|
Financial
statements in U.S. dollars
|
c.
|
Unaudited
Interim financial
information:
|
d.
|
Principles
of consolidation
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
NOTE
2:-
|
SIGNIFICANT
ACCOUNTING POLICIES (CONT.)
|
e.
|
Cash
equivalents
|
f.
|
Property
and equipment
|
%
|
||
Furniture
and office equipment
|
6 -
15
|
(mainly
15)
|
Computers
and peripheral equipment
|
33
|
|
Laboratory
equipment
|
15
- 33
|
(mainly
15)
|
Leasehold
improvements
|
The
shorter of term of the lease or the useful life of the
asset
|
g.
|
Impairment of long-lived
assets
|
|
h.
|
Severance
pay
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
NOTE
2:-
|
SIGNIFICANT
ACCOUNTING POLICIES (CONT.)
|
h.
|
Severance
pay (cont.)
|
i.
|
Income
taxes
|
j.
|
Accounting
for stock based compensation
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
j.
|
Accounting
for stock based compensation
(cont.)
|
2008
|
|||
Dividend
yield
|
0%
|
||
Expected
volatility
|
78%
|
||
Risk-free
interest rate
|
3.5%
|
||
Suboptimal
exercise
factor
|
2.2-2.4
|
||
Contractual
life (years)
|
5
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
NOTE
2:-
|
SIGNIFICANT
ACCOUNTING POLICIES (CONT.)
|
j.
|
Accounting
for stock based compensation
(cont.)
|
2008
|
2009
|
Six months
ended June 30,
2010
|
|||||
Dividend
yield
|
0%
|
0%
|
0%
|
||||
Expected
volatility
|
73%
|
98%
|
85%
|
||||
Risk-free
interest rate
|
1.7%
|
1.5%
|
1.3%
|
||||
Contractual
life (years)
|
2.3-4.8
|
1.3-4.9
|
1.0-4.7
|
k.
|
Loss
per share
|
l.
|
Research
and development expenses
|
m.
|
Grants
and participation
|
|
·
|
Standstill
Payment and Development - in accordance with ASC 605-35 based on hours
incurred assigned to the project. The excess of the recognized amount
received from the Healthcare company over the amount of research and
development expenses incurred during the period is recognized as other
income within operating income.
|
|
·
|
Milestones
– upon the achievement of the specific
milestone.
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
NOTE
2:-
|
SIGNIFICANT
ACCOUNTING POLICIES (CONT.)
|
n.
|
Concentrations
of credit risks
|
o.
|
Fair
value of financial
instruments
|
Level 1 Inputs
|
–
|
Quoted
prices for identical instruments in active markets.
|
||
Level 2 Inputs
|
–
|
Quoted
prices for similar instruments in active markets; quoted prices for
identical or similar instruments in markets that are not active; and
model-derived valuations in which all significant inputs and significant
value drivers are observable.
|
||
Level 3 Inputs
|
–
|
Valuation
derived from valuation techniques in which one or more significant inputs
or significant value drivers are
unobservable.
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
NOTE
2:-
|
SIGNIFICANT
ACCOUNTING POLICIES (CONT.)
|
o.
|
Fair
value of financial instruments
(cont.)
|
December
31, 2009
|
June
30, 2010
|
|||
Dividend
yield
|
0%
|
0%
|
||
Expected
volatility
|
115%
|
77%
|
||
Risk-free
interest rate
|
0.78%
|
0.31%
|
||
Contractual
life (in years)
|
1.46
|
.96
|
p.
|
Initial
adoption of new accounting
standards
|
1.
|
In
October 2009, the FASB issued ASU 2009-13,
"Revenue Recognition (ASC
Topic 605)-Multiple-Deliverable Revenue Arrangements"
("ASU
2009-13"). ASU 2009-13 amends the criteria in ASC Subtopic 605-25,
"Revenue Recognition-Multiple-Element Arrangements", for separating
consideration in multiple-deliverable arrangements. This update addresses
the accounting for multiple-deliverable arrangements to enable vendors to
account for products or services (deliverables) separately rather than as
a combined unit. ASU 2009-13 modifies the requirements for determining
whether a deliverable can be treated as a separate unit of accounting by
removing the criteria that verifiable and objective evidence of fair value
exists for the undelivered elements. This guidance eliminates the residual
method of allocation and requires that arrangement consideration be
allocated at the inception of the arrangement to all
deliverables
using the relative selling price method. This guidance establishes a
selling price hierarchy for determining the selling price of a
deliverable, which is based on: a) vendor-specific objective evidence; b)
third-party evidence; or c) estimates. In addition, this guidance
significantly expands required disclosures related to a vendor's
multiple-deliverable revenue arrangements. ASU 2009-13 is effective
prospectively for revenue arrangements entered into or materially modified
in fiscal years beginning on or after June 15, 2010, with early adoption
permitted. The Company has chosen not to early adopt ASU
2009-13.
|
2.
|
In
May 2009, the FASB issued ASC 855
"Subsequent Events"
("ASC 855") (originally issued as "FAS
165").
|
|
The
adoption of this standard did not have any impact on the consolidated
results of operations or financial position of the
Company.
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
NOTE
2:-
|
SIGNIFICANT
ACCOUNTING POLICIES (CONT.)
|
q.
|
Impact
of recently issued Accounting
Standards
|
1.
|
In
June 2009, FASB issued ASC Topic No. 105,
"Generally Accepted Accounting
Principles"
("the Codification"). The Codification was
effective for interim and annual periods ended after September 15, 2009
and became the single official source of authoritative, nongovernmental
U.S. GAAP, other than guidance issued by the Securities and Exchange
Commission. All other literature is non-authoritative. The
adoption of the Codification did not have a material impact on the
Company's consolidated financial statements and notes thereto. The
Company has appropriately updated its disclosures with the appropriate
Codification references for the year ended December 31, 2009. As such, all
the notes to the consolidated financial statements have been updated with
the appropriate Codification
references.
|
2.
|
In
March 2010, the FASB issued an update to ASC 605 (ASU No. 2010-17,
"Revenue Recognition -
Milestone Method"
, originally issued as EITF 08-9). The update
provides that the milestone method is a valid application of the
proportional performance model for revenue recognition for research and
development transactions if the milestones are substantive and there is
substantive uncertainty about whether the milestones will be achieved.
Determining whether a milestone is substantive requires judgment that
should be made at the inception of the arrangement. To meet the definition
of a substantive milestone, the consideration earned by achieving the
milestone (1) would have to be commensurate with either the level of
effort required to achieve the milestone or the enhancement in the value
of the item delivered, (2) would have to relate solely to past
performance, and (3) should be reasonable relative to all
deliverables and payment terms in the arrangement. No bifurcation of an
individual milestone is allowed and there can be more than one milestone
in an arrangement. The new guidance is effective prospectively for interim
and annual periods beginning on or after June 15, 2010. Early
adoption is permitted. While the Company is still analyzing the potential
impact of this guidance, the Company believes that its current practices
are consistent with the guidance and, accordingly, does not expect the
adoption of this guidance will have a material impact on the financial
statements.
|
NOTE
3:-
|
CASH
AND CASH EQUIVALENTS
|
December
31,
|
June
30,
|
|||||||||||
2008
|
2009
|
2010
|
||||||||||
(unaudited)
|
||||||||||||
In
Dollars
|
$ | 259 | $ | 452 | $ | 1,306 | ||||||
In
NIS
|
784 | 18 | 57 | |||||||||
$ | 1,043 | $ | 470 | $ | 1,363 |
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
NOTE
4:-
|
ACCOUNTS
RECEIVABLE AND PREPAID EXPENSES
|
December
31,
|
June
30,
|
|||||||||||
2008
|
2009
|
2010
|
||||||||||
(unaudited)
|
||||||||||||
Grant
receivable
|
$ | 75 | $ | - | $ | 59 | ||||||
Government
authorities
|
31 | 5 | 26 | |||||||||
Prepaid
expenses and other
|
16 | 6 | 127 | |||||||||
$ | 122 | $ | 11 | $ | 212 |
NOTE
5:-
|
PROPERTY
AND EQUIPMENT, NET
|
December
31,
|
June
30,
|
|||||||||||
2008
|
2009
|
2010
|
||||||||||
(unaudited)
|
||||||||||||
Cost:
|
||||||||||||
Furniture
and office equipment
|
$ | 95 | $ | 97 | $ | 97 | ||||||
Computers
and peripheral equipment
|
42 | 34 | 34 | |||||||||
Laboratory
equipment
|
214 | 242 | 249 | |||||||||
Leasehold
improvements
|
170 | 170 | 170 | |||||||||
Total
cost
|
521 | 543 | 550 | |||||||||
Total
accumulated depreciation
|
121 | 240 | 297 | |||||||||
Depreciated
cost
|
$ | 400 | $ | 303 | $ | 253 |
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
NOTE
6:-
|
TRADE
PAYABLES
|
December
31,
|
June
30,
|
|||||||||||
2008
|
2009
|
2010
|
||||||||||
(unaudited)
|
||||||||||||
Open
accounts
|
$ | 830 | $ | 947 | $ | 824 | ||||||
Notes
payable
|
59 | - | - | |||||||||
$ | 889 | $ | 947 | $ | 824 |
NOTE
7:-
|
OTHER
ACCOUNTS PAYABLE AND ACCRUED
EXPENSES
|
December
31,
|
June
30,
|
|||||||||||
2008
|
2009
|
2010
|
||||||||||
(unaudited)
|
||||||||||||
Employees
and payroll accruals
|
$ | 642 | $ | 783 | $ | 542 | ||||||
Governmental
authorities
|
- | 97 | - | |||||||||
Interest
payable on debentures
|
- | 33 | 96 | |||||||||
Accrued
expenses and others
|
426 | 777 | 559 | |||||||||
$ | 1,068 | $ | 1,690 | $ | 1,197 |
NOTE
8:-
|
COMMITMENTS
AND CONTINGENCIES
|
a.
|
License
agreements
|
1.
|
On
November 23, 2005 the Company signed a new agreement with Yissum Research
and Development Company of the Hebrew University of Jerusalem ("Yissum").
According to the agreement, Yissum granted the Company a license of
certain patents for commercial development, production, sub-license and
marketing of products to be based on its know-how and research results. In
consideration, the Company agreed to pay Yissum the following
amounts:
|
(a)
|
Three
fixed installments measured by reference to investment made in the
Company, as follows:
|
I. 1
st
installment
-
|
$50 shall be paid when the
cumulative investments in the Company by any third party or parties, from
May 23, 2005, amount to at least
$3,000.
|
II. 2
nd
installment
-
|
Additional $150 shall be paid
when the cumulative investments in the Company by any third party or
parties, from May 23, 2005, amount to at least
$12,000.
|
III. 3
rd
installment -
|
Additional $200 shall be paid
when the cumulative investments in the Company by any third party or
parties, from May 23, 2005, amount to at least
$18,000.
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
NOTE
8:-
|
COMMITMENTS
AND CONTINGENCIES (CONT.)
|
|
a.
|
License
agreements (cont.)
|
(b)
|
Royalties
at a rate of 5% of net sales of the
product.
|
(c)
|
Sub-license
fees at a rate of 9% of sublicense
considerations.
|
2.
|
Pursuant
to an agreement dated January 25, 2007 between Baylor College of Medicine
("BCM") and the Company, BCM granted the Company a non-exclusive
worldwide license of a certain technology ("the Subject
Technology").
|
|
In
consideration the Company agreed to pay the following
amounts:
|
i
|
a
one time, non-refundable license fee of $25 which was paid in
2007;
|
ii
|
an
annual non-refundable maintenance fee of
$20;
|
iii
|
a
one-time milestone payment of $75 upon FDA clearance or equivalent
of clearance for therapeutic use. As of the balance sheet date, the
Company did not achieve FDA clearance;
and
|
iv
|
an installment
of $25 upon executing any sub-licenses that the Company executes in
respect of the Subject
Technology.
|
|
b.
|
Letter
of credit
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
NOTE
8:-
|
COMMITMENTS
AND CONTINGENCIES (CONT.)
|
|
b.
|
Letter
of credit (cont.)
|
|
c.
|
Chief
Scientist
|
d.
|
Clinical
trials
|
e.
|
Lease
Agreement
|
1.
|
The
facilities of the Subsidiary are rented under operating lease agreement
for a three year period ending December 2010 with an option to renew the
lease for an additional 12 month period. Future minimum lease commitment
under the existing non-cancelable operating lease agreement for 2010 is
approximately $54.
|
2.
|
The
Subsidiary leases vehicles under standard commercial operating leases.
Future minimum lease commitments under various non-cancelable operating
lease agreements in respect of motor vehicles are as
follows:
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
NOTE
8:-
|
COMMITMENTS
AND CONTINGENCIES (CONT.)
|
|
e.
|
Lease
Agreement (cont.)
|
Year
|
||||
2010
|
$ | 44 | ||
2011
|
25 | |||
2012
|
4 | |||
$ | 73 |
NOTE
9:-
|
STOCKHOLDERS’
EQUITY
|
a.
|
Composition:
|
December
31,
|
December
31,
|
|||||||||||||||
2008
|
2009
|
2008
|
2009
|
|||||||||||||
Authorized
|
Issued
and Outstanding
|
|||||||||||||||
Number
of shares
|
||||||||||||||||
Shares
of $0.0001 par value:
|
||||||||||||||||
Common
stock
|
500,000,000 | 500,000,000 | 106,728,195 | 122,174,027 |
b.
|
Common
stock
|
c.
|
Recapitalization
of equity capital
|
|
1.
|
A
total of 11,982,914 Common shares were issued to the holders of the
convertible Note upon conversion of the
Note.
|
|
2.
|
One
Common stock was issued for 10,578.95 Old Common
shares.
|
|
3.
|
One
Common stock was issued for 404.51 Series A Preferred
shares.
|
|
4.
|
One
Common stock was issued for 345.69 Series B Preferred
shares.
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
NOTE
9:-
|
SHAREHOLDERS’
EQUITY (CONT.)
|
|
d.
|
Issuance
of shares and warrants to investors
|
|
1.
|
In
January and March 2000, the Company issued a total of 2,069,677 Old Common
shares at par value.
|
|
2.
|
In
August 2000, the Company issued 437,936 Old Common shares in consideration
of $500.
|
|
3.
|
In
August 2000, in respect of the earlier license agreement with Yissum, the
Company issued 940,950 Old Common shares at par
value.
|
|
4.
|
In
January 2001, the Company issued 138,502 Series A Preferred shares in
consideration of $200. The issuance costs amounted to
$5.
|
|
5.
|
On
March 19, 2001, the Board of Directors authorized a 10 to 1 stock split
and 1000 to 1 stock split effected as stock dividend. As a
result, 3,445,113 additional shares were issued and the par value of each
share was reduced from $0.001 to
$0.0001.
|
|
6.
|
In
March and June 2001, the Company issued a total of 4,085,837 Series A
Preferred shares in consideration of $6,998. The issuance costs amounted
to $192.
|
|
7.
|
In
October 2002, the Company issued a total of 2,676,674 Series B Preferred
shares in consideration for $5,353. The issuance costs amounted
to $89.
|
|
8.
|
In
February, September and November 2003, the Company issued a total of
19,443 Old Common shares in consideration of $0.195, upon exercise of
stock options.
|
|
9.
|
In
April and May 2003, the Company issued a total of 1,066,997 Series B
Preferred shares
in
consideration of $2,134. The issuance costs amounted to
$97.
|
10.
|
In
January and February 2004, the Company issued a total of 46,083 Old Common
shares in consideration of $0.1 in cash upon exercise of stock options and
$10 in consideration of
services.
|
11.
|
In
March 2006, the Company issued 2,633,228 Common shares as a settlement of
a debt.
|
12.
|
In
March 2006, as part of the recapitalization, warrants to purchase
2,139,106 Common shares at an exercise price per share of $0.0001 with a
term of 5 years were issued by the Company to existing holders of Old
Common shares.
|
13.
|
In
March, April and June 2006, the Company issued a total of 16,217,552
Common shares and warrants to purchase 32,435,103 Common shares at an
exercise price per share of $0.071 and a term of 5 years in consideration
of $1,149. The issuance costs amounted to
$197.
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
NOTE
9:-
|
SHAREHOLDERS’
EQUITY (CONT.)
|
|
d.
|
Issuance
of shares and warrants to investors
(cont.)
|
14.
|
In
November and December 2006, the Company issued a total of 16,685,790
Common shares and warrants to purchase 20,857,259 Common shares at an
exercise price of $0.117 and a term of 5 years in consideration of $1,949.
The issuance costs amounted to
$335.
|
15.
|
In
January 2007, the Company issued a total of 427,402 Common shares and
warrants to purchase 534,252 Common shares at an exercise price per share
of $0.117 and a term of 5 years, in consideration of $50. The issuance
costs amounted to $17.
|
16.
|
In
May, July, and August 2007, the Company issued a total of 7,647,436 Common
shares and warrants to purchase 1,634,909 Common shares at an exercise
price per share of $0.164 and a term of 5 years in consideration of
$1,251. The issuance costs amounted to
$417.
|
17.
|
In
July 2007, 451,939 warrants were exercised into 451,939 Common shares, in
consideration of $0.002.
|
18.
|
In
August 2007, the Company issued 122,232 Common shares at fair value of $18
to an advisor in consideration of consulting services related to the
issuance of shares. The fair value of the shares was recorded as issuance
costs.
|
19.
|
Based
on a resolution approved by shareholders in November 22, 2007, a stock
split was effectuated on December 4, 2007 such that 21.39149 Common shares
were given in exchange for each existing Common share. In addition all
existing warrants and options were automatically adjusted so that each
warrant or option to purchase one Common share was converted to a warrant
or option to purchase 21.39149 Common shares. Data regarding share and per
share amounts in these financial statements has been retroactively
adjusted to reflect this stock
split.
|
20.
|
On
August 13, 2007, the Company issued a $1.05 million convertible unsecured
promissory note ("Note"). In addition, the Company issued to the Note
holder warrants to purchase up to 3,208,724 Common shares at an exercise
price per share of $0.164 and a term of 5 years. In respect of the Note
and warrants, the Company recorded financial expenses relating to the
beneficial conversion feature in accordance with the provisions of ASC
470-20,
"Debt with
Conversion and Other Options"
("ASC 470-20") (originally issued as
"EITF 98-5" and "EITF 00-27") in the amount of $469,500 with a
corresponding credit to additional paid in capital in shareholders'
equity. The Company computed the value of the warrants using the Black
& Scholes option pricing model with the following assumptions: a
risk-free interest rate of 4.72%, zero dividends, volatility of 66%, and
an expected term of 5 years. On November 14, 2007, the Note term was
extended to December 15, 2007. In respect of this change, the Company
recorded additional financial costs of $42 in the statement of operations
with a corresponding credit to additional paid-in capital in shareholders'
equity. On December 4, 2007, the Note was converted into 6,417,447 Common
shares.
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
NOTE
9:-
|
SHAREHOLDERS’
EQUITY (CONT.)
|
|
d.
|
Issuance
of shares and warrants to investors
(cont.)
|
21.
|
On
December 4, 2007, the Company's Common shares were admitted for trading on
the London Stock Exchange’s Alternative Investment Market (AIM).
Concurrently, the Company placed 9,640,000 Common shares at a per share
price of GBP 0.10 ($0.21), issued 18,897,213 Common shares and 3,084,422
Common shares to investors and consultants, respectively, and issued
additional 6,417,447 Common shares resulting from the conversion of a
convertible Note (see note 9d (20)), for a total gross consideration for
GBP 3,276,985 ($6,719). The issuance costs amounted to
$2,221. In addition the Company issued warrants to purchase
971,075 Common shares at an exercise price per share of $0.164, and
additional warrants to purchase 5,799,553 Common shares at an exercise
price per share of $0.194, each with a term of 5
years.
|
22.
|
In
January 2008, a total of 3,560,314 warrants were exercised in a cashless
conversion to 2,414,326 Common shares by consultants of the
Company. In addition 47,724 warrants were exercised and
resulted in the issuance of 47,724 Common shares. The cash consideration
received was immaterial.
|
23.
|
In
April 2008, the Company issued a total of 142,609 Common shares to an
advisor in consideration of assistance with the Company’s fund raising in
relation to the placing of the Common shares on December 4,
2007.
|
24.
|
In
December 2008, 30,119 warrants were exercised to 30,119 Common shares. The
cash consideration received upon exercise of the warrants was
immaterial.
|
25.
|
On
December 17, 2008, the Company announced that it was implementing a
warrant repricing program ("program") to encourage the exercise of
existing warrants provided that such exercise is completed by February 13,
2009. To encourage existing warrant holders to exercise their warrants
before the closing date as aforesaid, the following terms were
offered:
|
a)
|
Reduced
Exercise Price: $0.0375/share (2.5 pence/share) or the current exercise
price, whichever is lower;
|
b)
|
Bonus
Warrants: for every one dollar ($1.00) or 0.667 GBP paid for exercise of
warrants during this program, a new bonus warrant will be issued to
purchase three Common Shares, which will be immediately exercisable for
three years at an exercise price of $0.25 per
share.
|
26.
|
Pursuant
to the warrant repricing program mentioned above, during January and
February 2009, 11,025,832 warrants were exercised into 11,025,832 Common
shares in consideration of a reduced price of $ 406,048 and the issuance
of 1,218,144 new warrants as a bonus. The issuance costs were $17. The
bonus warrants were exercisable immediately for a period of three years
from the issuance date at an exercise price of $0.25 per share. The
consideration was paid partly in the year ended December 31, 2008 ($150)
and the balance was paid in 2009. According to ASC 815 the benefit
provided to the warrant holders from the reduction of the exercise price
and the bonus warrants in the amount of $7 and $3 as of December 31, 2008
and December 31, 2009, respectively, was recorded as a dividend to the
warrant holders.
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
NOTE
9:-
|
SHAREHOLDERS’
EQUITY (CONT.)
|
|
d.
|
Issuance
of shares and warrants to investors
(cont.)
|
27.
|
On
October 6, 2009, the Company issued a total of 4,420,000 Common shares in
consideration of GBP 265,200 ($423). The issuance costs were
$59.
|
e.
|
Stock
options and warrants to employees and
directors
|
1.
|
On
March 30, 2006, the Company adopted a stock option plan ("the stock option
plan") according to which options to purchase up to 21,327,380 Common
shares of the Company may be granted to directors, employees and
consultants (non-employees) of the Company and its subsidiary, as
determined by the Company’s Board of Directors from time to time. The
options outstanding are exercisable within a period of 5 years from the
date of grant at an exercise price as determined by the Company's Board of
Directors. The options outstanding to employees, directors and consultants
will vest over a period of three or four years from the date of grant. Any
option which is canceled or forfeited before expiration becomes available
for future grants.
|
2.
|
On
June 12, 2008, the Company granted to the Company's employees 3,188,370
options exercisable at a price of $0.146 per share. The options vest in
four equal annual tranches of 797,092 each. The options were granted under
the stock option plan terms. The fair value of these options at the grant
date was $0.036 per option.
|
3.
|
On
December 1, 2008, the Company granted to a Company’s director 1,711,319
options exercisable at a price of $0.042 per share. The options vest in
three equal annual tranches of 570,440 each. The options were granted
under the stock option plan terms. The fair value of these options at the
grant date was $0.0261 per
option.
|
4.
|
No
options or warrants were granted to employees or directors during the year
ended December 31, 2009 nor during the six months ended June 30,
2010.
|
5.
|
A
summary of the Company’s activity for options and warrants granted to
employees and directors is as
follows:
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
NOTE
9:-
|
SHAREHOLDERS’
EQUITY (CONT.)
|
e.
|
Stock
options and warrants to employees and directors
(cont.)
|
Number of
options and
warrants
|
Weighted
average
exercise
price
|
Weighted
average
remaining
contractual
terms
(years)
|
Aggregate
intrinsic
value price
|
|||||||||||||
Outstanding
at January 1, 2008
|
81,595,466 | $ | 0.08 | |||||||||||||
Granted
|
4,899,689 | 0.11 | ||||||||||||||
Forfeited
|
(641,745 | ) | 0.21 | |||||||||||||
Outstanding
at December 31, 2008
|
85,853,410 | $ | 0.081 | 2.65 | $ | 800,767 | ||||||||||
Vested
and expected to vest at December 31, 2008
|
82,530,416 | 0.08 | 2.59 | $ | 780,878 | |||||||||||
Exercisable
at December 31, 2008
|
63,951,473 | 0.06 | 2.36 | $ | 779,101 | |||||||||||
Forfeited
|
(2,595,501 | ) | 0.109 | |||||||||||||
Outstanding
at December 31, 2009
|
83,257,909 | $ | 0.081 | 1.56 | $ | 4,342,931 | ||||||||||
Vested
and expected to vest at December 31, 2009
|
82,456,683 | $ | 0.080 | 1.55 | $ | 4,332,986 | ||||||||||
Exercisable
at December 31, 2009
|
74,023,902 | $ | 0.071 | 1.45 | $ | 4,223,830 | ||||||||||
Outstanding at June
30, 2010
(unaudited)
|
83,257,909 | $ | 0.081 | 1.06 | $ | 4,397,279 | ||||||||||
Vested and expected
to vest at June 30, 2010
(unaudited)
|
82,587,846 | $ | 0.080 | 1.05 | $ | 4,393,734 | ||||||||||
Exercisable at June
30, 2010
(unaudited)
|
75,623,455 | $ | 0.071 | 0.94 | $ | 4,355,150 |
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
NOTE
9:-
|
SHAREHOLDERS’
EQUITY (CONT.)
|
e.
|
Stock
options and warrants to employees and directors
(cont.)
|
|
6.
|
The
Company's outstanding options and warrants under the Company's stock
option plan to employees and directors as of December 31, 2009 have been
separated into exercise prices as
follows:
|
As of December 31, 2009
|
|||||||||||||||||
Exercise
price
|
Options and
warrants
outstanding
|
Weighted
average
remaining
contractual
life (years)
|
Options and
warrants
exercisable
|
Weighted
average
remaining
contractual
life (years)
|
|||||||||||||
$
|
0.0005
|
14,480,755 | 1.25 | 14,480,755 | 1.25 | ||||||||||||
$
|
0.042
|
570,440 | 0.92 | 570,440 | 0.92 | ||||||||||||
$
|
0.071
|
53,097,230 | 1.02 | 50,642,818 | 1.02 | ||||||||||||
$
|
0.120
|
1,497,404 | 2.65 | 748,702 | 2.65 | ||||||||||||
$
|
0.146
|
1,733,748 | 3.45 | 433,437 | 3.45 | ||||||||||||
$
|
0.210
|
11,878,332 | 2.87 | 7,147,750 | 2.87 | ||||||||||||
Total
|
83,257,909 | 74,023,902 |
|
f.
|
Warrants
and options to-non-employees
|
|
1.
|
On
October 16, 2008, the Company granted to a consultant 677,397 warrants
exercisable at a price of $0.146 per share and has contractual life of 5
years. 33.3% of the warrants vested immediately at the grant date and the
remaining portion of the warrants vest in two equal annual tranches
starting from the grant date of 225,799. The warrants were granted under
the stock option plan terms. The fair value of these warrants at the grant
date was $0.00511 per warrant. The fair value was estimated using Binomial
model with the following weighted-average assumptions: expected stock
price volatility range of 62%, risk-free interest rate of 4.2%, expected
dividend yield of 0% and a contractual life of the options of five
years.
|
|
2.
|
On
December 1, 2008, the Company granted to a consultant 2,353,064 warrants
exercisable at a price of $0.194 per share and has contractual life of 5
years. The warrants vest immediately at the grant date. The warrants were
granted under the stock option plan terms. The fair value of these
warrants at the grant date was $0.00934 per
warrant.
|
|
3.
|
On
December 7, 2009, the Company granted to a consultant 677,397 options
exercisable at a price of $0.12 per share and has contractual life of 5
years. The options vest in three equal annual tranches of 225,799. The
options were granted under the stock option plan terms. The fair value of
these options at the grant date was $0.08768 per warrant. The fair value
was estimated using Binomial model with the following weighted-average
assumptions: expected stock price volatility range of 74.9%, risk-free
interest rate of 2.4%, expected dividend yield of 0% and a contractual
life of the options of five years.
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
NOTE
9:-
|
SHAREHOLDERS’
EQUITY (CONT.)
|
|
f.
|
Warrants
and options to-non-employees
(cont.)
|
|
4.
|
A
summary of the Company's stock option activity for warrants and options
granted to consultants under the stock option plan is as
follows:
|
Number of
Warrants
and options
|
Weighted
average
exercise
price
|
Weighted
average
remaining
contractual
terms
( years)
|
Aggregate
intrinsic
value
price
|
|||||||||||||
Outstanding
at January 1, 2008
|
22,808,059 | $ | 0.120 | |||||||||||||
Granted
|
3,030,461 | 0.182 | ||||||||||||||
Exercised
|
(3,560,316 | ) | ||||||||||||||
Forfeited
|
(2,482,312 | ) | 0.150 | |||||||||||||
Outstanding
at December 31, 2008
|
19,795,892 | $ | 0.115 | 3.11 | $ | 64,566 | ||||||||||
Exercisable
at December 31, 2008
|
16,555,869 | $ | 0.138 | 3.72 | $ | 64,566 | ||||||||||
Outstanding
at January 1, 2009
|
19,795,892 | $ | 0.115 | |||||||||||||
Granted
|
677,397 | 0.12 | ||||||||||||||
Outstanding
at December 31, 2009
|
20,473,289 | $ | 0.116 | 2.21 | $ | 607,399 | ||||||||||
Exercisable
at December 31, 2009
|
18,389,796 | $ | 0.114 | 2.09 | $ | 580,220 | ||||||||||
Outstanding
at June 30, 2010 (unaudited)
|
20,473,289 | $ | 0.116 | 1.71 | $ | 616,641 | ||||||||||
Exercisable
at June 30, 2010 (unaudited)
|
18,949,717 | $ | 0.112 | 1.57 | $ | 616,497 |
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
NOTE
9:-
|
SHAREHOLDERS’
EQUITY (CONT.)
|
|
f.
|
Warrants
and options to-non-employees
(cont.)
|
|
The
weighted-average grant-date fair value of warrants and options granted to
consultants during the year ended December 31, 2008 and 2009 was $0.01 and
$0.09, respectively. As of December 31, 2009, there was $65 of total
unrecognized compensation cost related to non-vested share-based
compensation arrangements granted to consultants under the Company's stock
option plan. That cost is expected to be recognized over a
weighted-average period of 1.2
years.
|
|
Calculation
of aggregate intrinsic value is based on the share price of the
Company’s Common shares as of December 31, 2009 ($0.1234 / 0.075 GBP,
per share).
|
|
5.
|
The
Company's outstanding warrants and options under the Company's stock
option plan to consultants as of December 31, 2009 were as
follows:
|
As of December 31, 2009
|
|||||||||||||||||
Exercise
price
|
warrants and
options
outstanding
|
Weighted
average
remaining
contractual
term (years)
|
Warrants
and
options
exercisable
|
Weighted
average
remaining
contractual
term (years)
|
|||||||||||||
$
|
0.000
|
1,200,063 | 1.25 | 1,200,063 | 1.25 | ||||||||||||
$
|
0.071
|
9,534,722 | 1.31 | 8,974,800 | 1.30 | ||||||||||||
$
|
0.117
|
1,040,397 | 1.81 | 1,040,397 | 1.81 | ||||||||||||
$
|
0.120
|
677,397 | 4.92 | - | - | ||||||||||||
$
|
0.159
|
1,271,572 | 3.39 | 1,045,773 | 3.30 | ||||||||||||
$
|
0.164
|
1,312,796 | 2.69 | 1,314,796 | 2.69 | ||||||||||||
$
|
0.194
|
3,575,217 | 3.58 | 3,575,217 | 3.58 | ||||||||||||
$
|
0.210
|
1,861,125 | 2.87 | 1,240,750 | 2.87 | ||||||||||||
Total
|
20,473,289 | 18,389,796 |
|
g.
|
Compensation
expenses
|
|
Compensation
expense related to warrants and options granted to employees, directors
and consultants was recorded in the statement of operations in the
following line items:
|
Year
ended
December
31,
|
Six
months ended
June
30,
|
|||||||||||||||
2008
|
2009
|
2009
|
2010
|
|||||||||||||
(
Unaudited
)
|
||||||||||||||||
Research
and development expenses (income)
|
$ | 68 | $ | 192 | $ | 57 | $ | 58 | ||||||||
General
and administrative expenses (income)
|
368 | 328 | 174 | 142 | ||||||||||||
$ | 436 | $ | 520 | $ | 231 | $ | 200 |
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
|
h.
|
Events
Subsequent to December 31, 2009
(unaudited)
|
|
1.
|
In
February 2010, the Company issued 1,125,000 Common shares as settlement of
debt for services rendered to the Company by a consultant in
2009. An additional 150,000 Common stock will be issued to the
consultant during the year 2010 with regard to services rendered to the
Company, as well as future services which will be provided to the
Company.
|
|
2.
|
In
a series of closings from March through June 2010, the Company issued a
total of 14,465,591 Common shares consisting of 14,273,000 Common shares
issued in March 2010 in consideration of GBP 713,650 ($1,078) with
issuance costs of $134 and 192,591 Common shares issued to directors of
the Company in May 2010 in consideration of GBP 12,518
($19).
|
|
3.
|
In
May 2010, the Company issued 16,727,698 Common shares in consideration of
$1,202. The issuance costs amounted to
$87.
|
|
4.
|
In
August 2010, 150,000 share of common stock were issued to a consultant for
services rendered to the company as well as future services which will be
provided to us.
|
|
5.
|
In
September 2010 the expiry date of certain warrants and options
held by Dr. Andrew L. Pearlman, our Chief Executive Officer, was
extended from March 31, 2011 to March 31, 2016, consisting of
(i) warrants to purchase 31,681,652 shares of common stock at an exercise
price of $0.071 per share, (ii) warrants to purchase 1,257,285 shares of
common stock at an exercise price of $0.001 per share, and (iii) options
to purchase 6,398,216 shares of common stock at an exercise price of
$0.071 per share. All of the other terms of these warrants and
options remain the same.
|
|
6.
|
In
September 2010, the Company granted options to purchase 1,000,000 shares
of common stock under our 2006 Stock Incentive Plan at an exercise price
of $0.234 per share to each of our non-executive directors, Dr. Bauer, Mr.
Kanter, Mr. Brukardt and Dr. McMurray, in recognition of their past
service to our company in 2008 and 2009 and for their continued service in
2010. Such options have a 10-year term and vest in equal
installments over three years. We also granted options to
purchase 450,000 shares of common stock at an exercise price of $0.234 per
share to Dr. Alastair Clemow who joined the Board in August 2010. Such
options also have a 10-year term and vest in equal installments over three
years.
|
|
7.
|
In
September 2010, the Company granted options to purchase 667,397 shares of
common stock under our 2006 Stock Incentive Plan at an exercise price of
$0.234 per share to each of Mr. Burt Rosen and Dr. Stephen Ettinger, new
members to our Strategic Advisory Board. Such options have a 10
year term and vest in equal installments over three
years.
|
|
8.
|
In
September 2010, the Company granted to a consultant, in lieu of cash for
services rendered, a warrant to purchase 397,949 shares of common stock at
an exercise price of $0.091 per share. Such warrant has a 5-year term and
is immediately exercisable.
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
NOTE 9:-
|
SHAREHOLDERS’ EQUITY
(CONT.)
|
|
h.
|
Events
Subsequent to December 31, 2009 (unaudited)
(cont.)
|
|
9.
|
In
September 2010, Dr. Eugene Bauer (Chairman of the Board of Directors)
exercised warrants over 1,000,000 shares of common stock at an exercise
price of US $0.071 per share ($71,000 aggregate exercise price) and used
the cashless exercise mechanism to exercise warrants over a further
2,000,156 shares. The fair market value of our common stock utilized to
calculate the number of shares issued under such mechanism was the average
of the MEDU.LN closing price for the ten trading days prior to the
commitment to exercise, which equated to GBP 0.15 per share or, based on
current exchange rates, $0.234. Using this cashless exercise
method, Dr. Bauer was issued 1,392,528 shares and, together with the
warrants exercised for cash, was issued a total of 2,392,528 shares of
common stock as a result of these warrant
exercises.
|
|
10.
|
In
September 2010, Dr. Stephen McMurray, a Director of our company exercised
warrants over 1,069,575 shares of common stock and options over 1,599,549
shares of common stock, each having an exercise price of US $0.071 per
share using the cashless exercise mechanism. Based on the same
cashless exercise pricing mechanism described above, Dr. McMurray was
issued 744,649 shares as a result of the warrant exercise and 1,113,622
shares as a result of the option exercise, or 1,858,271 shares of common
stock in total.
|
|
11.
|
In
September 2010, Mr. Joel Kanter, a Director of the Company and certain
parties described in the section entitled “Principal Stockholders”
exercised warrants and options. Mr. Kanter exercised options to
purchase 1,599,549 shares of common stock at an exercise price of $0.071
per share, or an aggregate exercise price of $113,568, In
addition, Chicago Investments, Inc. exercised warrants to purchase
14,080,734 shares of common stock at an exercise price of $0.0005 per
share, or an aggregate exercise price of $7,040, and exercised warrants to
purchase an additional 1,069,575 shares at an exercise price of $0.117 per
share, or an aggregate exercise price of $125,140. Chicago
Private Investments, Inc. exercised warrants to purchase 3 shares of
common stock at an exercise price of $0.25 per share, or an aggregate
exercise price $0.75. CIBC Trust Company (Bahamas) Limited, as
trustee, exercised warrants to purchase 3,059,192 shares of common stock
at our exercise price of $0.071 per share, or an aggregate exercise price
of $217,703.
|
|
12.
|
In
September 2010, the Company also issued 1,367,800 shares of common stock
in settlement of advisers’ fees in relation to the Company’s ongoing
fundraising endeavors and consultancy advice to our Board’s Compensation
Committee.
|
|
13.
|
In
October 2010, 441,224 shares were issued in a cashless exercise of
options.
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
NOTE
10:-
|
CONVERTIBLE
DEBENTURES
|
|
·
|
In
the event that the per share price paid in the Qualified Transaction (or
per share value of merger consideration in a Merger Transaction (as
defined in the Debenture)) (the "Qualified Transaction Price") is $0.12
per share or greater, the conversion price shall be the lesser of $0.12
per share or a 40% discount from the Qualified Transaction
Price.
|
|
·
|
In
the event that the Qualified Transaction Price is at least $0.07 but less
than $0.12 per share, the conversion price shall be $0.07 per
share.
|
|
·
|
In
the event that the Qualified Transaction Price is less than $0.07 per
share, the conversion price shall be the Qualified Transaction Price;
provided, however, that the holder of the Debenture shall receive 100%
more Warrants than such holder would have otherwise been entitled to
receive upon conversion.
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
NOTE
10:-
|
CONVERTIBLE
DEBENTURES (CONT.)
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
NOTE
11:-
|
TAXES
ON INCOME
|
a.
|
Tax
laws applicable to the
companies:
|
1.
|
The
Company is taxed under U.S. tax
laws.
|
2.
|
The
Subsidiary is taxed under the Israeli income Tax Ordinance and the Income
Tax (Inflationary Adjustments) Law, 1985: ("the
law").
|
b.
|
Tax
assessments:
|
c.
|
Tax
rates applicable to the Company and the
Subsidiary:
|
1.
|
The
Subsidiary:
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
2.
|
The
Company:
|
|
The
tax rates applicable to the Company whose place of incorporation is the
U.S. are corporate (progressive) tax at the rate of up to 35%, excluding
state tax, which rates depend on the state in which the Company will
conduct its business.
|
|
According
to the tax laws applicable to Israeli residents, dividend received from a
foreign resident company is subject to tax in Israel at the rate of 25% in
the hands of its recipient. According to the tax laws applicable in the
U.S., tax at the rate of 30% is withheld and based on the treaty for the
avoidance of double taxation of Israel and the U.S., it may be reduced to
either 25% or 12.5% (dependent on the identity of the shareholder). To
enjoy the benefits of the tax treaty, certain procedural requirements need
to be satisfied.
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
NOTE
11:-
|
TAXES
ON INCOME (CONT.)
|
d.
|
Carryforward
losses for tax purposes:
|
e.
|
Deferred
income taxes:
|
December
31,
|
||||||||
2008
|
2009
|
|||||||
Deferred
tax assets:
|
||||||||
Net
operating loss carryforward
|
$ | 3,477 | $ | 4,942 | ||||
Allowances
and reserves
|
262 | 325 | ||||||
Total
deferred tax assets before valuation allowance
|
3,739 | 5,267 | ||||||
Valuation
allowance
|
(3,739 | ) | (5,267 | ) | ||||
Net
deferred tax asset
|
$ | - | $ | - |
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
U.S.
dollars in thousands
|
NOTE
12:-
|
FINANCIAL
EXPENSE (INCOME)
|
Year ended December 31,
|
Period from
January 27,
2000
(inception)
through
June
|
|||||||||||
2008
|
2009
|
30, 2010
|
||||||||||
(unaudited)
|
||||||||||||
Financial
expense (income), net:
|
||||||||||||
Financial
income:
|
||||||||||||
Foreign
currency remeasurement adjustments
|
$ | (88 | ) | $ | (7 | ) | $ | (306 | ) | |||
Interest
on cash equivalents, short-term bank deposits and others
|
(63 | ) | (3 | ) | (210 | ) | ||||||
Others
|
(15 | ) | - | (49 | ) | |||||||
(166 | ) | (9 | ) | (565 | ) | |||||||
Financial
expenses:
|
||||||||||||
Bank
charges
|
26 | 16 | 65 | |||||||||
Interest
expenses
|
2 | 42 | 227 | |||||||||
Interest
and amortization of beneficial conversion feature of convertible
note
|
- | - | 759 | |||||||||
Convertible
debentures valuation
|
- | 443 | 422 | |||||||||
Foreign
currency remeasurement adjustments
|
122 | 52 | 232 | |||||||||
Others
|
3 | - | 11 | |||||||||
153 | 553 | 1,716 | ||||||||||
$ | (13 | ) | $ | 543 | $ | 1,151 |
ROTH
CAPITAL PARTNERS
|
MAXIM
GROUP LLC
|
SEC
registration fee
|
$ | 1,348 | ||
FINRA
filing fee
|
2,390 | |||
NYSE
Amex listing fee and expenses
|
* | |||
Printing
and engraving expenses
|
* | |||
Legal
fees and expenses
|
* | |||
Accounting
fees and expenses
|
* | |||
Transfer
Agent and Registrar fees and expenses
|
* | |||
Miscellaneous
|
* | |||
Total
|
$ |
*
|
|
1.
|
In
December 2007, the Registrant’s common stock was admitted for trading on
AIM and consequent to such admission, the Registrant sold 28,537,213
shares of common stock to non-U.S. investors. The Registrant sold these
shares for total gross consideration of approximately $5.7 million. The
Registrant paid an aggregate of $803,127 in broker’s fees and commissions
to various third parties and also issued an aggregate 3,008,033 shares of
common stock to consultants for services related to the issuance of the
above shares upon admission to AIM.
|
|
2.
|
In
December, the Registrant issued 76,389 shares of common stock to an entity
as compensation in connection with the issuance of a letter of credit for
the benefit of the Registrant.
|
|
3.
|
In
April 2008, the Registrant issued 142,609 shares of common stock to an
advisor in consideration for assistance with the Registrant’s fundraising
activities.
|
|
4.
|
On
May 1, 2009, the Registrant entered into an agreement with Equity Source
Partners, LLC (ESP) for consulting services rendered to the Registrant by
ESP. As compensation for these services, the Registrant issued 1,250,000
shares of common stock to the principals of
ESP.
|
|
5.
|
In
October 2009, the Registrant issued 4,420,000 shares of common stock in
consideration of approximately $0.4 million. SVS Securities PLC acted as
the Registrant’s broker and was paid commissions of
$20,973.
|
|
6.
|
In
March 2010, the Registrant issued 14,273,000 shares of common stock to
non-U.S. investors for total gross consideration of approximately $1.1
million. SVS Securities plc (SVS) acted as Registrant’s broker and was
paid commissions of $72,763. Also in March 2010, the Registrant issued
192,591 shares of common stock to certain of the Registrant’s directors
and their related parties for total gross consideration of approximately
$0.02 million.
|
|
7.
|
In
May 2010, the Registrant issued 10,780,000 shares of common stock to
non-U.S. investors for total gross consideration of approximately $0.8
million. SVS acted as the Registrant’s broker and was paid commissions of
$52,539. Also in May 2010, the Registrant issued 5,947,698 shares of
common stock for total gross consideration of approximately $0.4
million.
|
|
8.
|
On
June 1, 2010, the Registrant into an agreement with The Nybor Group, Inc.
(Nybor) for consulting services rendered to the Registrant by Nybor. As
compensation for these services, the Registrant issued 150,000 shares of
common stock to Nybor.
|
|
9.
|
On
August 17, 2010, the Registrant entered into an agreement with ESP for
consulting services rendered to the Registrant by ESP. As compensation for
these services, the Registrant issued 1,125,000 shares of common stock to
the principals of ESP.
|
|
10.
|
On
September 15, 2010, the Registrant issued 92,800 shares of common stock to
the principal of WNB Consulting, LLC in lieu of cash consulting
fees.
|
|
11.
|
In
January 2008, the Registrant issued 2,414,326 shares of common stock upon
the cashless exercise of outstanding warrants by certain holders. In
addition, the Registrant issued 47,724 shares of common stock upon the
exercise of outstanding warrants by a holder and received nominal
consideration.
|
|
12.
|
In
December 2008, the Registrant issued 30,119 shares of common stock upon
the exercise of outstanding warrants by a holder and received nominal
consideration.
|
|
13.
|
In
January and February 2009, the Registrant issued 11,025,832 shares of
common stock upon the exercise of outstanding warrants by certain holders
(including directors of the Registrant and related parties) and received
aggregate consideration of approximately $0.4 million. The Registrant
issued additional warrants to purchase 1,218,144 of common stock, with an
exercise price of $0.25, in connection with this
exercise.
|
|
14.
|
In
January 2010, the Registrant issued 232,072 shares of common stock upon
the exercise of outstanding warrants by a holder and received aggregate
consideration of approximately $0.03
million.
|
|
15.
|
In
May 2010, the Registrant issued 3,166 shares of common stock upon the
exercise of outstanding warrants by a holder and received nominal
consideration.
|
|
16.
|
In
September 2010, the Registrant issued 21,346,681 shares of common stock
upon the exercise of outstanding warrants by certain holders (including
directors of the Registrant and related parties) and received aggregate
consideration of approximately $0.5 million. Also in September 2010, the
Registrant issued 2,713,171 shares of common stock upon the exercise of
outstanding options by two directors and received aggregate consideration
of approximately $0.1 million.
|
|
17.
|
In
October 2010, the Registrant issued 441,224 shares of common stock upon
the cashless exercise of outstanding options by a
holder.
|
|
18.
|
During
the period June 2009 through September 5, 2009, the Registrant issued the
2009 Debentures in the aggregate principal amount of $0.57 million. The
2009 Debentures are unsecured obligations of the Registrant with a
maturity date two years from the date of issuance (ranging from June 16,
2011 to September 15, 2011) and currently accrue interest at the rate of
10% per annum. The 2009 Debentures (including any accrued interest) will
automatically convert into shares of common stock at the closing of the
offering to which this registration statement relates, at a conversion
ratio based on the offering price for shares in the offering to which this
registration statement relates. Upon such conversion, the Registrant will
issue to the holders five-year warrants to purchase a number of shares of
common stock equal to (a) the number of shares of common stock into which
such holder’s 2009 Debentures was converted, multiplied by (b) 0.35. Each
warrant will have an exercise price based on the offering price for shares
in the offering to which this registration statement relates. Newbridge
Securities Corporation acted as the Registrant’s underwriter in 2009 and
was paid commissions of $54,600, together with warrants to purchase 10% of
the number of shares of common stock into which the 2009 Debentures will
convert upon the closing of the offering to which this registration
statement relates.
|
|
19.
|
On
September 22, 2010, the Registrant issued the 2010 Debentures in the
aggregate principal amount of $4.0 million. The 2010 Debentures are
unsecured obligations of the Registrant with a maturity date of September
22, 2011 and currently accrue interest at 4% per annum. In connection with
the issuance of the 2010 Debentures, the Registrant issued to the
purchasers of such 2010 Debentures 5-year warrants to purchase 15,000,000
shares of common stock in the aggregate, at an initial exercise price per
share of £0.16. The 2010 Debentures (including any accrued and unpaid
interest) will automatically convert into shares of common stock at the
closing of the offering to which this registration statement relates, at a
conversion ratio based on the offering price for shares in the offering to
which this registration statement relates. In connection with such
issuances, the Registrant paid to Maxim Group LLC (Maxim) cash commissions
of $172,000 and issued Maxim 5-year warrants to purchase 1,612,500 shares
of common stock at an initial exercise price per share of £0.16. The
Registrant also paid cash commissions of $80,350 to Equity Source Partners
LLC.
|
|
20.
|
The
table below sets forth certain information relating to additional warrants
issued by the Registrant in the three years prior to the date of this
registration statement, not otherwise described
above.
|
Date of Issue
|
Number of Underlying Shares of
Common Stock
|
Exercise Price per Share
|
|||||
12/04/07
|
2,671,649 |
US $
|
0.164 | ||||
12/04/07
|
6,563,398 |
US
$
|
0.194 | ||||
12/04/07
|
594,175 |
GBP
|
0.10 | ||||
12/04/07
|
192,523 |
GBP
|
0.0778 | * | |||
12/04/07
|
458,308 |
GBP
|
0.0922 | ** | |||
12/01/08
|
2,353,063 |
US
$
|
0.194 | ||||
01/30/09
|
1,121,728 |
US
$
|
0.25 | ||||
02/13/09
|
96,416 |
US
$
|
0.25 | ||||
09/13/10
|
397,949 |
US
$
|
0.091 | ||||
09/22/10
|
15,000,000 |
GBP
|
0.16 |
|
21.
|
The
table below sets forth certain information relating to options issued to
directors, employees and consultants of the Registrant under its 2006
Stock Incentive Plan during the three years prior to the date of this
registration statement.
|
Consultant
|
Grant Date
|
Number of Underlying
Shares of Common Stock
|
Exercise Price
per Share
|
Option/Warrant
|
|||||||
Bruce
Bacon
|
12/07/2009
|
677,397 | $ | 0.120 |
Option
|
||||||
Anatole
Besarab
|
10/22/2008
|
677,397 | £ | 0.100 |
Option
|
||||||
Stephen
Ettinger
|
09/13/2010
|
667,397 | $ | 0.234 |
Option
|
||||||
Mark
Kay
|
11/14/2007
|
249,575 | $ | 0.210 |
Option
|
||||||
Emmett
Keeffe
|
11/14/2007
|
249,575 | $ | 0.210 |
Option
|
||||||
Philip
Ng
|
11/14/2007
|
534,787 | $ | 0.210 |
Option
|
||||||
Allen
Nissenson
|
11/14/2007
|
249,575 | $ | 0.210 |
Option
|
||||||
Amos
Panet
|
11/14/2007
|
577,613 | $ | 0.210 |
Option
|
||||||
Burt
Rosen
|
09/13/2010
|
667,397 | $ | 0.234 |
Option
|
Number
|
Description
of Exhibit
|
|
1.1*
|
Form
of Underwriting Agreement
|
|
3.1
|
Amended
and Restated Certificate of Incorporation
|
|
3.2
|
Certificate
of Amendment to Amended and Restated Certificate of
Incorporation
|
|
3.3*
|
Second
Amended and Restated By-Laws
|
|
4.1*
|
Specimen
common stock certificate
|
|
4.2
|
Registration
Rights Agreement, dated as of May 25, 2009, between the Company and the
person named therein
|
|
4.3
|
Registration
Rights Agreement, dated as of September 15, 2010, between the Company and
the persons named therein
|
|
5.1*
|
Opinion
of Barack Ferrazzano Kirschbaum & Nagelberg LLP
|
|
10.1
|
Israeli
Stock Option Plan, dated 2001, as amended as of July 7,
2003
|
|
10.2
|
Medgenics,
Inc. 2006 Stock Incentive Plan, effective March 31,
2006
|
|
10.3
|
First
Amendment to Medgenics, Inc. 2006 Stock Incentive Plan, dated August 22,
2007
|
|
10.4
|
Second
Amendment to Medgenics, Inc. 2006 Stock Incentive Plan, dated September
13, 2010
|
|
10.5
|
Employment
Agreement, dated as of April 20, 2006, between the Company and Baruch
Stern
|
|
10.6
|
Employment
Agreement, dated as of March 18, 2007, between the Company and Stephen
Bellomo
|
|
10.7
|
First
Amendment to Employment Agreement, dated as of July 1, 2007, between the
Company and Stephen Bellomo
|
|
10.8
|
Amended
and Restated Employment Agreement, dated as of June 1, 2007, between the
Company and Andrew Pearlman
|
|
10.9
|
First
Amendment to Amended and Restated Employment Agreement, dated as of
June 1, 2008, between the Company and Andrew Pearlman
|
|
10.10
|
Employment
Agreement, dated as of July 1, 2007, between the Company and Phyllis
Bellin
|
|
10.11
|
Executive
Director Appointment Letter, dated as of June 1, 2007, for Andrew
Pearlman
|
|
10.12
|
Non-Executive
Director Appointment Letter, dated as of November 14, 2007, for Eugene
Andrew Bauer
|
|
10.13
|
Non-Executive
Director Appointment Letter, dated as of November 14, 2007, for Gary Allan
Brukardt
|
|
10.14
|
Non-Executive
Director Appointment Letter, dated as of November 14, 2007, for Joel
Stephen
Kanter
|
10.15
|
Non-Executive
Director Appointment Letter, dated as of November 14, 2007, for Stephen
Devon McMurray
|
|
10.16
|
Consulting
Agreement, dated as of May 1, 2006, between the Company and Amos
Panet
|
|
10.17
|
Scientific
Advisory Board Agreement, dated as of May 1, 2006, between the Company and
Allen Nissenson
|
|
10.18
|
Scientific
Advisory Board Agreement, dated as of May 1, 2006, between the Company and
Mark Kay
|
|
10.19
|
Scientific
Advisory Board Agreement, dated as of October 22, 2008, between the
Company and Anatole Besarab
|
|
10.20
|
Scientific
Advisory Board Agreement, dated as of November 25, 2009, between the
Company and Bruce Bacon
|
|
10.21
|
Advisory
Board Agreement, dated as of June 9, 2010, between the Company and Burt
Rosen
|
|
10.22
|
Advisory
Board Agreement, dated as of September 2, 2010, between the Company and
Stephen Ettinger
|
|
10.23
|
Yissum
License Agreement, dated November 23, 2005, by and between the Company and
Yissum Research Development Company of the Hebrew University of
Jerusalem
|
|
10.24
|
Non-Exclusive
License Agreement, dated January 25, 2007, between the Company and Baylor
College
of Medicine
|
|
10.25
|
Production
Service Agreement, dated as of March 12, 2007, between the Company and
Molecular Medicine Bioservices, Inc.
|
|
10.26
|
Development
and License Agreement, dated as of April 16, 2007, between the Company and
Medgenics
Medical Israel, Ltd.
|
|
10.27*
|
Agreements
between the Company and the Office of Chief Scientist
|
|
10.28
|
Clinical
Trials Agreement, dated as of March 18, 2010, between Medgenics Medical
Israel, Ltd. and The Medical Research, Infrastructure, and Health Services
Fund of the Tel Aviv Medical Center
|
|
10.29
|
Agreement,
dated as of May 1, 2010, between the Company and Hadasit Medical Research
Services and Development Company, Ltd.
|
|
10.30
|
Service
Agreement, dated as of April 26, 2010, between the Company and Roei-Zohar
Liad
|
|
10.31
|
Consulting
Agreement, dated as of June 19, 2007, between the Company, ProPharma
Partners
Limited
and Medgenics Medical Israel, Ltd.
|
|
10.32
|
Consulting
Agreement, dated as of January 31, 2008, between the Company and BioMondo
Consulting,
Inc.
|
|
10.33
|
Consulting
Agreement, dated as of June 18, 2008, between the Company and Biologics
Consulting Group, Inc.
|
|
10.34
|
Amendment
No. 1 to Consulting Agreement, effective January 1, 2010, between the
Company and Biologics Consulting Group, Inc.
|
|
10.35
|
Agreement,
dated as of May 5, 2010, between the Company and Sudbrook Associates
LLP
|
|
10.36
|
Agreement,
dated as of May 12, 2010, between the Company and Nomura Code Securities,
Ltd.
|
|
10.37
|
Consulting
Agreement, dated as of June 1, 2010, between the Company and The Nybor
Group, Inc.
|
|
10.38
|
Consulting
Agreement, dated as of August 17, 2010, between the Company and Equity
Source
Partners,
LLC
|
|
10.39
|
Consulting
and Fee Agreement, dated as of September 15, 2010, between the Company and
Equity Source Partners, LLC
|
|
10.40*
|
Consulting
Services Agreement, dated as of October __, 2010, between the Company and
Eugene Bauer
|
|
10.41
|
Offshore
Registrar Agreement, dated as of 2007, between the Company and Capita
Registrars
(Jersey)
Limited
|
|
10.42
|
Side
Letter Agreement re Warrants, dated as of June 16, 2010, between the
Company and
Newbridge
Securities Corporation
|
|
10.43
|
Broker
Agreement, dated as of November 28, 2007, between the Company and SVS
Securities PLC
|
|
10.44
|
Nominated
Adviser Agreement, dated as of November 28, 2007, between the Company and
Blomfield Corporate Finance
Limited
|
10.45
|
Depository
Agreement, dated as of 2008, between the Company and Capita IRG Trustees
Limited
|
|
10.46
|
Securities
Purchase Agreement, dated as of May 13, 2009, between the Company and the
persons named therein
|
|
10.47
|
Form
of Convertible Debenture, dated as of May 13, 2009, between the Company
and the persons named therein
|
|
10.48
|
Stock
Purchase Agreement, dated as of February 5, 2010, between the Company and
Windy City, Inc., Andrew Pearlman and Eugene Bauer
|
|
10.49
|
Stock
Purchase Agreement, dated as of May 1, 2010, between the Company and the
persons named therein
|
|
10.50
|
Securities
Purchase Agreement, dated September 15, 2010, between the Company and the
persons named therein
|
|
21.1
|
Subsidiaries
of the Company
|
|
23.1
|
Consent
of Kost Forer Gabbay and Kasierer (Ernst & Young)
|
|
24.1
|
|
Power
of Attorney (contained on the signature page to this registration
statement)
|
|
(b)
|
No
financial statement schedules are provided because the information called
for is not required or is shown either in the financial statements or the
notes thereto.
|
MEDGENICS,
INC.
|
|
By:
|
/s/ Andrew L. Pearlman
|
Andrew
L. Pearlman
|
|
President
and Chief Executive Officer
|
Signature
|
Title
|
Date
|
||
/s/
Andrew L. Pearlman
|
President
and Chief Executive Officer
|
November
5, 2010
|
||
Andrew
L. Pearlman
|
(Principal
Executive Officer)
|
|||
/s/
Phyllis Bellin
|
Director
of Finance and
Administration;
Secretary;
Treasurer
(Principal
Accounting and
|
November
5, 2010
|
||
Phyllis
Bellin
|
Financial
Officer)
|
|||
/s/
Joel S. Kanter
|
Director
|
November
5, 2010
|
||
Joel
S. Kanter
|
||||
/s/
Eugene A. Bauer
|
Director
|
November
5, 2010
|
||
Eugene
A. Bauer
|
||||
/s/
Stephen D. McMurray
|
Director
|
November
5, 2010
|
||
Stephen
D. McMurray
|
||||
/s/
Gary A. Brukardt
|
Director
|
November
5, 2010
|
||
Gary
A. Brukardt
|
||||
/s/
Alastair Clemow
|
Director
|
November
5, 2010
|
||
Alastair
Clemow
|
(a)
|
In
furtherance and not in limitation of the powers conferred by statute, the
board of directors is expressly authorized to make, alter, amend, or
repeal the by-laws of the corporation at any meeting of the board of
directors of the corporation.
Notwithstanding the
foregoing,
no amendment to the by-laws adopted by the board of
directors of the corporation may vary or conflict with the by-laws adopted
at the date of this Amended and Restated Certificate of Incorporation or
any subsequent amendment adopted by Stockholders in accordance with the
by-laws. By-laws, whether made or altered by the Stockholders
or by the board of directors of the corporation, shall be subject to
alteration or repeal by the Stockholders as provided in the
by-laws.
|
(b)
|
The
second sentence of clause (a) of this Article V shall cease to apply with
immediate effect from the date
that:
|
|
(i)
|
any
shares of capital stock of the corporation become listed on a United
States national securities exchange or authorized for quotation on the
NASDAQ Stock Market; or
|
|
(ii)
|
the
corporation no longer has any shares of its capital stock listed or
admitted to trading on the Official List of the United Kingdom Listing
Authority or on AIM (as defined in Article XI(a)(iii) below), or any
successor to either of them.
|
(a)
|
Any
person who was or is a party, or is threatened to be made a party, to any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact
that he or she is or was a director or officer of the corporation, or by
reason of the fact that he or she was serving at the request of the
corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise, shall be indemnified (and the
corporation shall advance expenses incurred in connection with the defense
of such actions, suits or proceedings) to the full extent now or hereafter
permitted by law.
|
(b)
|
Any
person who was or is a party, or is threatened to be made a party, to any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact
that he or she is or was a non-officer employee or an agent of the
corporation, or by reason of the fact that he or she is or was serving at
the request of the corporation as a non-officer employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, may be indemnified (and the corporation may advance expenses
incurred in connection with the defense of such actions. suits or
proceedings) to the full extent now or hereafter permitted by
law.
|
(c)
|
The
right of indemnification and advancement of expenses under this Article
VIII shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under
any by-law, agreement, vote of Stockholders or disinterested directors or
otherwise.
|
(d)
|
The
corporation may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the corporation,
or who is or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against
him or her and incurred by such person in any such capacity, or arising
out of his or her status as such, whether or not the corporation would
have the power to indemnify such person against such
liability.
|
(e)
|
Any
repeal or modification of the foregoing provisions of this Article VIII by
the Stockholders shall be prospective only and shall not adversely affect
any right or protection of any person existing at the time of such repeal
or modification for or with respect to any acts of omission of such person
occurring prior to such repeal or
modification.
|
(a)
|
DEFINITIONS
. In
this Article XI, the following words and expressions have the meanings set
forth below:
|
|
(i)
|
“Admission”
means admission of shares of the corporation’s common stock to trading on
AIM;
|
|
(ii)
|
“affiliate”
means a person that directly, or indirectly, through one or more
intermediaries, Controls, or is Controlled by, or is under common Control
with, another person;
|
|
(iii)
|
“AIM”
means AIM, the market operated by London Stock Exchange
plc;
|
|
(iv)
|
“acting
in concert” means actively co-operating, pursuant to an agreement,
arrangement or understanding (whether written or oral), through the
acquisition of securities of the corporation, to obtain or consolidate
Control of the corporation;
|
|
(v)
|
“beneficial
ownership” means, with respect to shares of capital stock of the
corporation, sole or shared voting power (which includes the power to
vote, or to direct the voting of, such shares of capital stock of the
corporation) and/or investment power (which includes the power to dispose,
or to direct the disposition of, such shares of capital stock of the
corporation), whether direct or indirect, and the right to acquire any of
the foregoing interests, in each case whether through any contract,
arrangement, understanding, relationship, or otherwise. Shares of capital
stock of the corporation may be beneficially owned by one or more persons.
A person who has a right to subscribe for or convert into shares of
capital stock of the corporation shall also be deemed beneficially to own
such shares of capital stock and references to beneficial ownership of
capital stock of the corporation shall include any beneficial ownership
whatsoever in such stock including, without limitation, a right to Control
directly or indirectly the exercise of any right conferred by the
ownership of capital stock of the corporation, alone or in conjunction
with any person, and the beneficial ownership of any person shall be
deemed to include the beneficial ownership of any other person deemed to
be acting in concert with such
person;
|
|
(vi)
|
“Control”
means beneficial ownership of shares of capital stock of the corporation
representing 30% or more of the Voting Power (as defined below) of the
corporation, whether or not such ownership holdings give de facto
control;
|
|
(vii)
|
“Disclosure
Notice” means a notice issued by the corporation requiring the disclosure
of beneficial ownership of shares of capital stock of the
corporation;
|
|
(viii)
|
“Exchange
Act” means the Securities Exchange Act of 1934, as
amended;
|
|
(ix)
|
“Highest
Price” has the meaning set forth in Article
XI(e)(ii);
|
|
(x)
|
“interest”
in a person means beneficial ownership of any shares of capital stock of
the corporation of such person;
|
|
(xi)
|
“Notifiable
Interest” means a beneficial ownership of a number of shares of capital
stock of the corporation equal to or more than 3 per cent (3%) of the
aggregate number of outstanding shares of capital stock of the
corporation;
|
|
(xii)
|
“Offer”
means a written tender offer made in accordance with Article
XI(e);
|
|
(xiii)
|
“Offeror”
has the meaning set forth in Article
XI(e)(i);
|
|
(xiv)
|
“Offer
Period” means the period from the time when an announcement is made of a
proposed or possible Offer (with or without terms) until the first closing
date or, if later, the date when the Offer becomes or is declared
unconditional as to acceptances or lapses. An announcement that 30% or
more of the Voting Power of the corporation is for sale or that the board
of directors of the corporation is seeking potential offers to acquire
Control of the corporation will be treated as the announcement of a
possible Offer for purposes of determining the applicable Offer
Period;
|
|
(xv)
|
“Operator”
means any person who is a Stockholder of record of the corporation by
virtue of its holding capital stock of the corporation as trustee or
nominee on behalf of those persons who beneficially own capital stock of
the corporation and have elected to hold such capital stock in
dematerialized form through a depository
interest;
|
|
(xvi)
|
“person”
means any individual, firm, partnership, association, corporation, limited
liability company, or other entity;
|
|
(xvii)
|
“public
disclosure” means disclosure in a press release, announcement or other
publication released through or otherwise reported or reproduced by the
Dow Jones News Service, Associated Press, Reuters, Bloomberg, the
regulatory news service operated by London Stock Exchange plc or
comparable national or international news service or in a document filed
by the corporation with London Stock Exchange plc (if the corporation’s
capital stock is admitted to trading on AIM at such time) or the US
Securities and Exchange Commission (“SEC”) pursuant to the Exchange Act
(if the corporation is then a U.S. Reporting corporation) or otherwise
furnished to all Stockholders;
|
|
(xviii)
|
“U.S.
Reporting corporation” means a person with a class of equity securities
registered under the Exchange Act;
|
|
(xix)
|
“Voting
Power” means all the voting power attributable to the issued and
outstanding capital stock of the corporation that is currently exercisable
at a meeting of Stockholders, taking into account any Voting Power
Reduction then in effect; and
|
|
(xx)
|
“Voting
Power Reduction” has the meaning set forth in Article
XI(c)(iii).
|
(b)
|
EFFECT OF THIS
ARTICLE
. From the date of Admission, this Article XI
shall be in effect;
provided,
however
, that this Article XI shall cease to apply with immediate
effect from the date that:
|
|
(i)
|
any
shares of capital stock of the corporation become listed on a United
States national securities exchange or authorized for quotation on the
NASDAQ Stock Market; or
|
|
(ii)
|
the
corporation no longer has any shares of its capital stock listed or
admitted to trading on the Official List of the United Kingdom Listing
Authority or on AIM, or any successor to either of
them.
|
(c)
|
DISCLOSURE
REQUIREMENTS.
|
|
(i)
|
Beneficial
Ownership
. For purposes of this Article XI(c), a person shall be
treated as beneficially owning capital stock of the
corporation:
|
(A)
|
if
the person has been named in a Disclosure Notice as being a beneficial
owner;
|
(B)
|
if
in response to a Disclosure Notice, the person beneficially owning the
capital stock of the corporation or another person appearing to
beneficially own such capital stock has failed to establish the identities
of those who have beneficial ownership and, taking into account the
response and other relevant information, the corporation has determined
that the person in question does or may beneficially own such capital
stock; or
|
(C)
|
if
the person holding the capital stock of the corporation is an Operator and
the person in question has notified the Operator that he beneficially owns
such capital stock.
|
|
(ii)
|
Disclosure
Notice
. The board of directors of the corporation may send a
Disclosure Notice in writing to any person that the board of directors of
the corporation determines to have or be reasonably likely to have
beneficial ownership of shares of capital stock of the corporation
requiring such person to identify any capital stock of the corporation
that person beneficially owns and to give such further information as may
be required by the board of directors of the corporation. Any Disclosure
Notice may require such person to describe specifically its beneficial
ownership of the capital stock of the corporation. Any information given
in response to the Disclosure Notice shall be received by the Secretary of
the corporation within a period of 14 days (subject to Articles XI(c)iv
and XI(c)(v)) of service of the Disclosure Notice. A Disclosure Notice
that has been given under this Article XI(c)(ii) shall remain in effect in
accordance with its terms following a transfer of the shares of capital
stock of the corporation to which it relates, unless and until the board
of directors of the corporation determines otherwise and notifies the
person accordingly. Where a Disclosure Notice is given to an Operator, the
obligations of the Operator shall be limited to disclosing information
that it records relating to a person appearing to beneficially own the
capital stock of the corporation it
holds.
|
|
(iii)
|
Failure to Comply with
Article XI(c)(ii)
. Despite anything herein to the contrary, if a
Disclosure Notice has been sent to a person and the corporation has not
(subject to Articles XI(c)(iv) and XI(c)(v)) received the information
required in respect of the capital stock of the corporation within a
period of 14 days after service of the Disclosure Notice, then the Voting
Power of such person relating to the shares of capital stock of the
corporation held by such person shall automatically be reduced so that
each share beneficially owned by such person has no votes per share (the
“Voting Power Reduction”). The corporation shall, as soon as practicable
after such Voting Power Reduction, send notice to the relevant person
stating that (until such time as the board of directors of the corporation
determines otherwise under Article XI(c)(iv)) such person shall be subject
to the Voting Power Reduction stated in the notice with respect to the
shares of capital stock of the corporation beneficially owned by such
person.
|
|
(iv)
|
Removal of Voting
Power Reduction
. The board of directors of the corporation may
determine that the Voting Power Reduction imposed on any holder of capital
stock of the corporation shall cease to apply at any time. If the
corporation receives the information required by the relevant Disclosure
Notice, the board of directors of the corporation shall, within 7 days of
receipt, determine that the Voting Power Reduction shall cease to apply
unless the board of directors of the corporation has reason to believe the
information is incorrect.
|
|
(v)
|
Exceptions
.
Where the capital stock of the corporation beneficially owned by any
person representing less than 0.25% of the outstanding shares of the class
or series of capital stock of the corporation at issue on the date on
which the relevant Disclosure Notice is given, then the period of 14 days
referred to in Article XI(c)(ii) shall be a period of 28
days.
|
(d)
|
NOTIFICATION
REQUIREMENTS
|
|
(i)
|
Without
prejudice to, and in addition to any obligation of disclosure or
notification under DGCL, where a Stockholder
either:
|
|
(A)
|
to
his knowledge acquires a Notifiable Interest or ceases to have a
Notifiable Interest; or
|
|
(B)
|
becomes
aware that he has acquired a Notifiable Interest or that he has ceased to
have a Notifiable Interest in which he was previously
interested,
|
|
(ii)
|
The
obligation to disclose in Article XI(d)(i) also arises where there is an
increase or decrease in the percentage level of a Stockholder’s Notifiable
Interest and, for these purposes, if the percentage level is not a whole
number it shall be rounded down to the next whole
number.
|
|
(iii)
|
Any
notification under Article XI(d)(i) shall identify the Stockholder so
interested, the nature and extent of his interest and the date on which he
acquired or ceased to hold a Notifiable Interest or on which there was an
increase or decrease in the percentage level of his Notifiable
Interest.
|
(e)
|
OFFER
REQUIREMENTS
.
|
|
(i)
|
Offer
. Subject
to the DGCL, the Exchange Act (if the corporation is a US Reporting
corporation) and any applicable SEC regulations,
when:
|
(A)
|
any
person acquires beneficial ownership of shares of capital stock of the
corporation, whether such ownership was acquired in one transaction or a
series of transactions, that (taken together with shares of capital stock
of the corporation beneficially owned, held or acquired by persons acting
in concert with such person) represents at the time of, and including such
acquisition, at least 30% of the Voting
Power;
|
(B)
|
any
person who beneficially owns (taken together with shares of capital stock
of the corporation beneficially owned, held or acquired by persons acting
in concert with such person) at least 30% but less than 50% of the Voting
Power acquires or any person acting in concert with him acquires
additional shares of capital stock of the
corporation
|
|
(ii)
|
Form of Offer
.
An Offer must be made in writing and publicly disclosed, must be open for
acceptance for a period of not less than 30 days and, if the Offer is made
conditional as to acceptances and becomes or is declared unconditional as
to acceptances, must remain open for not less than 14 days after the date
on which it would otherwise have expired. An Offer must, in respect of
each class or series of capital stock of the corporation, be in cash or be
accompanied by a cash alternative at a value not less than the highest
price (as computed in accordance with Article XI(e)(iii) paid by the
Offeror for shares of that class or series during the Offer Period and
within 12 months prior to its commencement (the “Highest Price”). The
Highest Price shall be determined by the board of directors of the
corporation or any advisor retained by the board of directors of the
corporation for such purpose; provided, however, that the board of
directors of the corporation or any advisor retained by the board of
directors of the corporation shall adhere to the guidelines set forth in
Article XI(e)(iii).
|
|
(iii)
|
Calculation of Highest
Price
. When capital stock of the corporation has been acquired for
consideration other than cash in a transaction giving rise to an
obligation to make an Offer under Article XI(e), the Offer must
nevertheless be in cash or be accompanied by a cash alternative of at
least equal value, which value must be determined by an independent
valuation. In calculating the Highest Price, stamp duty and broker’s
commission, if any, shall be
excluded.
|
(A)
|
Listed Securities.
If
capital stock of the corporation has been acquired in exchange for listed
securities in a transaction giving rise to an obligation to make an Offer
under Article XI(e), the Highest Price will be established by reference to
the middle market price of such listed securities on the applicable market
on the date of such
acquisition.
|
(B)
|
Conversion, Warrants, Options
or Other Subscription Rights.
If capital stock of the corporation
is admitted to trading on AIM and has been acquired by the conversion or
exercise (as applicable) of convertible securities, warrants, options or
other subscription rights, the Highest Price shall be established by
reference to the middle market price of such capital stock on the London
Stock Exchange at the close of business on the day on which the relevant
exercise or conversion notice was submitted
provided that
if the convertible securities, warrants, options or subscription rights
were acquired more than 12 months after the commencement of the Offer
Period, they will be treated as if they were purchases of the underlying
capital stock of the corporation at a price equal to the sum of the
purchase price of such convertible securities, warrants, options or other
subscription rights plus the relevant conversion or exercise price paid
(or if such convertible securities, warrants, options or other
subscription rights have not yet been converted or exercised, the maximum
conversion or exercise price payable under the relevant conversion or
exercise terms).
|
|
(iv)
|
Redemption
. If
an Offeror shall fail to comply with Article XI(e), or shall fail to
comply with such Offeror’s obligations under the Offer, all of the shares
of capital stock of the corporation held by such Offeror shall be subject
to redemption by the corporation, to the extent of funds legally available
therefor, for a price per share (the “Redemption Price”) equal to the par
value of the shares of capital stock of the corporation to be so redeemed
(the “Imposed Redemption”).
|
(A)
|
Notice.
At least ten
(10) but no more than sixty (60) days prior to the date fixed for any
redemption of the shares of capital stock of the corporation held by an
Offeror described in Article XI(e)(iv) (the “Redemption Date”), notice
shall be mailed, first class, postage prepaid, to each holder of record
(at the close of business on the business day next preceding the day on
which notice is given) of the shares to be redeemed, at the address last
shown on the records of the corporation for such holder or given by the
holder to the corporation for the purpose of notice, or if no such address
appears or is given, at the place where the principal executive office of
the corporation is located, notifying such holder of the redemption to be
effected, specifying the number of shares to be redeemed from such holder,
the Redemption Date, the Redemption Price, the place at which payment may
be obtained and calling upon such holder to surrender to the corporation,
in the manner and at the place designated, the certificate or certificates
representing the shares to be redeemed (the “Redemption Notice”). Except
as provided below, on or after the Redemption Date, each holder of shares
to be redeemed shall surrender to the corporation the certificate or
certificates representing such shares, in the manner and at the place
designated in the Redemption Notice, and thereupon the Redemption Price of
such shares shall be payable to the order of the person whose name appears
on such certificate or certificates as the owner thereof and each
surrendered certificate shall be canceled. In the event fewer than all of
the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed
shares.
|
(B)
|
Effect of Redemption.
From and after the Redemption Date, unless there shall have been a
default in the payment of the Redemption Price, all rights of the holders
of such shares of capital stock in the corporation as holders of such
shares (except the right to receive the Redemption Price without interest
upon surrender of their certificate or certificates) shall cease with
respect to such shares, and such shares shall not thereafter be
transferred on the books of the corporation or be deemed to be outstanding
for any purpose whatsoever. If the funds of the corporation legally
available for redemption on any Redemption Date are insufficient to redeem
the total number of shares of capital stock of the corporation to be
redeemed on such date, those funds which are legally available will be
used to redeem the maximum possible number of such shares ratably among
the holders of such shares to be redeemed. The shares of capital stock of
the corporation not redeemed shall remain outstanding and entitled to all
of the rights and preferences provided herein, and the holder thereof
shall continue to be subject to any Voting Power Reduction then in effect
with respect to the shares of capital stock of the corporation of such
holder. At any time thereafter when additional funds of the corporation
are legally available for the redemption of such remaining shares, such
funds will immediately be used to redeem the balance of the shares of
capital stock of the corporation that are subject to the redemption but
have not been redeemed.
|
|
(v)
|
Voting Power
Reduction
. Until such time as the corporation has exercised the
Imposed Redemption right, the Offeror shall be subject to the Voting Power
Reduction with respect to the shares of capital stock of the corporation
held thereby described in Article XI(e)(iv). In addition, until public
disclosure of an Offer has been made, an Offeror shall be subject to the
Voting Power Reduction.
|
|
(vi)
|
Stockholder Waiver of
Offer Obligation
. If an issue of new securities by the corporation
or the acquisition of beneficial ownership of shares of capital stock of
the corporation by any person (either alone or taken together with shares
of capital stock of the corporation beneficially owned, held or acquired
by persons acting in concert with such person) would otherwise result in
an obligation to make an Offer under Article XI(e), the obligation may be
waived by the holders of a majority of the Voting Power of the corporation
not affiliated or acting in concert with the proposed recipient of the new
securities or the person making such
acquisition.
|
|
(vii)
|
Waiver by the
corporation
. The Imposed Redemption may be waived, at the
discretion of the board of directors of the corporation, when (i) the
capital stock of the corporation subject to such Imposed Redemption is
proved, to the reasonable satisfaction of the board of directors of the
corporation, to have been sold to a new beneficial owner that is not
affiliated or acting in concert with the Offeror, or (ii) the provisions
of this Article XI(e) relating to the Offer or, as the case may be, the
Offeror’s obligations under the Offer, have been complied with in
full.
|
(f)
|
SEVERABILITY
.
If any term or provision in this Article XI shall be in violation of any
applicable law or public policy, then this Article XI shall be deemed to
include such provision only to the fullest extent that it is legal, valid
and enforceable, and the remainder of the terms and provisions herein
shall be construed as if such illegal, invalid, unlawful, void, voidable
or unenforceable term or provision were not contained herein; if this
Article XI shall be in violation of any applicable law or public policy in
its entirety, then this Amended and Restated Certificate of Incorporation
shall be deemed not to include the provisions of this Article
XI.
|
(g)
|
INTERPRETATION
.
To the fullest extent permitted by law, the board of directors of the
corporation shall have the exclusive power and authority to administer and
interpret the provisions of this Article XI and to exercise all rights and
powers specifically granted to the board of directors of the corporation
or the corporation or as may be necessary or advisable in the
administration of this Article XI, and all such actions, calculations,
determinations and interpretations which are done or made by the board of
directors of the corporation in good faith shall be final, conclusive and
binding on the corporation and the beneficial and record owners of the
capital stock of the corporation and shall not subject the board of
directors of the corporation to any
liability.
|
(a)
|
EFFECT OF THIS
ARTICLE
. From the date of Admission (as defined in
Article XI(a)), this Article XII shall be in effect;
provided,
however
, that this Article XII shall cease to apply with immediate
effect from the date that:
|
|
(i)
|
any
shares of capital stock of the corporation become listed on a United
States national securities exchange or authorized for quotation on the
NASDAQ Stock Market; or
|
|
(ii)
|
the
corporation no longer has any shares of its capital stock of the
corporation admitted to the Official List of the United Kingdom Listing
Authority and to trading on the London Stock Exchange’s market for listed
securities or admitted to trading on AIM, or any successor to either of
them.
|
(b)
|
PREEMPTIVE
RIGHTS
: Unless otherwise approved by the affirmative
vote of the holders of at least seventy-five per cent. (75%) of the
outstanding capital stock of the corporation entitled to vote and whose
votes are cast in relation to the resolution disapplying this Article, the
corporation shall not allot or issue shares of capital stock of the
corporation or any other shares or securities convertible into shares of
capital stock of the corporation or any warrants or options to purchase
shares or securities convertible into shares to any person for cash unless
it shall first have made an offer to each holder of capital stock of the
corporation to sell to him on the same or more favorable terms a
proportion of those shares, securities, options or warrants which is as
nearly as practical equal to the proportion that the par value of shares
held by him bears to the aggregate par value of the then outstanding
shares of capital stock of the corporation (subject to such exclusions as
the board of directors of the corporation may deem expedient or necessary
to deal with fractional entitlements or legal or practical problems under
any applicable law or regulation), provided, however, that these
pre-emption rights shall not apply with respect
to:
|
|
(i)
|
the
placing and/or sale for cash of any shares of capital stock of the
corporation in connection and simultaneous with
Admission;
|
|
(ii)
|
the
sale for cash of any of shares of capital stock of the corporation in the
period of 12 months following the date of Admission (as defined in Article
XI(a)(i) above) which, when aggregated with all other such sales in such
12 month period (excluding the sales referenced in clause (i) above), do
not exceed thirty per cent. (30%) of the outstanding capital stock of the
corporation as of the date of
Admission;
|
|
(iii)
|
from
and after the first anniversary of the date of Admission, the sale for
cash of any of shares of capital stock of the corporation in any 12 month
period which, when aggregated with all other such sales in the relevant 12
month period, do not exceed 10 per cent. (10%) of the outstanding capital
stock of the corporation as of the first day of the relevant 12 month
period;
|
|
(iv)
|
options
or shares granted to employees, officers, directors, consultants,
contractors or advisers under, and the issuance of shares pursuant to
benefits granted under, any stock option or incentive plan heretofore or
hereafter adopted by the corporation or any exercise
thereof;
|
|
(v)
|
shares
issued upon exercise of any options or warrants granted prior the
effective date of this Amended and Restated Certificate of Incorporation
or warrants otherwise granted in connection with business transactions of
the corporation in the ordinary course (including, without limitation, to
financial institutions, vendors and research and development joint venture
partners);
|
|
(vi)
|
shares
issued as a dividend or distribution payable in shares of capital stock of
the corporation offered pro rata to all
Stockholders;
|
|
(vii)
|
shares
issued upon any subdivision or combination or reclassification of Common
Shares; and
|
(viii)
|
shares
of capital stock of the corporation issued for or in connection with the
purchase or acquisition of the stock, business or assets of one or more
other persons, or in connection with a merger of the corporation with or
into one or more other persons or any similar business combination or
acquisition.
|
MEDGENlCS,
INC.
|
||
By:
|
/s/ Andrew L. Pearlman
|
|
Name:
|
Andrew
L. Pearlman
|
|
Title:
|
President
|
Medgenics,
Inc.
|
|
/s/ Andrew L. Pearlman
|
|
Andrew
L. Pearlman, President
|
COMPANY:
|
|
MEDGENICS,
INC.
|
|
By:
|
|
Name:
Andrew L. Pearlman
|
|
Title:
President
|
COMPANY:
|
|||
MEDGENICS,
INC.
|
|||
By:
|
/s/
Andrew L. Pearlman
|
||
Name:
Andrew L. Pearlman
|
|||
Title:
President
|
If
Entity:
|
If
Individual:
|
|||
|
||||
[Name
of Entity]
|
[Signature]
|
|||
By:
|
|
|
||
Name:
|
[Print
Name]
|
|||
Title:
|
1.
|
PURPOSE
OF THE ISOP
|
1
|
|
2.
|
DEFINITIONS
|
1
|
|
3.
|
ADMINISTRATION
OF THE ISOP
|
5
|
|
4.
|
DESIGNATION
OF PARTICIPANTS
|
7
|
|
5.
|
DESIGNATION
OF OPTIONS PURSUANT TO SECTION 102
|
7
|
|
6.
|
TRUSTEE
|
7
|
|
7.
|
SHARES
RESERVED FOR THE ISOP; RESTRICTION THEREON
|
8
|
|
8.
|
PURCHASE
PRICE
|
9
|
|
9.
|
ADJUSTMENTS;
CORPORATE TRANSACTIONS
|
9
|
|
10.
|
TERM
AND EXERCISE OF OPTIONS
|
11
|
|
11.
|
VESTING
OF OPTIONS
|
13
|
|
12.
|
PURCHASE
FOR INVESTMENT
|
14
|
|
13.
|
SHARES
SUBJECT TO RIGHT OF FIRST REFUSAL
|
14
|
|
14.
|
DIVIDENDS
|
15
|
|
15.
|
RESTRICTIONS
ON ASSIGNABILITY AND SALE OF OPTIONS
|
15
|
|
16.
|
EFFECTIVE
DATE AND DURATION OF THE ISOP
|
15
|
|
17.
|
AMENDMENTS
OR TERMINATION
|
16
|
|
18.
|
GOVERNMENT
REGULATIONS
|
16
|
|
19.
|
CONTINUANCE
OF EMPLOYMENT OR HIRED SERVICES
|
16
|
|
20.
|
GOVERNING
LAW & JURISDICTION
|
16
|
|
21.
|
TAX
CONSEQUENCES
|
16
|
|
22.
|
NON-EXCLUSIVITY
OF THE ISOP
|
17
|
|
23.
|
MULTIPLE
AGREEMENTS
|
17
|
|
24.
|
INFORMATION
TO OPTIONEES AND PURCHASERS
|
17
|
1.
|
PURPOSE
OF THE ISOP
|
2.
|
DEFINITIONS
|
|
2.1
|
“
Administrator
” means the
Board or a Committee appointed pursuant to Section 3
below.
|
|
2.2
|
“
Affiliate
” means any
“employing company” within the meaning of Section 102(a) of the
Ordinance.
|
|
2.3
|
“
Approved 102 Option
”
means an Option granted pursuant to Section 102(b) of the Ordinance and
held in trust by a Trustee for the benefit of the
Optionee.
|
|
2.4
|
“
Applicable Laws
” means
the legal requirements relating to the administration of stock option and
restricted stock purchase plans under applicable U.S. state corporate
laws, U.S. federal and applicable state securities laws, the Code, any
stock exchange rules or regulations and the applicable laws of any other
country or jurisdiction where Options or Stock Purchase Rights are granted
under the ISOP as such laws, rules, regulations and requirements shall be
in place from time to time.
|
|
2.5
|
“
Board
” means the Board
of Directors of the Company.
|
|
2.6
|
“
Capital Gain Option
(CGO)
” means an Approved 102 Option elected and designated by the
Company to qualify under the capital gain tax treatment in accordance with
the provisions of Section 102(b)(2) of the
Ordinance.
|
|
2.7
|
“
Cause
” For termination
of an Employee’s or Non Employee’s Continuous Service Status will exist if
the participant is terminated by the Company for any of the following
reasons: (i) conviction of any felony; (ii) commission of any
act of fraud, embezzlement or dishonesty against or involving the Company,
or breach of Fiduciary duties or duties of care as regards the Company;
(iii) any other willful misconduct against the Company that violates
either a law or a Company policy and has caused or is reasonably expected
to result in material injury to the Company; (iv) unauthorized use or
disclosure by participant of any proprietary information or trade secrets
of the Company or any other party to whom the participant owes an
obligation of nondisclosure as a result of his or her relationship with
the Company; or (v) willful breach of any of participant’s obligations
under any written agreement or covenant with the Company. The
determination as to whether a participant is being terminated for Cause
shall be made in good faith by the Company and shall be final and binding
on the participant.
|
|
2.8
|
“
Chairman
” means the
Chairman of the corporate body constituting the
Administrator.
|
|
2.9
|
“
Change of Control
” means
a sale of all or substantially all of the Company’s assets, or any merger,
consolidation or other transaction of the Company with or into another
corporation, entity or person, other than a transaction in which the
holders of at least a majority of the shares of capital stock of the
Company outstanding immediately prior to such transaction continue to hold
(either by the voting securities remaining outstanding or by their being
converted into voting securities of the surviving entity) a majority of
the total voting power represented by the voting securities of the
Company, or such surviving entity, outstanding immediately after such
transaction.
|
|
2.10
|
“
Code
” means the Internal
Revenue Code of 1986, as now in effect or as hereafter
amended.
|
|
2.11
|
“
Committee
” means one or
more committees or subcommittees of the Board appointed by the Board to
administer the ISOP in accordance with Section 3
below.
|
|
2.12
|
“
Company
” means Medgenics
Inc., a Delaware corporation.
|
|
2.13
|
“
Continuous Service
Status
” means the absence of any interruption or termination of
service as an Employee or Non-Employee. Continuous Service
Status as an Employee or Non-Employee shall not be considered interrupted
in the case of: (i) sick leave; (ii) military leave; (iii) any
other leave of absence approved by the Administrator, provided that such
leave is for a period of not more than ninety (90) days, unless
reemployment upon the expiration of such leave is guaranteed by contract
or statute, or unless provided otherwise pursuant to Company policy
adopted from time to time; or (iv) in the case of transfers between
locations of the Company or between the Company, its Parents or
Affiliates, or their respective successors. In addition, the
Company’s providing a participant with notice of termination of employment
or services shall be deemed to constitute termination of Continuous
Service Status, effective as of the date set forth in such
notice. A change in status from an Employee to a Non-Employee,
or from a Non-Employee to an Employee, will not constitute an interruption
of Continuous Service Status.
|
|
2.14
|
“
Controlling Shareholder
”
shall have the meaning ascribed to it in Section 32(9) of the
Ordinance.
|
|
2.15
|
“
Date of Grant
” means, as
determined by the Board or authorized Committee, (i) the date as of
which the Board or such Committee approves a grant or (ii) such other
later date that may be specified by the Board or such Committee, as set
forth in Exhibit B of the Option
Agreement.
|
|
2.16
|
“
Disability
” means an
Optionee’s inability to perform his or her duties with the Company, or any
of its affiliates, for a consecutive period of at least 180 days, by
reason of any medically determinable, physical or mental impairment, as
determined by a physician selected by the Optionee and acceptable to the
Company, including a disability under Code Section
22(e)(3).
|
|
2.17
|
“
Employee
” means a person
who is employed by the Company or a Parent or an Affiliate with the status
of employment determined based upon such factors as are deemed appropriate
by the Administrator in its discretion, subject to the requirements of the
Applicable Laws, including an individual who is serving as a director or
an office holder, but excluding a Controlling
Shareholder.
|
|
2.18
|
“
Expiration date
” means
the date upon which an Option shall expire, as set forth in Section 10.3
of the ISOP.
|
|
2.19
|
“
Exchange Act
” means the
Securities Exchange Act of 1934, as now in effect or as hereafter
amended.
|
|
2.20
|
“
Fair Market Value
” means
as of any date, the value of a Share determined as follows: (i)
Prior to the IPO (as defined below) or otherwise in the absence of an
established market for the Shares, the value of the Shares shall be
determined in the good faith judgment of the Board (or the Committee, if
the Board shall have delegated such authority to the Committee) based on
all relevant factors, in a manner consistent with Section 260.140.50, of
Title 10 of the California Code of Regulations. Without
derogating from the above, solely for the purpose of
Section 102(b)(3) of the Ordinance, if at the Date of Grant the
Company’s shares are listed on any established stock exchange or a
national market system or if the Company’s shares, will be registered for
trading within ninety (90) days following the Date of Grant, the Fair
Market Value of a Share at the Date of Grant shall be determined in
accordance with the average value of the Company’s shares on the thirty
(30) trading days preceding the Date of Grant or on the thirty (30)
trading days following the date of registration for trading, as the case
may be; (ii) If the Shares are listed on any established stock exchange or
a national market system, including without limitation the Nasdaq National
Market system, or the Nasdaq Small Cap Market of the Nasdaq Stock Market,
the Fair Market Value shall be the closing sales price for such Shares (or
the closing bid, if no sales were reported), as quoted on such exchange or
system as of the applicable date, as reported in the
Wall Street
Journal
or such other source as the Committee deems reliable; or
(iii) If the Share are regularly quoted by a recognized securities
dealer, but selling prices are not reported, the Fair Market Value shall
be the mean the midpoint between the high bid and low asked prices for the
Shares on the last market trading day prior to the day of
determination. The determination of Fair Market Value of the
Shares shall be applied consistently with respect to different ISOP
participants.
|
|
2.21
|
“
IPO
” means the initial
Public Offering of the Company’s
shares.
|
|
2.22
|
“
ISOP
” means the
Company’s 2001 Israeli Share Option Plan
amended as of March, 6,
2003
.
|
|
2.23
|
“
Non-Employee
” means a
consultant, adviser, service provider, Controlling Shareholder or any
other person who is not an
Employee.
|
|
2.24
|
“
Ordinary Income Option
(OIO)
” means an Approved 102 Option elected and designated by the
Company to qualify under the ordinary income tax treatment in accordance
with the provisions o1 Section 102(b)(1) of the
Ordinance.
|
|
2.25
|
“
Option
” means an option
to purchase one or more shares of stock pursuant to the
ISOP.
|
|
2.26
|
“
102 Options
” means
Options containing such terms that will qualify them for the special tax
treatment under Section 102.
|
|
2.27
|
“
3(i) Options
” means
Options that do nut contain such terms that will qualify them for the
special tax treatment under Section
102.
|
|
2.28
|
“
Optionee
” means a person
who receives or holds an Option under the
ISOP.
|
|
2.29
|
“
Option Agreement
” means
the stock option agreement between the Company and an Optionee that
evidences and sets out the terms and conditions of an
Option.
|
|
2.30
|
“
Parent
” means a “parent
corporation,” whether now or hereafter existing, as defined in Section
424(e) of the Code, or any successor
provision.
|
|
2.31
|
“
Purchase Price
” means
the price for each Share of stock subject to an
Option.
|
|
2.32
|
“
Restricted Period
” means
a period of time from the Date of Grant, during which the Trustee shall
hold the Options and/or Shares as required under Section 102 of the
Ordinance, as now in effect or as hereafter
amended.
|
|
2.33
|
“
Securities Act
” means
the United States Securities Act of 1933, as now in effect or as hereafter
amended.
|
|
2.34
|
“
Section 102
” means
Section 102 of the Ordinance, as now in effect or as hereafter
amended.
|
|
2.35
|
“
Share
” means the common
stock, $0.01 par value per share, of the
Company.
|
|
2.36
|
“
The Ordinance
” means the
1961 Israeli Tax Ordinance [New Version], as now in effect or as hereafter
amended.
|
|
2.37
|
“
Transaction
” means a
sale of all or substantially all of the Company’s assets, or a merger,
consolidation or other capital reorganization or transaction of the
Company with or into another corporation, entity or person, and includes a
Change of Control.
|
|
2.38
|
“
Trustee
” means a trustee
nominated by the Committee and approved by the Tax authorities under
Section 102(a) of the Ordinance.
|
|
2.39
|
“
Unapproved 102 Option
”
means an Option granted pursuant to Section 102(c) or the Ordinance and
not held in trust by a Trustee.
|
|
2.40
|
“
USSOP
” means the
Company’s 2001 US Stock Option
Plan.
|
|
2.41
|
“
Vesting Dates
” means, as
determined by the Board or authorized Committee, the date as of which the
Optionee shall be entitled to exercise the options or part of the Options,
as set forth in Section 10 if the
ISOP.
|
3.
|
ADMINISTRATION
OF THE ISOP
|
|
3.1
|
The
Board or a Committee appointed and maintained by the Board for such
purpose (in either case, referred to as the “
Administrator
”), shall
have the power to administer the ISOP. Notwithstanding the
above, the Board shall automatically have residual authority if no
Committee shall be constituted or if such Committee shall cease to operate
for any reason whatsoever. In addition, the ISOP may be
administrated by different administrative bodies with respect to different
classes of Optionees and, if permitted by the Applicable Laws, the Board
may authorize one or more officers who are not members of the Board to
grant Options under the ISOP.
|
|
3.2
|
The
Committee shall consist of such number of members as may be determined by
the Board. The Committee shall select one of its members as its
Chairman and shall hold its meetings at such times and places as the
Chairman shall determine. The Committee shall keep records of
its meetings and shall make such rules and regulations for the conduct of
its business as it shall deem
advisable.
|
|
3.3
|
Any
member of such Committee shall be eligible to receive Options under the
ISOP while serving on the Committee, unless otherwise specified herein or
prohibited by the Applicable Laws.
|
|
3.4
|
Subject
to the provisions of the ISOP and the Applicable Laws, and in the case of
a Committee, the specific authority delegated by the Board to such
Committee, the Administrator shall have full power and authority
to: (i) designate Optionees and to issue Options; (ii)
determine the terms and provisions of respective Option Agreements (which,
need not be identical from one Optionee to another) including, but not
limited to, the number of Shares to be covered by each Option, the
Purchase Price applicable to Options, the provisions concerning the time
or times when and the extent to which the Options shall vest and become
exercisable, and the nature and duration of restrictions as to
transferability or restrictions constituting substantial risk of
forfeiture or other restrictions or forfeiture provision, and to cancel or
suspend awards, as necessary; (iii) to accelerate the vesting rights or
rights of an Optionee to exercise in whole or in part, any previously
granted Option; (iv) to interpret the provisions and supervise the
administration of the ISOP which determination shall be final and binding
on all parties; (v) to determine the Fair Market Value of the Shares in
accordance with Section 2.20 above; (vi) to adjust the Vesting Dates of an
Option; (vii) to designate Options as CGOS, OIOs, Unapproved 102 Options,
3(i) Options or any other type of option which shall be taxable by the
Ordinance; (viii) to make an election as to the type of 102 Approved
Option; and (ix) to determine any other matter which is necessary or
desirable for, or incidental to administration of the
ISOP.
|
|
3.5
|
The
Committee shall have the authority to grant, in its discretion, to the
holder of an outstanding Option, in exchange for the surrender and
cancellation of such Option, a new Option having a Purchase Price equal
to, lower than or higher than the Purchase Price provided in the Option so
surrendered and canceled, and containing such other terms and conditions
as the Committee may prescribe, in accordance with the provisions of the
ISOP.
|
|
3.6
|
The
interpretation and construction by the Committee of any provision of the
ISOP, or of any Option Agreement thereunder, shall be final and conclusive
unless otherwise determined by the
Board.
|
|
3.7
|
At
the Company’s discretion, each member of the Board or the Committee may be
indemnified and held harmless by the Company against any cost or expense
(including counsel fees) reasonably incurred by him, or any liability
(including any sum paid in settlement of a claim with the approval of the
Company) arising out of any act or omission to act in connection with the
ISOP, unless arising out of such member’s own fraud or bad faith, to the
extent permitted by the Applicable Laws. Such indemnification
shall be in addition to any rights of indemnification the member may have
as a director or otherwise under the Company’s incorporation documents,
any agreement, any vote of shareholders or disinterested directors,
insurance policy or otherwise, but shall be subject to the terms and
provisions of any written indemnification agreements between the Company
and such individual.
|
4.
|
DESIGNATION
OF PARTICIPANTS
|
|
4.1
|
The
persons eligible for participation in the ISOP shall include any Employees
and/or Non-Employees of the Company or of any Parent or Affiliate of the
Company, provided that 102 Options may be granted only to Employees and
that 3(i) Options may only be granted to Non-Employees and/or Controlling
Shareholders. The grant of an Option hereunder shall neither
entitle the Optionee to participate nor disqualify him from participating
in any other grant of Options, pursuant to the ISOP or any other option,
stock or similar plan of the Company or any of its
subsidiaries.
|
|
4.2
|
Anything
in the ISOP to the contrary notwithstanding, all grants of Options to
members of the Board and office holders shall be authorized and
implemented in accordance with the provisions of the Applicable Laws, as
in effect from time to time.
|
5.
|
DESIGNATION
OF OPTIONS PURSUANT TO SECTION
102
|
|
5.1
|
The
Company may designate Options granted to Employees pursuant to
Section 102 as Approved 102 Options or as Unapproved 102
Options.
|
|
5.2
|
The
grant of Approved 102 Options shall be made under this ISOP adopted by the
Board, and shall be conditioned upon the approval of this ISOP by the
ITA.
|
|
5.3
|
Approved
102 Options may either be classified as Capital Gain Options (“
CGOs
”) or Ordinary
Income Options (“
OIOs
”).
|
|
5.4
|
No
Approved 102 Option may be granted under the ISOP to any eligible
Employee, unless and until, the Company’s election or the type of Approved
102 Option as CGO or as OIO that will be granted to Employees (the “
Election
”), is
appropriately filed with the ITA. Such Election shall become
effective beginning the first Date of Grant of an Approved 102 Option
under this ISOP and shall remain in effect until the end of the year
following the year in which the Company first granted Approved 102
Options. The Election shall obligate the Company to grant only
the type of Approved 102 Option it has elected, and shall apply to all
Optionees who were granted Approved 102 Options during the period
indicated herein, all in accordance with the provisions of Section 102(g)
of the Ordinance. For the avoidance of doubt, such Election
shall not prevent the Company from granting Unapproved 102 Options
simultaneously.
|
|
5.5
|
For
the avoidance doubt, the designation of Approved 102 Options and
Unapproved 102 Options shall be subject to the terms and conditions of
Section 102 of the Ordinance and the regulations promulgated
thereunder.
|
6.
|
TRUSTEE
|
|
6.1
|
Approved
102 Options which shall be granted under the ISOP, and/or any Shares
allocated or issued upon exercise of such Options, and/or other shares
received subsequently following any realization of rights (including bonus
stock), shall be allocated or issued to a Trustee nominated by the
Committee, and approved in accordance with the provisions of Section 102
and held for the benefit of the Optionees. Approved 102 Options
and any Shares received subsequently following exercise of Approved 102
Options, shall be held by the Trustee in accordance with the rules of
Section 102. In the case the requirements for Approved 102
Options are not met, then the Approved 102 Options shall be treated as
Unapproved 102 Options, all in accordance with the provisions of Section
102 and regulations promulgated
thereunder.
|
|
6.2
|
The
Trustee shall not release any Shares allocated or issued upon exercise of
Options prior to the full payment of the Optionee’s tax liabilities
arising from Options which were granted to
him.
|
|
6.3
|
Upon
receipt of the Option, the Optionee shall sign an undertaking to release
the Trustee from any liability in respect to any action or decision duly
taken and executed in a bona fide manner in relation to the ISOP, or any
Option or Share granted to him
thereunder.
|
|
6.4
|
With
respect to any Approved 102 Option, subject to the provisions of
Section 102 and any rules or regulation or orders or procedures
promulgated thereunder, an Optionee shall not be entitled to sell or
release from trust any Share received upon the exercise of an Approved 102
Option and/or any share received subsequently following any realization of
rights, including without limitation, bonus shares, until the lapse of the
holding period required under Section 102 of the
Ordinance.
|
7.
|
SHARES
RESERVED FOR THE ISOP; RESTRICTION
THEREON
|
|
7.1
|
Subject
to the provisions of Section 9 below, the maximum aggregate number of
Shares that may be sold under the ISOP and the USSOP shall equal a total
of 910,117 (nine hundred ten thousand one hundred seventeen)
Shares. The Shares may be authorized but unissued or reacquired
Shares. Any Shares which remain unissued and which are not
subject to outstanding Options at the termination of the ISOP shall cease
to be reserved for the purpose of the ISOP, but until termination of the
ISOP, the Company shall at all times reserve sufficient number of Shares
to meet the requirements of the ISOP and the USSOP. Should any
Option for any reason expire or be canceled prior to its exercise or
relinquishment in full, the Shares subject to such Option may again be
subjected to an Option under the ISOP or any other Stock Option
Plan. In addition, any Shares which are retained by the Company
upon exercise of an Option in order to satisfy any withholding taxes due
with respect to such exercise or purchase shall be treated as not issued
and shall continue to be available under the ISOP. Shares
issued under the ISOP and later repurchased by the Company pursuant to any
repurchase right which the Company may have shall not be available for
future grant under the ISOP.
|
|
7.2
|
For
the removal of doubt, the Optionee shall not have any legal, financial or
other claims against the Company with regards to any additional issuance
of shares or grant of options.
|
8.
|
PURCHASE
PRICE
|
|
8.1
|
The
Purchase Price of each Share underlying an Option shall be determined by
the Board or the Committee, if the Board has delegated such authority to
the Committee, in the Board’s or the Committee’s sole and absolute
discretion, in accordance with the Applicable Laws, subject to any
guidelines as may be determined or adopted by the Board from time to
time. Each written agreement governing an Option will contain
the Purchase Price applicable with respect to such
Option.
|
|
8.2
|
The
Purchase Price shall generally be payable upon the exercise of an Option
in a form satisfactory to the Committee, including without limitation, by
cash or check. In addition and if permitted by the Applicable
Laws, the Administrator may in its discretion authorize the following
additional types of consideration (to be reflected in individual Option
agreements if applicable): (1) delivery of the Optionee’s
promissory note bearing a commercial rate of interest at the time of
exercise and having such recourse, security and redemption provisions as
the Administrator determines to be appropriate (subject to the provisions
of Section 153 of the Delaware General Corporation Law); (2)
cancellation of indebtedness; (3) other Shares that have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of
the Shares as to which the Option is exercised, provided that in the case
of Shares acquired, directly or indirectly, from the Company, such Shares
must have been owned by the participant for more than six months on the
date of surrender (or such other period as may be required to avoid the
Company’s incurring an adverse accounting charge); (4) delivery of a
properly executed exercise notice together with such other documentation
as the Administrator and a securities broker approved by the Company shall
require to effect exercise of the Option and prompt delivery to the
Company of the sale or loan proceeds required to pay the Purchase Price
and any applicable withholding taxes; or (5) any combination of the
foregoing methods of payment. In making its determination as to
the type of consideration to accept, the Administrator shall consider if
acceptance of such consideration may be reasonably expected to benefit the
Company and the Administrator may, in its sole discretion, refuse to
accept a particular form of consideration at the time of any Option
exercise. The Committee shall have the authority to postpone
the date of payment on such terms as it may
determine.
|
9.
|
ADJUSTMENTS;
CORPORATE TRANSACTIONS
|
|
9.1
|
In
the event of a Transaction, each outstanding Option shall be assumed, or
an equivalent option or right shall be substituted by the successor
corporation or a parent or a subsidiary of such successor corporation (the
“
Successor
Corporation
”), unless the Successor Corporation does not agree to
assume the Option or to substitute an equivalent option or right, in which
case the vesting and exercisability of such outstanding Options shall
accelerate in full, effective as of immediately prior to the consummation
of the Transaction, and the Options shall terminate upon the consummation
of the Transaction. In the event of an Option assumption or
substitution, the Administrator shall make appropriate adjustments to the
Purchase Price to reflect such action, and all other terms and conditions
of the written Option Agreements shall remain in
force.
|
|
9.2
|
Nothing
in Section 9.1 shall limit the Administrator’s ability to provide for,
either in the initial Option Agreement or later through amendment of an
Option, for acceleration of vesting or exercisability provisions
applicable to an Option, as a result of a Change of Control or
otherwise.
|
|
9.3
|
If
the Company liquidates or dissolved while unexercised Options remain
outstanding under the ISOP, then all such outstanding Options will
terminate immediately as of the effective date of any such liquidation or
dissolution of the Company.
|
|
9.4
|
Subject
to any action required under the Applicable Laws by the stockholders of
the Company, the number of Shares of Common Stock covered by each
outstanding Option, and the number of Shares of Common Stock that have
been authorized for issuance under the ISOP but as to which no Options
have yet been granted or that have been returned to the ISOP upon
cancellation or expiration of an Option, as well as the price per Share of
Common Stock covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of
issued Shares resulting from a stock split, reverse stock split, stock
dividend, combination, recapitalization or reclassification of the Common
Stock, or any other increase or decrease in the number of issued Shares
effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company
shall not be deemed to have been “effected without receipt of
consideration.” Such adjustment shall be made by the
Administrator, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of Shares of Common Stock subject to an
Option.
|
|
9.5
|
Anything
herein to the contrary notwithstanding, if prior to the completion of the
IPO, all or substantially all of the shares of the Company are to be sold,
or in case of a Transaction, all or substantially all of the shares of the
Company are to be exchanged for securities of another Company, then each
Optionee shall be obliged to sell or exchange, as the case may be, any
Shares such Optionee purchased under the ISOP, in accordance with the
instructions issued by the Board in connection with the Transaction, whose
determination shall be final.
|
10.
|
TERM
AND EXERCISE OF OPTIONS
|
|
10.1
|
Each
Option granted pursuant to the ISOP, shall be evidenced by a written
Option Agreement between the Company and the Optionee, in such form as the
Board or the Committee shall from time to time approve. Each
Option Agreement shall state, inter alia, the number of Shares to which
the Option relates and the type of Option granted thereunder (whether a
CGO, a OIO, an Unapproved 102 Option or a 3(i)
Option).
|
|
10.2
|
Options
shall be exercised by the Optionee by delivering both a written notice of
the intent to exercise and payment of the Purchase Price to the Company,
in such form and method as may be determined by the Company and the
Trustee, and when applicable, in accordance with the requirements of
Section 102, which exercise shall be effective upon receipt of notice and
payment by the Company at its principal office. The notice
shall specify the number of Shares with respect to which the Option is
being exercised. Options may not be exercised for a fraction of
a Share. The Administrator may require that an Option be
exercised as to a minimum number of Shares, provided that such requirement
shall not prevent an Optionee from exercising the full number of Shares as
to which the Option is then exercisable. Exercise of an Option
in any manner shall result in a decrease in the number of Shares that
thereafter may be available, both for purposes of the ISOP and for sale
under the Option, by the number of Shares as to which the Option is
exercised.
|
|
10.3
|
Options,
to the extent not previously exercised, shall terminate forthwith upon the
Expiration Date, which shall be the earlier of: (i) the
expiration of ten (10) years from the Date of Grant (or such shorter
period as may be specified in the Option Agreement); (ii) the expiration
of any extended or shortened period in any of the events set forth in
Section 10.8 below; or (iii) as a result of a Transaction governed by
Section 9.
|
|
10.4
|
Transferability
of Options shall be governed by Section 15
below.
|
|
10.5
|
Each
Option shall be exercisable following the Vesting Dates set forth in the
Option Agreement and subject to the provisions of the ISOP for the number
of Shares as shall be provided in Exhibit B of the Option
Agreement. However no Option shall be exercisable after the
Expiration Date.
|
|
10.6
|
The
Options may be exercised by the Optionee in whole at any time or in part
from time to time, to the extent that the Options are either vested and/or
exercisable pursuant to their terms, prior to the Expiration Date, and
provided that, subject to the provisions of Section 10.8 below, the
Optionee is an Employee or a Service Provider of the Company or any of its
Affiliates, at all times during the period beginning with the Date of
Grant of the Option and ending upon the date of
exercise.
|
|
10.7
|
Subject
to the provisions of Section 10.8 below, in the event of termination of
Optionee’s Continuous Service Status with the Company or any of its
Parents or Affiliates, all unexercised Options granted to such Optionee
will immediately expire.
|
|
10.8
|
Notwithstanding
anything to the contrary in Section 9 and provided that the Administrator
may provide for longer periods (not to exceed the term of the Option under
Section 10.2 above) with respect to any individual Option (to be reflected
in the applicable Option Agreement), an Option may be exercised after the
date of termination of Optionee’s Continuous Service Status during an
additional period of time beyond such date, but only with respect to the
number of Options in which the Optionee was vested as of the date of
termination of the Optionee’s Continuous Service
Status:
|
|
(i)
|
in
the event of termination without Cause, within a period of thirty (30)
days (or such longer period provided in the Option Agreement) following
the date of such termination; or
|
|
(ii)
|
in
the event termination as the result of death or Disability of the
Optionee, within a period of twelve (12) months following the date of such
termination; or
|
|
(iii)
|
in
the event of termination of employment for Cause, any outstanding
unexercised Option (including Option Shares that are otherwise vested and
exercisable) will immediately expire and terminate, as of the earlier of
the last day of Continuous Service Status or the date on which the Company
first notifies the Optionee that his or her relationship will be
terminated.
|
|
10.9
|
To
avoid doubt, the holders of Options shall not be deemed owners of the
Shares issuable upon the exercise of Options, and shall not have any of
the rights or privileges of stockholders of the Company in respect to any
shares purchasable upon the exercise of any part of an Option, until
registration of the Optionee as holder of such Shares in the Company’s
register of members, upon exercise of the Option in accordance with the
provisions of Section 10.2 above.
|
10.10
|
Any
form of Option Agreement authorized by the ISOP may contain such other
provisions as the Administrator may, from time to time, deem
advisable. Without limiting the foregoing, the Administrator
may, with the consent of the Optionee, from time to time cancel all or any
portion of any Option then subject to exercise, and the Company’s
obligation in respect of such Option may be discharged by (i) payment
to the Optionee of an amount in cash equal to the excess, if any, of the
Fair Market Value of the Shares at the date of such cancellation subject
to the portion of the Option so canceled over the aggregate Purchase Price
or such Shares, (ii) the issuance or transfer to the Optionee of Shares of
the Company with a Fair Market Value at the date of such transfer equal to
any such excess, or (iii) a combination of cash and shares with a combined
value equal to any such excess, all as determined by the Administrator in
its sole discretion.
|
11.
|
VESTING
OF OPTIONS
|
|
11.1
|
Subject
to Section 11.2 below, any Option granted hereunder shall vest and become
exercisable at such times and under such conditions as determined by the
Administrator, consistent with the terms of the ISOP and reflected in the
Option Agreement, including vesting requirements and/or performance
criteria with respect to the Company and/or the Optionee. No
Option shall be exercisable after the Expiration Date. The
vesting provisions of individual Options, as reflected in individual
Option Agreements, may vary.
|
|
11.2
|
The
Administrator shall have the discretion to determine whether and to what
extent the vesting of Options shall be tolled during any unpaid leave of
absence; provided, however, that in the absence of such determination,
vesting of Options shall be tolled during any such unpaid leave (unless
otherwise required by the Applicable Laws). In the event of
military leave, vesting shall toll during any unpaid portion of such
leave, provided that, upon a Optionee’s returning from military leave
(under conditions that would entitle him or her to protection upon such
return under the Applicable Laws), he or she shall be given vesting credit
with respect to Options to the same extent as would have applied had the
Optionee continued to provide services to the Company throughout the leave
on the same terms as he or she was providing services immediately prior to
such leave.
|
12.
|
PURCHASE
FOR INVESTMENT
|
13.
|
SHARES
SUBJECT TO RIGHT OF FIRST
REFUSAL
|
|
13.1
|
Notwithstanding
anything to the contrary in the Company’s Bylaws or Certificate of
Incorporation, as amended from time to time, none of the Optionees shall
have a right of first refusal in relation to any sale of Company’s shares
by the Company or any other party.
|
|
13.2
|
Unless
otherwise determined by the Administrator, until such time as the Company
shall complete an IPO, the sale of Shares issuable upon the exercise of an
Option shall be subject to a right of first refusal on the part of the
Repurchaser(s), as set forth in the Exercise Notice provided as a part of
the Option Agreement, or if not so provided as set forth
below: Repurchaser(s) means (i) the Company, if permitted by
applicable law, (ii) if the Company is not permitted by applicable law,
then any Affiliate of the Company designated by the Board or (iii) if no
decision is reached by the Board then the Company’s existing stockholders
(save, for avoidance of doubt, for other Optionees who already exercised
their Options), pro rata in accordance with their
shareholding. The Optionee or the Trustee on his behalf shall
give a notice of sale (hereinafter the “
Notice
”) to the Company
in order to offer the Shares to the
Repurchaser(s).
|
|
13.3
|
The
Notice shall specify the name of each proposed purchaser or other
Transferee (hereinafter the “
Proposed Transferee
”),
the Number of Shares offered for sale, the price per Share and the payment
terms. The Repurchaser(s) will be entitled for 30 days from the
day of receipt of the Notice (hereinafter the “
Notice Period
”), to
purchase all or part of the offered Shares on a pro rata basis based upon
their respective holdings in the
Company.
|
|
13.4
|
If
by the end of the Notice Period, not all of the offered Shares have been
purchased by the Repurchaser(s), the Optionee or the Trustee on his
behalf, shall be entitled to sell such Shares at any time during the 90
days following the end of the Notice Period on terms not more favorable
than those set out in the Notice, provided that the Proposed Transferee
agrees in writing that the provisions of this section shall continue to
apply to the Shares in the hands of such Proposed
Transferee.
|
14.
|
DIVIDENDS
|
15.
|
RESTRICTIONS
ON ASSIGNABILITY AND SALE OF
OPTIONS
|
16.
|
EFFECTIVE
DATE AND DURATION OF THE ISOP
|
17.
|
AMENDMENTS
OR TERMINATION
|
18.
|
GOVERNMENT
REGULATIONS
|
19.
|
CONTINUANCE
OF EMPLOYMENT OR HIRED
SERVICES
|
20.
|
GOVERNING
LAW & JURISDICTION
|
21.
|
TAX
CONSEQUENCES
|
|
21.1
|
Any
tax consequences arising from the grant or exercise of any Option, from
the payment for Shares covered thereby or from any other event or act (of
the Company and/or its Affiliates, the Trustee or the Optionee),
hereunder, shall be borne solely by the Optionee. The Company
and/or its Parent or Affiliates and/or the Trustee shall withhold taxes
according to the requirements under the applicable laws, rules, and
regulations, including withholding taxes at
source. Furthermore, the Optionee shall agree to indemnify the
Company and/or its Parent or Affiliates and/or the Trustee and hold them
harmless against and from any and all liability for any such tax or
interest or penalty thereon, including without limitation, liabilities
relating to the necessity to withhold, or to have withheld, any such tax
from any payment made to the Optionee, the Administrator allows the
withholding or surrender of Shares to satisfy an Optionee’s tax
withholding obligations under this Section 21, the Administrator shall not
allow Shares to be withheld in an amount that exceeds the minimum
statutory withholding rates for tax purposes, including payroll
taxes.
|
|
21.2
|
The
Company and/or the Trustee shall not be required to release any Share
certificate to an Optionee until all required payments have been fully
made.
|
|
21.3
|
To
the extent provided by the terms of an Option Agreement, the Optionee may
satisfy any tax withholding obligation relating to the exercise or
acquisition of Shares under an Option by any of the following means (in
addition to the Company’s right to withhold from any compensation paid to
the Option by the Company) or by a combination of such
means: (i) tendering a cash payment; (ii) subject to the
Administrator’s approval on the payment date, authorizing the Company to
withhold Shares from the Shares otherwise issuable to the Optionee as a
result of the exercise or acquisition of Shares under the Option in an
amount not to exceed the minimum amount of tax required to be withheld by
law; or (iii) subject to Administrator approval on the payment date,
delivering to the Company owned and unencumbered Shares, provided that
Shares acquired upon exercise of Options have been held by the Optionee
for at least 6 months from the date of
exercise.
|
22.
|
NON-EXCLUSIVITY
OF THE ISOP
|
23.
|
MULTIPLE
AGREEMENTS
|
24.
|
INFORMATION
TO OPTIONEES AND PURCHASERS
|
|
(A)
|
Termination Other Than
Due to Death or Disability
. In the event of a Participant’s
Termination of Service for any reason other than death or Disability, the
right of the Participant to exercise any vested Options and/or Stock
Appreciation Rights shall, unless the exercise period is extended by the
Committee in accordance with Section 6.03(d) above, terminate upon the
earlier of: (I) ninety (90) days after the date of the Termination of
Service; and (II) the date of expiration of the Options and/or Stock
Appreciation Rights determined pursuant to Section 6.03(b)(ii)
above.
|
|
(B)
|
Death or
Disability
. In the event of a Participant’s Termination of Service
by reason of death or Disability, the right of the Participant to exercise
any vested Options and/or Stock Appreciation Rights shall, unless the
exercise period is extended by the Committee in accordance with Section
6.03(d) above, terminate upon the earlier of: (I) one year after the date
of the Termination of Service; and (II) the date of expiration of the
Options and/or Stock Appreciation Rights determined pursuant to Section
6.03(b)(ii) above.
|
|
7.02
|
Terms of Restricted
Shares
.
|
MEDGENICS,
INC.
|
||
By:
|
/s/ Andrew L. Pearlman
|
|
Its:
|
Chief Executive Officer
|
MEDGENICS,
INC.
|
||
By:
|
/s/ Andrew L. Pearlman
|
|
Its:
|
Chief Executive Officer
|
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,
|
the
Company desires to engage the Employee as Bioscience Director, and the
Employee represents that he has the requisite skill and knowledge to serve
as such; and
|
WHEREAS,
|
the
parties desire to state the terms and conditions of the Employee’s
engagement by the Company, effective as of the date of this Agreement, as
set forth below.
|
1.
|
Appointment; Position:
Bioscience Director
|
2.
|
Position
|
2.1
|
The
Employee shall be employed on a full-time basis and shall devote his
entire business time, attention and efforts to the performance of his
duties and responsibilities under this Agreement and the business and
affairs of the Company. The Employee may not be employed by nor 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.
|
2.2
|
The
Employee shall be responsible for managing biological research and
development efforts, including the bio-research facilities, outsourced
services and consultants in bio-research and development that are
pertinent to the bioscience work of the company. The Employee’s areas of
activity shall include:
|
a)
|
Scientific
leadership of bioscience development, including preclinical
preparations
|
b)
|
As
part of the senior management team, participating in company planning and
management, creating and updating the technology development plan and
schedule, and executing the detailed
plan.
|
c)
|
Ensuring
compliance with the applicable regulatory quality and safety standards
(e.g. GLP, GCP, GMP) for development, preclinical, and clinical stages,
including consulting with appropriate advisors and
experts
|
d)
|
Preparing
for, supervising and guiding the implementation of experiments and
interpretation of results obtained, within approved schedule and
budget
|
e)
|
Analysis
of experimental results qualitatively and quantitatively, lessons learned,
and use in ongoing
development
|
f)
|
Keeping
the company updated on relevant technology developments and
opportunities
|
g)
|
Establishing
and maintaining contacts with world class experts and advisors, together
with CTO
|
h)
|
Providing
key scientific support for partnering,
fundraising
|
i)
|
Supporting
maintenance and strengthening of intellectual property, together with
CTO
|
j)
|
Additional
management duties as updated and agreed with the CEO/CTO from time to
time.
|
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 Employer retains the right of sole discretion to make such
changes.
|
2.4
|
The
Employee acknowledges hereby that the terms of his employment, the
circumstances thereof, and the nature of his 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 his employment with the
Company.
|
3.
|
Place of
Work
|
4.
|
Salary
|
4.1
|
The
Company shall pay the Employee as compensation for the employment services
hereunder a monthly gross salary (“bruto”) of NIS 27,000 per month
(payable on the ninth day of each month) through June 2007; as of July 1,
2007 the Company shall increase the Employee monthly gross salary to NIS
37,500 per 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
|
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 fiscal
year of the Company during the Term of up to $20,000 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 fiscal year to which it relates, or earlier
if the CEO and Board so agree. The performance criteria for the Goal Bonus
for the period through July, 2007 is set forth on Exhibit A attached
hereto.
|
4.4
|
Potential
Bonus Related to Team Leadership
. The Employee shall be eligible to
receive an annual cash bonus with respect to each fiscal year of the
Company 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
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 fiscal year to which it
relates. The criteria for the Team Leadership Bonus for the period through
July, 2007 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
|
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.
|
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, in addition to public holidays to 22
(twenty-two) paid vacations days per year calculated on the basis of a
five-day work-week. A maximum of one year’s entitlement to vacation days
may be accumulated if unused beyond which any vacation days will be
forfeited by the Employee if not utilized during the year in which they
are allocated.
|
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 type Group 2, and under other conditions to be determined by the
Company. For
|
6.5
|
The
Employee was granted options on 11.5.2006 to purchase up to 20,000 shares
per year, at an exercise price of $1.516 per share during a vesting period
of four (4) years, for up to a total of 80,000 shares in Medgenics Medical
Israel’s parent company, Medgenics Inc. (the “Parent”), according to the
vesting schedule discussed below. In addition, the Company hereby grants,
subject to and with effect from immediately prior to Admission of the
entire issued share capital in the Company to trading on AIM becoming
effective prior to 31 December 2007, options to purchase 6,667 shares per
year, up to a total of 26,667 additional shares during a vesting period of
four (4) years, starting from the date granted, and at an exercise price
equal to the share price upon listing. All such grants shall be subject to
the approval of the Parent’s Compensation Committee or Board of Directors
and pursuant to the terms and conditions of any stock option plan which
the Company/and or the Parent adopts, and pursuant to the standard form of
option agreement which the Company and/or Parent may
use.
|
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.
|
6.7
|
These
options will be calculated from grant date and will be under the employee
benefit plan of the Parent.
|
7.
|
Term and
Termination
|
7.1
|
This
Agreement shall commence as of the Effective Date and shall continue
unless this
|
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 Employee may terminate this Agreement and
the employment relationship hereunder at his discretion and at any time by
giving the Company 3 (three) months prior written
notice.
|
7.3
|
Termination
With Cause – The Company may terminate the Employee’s employment 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, the Parent or its subsidiaries; (b) any refusal to
carry out a reasonable directive of his CEO or such other officer
appointed by the CEO which involves the business of the Company, the
Parent or its subsidiaries and was capable of being lawfully performed;
(c) embezzlement of funds of the Company, the Parent 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 upon the death of the
Employee or after having established the Employee’s
disability. For purposes of this
Agreements “disability” means a physical or
mental
|
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 his 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
|
This
Agreement shall remain in full force and effect during the period after
the notice of termination has been served 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.
|
8.
|
Proprietary
Information
|
8.1
|
The Employee acknowledges and
agrees that he will have access to confidential
and proprietary information
concerning the business and financial activities of the
Company and information and
technology regarding the Company’s product research
and development, including
without limitation, the Company’s banking, investments,
investors, properties, employees,
marketing plans, customers, trade secrets, and 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 “Proprietary
Information”.
|
8.2
|
Proprietary
Information shall be deemed to include any and all proprietary information
disclosed by or on behalf of the Company and irrespective of form, but
excluding information that (a) was known to the Employee prior to his
association with the Company and can be so proven; (b) shall have appeared
in any printed publication or patent or shall have become a part of the
public knowledge except as a result of a breach of this Agreement by the
Employee; (c) shall have been received by the Employee from a third party
having no obligation to the
Company
|
8.3
|
The
Employee agrees and declares that all Proprietary Information, patents and
other rights in connection therewith shall be the sole property of the
Company and its assigns.
|
8.4
|
Upon
termination of his employment with the Company, the Employee will promptly
deliver to the Company all documents and materials of any nature
pertaining to his work with the Company, and he will not take with him any
documents or materials or copies thereof containing any Proprietary
Information.
|
8.5
|
The
Employee recognizes that the Company received and will receive
confidential or proprietary information from third parties subject to a
duty on 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 his employment and after its termination, the Employee
undertakes to keep and hold all such information in strict confidence and
trust, and he will not use or disclose any of such information without the
prior written consent of the Company, except as may be necessary to
perform his duties as an employee of the Company and consistent with the
Company’s agreement with such third party. Upon termination of his
employment with 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 his employment with the
Company, he is expected to make new contributions to and create inventions
of value for the Company. Employee agrees to share with the Company all
his knowledge and experience, provided however that Employee shall not
disclose to the Company any information which Employee has
prior
|
9.2
|
As
of the Effective Date of this Agreement, the Employee undertakes and
covenants that he will promptly 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 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 him, either alone or jointly
with others, during the period of his employment, whether or not in the
course of his employment
(“Inventions”).
|
9.3
|
The
Employee agrees that all Inventions that (a) are developed using
equipment, supplies, facilities or trade secrets of the Company, (b)
result from work performed by him for the Company, or (c) relate to the
Company’s business or current or anticipated research and development,
will be the sole and exclusive property of the Company (“Company
Inventions”).
|
9.4
|
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) any and all “Moral
Rights” (as defined below) that he may have in or with respect to any
Company Invention. He also hereby forever waives and agrees never to
assert any and all Moral Rights he may have in or with respect to any
Company Invention, even after termination of his 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
his 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
|
9.5
|
The
Employee agrees to assist the Company in every proper way to obtain for
the Company and enforce 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 the Company may reasonably request for
use in obtaining or enforcing such patents, copyrights, mask work rights,
trade secrets and other legal protections. His obligations under this
Section 9.5 will continue beyond the termination of his employment with
the Company, provided that the Company will compensate him at a reasonable
rate after such termination for time or expenses actually spent by him at
the Company’s request on such assistance. The Employee hereby irrevocably
appoints the CEO of the Company as his attorney-in-fact to execute
documents on his behalf for this
purpose.
|
10.
|
Non-Competition
|
10.1
|
The
Employee agrees and undertakes that he will not, so long as he is employed
by the Company and for a period of 12 months following termination of his
employment for whatever reason, 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 by 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 he 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 period of his employment
and for a period of 12 months following termination, he will not, directly
or indirectly, including personally or in any business in which he is an
officer, director or shareholder, for any purpose or in any
place:
|
(a)
|
employ
any person employed by the Company or retained by the Company as a
consultant on the date of such termination or during the preceding five
months.
|
(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 the
Company with which the Employee dealt within six months of the Termination
Date.
|
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 shall be construed in a manner to enable it to
be enforced to the extent compatible with applicable
law.
|
11.
|
Rights Upon
Termination
|
12.
|
Mutual
Representations
|
12.1
|
The
Employee represents and warrants to 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 he is a party or by which he 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 of
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
|
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
proof 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.
|
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 the Company
shall merge or consolidate or to which the Company shall lease or sell all
or substantially all of its assets, and may be assigned by the Company to
any affiliate of 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 the Company hereunder, but such
assignment and assumption shall not serve as a release of prior
agreements, promises, covenants, arrangements, communications, or
representations of 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 the Company or any
party thereto; and any prior agreement of the parties hereto or of the
Employee and 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.
|
14.9
|
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.
|
/s/ Andrew Pearlman
|
/s/ Baruch Stern
|
MEDGENICS
MEDICAL ISRAEL, LTD.
|
Baruch
Stern, PhD
|
By:
Dr. Andrew L. Pearlman,
CEO
|
I.
|
Goal
Bonus Criteria through July, 2008 - $20,000, split between two groups of
objectives:
|
a.
|
Company
objectives - $10,000
|
i.
|
Assuming
Medgenics is admitted to AIM during October, 2007, then during QI/2008,
commence approved EPODURE Phase I/II clinical trial run under full GMP
compliance, implanting EPODURE biopumps in at least the first 5 patients
before the end of Ql/08, preferably by February 28. If the AIM admission
date is delayed past October, 2007, the target dates for the start of the
trial will be delayed
accordingly.
|
ii.
|
By
3 months after treatment of the first patient, in at least 5 patients,
demonstrate at least 6 weeks’ sustained elevation of serum EPO (by at
least 25mU over baseline), and reticulocyte count (by at least 1% over
baseline)
|
iii.
|
By
5 months after treatment of first patient, in the first 10 patients,
demonstrate at least:
|
1.
|
sustained
elevation of serum EPO (by at least 25mU over baseline), and reticulocyte
count (by at least 1% over baseline) for at least 2 months and
counting...
|
2.
|
elevated
hematocrit by at least 5 points or to at least 33-36 , for at least 2
weeks and counting...
|
b.
|
Personal
professional objectives/deliverables -
$10,000
|
i.
|
GMP
vector - receive by December 31, 2007, GMP HDAd vector fully tested and
meeting all our required specifications, and available for use in the
clinical trial, and sufficient to treat at least 100
patients
|
ii.
|
Preclinical
testing - complete on agreed schedule with the required GLP results to
support the proposed clinical
trial
|
iii.
|
GMP
cell processing facility at Hadassah: Fully set up and verify ready for
use
in the
clinical trial, establish updated, optimized SOPs and implementation
program to maximize
number of patients that can be processed per day of
planned
use
|
iv.
|
Design,
successfully move into new lab
facilities
|
v.
|
Demonstrate
AAV based biopumps producing at least 200 lU/day EPO for at
least 1 month in
vitro, and remaining at least 25% of peak for 6 months in
vitro
|
vi.
|
Complete
feasibility test of at least two nonviral vector
approaches
|
1.
|
Building
the team and maintaining good team atmosphere within the science group and
with the other groups of the company, and also with external entities such
as strategic partners, regulatory agencies,
etc.
|
2.
|
Planning
and managing projects so as to complete deliverables on or before the
agreed times, including timely achievement of interim milestones, making
effective and regular use of project management tools (MS Project, EXCEL,
etc.)
|
3.
|
Problem
solving with a sense of urgency and “can do” attitude, dealing with
technical challenges and obstacles in a way that builds confidence in the
company both internally and
externally
|
4.
|
Continuing
to develop managerial and technical skills, and to be open to feedback on
both managerial and technical levels. Learn the Courage Institute
approaches and methodologies, and work actively with organizational
advisors to apply them in your executive
role.
|
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,
|
the
Company desires to engage the Employee as Vice President Program
Management and Product Development;
and
|
WHEREAS,
|
the
Employee represents that he has the requisite skill and knowledge to serve
as such; and
|
WHEREAS,
|
the
parties desire to state the terms and conditions of the Employee’s
engagement by the Company, effective as of the Effective Date, as set
forth below.
|
1.
|
Appointment
|
2.
|
Position
|
2.1
|
The
Employee shall be employed on a full-time basis and shall devote his
entire business time, attention and efforts to the performance of his
duties and responsibilities under this Agreement and the business and
affairs of the Company. The Employee may not be employed by nor 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.
|
2.2
|
The
Employee shall be responsible for (i) coordinating the overall execution
of the Company’s business plan, as adopted by the Company’s Board of
Directors (the
“
Board
”
),
in cooperation and
coordination with the CEO and other members of management, and (ii)
product development, including specific responsibility for design and
development of all devices and their related materials and assembling and
leading the product development
team.
|
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 the CEO deems necessary, and reasonable efforts to
work with and accommodate the Employee with such changes will be made;
however, the Employer retains the right of sole discretion to make such
changes.
|
2.4
|
The
Employee acknowledges hereby that the terms of his employment, the
circumstances thereof, and the nature of his work require an unusual
amount of personal
|
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 shall have no authority toward third parties on behalf of the
Company and may not execute any agreements or contracts which bind the
Company, without the prior, express, written authorization of the CEO or
of the Board of Directors of the
Company.
|
2.7
|
The
Employee undertakes to notify the Company, immediately and without delay,
of any interest or matter in respect of which he may have a personal
interest or is likely to create a conflict of interest with his role in
the Company.
|
3.
|
Place of
Work
|
4.
|
Salary;
Bonus
|
4.1
|
The
Company shall pay the Employee as compensation for the employment services
hereunder a monthly gross salary (“bruto”) of NIS 40,200 per month
(payable in arrears on the ninth day of each month), during the term of
the Employee’s engagement hereunder (the “
Salary
”). The Company
shall deduct taxes and other obligatory payments at source, in accordance
with all applicable law.
|
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, in the CEO’s sole discretion and subject to the approval of
the Board, the Employee’s Salary may 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
|
4.4
|
Potential
Bonus Related to Team Leadership
. The Employee shall be eligible to
receive an annual cash bonus with respect to each fiscal year of the
Company during the Term of up to $15,000 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 fiscal year to which it relates. The criteria
for the Team Leadership Bonus for 2007 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 or pension plan for the Employee’s
benefit and shall deduct 5% from the Employee’s Salary and pay such amount
towards the Managers Insurance or pension plan for the Employee’s benefit
(division among the various components shall be fixed at the discretion of
the Employee subject to legal limitations); (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 benefits
hereunder, during the period of the Employee’s military reserve service
(but not including “Shlav Bet” service). National Insurance Institute
transfers in connection with such military reserve duty shall be retained
by the Company. The Employee shall provide the Company with a valid
certificate from the IDF as necessary to receive National Insurance
payments as aforesaid (Form
3010).
|
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, and the Employee shall contribute to such
Fund an amount equal to 2-1/2% of each monthly Salary payment, subject to
said tax limitation. 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
Board,
|
6.2
|
The
Employee shall be entitled, in addition to public holidays, to 22
(twenty-two) paid vacation days, calculated on the basis of a five-day
work-week. A maximum of one year’s entitlement to vacation days may be
accumulated if unused, beyond which any vacation days will be forfeited by
the Employee if not utilized during the year in which they are
allocated,.
|
6.3
|
Employee
shall be entitled to sick leave and Recreation Pay (Dmei Havra-ah)
according to applicable law.
|
6.4
|
As
soon as practicable after the Effective Date and subject to the approval
of the Board, the Employee shall be granted options to purchase up to
70,000 shares of the Company’s common stock pursuant to the Company’s
Incentive Stock Plan, as the same may be amended. Such
options shall vest in four (4) equal annual installments,
with
|
6.5
|
The
Employee will be entitled at the Company’s expense to the use of a company
car, of a type Group 2, 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.
|
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.
|
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
|
Termination
Without Cause - The Company may terminate this Agreement and the
employment relationship hereunder at its discretion and at any time by
giving Employee 2 (two) months prior written notice. Employee may
terminate this Agreement and the employment relationship hereunder at his
discretion and at any time by giving the Company 2 (two) months prior
written notice.
|
7.3
|
Termination
With Cause - The Company may terminate the Employee’s employment
immediately upon 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, or its subsidiaries;
(b) any refusal to carry out a reasonable directive of the CEO or the
Board which involves the business of the Company or its subsidiaries and
was capable of being lawfully performed; (c) embezzlement of funds of the
Company 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 and the failure
to cure the same to the satisfaction of the Company within fifteen days of
written notice from the Company specifying in reasonable detail such
breach; or (f) any conduct (other than in good faith) materially
detrimental to the Company or its subsidiaries, including, but not limited
to, sexual harassment and violence. If the employment of the Employee is
terminated for cause, then the Employee shall not be entitled to severance
pay.
|
7.4
|
Termination Upon Death or
Disability - The Company may terminate the Employee’s
employment 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 his duties under
the Agreement that continues for
a period of at least ninety (90) consecutive
days.
|
7.5
|
From
and after the delivery of a notice of termination by either the Employee
or the Company, the Employee shall, at the Company’s request, cooperate
with the Company and use his best efforts to assist in the integration
into the Company’s organization the person or persons who will assume the
Employee’s responsibilities.
|
8.
|
Proprietary
Information
|
8.1
|
The
Employee acknowledges and agrees that he may have access to confidential
and/or proprietary information concerning the business and financial
activities of the Company and information and technology regarding the
Company’s product research and development, including, without limitation,
the Company’s banking, investments, investors, properties, employees,
marketing plans, customers, trade secrets, and test results, processes,
data and know-how, improvements, inventions, techniques and products
(actual or planned). Such information, whether documentary, written, oral
or computer generated, even if not patentable, or not protectable or
protected by copyright laws, shall be deemed to be and is referred to as
“
Proprietary
Information
”.
|
8.2
|
Proprietary
Information shall be deemed to include any and all proprietary information
disclosed by or on behalf of the Company and irrespective of form, but
excluding information that (a) was known to the Employee prior to his
association with the Company and can be so proven; (b) shall have become a
part of the public domain except as a result of a breach of this Agreement
by the Employee; (c) shall have been received by the Employee from a third
party having no obligation to the
Company.
|
8.3
|
The
Employee agrees and declares that all Proprietary Information, patents and
other rights in connection therewith shall be the sole property of the
Company and its assigns. At all times, both during and after the
termination of his employment with the Company for any reason, the
Employee will keep in strict confidence and trust all Proprietary
Information, and the Employee will not use, disclose or provide access to
any Proprietary Information or anything relating to it without the written
consent of the Board.
|
8.4
|
Upon
termination of his employment with the Company, the Employee will promptly
deliver to the Company all documents and materials of any nature
pertaining to his work with the Company, and he will not take with him any
documents or materials or copies thereof containing any Proprietary
Information.
|
8.5
|
The
Employee recognizes that the Company has received and may receive
confidential or proprietary information from third parties subject to a
duty on the Company’s part to maintain the confidentiality of such
information and to use it only for certain
limited
|
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 his employment with the
Company, he is expected to make new contributions to and create inventions
of value for the Company. Employee agrees to share with the Company all
his knowledge and experience, provided however that Employee shall not
disclose to the Company any information which Employee has undertaken to
third parties to keep confidential or in which third parties have any
rights.
|
9.2
|
As
of the Effective Date of this Agreement, the Employee undertakes and
covenants that he will promptly 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 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 him, either alone or jointly with others, during the period of
his employment, whether or not in the course of his employment (“
Inventions
”).
|
9.3
|
The
Employee agrees that all Inventions that (a) are developed using
equipment, supplies, facilities or Proprietary Information of the Company,
(b) result from work performed by him for the Company, or (c) relate to
the Company’s business or current
or
|
9.4
|
The
Employee hereby irrevocably transfers and assigns to the Company: (a) all
worldwide patents, patent applications, copyrights, mask works, trade
secrets and other intellectual property rights in any Company Invention;
and (b) any and all “Moral Rights” (as defined below) that he may have in
or with respect to any Company Invention. He also hereby forever waives
and agrees never to assert any and all Moral Rights he may have in or with
respect to any Company Invention, even after termination of his 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 his 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 for
the Company and enforce 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 the Company may reasonably request for
use in obtaining or enforcing such patents, copyrights, mask work rights,
trade secrets and other legal protections. His obligations under this
Section 9.5 will continue beyond the termination of his employment with
the Company, provided that the Company will compensate him at a reasonable
rate after such termination for time or expenses actually spent by him at
the Company’s request on such assistance. The Employee hereby irrevocably
appoints the CEO of the Company, including future CEO’s or corresponding
officers of the Company or successor companies, as his attorney-in-fact to
execute documents on his behalf for this
purpose.
|
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 he will not, so long as he is employed
by the Company and for a period of 12 months following termination of his
employment for whatever reason, 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 by 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 he 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 period of his employment
and for a period of 12 months following termination, he will not, directly
or indirectly, including personally or in any business in which he is an
officer, director or shareholder, for any purpose or in any place,
solicit, assist in soliciting or employ any person employed by the Company
or retained by the Company as a consultant, or any customer or supplier of
the Company, on the date of such termination or during the preceding five
months.
|
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 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
effect after termination of this Agreement or any renewal
thereof.
|
11.
|
Rights Upon
Termination
|
12.
|
Mutual
Representations
|
12.1
|
The
Employee represents and warrants to 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 he is a party or by which he 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 of 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
proof 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.
|
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 the Company
shall merge or consolidate or to which the Company shall lease or sell all
or substantially all of its assets, and may be assigned by the Company to
any affiliate of 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 the Company hereunder, but such
assignment and assumption shall not serve as a release of prior
agreements, promises, covenants, arrangements, communications, or
representations of 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,
|
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.
|
/ s/ Andrew L. Pearlman |
/s/
Stephen Bellomo
|
||
MEDGENICS,
MEDICAL ISRAEL LTD.
|
Stephen
Bellomo
|
||
By:
Dr. Andrew L. Pearlman,
CEO
|
1.
|
10% for
Updated Master
Plan
Updated Master Plan to get to
successful start of EPODURE Trial in first patients starting in Q1/08,
approved by the CEO, with sign-on by all key
parties
|
2.
|
10% for Devices Master Plan:
Clear specifications, schedule, budget, core team, key outsourcing,
updated MDR and regulatory approval plan, for Derma Vac Harvester,
Implanter, Locator/Ablator and Bioreactor, approved by the
CEO
|
3.
|
25% for Trial-ready set of
Devices:
Harvester, Implanter Locator/Ablator
tested, ready and regulatory approved for
trial
|
4.
|
15% for updated Bioreactor and
cassette design;
Projecting full scale production costs per-patient
under $100 for all consumed materials (besides vector) to produce 4
biopumps.
|
5.
|
40% for actual successful
implantation in first patients
of EPODURE trial
Ql/08
|
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
|
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
|
1.
|
The
parties hereby agree and acknowledge, that as of
July 1, 2007
,
all of the payments that the Company shall make to the Managers Insurance
policy or pension fund (“the Policy”) shall be instead of any severance
pay to which the Employee or Employee’s successors shall be entitled to
receive from the Company with respect to the Salary from which these
payments were made and the period during which they were made, in
accordance with Section 14 of the Severance Pay Law 5723-1963 (the “Law”).
The parties hereby adopt the General Approval of the Minister of Labor and
Welfare, published in the Official Publications Gazette No. 4659 on June
30, 1998, attached hereto as Schedule A. The Company hereby waives in
advance any claim it has or may have to be refunded any of the payments
made to the policy, unless (1) the Employee’s right to severance pay is
invalidated by a court ruling on the basis of Sections 16 or 17 of the Law
(and in such case only to the extent it is invalidated), or (2) the
Employee withdrew funds from the policy for reasons other than an
“Entitling Event”. An “Entitling Event” means death, disability or
retirement at the age of 60 or
more.
|
2.
|
It
is clarified, that there will be no change in the Company’s or the
Employees payments to the
policy.
|
/s/
Andrew Pearlman
|
/s/ Stephen Bellomo |
MEDGENICS
MEDICAL ISRAEL, LTD.
By:
Dr. Andrew L. Pearlman,
CEO
|
Employee
|
(1)
|
The
Employer’s Payments
–
|
(a)
|
to
the Pension Fund are not less than 14 1/3% of the Exempt Salary or 12% of
the Exempt Salary if the employer pays, for the sake of his employee, in
addition thereto, payments to supplement severance pay to a severance pay
provident fund or to an Insurance Fund in the employee’s name, in the
amount of 2 1/3 % of the Exempt Salary. In the event that the employer has
not paid the above mentioned 2 1/3% in addition to said 12%, his payments
shall come in lieu of only 72% of the employee’s severance
pay;
|
(b)
|
to
the Insurance Fund are not less than one of the
following:
|
(i)
|
13
1/3% of the Exempt Salary, provided that, in addition thereto, the
employer pays, for the sake of his employee, payments to secure monthly
income in the event of disability, in a plan approved by the Commissioner
of the Capital Market, Insurance and Savings Department of the Ministry of
Finance, in an amount equivalent to the lower of either an amount required
to secure at least 75% of the Exempt Salary or in an amount of 2 1/2% of
the Exempt Salary (hereinafter: “
Disability Insurance
Payment
”);
|
(ii)
|
11%
of the Exempt Salary, if the employer paid, in addition, the Disability
Insurance Parent; and in such case, the Employer’s Payments shall come in
lieu of only 72% of the employee’s severance pay. In the event that the
employer has made payments in the employee’s name, in addition to the
foregoing payments, to a severance pay provident fund or to an Insurance
Fund in the employee’s name, to supplement severance pay in an amount of 2
1/3% of the Exempt Salary, the Employer’s Payments shall come in lieu of
100% of the employee’s severance
pay.
|
(2)
|
No
later than three months from the commencement of the Employer’s Payment, a
written agreement was executed between the employer and the employee,
which includes:
|
(a)
|
the
employee’s consent to an arrangement pursuant to this approval, in an
agreement specifying the Employer’s Payments, the Pension Fund and the
Insurance Fund, as the case may be; said agreement shall also incorporate
the text of this approval;
|
(b)
|
an
advance waiver by the employer of any right which he may have to a refund
of monies from his payments, except in cases in which the employee’s right
to severance pay was denied by a final judgment pursuant to Section 17 of
the Law, and in such a case or in cases in which the employee withdrew
monies from the Pension Fund or Insurance Fund, other than by reason of an
entitling event; for these purposes an “Entitling Event” means death,
disability or retirement at or after the age of
60.
|
(3)
|
This
approval shall not derogate from the employee’s right to severance pay
pursuant to
any
law, collective agreement, extension order or employment agreement with
respect to
compensation
in excess of the Exempt
Salary.
|
/s/
Stephen Bellomo
|
/s/
Andrew Pearlman
|
Employee’s
signature
|
Employer’s
signature
|
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 area of protein
therapeutics and devices and uses
therefor, and
|
WHEREAS,
|
Medgenics
was established for the purposes of holding all of the entire issued
capital stock of the Company;
and
|
WHEREAS,
|
the
parties have previously entered into a Personal Employment Agreement dated
as of July 7, 2005 (the "
2005
Agreement
") and now desire to amend and restated the 2005 Agreement
in its entirety; and
|
WHEREAS,
|
the
parties desire that the Employee continue to serve in the capacity of
President and Chief Executive Officer of both Medgenics and the Company,
all on the terms and conditions set forth herein;
and
|
WHEREAS,
|
the
Employee represents that he has the requisite skill and knowledge to serve
as such; and
|
WHEREAS,
|
the parties desire to amend and
restate the terms and conditions of the Employee's
engagement by the Company on the
terms and conditions set forth herein, effective as
of the Effective
Date;
|
Employment
Agreement Pearlman CEO June 1, 2007
|
1.
|
Appointment:
Position
|
1.1.
|
The
Employee shall serve as the President and Chief Executive Officer ("
CEO
") of each
of the Company and Medgenics and, in such capacity, the Employee shall be
subject to the direction and control of the Board of Directors of
Medgenics (the "
Board
"). To the
extent not in conflict with the direction of the Board, the Employee shall
have all powers and authority conferred upon a General Manager or Chief
Executive Officer under the Israeli Companies Ordinance [New Version]
5743-1983 and the Companies Law 5759-1999, and, without limiting the
generality of the aforesaid, he shall have sole authority to hire or fire
employees of the Company and
Medgenics.
|
1.2.
|
The
Employee shall perform his duties hereunder at the Company's facilities in
Israel or, at his discretion reasonably exercised, out of his home;
however, the Employee acknowledges and agrees that the performance of his
duties hereunder will require a significant amount of domestic and
international travel.
|
2.
|
Position
.
|
Employment
Agreement Pearlman CEO June 1, 2007
|
Page
2 of 16
|
2.1.
|
Subject
only to Section 2.2 of this Agreement, the Employee shall be employed on a
full-time basis and shall well, faithfully, honestly, diligently and with
due skill, care and attention devote his full business time, attention,
skills and efforts to the performance of such duties and responsibilities
as are consistent with a President and CEO of other similarly situated
companies or otherwise as may be assigned to him by the Board under this
Agreement and to use his best efforts to promote the interests and the
business and affairs of each of Medgenics and the Company and any other
company from time to time within the same group of companies
(collectively, the "
Group
").
|
2.2.
|
The
aforementioned notwithstanding, the Employee may engage in additional
minor advisory work for noncompeting ventures, but only with prior
approval by the Board on a case by case
basis.
|
2.3.
|
The
Employee acknowledges hereby that the terms of his employment, the
circumstances thereof, and the nature of his work require an unusual
amount of personal trust as set out in the Israel law governing Hours of
Employment and Rest Law; 5711-1951, and therefore, said law shall not
apply to his employment with the
Company.
|
3.
|
Term and
Termination
|
3.1.
|
This
Agreement shall commence as of the Effective Date and shall continue
unless (i) this Agreement is terminated by the Company upon the Employee's
death or disability or upon justifiable cause as provided in Section 3.2
below, (ii) this Agreement is voluntarily terminated by either the Company
or the Employee as provided in Section 3.3 below, or (iii) this Agreement
is terminated due to the Employee's resignation as a director of the
Company or Medgenics as provided in Section 3.6
below.
|
3.2.
|
Notwithstanding
the aforesaid, the Company (acting upon direction of the Board) shall have
the right to terminate this Agreement effective upon the occurrence of any
of the following: (i) the death of Employee, (ii) upon delivery of written
notice to the Employee, the Employee's legal guardian or representative,
as applicable, in the event that the Employee shall suffer the disability
(as hereinafter defined), or (iii) upon delivery of written notice to the
Employee in the event of any justifiable cause
(as
|
Employment
Agreement Pearlman CEO June 1, 2007
|
Page
3 of 16
|
|
hereinafter
defined).
|
|
The
term
"disability"
shall mean any physical or mental illness or injury as a result of which
Employee remains absent from work or unable to perform substantially all
of the duties required hereunder for a period of six (6) successive
months, or an aggregate of six (6) months in any twelve (12) month period,
as reasonably determined by the Board. The Employee shall not be deemed to
suffer a disability until the end of such six-month
period.
|
|
The
term
"justifiable cause"
shall mean any of the following: (i) a serious breach of trust by
the Employee including but not limited to theft, embezzlement, or
self-dealing; (ii) material damage to the Group or any member thereof
caused by the Employee's prohibited disclosure to unauthorized persons or
entities of confidential or proprietary information of or relating to the
Group or any member thereof; (iii) the engaging by Employee in any
business competitive to the business of the Group or any member thereof;
(iv) the Employee's material breach of any provision of this Agreement
(unless any such breach is the result of the Employee's death or
disability), which breach continues without the satisfactory cure thereof
(as reasonably determined by the Board) by the Employee for a period of
thirty (30) days following written notice thereof from the Board to
Employee, identifying in reasonable detail the alleged breach; and (v) the
commission by the Employee of any willful, reckless or grossly negligent
act or failure to act in connection with his performance of his duties as
set forth herein or any breach of the Employee's fiduciary duties to
Medgenics or the Company. For purposes of determining justifiable cause,
the Employee's act, or failure to act, shall be deemed "willful" if
Employee was not acting in good faith or acting without reasonable belief
that Employee's action or omission was in the best interests of Medgenics
and the Company.
|
3.3.
|
The
Company, on one hand (acting upon direction of the Board), and the
Employee on the other hand, shall each have the right to terminate this
Agreement and the employment relationship hereunder at any time by giving
3-month prior written notice (the "
Notice Period
")
to the other party. During the Notice Period, the Company shall have the
right to require that the Employee to not come to work and/or refrain
from
|
Employment
Agreement Pearlman CEO June 1, 2007
|
Page
4 of 16
|
|
performing
all or certain duties, but in all events the Employee shall be entitled to
receive his Salary and all other benefits pursuant to Sections 7-9 below
during the Notice Period. In addition, the Company (acting upon direction
of the Board) may terminate this Agreement immediately upon written notice
(without a Notice Period), if the Company accompanies such written notice
with the lump sum payment equal in amount to three-months of his
then-current Salary and other benefits that would otherwise be payable to
the Employee during a Notice Period. The Employee agrees that he will not
voluntarily terminate this Agreement pursuant to this Section 3.3 prior to
March 31, 2009.
|
3.4.
|
During
the period following notice of termination by the Company, the Employee
shall cooperate with the Company and use his best efforts to assist the
integration into the Group's organization of the person or persons who
will assume the Employee's
responsibilities.
|
3.5.
|
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 Medgenics or any obligations hereunder, unless otherwise
determined by the Board in a written notice to
Employee.
|
3.6.
|
If
the Employee shall resign as a director of either Medgenics or the Company
(otherwise than at the request of the Board), this Agreement shall
automatically terminate.
|
4.
|
Proprietary
Information
|
4.1.
|
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 the companies within 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,
|
Employment
Agreement Pearlman CEO June 1, 2007
|
Page
5 of 16
|
|
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 referred to as "
Information
"
.
|
4.2.
|
Information
shall be deemed to include any and all information disclosed by or on
behalf of Medgenics, the Company and/or the Group and irrespective of
form, but excluding information that (i) was known to the Employee prior
to his association with the Company and can be so proven; (ii) 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 (iii) shall have been received by the
Employee from a third party having no obligation of confidentiality to any
company within the Group.
|
4.3.
|
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 and at
all times after the term of this Agreement, 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 Board, 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.
|
4.4.
|
Upon
termination of this Agreement, the Employee will promptly deliver to the
Company or to another company within the Group as directed by the Board
all documents and materials of any nature pertaining to his work with
Medgenics and/or companies within the Group, and he will not take with him
any documents or materials or copies thereof containing any
Information.
|
Employment
Agreement Pearlman CEO June 1, 2007
|
Page
6 of 16
|
4.5.
|
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 his employment and
after its termination, the Employee undertakes to keep and hold all such
information in strict confidence and trust, and he will not use or
disclose any of such information without the prior written consent of the
Board, except as may be necessary to perform his 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 his employment with the Company, Employee shall
act with respect to such information as set forth in Section 4.4,
mutatis
mutandis
.
|
4.6.
|
The
Employee's undertakings in this Section 4 shall remain in full force and
effect after termination of this Agreement or any renewal
thereof.
|
5.
|
Disclosure and
Assignment of
Inventions
|
5.1.
|
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 his employment with the
Company, he is expected to make new contributions to and create inventions
of value for the Company. Employee agrees to share with the Company all
his knowledge and experience; provided, however, that Employee shall not
disclose to the Company any information which Employee has undertaken to
third parties to keep confidential or in which third parties have any
rights.
|
5.2.
|
As
of the Effective Date of this Agreement, the Employee undertakes and
covenants that he has disclosed and going forward 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
|
Employment
Agreement Pearlman CEO June 1, 2007
|
Page
7 of 16
|
|
research
and development, whether or not patentable, copyrightable or protectable
as trade secrets, that are made or conceived or first reduced to practice
or created by him, either alone or jointly with others, during the period
of his employment, whether or not in the course of his employment ("
Company
Inventions
").
|
5.3.
|
The
Employee agrees that all Company Inventions will be the sole and exclusive
property of the Company.
|
5.4.
|
Entirely
without prejudice to the foregoing, the Employee hereby irrevocably
transfers and assigns to the Company: (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 he
may have in or with respect to any Company Invention. He also hereby
forever waives and agrees never to assert any and all Moral Rights he may
have in or with respect to any Company Invention, even after termination
of his 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 his 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
Medgenics or 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).
|
5.5.
|
The
Employee agrees to assist Medgenics and 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 Inventions in any and all countries. The Employee agrees to
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.
|
Employment
Agreement Pearlman CEO June 1, 2007
|
Page
8 of 16
|
|
His
obligations under this Section 5.5 will continue beyond the termination of
his employment with the Company, provided that the Company will compensate
him at a reasonable rate after such termination for time or expenses
actually spent by him at the Company's request on such assistance. The
Employee hereby irrevocably appoints the Secretary of the Company as his
attorney-in-fact to execute documents on his behalf for this
purpose.
|
5.6.
|
The
Employee's undertakings in this Section 5 shall remain in full force and
effect after termination of this Agreement or any renewal
thereof.
|
6.
|
Non-Competition
|
6.1.
|
The
Employee agrees and undertakes that he will not, so long as he is employed
by the Company and for a period of 12 months following termination of his
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 he has no active role in the
publicly owned and traded company as director, employee, consultant or
otherwise.
|
6.2.
|
The
Employee agrees that, during the Covenant Period, he will not, directly or
indirectly, (i) solicit or induce or attempt to solicit or induce any of
Medgenics' or the Company's suppliers or customers to terminate such
person's relationship with Medgenics or the Company, nor shall the
Employee interfere with or disrupt (or attempt to interfere with or
disrupt) any such relationship, or (ii) solicit or induce or in any manner
encourage any contractor, producer, agent or business partner of Medgenics
or the Company or any present employee of Medgenics or the Company
or
|
Employment
Agreement Pearlman CEO June 1, 2007
|
Page
9 of 16
|
|
any
person who is an employee of Medgenics or the Company during the Covenant
Period, to leave the employ of Medgenics or the Company or otherwise
terminate their relationship with Medgenics or the
Company.
|
6.3.
|
If
any one or more of the terms contained in this Section 6 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.
|
6.4.
|
The
Employee's undertakings in this Section 6 shall remain in full force and
effect after termination of this Agreement or any renewal
thereof.
|
7.
|
Salary
|
7.1.
|
From
June 1, 2007, the Company shall pay the Employee as compensation for the
employment services hereunder a base full time equivalent monthly gross
salary in an amount in NIS equal to US$ 210,000 per annum ($17,500 per
month), calculated at the representative rate of the US dollar published
by the Bank of Israel and known at the time of payment, payable on the
first business day of each month, during the term of the Employee's
engagement hereunder (the "
Salary
"
).
|
7.2.
|
The
Salary and other benefits herein agreed to be paid shall be in lieu of any
fees in respect of the office of director of any member of the
Group.
|
8.
|
Social Insurance and
Benefits
|
8.1.
|
The
Company shall provide the Employee 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: (i)
the Company shall pay an amount equal to 5% of the Employee's Salary
towards the Managers Insurance for the Employee's benefit and in addition
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
|
Employment
Agreement Pearlman CEO June 1, 2007
|
Page
10 of 16
|
|
Employee);
(ii) the Company shall pay an amount up to 2.5% of the Employee's Salary
towards disability insurance; and (iii) 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 whether
compensation is required by law or
not.
|
8.2.
|
The Company and the Employee
shall open and maintain a Keren Hishtalmut
("Education Fund"). The Company
shall contribute to such Education Fund an amount
equal to 7-1/2% 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.
|
9.
|
Additional Benefits;
Review
|
9.1.
|
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
Board.
|
9.2.
|
The
Employee shall be entitled to cumulative paid vacations of 22 days per
year.
|
9.3.
|
Employee
shall be entitled to sick leave and Recreation Pay (Dmei Havra-ah)
according to applicable law.
|
9.4.
|
The
Employee shall be entitled to the use of a Company cellular phone and
other office facilities at his home, and for this purpose, the Company
shall provide fax, phone, computer and related facilities for the
Employee's use from his home.
|
9.5.
|
The
Company shall pay all taxes that may be imposed on Employee as a result of
any additional benefits granted
hereunder.
|
9.6.
|
The
Company acknowledges that it owes the Employee $30,000 of the 2006 bonus
package earned by the Employee as provided under Section 9.7 of the
2005
|
Employment
Agreement Pearlman CEO June 1, 2007
|
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|
|
Agreement
and shall pay such amount on the earlier of October 15, 2007 or the
effective date of admission of the entire issued share capital of
Medgenics to trading on the AIM market operated by the London Stock
Exchange plc("
Admission
").
During Q4/2007, the Board shall retain the services of a consultant on
compensation who will work in coordination with the CEO to provide, by
December 31, 2007, the Board with data and models appropriate to the
establishment of a Group-wide compensation plan. For calendar year 2007,
commencing effective January 1, 2007, a bonus package initially set at
$70,000 (exclusive of any bonus that the Board may determine, in its
discretion, in connection with Admission) shall be available to the
Employee upon the achievement of individual goals and corporate milestones
to be agreed between the Employee and the Board. Such goals and milestones
shall be so determined no later than September 30, 2007. The final bonus
package for calendar year 2007, as well as the terms for calendar year
2008 will be reviewed within the context of the efforts towards a
Group-wide compensation plan, and agreed between the Employee and the
Board on or before December 31,
2007.
|
9.7.
|
Stock
Options: The parties acknowledge that the Employee has previously been
granted options to purchase 299,101 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 149,550 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.
|
9.8.
|
The
Salary and additional benefits to which the Employee shall be entitled
hereunder (including bonuses) shall be reviewed by the Board on an annual
basis and also in connection with new funding rounds, and, if in the
Board'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, provided,
however,
|
Employment
Agreement Pearlman CEO June 1, 2007
|
Page
12 of 16
|
|
that
no increase or additional benefits shall be automatically implied or
guaranteed.
|
10.
|
Rights Upon
Termination
|
10.1.
|
Upon
termination of this Agreement by the Employee, for any reason whatsoever,
the Employee shall be entitled to receive such severance as required under
applicable law. Upon the termination of this Agreement by the Company
pursuant to Section 3.2 (death, disability or justifiable cause) or the
termination of this Agreement by the Employee pursuant to Section 3.3 or
the termination of this Agreement pursuant to Section 3.6, 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 8.1 and such
payouts on life and disability insurance policies (including the life and
disability amounts referenced in Section 8.1). Upon the termination of
this Agreement by the Company pursuant to Section 3.3, the Employee shall
be entitled to the payment of his full salary, including insurance and
social benefits, as set forth in Sections 7-9 above, during a period of 15
months following the effective date of such termination 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 his full salary,
including insurance and social benefits, for such 15-month
period.
|
11.
|
Mutual
Representations
|
11.1.
|
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 (i) will not constitute a default under or conflict with any
agreement or other instrument to which he is a party or by which he is
bound, and (ii) do not require the consent of any person or
entity.
|
11.2.
|
The
Company represents and warrants to the Employee that this Agreement has
been duly authorized, executed and delivered by each of Medgenics and the
Company and that the fulfillment of the terms hereof (i) will not
constitute a default under or
conflict
|
Employment
Agreement Pearlman CEO June 1, 2007
|
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|
|
with
any agreement of other instrument to which it is a party or by which it is
bound, and (ii) do not require the consent of any person or
entity.
|
11.3.
|
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).
|
12.
|
Notice:
Addresses
|
12.1
|
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.
|
12.2.
|
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 cable, telex, facsimile or other
electronic communication shall be sufficient and be deemed to have
occurred upon electronic confirmation of
receipt.
|
13.
|
Miscellaneous
|
13.1.
|
The
preamble to this Agreement constitutes an integral part
hereof.
|
13.2.
|
Headings
are included for reference purposes only and are not to be used in
interpreting this Agreement.
|
13.3.
|
The
provisions of this Agreement are in lieu of the provisions of any
collective bargaining agreement, and therefore, no collective bargaining
agreement shall apply
|
Employment
Agreement Pearlman CEO June 1, 2007
|
Page
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|
|
with
respect to the relationship between the parties hereto (subject to the
applicable provisions of
law).
|
13.4.
|
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.
|
13.5.
|
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.
|
13.6.
|
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.
|
13.7.
|
This
Agreement is the only agreement between the parties on the subject matter
of the Agreement and supersedes and replaces all other agreements, whether
written or oral, between the parties, concerning the subject matter of
this Agreement, including without limitation the 2005
Agreement.
|
13.8.
|
It
is hereby agreed between the parties that the laws of the State of Israel
shall apply to this
Agreement.
|
13.9.
|
In
addition to the terms of this Agreement, in his role as a director of
Medgenics, the Employee agrees to comply with the provisions of the
Director Appointment Letter, attached
hereto.
|
Employment
Agreement Pearlman CEO June 1, 2007
|
Page
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|
|
By:
|
/s/
[illegible]
|
|
Its:
|
Chairman,
Board of Directors
|
|
By:
|
Andrew
Pearlman
|
|
Its:
|
Chairman
|
|
/s/ Andrew
Pearlman
|
|
Dr.
Andrew Pearlman Aug. 29,
2007
|
Employment
Agreement Pearlman CEO June 1, 2007
|
Page
16 of 16
|
MEDGENICS,
INC.
|
/s/
Andrew L. Pearlman
|
ANDREW
L. PEARLMAN
|
By:
|
/s/
Eugene Bauer
|
|
Its:
|
Director
|
By:
|
/s/
Andrew L. Pearlman
|
|
Its:
|
Chief
Executive Officer
|
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
|
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.
|
|
2.4
|
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.
|
|
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.
|
|
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.
|
|
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.
|
|
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.
|
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.
|
|
8.5
|
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”
).
|
|
9.3
|
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.
|
|
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
|
|
(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.
|
Ri
ghts 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.
|
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.
|
|
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.
|
|
14.9
|
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.
|
/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
|
|
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
|
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
|
|
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
|
1
|
Definitions
|
“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;
|
“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;
|
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
|
4
|
Term
of office
|
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
|
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.
|
7
|
Independent
Legal Advice
|
8
|
Governing law
and jurisdiction
|
/s/ Eugene A. Bauer |
Dr.
Eugene A. Bauer
|
SIGNED
AS A DEED
|
)
|
|||
by
Andrew L. Pearlman
|
)
|
|||
in
the presence of:
|
)
|
|||
Andrew
L. Pearlman
|
Witness
Signature:
|
|||
Name:
|
|||
Address:
|
|||
Occupation:
|
(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.
|
(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.
|
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;
|
“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.
|
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.
|
3
|
A director or applicable employee
or persons connected with them must not deal in any
securities of
the Company during a
“
close period
”
.
|
|
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.
|
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.
|
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.
|
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.
|
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.
|
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.
|
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.
|
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;
|
|
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).
|
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.
|
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.
|
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.
|
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.
|
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.
|
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
|
|
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.
|
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.
|
1
|
Definitions
|
“
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;
|
“
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;
|
“
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
the Chairman of the Board and 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 a non-executive director, you shall be required
to:
|
|
2.3.1
|
constructively
challenge and contribute to the development of the Group
’
s
strategy;
|
|
2.3.2
|
scrutinise
the performance of management in meeting agreed goals and objectives and
monitor the reporting of
performance;
|
|
2.3.3
|
satisfy yourself
that financial information is accurate and that financial controls
and
systems of risk management are appropriate, robust and
defensible;
|
|
2.3.4
|
endeavour
to attend all meetings of the Board and the annual and all other meetings
of the shareholders of the Company;
|
|
2.3.5
|
serve
on the Audit and Remuneration and Nominations committees of the Board and
attend all such committees
’
meetings;
|
|
2.3.6
|
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;
|
|
2.3.7
|
abide
by your fiduciary duties as a director of the
Company;
|
|
2.3.8
|
diligently
perform your duties;
|
|
2.3.9
|
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
Chief Executive Officer of the Company;
and
|
2.3.10
|
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, in your role as Chairman of the Board, your duties shall require
that you shall:
|
|
2.4.1
|
chair
meetings of the Board and annual and special meetings of the Company,
including setting and/or approving the agenda for each such
meeting;
|
|
2.4.2
|
promote
the highest standards of integrity, probity and corporate governance
throughout the Company, particularly at Board
level;
|
|
2.4.3
|
use
your best endeavours to ensure that the Board receives accurate, timely
and clear information;
|
|
2.4.4
|
use
your best endeavours to ensure effective communication with
shareholders;
|
|
2.4.5
|
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;
|
|
2.4.6
|
ensure
that the performance of the Chief Executive Officer (and of any other
executive director(s) from time to time) is evaluated at least once a
year; and
|
|
2.4.7
|
at
the request of the Company, serve on the Company
’
s Scientific
Advisory Board.
|
3
|
Time
Commitment
|
4
|
FEES
|
5
|
Term
of office
|
6
|
Expenses
|
7
|
Confidentiality
|
7.1
|
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:
|
|
7.1.1
|
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;
|
|
7.1.2
|
to
the extent that such information is or (without default of your part)
becomes generally available to the public;
or
|
|
7.1.3
|
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.
|
7.2
|
If
you are required to make a disclosure as contemplated in clause
7.1.3:
|
|
7.2.1
|
you
must disclose
only
the
minimum Confidential Business Information required to comply with the
applicable law, order or requirement;
and
|
|
7.2.2
|
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.
|
7.3
|
By
your counter-signature hereto, you acknowledge
that:
|
|
7.3.1
|
the
Company and each Group Company possess a valuable body of Confidential
Business Information;
|
|
7.3.2
|
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;
|
|
7.3.3
|
your
duties include, without limitation, a duty of care and a duty of loyalty
as provided under the DGCL; and
|
|
7.3.4
|
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
|
8
|
Other
Interests and Restrictions
|
8.1
|
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 Chief Executive Officer of the Company and company
secretary as soon as you become aware
thereof.
|
8.2
|
By
your counter-signature hereto, you agree and undertake that, during the
term of Your Appointment, you shall not, without the Company's written
permission, assume or hold any Material Interest in any person, firm or
company which:
|
|
8.2.1
|
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
|
|
8.2.2
|
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.
|
8.3
|
By
your counter-signature hereto, you agree and undertake that you will not,
without the Company
’
s written
permission, during the term of Your Appointment and for the period of 12
months after the Termination Date, in any part of the world, whether
directly or indirectly:
|
|
8.3.1
|
assume
or hold a Material Interest in a business which manufactures, distributes
or utilizes the Group
’
s Biopump
technology using Biopumps;
|
|
8.3.2
|
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;
|
|
8.3.3
|
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 six (6) 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;
or
|
|
8.3.4
|
enter
into a license with Yissum Research Development Company of the Hebrew
University of Jerusalem (
“
Yissum
”
) for any of
the technologies that are currently expressly excluded from the
“
Scope
”
of the
Agreement between Yissum and the Company dated November 23, 2005 (the
“
Yissum
License
”
), as set
forth on Appendix A of the Yissum
License.
|
8.4
|
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.
|
8.5
|
Each
of the provisions of clauses 8.2, 8.3 and 8.4 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.
|
8.6
|
You
have given the undertakings contained in this clause 8 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 8.
|
8.7
|
The
Company agrees that each Material Interest that you assume or hold as of
the date hereof is hereby
permitted.
|
9
|
Independent
Legal Advice
|
10
|
Governing
law and jurisdiction
|
Yours
sincerely
|
|
|
|
Andrew
L. Pearlman
|
|
Director,
duly authorized for and on behalf of the
Board
|
SIGNED
AS A DEED
|
)
|
||
by
Eugene A. Bauer
|
)
|
||
in
the presence of:-
|
)
|
/s/ Eugene A. Bauer
|
|
Eugene
A. Bauer
|
(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.
|
(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.
|
1
|
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;
|
|
“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,
|
|
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.
|
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.
|
3
|
A
director or applicable employee or persons connected with them must not
deal in any securities of the Company during a
“
close period
”
.
|
|
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.
|
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.
|
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.
|
|
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.
|
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.
|
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.
|
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.
|
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;
|
|
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).
|
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.
|
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.
|
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.
|
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.
|
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.
|
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
|
|
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 1 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.
|
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.
|
1
|
Definitions
|
“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;
|
“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;
|
“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 a non-executive director, you shall be required
to:
|
2.3.1
|
constructively
challenge and contribute to the development of the Group’s
strategy;
|
2.3.2
|
scrutinize
the performance of management in meeting agreed goals and objectives and
monitor the reporting of
performance;
|
2.3.3
|
satisfy
yourself that financial information is accurate and that financial
controls
and
systems of risk management are appropriate, robust and
defensible;
|
2.3.4
|
endeavour
to attend all meetings of the Board and the annual and all other meetings
of the shareholders of the
Company;
|
2.3.5
|
serve
on the Audit committee of the Board and attend all such committee’s
meetings;
|
2.3.6
|
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;
|
2.3.7
|
abide
by your fiduciary duties as a director of the Company;
|
2.3.8
|
diligently
perform your duties;
|
2.3.9
|
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
|
2.3.10
|
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
|
chair
meetings of the Audit Committee of the Board, including setting and/or
approving the agenda for each such
meeting;
|
2.4.2
|
promote
the highest standards of integrity, probity and corporate governance
throughout the Company, particularly at Board
level;
|
2.4.3
|
use
your best endeavours to ensure that the Board receives accurate, timely
and clear information;
|
2.4.4
|
use
your best endeavours to ensure effective communication with
shareholders;
|
2.4.5
|
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;
and
|
2.4.6
|
ensure
that the performance of the Chief Executive Officer (and of any other
executive
director(s) from time to time) is evaluated at least once a
year.
|
3
|
Time
Commitment
|
4
|
FEES
|
5
|
Term
of office
|
6
|
Expenses
|
7
|
Confidentiality
|
7.1
|
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:
|
7.1.1
|
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;
|
7.1.2
|
to
the extent that such information is or (without default of your part)
becomes generally available to the public;
or
|
7.1.3
|
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.
|
7.2
|
If
you are required to make a disclosure as contemplated in clause
7.1.3:
|
7.2.1
|
you
must disclose
only
the minimum Confidential Business Information required to comply with the
applicable law, order or requirement;
and
|
7.2.2
|
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.
|
7.3
|
By
your counter-signature hereto, you acknowledge
that:
|
7.3.1
|
the
Company and each Group Company possess a valuable body of Confidential
Business Information;
|
7.3.2
|
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;
|
7.3.3
|
your
duties include, without limitation, a duty of care and a duty of loyalty
as provided under the DGCL;
and
|
7.3.4
|
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
|
8
|
Other
Interests and Restrictions
|
8.1
|
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.
|
8.2
|
By your
counter-signature hereto, you agree and undertake that, during the term of
Your Appointment, you shall not, without the Company’s written permission,
assume or hold any
Material Interest in
any
person, firm or company
which:
|
|
8.2.1
|
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
|
|
8.2.2
|
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.
|
8.3
|
By
your counter-signature hereto, you agree and undertake that you will not,
without the Company’s written permission, during the term of Your
Appointment and for the period of 12 months after the Termination Date, in
any part of the world, whether directly or
indirectly:
|
8.3.1
|
assume
or hold a Material Interest in a business which manufactures, distributes
or utilizes the Group’s Biopump technology using
Biopumps;
|
8.3.2
|
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;
|
8.3.3
|
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 six (6) 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;
or
|
8.3.4
|
enter
into a license with Yissum Research Development Company of the Hebrew
University of Jerusalem (“Yissum”) for any of the technologies that are
currently expressly excluded from the “Scope” of the Agreement between
Yissum and the Company dated November 23, 2005 (the “Yissum License”), as
set forth on Appendix A of the Yissum
License.
|
8.4
|
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.
|
8.5
|
Each
of the provisions of clauses 8.2, 8.3 and 8.4 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.
|
8.6
|
You
have given the undertakings contained in this clause 8 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 8.
|
8.7
|
The
Company agrees that each Material Interest that you assume or hold as of
the date hereof is hereby
permitted.
|
9
|
Independent
Legal Advice
|
10
|
Governing
law and jurisdiction
|
Yours
sincerely
|
|
/s/
Eugene A. Bauer
|
|
Dr.
Eugene A. Bauer
|
|
Chairman,
duly authorised for and on behalf of the Board
|
SIGNED
AS A DEED
|
)
|
|
by
Gary A. Brukardt
|
)
|
|
in
the presence of:-
|
)
|
/s/
Gary
A. Brukardt
|
Gary
A. Brukardt
|
(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.
|
(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.
|
1
|
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;
|
“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.
|
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.
|
3
|
A
director or applicable employee or persons connected with them must not
deal in any
securities of
the Company during a “
close
period
”.
|
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.
|
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.
|
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.
|
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.
|
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.
|
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.
|
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.
|
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;
|
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).
|
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.
|
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.
|
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.
|
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.
|
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.
|
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
|
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 1 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.
|
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.
|
1
|
Definitions
|
“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;
|
“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 a non-executive director, you shall be required
to:
|
2.3.1
|
constructively
challenge and contribute to the development of the Group's
strategy;
|
|
2.3.2
|
scrutinise
the performance of management in meeting agreed goals and objectives and
monitor the reporting of
performance;
|
|
2.3.3
|
satisfy yourself
that financial information is accurate and that financial controls
and
systems of risk management are appropriate, robust and
defensible;
|
|
2.3.4
|
endeavour
to attend all meetings of the Board and the annual and all other meetings
of the shareholders of the Company;
|
|
2.3.5
|
serve
on the Audit and Remuneration and Nominations committees of the Board and
attend all such committees'
meetings;
|
|
2.3.6
|
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;
|
|
2.3.7
|
abide
by your fiduciary duties as a director of the Company;
|
|
2.3.8
|
diligently
perform your duties;
|
|
2.3.9
|
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
|
|
2.3.10
|
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;
|
|
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;
and
|
|
2.4.5
|
ensure
that the performance of the Chief Executive Officer (and of any other
executive director(s) from time to time) is evaluated at least once a
year.
|
3
|
Time
Commitment
|
4
|
FEES
|
5
|
Term
of office
|
6
|
Expenses
|
7
|
Confidentiality
|
7.1
|
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:
|
|
7.1.1
|
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;
|
|
7.1.2
|
to
the extent that such information is or (without default of your part)
becomes generally available to the public;
or
|
|
7.1.3
|
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.
|
7.2
|
If
you are required to make a disclosure as contemplated in clause
7.1.3:
|
|
7.2.1
|
you
must disclose
only
the
minimum Confidential Business Information required to comply with the
applicable law, order or requirement;
and
|
|
7.2.2
|
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.
|
7.3
|
By
your counter-signature hereto, you acknowledge
that:
|
|
7.3.1
|
the
Company and each Group Company possess a valuable body of Confidential
Business Information;
|
|
7.3.2
|
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;
|
|
7.3.3
|
your
duties include, without limitation, a duty of care and a duty of loyalty
as provided under the DGCL; and
|
|
7.3.4
|
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
|
8
|
Other
Interests and Restrictions
|
8.1
|
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.
|
8.2
|
By
your counter-signature hereto, you agree and undertake that, during the
term of Your Appointment, you shall not, without the Company's written
permission, assume or hold any Material Interest in any person, firm or
company which:
|
|
8.2.1
|
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
|
|
8.2.2
|
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.
|
8.3
|
By
your counter-signature hereto, you agree and undertake that you will not,
without the Company's written permission, during the term of Your
Appointment and for the period of 12 months after the Termination Date, in
any part of the world, whether directly or
indirectly:
|
|
8.3.1
|
assume
or hold a Material Interest in a business which manufactures, distributes
or utilizes the Group's Biopump technology using
Biopumps;
|
|
8.3.2
|
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;
|
|
8.3.3
|
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 six (6) 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;
or
|
|
8.3.4
|
enter
into a license with Yissum Research Development Company of the Hebrew
University of Jerusalem (“Yissum”) for any of the technologies that are
currently expressly excluded from the “Scope” of the Agreement between
Yissum and the Company dated November 23, 2005 (the “Yissum License”), as
set forth on Appendix A of the Yissum
License.
|
8.4
|
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.
|
8.5
|
Each
of the provisions of clauses 8.2, 8.3 and 8.4 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.
|
8.6
|
You
have given the undertakings contained in this clause 8 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 8.
|
8.7
|
The
Company agrees that each Material Interest that you assume or hold as of
the date hereof is hereby
permitted.
|
9
|
Independent
Legal Advice
|
10
|
Governing
law and jurisdiction
|
Yours
sincerely
|
/s/
Eugene A. Bauer
|
Dr.
Eugene A. Bauer
|
Chairman, duly authorised
for
and on behalf of the Board)
|
SIGNED
AS A DEED
|
)
|
||
by
Joel Stephen Kanter
|
)
|
||
In
the presence of:
|
)
|
/s/
Joel S. Kanter
|
|
Joel
S.
Kanter
|
(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.
|
(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.
|
1
|
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;
|
“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.
|
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.
|
3
|
A
director or applicable employee or persons connected with them must not
deal in any securities of the Company during a “
close
period
”.
|
|
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.
|
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.
|
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.
|
|
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.
|
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.
|
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.
|
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.
|
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;
|
|
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).
|
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.
|
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.
|
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.
|
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.
|
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.
|
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
|
|
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.
|
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.
|
1
|
Definitions
|
“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;
|
“
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;
|
“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 a non-executive director, you shall be required
to:
|
2.3.1
|
constructively
challenge and contribute to the development of the Group’s
strategy;
|
2.3.2
|
scrutinise
the performance of management in meeting agreed goals and objectives and
monitor the reporting of
performance;
|
2.3.3
|
satisfy
yourself that financial information is accurate and that financial
controls and systems of risk management are appropriate, robust and
defensible;
|
2.3.4
|
endeavour
to attend all meetings of the Board and the annual and all other meetings
of the shareholders of the Company;
|
2.3.5
|
serve
on the Remuneration and Nominations committee of the Board and attend all
such committee’s meetings;
|
2.3.6
|
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;
|
2.3.7
|
abide
by your fiduciary duties as a director of the
Company;
|
2.3.8
|
diligently
perform your duties;
|
2.3.9
|
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
|
2.3.10
|
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
|
chair
meetings of the Remuneration and Nominations committee of the Board,
including setting and/or approving the agenda for each such
meeting;
|
2.4.2
|
promote
the highest standards of integrity, probity and corporate governance
throughout the Company, particularly at Board
level;
|
2.4.3
|
use
your best endeavours to ensure that the Board receives accurate, timely
and clear information;
|
2.4.4
|
use
your best endeavours to ensure effective communication with
shareholders;
|
2.4.5
|
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;
|
2.4.6
|
ensure
that the performance of the Chief Executive Officer (and of any other
executive director(s) from time to time) is evaluated at least once a
year; and
|
2.4.7
|
at
the request of the Company, serve on the Company’s Scientific Advisory
Board.
|
3
|
Time
Commitment
|
4
|
FEES
|
5
|
Term
of office
|
6
|
Expenses
|
7
|
Confidentiality
|
7.1
|
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:
|
7.1.1
|
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;
|
7.1.2
|
to
the extent that such information is or (without default of your part)
becomes generally available to the public;
or
|
7.1.3
|
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.
|
7.2
|
If
you are required to make a disclosure as contemplated in clause
7.1.3:
|
7.2.1
|
you
must disclose
only
the
minimum Confidential Business Information required to comply with the
applicable law, order or requirement;
and
|
7.2.2
|
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.
|
7.3
|
By
your counter-signature hereto, you acknowledge
that:
|
|
7.3.1
|
the
Company and each Group Company possess a valuable body of Confidential
Business Information;
|
|
7.3.2
|
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;
|
|
7.3.3
|
your
duties include, without limitation, a duty of care and a duty of loyalty
as provided under the DGCL; and
|
|
7.3.4
|
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
|
8
|
Other
Interests and Restrictions
|
8.1
|
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.
|
8.2
|
By
your counter-signature hereto, you agree and undertake that, during the
term of Your Appointment, you shall not, without the Company’s written
permission, assume or hold any Material Interest in any person, firm or
company which:
|
8.2.1
|
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
|
8.2.2
|
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.
|
8.3
|
By
your counter-signature hereto, you agree and undertake that you will not,
without the Company’s written permission, during the term of Your
Appointment and for the period of 12 months after the Termination Date, in
any part of the world, whether directly or
indirectly:
|
8.3.1
|
assume
or hold a Material Interest in a business which manufactures, distributes
or utilizes the Group’s Biopump technology using
Biopumps;
|
8.3.2
|
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;
|
8.3.3
|
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 six (6) 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;
and
|
8.3.4
|
enter
into a license with Yissum Research Development Company of the Hebrew
University of Jerusalem (“Yissum”) for any of the technologies that are
currently expressly excluded from the “Scope” of the Agreement between
Yissum and the Company dated November 23, 2005 (the “Yissum License”), as
set forth on Appendix A of the Yissum
License.
|
8.4
|
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.
|
8.5
|
Each
of the provisions of clauses 8.2, 8.3 and 8.4 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.
|
8.6
|
You
have given the undertakings contained in this clause 8 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 8.
|
8.7
|
The
Company agrees that each Material Interest that you assume or hold as of
the date hereof is hereby
permitted.
|
9
|
Independent
Legal Advice
|
10
|
Governing
law and jurisdiction
|
Yours
sincerely
|
|
/s/ Eugene A. Bauer | |
Dr.
Eugene A. Bauer
|
|
Chairman,
duty
authorised
for
and on behalf of
the Board)
|
SIGNED
AS A DEED
|
)
|
|
by
Stephen D. McMurray
|
)
|
/s/
Stephen D. McMurray
|
in
the presence of:-
|
)
|
Stephen
D. McMurray
|
(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.
|
(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.
|
1
|
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;
|
“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,
|
|
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.
|
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.
|
3
|
A
director or applicable employee or persons connected with them must not
deal in any securities of the Company during a “
close
period
”.
|
3.1
|
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.
|
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.
|
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.
|
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.
|
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.
|
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.
|
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.
|
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;
|
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).
|
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.
|
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.
|
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.
|
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.
|
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.
|
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
|
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 1 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.
|
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.
|
1.
|
Term;
Termination
. The terns of this Agreement shall commence on the date
hereof, and shall continue until terminated by either party (the “
Consulting Term
”). Each
of the parties may terminate this Agreement at any time, at its sole
discretion, by giving the other a 30-day advance written notice. In the
event, however, that Consultant breaches any term of this Agreement, or
performs any of Consultant’s duties hereunder in gross negligence or
willful misconduct, the Company shall have the right to terminate this
Agreement immediately, with no prejudice to its rights and remedies
against the Consultant for any of the
above.
|
2.
|
Consulting
Services
. During the Consulting Term Consultant shall provide to
the Company advice, knowledge and know-how with respect to the Company’s
Business, including those services defined in Attachment A hereto (the
“Consulting Services”). Consultant shall use his best efforts during the
Consulting Term to provide the Consulting Services as requested by the
Company from time to time, but the same shall always be coordinated with
Consultant and take into account Consultant’s other obligations and
engagements.
|
3.
|
Compensation
and Reimbursement
|
|
3.1
|
In
consideration of the Consulting Services already rendered by the
Consultant during the restart period up to May 1, 2006, the Consultant
shall receive: 56,100 fully vested options at nominal exercise price of
$0.001 per share.
|
|
3.2
|
During
the Consulting Terms, in consideration for the performance of the
Consulting Services, the Consultant shall
receive:
|
4.
|
Non-Disclosure;
Publications
. Consultant covenants and undertakes that, during the
term of this Agreement and thereafter, absent the Company’s prior written
consent, all information, written or oral, relating to the Company, its
Business or condition (actual or planned), disclosed to him by the
Company, or which otherwise became known to him in connection with the
performance of the Consulting Services (the “
Information
”), shall be
maintained by him in full and absolute confidence. and he shall not use
such Information, directly or indirectly, in whole or in part, for his own
benefit or any purpose whatsoever except as specifically and explicitly
provided hereunder. The Consultant’s undertaking hereunder shall not apply
to Information which is in, or becomes part of, the public domain, or
which was known by Consultant before the time of disclosure, as evidenced
by written records. In addition, and notwithstanding the foregoing, any
publication by Consultant
related in
whole or in
part to
Information,
shall not be in violation of any commitments or contracts with
Yissum.
|
|
(i)
|
were
known to the Consultant other than from the Company or from someone acting
on behalf of the Company, prior to his consulting to the
Company;
|
|
(ii)
|
have
passed into the public domain prior to or after their development by or
for the Company or their disclosure to the Company, other than through
acts or omission(s) attributable to the Consultant
or
|
|
(iii)
|
were
obtained, other than under an obligation of confidentiality, from a third
party not acquiring the information under an obligation of confidentiality
from the disclosing party.
|
5.
|
Ownership
of Intellectual Property Rights
. The parties agree that regarding
any and all patent applications, drawings, specifications, test results,
techniques, diagrams, charts, plans, statements, assessments, analyses,
estimates, views, opinions, know-how, processes, machines, practices, in
inventions, improvements, records, copyrights and any other intellectual
property rights under law or ideas made, received or invented by or
originating with (or as otherwise similarly applicable) Consultant in the
performance of the Consulting Services for the Company, or resulting
therefrom (collectively, “
Inventions
”), ownership shall be assigned
to the Company. As regards all worldwide patents, patent applications,
copyrights, mask works, trade secrets, moral rights and other intellectual
property rights in all Inventions pursuant to the Consulting Services
performed hereunder, the Company shall also have ownership of these
rights.
|
6.
|
Non-Competition.
Consultant agrees and undertakes that he will not, so long as this
Agreement is in effect and for a period of 18 months following termination
of this Agreement, for any reason whatsoever, engage in activities which
compete with the Company’s products or services for which the Consultant
provided said consulting services, or whose confidential aspects became
known to the Consultant as a result of said
services.
|
7.
|
Independent
Contractor
. Consultant is an independent contractor, not an
employee of the Company, and the manner in which the Consulting Services
are rendered shall be within his sole control and discretion. The Company
shall not be responsible for Consultant’s acts while performing the
Consulting Services hereunder, whether on the Company’s premises or
elsewhere.
|
8.
|
Duties
.
The consultant duties during the term of this agreement will consist of
rendering, from time to time, consulting services on matters such as viral
vectors, their use in connection with Micro-Organ Culture technology and
genetically engineered Biopumps. The average monthly time to be spent by
the Consultant in providing such services shall approximate 20 hours per
month, but may moderately vary from this depending upon the results of the
Company’s research.
|
9.
|
Representations
by Consultant
. Consultant represents and warrants to the Company
that the execution and delivery of this Agreement and the fulfillment of
the terms hereof (i) will not constitute a default under or conflict with
any agreement or other instrument to which he is a party or by which he is
bound, and (ii) do not require the consent of any person or entity except
as disclosed by the Consultant in Appendix
B.
|
10.
|
Miscellaneous
.
This Agreement shall be exclusively governed by the laws of the State of
Israel. This Agreement constitutes the entire agreement between the
parties with respect to the matters referred to herein, and supersedes all
prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer,
employee or representative of the Company or any party thereto; and any
prior agreement of the parties hereto or of the Consultant and 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 Consultant and an appropriate officer of the
Company.
|
/s/
Andrew L. Pearlman
|
/s/
Amos Panet
|
|
For
the Company
|
The
Consultant
|
By:
|
/s/ Andrew L. Pearlman
|
|
Date:
|
May 10, 2006
|
|
A.L.P
|
1.
|
Role:
Chief Science advisor and member of the Scientific Advisory
Board
|
a.
|
As
vector
expert, to
provide
high level and supportive guidance, critical evaluation and feedback, and
proposed solutions, in:
|
i.
|
vector
development: selection, preparation, production, testing, use of viral
vectors
|
ii.
|
Gene
construct, related elements for stable, high level
secretion
|
iii.
|
transduction
optimization
|
iv.
|
method
development, potency assay
|
b.
|
Assist/guide
preclinical testing, GMP
preparations
|
c.
|
Other
areas of the Consultant’s
contribution
|
d.
|
Possible
R & D in the Consultant’s lab at Hadassah: Assuming any resulting IP
is included in the current Yissum license, potentially perform specific
projects in the Consultant’s lab based on at-cost budget to be
agreed.
|
2.
|
Time
Commitment: (not counting any research performed in the Consultant’s lab):
about 20/ hrs/month (ca 250
hours/year):
|
a.
|
1
day per month at Medgenics
|
b.
|
3
weekly 2-hour review meetings via email and
phone
|
c.
|
Brief
consults and side projects as needed (1-2
hours/week).
|
1.
|
Services.
|
|
a.
|
The
Advisor will advise, consult for and on behalf of the Company's
management, employees and agents, at reasonable times, as requested by the
Company for the Services set forth on Exhibit 1 (the
“
Description of Services
”
).
|
|
b.
|
Advisor
will participate in 3-4 SAB meetings per year by phone. Additionally,
Consultation of up to 2 hours per month on average may be sought by the
Company by telephone, written correspondence or in person at the Advisor’s
office and will involve reviewing activities and developments in the
Company
’
s field of
activity.
|
2.
|
The
Advisor’s compensation will comprise 20,000 options for common shares
exercisable for 5 years at the restart round price ($1.516/share) These
options shall vest over a 3 year period starting from the Effective Date
of this Agreement however, vesting will be accelerated in case of a change
of ownership. The Advisor will be paid $1,500 per day for in-person
meetings. Reasonable expenses of the Advisor incurred at the request of
the Company (including phone and other expenses incurred in the normal
course of business on behalf of the Company and travel expenses incurred
in connection with Company related business in accordance with the
Company’s travel policy) will be reimbursed promptly by the Company,
subject to customary verification and prior written approval.
=
|
3.
|
Term
.
The term of this
Agreement will begin on the Effective Date of this Agreement and will end
on the third anniversary of this Agreement or upon earlier termination as
provided below (the
“
Term
”);
provided that the Term may
be renewed for successive one-year periods. This Agreement may be
terminated at any time upon written notice by either
party.
|
4.
|
Confidentiality.
|
|
a.
|
The
Advisor acknowledges that, during the course of performing his services
hereunder, the Company will be disclosing information to the Advisor
(“
Confidential Information
”)
which is owned by the
Company. The Advisor acknowledges that the Company’s business is extremely
competitive, dependent in part upon the maintenance of secrecy, and that
any disclosure of the Confidential Information would likely result in
serious harm to the Company.
|
|
b.
|
The
Advisor agrees that the Confidential Information will be used by the
Advisor only in connection with consulting activities hereunder, and will
not be used for any other purpose.
|
|
c.
|
The
Advisor agrees not to disclose, directly or indirectly, the Confidential
Information to any third person or entity, other than representatives or
agents of the Company. The Advisor agrees not to use the Confidential
Information for any purposes other than explicitly permitted under this
Agreement. The Advisor will treat all such information as confidential and
proprietary property of the
Company.
|
|
d.
|
The
Advisor may disclose any Confidential Information that is required to be
disclosed by law, government regulation or court order. If disclosure is
required, the Advisor will give the Company advance notice so that the
Company may seek a protective order or take other action reasonable in
light of the circumstances.
|
5.
|
Intellectual
Property
|
|
a.
|
The
Advisor recognizes that the Company is engaged in a continuous program of
research, development, and production respecting its business. The Company
possesses or has rights to information that has been created, discovered,
developed or otherwise become known to the Company (including information
developed by, discovered by or created by Advisor which arises out of the
consulting relationship with the Company) that has commercial value in its
business (“Proprietary Information”). For example, Proprietary Information
includes without limitation inventions (whether or not patentable), patent
applications trade secrets, discoveries, experiments, research concepts
ideas, techniques, methods, processes, testing procedures, formulas,
compositions, data, know-how, computer programs, computer code,
improvements in the foregoing, as well as names and expertise of
employees, consultants, customers and prospects, and technical, business,
financial, marketing customer and product development plans, forecasts,
strategies and any other information relating to the Company’s business
and/or fields of interest.
|
|
b.
|
The
Advisor understands that its advisory relationship creates a relationship
of confidence and trust between Advisor and the Company with respect to
any (i) Proprietary Information or (ii) confidential information
applicable to the business of any customer of the Company or other entity
with which the Company does business and that it learns in connection with
the advisory relationship. At all times, both during the consulting
relationship with the Company and after its termination, Advisor will keep
in confidence and trust all such information, and Advisor will not use or
disclose any such information without the written consent of the Company,
except as may be necessary in the ordinary course of performing its duties
to the Company. This obligation shall end whenever such information enters
the public domain and is no longer confidential or
proprietary,
|
|
c.
|
In
addition, the Advisor hereby
agrees:
|
i.
|
All
Proprietary Information shall be the sole property of the Company and its
assigns, and the Company and its assigns shall be the sole owner of all
patents, copyrights, trade secrets and other proprietary rights in
connection therewith. Advisor hereby assigns to the Company any rights it
may have or acquire in such Proprietary Information, Advisor specifically
agrees that the foregoing assignment shall include any and all rights it
may have, had, acquire, or acquired in the Proprietary Information of
Medgenics, Inc., and a Delaware corporation, if applicable. Additionally,
Advisor agrees to perform all reasonable acts requested by the Company or
its representatives to perfect and enforce such
rights.
|
|
b.
|
All
documents or other media, records apparatus, equipment and other physical
property whether or not pertaining to Proprietary Information, furnished
to the advisor by the Company or produced by Advisor or others in
connection with the consulting relationship shall be and remain the sole
property of the Company. Advisor shall return and deliver all such
property of the Company immediately as and when requested by the Company.
The advisor shall return and deliver all such property (including any
copies thereof) upon request and, even without any request, upon
termination of the consulting
relationship.
|
c.
|
During
the advisory relationship with the Company, the advisor will not engage in
providing advisory services to other entities in the field of
ex
vivo genetic modification of autologous
tissue.
|
|
d.
|
Advisor
will promptly disclose to the Company all improvements, inventions. works
of authorship, trade secrets, computer programs, designs, formulas, mask
works, ideas, processes, techniques, know-how and data, whether or not
patentable (“Inventions”) that relate to the subject matter of my advising
and that are conceived, developed or learned by the Advisor, either alone
or jointly with others, during the term of the advisory
relationship.
|
|
e.
|
During
the term of the advising and for twelve (12) months thereafter, the
Advisor will not solicit any employee of the Company to leave the Company
for any reason or to devote less than all of any such employee’s efforts
to the affairs of the Company.
|
|
f.
|
All
inventions that Advisor conceives, develops or learns (in whole or in
part, either alone or jointly with others) in connection
with
performance of its
advising for the Company or that uses the Company’s Proprietary
Information shall be the sole property of the Company and its assigns (and
to
the extent
permitted by law shall
be
works made for
hire).The Company and its assigns shall be the sole owner of all trade
secret rights, patents, copyrights and other proprietary rights anywhere
in the world in connection therewith, and Advisor hereby assigns to the
Company any rights it may have or acquire in such Inventions. Advisor
specifically agrees that the
foregoing
assignment
shall include any and all rights, title and interest Advisor may have,
had, acquired or acquire in Inventions made conceived, developed, acquired
or first reduced to practice by Advisor (in whole or in part, either alone
or jointly with others) while Advisor was rendering services to Medgenics,
Inc. a Delaware corporation, if
applicable.
|
|
g.
|
With
regard to Inventions described in (f) above, Advisor will assist the
Company or its assigns in every proper way (but at the Company’s expense)
to obtain and from time to time enforce patents, copyrights on the
Inventions in any and all countries, and
to
that end Advisor
will
execute all
appropriate documents. This obligation shall continue beyond the
termination of the consulting relationship, but the Company shall then
compensate Advisor at a reasonable rate for time spent. If the Company is
unable for any reason whatsoever to secure signature to any such document
(including renewals, extensions, continuations, divisions or continuations
in part), Advisor hereby irrevocably designates and appoints the Company
and its duly authorized officers and agents, as
its
agents and
attorneys-in-fact to act for and in my behalf and instead of Advisor,
but
only for the
purpose
of
executing and filing such documents and doing all other lawful permitted
acts
to
accomplish the foregoing with the same legal force and effect as if
done by Advisor.
|
|
h.
|
As
a matter or record Advisor attaches hereto (as Exhibit 2) a list of
existing inventions or improvements relevant to the subject matter of the
advisory relationship with the Company that have been made
or
conceived or first reduced to
practice by Advisor alone, or jointly with others, prior to rendering
services as an advisor to the Company that Advisor desires to remove from
the operation of the Agreement, and Advisor covenants that such list is
complete.
|
|
i.
|
Advisor
represents that execution
of
the Agreement, the advisory
relationship with the Company and my performance of the Services will not
violate any obligations it may have to any person or entity, including the
obligation to keep confidential any proprietary information of that person
or entity. Advisor has not entered into any agreement in conflict wit this
Agreement or the advisory relationship with the Company. Advisor
represents that it will not disclose to the Company or induce the Company
to use any confidential or proprietary information or material belonging
to any previous employers, clients, or
others
|
6.
|
Use of Name
. It
is understood that the name of the Advisor and Advisor’s affiliation with
the Institution will appear in disclosure documents required by securities
laws, and in other regulatory and administrative filings; and in the
ordinary course of the Company’s
business.
|
7.
|
No Conflict; Valid and
Binding
.The Advisor represents that neither the execution of this
Agreement nor the performance of the Advisor’s obligations under this
Agreement will result in a violation or breach of any other agreement by
which the Advisor is bound. The Company represents that this Agreement has
been duly authorized and executed and is a valid and legally binding
obligation of the Company, subject to no conflicting
agreements.
|
8.
|
Notices
.
Any notice provided under this Agreement
shall be in writing and shall be deemed to have been
effectively given (i) upon receipt when delivered personally, (ii)
one day after sending when sent by private express mail service (such as
Federal Express), or (iii) 5 days after sending when sent by regular mail
to the following address:
|
Medgenics,
Inc.
|
ADVISOR:
|
|||
By:
|
/s/
Andrew L. Pearlman
|
By:
|
/s/
Allen R. Nissenson
|
|
Name:
|
Andrew
L. Pearlman
|
Name:
|
Allen
R. Nissenson
|
|
Title:
|
Chief
Executive Officer
|
Title:
|
PROF.
MD
|
|
9/12/06
|
1)
|
Participating
as a member of the Scientific Advisory
Board
|
2)
|
Guiding
the general scientific, business, laboratory, and medical direction of the
company;
|
3)
|
Reviewing
the goals and plans of the Company and developing strategies for achieving
them;
|
4)
|
Identifying
and developing relationships with potential strategic
partners;
|
5)
|
Interacting
with potential investors, stockholders, and strategic or corporate
partners;
|
6)
|
Identifying
and reviewing promising scientific developments and intellectual property;
and
|
7)
|
Providing
advice and guidance in the Company’s scientific research and product
development activities.
|
|
Mark
A. Kay, MD, PhD (the
“Advisor”).
|
|
1.
|
Services
.
|
|
a.
|
The
Advisor will advise, consult for and on behalf of the Company’s
management, employees and agents, at reasonable times, as requested by the
Company for the Services set forth on Exhibit 1 (the
“
Description of
Services”
).
|
|
b.
|
Advisor
will participate in 3-4 SAB meetings per year by phone. Additionally,
Consultation of up to 2 hours per month on average may be sought by the
Company by telephone, written correspondence or in person at the Advisor’s
office and will involve reviewing activities and developments in the
Company’s field of activity.
|
|
2.
|
The
Advisor’s compensation will comprise 20,000 options for common shares
exercisable for 5 years at the restart round price ($1.516/share) These
options shall vest over a 3 year period starting from the Effective Date
of this Agreement however, vesting will be accelerated in case of a change
of ownership The Advisor will be paid $l,500 per day for in-person
meetings. Reasonable expenses of the Advisor incurred at the request of
the Company (including phone and other expenses incurred in the normal
course of business on behalf of the Company and travel expenses incurred
in connection with Company related business in accordance with the
Company’s travel policy) will be reimbursed promptly by the Company,
subject to customary verification and prior written
approval.
|
|
3.
|
Term
. The term
of this Agreement will begin on the Effective Date of this Agreement and
will end on the third anniversary of this Agreement or upon earlier
termination as provided below (the
“
Term
”
); provided that the Term may
be renewed for successive one-year periods. This Agreement may be
terminated at any time upon written notice by either
party.
|
|
4.
|
Confidentiality.
|
|
a.
|
The
Advisor acknowledges that, during the course of performing his services
hereunder, the Company will be disclosing information to the Advisor
(
“
Confidential Information
”
) which is owned by the Company. The
Advisor acknowledges that the Company’s business is extremely competitive,
dependent in part upon the maintenance of secrecy, and that any disclosure
of the Confidential Information would likely result in serious harm to the
Company.
|
|
b.
|
The
Advisor agrees that the Confidential Information will be used by the
Advisor only in connection with consulting activities hereunder, and will
not be used for any other
purpose.
|
|
c.
|
The
Advisor agrees not to disclose, directly or indirectly, the Confidential
Information to any third person or entity, other than representatives or
agents of the Company. The Advisor agrees not to use the Confidential
Information for any purposes other than explicitly permitted under this
Agreement. The Advisor will treat all such information as confidential and
proprietary property of the
Company.
|
|
d.
|
The
Advisor may disclose any Confidential Information that is required to be
disclosed by law, government regulation or court order. If disclosure is
required, the Advisor will give the Company advance notice so that the
Company may seek a protective order or take other action reasonable in
light of the circumstances.
|
|
5.
|
Intellectual
Property
|
|
a.
|
The
Advisor recognizes that the Company is engaged in a continuous program of
research, development, and production respecting its business. The Company
possesses or has rights to information that has been created, discovered,
developed or otherwise become known to the Company (including information
developed by, discovered by or created by Advisor which arises out of the
consulting relationship with the Company) that has commercial value in its
business (“Proprietary Information”). For example, Proprietary Information
includes without limitation inventions (whether or not patentable), patent
applications trade secrets, discoveries, experiments, research concepts
ideas, techniques, methods, processes, testing procedures, formulas,
compositions, data, know-how, computer programs, computer code,
improvements in the foregoing, as well as names and expertise of
employees, consultants, customers and prospects, and technical, business,
financial, marketing customer and product development plans, forecasts,
strategies and any other information relating to the Company’s business
and/or fields of interest.
|
|
b.
|
The
Advisor understands that its advisory relationship creates a relationship
of confidence and trust between Advisor and the Company with respect to
any (i) Proprietary Information or (ii) confidential information
applicable to the business of any customer of the Company or other entity
with which the Company does business and that it learns in connection with
the advisory relationship. At all times, both during the consulting
relationship with the Company and after its termination. Advisor will keep
in confidence and trust all such information, and Advisor will not use or
disclose any such information without the written consent of the Company,
except as may be necessary in the ordinary course of performing its duties
to the Company. This obligation shall end whenever such information enters
the public domain and is no longer confidential or
proprietary.
|
|
c.
|
In
addition, the Advisor hereby
agrees:
|
|
i.
|
All
Proprietary Information shall be the sole property of the Company and its
assigns, and the Company and its assigns shall be the sole owner of all
patents, copyrights, trade secrets and other proprietary rights in
connection therewith. Advisor hereby assigns to the Company any rights it
may have or acquire in such Proprietary Information. Advisor specifically
agrees that the foregoing assignment shall include any and all rights it
may have, had, acquire, or acquired in the Proprietary Information of
Medgenics, Inc., and a Delaware corporation, if applicable. Additionally,
Advisor agrees to perform all reasonable acts requested by the Company or
its representatives to perfect and enforce such
rights.
|
|
b.
|
All
documents or other media, records apparatus, equipment and other physical
property whether or not pertaining to Proprietary Information, furnished
to the advisor by the Company or produced by Advisor or others in
connection with the consulting relationship shall be and remain the sole
property of the Company. Advisor shall return and deliver all such
property of the Company immediately as and when requested by the Company.
The advisor shall return and deliver all such property (including any
copies thereof) upon request and, even without any request, upon
termination of the consulting
relationship.
|
|
c.
|
During
the advisory relationship with the Company, the advisor will not engage in
providing advisory services to other entities in the field of
ex
vivo genetic modification of autologous
tissue.
|
|
d.
|
Advisor
will promptly disclose to the Company all improvements, inventions, works
of authorship, trade secrets, computer programs, designs, formulas, mask
works, ideas,, processes, techniques, know-how and data, whether or not
patentable (“Inventions”) that relate to the subject matter of my advising
and that are conceived, developed or learned by the Advisor, either alone
or jointly with others, during the term of the advisory
relationship.
|
|
e.
|
During
the term of the advising and for twelve (12) months thereafter, the
Advisor will not solicit any employee of the Company to leave the Company
for any reason or to devote less than all of any such employee’s efforts
to the affairs of the
Company.
|
|
f.
|
All
inventions that Advisor conceives, develops or learns (in whole or in
part, either alone or jointly with others) in connection with performance
of its advising for the Company or that uses the Company’s Proprietary
Information shall be the sole property of the Company and its assigns (and
to the extent permitted by law shall be works made for hire).The Company
and its assigns shall be the sole owner of all trade secret rights,
patents, copyrights and other proprietary rights anywhere in the world in
connection therewith, and Advisor hereby assigns to the Company any rights
It may have or acquire in such Inventions. Advisor specifically agrees
that the foregoing assignment shall include any and all rights, title and
interest Advisor may have, had, acquired or acquire in Inventions made
conceived, developed, acquired or first reduced to practice by Advisor (in
whole or in part, either alone or jointly with others) while Advisor was
rendering services to Medgenics, Inc. a Delaware corporation, if
applicable.
|
|
g.
|
With
regard to Inventions described in (f) above, Advisor will assist the
Company or its assigns in every proper way (but at the Company’s expense)
to obtain and from time to time enforce patents, copyrights on the
Inventions in any and all countries, and to that end Advisor will execute
all appropriate documents. This obligation shall continue beyond the
termination of the consulting relationship, but the Company shall then
compensate Advisor at a reasonable rate for time spent. If the Company is
unable for any reason whatsoever to secure signature to any such document
(including renewals, extensions, continuations, divisions or continuations
in part), Advisor hereby irrevocably designates and appoints the Company
and its duly authorized officers and agents, as its agents and
attorneys-in-fact to act for and in my behalf and instead of Advisor, but
only for the purpose of executing and filing such documents and doing all
other lawful permitted acts to accomplish the foregoing with the same
legal force and effect as if done by
Advisor.
|
h.
|
As
a matter or record Advisor attaches hereto (as Exhibit 2) a list of
existing inventions or improvements relevant to me subject matter of the
advisory relationship with the Company that have been made or conceived or
first reduced to practice by Advisor alone, or jointly with others, prior
to rendering services as an advisor to the Company that Advisor desires to
remove from the operation of the Agreement, and Advisor covenants that
such list is complete.
|
|
i.
|
Advisor
represents that execution of the Agreement, the advisory relationship with
the Company and my performance of the Services will not violate any
obligations it may have to any person or entity, including the obligation
to keep confidential any proprietary information of that person or entity.
Advisor has not entered into any agreement in conflict wit this Agreement
or the advisory relationship with the Company. Advisor represents that it
will not disclose to the Company or induce the Company to use any
confidential or proprietary information or material belonging to any
previous employers, clients, or
others.
|
|
6.
|
Use of Name
. It
is understood that the name of the Advisor and Advisor’s affiliation with
the Institution will appear in disclosure documents required by securities
laws, and in other regulatory and administrative filings; and in the
ordinary course of the Company’s
business.
|
|
7.
|
No Conflict: Valid and
Binding
. The Advisor represents that neither the execution of this
Agreement nor the performance of the Advisor’s obligations under this
Agreement will result in a violation or breach of any other agreement by
which the Advisor is bound. The Company represents that this Agreement has
been duly authorized and executed and is a valid and legally binding
obligation of the Company, subject to no conflicting
agreements.
|
|
8.
|
Notices
. Any
notice provided under this Agreement shall be in writing and shall be
deemed to have been effectively given (i) upon receipt when delivered
personally, (ii) one day after sending when sent by private express mail
service (such as Federal Express), or (iii) 5 days after sending when sent
by regular mail to the following
address:
|
|
Medgenics
Inc.
|
|
12
HaNapach St. POB 6314 Karmiel
Israel
|
|
Office
+972-4-958-8555
|
|
Fax
+972-4-988-2270
|
|
Attention:
Dr. Andrew L. Pearlman
|
|
Chief
Executive Officer
|
|
Pearl
Cohen Zedek Latzer, LLP
|
|
1500
Broadway, 12th Floor
|
|
New
York. NY 10036
|
|
Tel:
646-878-0804
|
|
Fax:
646-878-0801
|
|
Attention:
Mark S. Cohen
|
|
__________________________
|
|
__________________________
|
|
__________________________
|
Medgenics,
Inc.
|
ADVISOR:
|
By:
/s/ Andrew L.
Pearlman
|
By:
/s/ Mark
Kay
|
Name:
Andrew L. Pearlman
|
Name:
Mark Kay
|
Title:
Chief Executive Officer
|
Title:
Professor
|
|
1)
|
Guiding
the general scientific, business, laboratory, and medical direction of the
company;
|
|
2)
|
Reviewing
the goals and plans of the Company and developing strategies for achieving
them;
|
|
3)
|
Identifying
and developing relationships with potential strategic
partners;
|
|
4)
|
Interacting
with potential investors, stockholders, and strategic or corporate
partners;
|
|
5)
|
Identifying
and reviewing promising scientific developments and intellectual property;
and
|
|
6)
|
Providing
advice and guidance in the Company’s scientific research and product
development activities.
|
|
1.
|
Services.
|
|
a.
|
The
Advisor will advise, consult for and on behalf of the Company’s
management, employees and agents, at reasonable times, as requested by the
Company for the Services set forth on Exhibit 1 (the
“
Description of Services
”
).
|
|
b.
|
Advisor
will participate in 3-4 SAB meetings per year by phone. Additionally,
Consultation of up to 2 hours per month on average may be sought by the
Company by telephone, written correspondence or in person at the Advisor’s
office and will involve reviewing activities and developments in the
Company’s field of activity.
|
|
2.
|
The
Advisor’s compensation will comprise 677,397 options for common shares
exercisable for 5 years at the price of £0.10/share, subject to approval
of the Board of Directors. The Advisor acknowledges that the Company is
prohibited by the AIM Rules for Companies from granting such options at
the date of this Agreement but that, subject as aforesaid, such options
shall be granted as soon as practicable, lawful and otherwise permitted
under the said Rules. When granted, one third of these options shall be
deemed to have vested as of the Effective Date of this Agreement and 2/3
will vest over a 2 year period starting from the Effective Date of this
Agreement however, vesting will be accelerated in case of a change of
ownership. The Advisor will be paid $1,500 per day for in-person meetings.
Reasonable expenses of the Advisor incurred at the request of the Company
(including phone and other expenses incurred in the normal course of
business on behalf of the Company and travel expenses incurred in
connection with Company related business in accordance with the Company’s
travel policy) will be reimbursed promptly by the Company, subject to
customary verification and prior written
approval.
|
|
3.
|
Term.
The term of this Agreement will begin on the Effective Date of this
Agreement and will end on the third anniversary of this Agreement or upon
earlier termination as provided below (the
“
Term
”
);
provided that the Term may be
renewed for successive one-year periods. This Agreement may be terminated
at any time upon written notice by either
party.
|
|
4.
|
Confidentiality and prohibited
dealings.
|
|
a.
|
The
Advisor acknowledges that, during the course of performing his services
hereunder, the Company will be disclosing information to the Advisor
(
“
Confidential Information
”)
which is owned by the
Company. The Advisor acknowledges that the Company’s business is extremely
competitive, dependent in part upon the maintenance of secrecy, and that
any disclosure of the Confidential Information would likely result in
serious harm to the Company.
|
|
b.
|
The
Advisor agrees that the Confidential Information will be used by the
Advisor only in connection with consulting activities hereunder, and will
not be used for any other purpose.
|
|
c.
|
The
Advisor agrees not to disclose, directly or indirectly, the Confidential
Information to any third person or entity, other than representatives or
agents of the Company. The Advisor agrees not to use the Confidential
Information for any purposes other than explicitly permitted under this
Agreement. The Advisor will treat all such information as confidential and
proprietary property of the
Company.
|
|
d.
|
The
Advisor may disclose any Confidential Information that is required to be
disclosed by law, government regulation or court order. If disclosure is
required, the Advisor will give the Company advance notice so that the
Company may seek a protective order or take other action reasonable in
light of the circumstances.
|
|
e.
|
The
Advisor hereby acknowledges that he is aware that the Company is a company
whose issued shares have been admitted to trading on the AIM market of the
London Stock Exchange. Information imparted and/or to be imparted by the
Company to the Advisor regarding the Company and/or the Company’s
subsidiary is or may be
“
inside information
”
relating to the Company and/or
the securities of the Company within the meaning of the UK’s Criminal
Justice Act 1993. As such, the Advisor may hereafter become
“
an insider
”
in relation to the Company.
The Advisor hereby agrees to being made an insider and that, entirely
without prejudice to the generality of the foregoing provisions hereof,
that he will not:
|
|
(i)
|
use
Confidential Information in relation to the Company and/or its subsidiary
to deal or encourage any other person to deal in securities of the
Company. For the purposes of the foregoing the term “deal” is to be
construed in accordance with the UK’s Criminal Justice Act
1993;
|
|
(ii)
|
(and
will use his best endeavours to procure that none of his related,
connected or associated parties will) without the Company’s prior written
consent directly or indirectly by purchase or otherwise, acquire
(conditionally or otherwise), offer to acquire, or agree to acquire
ownership or options to acquire such ownership or any rights whatsoever in
respect of any share capital in the Company (or otherwise act in concert
with any person who so acquires, offers to acquire or agrees to acquire)
whilst any such information shall be and remain “inside
information”.
|
|
5.
|
Intellectual
Property
|
|
a.
|
The
Advisor recognizes that the Company is engaged in a continuous program of
research, development, and production respecting its business. The Company
possesses or has rights to information that has been created, discovered,
developed or otherwise become known to the Company (including information
developed by, discovered by or created by Advisor which arises out of the
consulting relationship with the Company) that has commercial value in its
business (“Proprietary Information”). For example, Proprietary Information
includes without limitation inventions (whether or not patentable), patent
applications trade secrets, discoveries, experiments, research concepts
ideas, techniques, methods, processes, testing procedures, formulas,
compositions, data, know-how, computer programs, computer code,
improvements in the foregoing, as well as names and expertise of
employees, consultants, customers and prospects, and technical, business,
financial, marketing customer and product development plans, forecasts,
strategies and any other information relating to the Company’s business
and/or fields of interest.
|
|
b.
|
The
Advisor understands that its advisory relationship creates a relationship
of confidence and trust between Advisor and the Company with respect to
any (i) Proprietary Information or (ii) confidential information
applicable to the business of any customer of the Company or other entity
with which the Company does business and that it learns in connection with
the advisory relationship. At all times, both during the consulting
relationship with the Company and after its termination, Advisor will keep
in confidence and trust all such information, and Advisor will not use or
disclose any such information without the written consent of the Company,
except as may be necessary in the ordinary course of performing its duties
to the Company. This obligation shall end whenever such information enters
the public domain and is no longer confidential or
proprietary.
|
|
c.
|
In
addition, the Advisor hereby agrees:
|
|
i.
|
All
Proprietary Information shall be the sole property of the Company and its
assigns, and the Company and its assigns shall be the sole owner of all
patents, copyrights, trade secrets and other proprietary rights in
connection therewith. Advisor hereby assigns to the Company any rights it
may have or acquire in such Proprietary Information. Advisor specifically
agrees that the foregoing assignment shall include any and all rights it
may have, had, acquire, or acquired in the Proprietary Information of
Medgenics, Inc., and a Delaware corporation, if applicable. Additionally,
Advisor agrees to perform all reasonable acts requested by the Company or
its representatives to perfect and enforce such
rights.
|
|
ii.
|
All
documents or other media, records apparatus, equipment and other physical
property whether or not pertaining to Proprietary Information, furnished
to the advisor by the Company or produced by Advisor or others in
connection with the consulting relationship shall be and remain the sole
property of the Company. Advisor shall return and deliver all such
property of the Company immediately as and when requested by the Company.
The advisor shall return and deliver all such property (including any
copies thereof) upon request and, even without any request, upon
termination of the consulting
relationship.
|
|
iii.
|
During
the advisory relationship with the Company, the advisor will not engage in
providing advisory services to other entities in the field of
ex
vivo genetic modification of autologous
tissue.
|
|
d.
|
Advisor
will promptly disclose to the Company all improvements, inventions, works
of authorship, trade secrets, computer programs, designs, formulas, mask
works, ideas, processes, techniques, know-how and data, whether or not
patentable (“Inventions”) that relate to the subject matter of my advising
and that are conceived, developed or learned by the Advisor, either alone
or jointly with others, during the term of the advisory
relationship.
|
|
e.
|
During
the term of the advising and for twelve (12) months thereafter, the
Advisor will not solicit any employee of the Company to leave the Company
for any reason or to devote less than all of any such employee’s efforts
to the affairs of the Company.
|
|
f.
|
All
inventions that Advisor conceives, develops or learns (in whole or in
part, either alone or jointly with others) in connection with performance
of its advising for the Company or that uses the Company’s Proprietary
Information shall be the sole property of the Company and its assigns (and
to the extent permitted by law shall be works made for hire). The Company
and its assigns shall be the sole owner of all trade secret rights,
patents, copyrights and other proprietary rights anywhere in the world in
connection therewith, and Advisor hereby assigns to the Company any rights
it may have or acquire in such Inventions. Advisor specifically agrees
that the foregoing assignment shall include any and all rights, title and
interest Advisor may have, had, acquired or acquire in Inventions made,
conceived, developed, acquired or first reduced to practice by Advisor (in
whole or in part, either alone or jointly with others) while Advisor was
rendering services to Medgenics, Inc. a Delaware corporation, if
applicable.
|
|
g.
|
With
regard to Inventions described in (f) above, Advisor will assist the
Company or its assigns in every proper way (but at the Company’s expense)
to obtain and from time to time enforce patents, copyrights on the
Inventions in any and all countries, and to that end Advisor
will
execute all appropriate documents. This obligation shall continue
beyond the termination of the consulting relationship, but the Company
shall then compensate Advisor at a reasonable rate for time spent. If the
Company is unable for any reason whatsoever to secure signature to any
such document (including renewals, extensions, continuations, divisions or
continuations in part), Advisor hereby irrevocably designates and appoints
the Company and its duly authorized officers and agents, as its agents and
attorneys-in-fact to act for and in my behalf and instead of Advisor, but
only for the purpose of executing and filing such documents and doing all
other lawful permitted acts to accomplish the foregoing with the same
legal force and effect as if done by
Advisor.
|
|
h.
|
As
a matter or record Advisor attaches hereto (as Exhibit 2) a list of
existing inventions or improvements relevant to the subject matter of the
advisory relationship with the Company that have been made or conceived or
first reduced to practice by Advisor alone, or jointly with others, prior
to rendering services as an advisor to the Company that Advisor desires to
remove from the operation of the Agreement, and Advisor covenants that
such list is complete.
|
|
i.
|
Advisor
represents that execution of the Agreement, the advisory relationship with
the Company and my performance of the Services will not violate any
obligations it may have to any person or entity, including the obligation
to keep confidential any proprietary information of that person or entity.
Advisor has not entered into any agreement in conflict with this Agreement
or the advisory relationship with the Company. Advisor represents that it
will not disclose to the Company or induce the Company to use any
confidential or proprietary information or material belonging to any
previous employers, clients, or
others.
|
|
6.
|
Use
of Name
.
It is
understood that the name of the Advisor and Advisor’s affiliation with the
Institution will appear in disclosure documents required by securities
laws, and in other regulatory and administrative filings; and in the
ordinary course of the Company’s
business.
|
|
7.
|
No
Conflict: Valid and Binding
.
The Advisor represents that
neither the
execution of this Agreement nor
the performance of the Advisor’s
obligations under this Agreement
will result in a violation or breach of
any other agreement by which the
Advisor is bound. The Company
represents that this Agreement has
been duly authorized and executed and is a valid and legally binding
obligation of the Company, subject to no conflicting
agreements.
|
Medgenics,
Inc.
|
ADVISOR:
|
|||
By:
|
/s/ Andrew Pearlman
|
By:
|
/s/ Anatole Besarab MD
|
|
Name:
Andrew Pearlman
|
Name:
Anatole Besarab MD
|
|||
Title:
Chief Executive Officer
|
|
Title:
Consultant
|
|
1)
|
Participating
as a member of the Scientific Advisory
Board
|
|
2)
|
Guiding
the general scientific, business, laboratory, and medical direction of the
company;
|
|
3)
|
Reviewing
the goals and plans of the Company and developing strategies for achieving
them;
|
|
4)
|
Identifying
and developing relationships with potential strategic
partners;
|
|
5)
|
Interacting
with potential investors, stockholders, and strategic or corporate
partners;
|
|
6)
|
Identifying
and reviewing promising scientific developments and intellectual property;
and
|
7)
|
Providing
advice and guidance in the Company’s scientific research and product
development activities.
|
1.
|
Services
.
|
|
a.
|
The
Advisor will advise, consult for and on behalf of the Company’s
management, employees and agents, at reasonable times, as requested by the
Company for the Services set forth on Exhibit l (the
“
Description of Services
”).
|
|
b.
|
Advisor
will participate in 3-4 SAB meetings per year by phone. Additionally,
Consultation of up to 2 hours per month on average may be sought by the
Company by telephone, written correspondence or in person at the Advisor’s
office and will involve reviewing activities and developments in the
Company’s field of activity.
|
2.
|
The
Advisor’s compensation will comprise 677,397 options for common shares
exercisable for 5 years at the mid market trading price of the Company’s
listed stock on the date the options are granted, subject to approval of
the Board of Directors. The Advisor acknowledges that the Company is
prohibited by the AIM Rules for Companies from granting such options at
the date of this Agreement but that, subject as aforesaid, such options
shall be granted as soon as practicable, lawful and otherwise permitted
under the said Rules. These options shall vest in three equal increments
over a 3 year period [starting from the Effective Date of this Agreement,
however, vesting will be accelerated in case of a change of ownership. The
Advisor will be paid $1,500 per day for in-person meetings. Reasonable
expenses of the Advisor incurred at the request of the Company (including
phone and other expenses incurred in the normal course of business on
behalf of the Company and travel expenses incurred in connection with
Company related business in accordance with the Company’s travel policy)
will be reimbursed promptly by the Company, subject to customary
verification and prior written
approval.
|
3.
|
Term
.
The term of this Agreement will begin on the Effective Date of this
Agreement and will end on the third anniversary of this Agreement or upon
earlier termination as provided below (the
“
Term
”);
provided that the Term may
be renewed for successive one-year periods. This Agreement may be
terminated at any time upon written notice by either
party.
|
4.
|
Confidentiality
and prohibited
dealings.
|
|
a.
|
The
Advisor acknowledges that, during the course of performing his services
hereunder, the Company will be disclosing information to the Advisor
(“
Confidential Information
”) which
is owned by the Company. The Advisor acknowledges that the Company’s
business is extremely competitive, dependent in part upon the maintenance
of secrecy, and that any disclosure of the Confidential Information would
likely result in serious harm to the
Company.
|
|
b.
|
The
Advisor agrees that the Confidential Information will be used by the
Advisor only in connection with consulting activities hereunder, and will
not be used for any other purpose.
|
|
c.
|
The
Advisor agrees not to disclose, directly or indirectly, the Confidential
Information to any third person or entity, other than representatives or
agents of the Company. The Advisor agrees not to use the Confidential
Information for any purposes other than explicitly permitted under this
Agreement. The Advisor will treat all such information as confidential and
proprietary property of the
Company.
|
|
d.
|
The
Advisor may disclose any Confidential Information that is required to be
disclosed by law, government regulation or court order. If disclosure is
required, the Advisor will give the Company advance notice so that the
Company may seek a protective order or take other action reasonable in
light of the circumstances.
|
|
e.
|
The
Advisor hereby acknowledges that he is aware that the Company is a company
whose issued shares have been admitted to trading on the AIM market of the
London Stock Exchange. Information imparted and/or to be imparted by the
Company to the Advisor regarding the Company and/or the Company’s
subsidiary is or may be “inside information” relating to the Company
and/or the securities of the Company within the meaning of the UK’s
Criminal Justice Act 1993. As such, the Advisor may hereafter become “an
insider” in relation to the Company. The Advisor hereby agrees to being
made an insider and that, entirely without prejudice to the generality of
the foregoing provisions hereof, that he will
not:
|
|
(i)
|
use
Confidential Information in relation to the Company and/or its subsidiary
to deal or encourage any other person to deal in securities of the
Company. For the purposes of the foregoing the term “deal” is to be
construed in accordance with the UK’s Criminal Justice Act
1993;
|
|
(ii)
|
(and
will use his best endeavours to procure that none of his related,
connected or associated parties will) without the Company’s prior written
consent directly or indirectly by purchase or otherwise, acquire
(conditionally or otherwise), offer to acquire, or agree to acquire
ownership or options to acquire such ownership or any rights whatsoever in
respect of any share capital in the Company (or otherwise act in concert
with any person who so acquires, offers to acquire or agrees to acquire)
whilst any such information shall be and remain “inside
information”.
|
5.
|
Intellectual
Property
|
|
a.
|
The
Advisor recognizes that the Company is engaged in a continuous program of
research, development, and production respecting its business. The Company
possesses or has rights to information that has been created, discovered,
developed or otherwise become known to the Company (including information
developed by, discovered by or created by Advisor which arises out of the
consulting relationship with the Company) that has commercial value in its
business (“Proprietary Information”). For example, Proprietary Information
includes without limitation inventions (whether or not patentable), patent
applications trade secrets, discoveries, experiments, research concepts
ideas, techniques, methods, processes, testing procedures, formulas,
compositions, data, know-how, computer programs, computer code,
improvements in the foregoing, as well as names and expertise of
employees, consultants, customers and prospects, and technical, business,
financial, marketing customer and product development plans, forecasts,
strategies and any other information relating to the Company’s business
and/or fields of interest.
|
|
b.
|
The
Advisor understands that the advisory relationship creates a relationship
of confidence and trust between Advisor and the Company with respect to
any (i) Proprietary Information or (ii) confidential information
applicable to the business of any customer of the Company or other entity
with which the Company does business and that it learns in connection with
the advisory relationship. At all times, both during the consulting
relationship with the Company and after its termination, Advisor will keep
in confidence and trust all such information, and Advisor will not use or
disclose any such information without the written consent of the Company,
except as may be necessary in the ordinary course of performing its duties
to the Company. This obligation shall end whenever such information enters
the public domain and is no longer confidential or
proprietary.
|
|
c.
|
In
addition, the Advisor hereby
agrees:
|
|
i.
|
All
Proprietary Information shall be the sole property of the Company and its
assigns, and the Company and its assigns shall be the sole owner of all
patents, copyrights, trade secrets and other proprietary rights in
connection therewith. Advisor hereby assigns to the Company any rights it
may have or acquire in such Proprietary Information. Advisor specifically
agrees that the foregoing assignment shall include any and all rights it
may have, had, acquire, or acquired in the Proprietary Information of
Medgenics, Inc., and a Delaware corporation, if applicable. Additionally,
Advisor agrees to perform all reasonable acts requested by the Company or
its representatives to perfect and enforce such
rights.
|
|
b.
|
All
documents or other media, records apparatus, equipment and other physical
property whether or not pertaining to Proprietary Information, furnished
to the Advisor by the Company or produced by Advisor or others in
connection with the consulting relationship shall be and remain the sole
property of the Company. Advisor shall return and deliver all such
property of the Company immediately as and when requested by the Company.
The Advisor shall return and deliver all such property (including any
copies thereof) upon request and, even without any request, upon
termination of the consulting
relationship.
|
|
c.
|
During
the advisory relationship with the Company, the Advisor will not engage in
providing advisory services to other entities in the field of
ex
vivo
genetic
modification of autologous tissue
.
|
|
d.
|
Advisor
will promptly disclose to the Company all improvements, inventions, works
of authorship, trade secrets, computer programs, designs, formulas, mask
works, ideas, processes, techniques, know-how and data, whether or not
patentable (“Inventions”) that relate to the subject matter of my advising
and that are conceived, developed or learned by the Advisor, either alone
or jointly with others, during the term of the advisory
relationship.
|
|
e.
|
During
the term of the advising and for twelve (12) months thereafter, the
Advisor will not solicit any employee of the Company to leave the Company
for any reason or to devote less than all of any such employee’s efforts
to the affairs of the Company.
|
|
f.
|
All
Inventions that Advisor conceives, develops or learns (in whole or in
part, either alone or jointly with others) in connection with performance
of its advising for the Company or that uses the Company’s Proprietary
Information shall be the sole property of the Company and its assigns (and
to the extent permitted by law shall be works made for hire). The Company
and its assigns shall be the sole owner of all trade secret rights,
patents, copyrights and other proprietary rights anywhere in the world in
connection therewith, and Advisor hereby assigns to the Company any rights
it may have or acquire in such Inventions. Advisor specifically agrees
that the foregoing assignment shall include any and all rights, title and
interest Advisor may have, had, acquired or acquire in Inventions made
conceived, developed, acquired or first reduced to practice by Advisor (in
whole or in part, either alone or jointly with others) while Advisor was
rendering services to the Company or its subsidiaries or
affiliates.
|
|
g.
|
With
regard to Inventions described in (f) above, Advisor will assist the
Company or its assigns in every proper way (but at the Company’s expense)
to obtain and from time to time enforce patents, copyrights on the
Inventions in any and all countries, and to that end Advisor will execute
all appropriate documents. This obligation shall continue beyond the
termination of the consulting relationship, but the Company shall then
compensate Advisor at a reasonable rate for time spent. If the Company is
unable for any reason whatsoever to secure signature to any such document
(including renewals, extensions, continuations, divisions or continuations
in part), Advisor hereby irrevocably designates and appoints the Company
and its duly authorized officers and agents, as its agents and
attorneys-in-fact to act for and in my behalf and instead of Advisor, but
only for the purpose of executing and filing such documents and doing all
other lawful permitted acts to accomplish the foregoing with the same
legal force and effect as if done by
Advisor.
|
|
h.
|
As
a matter of record Advisor attaches hereto (as Exhibit 2) a list of
existing inventions or improvements relevant to the subject matter of the
advisory relationship with the Company that have been made or conceived or
first reduced to practice by Advisor alone, or jointly with others, prior
to rendering services as an advisor to the Company that Advisor desires to
remove from the operation of the Agreement, and Advisor covenants that
such list is complete.
|
|
i.
|
Advisor
represents that execution of the Agreement, the advisory relationship with
the Company and the performance by Advisor of the Services will not
violate any obligations the Advisor may have to any person or entity,
including the obligation to keep confidential any proprietary information
of that person or entity. Advisor has not entered into any agreement in
conflict with this Agreement or the advisory relationship with the
Company. Advisor represents that the Advisor will not disclose to the
Company or induce the Company to use any confidential or proprietary
information or material belonging to any previous employers, clients, or
others.
|
6.
|
Use
of Name
.
It is understood that the name of the Advisor and Advisor’s affiliation
with the Advisor’s current employer will appear in disclosure documents
required by securities laws, and in other regulatory and administrative
filings; and in the ordinary course of the Company’s
business.
|
7.
|
No
Conflict: Valid and Binding
.
The Advisor represents that neither the execution of this
Agreement nor the performance of the Advisor’s obligations under this
Agreement will result in a violation or breach of any other agreement by
which the Advisor is bound. The Company represents that this Agreement has
been duly authorized and executed and is a valid and legally binding
obligation of the Company, subject to no conflicting
agreements.
|
8.
|
Notices
.
Any notice provided under this Agreement shall be in writing and shall be
deemed to have been effectively given (i) upon receipt when delivered
personally, (ii) one day after sending when sent by private express mail
service (such as Federal Express), or (iii) 5 days after sending when sent
by regular mail to the following
address:
|
|
|
|
|
Office
|
|
Fax
|
|
Attention: Dr. Andrew L. Pearlman | |
Chief Executive Officer |
Bruce R. Bacon, MD
|
1228
Tammany Lane
|
St.
Louis, MO
63131
|
Medgenics,
Inc.
|
ADVISOR
|
|||
By:
|
/s/ Andrew Pearlman
|
By:
|
/s/ Bruce R. Bacon
|
|
Name:
|
Andrew Pearlman
|
Name:
|
Bruce R. Bacon
|
|
Title:
|
Chief
Executive Officer
|
Title:
|
Professor of
Internal Medicine
|
|
1)
|
Participating
as a member of the Scientific Advisory
Board
|
|
2)
|
Guiding
the general scientific, business, laboratory, and medical direction of the
company;
|
|
3)
|
Reviewing
the goals and plans of the Company and developing strategies for achieving
them;
|
|
4)
|
Identifying
and developing relationships with potential strategic
partners;
|
|
5)
|
Interacting
with potential investors, stockholders, and strategic or corporate
partners;
|
|
6)
|
Identifying
and reviewing promising scientific developments and intellectual property;
and
|
|
7)
|
Providing
advice and guidance in the Company’s scientific research and product
development activities.
|
|
1.
|
Services
.
|
|
a.
|
The
Advisor will advise, consult for and on behalf of the Company’s
management, employees and agents, at reasonable times, as requested by the
Company and shall provide the Services set forth on Exhibit
1.
|
|
b.
|
Advisor
will participate in 3-4 SAB meetings per year by phone. Additionally,
consultation of up to 2 hours per month on average may be sought by the
Company by telephone, written correspondence or in person at the Advisor’s
office and will involve reviewing activities and developments in the
Company’s field of activity.
|
|
c.
|
For
purposes of this Agreement, the
“
Effective Date
”
shall be the earlier of the
date of this Agreement set forth above, and the date the Company issues a
press release regarding the appointment of
Advisor.
|
|
2.
|
Compensation
.
|
|
a.
|
In
connection with the execution of this Agreement, the Company will issue to
Advisor options to purchase 667,397 shares of common stock of the Company,
having $0.0001 par value per share (the “Common Stock”), exercisable for
10 years at an exercise price to be calculated as the average of the
Applicable Daily Closing Share Price (as defined below) for the 10 trading
days prior to the date of formal approval of the grant of options by the
Board of Directors. The Advisor acknowledges that the Company may be
prohibited by the AIM Rules for Companies (the
“
AIM Rules
”
)
from granting such options on
the Effective Date, but that, subject to the approval of the Board of
Directors, such options shall be granted as soon as practicable, lawful
and otherwise permitted under the AIM Rules. These options shall vest in
three equal increments over a 3-year period starting from the grant date
of the options; however, vesting will be accelerated in case of a change
of ownership pursuant to the terms set forth in the option grant
agreement.
|
|
b.
|
For
in-person meetings, the Advisor will be issued a number of shares of
Common Stock for each day of meetings equal to the quotient of (x) $1,500,
divided by (y) the average of the Applicable Daily Share Closing Price for
the 10 trading days prior to the date of such in-person
meeting.
|
|
c.
|
For
purposes of Section 2(a) and 2(b) above, the
“
Applicable Daily Closing Share
Price
”
shall be calculated
on a given date as (x) if the Common Stock is listed on a U.S. national
securities exchange, the last closing trade price of the Company’s Common
Stock, as reported by Bloomberg, L.P., on that date, or (y) if the Common
Stock is not listed on a U.S. national securities exchange, the closing
price of the Company’s Common Stock as reported on the MEDU ticker listed
on the London Stock Exchange AIM market on that
date.
|
|
d.
|
Reasonable
expenses of the Advisor incurred at the request of the Company (including
phone and other expenses incurred in the normal course of business on
behalf of the Company and travel expenses incurred in connection with
Company related business in accordance with the Company’s travel policy)
will be reimbursed promptly by the Company, subject to customary
verification and prior written
approval.
|
|
3.
|
Term
.
The term of this
Agreement will begin on the Effective Date of this Agreement and will end
on the third anniversary of this Agreement or upon earlier termination as
provided below (the
“
Term
”
); provided that the Term may
be renewed for successive one-year periods. This Agreement may be
terminated at any time upon written notice by either
party.
|
|
4.
|
Confidentiality
and prohibited dealings
.
|
|
a.
|
The
Advisor acknowledges that, during the course of performing his services
hereunder, the Company will be disclosing information to the Advisor
(
“
Confidential Information
”
)
which is owned by the Company.
The Advisor acknowledges that the Company’s business is extremely
competitive, dependent in part upon the maintenance of
secrecy,
and that any disclosure of the Confidential Information would likely
result in serious harm to the
Company.
|
|
b.
|
The
Advisor agrees that the Confidential Information will be used by the
Advisor only in connection with the advisory and consulting activities
hereunder, and will not be used for any other
purpose.
|
|
c.
|
The
Advisor agrees not to disclose, directly or indirectly, the Confidential
Information to any third person or entity, other than representatives or
agents of the Company. The Advisor agrees not to use the Confidential
Information for any purposes other than explicitly permitted under this
Agreement. The Advisor will treat all such information as confidential and
proprietary property of the
Company.
|
|
d.
|
The
Advisor may disclose any Confidential Information that is required to be
disclosed by law, government regulation or court order. If disclosure is
required, the Advisor will give the Company advance notice so that the
Company may seek a protective order or take other action reasonable in
light of the circumstances.
|
|
e.
|
The
Advisor hereby acknowledges that he is aware that the Company is a company
who’s issued shares have been admitted to trading on the AIM market of the
London Stock Exchange. Information imparted and/or to be imparted by the
Company to the Advisor regarding the Company and/or the Company’s
subsidiary is or may be “inside information” relating to the Company
and/or the securities of the Company within the meaning of the UK’s
Criminal Justice Act 1993. As such, the Advisor may hereafter become “an
insider” in relation to the Company. The Advisor hereby agrees to being
made an insider and that, entirely without prejudice to the generality of
the foregoing provisions hereof, that he will
not:
|
|
(i)
|
use
Confidential Information in relation to the Company and/or its subsidiary
to deal or encourage any other person to deal in securities of the
Company. For the purposes of the foregoing the term “deal” is to be
construed in accordance with the UK’s Criminal Justice Act 1993;
and
|
|
(ii)
|
(and
will use his best endeavors to procure that none of his related, connected
or associated parties will) without the Company’s prior written consent
directly or indirectly by purchase or otherwise, acquire (conditionally or
otherwise), offer to acquire, or agree to acquire ownership or options to
acquire such ownership or any rights whatsoever in respect of any share
capital in the Company (or otherwise act in concert with any person who so
acquires, offers to acquire or agrees to acquire) whilst any such
information shall be and remain “inside
information”.
|
|
5.
|
Intellectual
Property
.
|
|
a.
|
The
Advisor recognizes that the Company is engaged in a continuous program of
research, development, and production with respect to its business. The
Company possesses or has rights to information that has been created,
discovered, developed or otherwise become known to the Company (including
information developed by, discovered by or created by Advisor which arises
out of the advisory and consulting relationship with the Company) that has
commercial value in its business
(
“
Proprietary Information
”
)
.
For example, Proprietary Information includes,
without limitation, inventions (whether or not patentable), patent
applications, trade secrets, discoveries, experiments, research, concepts,
ideas, techniques, methods, processes, testing procedures, formulas,
compositions, data, know-how, computer programs, computer code, and
improvements in the foregoing, as well as names and expertise of
employees, consultants, customers and prospects, and technical, business,
financial, marketing, customer and product development plans, forecasts,
strategies and any other information relating to the Company’s business
and/or fields of interest.
|
|
b.
|
The
Advisor understands that the advisory and consulting relationship creates
a relationship of confidence and trust between Advisor and the Company
with respect to any (i) Proprietary Information or (ii) confidential
information applicable to the business of any customer of the Company or
other entity with which the Company does business and that it learns in
connection with the advisory and consulting relationship. At all times,
both during the Term hereunder and after its termination, Advisor will
keep in confidence and trust all such information, and Advisor will not
use or disclose any such information without the written consent of the
Company, except as may be necessary in the ordinary course of performing
its duties to the Company. This obligation shall end whenever such
information enters the public domain and is no longer confidential or
proprietary.
|
|
c.
|
In
addition, the Advisor hereby agrees:
|
|
i.
|
All
Proprietary Information shall be the sole property of the Company and its
assigns, and the Company and its assigns shall be the sole owner of all
patents, copyrights, trade secrets and other proprietary rights in
connection therewith. Advisor hereby assigns to the Company any rights it
may have or acquire in such Proprietary Information. Advisor specifically
agrees that the foregoing assignment shall include any and all rights it
may have, had, acquire, or acquired in the Proprietary Information of the
Company and its subsidiaries, if applicable. Additionally, Advisor agrees
to perform all reasonable acts requested by the Company or its
representatives to perfect and enforce such
rights.
|
|
ii.
|
All
documents or other media, records apparatus, equipment and other physical
property whether or not pertaining to Proprietary Information, furnished
to the Advisor by the Company or produced by Advisor or others in
connection with the consulting relationship shall be and remain the sole
property of the Company. Advisor shall return and deliver all such
property of the Company immediately as and when requested by the Company.
The Advisor shall return and deliver all such property (including any
copies thereof) upon request and, even without any request, upon
termination of the consulting
relationship.
|
|
d.
|
Advisor
will promptly disclose to the Company all improvements, inventions, works
of authorship, trade secrets, computer programs, designs, formulas, mask
works, ideas, processes, techniques, know-how and data, whether or not
patentable (“Inventions”) that relate to the subject matter of my advising
and that are conceived, developed or learned by the Advisor, either alone
or jointly with others, during the term of the advisory
relationship.
|
|
e.
|
All
Inventions that Advisor conceives, develops or learns (in whole or in
part, either alone or jointly with others) in connection with performance
of its advising for the Company or that uses the Company’s Proprietary
Information shall be the sole property of the Company and its assigns (and
to the extent permitted by law shall be works made for hire). The Company
and its assigns shall be the sole owner of all trade secret rights,
patents, copyrights and other proprietary rights anywhere in the world in
connection therewith, and Advisor hereby assigns to the Company any rights
it may have or acquire in such Inventions. Advisor specifically agrees
that the foregoing assignment shall include any and all rights, title and
interest Advisor may have, had, acquired or acquire in Inventions made,
conceived, developed, acquired or first reduced to practice by Advisor (in
whole or in part, either alone or jointly with others) while Advisor was
rendering services to the Company or its subsidiaries or
affiliates.
|
|
f.
|
With
regard to Inventions described in (f) above, Advisor will assist the
Company or its assigns in every proper way (but at the Company’s expense)
to obtain and from time to time enforce patents, copyrights on the
Inventions in any and all countries, and to that end Advisor will execute
all appropriate documents. This obligation shall continue beyond the
termination of the consulting relationship, but the Company shall then
compensate Advisor at a reasonable rate for time spent. If the Company is
unable for any reason whatsoever to secure signature to any such document
(including renewals, extensions, continuations, divisions or continuations
in part), Advisor hereby irrevocably designates and appoints the Company
and its duly authorized officers and agents, as its agents and
attorneys-in-fact to act for and in my behalf and instead of Advisor, but
only for the purpose of executing and filing such documents and doing all
other lawful permitted acts to accomplish the foregoing with the same
legal force and effect as if done by
Advisor.
|
|
g.
|
As
a matter of record Advisor attaches hereto (as Exhibit 2) a list of
existing inventions or improvements relevant to the subject matter of the
advisory relationship with the Company that have been made or conceived or
first reduced to practice by Advisor alone, or jointly with others, prior
to rendering services as an advisor to the Company that Advisor desires to
remove from the operation of the Agreement, and Advisor covenants that
such list is complete.
|
|
h.
|
Advisor
represents that execution of the Agreement, the advisory relationship with
the Company and the performance by Advisor of the Services
will
not violate any obligations the Advisor may have to any person or
entity, including the obligation to keep confidential any proprietary
information of that person or entity. Advisor has not entered into any
agreement in conflict with this Agreement or the advisory relationship
with the Company. Advisor represents that the Advisor will not disclose to
the Company or induce the Company to use any confidential or proprietary
information or material belonging to any previous employers, clients, or
others.
|
|
6.
|
Non-Compete;
Non-Solicitation.
|
|
a.
|
During
the Term, the Advisor will not engage in providing advisory services to
other entities in the field of
ex
vivo genetic modification of
autologous
tissue.
|
|
b.
|
During
the Term and for twelve (12) months after the termination of the Term for
any reason, the Advisor will not solicit any employee of the Company to
leave the Company for any reason or to devote less than all of any such
employee’s full efforts to the affairs of the
Company.
|
|
10.
|
Independent
Contractor.
Withholding. The Advisor will at all times be an
independent contractor, and as such will not have authority to bind the
Company. Advisor will not act as an agent nor shall he be deemed to be an
employee of the Company for the purposes of any employee benefit program,
unemployment benefits, or otherwise. The Advisor recognizes that no amount
will be withheld from his compensation for payment of any federal, state,
or local taxes and that the Advisor has sole responsibility to pay such
taxes, if any, and file such returns as shall be required by applicable
laws and regulations. Advisor shall not enter into any agreements or incur
any obligations on behalf of the
Company.
|
|
11.
|
Assignment
.
Due to the
personal nature of the services to be rendered by the Advisor, the Advisor
may not assign this Agreement. The Company may assign all rights and
liabilities under this Agreement to a subsidiary or an affiliate or to a
successor to all or a substantial part of its business and assets without
the consent of the Advisor. Subject to the foregoing, this Agreement will
inure to the benefit of and be binding upon each of the heirs, assigns and
successors of the respective
parties.
|
|
12.
|
Severability
.
If
any
provision of this Agreement
shall be declared invalid, illegal or unenforceable, such provision shall
be severed and the remaining provisions shall continue in full force and
effect.
|
|
13.
|
Remedies
.
The Advisor
acknowledges that the Company would have no adequate remedy at law to
enforce the provisions of Sections 4, 5 and 6 above. In the event of a
violation by the Advisor of such Sections, the Company shall have the
right to obtain injunctive or other similar relief, as well as any other
relevant damages, without the requirement of posting bond or other similar
measures.
|
14.
|
Governing
Law; Entire Agreement; Amendment
.
This Agreement shall
be governed by the substantive laws of New York and under the exclusive
jurisdiction of the New York courts. This Agreement represents the entire
agreement between the parties relating to the subject matter hereof and
supersedes all prior oral or written agreements between the Company and
Advisor. No provision of this Agreement may be amended other than by an
instrument in writing signed by the Company and Advisor. No waiver shall
be effective unless it is in writing and signed by an authorized
representative of the waiving
party.
|
15.
|
Counterparts
.
This Agreement may be
executed in two or more identical counterparts, all of which shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered by facsimile
transmission or by an e-mail which contains a portable document format
(.pdf) file of an executed signature page, such signature page shall
create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if
such signature page were an original
thereof.
|
Medgenics,
Inc.
|
ADVISOR:
|
|||
By:
|
/s/ Andrew Pearlman
|
By:
|
/s/ Burt Rosen
|
|
Name:
Dr. Andrew L. Pearlman
|
Burt
Rosen
|
|||
Title:
Chief Executive Officer
|
|
1)
|
Participating
as a member of the SAB;
|
|
2)
|
Guiding
the general scientific, business, laboratory, and medical direction of the
Company;
|
|
3)
|
Reviewing
the goals and plans of the Company and developing strategies for achieving
them;
|
|
4)
|
Identifying
and developing relationships with potential strategic
partners;
|
|
5)
|
Interacting
with potential investors, stockholders, and strategic or corporate
partners;
|
|
6)
|
Identifying
and reviewing promising scientific developments and intellectual
property;
|
|
7)
|
Providing
advice and guidance in the Company’s scientific research and product
development activities; and
|
|
8)
|
Other
functions as may be agreed with the
Company.
|
|
1.
|
Services
.
|
|
a.
|
The
Advisor will advise, consult
for
and on behalf of the
Company’s management, employees and agents, at reasonable times, as
requested by the Company and shall provide the Services set forth on
Exhibit 1.
|
|
b.
|
Advisor
will participate in 3-4 SAB meetings per year by phone. Additionally,
consultation of up to 2 hours per month on
average
may
be
sought by
the Company by telephone, written correspondence or in
person at the Advisor’s office and will involve reviewing activities and
developments in the Company’s field of
activity.
|
|
c
|
For
purposes of this Agreement, the
“
Effective Date
”
shall be the earlier of the
date of this Agreement set forth above, and the date the Company issues a
press release regarding the appointment of
Advisor.
|
|
2.
|
Compensation
.
|
|
a.
|
In
connection with the execution of this Agreement, the Company will issue to
Advisor options to purchase 667,397 shares of common stock of the Company,
having $0.0001 par value per share (the “Common Stock”), exercisable for
10 years at an exercise price to be calculated as the average of the
Applicable Daily Closing Share Price (as defined below) for the 10 trading
days prior to the date of formal approval of the grant of options by the
Board of Directors. The Advisor acknowledges that the Company may be
prohibited by the AIM Rules for Companies (the
“
AIM Rules
”
)
from granting such options on
the Effective Date, but that, subject to the approval of the Board of
Directors, such options shall be granted as soon as practicable, lawful
and otherwise permitted under the AIM Rules. These options shall vest in
three equal increments over a 3-year period starting from the grant date
of the options; however, vesting will be accelerated in case of a change
of ownership pursuant to the terms set forth in the option grant
agreement.
|
|
b.
|
For
in-person meetings, the Advisor will be paid $1,500 for each day of
meetings.
|
|
c.
|
For
purposes of Section 2(a) above, the
“
Applicable Daily Closing
Share Price
”
shall be calculated on a given
date as (x) if the Common Stock is listed on a U.S. national securities
exchange, the last closing trade price of the Company’s Common Stock, as
reported by Bloomberg, L.P., on that date, or (y) if the Common Stock is
not listed on a U.S. national securities exchange, the closing price of
the Company’s Common Stock as reported on the MEDU ticker listed on the
London Stock Exchange AIM market on that
date.
|
|
d.
|
Reasonable
expenses of the Advisor incurred at the request of the Company (including
phone and other expenses incurred in the normal course of business on
behalf of the Company and travel expenses incurred in connection with
Company related business in accordance with the Company’s travel policy)
will be reimbursed promptly by the Company, subject to customary
verification and prior written
approval.
|
|
3.
|
Term
.
The term of this
Agreement will begin on the Effective Date of this Agreement and will end
on the third anniversary of this Agreement or upon earlier termination as
provided below (the
“
Term
”
);
provided that the Term may be renewed for successive
one-year periods. This Agreement may be terminated at any time upon
written notice by either party.
|
|
4.
|
Confidentiality
and prohibited dealings
.
|
|
a.
|
The
Advisor acknowledges that, during the course of performing his services
hereunder, the Company will be disclosing information to the Advisor
(
“
Confidential Information
”
)
which is owned by the Company.
The Advisor acknowledges that the Company’s business is extremely
competitive, dependent in part upon the maintenance of secrecy, and that
any disclosure of the Confidential Information would likely result in
serious harm to the Company.
|
|
b.
|
The
Advisor agrees that the Confidential Information will be used by the
Advisor only in connection with the advisory and consulting activities
hereunder, and will not be used for any other
purpose.
|
|
c.
|
The
Advisor agrees not to disclose, directly or indirectly, the Confidential
Information to any third person or entity, other than representatives or
agents of the Company. The Advisor agrees not to use the Confidential
Information for any purposes other than explicitly permitted under this
Agreement. The Advisor will treat all such information as confidential and
proprietary property of the
Company.
|
|
d.
|
The
Advisor may disclose any Confidential Information that is required to be
disclosed by law, government regulation or court order. If disclosure is
required, the Advisor will give the Company advance notice so that the
Company may seek a protective order or take other action reasonable in
light of the circumstances.
|
|
e.
|
The
Advisor hereby acknowledges that he is aware that the Company is a company
who’s issued shares have been admitted to trading on the AIM market of the
London Stock Exchange. Information imparted and/or to be imparted by the
Company to the Advisor regarding the Company and/or the Company’s
subsidiary is or may be “inside information” relating to the Company
and/or the securities of the Company within the meaning of the UK’s
Criminal Justice Act 1993. As such, the Advisor may hereafter become “an
insider” in relation to the Company. The Advisor hereby agrees to being
made an insider and that, entirely without prejudice to the generality of
the foregoing provisions hereof, that he will
not:
|
|
(i)
|
use
Confidential Information in relation to the Company and/or its subsidiary
to deal or encourage any other person to deal in securities of the
Company. For
the
purposes of the foregoing the term “deal” is to be construed in
accordance with the UK’s Criminal Justice Act 1993;
and
|
|
(ii)
|
(and
will use his best endeavors to procure that none of his related, connected
or associated parties will) without the Company’s prior written consent
directly or indirectly by purchase or otherwise, acquire (conditionally or
otherwise), offer to acquire, or agree to acquire ownership or options to
acquire such ownership or any rights whatsoever in respect of any share
capital in the Company (or otherwise act in concert with any person who so
acquires, offers to acquire or agrees to acquire) whilst any such
information shall be and remain “inside
information”.
|
|
5.
|
Intellectual
Property
.
|
|
a.
|
The
Advisor recognizes that the Company is engaged in a continuous program of
research, development, and production with respect to its business. The
Company possesses or has rights to information that has been created,
discovered, developed or otherwise become known to the Company (including
information developed by, discovered by or created by Advisor which arises
out of the advisory and consulting relationship with the Company) that has
commercial value in its business
(
“
Proprietary Information
”
).
For example, Proprietary
Information includes, without limitation, inventions (whether or not
patentable), patent applications, trade secrets, discoveries, experiments,
research, concepts, ideas, techniques, methods, processes, testing
procedures, formulas, compositions, data, know-how, computer programs,
computer code, and improvements in the foregoing, as well as names and
expertise of employees, consultants, customers and prospects, and
technical, business, financial, marketing, customer and product
development plans, forecasts, strategies and any other information
relating to the Company’s business and/or fields of
interest.
|
|
b.
|
The
Advisor understands that the advisory and consulting relationship creates
a relationship of confidence and trust between Advisor and the Company
with respect to any (i) Proprietary Information or (ii) confidential
information applicable to the business of any customer of the Company or
other entity with which the Company does business and that it learns in
connection with the advisory and consulting relationship. At all times,
both during the Term hereunder and after its termination, Advisor will
keep in confidence and trust all such information, and Advisor will not
use or disclose any such information without the written consent of the
Company, except as may be necessary in the ordinary course of performing
its duties to the Company. This obligation shall end whenever such
information enters the public domain and is no longer confidential or
proprietary.
|
|
c.
|
In
addition, the Advisor hereby
agrees:
|
|
i.
|
All
Proprietary Information shall be the sole property of the Company and its
assigns, and the Company and its assigns shall be the sole owner of all
patents, copyrights, trade secrets and other proprietary rights in
connection therewith. Advisor hereby assigns to the Company any rights it
may have or acquire in such Proprietary Information. Advisor specifically
agrees that the foregoing assignment shall include any and all rights it
may have, had, acquire, or acquired in the Proprietary Information of the
Company and its subsidiaries, if applicable. Additionally, Advisor agrees
to perform all reasonable acts requested by the Company or its
representatives to perfect and enforce such
rights.
|
|
ii.
|
All
documents or other media, records apparatus, equipment and other physical
property whether or not pertaining to Proprietary Information, furnished
to the Advisor by the Company or produced by Advisor or others in
connection with the consulting relationship shall be and remain the sole
property of the Company. Advisor shall return and deliver all such
property of the Company immediately as and when requested by the Company.
The Advisor shall return and deliver all such property (including any
copies thereof) upon request and, even without any request, upon
termination of the consulting
relationship.
|
|
d.
|
Advisor
will promptly disclose to the Company all improvements, inventions, works
of authorship, trade secrets, computer programs, designs, formulas, mask
works, ideas, processes, techniques, know-how and data, whether or not
patentable (“Inventions”) that relate to the subject matter of my advising
and that are conceived, developed or learned by the Advisor, either alone
or jointly with others, during the term of the advisory
relationship.
|
|
e.
|
All
Inventions that Advisor conceives, develops or learns (in whole or in
part, either alone or jointly with others) in connection with performance
of its advising for the Company or that uses the Company’s Proprietary
Information shall be the sole property of the Company and its assigns (and
to the extent permitted by law shall be works made for hire). The Company
and its assigns shall be the sole owner of all trade secret rights,
patents, copyrights and other proprietary rights anywhere in the world in
connection therewith, and Advisor hereby assigns to the Company any rights
it may have or acquire in such Inventions. Advisor specifically agrees
that the foregoing assignment shall include any and all rights, title and
interest Advisor may have, had, acquired or acquire in Inventions made
conceived, developed, acquired or first reduced to practice by Advisor (in
whole or in part, either alone or jointly with others) while Advisor was
rendering services to the Company or its subsidiaries or
affiliates.
|
|
f.
|
With
regard to Inventions described in (f) above, Advisor will assist the
Company or its assigns in every proper way (but at the Company’s expense)
to obtain and from time to time enforce patents, copyrights on the
Inventions in any and all countries, and to that end Advisor will execute
all appropriate documents. This obligation shall continue beyond the
termination of the consulting relationship, but the Company shall then
compensate Advisor at a reasonable rate for time spent. If the Company is
unable for any reason whatsoever to secure signature to any such document
(including renewals, extensions, continuations, divisions or continuations
in part), Advisor hereby irrevocably designates and appoints the Company
and its duly authorized officers and agents, as its agents and
attorneys-in-fact to act for and in my behalf and instead of Advisor, but
only for the purpose of executing and filing such documents and doing all
other lawful permitted acts to accomplish the foregoing with the same
legal force and effect as if done by
Advisor.
|
|
g.
|
As
a matter of record Advisor attaches hereto (as Exhibit 2) a list of
existing inventions or improvements relevant to the subject matter of the
advisory relationship with the Company that have been made or conceived or
first reduced to practice by Advisor alone, or jointly with others, prior
to rendering services as an advisor to the Company that Advisor desires to
remove from the operation of the Agreement, and Advisor covenants that
such list is complete.
|
|
h.
|
Advisor
represents that execution of the Agreement, the advisory relationship with
the Company and the performance by Advisor of the Services will not
violate any obligations the Advisor may have to any person or entity,
including the obligation to keep confidential any proprietary information
of that person or entity. Advisor has not entered into any agreement in
conflict wit this Agreement or the advisory relationship with the Company.
Advisor represents that the Advisor will not disclose to the Company or
induce the Company to use any confidential or proprietary information or
material belonging to any previous employers, clients, or
others.
|
|
6.
|
Non-Compete;
Non-Solicitation
.
|
|
a.
|
During
the Term, the Advisor will not engage in providing advisory services to
other entities in the field of
ex
vivo genetic modification of
autologous
tissue.
|
|
b.
|
During
the Term and for twelve (12) months after the termination of the Term for
any reason, the Advisor will not solicit any employee of the Company to
leave the Company for any reason or to devote less than all of any such
employee’s full efforts to the affairs of the
Company.
|
|
10.
|
Independent
Contractor. Withholding
.
The Advisor will
at all times be an independent contractor, and as such will not have
authority to bind the Company. Advisor will not act as an agent nor shall
he be deemed to be an employee of the Company for the purposes of any
employee benefit program, unemployment benefits, or otherwise. The Advisor
recognizes that no amount will be withheld from his compensation for
payment of any federal, state, or local taxes and that the Advisor has
sole responsibility to pay such taxes, if any, and file such returns as
shall be required by applicable laws and regulations. Advisor shall not
enter into any agreements or incur any obligations on behalf of the
Company.
|
|
11.
|
Assignment
.
Due to the
personal nature of the services to be rendered by the Advisor, the Advisor
may not assign this Agreement. The Company may assign all rights and
liabilities under this Agreement to a subsidiary or an affiliate or to a
successor to all or a substantial part of its business and assets without
the consent of the Advisor. Subject to the foregoing, this Agreement will
inure to the benefit of and be binding upon each of the heirs, assigns and
successors of the respective
parties.
|
|
12.
|
Severability
.
If any provision
of this Agreement shall be declared invalid, illegal or unenforceable,
such provision shall be severed and the remaining provisions shall
continue in full force and effect.
|
|
13.
|
Remedies.
The Advisor
acknowledges that the Company would have no adequate remedy at law to
enforce the provisions of Sections 4, 5 and 6 above. In the event of a
violation by the Advisor of such Sections, the Company shall have the
right to obtain injunctive or other similar relief, as well as any other
relevant damages, without the requirement of posting bond or other similar
measures.
|
|
14.
|
Governing
Law; Entire Agreement; Amendment
.
This
Agreement shall be governed by the substantive laws of New York and under
the exclusive jurisdiction of the New York courts. This Agreement
represents the entire agreement between the parties relating to the
subject matter hereof and supersedes all prior oral or written agreements
between
the Company and Advisor. No
provision
of this
Agreement
may be
amended other than by an instrument in writing signed by the
Company and
Advisor.
No waiver
shall be effective unless it is in
writing and
signed by an authorized representative of the waiving
party.
|
|
15.
|
Counterparts
.
This Agreement may be
executed in two or more identical counterparts, all of which shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other
party. In the event that any signature is delivered by facsimile
transmission or by an e-mail which contains a portable document format
(.pdf) file of an executed signature page, such signature page shall
create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if
such signature page were an original
thereof.
|
Medgenics,
Inc.
|
ADVISOR:
|
|||
By:
|
/s/ Andrew L. Pearlman
|
|
By:
|
/s/ Stephen Ettinger
|
Name:
Dr. Andrew L. Pearlman
|
Stephen
Ettinger, DVM
|
|||
Title:
Chief Executive Officer
|
|
1)
|
Participating
as a member of the SAB;
|
|
2)
|
Guiding
the general scientific, business, laboratory, and medical direction of the
Company;
|
|
3)
|
Reviewing
the goals and plans of the Company and developing strategies for achieving
them;
|
|
4)
|
Identifying
and developing relationships with potential strategic
partners;
|
|
5)
|
Interacting
with potential investors, stockholders, and strategic or corporate
partners;
|
|
6)
|
Identifying
and reviewing promising scientific developments and intellectual
property;
|
|
7)
|
Providing
advice and guidance in the Company’s scientific research and product
development activities; and
|
|
8)
|
Other
functions as may be agreed with the
Company.
|
Section
|
Content
|
Page
|
||
1.
|
Interpretation
and Definitions
|
2
|
||
2.
|
The
License
|
5
|
||
3.
|
Term
of the License
|
5
|
||
4.
|
Sub-Licenses
|
5
|
||
5.
|
Considerations
|
6
|
||
6.
|
Reports
and Accounting
|
7
|
||
7.
|
Development
and Commercialization
|
8
|
||
8.
|
Ownership
|
9
|
||
9.
|
Patents
|
9
|
||
10.
|
Patent
Rights Protection
|
10
|
||
11.
|
Confidentiality
|
11
|
||
12.
|
Publications
|
11
|
||
13.
|
Liability
and Indemnity
|
12
|
||
14.
|
Termination
of the Agreement
|
13
|
||
15.
|
Law
|
14
|
||
16.
|
Arbitration
|
14
|
||
17.
|
Miscellaneous
|
15
|
||
18.
|
Notices
|
16
|
WHEREAS
|
The
Parties entered into a Research and License agreement, which is no longer
in force, whereby,
inter
alia,
the Company obtained a license from Licensor for the
commercial development, production and marketing of products based on the
technology owned by the Licensor (hereinafter: the
“
Former License
”
)
and pursuant to which the
Licensor performed Research between the dates of August 1, 2000 and May
31, 2001; and
|
|
WHEREAS
|
The
Parties wish to enter into a new License Agreement in respect of the
Registered Patents, this wish having been set out in the Memorandum of
Understanding entered into between the Parties and dated May 23, 2005;
and
|
|
WHEREAS
|
This
Agreement shall replace the Former License which shall be considered null
and void, including those provisions of the Former License that according
to the terms of the Former License survive termination thereof;
and
|
|
WHEREAS
|
The
Company declares that as stated in the Exercise Notice (attached hereto as
Appendix F), it has reviewed the Registered Patents that it has had the
opportunity to acquire independent advice as to the Registered Patents,
their protection, validity and coverage in specific geographical areas and
that it is satisfied with the information and data it
received.
|
|
WHEREAS
|
|
The
Licensor hereby agrees to grant the Company a license with respect to the
Registered Patents, in accordance with the terms and conditions of this
Agreement and subject to the full performance by the Company of its
obligations in accordance with this Agreement;
and
|
1. |
(a)
|
The
recitals and appendixes annexed hereto constitute an integral part hereof
and shall be read jointly with its terms and
provisions.
|
(b)
|
In
this Agreement, unless otherwise required or indicated by the context, the
singular shall include the plural and vice-versa, the masculine gender
shall include all other
genders.
|
(c)
|
The
headings to the sections in this agreement are for the sake of convenience
only and shall not serve in the Agreement’s
interpretation.
|
(d)
|
In
this agreement the following capitalized terms shall have the meanings
appearing alongside them, unless provided otherwise
herein:
|
2.
|
Subject
to the full performance by the Company of its obligations in accordance
with this Agreement, the Licensor shall grant the Company an exclusive
license to make commercial use of the Registered Patents, in order to
develop, manufacture and/or market a Product, all within the Scope and the
Territory only, subject to the terms and conditions
hereof.
|
3.
|
The
License shall end, if not ended or terminated prior thereto pursuant to
the provisions hereof, upon the later of: (i) the date of expiration of
the last valid Registered Patent, in the Territory, upon which the Product
is partially based; or (ii) the end of a period of 20 years from the date
of making the First Commercial
Sale.
|
4. |
(a)
|
The
Company shall be entitled to sub-license the rights granted in the
License, or any part thereof, (herein referred to as “Sub-License”) to
third parties after obtaining Licensors written approval to the identity
of the intended sub-licensee (the “Sublicensee”) and the Licensor’s
consent to all the material terms and conditions of the Sublicense, which
shall not be unreasonably withheld. The Sublicense shall not derogate from
Yissum’s rights or Licensee’s obligations under this Agreement. The
Licensor shall make best efforts to provide the Licensee with an answer in
relation to the Sublicense no later than 30 days from the date of receipt
of the request by the Licensee. The Company hereby warrants that all
Sub-Licenses shall be granted at “arms-length”
terms.
|
|
(b)
|
The
Company shall fully disclose and submit to the Licensor all documentation
relating directly and indirectly to the Sub-License, and adequately
disclose to the Licensor any other business connection which it now has or
is in the process of forming with the Sub-Licensee which may reasonably
effect the Company’s decision regarding the Sub-Licenses’ Terms and
Conditions; and shall notify the Licensor in writing, whether a proposed
Sub-Licensee is a Related Entity and/or
Affiliate.
|
|
(c)
|
Subject
to subsection (g), any Sub-License shall be dependent on the validity of
the License and shall terminate in whole or in part upon termination of
the License or any part thereof.
|
|
(d)
|
Subject
to subsection (g), the Company shall ensure that all Sublicense agreements
shall include terms that bind the Sub-Licensee to observe the terms of
this Agreement, the breach of which shall be a fundamental breach
resulting in the prompt termination of the Sub-License. In such an event,
the Company undertakes to take all reasonable steps to enforce such terms
upon the Sub-Licensee, including the termination of the Sub-license. In
all cases, the Company shall immediately notify the Licensor of any breach
of the terms of a Sub-License, and shall copy the Licensor on all
correspondence with regard thereto.
|
|
(e)
|
Any
act or omission of the Sub-Licensee which is not promptly remedied by the
Company or the Sub-Licensee and which would have constituted a breach of
this Agreement by the Company had it been an act or omission of the
Company, and which the Company has not made best efforts to promptly cure,
including termination of the sublicense, shall constitute a breach of this
Agreement by the Company.
|
|
(f)
|
For
the avoidance of any doubt it is hereby declared that under no
circumstance whatsoever shall a Sub-Licensee be entitled to grant the
Sub-License or any part thereof to any third party without the prior
consent of both the Company and the Licensor, not to be unreasonably
withheld.
|
|
(g)
|
Notwithstanding
anything to the contrary set forth herein, if the License is lawfully
terminated by Licensor in accordance with the provisions hereof, Yissum
agrees, if so requested by a Sub-Licensee within 30 days from date of
termination of the License, to grant to such a Sublicensee (other than
Related Entities of the Company) a direct license under the same terms and
conditions of this Agreement, provided that such Sublicensee (1) agrees to
be bound to Yissum under the same terms and conditions of this Agreement,
including to render direct payment to Licensor of any consideration that
would have been payable to Licensor by Licensee (such direct license with
a Sublicensee shall not impose any obligations or liabilities on Yissum
which are not included in this Agreement or which are in any way more
onerous than those included in this Agreement); (ii) Sub-License pays to
Yissum any amount due and owing under this Agreement at time of
termination that has not been paid by the Company;, and (iii) the
Sublicensee is not in breach of its Sub-License Agreement with the
Company. In such instance, such Sub-licensee shall become obligated
directly towards Licensor on all terms set forth in such Sub-License
Agreement.
|
5. |
(a)
|
In
consideration for the grant of the License, the Company shall pay the
Licensor the following
considerations:
|
(a)
|
a
non-refundable License Fee to be paid as detailed in Appendix
B.
|
|
(b)
|
Royalties
at a rate of 5% of Net Sales of the Product.
|
|
(c)
|
Sub-License
Fees at a rate of 9% of Sublicense
Considerations.
|
(b)
|
The
Company acknowledges that pursuant to the Former License, it owes the
Licensor certain License Fees as well as accumulated patent expenses with
respect to the Registered Patents up to May 23, 2005, the date of
execution of the Memorandum of Understanding , in the total amount of
$128,000 (hereinafter:
“
License and Patent Fees Debt
”
).
|
6. |
(a)
|
The
Company shall give the Licensor written notice of the First Commercial
Sale or Sub-License, of the Product by itself or by any Sub-Licensee
within 30 days thereof. This provision is a fundamental term of the
Agreement. The breach thereof shall constitute a fundamental breach of the
Agreement, and the Licensor, at its sole discretion, shall have the right
to terminate the Agreement immediately under terms and conditions as
stated in section 14.
|
|
(b)
|
Thirty
days after the end of each calendar quarter (January 1, April 1, etc.)
commencing from the date of the First Commercial Sale of the Product, the
Company shall furnish the Licensor with a quarterly report (“Periodic
Report”) detailing the total sales effected and Sublicense Consideration
received during the preceding quarter and the total Royalties and
Sublicense Fees due to the Licensor in respect of that
period.
|
|
(b)
|
The
Periodic Reports shall contain full particulars of all sales made by the
Company and/or Sub-Licensees and all of the proceeds obtained by the
Company in respect of granting Sub-Licenses pursuant to section 5 above,
including sales broken down according to countries, a breakdown of the
number of Products sold, discounts, returns, the currency in which the
sales were made, invoice date and all other data enabling the Royalties
and Sub-License Fees payable to be calculated. The Periodic Reports shall
also specify any Net Sale to a Related Entity and shall set forth full
details thereof.
|
|
(c)
|
On
the date prescribed for the submission of each Periodic Report, the
Company shall pay the Royalties and Sub-License Fees due to the Licensor
for the period reported on.
|
|
(d)
|
The
value of each sale shall be computed on the date of sale in US Dollars
based on the rates published in the Wall Street Journal. The Royalties
shall be computed and paid in US dollars. Payment of Value Added Tax (if
charged) shall be added to each payment in accordance with the statutory
rate in force at such time. In event that the Company is prohibited under
applicable foreign currency laws to transact in US Dollars, payment shall
be made in New Israeli shekels according to the representative rate of
exchange prevailing on the date of
payment.
|
(e)
|
The
Company shall keep full and correct books of accounts in accordance with
General Accepted Accounting Procedures as required by international
accounting standards enabling the Royalties and Sub-License Fees to be
calculated. The Company shall procure that Sub-Licensees, if any, also
keep such books of accounts as aforesaid. The CEO of the Company shall
certify in writing that all the particulars mentioned in each Periodic
Report are correct and accurate. Starting from the date of the First
Commercial Sale, or the date a Sub-License is granted, whichever occurs
first an annual report, authorized by a certified public accountant, shall
be submitted at the end of each year, detailing Net Sales and Sub-License
Considerations, Royalties and Sub-License Fees, both due and paid (the
“Annual Reports”).
|
(f)
|
Upon
reasonable notice, the Licensor and its authorized representatives may
examine the Company’s and Sub-Licensees’ books of accounts and any report
or information relating to the manufacture and marketing of the Product in
order to verify the calculation of the Royalties and Sub-License Fees and
the accuracy of the information given to The Licensor in the Period and
Annual Reports. If an error greater than 2% in the reports of the Company
will be found the Company will bear the full cost of the
examination.
|
(g)
|
Any
sum of money due to the Licensor which is not duly paid shall bear
interest from the due date of payment until the actual date of payment at
the maximum rate of interest for the time-being prevailing in respect of
unauthorized withdrawals on a credit line at Bank Leumi Le-Israel
Ltd.
|
(h)
|
All
payments required to be made in accordance with the provisions of this
Agreement shall be made with the addition of any taxes assessable upon the
Licensor (excluding income taxes) such that all payments shall be free and
clear of any taxes or withholding of any
kind.
|
7. |
(a)
|
The
Company undertakes, at its own expense, to carry out the development
(including clinical trials) and manufacturing work (including regulatory
approval) necessary to develop the Product in accordance with the written
plan and timetable for the development of the Product (herein “Development
Plan”) as approved by the Company’s Board of Directors and updated from
time to time, a copy of which is attached hereto as Appendix
E.
|
|
(b)
|
The
Company shall provide the Licensor on no less frequent basis than twice
per year, with the same reports, which have been submitted to the
Company’s Board of Directors, and which shall detail the material
Development Results and other related work effected by the Company or by
any Sub-Licensee during the period since the previous such report
(“Development Reports”). Development Reports shall also set forth a
general assessment regarding the status of the development of the Product
and the marketing thereof and detail all material proposed changes to the
Development Plan.
|
|
(c)
|
Upon
completion of the development of the Product, the Company undertakes to
perform all actions necessary to seek effective commercialization in terms
of strategic partnerships, alliances or other corporate deals, as well as
maximize Net Sales.
|
(d)
|
The
Licensor shall first offer the Company the opportunity to fund any further
research by the Researchers regarding the Registered Patents in the Scope
(“Further Research”), upon terms to be negotiated between the parties in
good faith, before allowing any other third party to fund the Further
Research. If the Company does fund the Further Research, then any Further
Research Results or other intellectual property deriving therefrom shall
belong to the Licensor and shall be licensed to the Company under the same
terms and conditions set forth herein. If the Company does not positively
indicate its desire to fund the Further Research within sixty (60)
calendar days of being offered same, and agree upon terms with Yissum
within sixty (60) calendar days thereafter, Yissum shall be free to
contract with a third party for the funding of such Further Research.
Ownership.
|
8.
|
Ownership
|
8.
|
Except
for Yissum File No. 2610 in Appendix A, all rights in the Registered
Patents listed in Appendix A, shall be solely owned by the Licensor, and
the Company shall hold the rights granted pursuant to the License as
trustee for the Licensor and make use of them solely in accordance with
the terms of this Agreement.
|
9.
|
Patents
|
9. |
(a)
|
With
regard to the Registered Patents or any Further Research, the Licensor,
following consultation with the Company, shall proceed in registering
patents in all the states and countries of the Territory, at the Company’s
expense. Each application and every patent registration as aforesaid shall
be made by the Licensor and registered in the name of the Licensor at the
Company’s expense. The Company shall reimburse the Licensor for all
documented costs and expenses the Licensor shall incur with regard to the
aforesaid application, registrations and maintenance and for all future
documented costs and expenses the Licensor shall incur with regard to the
aforesaid application, registrations and maintenance of the Registered
Patents or any patents resulting from the Further Research within 21 days
of invoice by the Licensor.
|
|
(b)
|
Subject
to the above, the parties shall consult and make every effort to reach
agreement in all respects relating to the manner of making applications
and registering said Registered Patents and other patents that may arise
from the Further Research, including the time of making the applications,
the countries where applications will be made and all other particulars
relating to patent registration as
aforesaid.
|
|
(c)
|
In
regard to the above, in the event that the Company is not willing to fund
the registering or maintenance of a patent in a certain state or country,
solely on the basis of reasonable commercial considerations to be provided
in writing by the Company to the Licensor, the Company will not be
required to reimburse the Licensor for expenses relating to the
registration and maintenance of the patent in such state or country.
However, thereafter and notwithstanding the terms of this Agreement, in
the event that the Licensor effects the application and/or registration of
a patent in the said state or country at its own cost, the License with
respect to such state or country shall revert back to the Licensor and the
Licensor shall be free to sub-license such rights to any other third
party, at its discretion.
|
|
(d)
|
The
aforegoing does not constitute an obligation on the part of the Licensor
that any patent or patent registration applications will indeed be made
and/or registered and/or registerable in respect of the Further Research
and/or any part thereof, nor shall such
constitute an obligation,
warranty, or declaration on the part of the Licensor that a patent
registered as aforesaid will afford due
protection.
|
|
(e)
|
The
Parties shall assist each other in all respects relating to the
preparation of documents for the registration of any patent or any
patent-related right forthwith upon the other’s request. Towards this end,
the Licensor shall promptly notify the Company regarding any application,
documentation, communication and/or “office action” received or required
to be filed relating to any Registered Patent. In addition, the Company
undertakes to take all appropriate action in order to assist the Licensor
to extend the period of the duration of the patent or any other extension,
granted by the law, to enable maximum extension of the time in which the
Registered Patents are protected.
|
10. |
(a)
|
To
the extent commercially reasonable as mutually agreed between the Parties,
the Company undertakes to act forthwith at its own expense to provide full
protection against a third party’s infringement of the Registered Patents,
in connection to the Scope, and/or any other right therein and forthwith
to advise the Licensor upon learning of the infringement. The Company
shall give the Licensor immediate notice of any approach made to it by a
patent examiner and/or attorney in connection with the subject matter of
this Agreement. The Company shall only reply to such approaches after
consultation with the Licensor and subject to its consent. In the event
the Parties mutually agree as to the lack of commercially reasonable
grounds to commence infringement proceedings, the Licensor shall be free
to take said legal action, at its sole expense. In such an event the
Licensor shall be entitled to the entire award, which may be granted as a
result of such legal action.
|
|
(b)
|
The
Company shall use its best efforts at its own expense to defend any
action, claim or demand made by any entity in connection with rights in
the Registered Patents, in connection to the Scope, and shall give notice
to the Licensor immediately upon learning of any such action, claim or
demand as aforesaid. Notwithstanding the aforementioned, nothing in this
Section 10(b) requires the Company so defend, should both Parties
determine, that there are valid commercial or other reasons not to do so,
in which the Licensor shall be free to take said action. In such an event
the Licensor shall be entitled to the entire award, which may be granted
as a result of such legal action.
|
|
(c)
|
Subject
to reimbursement of documented and reasonable out-of-pocket expenses
incurred by the Company in relation to any legal action contemplated under
the provisions of sub-sections (a) and (b) above and initiated by the
Company, any award in favor of the Licensor and/or the Company resulting
from such legal action shall be deemed to be a fee received by the Company
from a Sub-Licensee.
|
11. |
(a)
|
The
Company warrants and undertakes that it shall maintain full and absolute
confidentiality and shall also be liable for its employees and/or
representatives and/or
persons acting on its behalf
maintaining absolute confidentiality concerning, confidential information
which is in and/or comes to its knowledge and/or that of its employees,
representatives and/or any person acting on its behalf directly or
indirectly, and relating to the Registered Patents, the Licensor, the
University, the Researchers and their employees. For confidential
information received up to the date of signature of this Agreement, said
undertaking shall apply for 5 years from date of signature of this
Agreement, and for confidential information received after signature of
Agreement said undertaking shall apply for the duration of the term of
this Agreement and subsequent thereto. The Company undertakes not to
convey or disclose said confidential information in connection with the
aforegoing to any entity unless said entity executes a confidential
disclosure agreement with the Company having terms similar in content to
this section. Notwithstanding the above, the Parties acknowledge that as
of the date of this Agreement,, there is no confidential information
pertaining or belonging to Licensor or its employees that is subject to
the terms of this
Agreement.
|
(b)
|
The
obligation contained in this section shall not apply to information which
is in the public domain as at the date hereof or to information which
hereafter comes into the public domain, unless the Company breaches its
obligations pursuant to this Agreement and as a result thereof the
information comes into the public
domain.
|
(c)
|
Notwithstanding
the above, the Company may disclose details and information to its
employees and Sub-Licensees, as necessary for the performance of its
obligations pursuant to this Agreement, provided that it procures that its
employees and Sub-Licensees execute a confidentiality agreement
substantially similar in content to this section
11.
|
(d)
|
Without
prejudice to the aforegoing, and except for the purposes of fundraising,
the Company shall not mention the University’s and/or the Licensor’s name,
unless required by law, in any manner or for any purpose in connection
with this Agreement, or any matter relating to the Registered Patents,
without obtaining the Licensor’s prior written
consent.
|
(e)
|
As
a precondition to any Sub-License, the Company shall ensure that in
regards to any then applicable confidential information of the Licensor to
be disclosed in the Sub-License, the Sub-Licensee procure that the
employees and persons engaged thereby execute a confidentiality agreement
substantially similar in content to this Section
11.
|
(g)
|
This
section 11 shall survive expiry or termination of this
Agreement.
|
(i)
|
The
provisions of this section shall be subject to permitted publications
pursuant to section 12 herein.
|
12. |
(a)
|
The
Parties hereby agree to co-ordinate with each other regarding publications
involving the work of the Researchers, related to the Registered Patents,
but otherwise the Company shall be free to publicize as it sees fit. The
Company thus undertakes not to publish any information involving work
performed by the Researchers, including the Development Results, if
applicable, thereof without obtaining the Licensor’s prior written consent
to the publication and the manner of making such
publication.
|
|
(b)
|
The
Licensor shall ensure that no publications in writing, in scientific
journals or orally at scientific conventions relating to the results of
any Further Research, are published by it or its Researchers, without the
Company’s consent.
|
|
(c)
|
The
Company undertakes to reply to such any request for publication by the
Licensor within 30 days of application. The Company may only decline such
an application upon reasonable grounds which shall be fully detailed in
writing.
|
|
(d)
|
Should
the Company decide not to allow publication as provided in sub-section (b)
above for reasons which in the Licensor’s opinion are unreasonable,
publication shall be postponed for a period of not more than 3 months to
enable for the registration of
patents.
|
(e)
|
The
provisions of this section shall not prejudice any other right which the
Licensor has pursuant to this Agreement and at
law.
|
(f)
|
For
the avoidance of doubt, the provisions of this section in connection with
the prohibition against publication shall not apply whatsoever to internal
publication by the Licensor made in the University for the Researchers and
employees.
|
13. |
(a)
|
THE
LICENSOR MAKES NO WARRANTIES OF ANY KIND WITH RESPECT TO THE REGISTERED
PATENTS. IN PARTICULAR, THE LICENSOR MAKES NO EXPRESS OR IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE NOR IS
THERE A WARRANTY THAT THE USE OF THE REGISTERED PATENTS WILL NOT INFRINGE
ANY PATENT, COPYRIGHT, TRADEMARK OR OTHER RIGHTS. IN ADDITION, NOTHING IN
THIS AGREEMENT MAY BE DEEMED TO BE A REPRESENTATION OR WARRANTY BY THE
LICENSOR OF THE VALIDITY OF ANY OF THE PATENTS OR THEIR REGISTRABILITY OR
THE ACCURACY, SAFETY, EFFICACY, OR USEFULNESS, FOR ANY PURPOSE, OF THE
REGISTERED PATENTS. THE LICENSOR HAS NO OBLIGATION, EXPRESS OR IMPLIED, TO
SUPERVISE, MONITOR, REVIEW OR OTHERWISE ASSUME RESPONSIBILITY FOR THE
PRODUCTION, MANUFACTURE, TESTING, MARKETING OR SALE OF ANY PRODUCT OR
SERVICE. THE LICENSOR HAS NO LIABILITY WHATSOEVER TO THE COMPANY OR ANY
THIRD PARTIES FOR OR ON ACCOUNT OF ANY INJURY, LOSS, OR DAMAGE, OF ANY
KIND OR NATURE, SUSTAINED BY, OR ANY DAMAGE ASSESSED OR ASSERTED AGAINST,
OR ANY OTHER LIABILITY INCURRED BY OR IMPOSED UPON COMPANY OR ANY OTHER
PERSON OR ENTITY, ARISING OUT OF OR IN CONNECTION WITH OR RESULTING FROM
(i) the production, use, practice, lease, or sale of any Product or
service; the use of the Registered Patents; or (ii) any advertising or
other promotional activities with respect to any of the
foregoing.
|
|
(b)
|
The
Company shall be liable for any loss, injury and/or damage whatsoever
caused to its employees and/or any person acting on its behalf and/or to
the employees of the Licensor and/or any person acting on its behalf
and/or the Researcher and his/her team, and/or to any third party by
reason of the Company’s acts and/or omissions pursuant to this Agreement
and/or by reason of any use made of the Registered Patents, the Further
Research Results, the Development Plan, the Development Results, Product,
License and/or anything connected therewith by any third party
whatsoever.
|
|
(c)
|
The
Company undertakes to compensate, indemnify, defend and hold harmless the
Licensor and/or any person acting on its behalf and/or any of its
employees and/or representatives and/or the University and/or the
Researcher and his/her team (herein referred to as “Indemnitees”) against
any liability including product liability, damage, loss or expenses
including reasonable legal fees and litigation expenses incurred by or
imposed upon the Indemnitees by reason of the Company’s acts and/or
omissions and/or which derive from its use, development, manufacture,
marketing, sale and/or sub-licensing of the Product and/or Registered
Patents. Notwithstanding the foregoing, this indemnity shall not apply to
liability arising out of claims by third parties for infringement of
intellectual property rights.
|
(d)
|
During
the Development Period the Company shall procure and maintain, at its own
cost and expense, comprehensive general liability insurance in amounts as
are industry standard for similar circumstances. Beginning at the time as
any Product shall be commercially distributed or sold by the Company or by
a Sub-Licensee, but in any event no later than the First Commercial Sale,
the Company and its Sub-License (if applicable) shall procure and
maintain, at their own cost and expense, comprehensive general liability
insurance in amounts that are standard in the industry for similar
products. The minimum amounts of insurance coverage required shall not be
construed to create a limit of the Company’s liability with respect to its
indemnification under this
Agreement.
|
(e)
|
The
Company shall provide the Licensor with written evidence of such insurance
upon request of the Licensor. The Company shall provide the Licensor with
written notice at least fifteen days prior to the cancellation,
non-renewal or material change in such insurance; if the Company does not
obtain replacement insurance providing comparable coverage within such
fifteen day period, this shall constitute a breach of this Agreement, and
the Licensor shall have the right at the end of such fifteen day period to
apply the procedure and provisions of termination section
14.
|
(f)
|
The
Company shall maintain, at its own expense, comprehensive general
liability insurance beyond the expiration or termination of this Agreement
during the period that a Product relating to and/or developed pursuant to
this Agreement is being commercially distributed or sold by the Company
and/or Sub-Licensee.
|
14. |
(a)
|
Without
prejudice to either party’s rights pursuant to this Agreement or at law
and subject to Section 4(g) of this Agreement, either Party may terminate
this Agreement by written notice to the other only in the following
cases:
|
(1)
|
Breach
of this Agreement, including Fundamental Breaches, and such breach is not
remedied within 45 days of written
notice;
|
(2)
|
If
any of the following occur (i) the other Party passes a resolution for
voluntary winding up or a winding up application is made against it and
not set aside within 60 days; and/or (ii) a receiver or liquidator is
appointed for the other Party; and/or (iii) the other Party enters into
winding up or insolvency or bankruptcy proceedings, and the affected Party
fails within 90 days to demonstrate substantive evidence that it will be
able to reverse said event and continue operations. Each of the Parties
undertakes to notify the other within seven days if any of the
abovementioned events occur.
|
(b)
|
The
following shall be deemed breaches of this Agreement, entitling the
Licensor to terminate the Agreement and the License granted
hereunder:
|
(1)
|
Failure
by the Company to fulfill its obligation to make good faith efforts to
develop a Product in accordance with Section 7 hereinabove;
or
|
(2)
|
Non-performance
or delay of over than 180 days in the performance of the then applicable
approved Development Plan.
|
(3)
|
In
the event the Company fails to issue the Equity
or
fails to pay the past patent
expenses, as set forth in section 5(b), by March 31,
2006.
|
|
(c)
|
Upon
termination of this Agreement and termination of the License, or upon this
Agreement ending for any reason, the License shall revert to the Licensor,
and the Licensor shall be free to enter into agreements with any other
third parties for the granting of the License and/or any other right
regarding the Registered Patents.
|
|
(d)
|
Notwithstanding
the aforesaid, the end or termination of this Agreement shall not release
the Company from its obligation to carry out any financial or other
obligation which it was liable to perform prior to the Agreement’s end or
termination. Sections 8, 11, 12, 13, 15 and 16 shall survive termination
of this Agreement.
|
|
(e)
|
For
the sake of clarity, failure to comply with the terms and conditions of
sections 2, 3, 4, 5, 7, 8, 9, 10, 11, 12 and 13 shall constitute a
fundamental breach hereunder (“Fundamental
Breaches”).
|
15.
|
The
provisions of this Agreement and everything concerning the relationship
between the parties in accordance with this Agreement shall be governed by
Israeli law and jurisdiction shall be granted only to the appropriate
court in Jerusalem.
|
16. |
(a)
|
All
differences and disputes arising between the parties in connection with
the Agreement and/or its interpretation and/or its performance and/or
breach, shall be referred for the decision of a single arbitrator, whose
identity shall be determined by mutual consent of the
parties.
|
|
(b)
|
Should
the parties not reach agreement as to the arbitrator’s identity, the
arbitrator shall be appointed by the President of the Jerusalem district
of the Israeli Bar Association on the application of either of the
parties.
|
|
(c)
|
The
arbitration shall be held in Israel. The arbitrator shall not be bound by
the civil procedure regulations and laws of evidence but shall be bound by
the substantive law of Israel and be liable to give grounds for his
decision. The Arbitrator shall be empowered to grant temporary injunctions
and orders, which shall be enforceable in foreign jurisdictions, as per
Section 16 above.
|
|
(d)
|
The
arbitrator’s decision shall be final and binding upon the parties, and
shall be enforceable in foreign jurisdictions, as per Section 16
above.
|
(e)
|
The
execution of this Agreement shall constitute the execution of an
arbitration deed.
|
17. |
(a)
|
Relationship of the
Parties.
It is hereby agreed and declared between the parties that
they shall act in all respects relating to this Agreement as independent
contractors and there neither is nor shall be any employer-employee or
principal-agent relationship and/or partnership relationship between the
Company and/or any of its employees and the Licensor. Each party will be
responsible for payment of all salaries and taxes and social welfare and
benefits and any other payments of any kind in respect of their employees
and office holders, regardless of the location of the performance of their
duties, or the source of the directions for the performance
thereof.
|
|
(b)
|
Assignment.
Except for a transfer or assignment in connection with a merger,
acquisition or other change of control, the Company shall not be entitled
to transfer and/or assign and/or endorse its rights and/or duties and/or
any of them pursuant to this Agreement, to a third party, without the
prior written consent of the Licensor, which shall not be unreasonably
withheld by Licensor. In the event Licensor does not consent to the
assignment, it shall provide the Company with a detailed explanation
within 30 days after receiving written notice from Company about the
proposed transfer of rights.
|
|
(c)
|
No waiver.
The
failure or delay of a party to the Agreement to claim the performance of
an obligation of the other party shall not be deemed a waiver of the
performance of such obligation.
|
|
(d)
|
Linkage.
All
payments to be effected in accordance with the terms of this Agreement
shall be linked to the Israeli Consumer Price Index, and the month of the
signing of this Agreement shall serve as the base for all
calculations.
|
|
(e)
|
Legal Costs.
Each party shall bear its own legal expenses involved in the making of
this Agreement.
|
|
(f)
|
Entire
Agreement.
This Agreement constitutes a full and complete Agreement
between the parties and may only be amended by a document signed by both
parties.
|
|
(g)
|
Disclosure of
Agreements with Researcher.
The Company shall disclose to the
Licensor any existing agreement and/or arrangement of any kind with the
Researcher and or any representative thereof, and shall not enter any
agreement and/or arrangement of any kind with the Researcher or
representative thereof, without the prior written consent of the
Licensor.
|
|
(h)
|
Taxes.
Prices
mentioned in this agreement do not include Value Added Tax (VAT). All
taxes and duties to be paid in connection with this agreement, including
any VAT (if applicable), shall be borne by the Company. Any duties or
taxes paid by the Licensor in connection with this contract shall be
reimbursed by the Company.
|
18.
|
All
notices and communications pursuant to this Agreement shall be made in
writing and sent by registered mail to or served at the following
addresses:
|
THE
LICENSOR
|
THE
COMPANY
|
||||
By:
|
By:
|
||||
Name:
|
Name:
|
||||
Title:
|
Title:
|
||||
Date:
|
Date:
|
Prof.
|
Date
signed
|
||
Prof.
|
Date
signed
|
|
(i)
|
Installment
1 in the amount of Fifty Thousand US Dollars (US$50,000) shall be paid
when the accrued investments in the Company by any third party, from the
date of the MOU (23
rd
of May 2005), amount to at least
$3,000,000
|
|
(ii)
|
Installment
2 in the amount of One Hundred and Fifty Thousand US Dollars (US$150,000)
shall be paid when the accrued investments in the company by any third
party, from the date of the MOU (23
rd
of May 2005), amount to at least
$12,000,000
|
(iii)
|
Installment
3 in the amount of Two Hundred Thousand US Dollars (US$200,000) shall be
paid when the accrued investments in the company by any third party, from
the date of the MOU (23
rd
of May 2005), amount to at least
$18,000,000
|
|
1.
|
Demonstration
of significant EPO secretion from each of the new, completed
vectors
|
|
2.
|
Demonstration
of requisite sustained levels for at least 2 months, without signs of
imminent decline, from at least one of the
vectors
|
|
3.
|
Key
Milestone: reproducible demonstration from at least one of the vectors, of
requisite sustained EPO levels for 4-6 months in vitro and in SCID mice,
projected to be capable of elevating hematocrit in patients for at least
4-6 months
|
|
·
|
Key
patents will be maintained and national phase filings
pursued
|
|
·
|
Preparations
for potential GMP production of the selected
vector.
|
1.
|
DEFINITIONS AS USED
HEREIN
|
2.
|
GRANT OF
L1CENSE
|
3.
|
PAYMENTS
|
4.
|
REPORTING
|
5.
|
TRANSFER OF SUBJECT
TECHNOLOGY
|
6.
|
SUBLICENSES
|
7.
|
TERM AND
EXPIRAT1ON
|
8.
|
T
ERMINATION
|
9.
|
ASSIGNABILITY
|
10.
|
GOVERNMENT
COMPLAINCE
|
11.
|
ARBITRATION
|
12.
|
ADDRESSES
|
Telephone
No.
|
713-798-6821
|
Facsimile No.
|
713-798-1252
|
E-mail
|
blg@bcm.tmc.edu
|
Telephone
No.
|
+972-4-958-8555
|
Facsimile
No.
|
+972-4-990-5683
|
E-Mail
|
Phyllis@medgenics.com
|
Telephone
No.
|
713-798-6821
|
Facsimile
No.
|
713-798-1252
|
E-Mail
|
blg@bcm.tmc.edu
|
Telephone
No.
|
+972-4-958-8555
|
Facsimile
No.
|
+972-4-990-5683
|
E-Mail
|
andy@medgenics.com
|
13.
|
INDEMNITY, INSURANCE
& WARRANTIES
|
13.1
|
INDEMNITY.
|
14.
|
ADDITIONAL
PROVISIONS
|
MEDGENICS,
INC.
|
BAYLOR
COLLEGE OF MEDICINE
|
|||
Name:
|
/s/Andrew L. Pearlman |
Name:
|
/s/ Cyndi M. Baily | |
Cyndi
M. Baily
|
||||
Title:
|
CEO
|
Title:
|
Senior
Vice President &
|
|
General
Counsel
|
||||
Date:
|
Jan. 14, 2007
|
Date:
|
Jan.
25,
2007
|
l.
|
Projects.
|
|
a.
|
the
“
Scope of Work
”
for such Project, attached as
Exhibit A;
|
|
b.
|
the
“
Price and Payment Schedule
”
for such Project, attached as
Exhibit B;
|
|
c.
|
the
“
Work Schedule
”
for such Project, attached as
Exhibit C;
|
2.
|
Definitions.
As used
herein, the following capitalized terms shall have the meanings set forth
below:
|
3.
|
Project
Procedures.
|
4.
|
Project
Completion.
|
5.
|
Technology
Transfer; Inventions; Ownership of Product Production
Records.
|
6.
|
Confidentiality
. During
the performance of the Project, during the period of any permissible
license or sub-license under Section 5 above, and continuing until the
later of (i) the date five (5) years after the termination or expiration
of this Agreement and (ii) the date of termination of any such license or
sub-license, each party shall treat the trade secrets and other
proprietary or confidential information disclosed to such party (the
“
Receiving Party
”
) by the other party (the
“
Disclosing Party
”
) under this Agreement and
marked by the Disclosing Party as confidential, as the proprietary and
confidential information of the Disclosing Party (
“
Proprietary Information
”
), and shall maintain all
Proprietary Information in strict trust and confidence and shall not
disclose any Proprietary Information to any third party or use any
Proprietary Information except as may otherwise be authorized in this
Agreement or by the Disclosing Party’s prior written consent. For purposes
of this Agreement, Proprietary Information of the SPONSOR shall include
all Sponsor Inventions described in Section 5, and along with all Sponsor
Technology, Product and Project Material, and Product Production
Records.
|
|
a)
|
is
already known to the Receiving Party at the time of the Disclosing Party’s
disclosure;
|
|
b)
|
is
or becomes publicly known by any means other than through a wrongful act
or omission of the Receiving Party, its employees or
agents;
|
|
c)
|
is
received from a third party entitled to make such a transfer without
violating an obligation of
confidentiality;
|
|
d)
|
is
independently developed by or for the Receiving
Party;
|
|
e)
|
is
disclosed in response to an order of a court or other governmental body or
regulatory authority with competent jurisdiction over the Receiving Party;
or is otherwise required to be disclosed by law; provided, however, that
the Receiving Party shall have provided the Disclosing Party with
sufficient notice prior to any required disclosure in order to afford the
Disclosing Party the opportunity to object to the
disclosure.
|
7.
|
Use
of Names.
Neither party
shall use the name of the other party or its employees in any advertising
or sales promotion materials or in any publication without such other
party’s prior written consent. Notwithstanding the foregoing, each party
may identify the other party with regards to the Product in any regulatory
submission associated with the Project without prior written
consent.
|
8.
|
Regulatory
Issues:
SPONSOR
acknowledges that MOLECULAR MEDICINE’s manufacturing technology, as well
as any technology licensed to MOLECULAR MEDICINE from third parties, and
any information related respectively thereto that is filed with the FDA or
other health regulatory authorities in countries other than the United
States, is of crucial importance to MOLECULAR MEDICINE and to such
licensing parties, as well as to all other sponsors benefiting from
MOLECULAR MEDICINE’s technology. Such information includes all process
related Biologic (Type II) Master Files and Facility (Type V) Drug Master
Files. To assist in preserving the integrity and value of such technology,
SPONSOR agrees that it will not, on its own initiative, analyze or engage
in any research of such technology that may be reasonably expected to
raise safety concerns with the FDA regarding the use of such technology in
the Project. If SPONSOR reasonably believes that such a study is
necessary, SPONSOR shall consult with MOLECULAR MEDICINE before engaging
in such a study. SPONSOR further agrees to promptly notify MOLECULAR
MEDICINE of any and all communications and/or concerns expressed by the
FDA or any other health regulatory authority relating to the development
and manufacture of the Product including MOLECULAR MEDICINE’s
manufacturing technology and agrees to consult with MOLECULAR MEDICINE to
resolve any such concerns with the FDA or such other authority. MOLECULAR
MEDICINE agrees to provide SPONSOR with letters of cross-reference to all
Master Files as appropriate. Non-compliance with the obligation to consult
with MOLECULAR MEDICINE to resolve such concerns with the FDA by SPONSOR
shall constitute a material breach of SPONSOR’s obligations under this
Agreement, permitting MOLECULAR MEDICINE at its sole discretion to
terminate all or part of this Agreement pursuant to Section 23.3, in
addition to such other rights that MOLECULAR MEDICINE may have under
law.
|
9.
|
Limited Warranty.
Upon
the issuance of a Certificate of Compliance, MOLECULAR MEDICINE shall be
deemed to warrant only that: (i) it has performed the Project with due
care in accordance with the Scope of Work, current Good Manufacturing
Practices and applicable federal and state laws, rules and regulations,
and (ii) the Product conforms to the Technical Specifications reported in
the Certificate of Compliance. Any claim by SPONSOR for a breach of such
warranty shall be made in writing to MOLECULAR MEDICINE on or before the
first anniversary of the date that SPONSOR is notified that Product is
complete. The sole remedy of SPONSOR for breach of this warranty shall be
for MOLECULAR MEDICINE to perform the Project again, or (if practicable)
to perform again such portions of the Project as may be required to
correct the deficiency. MOLECULAR MEDICINE SHALL NOT BE RESPONSIBLE FOR
GENETIC ALTERATIONS, INCLUDING THE FORMATION OF REPLICATION-COMPETENT
VIRUSES (SUCH AS REPLICATION-COMPETENT ADENOVIRUS OR
REPLICATION-COMPETENT RETROVIRUS) THAT OCCUR DURING PRODUCTION OF THE
PRODUCT. SUCH GENETIC ALTERATIONS SHALL NOT BE THE BASIS FOR A WARRANTY
CLAIM BY SPONSOR. UNDER NO CIRCUMSTANCES SHALL MOLECULAR MEDICINE BE
LIABLE TO SPONSOR OR ANY THIRD PARTY CLAIMING BY OR THROUGH SPONSOR FOR
ANY CONSEQUENTIAL, SPECIAL, OR OTHER DAMAGES, AND THE WARRANTY SET FORTH
HEREIN IS IN LIEU OF ANY AND ALL OTHER WARRANTIES, WHETHER EXPLICIT OR
IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. MOLECULAR MEDICINE’S
LIABILITY TO SPONSOR FOR THE BREACH OF ANY TERMS AND CONDITIONS CONTAINED
HEREIN (INCLUDING ANY EXHIBITS) SHALL IN NO EVENT EXCEED THE FEE PAID BY
SPONSOR TO MOLECULAR MEDICINE IN CONNECTION WITH THE
PROJECT.
|
10.
|
Indemnification.
|
1l.
|
Payment Terms.
SPONSOR
agrees to pay promptly all fees and expenses in accordance with the terms
set forth in the applicable Price and Payment Schedule. Unless otherwise
agreed to in the Price and Payment Schedule, all payments shall be due
within thirty (30) days of the date of invoice. Failure to timely pay any
of such amounts for any Project shall constitute a material breach of
SPONSOR’s obligations under this Agreement, permitting MOLECULAR MEDICINE
at its sole discretion to terminate all or part of this Agreement with
respect to any or all Projects pursuant to Section 23.3, to withhold
delivery of Product, to suspend any or all Project Runs, and to exercise
such other rights that MOLECULAR MEDICINE may have under this Agreement or
otherwise under law.
|
12.
|
Compliance with Law.
SPONSOR will not use, transport, store, or dispose of the Product
in a manner inconsistent with (a) laws, regulations, rules or ordinances
applicable to the Product, including without limitation, all applicable
requirements and procedures of the United States Food and Drug
Administration, or (b) health and safety standards and procedures
generally used in the industry. SPONSOR shall obtain assurance of
compliance with the preceding sentence from any of its affiliates, agents,
assignees, or licensees who use, transport, store, or dispose of the
Product.
|
13.
|
Excused Performance.
Except for payment obligations, neither party shall be responsible
for failure or delay in performance of its obligations under or in
connection with this Agreement due to causes beyond its reasonable
control, including but not limited to acts of God, governmental actions,
fire, smoke, labor difficulty, shortages, war, revolution, civil
disturbances, terrorism, sabotage, blockade, embargo, explosion,
transportation problems, interruptions of power or of communication,
failure of suppliers or subcontractors, or natural disasters. SPONSOR
acknowledges that it is SPONSOR’s responsibility to obtain its own
insurance coverage for the foregoing events. SPONSOR acknowledges that
after the occurrence of any of the foregoing events, (i) MOLECULAR
MEDICINE may be unable to suspend the Product Run and therefore may be
forced to restart the Product Run, and (ii) MOLECULAR MEDICINE may be
unable to limit, suspend, or terminate any outstanding financial
commitments for which SPONSOR shall be held responsible. SPONSOR shall
reimburse MOLECULAR MEDICINE for all additional costs incurred by
MOLECULAR MEDICINE as a result of its inability to suspend the Product Run
or to suspend or cancel outstanding financial obligations, to the extent
that such additional costs are not otherwise covered by MOLECULAR
MEDICINE’s business interruption insurance, if
any.
|
14.
|
Assignment.
This
agreement shall be binding upon and inure to the benefit of the parties
hereto, and their respective successors, assigns, legal representatives
and heirs. Either party may assign or transfer its rights and obligations
under this Agreement to a successor to all or substantially all of its
assets or business relating to this Agreement, whether by sale, merger,
operation of law or otherwise, upon written notice to the other
party.
|
15.
|
Independent Contractors.
Nothing in this Agreement shall be construed to create any
relationship between MOLECULAR MEDICINE and SPONSOR other than of
independent contracting parties. Neither party shall have any right,
power, or authority to assume, create or incur an expense, liability, or
obligation, express or implied, on behalf of the
other.
|
16.
|
Waiver.
No waiver by
either party of any breach of any provision hereof shall constitute a
waiver of any other breach of that or any provision of this
Agreement.
|
17.
|
Severability.
If any
part, term or provision of this Agreement is determined to be invalid or
unenforceable, the remainder of the Agreement shall not be affected and
shall remain in full force and
effect.
|
18.
|
Choice of Law.
This
Agreement shall be governed by the laws of the State of California,
regardless of the choice of law provisions of California or any other
jurisdiction.
|
19.
|
Exhibits and Schedules.
All exhibits and schedules attached hereto are hereby incorporated
in and made a part of this Agreement as if fully set forth
herein.
|
20.
|
Counterparts.
This
Agreement may be executed simultaneously in two or more counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same
instrument.
|
21.
|
Entire Agreement.
This
Agreement contains the final, complete and exclusive agreement of the
parties relative to the subject matter hereof and supersedes all prior and
contemporaneous understandings and agreements relating to its subject
matter. This Agreement may not be changed, modified, amended or
supplemented except by a written instrument signed by both
parties.
|
22.
|
Non-solicitation and non-hire.
SPONSOR agrees not to solicit or hire personnel from MOLECULAR
MEDICINE for production, process development, testing or manufacturing of
viral vectors or vaccines or of other biopharmaceuticals for a period of
two (2) years after completion of Project unless agreed to in writing by
MOLECULAR MEDICINE.
|
23.
|
Term and Termination.
The term of this Agreement is from the Effective Date through the
completion of the Project described in the Scope of Work, unless extended
upon the agreement of the parties.
|
24.
|
Notices.
All notices
required or permitted to be given under this Agreement shall be in writing
and shall be (a) mailed by registered or certified first-class mail,
return receipt requested, (b) mailed by Federal Express or other overnight
delivery service, (c) transmitted by facsimile, or (d) delivered
personally. Such notices will be deemed to have been sufficiently given
for all purposes (i) five (5) days after mailing by registered first class
mail, (ii) two (2) days after sending by overnight delivery service, (iii)
the same day if sent by facsimile transmission with electronic
confirmation of transmission if transmission is confirmed during the
recipient’s normal business hours, or otherwise on the recipient’s next
business day, or (iv) immediately if personally delivered. Unless
otherwise specified in writing, any notices will be sent to the following
addresses:
|
If
to MOLECULAR MEDICINE:
|
MOLECULAR
MEDICINE BIOSERVICES, INC.
|
1890
Rutherford Road
|
|
Carlsbad,
CA 92008
|
|
Attention:
Marian Ernst
|
|
Fax:
(760) 918-0788
|
|
If
to SPONSOR:
|
MEDGENICS,
INC.
|
8000
Towers Crescent Drive
|
|
Suite
1300
|
|
Vienna,
VA 22182
|
|
MEDGENICS
MEDICAL ISRAEL LTD.
|
|
12
HaNapach St.
|
|
Karmiel,
21653
|
|
ISRAEL
|
|
Attention:
Baruch Stern, Ph.D.
|
|
Fax:
+972-4-988-2270
|
|
With
a copy to:
|
|
Pearl
Cohen Zedek Latzer, LLP
|
|
1500
Broadway, 12th Floor
|
|
New
York, NY 10036
|
|
Tel:
646-878-0804
|
|
Fax:
646-878-0801
|
|
email:
MarkC
@
pczlaw.com
|
|
Attention:
Mark
Cohen
|
MOLECULAR
MEDICINE BIOSERVICES, INC.
|
||||
By:
|
/s/ David M. Backer |
3/23/07
|
||
Name
|
Date
|
|||
President
|
||||
MEDGENICS,
INC.
|
||||
By:
|
/s/ Andrew L. Pearlman |
3/14/07
|
||
Name:
Andrew L. Pearlman, Ph.D.
|
Date
|
|||
President
& CEO
|
||||
MEDGENICS
MEDICAL ISRAEL LTD..
|
||||
By:
|
/s/
Andrew L. Pearlman
|
3/14/07
|
||
Name:
Andrew L. Pearlman, Ph.D.
|
Date
|
|||
.
|
CEO
|
Exhibit A
|
Scope
of Work
|
Exhibit
B
|
Price
and Payment Schedule
|
Exhibit
C
|
Work
Schedule
|
Exhibit
D
|
Form
of Certificate of Compliance
|
Exhibit
E
|
Form
of Start Order
|
Exhibit
F
|
Standard
Terms and Conditions of Storage
|
Exhibit
G
|
Quality
Agreement
|
|
Process
Development and cGMP Production of 116 Master
Cell Bank for Medgenics HDAd-EPO Vector
Product
|
Project
2 Cost:
|
Expansion and Titer Analysis
of
Helper Virus in AC2
Cells:
|
$ | 4,000 | |||
Characterization
of Helper Virus in AC2 Cells:
|
$ | 14,000 | ||||
Total
Cost of Project 2:
|
$ | 18,000 |
Project
3 Cost:
|
Expansion
and Titer Analysis
of
HDAd-EPO in 116 Cells:
|
$ | 4,000 | |||
Characterization
of
HDAd-EPO in 116 Cells
|
$ | 12,000 | ||||
Total Cost of
Project
3:
|
$ | 16,000 |
Project
5 Cost
|
Production
of MCB:
|
$ | 55,000 | |||
Documentation
Fee
|
$ | 7,500 | ||||
Total:
|
$ | 62,500 |
PARAMETER
|
PROTOCOL/ANTICIPATED
RESULT
|
|
Cell
Lines: 116 Cells and AC2
|
SPONSOR
to provide116 cells with acceptable testing results for Sterility,
Mycoplasma and Endotoxin. The AC2 cells to be used will be MOLECULAR
MEDICINE's AC2 Working Cell Bank.
|
|
Additional
characterization requirements of the AC2 cells as a result of FDA review
of SPONSOR'S IND are the sole responsibility of
SPONSOR.
|
||
SPONSOR's
Viral Material for Infection
|
SPONSOR
will supply the Viral Seed Stocks for the Helper Virus and HDAd-EPO Virus
to Molecular Medicine. Acceptable results for Sterility, Endotoxin and
Mycoplasma will be provided by SPONSOR.
|
|
In-Process Testing
|
In-Process Test
Specifications
|
|
Titer
(Plaque Assay)
|
Report
|
|
Particles
(HPLC)
|
Report
|
|
Cell
Count per Vial (MCB)
|
Report
|
|
Total
Quantity (MCB)
|
Report
|
|
Sampling
Plan
|
SPONSOR
to confirm the sampling required for testing regimen in writing to
MOLECULAR MEDICINE prior to initiation of Project 5. Sampling plan
requirements to be approved by SPONSOR with review of final batch
production records.
|
|
Final
Release Testing By Outside Facility
|
SPONSOR
to confirm in writing to MOLECULAR MEDICINE prior to initiation of
Project
5.
|
|
See
FINAL RELEASE TESTING
|
||
Vials for Master Cell Bank | The Master Cell Bank will be filled into sterile 1.5 mL cryovials. | |
Formulation
Buffer
|
The
formulation buffer to be decided upon by SPONSOR prior to initiation of
Project 5.
|
|
Labeling
Requirements
|
SPONSOR
to define and confirm in writing to MOLECULAR MEDICINE prior to initiation
of Project 5.
|
|
Storage
and Shipment of Boxed Vials
|
Final
filled vials will be stored at no charge for a period of time defined in
section 4.2 of the Production Service Agreement dated March 12, 2007.
Storage beyond this term is subject to additional charges. Shipping
charges are the responsibility of SPONSOR. A handling fee will
apply.
|
1.
|
Defining
a prescribed testing regimen and applicable sample types consistent with
the requirements of Sponsor's IND.
|
2.
|
Determining
the third party testing facility or facilities in which all release
testing assays will be
performed.
|
3.
|
All
costs incurred as a result of release testing
performed.
|
4.
|
Review
and approval of sample submission form(s) required for release
testing.
|
5.
|
Selecting
an approved vendor for the release testing for Sterility, Mycoplasma and
Endotoxin. At this time, the approved vendors for this testing include
BioReliance and Apptec.
|
1.
|
Incorporating
the defined sampling plan into the Master Batch Production Records in
advance of the applicable
project.
|
2
|
Assuring
all required samples are taken as defined in advance and per approved
Master Batch Production Records.
|
3.
|
Appropriately
labeling and storing all samples.
|
4.
|
Preparation
of all paperwork required for sample submission to third party testing
facility.
|
5.
|
Scheduling
of samples with third party testing facility or facilities to assure
prompt initiation of tests.
|
Parameter
|
Payment
Schedule
|
Total
Cost
|
||||
PROCESS
DEVELOPMENT
|
||||||
Deposit
|
50%
of Process Development Costs due within 10 days of signed
contract
|
$ | 43,000 | |||
Project
1: Cell Line Feasibility Study
|
1a.
Amount due upon Cell Thaw.
|
$ | 3,000 | |||
lb.
Balance Due upon issuance of Summary Table Report to
SPONSOR
|
$ | 3,000 | ||||
Project
2: Characterization of Helper
|
2a.
Amount due upon Cell Thaw.
|
$ | 4,500 | |||
Virus
|
2b.
Balance Due upon issuance of Development Report to SPONSOR
|
$ | 4,500 | |||
Project
3: Characterization of HDAd-
|
3a.
Amount due upon Cell Thaw.
|
$ | 4,000 | |||
EPO
|
3b.
Balance Due upon issuance of Development Report to SPONSOR
|
$ | 4,000 | |||
Project
4: 5L Wave PD Run
|
4a.
Amount due upon Cell Thaw.
|
$ | 10,000 | |||
4b.
Balance Due upon issuance of Development Report to SPONSOR
|
$ | 10,000 | ||||
TOTAL
PROCESS DEVELOPMENT
COSTS:
|
$ | 86,000 | ||||
eGMP
PRODUCTION
|
||||||
Deposit
|
50%
of Production Costs due within 10 days of signed contract
|
$ | 27,500 | |||
Project
5: 116 Master Cell Bank
|
5a.
Amount due upon signature of Project Start Order
|
$ | 10,000 | |||
5b.
Amount due upon cell thaw
|
$ | 10,000 | ||||
5c.
Amount due upon completion and issuance of Certificate
of Compliance
|
$ | 7,500 | ||||
TOTAL
PRODUCTION COSTS:
|
$ | 55,000 | ||||
DOCUMENTATION
|
Documentation
Fee: Certificate of Compliance Standard fee applicable to each GMP product
lot defined in PRODUCTION. Due upon completion of each lot, acceptable
release testing for Sterility, Mycoplasma and Endotoxin, completed Batch
Record Review and issuance of each Certificate of
Compliance.
|
|||||
Project
5: Master Cell Bank
|
$ | 7,500 | ||||
TOTAL
DOCUMENTATION COSTS:
|
$ | 7,500 | ||||
TOTAL
CONTRACT COSTS:
|
$ | 148,500 |
1.
|
MOLECULAR
MEDICINE reserves the right to review and amend pricing should additional
project
requirements impact costs. Both parties must agree to Amendments to the
Contract.
|
2.
|
Product
resulting from Project 5 described in Exhibit A may be stored at no charge
for a period of up to 90 days from date of product fill. SPONSOR is
responsible for standard storage fees for product left at MOLECULAR
MEDICINE beyond this period. MOLECULAR MEDICINE will notify SPONSOR in
writing 30 days in advance of the close of this 90-day grace period for
storage options.
|
3.
|
Final
Release testing costs are the sole responsibility of SPONSOR. Any
additional testing not specified in advance or as a result of FDA review
is the sole responsibility of
SPONSOR
|
4.
|
SPONSOR
and MOLECULAR MEDICINE shall determine the schedule for this project upon
contract signature and receipt of contract initiation fee. The scheduling
of this project shall be determined by laboratory space and suite
availability at the time of contract
signature.
|
5.
|
Except
where elsewhere specified, all invoices are due for receipt at Molecular
Medicine BioServices NET 30 DAYS. 1.5% per month will be assessed on
overdue balances. In no case does the assessment of past-due invoice
charges affect the parties rights of termination under the Production
Service Agreement.
|
6.
|
Adjustments
to payment terms must be made in writing and signed off by the Chief
Financial Officer or equivalent authority at Molecular Medicine
BioServices, Inc.
|
7.
|
The
following Delay and Cancellation Fee Schedule applies to any
Sponsor-caused delays or cancellations to the mutually agreed upon
schedule for an individual project. Percentages are applied to the total
cost of the individual Project that is delayed or cancelled, including
Documentation Fees. Delay and Cancellation fees are only applicable after
signature of the Project Start Order for each project (Exhibit F) by
SPONSOR. In the event of a delay, both parties shall use reasonable and
good faith efforts to reschedule and avoid the application of the delay
fees. Imposition of any Delay and Cancellation fees will be at the
discretion of MOLECULAR MEDICINE.
|
Timeframe
to Laboratory Start
|
Delay
by Sponsor
|
Cancellation
by Sponsor
|
||
>
90 days
|
0
|
20%
|
||
61 –
90 days
|
15%
|
40%
|
||
31
– 60 days
|
20%
|
60%
|
||
15 –
30 days
|
25%
|
80%
|
||
8 –
14 days
|
40%
|
90%
|
||
≤
7
days
|
50%
|
100%
|
||
Run
in Process
|
*See
Comment Below
|
100%
|
*
|
Any
request to hold materials in-process at a specific stage within the
manufacturing process will result in an invoice for the pro-rated value
consistent with the in-process material on
hold.
|
1.
|
This
Exhibit C contains an approximate time schedule as agreed as of the
execution date of this Agreement. The party initiating changes to the
schedule contained in this Exhibit C shall deliver notice to the other
party of the change. Responsibility for changes shall be determined
according to paragraph 3
below.
|
2.
|
It
is recommended that some production activities may be scheduled in an
over-lapping fashion utilizing the facility more efficiently, saving time
and resources. This is an option for further
discussion.
|
3.
|
It
is recognized that biological processes do not always perform to a precise
number of days. Therefore, the party responsible for timeline extensions
or delays is as follows:
|
a.
|
MOLECULAR
MEDICINE is responsible for project extensions or delay due to their
manufacturing
equipment.
|
b.
|
MOLECULAR
MEDICINE is responsible for complete execution of manufacturing methods as
outlined in approved batch production records. MOLECULAR MEDICINE is
responsible for project extensions or delays due to inaccurate execution
of the manufacturing methods as outlined in the batch production
records.
|
c.
|
SPONSOR
is responsible for project extensions or delay due to their manufacturing
equipment.
|
d.
|
SPONSOR
is responsible for project extensions or delays due to lack of critical
information or materials in a timely manner to MOLECULAR MEDICINE as
agreed to in advance.
|
e.
|
SPONSOR
is responsible for project extensions or delays caused by variable
performance
of raw materials specified in
advance.
|
f.
|
SPONSOR
is responsible for project extensions or delays caused by variable
performance
of critical production parameters previously defined by
SPONSOR.
|
SPONSOR:
|
Date:
SPONSOR
Contact:
Client
Code:
MM-077
|
Part Number
|
Version
|
Name
|
Lot Number
|
|||
TBD
|
||||||
TBD
|
||||||
TBD
|
||||||
¨
|
Batch
Production Records were properly utilized, were reviewed after use by
responsible Manufacturing and Quality Assurance staff, and all lot
deviations have been reviewed, justified and approved.
|
¨
|
All
components utilized in production met specified requirements prior to
use.
|
¨
|
All
materials were manufactured in qualified facilities utilizing
standardized, documented and (where and when appropriate) validated
equipment, utilities, and manufacturing
processes.
|
¨
|
Representative
samples of each finished lot were subjected to the following required
testing and have met specifications; this data has been reviewed and
approved by Quality Control and Quality
Assurance.
|
TEST
|
METHOD
|
REFERENCE
|
SPECIFICATION
|
RESULT
|
||||
Titer
|
Plaque
Assay
|
Report
|
||||||
Particles
|
HPLC
|
Report
|
||||||
Cell
count/vial
|
Report
|
|||||||
Volume
|
Report
|
THESE
DATA ARE FOR PRODUCT CERTIFICATION ONLY AND ARE NOT A SUBSTITUTE FOR
FINAL
PRODUCT
RELEASE TESTING
|
¨
|
Any
unexplained discrepancies or the failure to meet any of the specifications
have been thoroughly investigated, documented, resolved and approved by
Quality Assurance and are considered to have no adverse affect on the
safety, identity, strength, quality of purity of the lot.
|
¨
|
No
unexplained discrepancies or failure to meet any of the
specifications.
|
(Name)
|
Date
|
||
Quality
Assurance
|
|||
Molecular
Medicine BioServices, Inc.
|
|
Project
Start Order
(Sample)
|
Client
|
Contract
Name
|
||||
Client
Code
|
MM-077
|
Project
Name
|
|||
Client
Contact
|
LN
or DEV no.
|
Name
|
Use of Product
|
Type of Report
|
Manufacturing Site
|
Records
|
||||
PD
|
None
|
Data
Only
|
PD
|
Notebook
|
||||
Pilot
or Tech Transfer
|
Animal
|
Development
Report
|
PD
|
Draft
Batch Records
|
||||
Shakedown
or Clinical
Fill
& Finish
|
Animal/Human
Human
|
CofC
CofC
|
GMP
GMP
|
Batch
Records
Batch
Records
|
Thaw
date: week of _____/_____/200___
|
Harvest
date: week of
_____/_____/200___
|
Fill
date: week of
_____/_____/200___
|
By:
|
(Sample)
|
|||
Name:
|
Date
|
|||
Title
|
1.
|
Definitions
|
1.1
|
“
Intellectual Property Rights
”
shall
mean
patents, patent applications,
mask
works,
copyrights,
trade
secrets, “moral” rights,
confidential and proprietary information of a
technical and business nature and
know-how.
Intellectual Property
includes,
but is
not limited to,
designs, inventions, algorithms, proc
esses, recipes, schematics,
logic
diagrams, software, hardware,
firmware, and technical specifications, whether in
documentary
or non-documentary
form.
|
1.2
|
“
Technology
”
-
the
know-how, technology and process and other results
developed
and that will be
developed by MMI u
nder
the Approved Programs supported by the OCS or
deriving
therefrom.
|
l.3
|
“
Technology IP
”
– all rights in and to the
Technology.
|
1.4
|
“
Law
”
– the Encouragement of
Research
and Development
in
Industry Law
(
5744-
1984) and
the regulations
rules
and procedures
promulgated pursuant thereto as may be amended from time to
time.
|
1.5
|
“
Net Sales
”
-
gross amount billed on
sales by MMI of the products covered by the
claims of the
Background IP, 1ess the following: (i) customary trade, quantity, or cash
discounts and commissions to non-affiliated brokers or agents to
the extent actually
allowed and taken; (ii) amounts repaid or credited by reason of rejection
or return; and (iii) to the extent separately stated on purchase orders,
invoices, or other documents of sale, any taxes or other governmental
charges levied on the production, sale, transportation, delivery, or use
of such product which is paid
by
or on behalf of
MMI;
|
l.6
|
“
OCS
”
–
the Office of Chief Scientist of
the Ministry of Industry, Trade and
Labor.
|
2.
|
Ownership of
Rights
|
3.
|
License
|
4.
|
Non-Exclusive License
to Background IP
|
4.1
|
Licens
e
G
rant
.
Medgenics
herby grants MMI a non-exclusive, worldwide, non-transferable.
sub-licensable irrevocable license to use Medgenics’ Intellectual Property
Rights, as existing at date of application made for financial support from
the OCS under the Grant or developed or obtained independently by
Medgenics thereafter, as well as such intellectual property rights
licensed to Medgenics under the certain License Agreement with Yissum
dated November 23, 2005 (the
“
Background
IP
”
),
solely to the extent
demonstrated, to the reasonable satisfaction of Medgenics, as required for
the performance and execution of the Approved Programs and any research
and development programs support by the OCS, to be technically
indispensable for MMI in order to develop and commercialize the products
based on the Technology and Technology
IP
(all such
rights granted herein, the
“
Non-Exclusive License
”).
The Background IP and all
Intellectual Property Rights therein shall remain in the sole ownership
of' Medgenics.
|
4.2
|
Royalties.
In
consideration for
the grant of the Non-Exclusive License to MMI, MMI shall pay Medgenics a
royalty equal to the five percent
(5%) of the Net Sales
of
the products based
on
the Background IP.
|
5.
|
Undertaking
|
6.
|
Miscellaneous
|
6.1
|
Governing
Law
and
Jurisdiction
.
This Agreement
shall be
governed by
and construed according to the
laws of
the state of
Israel, without
regard
to
the
conflict o
f
laws provisions t
hereof. All
disputes
hereunder shall be
resolved in the
courts of Israel, sitting in Tel
Aviv-Jaffa.
|
6.2
|
Entire
Agreement
.
This Agreement constitutes the entire agreement between the parties
relating
to the subject matter hereof, and supersedes and annuls
all
oral
or written representations or agreements, privileges or
understandings between
the
parties relating to the subject matter
hereof.
|
6.3
|
Amendments
.
T
his
Agreement may only be
amended
or modified by an agreement in writing duly signed by the parties
hereto.
The
parties undertake to obtain the approval of the OCS for any
amendment or modification for which such approval is required
under
the Law
.
|
6.4
|
Severabilit
y
.
If any non material
condition,
term or covenant of this Agreement shall at any time be held to be
void, invalid or unenforceable by a court of final jurisdiction, then
such
condition, covenant or term shall b
e
construed as severable and such holding shall attach only to such
condition, covenant or term and shall not in any way affect or render
void, invalid or
unenforceable
any other condition, c
ovenant or term of this Agreement, and this
Agreement shall be carried out as if such void, invalid or unenforceable
term were not embodied
herein.
|
6.5
|
Waiver
.
The failure at any time of either party to enforce any of the terms or
conditions or any right or to exercise any option of
this
Agreement, will in no way be construed to be a waiver of such
terms, conditions, rights or options, or in any way to affect the validity
of this Agreement.
|
6.6
|
Preamble
.
The
preamble
to this Agreement shall
form
an
Integral part
thereof.
|
6.7
|
Headings
.
The headings in this Agreement are inserted only as a matter
of
convenience, and
shall
not b
e taken into consideration in the
interpretation
of this
Agreement.
|
6.8
|
Notices
.
Any
notice,
demand, request, consent, approval, declaration,
delivery
or
other communication hereunder to
be
made pursuant to the provisions
of
this
Agreement
shall be sufficiently given or made if in writing and delivered in
person with receipt acknowledged, sent by registered
or
credited
mail, receipt requested, posted
prepaid,
sent
by overnight courier
with
guaranteed next day delivery or sent by telex or
facsimile
to the party to
whom
directed at the respective
address
indicated above or to such
other
address as
a party may
designate
in
writing
in accordance
with
the provisioins of this Subsection 6.8. A copy of any notice shall
be also sent to:
|
6.9
|
Further
Assurances
.
The parties hereto shall take any and all
actions as may be required to satisfy the terms, goals and intent of this
Agreement and shall take no actions in contravention of
thereof.
|
6.l0
|
Counterparts
.
This Agreement may be executed in any
number of counterparts, each of whom shall be deemed an original and
enforceable against the parties actually executing such counterpart, and
all of which together shall constitute one and the same
instrument.
|
MMI,
LTD.
|
MEDGENICS,
INC.
|
|||
Signature:
|
/s/
Andrew L. Pearlman
|
Signature:
|
/s/
Andrew L. Pearlman
|
|
Name:
Dr. Andrew L. Pearlman
|
Name:
Dr. Andrew L. Pearlman
|
|||
Title:
CEO
|
Title:
President and
CEO
|
a.
|
The
Company has expressed its interest in managing the Clinical Trial, the
subject of which is “Safety and Efficacy of Sustained Erythropoietin
Therapy of Anemia in Chronic Kidney Disease Patients using EPODURE
Biopump” (hereinafter: the
“
Trial
”
),
with Company’s code name
“EPODURE Trial”, bearing protocol No. MG-001-02, a copy of which is
attached as
Appendix
A
hereto
(hereinafter: the “Trial Protocol”);
and
|
b.
|
The
Company has warranted that to the best of its knowledge it is either the
sole owner of, or has license to, the intellectual property rights in the
Product, as defined below, and the Trial Protocol, and there is no
prohibition under any law and/or agreement to the Company executing this
Agreement and performing its obligations hereunder in all material
respects; and
|
c.
|
The
Fund and the Principal Investigator have the ability, the facilities and
the staff to perform the Trial, and the Fund and the Principal
Investigator have agreed to perform the Trial, without any promise of
success. The Fund and the Principal Investigator have warranted that there
is no prohibition under any law and/or agreement to the Fund or the
Principal Investigator executing this Agreement and performing their
respective obligations hereunder in all material respects;
and
|
d.
|
The
Company has agreed to pay the Fund the consideration, specified in
Appendix
C
hereto, for the
performance of the undertakings of the Principal Investigator and the Fund
under this Agreement; and
|
e.
|
The
Company shall not pay the Principal Investigator any consideration, it
being agreed that the Principal Investigator will conduct the Trial under
the auspices of the Fund and in consideration of whatever compensation the
Fund will pay to the Principal Investigator pursuant to a separate
agreement among them.
|
1
.
|
Preamble and
Appendices
|
|
a.
|
The
preamble to this Agreement and the representations contained therein
constitute an integral part of the
Agreement.
|
|
b.
|
The
appendices appended to this Agreement, as specified hereunder, constitute
an integral part of the Agreement:
-
|
|
c.
|
The
provisions of this Agreement shall prevail - in the event of a
contradiction or non-compliance - over the provisions of any appendix
attached to this Agreement or which shall be attached hereto in the
future, unless said appendix explicitly provides that its provisions shall
prevail over this Agreement. However, existing and/or future Ministry of
Health regulations and/or guidelines shall prevail over the provisions of
this Agreement and/or any appendix provided that said regulations and/or
guidelines are stricter regarding the Company’s undertakings than the
Company’s undertakings under this Agreement and/or any
appendix.
|
2.
|
Definitions
|
3.
|
The
Engagement
|
|
3.1
|
Upon
signing this Agreement, the Company appoints the Fund and the Principal
Investigator, and those two parties undertake, each of them pursuant to
its authority and share, to perform the Trial according to the stages
thereof, within the framework and by means of the Hospital and to provide
all needed facilities, materials and services necessary to complete the
Trial, while complying with the schedule, the Trial budget and the Trial
Protocol in Appendix “A”, and while complying with the demands and terms
established by the Ministry of Health, and all pursuant to the terms and
conditions of this Agreement. The Fund shall be responsible for and obtain
all approvals required under any applicable law for the conduct of the
Trial.
|
|
3.2
|
Notwithstanding
sub-section 3.1 above, in the event that the employer-employee
relationship between the Principal Investigator and the Hospital and/or
the Fund is terminated for any reason and/or in the event the Principal
Investigator goes on leave and/or is unable and/or unwilling to carry out
his duties under this Agreement, for any reason, the Fund may appoint a
substitute Principal Investigator in place of the Principal Investigator
subject to the prior written approval of the Company, which shall not
unreasonably be withheld.
|
4.
|
The
Term of the Agreement
|
|
4.1
|
Subject
to the terms of this Agreement, the Term of the Agreement shall be the
duration of the Trial as defined in the Trial Protocol, which shall
commence on
and end upon completion of the Trial; provided, however, that the rights
and obligations under Sections 5.6, 6, 8, 9, 10, 11, 12 and 15 shall
survive the termination or expiration of this
Agreement.
|
|
4.2
|
Notwithstanding
the aforesaid in sub-section 4.1 above, but subject to the provisions that
survive termination, the Parties may bring this Agreement to an early end
at any time, in writing, upon the occurrence of one (or more) of the
following events: -
|
|
4.2.1
|
by
the Company only, at any time at its sole discretion, by way of a written
notice to the Fund, thirty (30) days in
advance.
|
|
4.2.2
|
if
the Ministry of Health has voided, directly or indirectly, its approval of
the Trial or has conditioned its approval on conditions, as to which the
Fund has notified the Company that it does not intend and/or is unable to
comply with these conditions in whole or in part. In such case the
Agreement shall be terminated not later than ten (10) days after such
notice shall have been sent to the
Company.
|
|
4.2.3
|
A
Party breaches this Agreement and does not cure such breach within thirty
(30) days after having received a notice in writing from the other Party
demanding a cure of the breach in reasonable detail so that the breaching
Party is on notice of the nature of the
breach.
|
|
4.2.4
|
A
party enters into bankruptcy or liquidation proceedings or a receiver is
appointed over part or all of its assets, and such proceedings are not
ceased within a period of forty five (45) days from the time that they
have commenced.
|
|
4.2.5
|
An
adverse effect occurs to the Participants in the Trial, which, in the
absolute discretion of the Fund and/or the Principal Investigator and/or
the IRB, jeopardizes the safety of the Participants in the Trial and/or
the Trial Personnel, and prior notice thereof is given immediately to the
Company by any member of the Trial Personnel and the Principal
Investigator within a reasonable time from the discovery of such adverse
effect. In such case the Agreement shall be terminated immediately after
such notice shall be sent.
|
|
4.3
|
For
the avoidance of any doubt, the termination of this Agreement, for any
reason, shall not prejudice the Company’s undertaking to pay the Fund for
all services and expenditures of the Fund under this Agreement until the
termination of the Agreement.
|
5.
|
The
Trial
|
|
5.1
|
The
Company shall supply to the Principal Investigator the Products and/or
parts of the Product and/or the materials from which the Product is
composed, without consideration, at the necessary pharmaceutical standard,
all in accordance with the schedule and in the quantities provided in the
Trial Protocol.
|
|
5.2
|
The
Trial shall be performed and managed by the Principal Investigator at the
Hospital facilities, while making use of the Hospital’s resources, without
payment of further consideration by the Company
therefore.
|
|
5.3
|
The
Principal Investigator shall carry out the Trial in accordance with the
Trial Protocol, GCP, and all the relevant laws and regulations prevailing
in Israel and in accordance with all necessary permits and/or licenses
from the relevant authorities.
|
|
5.4
|
In
performance of the Trial, the Fund shall employ, directly or indirectly,
the Trial Personnel, which will comprise the individuals specified in the
list appended herewith and marked as Appendix B to this Agreement. In the
event that any of the Trial Personnel so identified cease to be available
for the Trial, the Fund will use its best efforts to procure within 30
days a substitute of a suitably qualified person acceptable to the
Company. The Fund and the Principal Investigator represent and warrant
that none of the Trial personnel has been debarred, disqualified or banned
from conducting clinical studies by any regulatory agency, including the
Israeli Ministry of Health and the U.S. Food & Drug Administration. In
the event that prior to or during the Trial, the Fund or the Principal
Investigator become aware that any of the Trial Personnel becomes
disbarred, or is in the process of disbarment, the Fund will immediately
notify the Company in writing and the Fund will procure within 30 days a
substitute of a suitably qualified person acceptable to the
Company.
|
|
5.5
|
Subject
to the provisions of sub-section 11 below, the representatives of the
Company shall have the right to examine the results, notes and other
documents and representations obtained during the course of the Trial,
during regular working hours and confidentially inspect the Principal
Investigator’s and the Hospital’s facilities required for performance of
the Trial, after providing advanced written notice and at a reasonable
time.
|
|
5.6
|
In
performance of the Trial, pursuant to this Agreement, the Company
undertakes to continue to supply the Product to the Fund and/or the
Hospital, without consideration, in order to complete the commenced
treatment of the Participants of the Trial at the Principal Investigator’s
sole and reasonable discretion, or as part of the Trial Protocol, should
one of the Participants of the Trial become dependent on the
Product.
|
|
5.7
|
Notwithstanding
the Company’s undertakings under this Agreement, the Company undertakes to
abide by all the relevant laws and regulations prevailing in Israel and in
accordance with and after all necessary permits and/or licenses from the
relevant authorities, as are presented to it by the
Fund.
|
6.
|
Reporting and
Follow-Up
|
|
6.1
|
The
Principal Investigator shall meet with the representatives of the Company,
during the customary working hours and to a reasonable extent, in order to
report to the Company, on an ongoing and consecutive basis, and in order
to update the Company in all matters related to the performance of the
Trial, its progress, difficulties, solutions, etc. The Principal
Investigator shall promptly advise the Company of any serious adverse
event or unanticipated effect occurring during the Trial, or subsequent to
the completion or termination of the Study, that becomes known to
him.
|
|
6.2
|
The
Principal Investigator shall prepare and maintain reasonably complete and
accurate written records, accounts, notes, report and data of the Trial,
including case report forms. The Principal Investigator shall prepare the
case reports forms (CRF) legibly and accurately (or ensure that a
co-Investigator does so) throughout the Trial, and shall make the CRF
available to the Company. The Principal Investigator will retain or will
cause the Fund to retain all such materials and data that the Fund has to
retain under any applicable law for such periods as such law
determines.
|
|
6.3
|
The
Principal Investigator hereby undertakes to adhere to the accuracy of the
Trial results as required by the Helsinki Declaration and the
GCP.
|
7.
|
Financing of the
Trial
|
|
7.1
|
In
consideration for the performance of the Trial under this Agreement, the
Company shall pay the Fund the consideration specified in Appendix C to
this Agreement on the dates specified in Appendix C. Such payments shall
be made against a proper invoice render a reasonable time in advance of
the due date for the payment.
|
|
7.2
|
To
avoid any doubt, it is hereby clarified that the Fund and/or the Principal
Investigator shall not perform any acts which deviate from the acts
specified in the Trial Protocol and/or are specifically mentioned in this
Agreement unless the Fund and the Company have both approved said acts, in
advance and in writing.
|
8.
|
Insurance
and Indemnity
|
|
8.1
|
The
Company shall indemnify and hold harmless the Hospital, the Fund, the
Principal Investigator, the Trial Personnel and all other employees of the
Hospital and the Fund (hereinafter: the “Indemnitees”) from and against
any loss, damage, liability and expense (including legal costs) arising
out of or resulting, directly or indirectly, from the use of the Products
and/or any other materials which have been supplied by the Company and/or
from conducting the Trial in accordance with the Trial Protocol, except to
the extent that such loss, damage, liability or expense are a result of
the negligent acts, willfulness, misconduct or breach of contract of any
of the Fund, the Principal Investigator or the Trial
Personnel.
|
|
8.1.1
|
The
indemnity shall not apply in case of claims or losses arising from a
breach of the Trial Protocol, GCP, Helsinki Declaration, National Health
Regulations, and/or any other applicable law or regulation relating to the
Trial.
|
|
8.1.2
|
The
Company will be notified promptly and in writing of any complaint or claim
promptly after the Fund becomes aware of the
same.
|
|
8.1.3
|
The
Company will be given absolute and sole discretion in the defense and
settlement of any such complaint or
claim.
|
|
8.1.4
|
The
Fund shall cooperate with and give the Company reasonable assistance in
connection with any such claim or proceedings at Company’s cost and
expense, and shall consent to any reasonable settlement of such complaint
or claim approved by the Company.
|
|
8.2
|
Without
derogation from Company’s liability under this Agreement and/or under any
applicable law, including the Ministry of Health Directive, Company
undertakes to present the Fund an Insurance Certificate according to the
law of Israel and the Guidelines of the Ministry of Health. The
Certificate will specifically include the following
provisions:
|
|
8.5.
|
The
Company hereby undertakes that any and all settlements of indemnification
claims hereunder by the Company and/or its insurers will be free of
admission of any liability whatsoever on the part of the
Indemnitees.
|
|
8.6.
|
The
Company’s undertaking under this section shall survive termination of this
Agreement for whatever reason.
|
9.
|
Limitation of Liability.
The Parties agree that the Parties shall be liable for direct
damages only and that no Party shall be liable for indirect, incidental or
consequential damages in connection with the
Agreement.
|
10.
|
Intellectual
Property
|
11.
|
Exploitation of the Trial
Results
|
12.
|
Confidentiality
|
|
12.1
|
The
Fund and the Principal Investigator undertake to keep, and shall cause all
other Trial Personnel to keep, in absolute confidence, not to transfer or
disclose to any person and/or entity and not to make any use, other than
for purposes of the performance of the Trial, any information, data,
inventions, conceptions, results, or know-how, whether orally or in
writing, which shall come into their possession in relation to and/or in
connection with the Trial, the Trial Results and/or the Product and/or the
IP (hereinafter - the Confidential
Information).
|
|
12.2
|
It
is hereby clarified that submission of the Confidential Information
pursuant to the demands of the authorities operating by virtue of the law
and according to their authority, after prior written notice has been
delivered with respect to same to the Company, as well as the exposure of
Confidential Information, after it has become public domain, but not as a
result of its being published in a patent application or granted patent,
and not as a result of the acts and omissions of the Hospital, the Fund,
the Principal Investigator and/or any other Trial Personnel, shall not be
considered a breach of this
Agreement.
|
|
12.3
|
At
the request of the Company, the Principal Investigator or the Fund, as the
case may be, will return to the Company all copies or other manifestations
of Confidential Information that may be in the possession of the Principal
Investigator or the Fund, except for materials that have to be retained by
the Principal Investigator or the Fund in accordance with applicable
law.
|
13.
|
Publications
|
|
13.1
|
The
Principal Investigator and the Fund hereby undertake to submit to the
Company all drafts of any publications proposed for publication by the
Principal Investigator, no later than sixty (60) days prior to the
submission of any form of such publication or drafts thereof to any
journal, publisher, and/or any other third
party.
|
|
13.2
|
The
Company hereby undertakes to promptly inform the Principal Investigator
and the Fund of any changes and/or deletions the Principal Investigator is
to perform in such publications, required for the purpose of preserving
the confidentiality and proprietary rights of the Company under this
Agreement. It is agreed that the Principal Investigator and/or the Fund
shall not make any publication of information to which the Company objects
under this sub-section 12.2.
|
|
13.3
|
Without
derogating from the above, the Company hereby undertakes to abide by the
rules of publications issued by the Ministry of Health including and
without limitation the Guidelines for the Conduct of Clinical Trials in
Human Subjects issued by the Israeli Ministry of Health in 2006, or any
guidelines issued in addition thereto or in substitution
thereof.
|
|
13.4
|
As
a condition for performing the Trial, the Company shall be responsible for
publishing the Trial in the NIH web sites in accordance with the
instructions of the General Manager of the Israeli Ministry of Health
published in 4/9/05.
|
14.
|
Relations of the
Parties
|
15.
|
Suspending
Conditions
|
|
15.1
|
Approval
of the Trial Protocol by the IRB and/or by the Ministry of Health, if
required by the National Health
Regulations.
|
|
15.2
|
Approval
of this Agreement in general and its Budget by the Ministry of Health and
specifically by the Contracting Committee of the Ministry of
Health.
|
|
15.3
|
Pursuant
to section 8.5 of this Agreement, a written Confirmation of Insurance
shall be provided to the Fund.
|
16.
|
Governing Law and
Jurisdiction
|
|
16.1
|
This
Agreement shall be exclusively governed by the Laws of the State of
Israel.
|
|
16.2
|
Any
dispute, controversy or claim arising under, out of or relating to this
Agreement (and subsequent amendments thereof), its validity, binding
effect, interpretation, performance, breach or termination, including tort
claims, shall be exclusively referred to the competent courts in Tel Aviv,
Israel.
|
17.
|
Non-Waiver of
Rights
|
18.
|
Endorsement, Assignment and
Transfer
|
19.
|
Cooperation between the
Parties
|
20.
|
Force
Majeure
|
|
20.1
|
Notwithstanding
the aforesaid in this Agreement, a delay in the performance of an
obligation imposed on any Party due to an event which falls under the
definition of the term “Force Majeure” shall not be considered a breach of
the Agreement, and performance of the said obligation shall be deferred
until a date when the hindrance is removed, whereas the schedule will be
amended accordingly, unless the performance has become, due to the delay,
unreasonable under the circumstance of the
matter.
|
|
20.2
|
For
purposes of this Agreement, the term “Force Majeure” shall mean acts of
war, acts of terror, sabotage, general conscription, decisions of legal
tribunals (including injunctions, whether temporary or permanent), the
acts and omissions of an authority operating pursuant to law, statute,
strikes, state of emergency at the Hospital, and general stoppage of the
economy, natural disasters and other events that are not under the
reasonable control of the Party alleging the occurrence of the “Force
Majeure” event if that same Party alleging the occurrence of the said
“Force Majeure” event has taken all reasonable measures to prevent their
occurrence and/or continuance.
|
21.
|
Interpretation
|
|
21.1
|
Any
change or addition to this Agreement shall be made in writing and with the
signatures of all of the Parties affected by said change or addition
only.
|
|
21.2
|
In
the event it is determined that any provision of this Agreement - which
does not constitute a material and basic term herein - is invalid, illegal
or unenforceable, this will be insufficient to cause the avoidance of the
rest of the provisions of this Agreement and/or to affect the validity,
legality or the possibility of the enforcement of the rest of the
provisions, as stated.
|
|
21.3
|
This
Agreement shall replace any prior binder, representation, engagement,
arrangement or agreement between the parties, the subject matter of which
is the Trial, and voids them to the extent that they
exist.
|
22.
|
Notice and
Addresses
|
|
22.1
|
The
addresses of the Parties for purposes of this Agreement shall be:
-
|
|
22.2
|
A
Party who shall change its address will submit notice of the same within a
reasonable time to the other
Parties.
|
|
22.3
|
A
notice that must be submitted pursuant to this Agreement will be delivered
to the Parties at the addresses specified above, by personal
delivery.
|
|
22.4
|
Any
notice submitted in accordance with this section shall be considered as if
delivered to its address after the passing of one business day from the
date on which receipt has been
confirmed.
|
/s/
Andrew L. Pearlman
|
/s/
Raz Tabib
Raz Tabib
General Manager
Research & Development Fund
Tel-Aviv Sourasky Medical Center
Israel
|
/s/
Doron
Schwartz
Doron
Schwartz,
MD
Tel-Aviv Sourasky Medical Center
Israel
|
||
The
Company
|
|
The
Fund
|
|
The
Principal
Investigator
|
1.
|
Dr.
Doron Swartz – Principle
Investigator
|
2.
|
Dr.
Gil Tzarnin – sub Principle
Investigator
|
3.
|
Prof.
Don Silverberg – sub Principle
Investigator
|
4.
|
Ofer
Rap – Site Study Coordinator
|
Ichilov
Budget
|
||||||||||||
Itemized per patient fees:
|
Quantity
|
ea.
|
Total
|
|||||||||
Sub
Investigator
|
1 | $ | 2,300 | $ | 2,300 | |||||||
Sub
Investigator
|
1 | $ | 1,725 | $ | 1,725 | |||||||
Sub
Investigator
|
1 | $ | 1,725 | $ | 1,725 | |||||||
Plastic
surgeon (per procedure)
|
2 | $ | 575 | $ | 1,150 | |||||||
Operating
room nurse (per procedure)
|
2 | $ | 173 | $ | 345 | |||||||
Per
Patient subtotal
|
$ | 7,245 | ||||||||||
Extended
follow-up - per month per patient
|
1 | $ | 575 | $ | 575 | |||||||
Screening
without enrollment (per patient)
|
1 | $ | 575 | $ | 575 | |||||||
Patient
reimbursement (estimated per patient)
|
$ | 2,000 | $ | 2,000 |
|
1.
|
On
receipt of invoice, Net +30 days
|
|
2.
|
For
each patient recruited into the trial, the Company will be
invoiced:
|
|
a.
|
60%
at patient enrollment
|
|
b.
|
40%
at patient termination (or completion of 6 months of
follow-up)
|
|
c.
|
Extended
follow-up: invoiced on a quarterly
basis
|
|
d.
|
Patient
reimbursement will be charged to the Company without overhead, invoiced on
a quarterly basis
|
1.1
|
The
preamble to this Agreement and the Schedules thereto form an integral part
thereof. In the event of a contradiction between the provisions of this
Agreement and the Schedules, the provisions of this Agreement shall
prevail.
|
1.2
|
Headings
of clauses of this Agreement are intended for orientation only and shall
not be used for the purpose of
interpretation.
|
1.3
|
The
capitalized terms specified below shall have the following
meaning:
|
1.3.1
|
The “Work Sheet”
shall
mean a detailed sheet specifying the precise manner in which the Work
shall be performed at the LAB, which shall include, among others, the
Company’s SOPs. Such Work Sheet and any amendment thereto shall be subject
to the prior approval of the SOG with respect to the GMP related aspects.
Such approval shall not be
construed
|
1.3.2
|
The “Company’s Supervisor”
shall mean Dr. Baruch Stern and other Company employees trained
according to section 4.4 herein, or such other person designated by the
Company [and reasonably acceptable to Hadasit], with sufficient background
in the Company’s technology.
|
1.3.3
|
The “Company’s Contact Person”
shall mean Dr. Baruch Stern and Dr. Avi Rimler, or another person
which may be designated by the Company subject to Hadasit’s prior
approval, not to be unreasonably
withheld.
|
1.3.4
|
The “Common Areas of the LAB”
shall mean those areas of the LAB that are intended for the use of
all the users of the LAB, including the Company, as set forth herein. Such
areas are rooms no. 2, 3, 6, 7, 8, 10, 11, 12, 15, 17, 18, 19, 20, 24, 26
and 27 in the drawing attached as
Schedule
D
hereto.
|
1.3.5
|
The “Dedicated Lab”
shall mean a class 10,000 laboratory within the LAB, which includes
a class 100 biohazard hood. The Dedicated Laboratory shall be designated
upon commencement of the Work as in the drawing of the LAB attached as
Schedule
D
hereto. The
equipment included in the Dedicated Lab is as specified in
Schedule
D-1
attached
hereto.
|
1.3.6
|
“GMP Standards”
shall
mean the Good Manufacturing Practice regulations determined by the U.S
Food and Drugs Association as shall be updated from time to time and
applied by the Supervisor of
GMP.
|
1.3.7
|
The
“LAB”
shall mean the Hadassah National
Facility operated according to GMP
Standards.
|
1.3.8
|
The “LAB Assistant”
shall mean Dikla Bezalel & Orit Daniel or another employee
designated by Hadasit.
|
1.3.9
|
The “Product”
shall mean
EPODURE (Biopump/hEPO).
|
1.3.10
|
The
“Process”
shall
mean: tissue manipulations for producing
EPODURE.
|
1.3.11
|
“Supervisor of GMP” or “SOG”
shall mean the person in charge of the operation of the LAB to be
designated from time to time by HMO. On the date hereof, Dr. Linda Rasooly
is the Supervisor of GMP.
|
1.3.12
|
“SOPs”
shall mean the LAB’s standard
operation procedures that are set forth in
Schedule
E
hereto.
|
1.3.13
|
“Company’s
SOPs”
shall mean the
Company’s standard operational procedures that were prepared by the
Company and approved by the SOG with respect to GMP related aspects and
are set forth in
Schedule
F
hereto.
|
1.3.14
|
The
“
HMO
Employees
”
:
jointly, shall mean those employees assigned to the conduct of the
Work, who may include the LAB Assistant, the SOG (as set forth in Section
1.3.11 hereto) or additional employees required in the opinion of the SOG
for the conduct of the Work.
|
1.3.15
|
The
“
Work
”
shall mean the production of the Product by the execution of the
Work Plan set forth in
Schedule A
hereto
, by conducting the Process at the LAB in accordance with the
GMP Standards, the SOPs, the Work Plan and the Work
Sheet.
|
1.3.16
|
The
“
Work
Plan
”
- shall mean the plan that specifies the timetables and the
different stages of Work (including specification of the dates in which
the Company's Supervisor attends at the Dedicated Lab), which was prepared
by the Company and approved by Hadasit and which is specified in
Schedule
A
attached hereto, which shall not be amended without Hadasit's prior
written approval, which approval shall not be unreasonably withheld. The
timetables may be changed according to the specific needs of the Work via
mutual agreement. Any delay caused by the Company shall automatically
extend the timetables.
|
1.3.17
|
“
The Work
Period
”
shall mean the term as defined herein and any Extended
Term.
|
3.1
|
Each
of the Parties hereby represents and warrants as to itself as
follows:
|
3.1.1
|
It
has the legal capacity and authority to execute and deliver this
Agreement, to perform hereunder and to consummate the transactions
contemplated hereby without the necessity of any act or consent of any
other person or authority
whomsoever.
|
3.1.2
|
Neither
the execution or the delivery of this Agreement by it nor the closing of
the transactions contemplated hereby is prohibited by or violates any
provision of, and will not result in a breach of, any law, rule or
regulation applicable to it or any undertaking towards a third
party.
|
3.2
|
The
Company hereby also represents and warrants to Hadasit
that:
|
3.2.1
|
It
has all the necessary expertise and knowledge to perform all its
obligations pursuant to this
Agreement.
|
3.2.2
|
That
the Work, the Product and the execution or production thereof according to
the work procedures set forth herein, conform to every law, rule,
regulation, code of conduct, and common practice that may be applicable
and that any such law, rule, regulation, code of conduct or common
practice will be communicated to Hadasit, generally and on a case by case
basis.
|
3.2.3
|
That
it has reviewed the LAB's procedures and SOPs and found them adequate and
satisfactory for the purpose of the Work and this
Agreement.
|
3.2.4
|
That
the conduct of the Work hereinunder shall not create any interruption with
the regular course of the operation of the LAB nor shall it cause any
hazard to HMO's and/or Hadasit's premises, equipment, personnel, other
materials or other products.
|
3.2.5
|
That
the Company retains all intellectual property rights in the Process, the
Work and the Product; that to the Company's knowledge the Company is not
in breach of the intellectual property rights of any third party; that in
performing its obligations under this Agreement, the Company is not
breaching the provisions of any law and/or the rights of any third
party;
|
3.3
|
Hadasit
hereby also represents and warrants to the Company
that:
|
3.3.1
|
It
has all the necessary expertise and knowledge to perform all of its
obligations
pursuant to this Agreement and that its actions hereunder will conform to
every law, rule, regulation, code of conduct, and common practice that may
be applicable including, without limitation, GMP Standards, SOPs, the Work
Sheet, the Company's SOPs and the Work Plan, the provisions of this
Agreement and HMO's procedures and
regulations.
|
4.1
|
The
SOG, the LAB Assistant or other HMO Employees as defined below and the
Company's Supervisor(s) and/or the Company's employees shall execute the
Work Plan in compliance with the SOPs, the Work Sheet and the Work Plan,
the GMP Standards, the provisions of this Agreement and HMO's procedures
and regulations. Unless otherwise expressly specified, each party shall be
liable for the performance of its own personnel, as well as for breaches
of the Work Sheet, the SOPs, the Work Plan or this Agreement or to the
negligence or intentional misconduct
thereof.
|
4.2
|
The
Work shall be conducted by the Company's employees headed by the Company's
Contact Person and with the assistance of the LAB Assistant under
supervision of the SOG. In addition, the SOG may approve that the
Company's Supervisor(s) participates in the Work, as set forth herein in
section 4.5, such approval not to be unreasonably withheld. The SOG's
contribution to the conduct of the Work (other than supervision) shall be
based on the actual needs of the Work as shall be determined by the SOG at
her discretion. The SOG may assign to the Work other HMO Employees if in
her opinion they are required for the Work, and provided they are
qualified under the Company's Training as set forth
below.
|
4.3
|
Company's
Training
: The Company shall train the SOG and the LAB Assistant
(and such other HMO Employees as the SOG deems fit) in order to qualify
them to conduct whatever portions of the Work is agreed between the
Company and the SOG from time to time. After the Company's Training is
completed, the Company shall test the HMO Employees' knowledge of such
materials and approve the commencement of said Work by such persons.
Hadasit shall not involve in said Work any of HMO employees that are not
trained by the Company as aforementioned. Hadasit, HMO, the SOG and any of
HMO's Employees who were trained by the Company shall not be held liable
for any act or omission that was done by them in compliance with said Work
and the Training.
|
4.4
|
|
|
|
4.5
|
As
part of the Work, the Company shall provide the LAB with human body
tissues
(
“
Tissues
”
)
that need to be manipulated at
the LAB. The SOG may refuse to work with any such Tissues if in her
professional opinion they are hazardous to the LAB. It is clarified that
Hadasit does not undertake that any of the Tissues to be provided by the
Company shall be found suitable for use in the LAB, without derogating
from Hadasit's rights
hereunder.
|
4.6
|
|
4.7
|
|
4.8
|
|
4.9
|
|
4.10
|
|
4.11
|
|
5.1
|
|
5.2
|
|
5.2.1
|
The
Work shall be conducted by the Company's Employees during the
LAB's
normal business days and hours (Sunday through Thursday from 8:00am until
16:00pm)
(
“
Standard
Working Hours
”
),
unless the Work requires
other days (Friday or Saturday) or hours, in which case the Company must
adequately coordinate with the SOG said non-Standard Working Hours. Such
extra effort and the consideration in respect thereof are agreed to by the
parties. The Company is aware that the LAB Assistant is commonly present
during Standard Working Hours only and that the availability may vary,
pending other LAB Assistant's
obligations.
|
5.2.2
|
Company's
Supervisor(s) shall be allowed access to the Dedicated Lab during the
times in which the Company's Employees conduct the Work as set forth in
Section 5.2.1 above. Request will be made for at least two keys to the
outer main entrance of the LAB, to be given to the Company's Supervisor(s)
upon availability.
|
5.2.3
|
At
any given time, not more than 3 qualified persons on behalf of Hadasit and
the Company will be present at the Dedicated Lab with priority to the
required HMO Employee(s).
|
5.2.4
|
|
5.3
|
Access to the
LAB
: The Company's Supervisor(s)'s access to the Common
Areas
of the LAB shall be governed by the SOPs during such times as set forth in
Section 5.2.1 above. The Company's Supervisor(s) shall not enter off-limit
areas without first obtaining the written approval of the SOG, which shall
not be unreasonably withheld.
|
6.1
|
Hadasit
represents that on the date hereof, the LAB and the Dedicated Lab are in
good condition and that during the Work it shall remain in such good
condition, suitable for the purpose of this
Agreement.
|
6.2
|
Nothing
contained herein shall cast upon Hadasit or HMO any liability to purchase
any additional equipment or to upgrade any existing
equipment.
|
6.3
|
As
specified in the LAB SOPs, the Dedicated Lab will be cleaned by HMO
Employees on each day of Work activity. In addition, in the case of Work
activity for multiple patients on a single day, the Dedicated Lab will be
cleaned by a Company's designee after the Work on each patient. In such
cases, the Company will coordinate at least one day in advance with the
SOG and shall incur all associated costs of the cleaning. Company's
cleaning designee shall be guided by the SOG prior to entering the
LAB.
|
6.4
|
To
the extent possible under the circumstances, Hadasit shall use its best
efforts to coordinate with the Company any maintenance that may materially
interfere with the regular course of the
Work.
|
6.5
|
The
Company shall be liable for any damage caused to Hadasit's equipment by
the Company's Supervisor(s) or due to the breach of the provisions of this
Agreement by the Company.
|
6.6
|
The
Company Employees shall be responsible for the Dedicated Lab cleaning at
the end of a working day that ends off-Standard Working
Hours.
|
7.1
|
Hadasit
shall be entitled to amend the SOPs and the Company shall adjust the Work
to any such amendment(s). However, prior to any such change, Hadasit shall
inform the Company thereof, and as to the Effective Date at which time it
shall be effectuated, and grant to the Company a review period of at least
30 days. At the end of such review period, the Company may either (i)
notify Hadasit of the termination of the Agreement as of the Effective
Date or (ii) inform Hadasit of its acceptance of the change, in which case
the SOG shall train the Company's Supervisor if needed and this Agreement
shall apply
mutatis
mutandis.
If the Company does not respond to Hadasit's notice of
the anticipated amendment, it shall be deemed to have accepted
it.
|
7.2
|
At
its discretion, Hadasit may require the Company to amend the Company's
documents (including without limitation: the Work plan, the Work Sheet,
the Company's SOPs or other documents related to the Work) in order to
ensure that they comply with the SOPs or with the GMP Standards. In such
event, the procedures set forth in Section 7.1 shall apply,
mutatis mutandis.
However, for as long as the Company's documents and/or procedures
are not amended as aforementioned, Hadasit shall be entitled to freeze the
Work until such amendment is effectuated. The aforementioned is not
designed to cast on Hadasit any further liabilities under this
Agreement.
|
7.3
|
The
Company may from time to time change the Work Plan, the Company's SOPs and
the Work Sheet, provided however that such change is coordinated with the
SOG and approved by Hadasit and the SOG prior to any implementation
thereof, which approval shall not be unreasonably
withheld.
|
8.1
|
The
Company's and HMO's employees shall keep such records, manage such
documentation and report to the SOG or to the Company, all as set forth in
the SOPs and the Work Sheet.
|
8.2
|
Without
derogating from the Company's undertakings hereunder, during the entire
Work Period, including any extension thereof, the Company shall promptly
notify the SOG of the occurrence of any of the
following:
|
8.2.1
|
Any
event that requires notification of the SOG under the SOPs or the
Company's SOPs.
|
8.2.2
|
Any
other event that is significant or is not in the regular course of events
or might cause any hazard or damage or contamination or interruption to
the LAB and its users.
|
8.3
|
The
Company shall fill in and file any form and report required under the
SOPs.
|
8.4
|
Hadasit
shall promptly inform the Company of any event within its knowledge
which
reflects problems, errors and deviations associated with the conduct of
the Work at the LAB.
|
8.5
|
The
Company shall not be charged for Agreement periods during which it
is
impossible
to use the LAB if such impossibility was directly caused by conditions in
Hadasit's or HMO's control or within their responsibility (such as
strikes, construction works, failure of the LAB systems, etc.). Under the
above circumstances, The Company shall in good faith use its best efforts
to take the required actions for it to renew the
Work.
|
10.1
|
Hadasit
and the Company shall be responsible for providing those items and
materials listed in
Schedule
H
hereto opposite
their name (the
“
Materials
”
).
|
10.2
|
The
Company hereby warrants that any of the Materials provided or to be
provided by it hereunder is suitable for use under GMP
Standards.
|
10.3
|
The
Materials supplied by the Company shall be stored in the LAB, according to
Hadasit's SOPs at no additional charge, and according to the
manufacturer's recommendations, should there be any. For Materials
supplied by the Company which need refrigerated storage or frozen storage,
dedicated storage space in a refrigerator/freezer shall be provided for
use by the Company.
|
13.1
|
Subject
to sections 13.2 and 13.3 hereto, the Product, the Process and all data
obtained in the performance of the Work and all results derived therefrom
and
|
|
13.2
|
Hadasit
and its employees hereby assign and transfer to the Company any and
all
right,
title and interest in such Proprietary Data and agree to take all further
acts
reasonably
required, at the Company's expense, to convey title in such
property
to
the Company and/or to assist the Company to perfect and protect such
rights.
|
|
|
13.3
|
In
the event that Hadasit's reasonable assistance is required in order to
enable the Company to perfect or protect the Company's rights in the
Proprietary Data, Hadasit and the SOG shall, at the Company's expense,
reasonably provide the Company with such assistance provided, however,
that such assistance does not cause the disclosure or infringement of the
LAB's confidential methods/procedures, proprietary information and/or
other intellectual property
rights.
|
13.4
|
For
purpose of this Section 13.4, the Company's Confidential Information shall
mean all Proprietary Data, information, and Materials furnished to Hadasit
by the Company whether in writing or orally or in any other media for
purposes of the Work.
|
13.5
|
The
Company shall maintain in strict confidence any and all
information
disclosed
to its employees, agents and other personnel including the Company
’
s
Supervisor(s)
whether in writing or orally or in any other media with respect
to
the
LAB's methods, procedures, know-how, equipment and/or any other
business
secrets
or information that are confidential in their nature
(
“Hadasit
Information”
).
The foregoing confidentiality
obligations shall not apply to
Information
that: (i) is at the time of disclosure in the public domain, or
(ii)
becomes
part of the public domain thereafter other than through a violation by
the
|
14.1
|
Any
publication by Hadasit with respect to the Work, Product or Process shall
require prior written approval of the Company, which approval shall not be
unreasonably withheld. In any such publication, Hadasit shall include
appropriate acknowledgement of the
Company.
|
14.2
|
Subject
to Section 14.3 hereto, the Company shall include appropriate
acknowledgement and credit to HMO, the LAB and the SOG in any publication
relating to the Work in whichever media it is
utilized.
|
14.3
|
Notwithstanding
anything to the contrary herein, the Company shall not use the names of
Hadasit, HMO or the SOG without Hadasit's prior written
approval.
|
15.1
|
The
Company warrants and confirms that it has prepared the Work Plan and the
Work Sheet including without limitation the manufacturing instructions,
the Company's SOPs and the Product Specifications and that it is solely
and exclusively responsible for the
same.
|
15.2
|
The
sole responsibility of Hadasit and the HMO Employees shall be to conduct
the Work in compliance with the SOPs and the Work Sheet and this
Agreement. Except as expressly set forth herein, Hadasit and/or HMO shall
not have any liability or responsibility whatsoever with respect to the
Product, the Work, any accompanying materials or any use thereof. Without
derogating from the foregoing, Hadasit and/or HMO and/or the SOG shall not
bear any responsibility for the use or failure of the Work's products and
results and shall not be liable for any act and/or omission on the part of
the Company and/or Company's Supervisor(s) in carrying out the
Work.
|
15.3
|
Disclaimer
of Warranty
. Without derogating from the aforementioned, Hadasit
disclaims all warranties, either express or implied, with respect to the
Work and the Product, including without limitation implied warranties of
merchantability, efficacy and fitness for a particular purpose. The entire
risk arising out of the performance of the Work and the Product and the
use of the results and products of the Work and any accompanying materials
remains solely with the Company, and the Company shall be solely
responsible for any use of the Work and/or the
Product.
|
15.4
|
Exclusion
of consequential
damages
.
Neither party shall be liable (whether under contract, tort (including
negligence) or otherwise) to the other party, or any third party for any
indirect, special or consequential damages, including, without limitation,
any loss or damage to business earnings, lost profits or goodwill and lost
or damaged data or documentation, suffered by any person, arising
from
|
15.5
|
Limitation
of Liability
.
Without derogating from the above, if Hadasit is found liable
(whether under contract, tort (including negligence) or otherwise), the
cumulative liability of Hadasit for all claims whatsoever related to the
Work or the Product or otherwise arising out of this Agreement, shall not
exceed the amounts actually paid to Hadasit under this
Agreement.
|
15.6
|
Indemnification;
legal defense
.
The Company shall indemnify, defend and hold harmless HMO, Hadasit,
the SOG, the HMO Employees engaged in the Work (each, an
“
Indemnitee
”
),
promptly upon their first
demand, from and against any loss, damage, liability and expense
(including legal costs) in connection with any third party arising out of
or resulting from the performance or production of the Work or the Product
or any accompanying materials or the use of the Product or the Work or the
results or products thereof or of any accompanying materials, including
damages suffered by Hadasit's or HMO's employees as a result of their
exposure to the Process or Product or Materials introduced by the Company
for the purpose of the Work. The indemnification undertaking under this
Section 15.6 shall be subject to the
following:
|
15.6.1
|
That
the respective damage was not caused by the negligence or intentional
misconduct of an Indemnitee. In the event of mutual responsibility, the
indemnification shall be proportionally
reduced.
|
15.6.2
|
That
the Company is notified in writing as soon as practicable under the
circumstances of any complaint or claim potentially subject to
indemnification and that the Indemnitees cooperate with the Company, at
its expense, with respect to such
claims.
|
15.7
|
A
condition precedent for this Agreement to become effective shall be that
the
Company
purchases an insurance policy with such coverage satisfactory
to
Hadasit
(the
“
Policy
”
).
The Company undertakes to maintain such insurance
during
the term of this Agreement and for such relevant periods under
the
applicable
statute of limitations. With respect to the insurance Policy, the
parties
have
agreed as follows: (i) the types of insurance coverage under the Policy
and
the
amounts thereof shall be as detailed in
Schedule
J
hereto. (ii) HMO
and
Hadasit
will be included as co-insured in such insurance Policy. (iii) for as
long
as
the Company maintains such Policy, the Company's liability towards
Hadasit,
HMO
and the Indemnitees (collectively), with respect to the performance of
this
Agreement,
shall be limited to US$ 3,000,000. On the date hereof, the
insurance
policy
maintained by the Company is as detailed in
Schedule
J
hereto.
|
16.1
|
This
Agreement shall commence on the date hereof and shall continue for a
period of up to four (4) months after the commencement of the Work at the
LAB, unless earlier terminated in accordance with the provisions of this
Section 16 (the
“
Term
”
).
The Company shall be entitled
to extend this Agreement on a monthly basis (the
“
Extended
Term
”
)
upon written notice to Hadasit
of at least 30 days
|
16.2
|
This
Agreement shall terminate upon the completion of the Term or the Extended
Term (as applicable). Notwithstanding the foregoing, each party may
terminate this Agreement at any time, at its sole discretion, upon 30 days
prior written notice to the terminated
party.
|
16.3
|
Either
party may terminate this Agreement upon the occurrence of any of the
following: (a) the filing of a petition for the winding-up or liquidation
of the other party or for an appointment of a receiver, and such petition
has not been withdrawn, dismissed or struck out within 21 days of its
filing (b) the breach by a party of this Agreement that is not cured
within fifteen (15) days of delivery of a written notice from the
non-defaulting party to the defaulting party calling upon it to cure such
breach. In addition, Hadasit may terminate the Agreement upon a delay of
more than 10 days in the Payment, provided 10 day prior notice has been
given to the Company regarding any failure to make such payments. The
aforementioned shall not derogate from any other remedy that the parties
are entitled to under law.
|
16.4
|
As
it receives all the payments due under this agreement, Hadasit shall
forward to the Company the Proprietary Data in its possession. However,
Hadasit shall be entitled to retain copies of all documents and data
relating to the functioning of the LAB, including, without limitation,
batch records, microbiological testing, total particle counts, printouts
from the computerized control system, and such other documents and data to
be determined by the SOG at its sole
discretion.
|
16.5
|
Within
five (5) days from the termination of the Agreement, the Company shall
vacate Hadasit's or HMO's premises, including without limitation the LAB
and its surroundings, and any failure to do so shall cast upon the Company
the obligation to continue paying the Payments for any such time until
complete evacuation. In the event the Company breaches its undertaking
hereunder, Hadasit shall be entitled at its sole discretion and without
derogating from its other remedies under law to vacate the Company's
belongings from the LAB by itself, and the Company shall reimburse Hadasit
for its costs in this regard.
|
16.6
|
The
undertakings contained in Sections 3, 6.8, 9, 11, 13, 14 and 15 shall
survive the termination of this
Agreement.
|
17.1
|
Neither
party may assign in whole or in part any of its rights or obligations
under this Agreement, without the prior written consent of the Company.
However, Hadasit may assign its rights for the Payment to any third party
whatsoever without obtaining such
approval.
|
17.2
|
This
Agreement is the entire agreement between the parties as to the subject
matter contained herein and supersedes all other agreements, oral and
written,
|
17.3
|
Neither
party is authorized to represent the other party or act as its agent or
undertake obligations on its
behalf.
|
17.4
|
The
waiver by either party of any breach or alleged breach of any provision
hereunder shall not be construed to be a waiver of any concurrent, prior
or succeeding breach of said provision or any other provision
herein.
|
17.5
|
If
any provision of this Agreement is held to be void, the remaining
provisions shall remain valid and shall be construed as to achieve their
original purposes in full compliance with the applicable
laws.
|
17.6
|
This
Agreement and its interpretation, execution and termination shall be
governed by the laws of the State of Israel, and the competent courts in
the District of Jerusalem shall have exclusive jurisdiction with respect
to this Agreement and everything connected thereto and/or stemming
therefrom.
|
17.7
|
Force Majeure
.
Neither party shall be liable for any delay or failure to perform
hereunder due to floods, riots, strikes (in which case Section 8.5 shall
apply), freight embargoes, acts of God, acts of war or hostilities of any
nature, laws or regulations of any government (whether foreign or
domestic, federal, state, county or municipal) or any other similar cause
beyond the reasonable control of the party affected. A party relying on
such an event to excuse its performance hereunder shall immediately notify
the other party in writing of the nature of that event and the prospects
for that party's future performance and shall thereafter, while that event
continues, respond promptly and fully in writing to all requests for
information from the other party relating to that event and those
prospects. If performance by either party is delayed more than thirty (30)
days due to such event or series of events, the other party may terminate
this Agreement, effective immediately, without
liability.
|
/s/ Andrew L. Pearlman | /s/ ILLEGIBLE | |
Company
|
Hadasit
|
|
By
: ANDREW L. PEARLMAN
|
By
: ILLEGIBLE
|
|
Title
: CEO
|
Title
:
|
Day
number
|
GMP
room
use
|
Procedure
description
|
Working
time at GMP
|
0
(Harvest
day)
|
+
|
Fat
tissue and stratum cornea removal from micro organs that were harvest in
operation room.
Introduce
micro organs into culture in 24 well plates.
|
120
minutes
|
1
|
+
|
Transduce
micro organs with helper dependent Adeno EPO vector.
|
60
minutes
|
2
|
+
|
Viral
vector removal
|
150
minutes
|
3
|
+
|
Transduce
micro organs with helper dependent Adeno EPO vector.
|
60
minutes
|
4
|
+
|
Viral
vector removal
|
150
minutes
|
5
|
-
|
||
6
|
-
|
||
7
|
+
|
Media
change:
Sampling
of the collect medium for
sterility
and secretion and viability
analysis.
|
120
minutes
|
8
|
-
|
||
9
|
-
|
||
10
|
+
|
Media
change:
Sampling
of the collect medium for
secretion
and viability analysis.
|
120
minutes
|
11
(Implantation
day)
|
+
|
Media
collect and micro organ wash:
Sampling
of the collect medium for sterility and viability analysis, and micro
organ
|
120
minutes
|
Protocol
number
|
Protocol
name
|
060001
|
Protocol
For Production Medium Preparation
|
060003
|
Protocol
for Sterilization
|
060009
|
Protocol
for Glucose Assay
|
060010
|
Protocol
for Micoplasma Assay
|
060011
|
Protocol
for Dermal core Biopump production
|
060013
|
Protocol
For Label Preparation
|
060015
|
Release
Criteria SOP for Dermal Core
|
060017
|
Protocol
for hEPO ELISA of Dermal Core BPs
|
060019
|
AminoLab
Pickup Verification Protocol
|
060403
|
Antibiotics
and Serum Aliquots preparation
|
060404
|
Protocol
for viral vector HD-EPO Aliquots
preparation
|
Material
|
Vendor
|
Catalog
no.
|
Medium
|
|
|
Serum
|
||
Saline
|
||
Antibiotics
|
||
Sterile
Pipettor tips (l0ul, 20ul, 200ul, l000ul, 5000ul)
|
||
Cryo-tubes
|
||
Wells
(24-wells, 6-wells)
|
||
Wells
(96-wells) - for ELISA
|
||
Petri
dishes (140mm)
|
||
Syringes
(5ml, 10ml, 50ml)
|
||
Scalpels
|
||
Glucose
test strips
|
||
EPO
ELISA kits
|
||
Non-sterile
pipettor tips (l0ul, 20ul, 200ul, 1000ul)
|
||
50
ml reagent reservoir
|
||
Pipettes
(5ml, 10ml, 25ml)
|
||
Test
tubes (15ml, 50ml)
|
||
Petri
dishes (90mm)
|
||
Eppendorf
tubes
|
||
Material
to be provided by Hadasit:
|
||
Material
|
Vendor
|
Catalog
no.
|
Ethanol
70%
|
||
Sterile
Gloves (different sizes)
|
||
Sterile
Gowns (different sizes)
|
||
Biotest
strips (bacteria and fungus)
|
||
Contact
plates
|
||
Masks
|
||
Hats
and foot covers
|
||
Sterile
water (for water bath and incubators)
|
||
Sterile
non-woven wipes
|
1.
|
In
consideration for the performance of the Work at the LAB by HMO's
Employees, the Company shall pay to Hadasit the total amount of NIS
125,000 (one hundred and twenty-five thousand New Israeli Shekels) plus
VAT (the
“
Payment
”
)
per month during the entire
Work Period including any extension thereof and for as long as the Company
has not completely evacuated Hadasit's or HMO's premises (including
storage of Materials) (the
“
Term
”
).
|
2.
|
Advance
payments totaling NIS 260,000 has been made in advance: NIS 10,000 check
dated March 3, 2010 non-refundable), and wire transfer of NIS 250,000 on
March 22, 2010.
|
3.
|
In the
event the Company cannot perform any of the Work for 30 or more
consecutive days during the Term because of regulatory issues (lack of
approval from the Israeli Ministry of Health for the commencement of the
Study (as defined in the Clinical Trial Agreement)), the Company shall be
entitled to suspend this Agreement for a maximum consecutive period of
four (4) months and shall not have to pay Hadasit any Payment for any of
those days during which it could not perform the Work, provided that the
Company made an advance fourteen (14) days written notice to Hadasit and
vacated the Dedicated Lab and the LAB and its
surroundings.
|
4.
|
The
period of suspension shall not last more than four (4) consecutive months.
The Company may end the suspension period by notifying Hadasit in writing
thirty (30) days in advance that it wishes to return and operate the
Dedicated Lab. At the end of the suspension period, Hadasit shall provide
the Company either the Dedicated Lab or another compatible Dedicated Lab
within the LAB, as may be assigned to the Company by the SOG with the
reasonable consent of the Company. Beyond the four (4) months consecutive
suspension period, Hadasit will work to facilitate, but has no obligation
to provide, the Dedicated Lab or a compatible Dedicated Lab to the
Company.
|
5.
|
The
monthly payment of NIS125,000 plus VAT shall be made on a monthly basis
upon receipt of a tax invoice and by the 5
th
of the month in which the work is performed. The advanced payment will be
deducted from the payment due for the last two months of
work.
|
6.
|
Any
payment pursuant to this Agreement shall be paid, along with applicable
V.A.T under Israeli law, as against Hadasit's issuance of a lawful tax
invoice therefore.
|
7.
|
With
respect to the Company's Training, the Company shall bear any travel and
overnight expenses of the HMO Employees, if caused by the
Company.
|
/s/ Andrew Pearlman
|
|
|
Medgenics,
Inc.
|
Roei-Zohar
Liad
|
1.
|
Introduction
of the Company to potential investors (“Investor/s”). RL shall submit a
list of proposed potential investors for prior approval by Medgenics, to
be appended as EXHIBIT B, and only investors listed in so approved EXHIBIT
B, as updated from time to time, shall be sent materials by or on behalf
of RL, or shall invest in Medgenics under the terms of this Agreement. RL
represents that it is aware that the sale of the securities has not been
registered under the U.S. Securities Act of 1933 (as amended, the “Act”),
and it is intended that the offer and sale of such Securities shall not be
required to be registered under the Act by virtue of the exemption
afforded by Section 4(2) thereof, including, without limitation,
Regulation D. RL agrees that it shall only solicit or approach potential
investors for the Company who have been pre-approved by the Company and
who are non-U.S. persons. All of RL’s activities in connection with the
Company shall occur outside the United States. RL agrees not to use any
form of general solicitation, including, without limitation, through
radio, television or internet, in connection with the Company. RL agrees
and acknowledges that the Company has the right to accept or reject any
potential investor and that only investors who are “accredited investors”
(as such term is defined in Rule 501 promulgated under the Act) will be
considered for acceptance and, accordingly, RL will only solicit or
approach potential investors for the Company that RL reasonably believes
are “accredited investors”. Each prospective purchaser of securities of
the Company will be required to complete and execute all applicable
documents. RL agrees to coordinate and cooperate with Company with respect
to the distribution of all offering materials and the submission of
subscription documents and investment
funds.
|
2.
|
Assisting
Company throughout the process of negotiation with Investors as requested
by the Company.
|
1.
|
TEVA
PHARMACEUTICAL INDUSTRIES LTD
|
2.
|
Dr
Ilan Cohen and associates; and/or Servotronix, LTD.
|
3.
|
Fachagentur
Nachwachsende Rohstoffe (FNR) – Germany
|
1.
|
Company
will pay RL in cash 7% of the cash or cash equivalent consideration
received from an Investor introduced to the Company by RL and listed on
Exhibit B herein in return for the investment accepted by the Company. In
addition, Company will allocate to RL warrants to purchase 7% of all
shares that were received by Investor with an exercise price equal to 110%
of the price per share paid by said Investor, and exercisable for five
years. Said compensation will be paid or issued to RL promptly after
receipt by the Company of said consideration received from the Investor.
The same compensation described above will also be paid to RL for any
future rounds, investment or loan, in which such an Investor participates,
provided said participation occurs in either of the following
cases:
|
|
a.
|
Said
participation occurs within 12 months of the termination or expiration of
this Agreement; or
|
|
b.
|
In
the event that said Investor has participated before the termination or
expiration of this Agreement, said further participation occurs within 18
months of the first
participation.
|
2.
|
Investor
means an entity listed in Exhibit B, or another entity that is
controlling, controlled by or under common control with such Investor and
following the listed Investor’s
action
|
3.
|
In
case that Company would like RL’s employee to join a meeting with a
potential investor outside of Israel, Company will be responsible to cover
all reasonable out of pocket expenses of the trip which shall be
authorized in advance by Company up to an agreed maximum expense of
$5,000.
|
/s/ Andrew Pearlman
|
/s/ Roei-Zohar
Liad
|
|
Medgenics,
Inc.
|
Roei-Zohar
Liad
|
1.
|
Introduction
of the Company to potential investors (“Investor/s”). RL shall submit a
list of proposed potential investors for prior approval by Medgenics, to
be appended as EXHIBIT B, and only investors listed in so approved EXHIBIT
B, as updated from time to time, shall be sent materials by or on behalf
of RL, or shall invest in Medgenics under the terms of this Agreement. RL
represents that it is aware that the sale of the securities has not been
registered under the U.S. Securities Act of 1933 (as amended, the “Act”),
and it is intended that the offer and sale of such Securities shall not be
required to be registered under the Act by virtue of the exemption
afforded by Section 4(2) thereof, including, without limitation,
Regulation D. RL agrees that it shall only solicit or approach potential
investors for the Company who have been pre-approved by the Company and
who are non-U.S. persons. All of RL’s activities in connection with the
Company shall occur outside the United States. RL agrees not to use any
form of general solicitation, including, without limitation, through
radio, television or internet, in connection with the Company. RL agrees
and acknowledges that the Company has the right to accept or reject any
potential investor and that only investors who are “accredited investors”
(as such term is defined in Rule 501 promulgated under the Act) will be
considered for acceptance and, accordingly, RL will only solicit or
approach potential investors for the Company that RL reasonably believes
are “accredited investors”. Each prospective purchaser of securities of
the Company will be required to complete and execute all applicable
documents. RL agrees to coordinate and cooperate with Company with respect
to the distribution of all offering materials and the submission of
subscription documents and investment
funds.
|
2.
|
Assisting
Company throughout the process of negotiation with Investors as requested
by the Company.
|
1.
|
TEVA
PHARMACEUTICAL INDUSTRIES LTD
|
2.
|
Dr
Ilan Cohen and associates; and/or Servotronix, LTD.
|
3.
|
Fachagentur
Nachwachsende Rohstoffe (FNR) – Germany
|
1.
|
Company
will pay RL in cash 7% of the cash or cash equivalent consideration
received from an Investor introduced to the Company by RL and listed on
Exhibit B herein in return for the investment accepted by the Company. In
addition, Company will allocate to RL warrants to purchase 7% of all
shares that were received by Investor with an exercise price equal to 110%
of the price per share paid by said Investor, and exercisable for five
years. Said compensation will be paid or issued to RL promptly after
receipt by the Company of said consideration received from the Investor.
The same compensation described above will also be paid to RL for any
future rounds, investment or loan, in which such an Investor participates,
provided said participation occurs in either of the following
cases:
|
|
a.
|
Said
participation occurs within 12 months of the termination or expiration of
this Agreement; or
|
|
b.
|
In
the event that said Investor has participated before the termination or
expiration of this Agreement, said further participation occurs within 18
months of the first
participation.
|
2.
|
Investor
means an entity listed in Exhibit B, or another entity that is
controlling, controlled by or under common control with such Investor and
following the listed Investor’s
action
|
3.
|
In
case that Company would like RL’s employee to join a meeting with a
potential investor outside of Israel, Company will be responsible to cover
all reasonable out of pocket expenses of the trip which shall be
authorized in advance by Company up to an agreed maximum expense of
$5,000.
|
(1)
|
PROPHARMA PARTNERS LIMITED
a company
incorporated pursuant to the laws of England and Wales and having its
registered office at 5th Floor, Hanover Square, London W1S 1HU,
United Kingdom (hereinafter referred to as “ProPharma”);
and
|
(2)
|
MEDGENICS, INC.
a company having a place
of business at 8000 Towers Crescent Drive, Suite 1300, Vienna, VA 22182,
USA and
|
A
|
ProPharma
is engaged in the business of providing consultancy services to the
pharmaceutical industry in relation to pharmaceutical products and has
considerable skill, knowledge and experience in that
field.
|
B
|
the
Company wishes to engage ProPharma to carry out the Service (as defined
below) and ProPharma has agreed to carry out the Service for the Company
on the terms set forth below
|
1
|
Definitions
|
1.1
|
In
this agreement the following words and phrases shall have the respective
following meanings except where the context requires
otherwise:
|
“Confidential
Information”
|
means
any information oral, visual or written that is disclosed, pursuant to
this agreement, by the Company or its Affiliates to ProPharma or its
Affiliates, employees, contractors or agents including but not limited to
such information and data embodied in the Materials, the content of any
report prepared, advice given or other work product produced hereunder,
any other information generated in the course of provision of the Service
and any information relating to The Company or its Affiliates and their
products, designs, business operations, marketing plans, customer lists,
pricing methods, personnel and organisational
data;
|
“Consultancy
Fee”
|
means
that part of the Total Fee which is calculated in accordance with Schedule
2;
|
“Expenses”
|
means
those travel, subsistence and other out-of-pocket expenses reasonably
incurred by ProPharma in the provision of the
Service;
|
“Materials”
|
means
all tangible materials made available by or on behalf of the Company to
ProPharma in contemplation of or pursuant to this agreement or in the
course of providing the Service;
|
“Service”
|
means
the advisory and consultancy services to be provided by ProPharma to the
Company, full particulars of which are set out in Schedule 1 and the
Appendix hereto;
|
“Total
Fee”
|
means
the total consideration for the performance of the Service being the sum
of the Consultancy Fee and the reimbursement of the
Expenses.
|
1.2
|
The
headings used are only for convenience and shall not affect interpretation
of this agreement.
|
1.3
|
The
terms of this agreement shall be deemed to include the provisions of the
Schedules provided that in all respects the terms and conditions in the
body of this agreement shall override any conflicting or amending
provision contained in any Schedule or
attachment.
|
1.4
|
Reference
to the singular shall include the plural and to masculine shall include
feminine and vice versa.
|
11
|
Notices
|
11.1
|
Any
notice given under or in connection with this agreement by either party to
the other shall be in writing and shall be served by sending the same
by registered post or recorded delivery or by leaving it at the address of
the relevant party specified at the beginning of this agreement or at such
other substitute address of which the parties may give notice from time to
time in accordance with this
clause.
|
12
|
Entire
Agreement
|
12.1
|
This
agreement (including the proposal set out in the Appendix hereto) contains
the entire understanding and agreement of the parties with respect to the
subject matter hereof and supersedes any prior representation or agreement
written or oral. No amendment or waiver of any provision of this agreement
or right arising therefrom shall be effective unless made in writing and
agreed to in writing by an authorised signatory of each
party.
|
12.2
|
If
any provision of this agreement shall be declared illegal or void it shall
be considered severed from this agreement without so far as possible
affecting any other provision
hereof.
|
13
|
Governing Law and
Jurisdiction
|
13.1
|
This
agreement is governed by and shall be construed in all respects with the
laws of England and the parties hereby submit to the jurisdiction of the
English courts.
|
CONSULTANT
|
|
By
|
/s/
Ray Chow
|
RAY
CHOW
|
|
Title:
|
PRESIDENT
|
CLIENT
|
|
By
|
/s/
Andrew Pearlman
|
Title:
|
CEO
|
|
1317 King Street
Alexandria,
VA 22314
P 703-739-5695
F 703-548-7457
Email:
bcg@bcg-usa.com
www.biologicsconsulting.com
|
Address:
|
1317
King Street
|
|
Alexandria,
Virginia 22314
|
TAX
I.D.#:
|
84-1693476
|
Address:
|
P.O.Box
14
|
|
Teradion
Business Park
|
|
D.N.
Misgav 20179
|
|
Israel
|
From:
January 1, 2008
Through:
December 31, 2009
|
1.
|
Scope
of Work
|
|
BCG
shall perform the consulting services for COMPANY described in Exhibit 1
(the “SERVICES”) attached hereto and made a part
hereof.
|
2.
|
Compensation
|
|
COMPANY
shall pay BCG a consulting fee in the amount and on the terms specified in
Exhibit 1 (the “FEE”) attached hereto and made a part
hereof.
|
3.
|
Representations
of BCG
|
|
BCG
represents that its employees have the requisite education, expertise,
experience and skill to render the desired SERVICES and BCG shall perform
the SERVICES in
a
competent and efficient
manner. BCG does not warrant that any particular result will be produced.
BCG shall abide by all laws, rules and regulations that apply to the
performance of the SERVICES, including applicable requirements regarding
equal employment opportunity and the
provisions
|
Version
10, 4/28/2008
|
Page
1 of 8
|
Biologics Consulting Group,
Inc.
|
|
of
Executive Order 11246 and related rules. BCG when on COMPANY premises
shall comply with COMPANY policies with respect to conduct of
visitors.
|
|
BCG
certifies that neither BCG nor any person employed by BCG has been
debarred under Section 306 (a) or 306 (b) of the Federal Food, Drug and
Cosmetic Act {codified at 21 U.S.C. 335(a) and 335(b)} and that no
debarred person will in the future be employed by BCG to perform any
services in connection with any application for approval of a drug by the
Food and Drug Administration. BCG certifies that neither BCG nor any
person employed by BCG has a conviction on their record for which a person
can be debarred as described in Section 306 (a) or 306 (b) of the Federal
Food, Drug and Cosmetic Act. BCG further certifies that should BCG or any
person employed by BCG be convicted in the future, of any act for which a
person can be debarred as described in Section 306 (a) or 306 (b) of the
Federal Food, Drug and Cosmetic Act, BCG shall immediately notify COMPANY
of such conviction.
|
|
EXCEPT
FOR ANY EXPRESS WARRANTIES AND REPRESENTATIONS STATED HEREIN, BCG MAKES NO
WARRANTIES, EXPRESS OR IMPLIED, AND BCG SPECIFICALLY DISCLAIMS ANY IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
|
|
In
no event shall BCG be liable under any legal theory for any indirect,
special or consequential damages, including, but not limited to, loss of
profits, even if BCG has notice of the possibility of such
damages.
|
|
Without
limiting the effect of the preceding paragraph (i.e., limitation of
consequential damages), BCG’s maximum liability, if any, for damages under
any circumstance, shall not exceed the amount which has actually been paid
by COMPANY to BCG.
|
4.
|
Confidentiality
|
|
During
the performance of SERVICES contemplated by this Agreement, it is
anticipated that COMPANY may disclose or deliver to BCG certain of
COMPANY’S trade secrets or confidential or proprietary
information.
|
|
As
used in this Agreement, the term “Proprietary Information” shall mean any
COMPANY trade secrets or confidential or proprietary information disclosed
by COMPANY to BCG and designated as such in writing by COMPANY whether by
letter or by the use of an appropriate proprietary stamp or legend, prior
to or at the time any such trade secret or confidential or proprietary
information is disclosed by COMPANY to
BCG.
|
|
BCG
shall hold in confidence, and shall not disclose (or permit or suffer its
personnel to disclose) to any person outside its organization, any
Proprietary Information. BCG and its personnel shall use such Proprietary
Information only for the purpose for which it was disclosed and neither
BCG nor such personnel shall use or exploit such Proprietary Information
for its own benefit or the benefit of another without the prior written
consent of COMPANY.
|
|
The
obligations of BCG specified in the preceding paragraph shall not apply,
and BCG shall have no further obligations, with respect to any Proprietary
Information to the extent such
Proprietary
|
Version
10, 4/28/2008
|
Page
2 of 8
|
Biologics Consulting Group,
Inc.
|
|
Information:
(a) was generally known to the public at the time of disclosure or becomes
generally known through no wrongful act on the part of BCG; (b) is in
BCG’s possession at the time of disclosure otherwise than as a result of
BCG’s breach of any legal obligation; or (c) becomes known to BCG through
disclosure by sources other than COMPANY having the legal right to
disclose such Proprietary Information. Notwithstanding anything contained
in this Agreement to the contrary, this Agreement shall not prohibit BCG
from disclosing Proprietary Information to the extent required in order
for BCG to comply with applicable laws and regulations,
provided that
BCG provides prior written notice of such required disclosure to the
COMPANY and takes reasonable and lawful actions to avoid and/or minimize
the extent of such
disclosure.
|
|
BCG
shall, upon request of COMPANY return to COMPANY all drawings, documents
and other tangible manifestations of Proprietary Information received by
BCG pursuant to this Agreement (and all copies and reproductions
thereof).
|
5.
|
Independent
Contractor
|
|
BCG
shall be an Independent Contractor, and BCG and any employees of BCG
performing SERVICES shall not be employees of COMPANY. The means, methods
and manner in which SERVICES are rendered by BCG shall be within BCG’s
sole control and discretion. COMPANY shall not be responsible for BCG’s
acts or the acts of its employees while performing the services whether on
COMPANY premises or elsewhere, and BCG and its employees shall not have
authority to speak for, represent, obligate, or legally bind COMPANY in
any way.
|
6.
|
Ownership
of Property and
Developments
|
|
All
materials and documents supplied to BCG during the Term of this Agreement
by COMPANY or third parties which relate to the SERVICES and all materials
and documents developed by BCG for COMPANY, with the exception of general
consulting and training materials (e.g. strategies, tutorials, study
designs, project outlines) owned and copyrighted by BCG that are not
related to any specific client project, pursuant to this Agreement
(“DEVELOPMENTS”) shall be the sole and exclusive property of COMPANY. BCG
agrees to hold all DEVELOPMENTS confidential in accordance with Paragraph
4 of this Agreement. All property and developments shall be returned,
delivered or assigned to COMPANY immediately upon expiration or
termination of this
Agreement.
|
7.
|
Term
and Termination
|
|
The
term of this Agreement is as specified on the first page of this
Agreement. In the event that this Agreement expires or is terminated, BCG
shall have no further obligation to COMPANY, other than those contained in
Paragraph 4 hereof.
|
|
Either
COMPANY or BCG may terminate this Agreement at any time by giving written
notice. In such event, COMPANY shall (i) pay for SERVICES actually
performed by BCG as of the date of notice; and (ii) reimburse BCG for any
reasonable expenses incurred by BCG as of the date of such
notice.
|
|
This
Agreement may be extended upon mutual agreement by both
Parties.
|
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10, 4/28/2008
|
Page
3of 8
|
Biologics Consulting Group,
Inc.
|
8.
|
Right
of Review
|
|
During
the term of this Agreement and for a period of one year after expiration
or termination, COMPANY and/or its representatives at reasonable times,
and upon reasonable notice to BCG, shall have the right to review all
contracts, correspondence, books, accounts, files, and records of BCG
which pertain in any manner to performance of this Agreement and services
rendered hereunder and the charges
therefore.
|
9.
|
Indemnity
|
|
COMPANY
shall defend, indemnify and hold BCG harmless from any loss or expense
arising out of any claim, action, suit or governmental proceeding relating
to SERVICES performed. This provision shall not apply to any loss or
expense caused by BCG’s negligence, bad faith, intentional misconduct or
gross negligence.
|
|
BCG
shall defend, indemnify and hold COMPANY, its officers, directors,
employees and agents harmless from any and all claims, suits, actions, and
proceedings, and related costs and expenses (including reasonable
attorneys fees) for personal injury or property damage resulting from
BCG’s negligence or willful misconduct arising out of the performance of
this Agreement.
|
10.
|
Hiring
of Employees
|
|
During
the term of this Agreement and for a period of twelve months thereafter,
COMPANY will not solicit, directly or indirectly, for employment or employ
any employee of BCG who is or was actively involved in the performance or
evaluation of the SERVICES without the prior written consent of BCG. In
the event of any breach of the provisions of the preceding sentence,
COMPANY shall pay BCG an amount equal to 100% of such employee’s salary
and bonus from BCG on an annualized basis for the calendar year preceding
such breach. COMPANY and BCG hereby acknowledge and agree that the
foregoing sum represents an enforceable liquidated damages remedy, and
does not (and in no event shall be deemed to) constitute a penalty, the
parties hereby further acknowledging that BCG’s loss of any such employee
will resulting a significant detriment to its
business.
|
11.
|
Miscellaneous
Provisions
|
|
No
assignment by BCG of this Agreement or any of its rights, duties or
obligations hereunder, shall be binding on COMPANY without COMPANY’S prior
written consent.
|
|
This
Agreement supersedes all prior agreements and understandings between the
parties, and all prior representations and negotiations, whether written
or oral, and is intended by the parties as the complete and exclusive
statement of the terms of their Agreement. No modification, addition to,
or waiver of any of the terms hereof shall be effective unless in writing
and signed by an authorized officer of
BCG.
|
|
Any
delivery times quoted by BCG or its personnel are estimates only and BCG
shall not be liable for any delays in
delivery.
|
|
BCG’s
failure to perform any obligation hereunder shall not constitute a breach
of this Agreement, or any warranty hereunder, where such failure of
performance is the result of any force majeure, including but not limited
to, riots, failure of contractors and subcontractors
to
|
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10, 4/28/2008
|
Page
4 of 8
|
Biologics Consulting Group,
Inc.
|
|
perform,
strikes, labor disturbances, acts of God, fires, floods, explosions, civil
disturbances, inability to obtain required material or transportation, or
acts of governmental
authorities.
|
|
No
action to enforce any claim arising out of or in connection with the
transaction which is the subject matter of this Agreement shall be brought
by COMPANY against BCG more than three years after the cause of action has
accrued.
|
|
In
the case of any dispute between the parties, which dispute shall result in
arbitration or litigation, the prevailing party shall be entitled to
reasonable attorney’s fees and costs, including expert witness
fees.
|
|
This
contract was the result of negotiation between the parties. The parties
agree that for the purpose of interpreting this Agreement they shall be
deemed to have jointly authored each and every
provision.
|
|
This
Agreement shall be construed according to the laws of Virginia for
contracts made within that state. The parties agree that the exclusive
jurisdiction and venue of any suit or arbitration relating to this
agreement, including any causes of action arising out of its formation,
performance and/or breach, including any claim for misrepresentation,
shall be in the City of Alexandria, State of
Virginia.
|
|
This
Agreement may be executed in any number of counterparts, each of which,
when executed, shall be deemed to be an original and all of which together
shall constitute one and the same document. This agreement may be executed
by facsimile or electronically transmitted
signatures.
|
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10, 4/28/2008
|
Page
5 of 8
|
Biologics Consulting Group,
Inc.
|
BIOLOGICS
CONSULTING GROUP, INC.
|
MEDGENICS,
INC.
|
|||
(BCG)
|
(COMPANY)
|
|||
By:
|
/s/ James G. Kenimer
|
By:
|
/s/ Andrew Pearlman
|
|
James
G. Kenimer, Ph.D.
|
Name:
|
Andrew
Pearlman
|
||
President
& CEO
|
Title:
|
CEO
|
||
Date:
|
7/8/08
|
Date:
|
July
3, 2008
|
Email:
jkenimer@bcg-usa.com
|
Email:
|
Ph: l-(703)
739-5695
|
Ph:
|
Version
10, 4/28/2008
|
Page
6 of 8
|
Biologics Consulting Group,
Inc.
|
1)
|
SERVICES TO BE
PERFORMED
|
|
BCG
shall provide regulatory consulting services to the COMPANY. The tasks to
be performed under this Agreement will be agreed to in advance by the
COMPANY and BCG. If requested by the COMPANY, BCG will provide a written
estimate of the time and costs for any requested task(s) (the PROPOSAL).
This PROPOSAL will be assigned a WORK ORDER NUMBER and become binding
under the terms of this contract when signed by both the COMPANY and BCG.
Alternatively, the COMPANY can request services under this contract by
contacting BCG or an individual BCG consultant and requesting a specific
task to be performed. In such cases, the BCG consultant shall provide the
company with an estimate of costs by electronic mail, with a copy to the
BCG main office.
|
|
The COMPANY representative(s)
who will designate the services to be performed
or
changes
thereto,
is
(are):
|
Full
Name
|
Email
Address
|
Phone
Number
|
Andrew
Pearlman
|
andy@medgenics.com
|
+972-4-902-8900
|
2)
|
REMUNERATION
|
|
The
COMPANY will compensate BCG at the hourly rates quoted in the applicable
PROPOSAL or cost estimate and as adjusted from time to time as provided
below. Currently these rates
are:
|
Category
|
Current
Billing Rate
|
President
|
$350/hour
|
Senior
Clinical Consultant (with M.D.)
|
$350/hour
|
Office
Heads
|
$325/hour
|
Senior
Consultant (with M.D.)
|
$350/hour
|
Senior
Consultant
|
$300/hour
|
Consultant
|
$225/hour
|
Associate
|
$175/hour
|
|
BCG
rates are subject to increase on an annual
basis.
|
|
If
the COMPANY requires services to be performed on a weekend or holiday, BCG
shall be compensated for such services at 150% of the applicable rate. If
the COMPANY requires a BCG consultant to be at a COMPANY-specified
location on a weekend or holiday (and not engaged in travel or the
performance of services), BCG shall be compensated for such consultant’s
time (up to 8 hours) at one-half the applicable
rate.
|
|
In
addition, the COMPANY will compensate BCG for all lodging, travel
expenses, business meals and all other project-related expenses as
specified in the individual PROPOSAL. A travel-time charge will be billed
to the COMPANY on a port to port basis. The travel rate is equal to
one-half of the billing rate for the BCG employee traveling. Air travel of
greater than 10 hours in-flight time will normally be via business class.
For ground travel, mileage is reimbursed at the current federal rate for a
non-government automobile as specified
at
|
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10, 4/28/2008
|
Page
7 of 8
|
Biologics Consulting Group,
Inc.
|
|
http://www.gsa.gov/Portal/gsa/ep/contentView.do?contentType=
GSA_BASIC&contentId=9646
.
|
|
Project-related
expenses will be billed at cost plus five percent
(5%).
|
3)
|
BILLING
PROCEDURES
|
|
BCG
will provide monthly itemized invoices to the COMPANY. Terms will be net
30 days from the date of the invoice. The invoices will specify the hours
worked, name of the BCG consultant performing the work, and a brief
description of the work performed for each day. A finance charge of 1% per
month will be charged to any invoices unpaid after 45 days.
Invoices are to be addressed
to:
|
Attn:
|
Phyllis
Bellin
|
|
Title:
|
Director
Finance
|
|
Company:
|
Medgenics
|
|
Address:
|
Teradion
Business Park
|
|
City/State/Zip:
|
Misgav
20179 ISRAEL
|
|
Phone:
|
+972-4-902-8904
|
|
Fax:
|
+972-4-999-0114
|
|
Email:
|
Phyllis@medgenics.com
|
COMPANY
will
issue a
Purchase Order
¨
COMPANY
will not
issue a
Purchase Order
x
|
|
Billing
inquiries to the COMPANY should be directed
to:
|
|
The above named
individual unless specified otherwise
below.
|
|
A
copy of billing inquiries should go to this person rather than the person
specified above:
|
|
Name:
Debbie
Pearlman
|
|
Email:
Debbie@medgenics.com
|
|
Phone#:
+972-4-902-8905
|
Billing
inquires for BCG should be directed to:
|
||
Kelly
Boyle, VP, Finance
|
Jessica
Shaw, Financial Assistant
|
|
kboyle@bcg-usa.com
|
OR
|
jshaw@bcg-usa.com
|
703-739-5695
x102
|
703-739-5695
x108
|
Version
10, 4/28/2008
|
Page
8 of 8
|
|
400 N. Washington Street
Suite 100
Alexandria,
VA 22314
P 703-739-5695
F 703-548-7457
Email:
bcg@bcg-usa.com
www.biologicsconsulting.com
|
Address:
|
400
N. Washington Street
|
|
Suite
100
|
|
Alexandria,
Virginia 22314
|
TAX
I. D. #:
|
84-1693476
|
Address:
|
PO
Box l4
|
|
Teradion
Business Park
|
|
D.N.
Misgav 20179
|
|
Israel
|
1.
|
All
terms that are used herein and that are not specifically defined herein
shall have the defined meanings set forth in the
Agreement.
|
2.
|
The
effective date of this Amendment No.
1
is
January 1,
2010.
|
3.
|
The
"Term of Consulting Services" will be amended as
follows:
|
From:
|
January
1, 2008
|
Through:
|
January
1, 2012
|
4.
|
The
rates set forth in Exhibit 1, paragraph 2 are modified to the rates listed
below:
|
Category
|
2009/2010
Billing
Rates
|
President/CEO
|
$380/hour
|
Senior
Clinical Consultant (with M.D.)
|
$380/hour
|
Office
Heads
|
$350/hour
|
Senior
Consultant (with M.D.)
|
$380/hour
|
Senior
Consultant
|
$325/hour
|
Consultant
|
$240/hour
|
Associate
|
$185/hour
|
Consulting Agreement
Amendment
|
Page 1 of 2
Version 6,
8/13/2008
|
|
400 N. Washington Street
Suite 100
Alexandria,
VA 22314
P 703-739-5695
F 703-548-7457
Email:
bcg@bcg-usa.com
www.biologicsconsulting.com
|
5.
|
Exhibit
1, paragraph 3 is modified to the contact listed
below:
|
Attn:
|
____
|
|
Title:
|
____
|
|
Company:
|
____
|
|
Address:
|
____
|
|
City/State/Zip:
|
____
|
|
Phone:
|
____
|
|
Fax:
|
____
|
|
Email:
|
____
|
7.
|
Except
as specifically modified or amended hereby, the Agreement shall remain in
full force and effect and, as modified or amended, is hereby ratified,
confirmed, and approved.
|
BOLOGICS
CONSULTING GROUP, INC
|
MEDGENICS,
INC.
|
|||
(BCG)
|
(COMPANY)
|
|||
By:
|
/s/
James G.
Kenimer
|
By:
|
/s/ Andrew L. Pearlman
|
|
James
G. Kenimer, Ph.D.
|
Name:
|
Andrew
L. Pearlman
|
||
CEO
|
Title:
|
CEO
|
||
Date:
|
September
8, 2010
|
Date:
|
Aug.
31, 2010
|
Email:
jkenimer@bcg-usa.com
Ph: 1-(703)
739-5695
|
Email:
Ph:
|
Consulting Agreement
Amendment
|
Page 2 of 2
Version 6,
8/13/2008
|
4.2
|
Unless
otherwise agreed, the Company must pay all reasonable costs, charges and
expenses (together “Expenses”) in connection with the Transaction or the
Engagement including all reasonable out of pocket expenses incurred by
Sudbrook (including roadshow, travel and hotel expenses), all stamp duty,
stamp
|
|
duty
reserve tax and any other stamp, transfer or registration duty or tax and
any related fines, costs penalties or interest otherwise payable in
connection with the Transaction (save for any such fines, costs penalties
or interest incurred as a result of any acts or omissions of Sudbrook);
all fees, commissions, costs, charges and expenses payable to the FSA, the
LSE or any other exchange or regulatory or similar body; the reasonable
fees, commissions, costs, charges and expenses of all legal, accountancy,
and other advisors, receiving bankers, depositories, custodians and
registrars engaged by the Company; and all printing, postage and
advertising expenses required for the Transaction. Any individual costs
and/or Expenses which are anticipated to exceed £500 require the prior
written approval of the Company before being incurred by Sudbrook.
Expenses incurred under this paragraph 4.2 shall be reimbursed within 30
days after receipt of detailed invoice
therefor.
|
1.
|
Services
|
1.1
|
Transaction
Services
|
|
•
|
Introducing
the Company to Shire plc;
|
|
•
|
Assisting,
when requested by the Company, with the preparation of any documentation
required for the Transaction including an information memorandum and
management presentation,
|
|
•
|
Providing
advice on the structure and terms of the Transaction and assisting, when
requested by the Company, with the evaluation and negotiation of the
Transaction.
|
1.2
|
Our
Services are subject to the
following:
|
|
•
|
Our
involvement in the preparation and publication of any communication in
connection with the Engagement does not constitute authorisation of the
contents of that document or any part of it, save to the extent expressly
stated in that document.
|
|
•
|
Nothing
in this Agreement requires us to provide specialist or technical advice
(for example, on legal, regulatory, actuarial, accounting or taxation
matters) which can be obtained from other professional advisors or for
advising on the commercial aspects of the
Transaction.
|
|
•
|
It
is your responsibility to ensure that the advice received from your other
professional advisors in relation to the Transaction is adequate and to
the requisite standard for the purposes of the Transaction. We can assume
all such advice is adequate and of the requisite standard without taking
independent steps to verify
this.
|
|
•
|
In
particular, we are not responsible for carrying out any due diligence
investigations on your behalf. You should rely on your own expertise and
that of your other professional advisors in defining the scope of any due
diligence exercise and in formulating and assessing its
conclusions.
|
|
•
|
Nothing
we do in performing our services shall be construed as advice to proceed
or not to proceed with the Transaction or any other transaction which may
come within the scope of our advice. These are matters for commercial
decision and are your responsibility. Whilst our advice may be a factor
taken into account by you when deciding whether or not to proceed, regard
must be had by you to the limitations on the scope of our advice as set
out in this Agreement and/or any subsequent advice provided by you and any
other factors, commercial or
|
|
otherwise,
of which you and your other advisors are, or should be or become aware of
other than our work.
|
2.1
|
The
Company agrees to pay Sudbrook a Success Fee of 2% of the cash and
non-cash consideration received by the Company from Shire plc or its
affiliates in connection with the Transaction (“Consideration”).
Consideration shall include, but is not limited to, fees, milestones,
royalties and licensing revenues and includes payment in cash, shares,
loan stock or other non-cash consideration. Consideration shall also
include any consideration paid to the Company in the event of a successful
offer to acquire part or all of the issued share capital of the Company.
Notwithstanding anything to the contrary contained herein, funds provided
by Shire plc or its affiliates for the reimbursement or direct payment of
research and development expenses, including, without limitation, employee
costs and expenses, shall not be deemed to be Consideration and no Success
Fee shall be due to Sudbrook in connection
therewith.
|
|
A
Success Fee with respect to any Consideration received by the Company
shall be paid to Sudbrook within 30 days of the Company’s actual receipt
of such Consideration. For example, if the Transaction provides for the
payment of $1.0 million upon the achievement of a certain milestone and
such milestone is achieved, then the Company shall pay to Sudbrook a
$20,000 Success Fee within 30 days after the Company receives from Shire
plc or its affiliates the $1.0 million milestone payment. In the
event that such milestone is not achieved or Shire plc or its affiliates
fails to make the milestone payment, the Company shall not be obligated to
pay such Success Fee.
|
|
If
any portion of the Consideration is paid in the form of securities, the
value of such securities, for the purposes of calculating the Transaction
Value, will be determined by the average of the closing prices, on the
principal investment exchange on which, they are listed or dealt in, on
the five trading days ending five days prior to the date the securities
are issued to the Company, its affiliates or stockholders. If such
securities are not traded on a public market at that time, the value of
the securities shall be the fair market value on the day when the
securities are issued to the Company, its affiliates or stockholders. If
the fair market value cannot be agreed by both parties a valuation will be
sought from a third party whose appointment is agreed by both Sudbrook and
the Company.
|
2.2
|
All
sums payable under this Agreement are exclusive of VAT (if
any).
|
2.3
|
The
Company must pay the above fees together with all VAT payable on them to
Sudbrook.
|
1.
|
Indemnity
|
1.1
|
The
Company irrevocably agrees with Sudbrook (and for the benefit of the
Indemnified Persons) that:
|
|
(A)
|
it
will fully indemnify and hold harmless Sudbrook and each other Indemnified
Person from and against any and all actions, claims, demands, proceedings
brought by any third party whether pending, threatened or actual and
whether successful, compromised, settled or discontinued (collectively
“Claims”) and any liabilities, losses, damages, costs, charges and
expenses of whatever nature and in whichever jurisdiction (collectively
“Losses”) which may be suffered or incurred by, Sudbrook or any other
Indemnified Person as a result of such Claims and which relate to or arise
from, directly or indirectly, the Engagement (including, without
limitation, in relation to any financial promotion (as referred to in
section 21, FSMA) distributed on the Company’s
behalf);
|
|
(B)
|
the
Company will reimburse Sudbrook and any other Indemnified Person promptly
on demand by Sudbrook or any such other Indemnified Person in full for all
Losses incurred in connection with investigating, responding to, preparing
for, defending or appearing as a witness in any such Claim, whether or not
in connection with pending or threatened litigation, arbitration or other
alternative dispute resolution procedures to which Sudbrook or any other
Indemnified Person is a party or otherwise involved, and whether or not
resulting in liability on the part of any such person, provided that
Sudbrook and any other Indemnified Person wishing to claim under the
indemnity in paragraph (A) above complies with the provisions of paragraph
(C) below and that the Company will not be responsible for any Claims or
Losses to the extent that (i) they are judicially determined to have
arisen from Sudbrook’s fraud, wilful default or negligence (or that of an
Indemnified Person) or the material breach by Sudbrook of its obligations
to the Company under the Agreement or (ii) they arise as a result of a
breach by Sudbrook or an Indemnified Person of its duties under the FSA
Rules or under the regulatory system (as defined in such
Rules);
|
|
(C)
|
the
indemnity given in paragraph (A) above is subject to Sudbrook or any other
Indemnified Person wishing to claim the benefit of the indemnity: (i)
notifying the Company in writing as soon as reasonably practicable of any
Claim and providing full details of the same, (ii) allowing the Company a
reasonable period of time to make representations as to the conduct of the
defence, or the terms of compromise, settlement or dealing with any Claim
(iii) at the Company’s expense, co-operating with the Company and giving
all such information as the Company may request in connection with any
Claim brought against Sudbrook or any Indemnified Person; and (iv) not
taking any action which might prejudice the position of Sudbrook or any
Indemnified Person or the Company in relation to any such Claim, in
particular not, without the prior written consent of the Company, settling
or compromising or consenting to the entry of any judgment with respect to
any pending or threatened Claim in respect of which indemnification may be
sought under this Schedule 2;
|
|
(D)
|
no
claim will be made against Sudbrook by the Company or any Associate of the
Company in respect of the Engagement or the Agreement, and the Company
will use all its reasonable endeavours to procure that no Claim will be
made by any other person, except in each of these circumstances as a
result of Sudbrook’s fraud, wilful default, negligence or breach of its
obligations to the Company under the Agreement or as a result of a breach
by Sudbrook or an Indemnified Person of its duties under the FSA Rules or
FSMA or under the regulatory system (as defined in the FSA Rules), and
neither Sudbrook nor any other Indemnified Person will have any liability
whatsoever to the Company or any Associate of the Company for or in
connection with the Engagement or the Agreement except to the extent that
(i) such liability is judicially determined to have arisen from Sudbrook’s
fraud, wilful default or negligence or breach of its obligations to the
Company under the Agreement or (ii) results from a breach by Sudbrook or
an Indemnified Person of its duties under the FSA Rules or under the
regulatory system (as defined in the FSA
Rules),
|
|
(E)
|
Sudbrook
will fully indemnify and hold harmless the Company, its Associates and any
successor or assignee of any such person from and against Sudbrook’s
fraud, wilful default, negligence or breach of its obligation to the
Company under this Agreement (“Sudbrook Claims”) and any liabilities,
losses, damages, costs, charges and expenses of whatever nature and in
whichever jurisdiction (collectively “Losses”) which may be suffered or
incurred by, the Company, its Associates and any successor or assignee of
any such person as a result of such Sudbrook Claims, and shall provide
reimbursement in connection with Sudbrook Claims, on the same terms, as
the Company agrees to provide under the provisions of paragraph (B) in
connection with Claims. The indemnity given in this paragraph (E) is
subject to the terms of paragraph (C) as they may apply to such a Sudbrook
Claim.
|
|
(F)
|
nothing
in this Schedule 2 shall restrict or limit the Company’s, Sudbrook’s or
any Indemnified Person’s general obligation at law to mitigate a loss it
may suffer or incur as a result of an event that may give rise to a claim
under the indemnity in paragraph (A) or (E)
above;
|
|
(G)
|
all
sums payable under this Schedule 2 must be paid free and clear of all
deductions or withholdings unless the deduction or withholding is required
by law, in which event the payee will pay such additional amount as to
ensure that the net amount received by the payor will equal the full
amount which would have been received by it had no such deduction or
withholding been made;
|
|
(H)
|
if HM
Revenue & Customs or any other taxing authority brings into charge to
tax any sum payable under this Schedule 2 by way of reimbursement or
indemnity and no tax relief was available for the loss giving rise to the
reimbursement or indemnity, the amount so payable shall be grossed up by
such amount as ensures that after deduction of the tax so chargeable
(ignoring for this purpose the availability of any reliefs or other
deductions available to the payee) there shall be left a sum equal to the
amount that would otherwise be payable as a result of such reimbursement
or indemnity;
|
|
(I)
|
References
in this Schedule 2 to:
|
|
“Affiliate”
means, in relation to a body corporate, any subsidiary undertaking or
parent undertaking of that body corporate, and any subsidiary undertaking
of any
|
|
such
parent undertaking for the time being as those terms are defined in the
Companies Act 2006;
|
|
“Associates”
means, in relation to an undertaking, the officers, directors and
employees from time to time of the undertaking, any Affiliates of the
undertaking and the officers, directors and employees from time to time of
any such Affiliates; and
|
|
“Indemnified
Persons” are to Sudbrook, its Associates and any successor or assignee of
any such persons;
|
|
(J)
|
this
Schedule 2 is in addition to any rights which Sudbrook or any other
Indemnified Person may have under common law or otherwise including, but
not limited to, any right of contribution;
and
|
|
(K)
|
the
benefit of the provisions in this Schedule 2 will survive termination of
the Engagement.
|
1.
|
Sudbrook
shall only use the Confidential Information for purposes of performing its
obligations under the Engagement and shall obtain an executed
confidentiality agreement, the form and substance of which has been
previously approved by the Company in its sole discretion, from each and
every party to which Sudbrook desires to evaluating, making, monitoring
and disposing of investments in the Company, and shall not use the
Confidential Information for any other
purposes.
|
2.
|
Sudbrook
shall treat all Confidential Information as the strictly confidential and
exclusive property of the Company, and shall not directly or indirectly
disclose or distribute such Confidential Information to any third party
(except as provided in paragraphs 1
above).
|
3.
|
Confidential
Information shall not include information which (a) was in the possession
of Sudbrook or the affiliates prior to receipt from the Company; (b) was
in the public domain at the time of receipt, or became a part of the
public domain through no fault of Sudbrook; (c) is disclosed to Sudbrook
or its affiliates by a third party lawfully entitled to make such
disclosure; or (d) was independently developed by Sudbrook or its
affiliates.
|
4.
|
If
Sudbrook is required by judicial or administrative process to disclose any
Confidential Information, Sudbrook shall promptly notify the Company and
shall allow the Company a reasonable time to oppose such process. Sudbrook
shall only disclose such Confidential Information pursuant to an
appropriate protective order that preserves the confidentiality of such
Confidential Information unless otherwise required by such judicial or
administrative process and shall take all reasonable and lawful actions to
avoid and/or minimize the extent of such
disclosure.
|
5.
|
No
provision of the Agreement shall be construed as an obligation of either
party to enter into an agreement relating to any investment in the Company
or to any products, technology or services, or as a grant of license or
ownership rights to the Confidential Information or any invention,
discovery or improvement made using such Confidential
Information.
|
6.
|
Sudbrook
will upon written request from the Company promptly return or destroy all
copies of any documents, samples or other physical embodiments of the
Confidential Information to the
Company.
|
7.
|
Sudbrook
acknowledges and agrees that the unauthorized disclosure or use of any
Confidential Information in breach of the terms of this Schedule 3 or
Section 6 of the Agreement will result in irreparable harm, injury and
damage to the Company that cannot be adequately compensated by money
damages alone. Therefore, Sudbrook hereby stipulates, acknowledges and
agrees that upon proof satisfactory to a court or tribunal of competent
jurisdiction of a breach or threatened breach of this Schedule 3 or
Section 6 of the Agreement, the Company shall be entitled, in addition to
any other remedies allowed by law, and without the requirement to post any
bond or other security, to entry of a temporary restraining order,
preliminary and/or permanent injunction, as the case may be, to restrain
and enjoin any unauthorized disclosure or use of Confidential
Information.
|
8.
|
Sudbrook
hereby acknowledges that Medgenics is a company whose issued shares have
been admitted to trading on the AIM market of London Stock Exchange plc.
Confidential Information imparted and/or to be imparted by Medgenics to
Sudbrook regarding Medgenics and/or its subsidiary is or may be inside
information relating to Medgenics and/or the securities of Medgenics
within the meaning of the United Kingdom’s Criminal Justice Act 1993. As
such, Sudbrook may already be and, in any event, will hereafter become
made “an insider” in relation to
Medgenics.
|
9.
|
Sudbrook
hereby agrees that, entirely without prejudice to the generality of the
foregoing provisions hereof, that it will
not:
|
Nomura
Code Securities Limited
|
||||
1
Carey Lane
|
Telephone
|
+44
(0)20 7776 1200
|
Direct
Tel
|
+44
(0) 20 7776 1207
|
London
|
Facsimile
|
+44
(0)20 7776 1201
|
Direct
Fax
|
+44
(0) 20 7776 1201
|
EC2V
8AE
|
Web
site
|
www.nomuracode.com
|
E-Mail
|
cic@nomuracode.com
|
1.
|
RETENTION
|
2.
|
REMUNERATION
|
3.
|
REIMBURSEMENT OF
EXPENSES
|
4.
|
THE COMPANY’S
OBLIGATIONS
|
(a)
|
it
has complied and will comply with all applicable AIM Rules and all other
requirements of the London Stock Exchange and all other legal requirements
in relation to the trading on AIM of the Company’s share
capital,
|
(b)
|
it
has complied and will comply with the Companies Act 1985 and the Companies
Act 2006 (the “Companies Acts”) and the Financial Services and Markets Act
2000 (the “FSMA”), so far as applicable to the
Company;
|
(c)
|
it has complied and will comply
with all legal requirements applicable to any prospectus or
admission document issued or proposed to be issued by it or to any
annual report and accounts or circulars or other documents sent or to be
sent by it to its
shareholders;
|
(d)
|
it
will as soon as reasonably practicable comply with all reasonable
directions given by Nomura Code in its role as the Company’s joint
corporate broker in order to ensure compliance by the Company and/or the
directors with the AIM Rules, the Companies Acts, the FSMA, the Prospectus
Rules or any other legal or regulatory requirements, each as applicable to
the Company, and inform Nomura Code forthwith upon becoming aware of any
breach by the Company and/or any director of the AIM Rules, the Companies
Acts, the FSMA, the Takeover Code, the Prospectus Rules or any other legal
or regulatory requirements applicable to the Company and, where
practicable, request the advice and guidance of Nomura Code in relation to
all matters relevant to the Company’s compliance on an ongoing basis with
the above legal and regulatory
requirements;
|
(e)
|
it
will register any transfer of securities within fourteen days of receipt
and will despatch share certificates, or credit the relevant Euroclear
account as applicable, without
delay;
|
(f)
|
it
will notify Nomura Code without delay of all such matters which would or
might give rise to an obligation to make an announcement to an RIS and/or
to seek shareholder approval (and in particular, but without limitation,
any new developments which are not public knowledge concerning a change in
(i) its financial condition, (ii) its sphere of activity or (iii) the
performance of its business or (iv) in the Company’s expectation of its
performance, which in each case if made public would be likely to lead to
a substantial movement in the price of its shares) and to keep Nomura Code
informed of any developments at the Company and of any such matters as
Nomura Code shall reasonably require in order for it to discharge its
duties and responsibilities to the Company as the Company’s joint
broker;
|
(g)
|
it
will before making any material announcement of the kind required to be
notified to an RIS use its reasonable endeavours to consult with Nomura
Code so far as practicable as to the content of such
announcement;
|
(h)
|
it
will ensure that all statements in any advertisements issued by the
Company, or in any document or announcement issued by it, are true in all
material respects and not misleading in any material respect and that any
expressions of opinion, contention or expectation included in such
statements are made on reasonable grounds and to notify Nomura Code
promptly on discovering that any published press announcement or other
public document contained any information subsequently discovered to be
inaccurate or misleading;
|
(i)
|
it
will not, without first notifying Nomura Code, adopt or give effect to any
arrangements (other than the Company’s share option schemes as currently
constituted or existing issued warrants) which may have the effect of
increasing the number of shares in the capital of the Company which may be
acquired or disposed of by employees of the Company or any of its
subsidiaries after the effective date of appointment of Nomura Code under
the terms of this letter;
|
(j)
|
it
will notify Nomura Code as soon as reasonably practicable after approval
by or on behalf of the board of the Company
of:
|
(i)
|
any
intended payments of dividends or other
distributions;
|
(ii)
|
the
preliminary announcement of profits or losses for any financial
periods;
|
(iii)
|
any
proposed change in the capital structure of the Company;
and
|
(iv)
|
all
proposed dealings by directors in the securities of the Company (prior to
such dealings taking place)
|
(k)
|
it
will consult with Nomura Code in relation to potential acquisitions,
mergers or other corporate transactions not in the ordinary course of
business;
|
(l)
|
it
will forward to Nomura Code for its prior perusal proofs of all documents
to be despatched to holders of the Company’s securities and documents
relating to takeovers, mergers, reorganisations or other schemes and all
press announcements (other than routine trade press
announcements);
|
(m)
|
it
will provide to and review with Nomura Code such financial information
(including audited consolidated annual accounts, preliminary statements,
interim accounts, monthly management accounts, budgets and business plans)
relating to the Company as Nomura Code may reasonably require from time to
time;
|
(n)
|
it
will promptly make available to Nomura Code any other information
whatsoever required by Nomura Code which Nomura Code reasonably believes
is necessary to enable it to carry out its obligations to the Company
and/or the London Stock Exchange as
broker;
|
(o)
|
without
limitation to paragraph 4(a) above, it shall have adopted by board
resolution, and take all proper and reasonable steps to ensure compliance
by its directors or any applicable employees (as defined in the AIM Rules)
with a share dealing code containing the restriction on dealings as set
out in Rule 21 of the AIM
Rules;
|
(p)
|
it
will consult with Nomura Code in respect of any proposed changes to the
directors (including appointments of new directors and the removal or
replacement of existing directors) and to ensure that any new director
completes a due diligence
questionnaire;
|
5.
|
ACKNOWLEDGEMENTS
|
(a)
|
the
directors of the Company understand the nature of their responsibilities
to holders of the Company’s securities and will carry out all their
obligations, and will in so far as they are able procure that the Company
carries out all of its obligations, under and in accordance with the AIM
Rules and other requirements of the London Stock
Exchange;
|
(b)
|
save
in relation to any of the Company’s issued shares that shall from time to
time be “restricted securities” (as defined in Rule 144 promulgated under
the United States Securities Act of 1933, as amended) by reason of the
fact that the Company’s shares has not been registered under the US
Securities Act of 1933, the shares in the Company which have been admitted
to trading on AIM are free from restrictions on transferability (including
any limitations on size of holdings and in respect of classes or identity
of holders) except for any restrictions of the kind permitted by Rule 32
of the AIM Rules;
|
(c)
|
Nomura
Code may take such steps as it considers reasonably necessary or desirable
to comply with legal or other regulatory requirements relevant to any
services provided by it to the
Company;
|
(d)
|
Nomura
Code retains the right to refuse to issue or approve, or arrange for the
issue of, a particular document or announcement and to require the Company
to cease to distribute a document or announcement which, in Nomura Code’s
reasonable opinion, has any connection with or potential effect on its
appointment under this Agreement if at any time Nomura Code becomes aware
of information which, in its opinion, renders the document or announcement
untrue, incomplete or misleading in a material
respect.
|
6.
|
DATE
OF APPOINTMENT
|
7.
|
FSA
RULES AND STATUS
|
(a)
|
Nomura
Code is engaged in a wide range of designated investment business. This
may give rise to situations where Nomura Code under the FSA Rules, Rule 21
of the AIM Rules for Nominated Advisers (the “Nomad Rules”) or under the
general law: (i) may have interests, relationships and/or arrangements
which conflict with those of the Company whether in relation to the
Engagement or otherwise; and/or (ii) may have other clients whose
interests conflict with those of the Company (“Conflicts of
Interests”).
|
(b)
|
Nomura
Code maintains and operates effective organisational and administrative
arrangements with a view to taking all reasonable steps to prevent
conflicts of interest from constituting or giving rise to a material risk
of damage to the interests of its clients. Nomura Code’s full conflict of
interest policy can be found on Nomura Code’s website at
www.nomuracode.com
under Compliance and
Legal Notices.
|
(c)
|
It
is Nomura Code’s policy, in providing services to its clients, to do so on
a consistent basis thus ensuring, so far as is practicable, that all
clients are treated in a fair and equal
manner.
|
(d)
|
So
as expressly to override any duty, obligation or restriction which would
otherwise apply by law, regulation or the FSA Rules, where a conflict of
interest or potential conflict of interest arises between either the
Company and Nomura Code or the Company and another customer for which
Nomura Code has, or may have, or may have had a relationship, Nomura Code
may provide services to the Company pursuant to this Agreement, and may
provide services to other existing clients or future clients of Nomura
Code notwithstanding the existence of any conflict of interest or
potential conflict of
interest.
|
(e)
|
The
employees of Nomura Code assigned to the Engagement (as defined below) may
(due, for example, to a Chinese Wall) be oblivious to, and in any event
are required to disregard, any Conflicts of Interests and the Company
agrees that Nomura Code may act for it despite any Conflicts of Interests
and that any profit or remuneration from such interests may be retained by
Nomura Code.
|
(f)
|
The
Company agrees that, subject to the FSA Rules and Rule 21 of
the
Nomad Rules, Nomura Code
does not have a duty to disclose any matter that comes to its notice in
the course of its business if doing so would constitute a breach of duty
owed to any other persons.
|
8.
|
TERMINATION
|
(a)
|
The
appointment of Nomura Code as joint corporate broker shall continue until
terminated in accordance with the provisions of paragraphs 8(b) to 8(g)
(inclusive).
|
(b)
|
Nomura
Code may terminate the provision of any of its
services:-
|
(i)
|
forthwith
by serving a notice in writing to the Company in the event of any material
breach of this Agreement by the Company;
or
|
(ii)
|
without
prejudice to its rights in paragraph 8(b)(i) above, by giving the Company
two months’ notice in
writing.
|
(c)
|
For
the purposes of paragraph 8(b)(i) above a “material breach” entitling
Nomura Code to terminate this Agreement shall be deemed to include, but
not be limited to any of the
following:
|
(i)
|
a
failure by the Company to follow the advice given by its Nominated Adviser
in respect of the AIM Rules after consultation with the Company’s legal
advisers;
|
(ii)
|
any
material failure by the Company or any of the directors to make any
disclosures or take any actions required under the
AIM
Rules (in particular any
announcements required under Rule 11 (General disclosure of price
sensitive information)), the FSMA, the Prospectus Rules, the Companies
Acts or any other law or regulation to which (in each case) the Company is
subject and the failure not being remedied (where capable of remedy)
within five business days of the failure coming to the notice of the
Company;
|
(iii)
|
non-payment
of the fees and expenses referred to in paragraph 2 on the date they fall
due for payment;
|
(iv)
|
any
material or persistent breach by the Company of its obligations under this
Agreement and (where capable of remedy) the relevant matter has remained
unremedied to the reasonable satisfaction of Nomura Code for ten business
days after the Company has received a request for remedy from Nomura Code;
and/or
|
(v)
|
where
the Company’s shares become ineligible for admission to trading on
AIM.
|
(d)
|
If
Nomura Code elects to terminate the provision of any but not all of its
services, the Company shall be entitled to terminate Nomura Code’s
appointment in relation to such services for which such appointment has
not been terminated by Nomura Code and such termination, unless agreed
otherwise, shall take place at the same time as the termination by Nomura
Code of its appointment takes
effect.
|
(e)
|
The
Company may terminate the provision of any of Nomura Code’s
services:-
|
(i)
|
forthwith
by serving a notice in writing to Nomura Code in the event of any material
breach of this Agreement by Nomura
Code;
|
(ii)
|
without
prejudice to its rights in paragraph 8(e)(i) above, by giving Nomura Code
one month’s notice in writing;
or
|
(iii)
|
forthwith
if approval by
the London Stock Exchange for Nomura Code
to act as nominated adviser and/or broker to the Company is
withdrawn.
|
(f)
|
If
the Company or Nomura Code terminate Nomura Code’s appointment as joint
corporate broker and Nomura Code agrees to continue to provide its
services in respect of any appointment which is not being terminated, then
the provisions of this letter shall continue in force insofar as they are
consistent with the provision of its services in respect of the
appointment for which Nomura Code continues to be retained. A revised fee
will be agreed for the services being retained which will be based on the
existing fee and reflect the lower level of service being
provided
|
By:
|
/s/
Chris
Collins
|
By:
|
/s/
Andrew L.
Pearlman
|
1.
|
Application
|
2.
|
Authorities
|
|
(a)
|
Nomura
Code is authorised by the Company to do anything which, in Nomura Code’s
opinion, is reasonably necessary either to carry out the Engagement
(including acting as the Company’s agent or through agents or in
conjunction with a subcontractor, as appropriate) or to act in accordance
with any applicable laws, rules, regulations, authorisations, consents or
practice as may reasonably be appropriate. The Company agrees that it
shall approve and confirm everything lawfully done by Nomura Code in the
exercise of such discretion.
|
(b)
|
Nomura
Code shall not be responsible for providing specialist advice in any
circumstances where the Company has agreed to procure, or would usually
procure, such advice from others (for example, accounting, regulatory,
legal, pensions or taxation matters) and Nomura Code shall not be liable
in relation to any advice or services provided to the Company by persons
other than Nomura Code irrespective of whether such advice is given or
made or available or reviewed by Nomura Code, or discussed by Nomura Code
with the Company.
|
(c)
|
Nomura
Code shall be entitled to believe that any information and/or instructions
given or purported to be given by an individual or person who is or
purports to be and is reasonably believed by Nomura Code to be a director,
duly authorised employee or authorised agent of the Company have been
properly authorised by the
Company.
|
3.
|
Provision of
Information
|
(a)
|
The
Company agrees to provide Nomura Code with all material information in its
possession relevant to the Engagement. Nomura Code will rely on the
Company to ensure that any information made available to Nomura Code
and/or third parties or otherwise published is information that the
Company is legally entitled to provide for the purpose for which it is
intended to be used and without committing a breach of any obligation or
duty owed by the Company to a third person or otherwise infringing any
legal, regulatory or equitable rights of any third parties whatsoever and
that it is true, fair, complete and accurate and not misleading in any
material respect and there are no omissions which could be material. If
the Company subsequently becomes aware that any such information is not
correct it will notify Nomura Code immediately and update the position
accordingly. The Company shall ensure that all statements and documents
made and/or published by it (the “Materials”) or on its behalf in relation
to the Engagement will only be made or published after Nomura Code has
been consulted. The Company acknowledges that, except where required by
law or rules made by the FSA under the Financial Services and Markets Act
2000 (“FSMA”), Nomura Code will have no obligation to independently verify
any documentation sent to investors and/or shareholders, any statement of
fact or opinion contained in such documentation or any information or
documentation provided by the
Company.
|
(b)
|
The
Company agrees to ensure that any financial promotion, document or
announcement issued to the London Stock Exchange or
otherwise:-
|
|
(i)
|
is
true and not misleading and all expressions of opinion, intention or
expectation it contains are made on reasonable grounds, and that there are
no facts known the omission of which would make any such financial
promotion, document or announcement misleading;
and
|
|
(ii)
|
contains
all information required by and otherwise complies with all applicable
laws and regulations.
|
(c)
|
Nomura
Code shall be entitled to assume that all and any matters, which may be
material for disclosure or otherwise in the context of the Engagement,
will be brought to its attention and, furthermore, it will only provide
its services on the basis of information disclosed to
it.
|
(d)
|
Nomura
Code shall not be liable for any losses, liabilities, damages or costs
suffered by the Company as a consequence of providing advice based on any
inaccurate or misleading information or documentation which has been
supplied by or on behalf of the Company or resulting from any omission
from such information or
documentation.
|
4.
|
Use of
Material
|
5.
|
Confidentiality
|
(a)
|
Nomura
Code may disclose any information which becomes publicly available other
than by reason of wrongful disclosure by Nomura
Code;
|
(b)
|
Nomura
Code may disclose any information which its legal advisers conclude after
consultation, to the extent practicable, with the Company and its legal
advisers, is or may be necessary or desirable to be disclosed by law or
rule or regulation or pursuant to any court or administrative order or
ruling or in any pending legal or administrative proceeding or
investigation or the requirement of any regulatory
authority;
|
(c)
|
Nomura
Code may disclose any information to its employees and to any of its
agents, legal and other professional advisers and, to any other person
that Nomura Code considers necessary or desirable in order to perform any
of the services contemplated herein. The Company acknowledges that it will
not unreasonably withhold or delay such
consent;
|
(d)
|
Nomura
Code shall not be required to keep confidential information that becomes
available to Nomura Code other than from the Company (and other than
subject to an obligation of confidentiality to the Company);
and
|
(e)
|
Nomura
Code shall not be required to keep confidential information that is known
by Nomura Code prior to the date of the engagement letter and in respect
of which Nomura Code is not under an existing obligation of
confidentiality to the Company, as evidenced by the written records of the
Company or Nomura Code.
|
6.
|
Conflicts of
Interests
|
(a)
|
Nomura
Code and its affiliates are engaged in a wide range of designated
investment business. This may give rise to situations where Nomura Code or
its affiliates under the general law: (i) may have interests,
relationships and/or arrangements which conflict with those of the Company
whether in relation to the Engagement or otherwise; and/or (ii) may have
other clients whose interests conflict with those of the Company
(“Conflicts of Interests”).
|
(b)
|
Nomura
Code maintains and operates effective organisational and administrative
arrangements with a view to taking all reasonable steps to prevent
conflicts of interest from constituting or giving rise to a material risk
of damage to the interests of its clients. Nomura Code’s full conflict of
interest policy can be found on Nomura Code’s website at
www.nomuracode.com
.
|
(c)
|
It
is Nomura Code’s policy, in providing services to its clients, to do so on
a consistent basis thus ensuring, so far as is practicable, that all
clients are treated in a fair and equal
manner.
|
(d)
|
So
as expressly to override any duty, obligation or restriction which would
otherwise apply by law, regulation or the FSA Rules, where a conflict of
interest or potential conflict of interest arises between either the
Company and Nomura Code or the Company and another customer for which
Nomura Code has, or may have, or may have had a relationship, Nomura Code
may provide services to the Company pursuant to this Agreement, and may
provide services to other existing clients or future clients of Nomura
Code notwithstanding the existence of any conflict of interest or
potential conflict of
interest.
|
(e)
|
The
employees of Nomura Code assigned to the Engagement may (due, for example,
to a Chinese Wall) be oblivious to, and in any event are required to
disregard, any Conflicts of Interests and the Company agrees that Nomura
Code may act for it despite any Conflicts of Interests and that any profit
or remuneration from such interests may be retained by Nomura
Code.
|
(f)
|
The
Company agrees that Nomura Code does not have a duty to disclose any
matter that comes to its notice in the course of its business if doing so
would constitute a breach of duty owed to any other
persons.
|
7.
|
Assignment
|
8.
|
Indemnity
|
(a)
|
any
of the Materials issued or supplied by the Company in connection with the
Engagement, not containing or being alleged not to contain all information
required to be stated therein or any statement therein (whether of fact,
opinion, expectation or intention and including any forecast, projection
or estimate) being or being alleged to be untrue, inaccurate, incomplete
or misleading or as having been made negligently or otherwise without the
required standard of skill and care or
reasonableness;
|
(b)
|
any
of the Materials issued or supplied by the Company in connection with the
Engagement, failing or being alleged to fail to disclose all material
information necessary to enable an informed assessment to be made of the
assets and liabilities, financial position, profits and losses, and
prospects of the Company or of the rights attaching to any of the
securities issued by the Company in connection with the
Engagement;
|
(c)
|
any
breach by the Company of any of its obligations under the
Engagement;
|
(d)
|
any
failure or alleged failure by the Company to comply with any legal,
statutory or regulatory requirement whether of the United Kingdom or
elsewhere,
|
9.
|
Billing
arrangements
|
10.
|
Legal and regulatory
requirements
|
11.
|
Miscellaneous
|
(a)
|
This
Agreement has been and is made solely for the benefit of the Company and
Nomura Code, in the case of Nomura Code for itself and as trustee (with
sole discretion as to acting in such capacity) for the benefit (and not
the burden) of this Agreement for each of the other Nomura Code
Persons.
|
(b)
|
Nomura
Code may process, store and retain by computer or otherwise any
information (including personal data) obtained about the Company as a
consequence of this and any other agreement the Company may enter into
with Nomura Code. All collated information, including databases on which
such information is stored, held by Nomura Code and other members of the
Nomura Code is and shall remain the property of Nomura
Code.
|
(c)
|
This
Agreement represents the entire agreement and understanding between the
Company and Nomura Code in relation to the appointment of Nomura Code as
joint broker to the Company.
|
(d)
|
The
Company has authorised Nomura Code to make such enquiries and obtain such
references as it may consider necessary to fulfil its statutory
obligations under the UK Money Laundering legislation (“the Money
Laundering Evaluation”). This Agreement authorises Nomura Code to make
such further enquiries and obtain such further references as it may from
time to time consider necessary for continuing compliance with its
statutory obligations under such legislation. Should Nomura Code be unable
to satisfactorily complete the Money Laundering Evaluation in relation to
the Company, it shall be entitled to terminate this Agreement and
Engagement forthwith.
|
(e)
|
Notices
given pursuant to any of the provisions of this Agreement shall be in
writing and shall
be sent
by facsimile transmission or personally delivered to: (a) The Company’s
registered
address, for the attention of the Chief Executive and
(b) Nomura Code Securities Limited, 1 Carey Lane, London, EC2V 8AE, for
the attention of Christopher Collins, or to such other address as either
party may have notified to the other in accordance with this paragraph.
Any such communication shall be deemed to have been received on the same
day if sent by facsimile transmission on a working day, at 9.00 a.m. on
the next working day in the place where left if personally delivered. A
“working day” shall mean a day other than a Saturday or a Sunday or
recognised public holiday in
England.
|
(f)
|
If
any provision of this Agreement contravenes the applicable regulations or
law or shall be declared void or unenforceable by the Court or
administrative body of competent jurisdiction, the validity of the
remaining provisions of this Agreement shall not be affected
thereby.
|
(g)
|
Nomura
Code may record telephone calls. These records (if made) will be the sole
property of Nomura Code and may be used as evidence of orders or
instructions given by the Company or agreements entered into by the
Company with Nomura Code. Any recordings made shall be kept confidential
and may not be disclosed to any third party unless required by law or
order of a court of competent jurisdiction or the requirements of the
Financial Services Authority or any other regulatory body or
authority.
|
(h)
|
The
Company authorises Nomura Code to communicate in relation to this
Agreement and/or the Engagement with all persons involved in this
Agreement and/or the Engagement including, without limitation, its own
employees and any third party advisers or agents, by means of electronic
mail, including the internet, in addition to other means of communication.
Nomura Code may refer to the Engagement for its marketing
purposes.
|
(i)
|
Unless
otherwise agreed, Nomura Code may disclose to third parties that the
Company is or has been a client in the past. The Company also grants
Nomura Code a licence to use any of the Company’s trade marks, logos and
service marks in respect of such
use.
|
(j)
|
Unless
expressly provided, none of the terms of this Engagement shall be
enforceable by any person who is not a party to it, in accordance the
Contracts (Rights of Third Parties) Act
1999.
|
(k)
|
The
Agreement
(i) shall be deemed to
be entered into once signed by the Company and Nomura Code and either
executed copies are exchanged or are faxed back by the Company to Nomura
Code and by Nomura Code to the Company and (ii) may be executed in two or
more counterparts, each of which shall be deemed an original, but which
together shall constitute one and the same
instrument.
|
(I)
|
Time
is of the essence in relation to this Agreement and/or the Engagement with
regard to (i) all payments to be made by the Company to Nomura Code and
(ii) ail notices to be served by any party to this
Agreement.
|
(m)
|
These
terms supersede any earlier terms of business that may have agreed with
the Company and, in the absence of express agreement to the contrary,
shall apply to the services referred to in the Engagement and all
subsequent services Nomura Code provide the
Company.
|
(n)
|
Any
term of this Agreement can be amended with the prior written consent of
the Company and Nomura Code.
|
12.
|
Waiver
|
13.
|
Governing
Law
|
Telephone:
|
020
7776 1200
|
Facsimile:
|
020
7776 1201
|
■
|
Provision
of general equity market advice, including advice on the Protein Therapy
and general biopharmaceutical
sector.
|
■
|
Liaison
with the Company’s shareholders and potential investors, as
appropriate.
|
■
|
Assistance,
in conjunction with the Company and its other advisers, in the preparation
and communication of Company announcements and press releases including,
but not limited to, preliminary and interim announcement of results,
provided that responsibility for such announcements and releases rests
with the Company.
|
■
|
Advice
in relation to investor relations activity and provision of investor
relations services.
|
■
|
Assistance,
in conjunction with the Company’s other advisers, in the analysis of
shareholder, analyst, press and other opinion of the Company and in the
development of a communications
strategy.
|
·
|
Investment Experience;
Acknowledgment of Risk
. The recipient acknowledges that the
recipient can bear the economic risk and complete loss of its investment
in the Shares and has such knowledge and experience in financial or
business matters that the recipient is capable of evaluating the merits
and risks of the investment contemplated hereby. The recipient understands
that investment in the Shares involves a significant degree of
risk.
|
·
|
Disclosure of
Information
. The recipient has conducted the recipient’s own due
diligence examination of the Company’s business, financial condition,
results of operations, and prospects, and has had an opportunity to
receive all information related to the Company and the Shares requested by
the recipient and to ask questions of and receive answers from the Company
regarding the Company, its business, finances and operations and the terms
and conditions of the Shares.
|
·
|
Restricted
Securities
. The recipient understands that the Shares are
characterized as “restricted securities” under the U.S. federal securities
laws inasmuch as they are being acquired from the Company in a transaction
not involving a public offering and that under such laws and applicable
regulations such securities may be resold without registration under the
1933 Act. The recipient understands that the Shares are being offered and
sold to it in reliance upon specific exemptions from the registration
requirements of United States and state securities laws and that the
Company is relying upon the truth and accuracy of, and the recipient’s
compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the recipient set forth herein in
order to determine the availability of such exemption and the eligibility
of the recipient to acquire the
Shares.
|
·
|
Legends
. It is
understood that, except as provided below, certificates evidencing the
Shares may bear the following or any similar
legend:
|
·
|
Accredited
Investor
. The recipient is an accredited investor as defined in
Rule 501(a) of Regulation D, as amended, under the 1933 Act. The recipient
understands that no United States federal or state agency or any other
government or governmental agency has passed upon or made any
recommendation or endorsement of the
Shares.
|
·
|
No General
Solicitation
. The recipient did not learn of the investment in the
Shares as a result of any public advertising or general
solicitation.
|
|
(a)
|
if
to the Company, to:
Medgenics,
Inc.
8000
Towers Crescent Drive, Suite 1300
Vienna,
Virginia 22182
Attention:
Andrew Pearlman, CEO
|
|
(b)
|
if
to ESP, to:
Equity
Source Partners, LLC
7
East Carver Road
Huntington,
New York 11743
|
MEDGENICS,
lNC.
|
EQUITY
SOURCE PARTNERS, LLC
|
|||
By:
|
/s/
Andrew Pearlman
|
By:
|
/s/
Cary Sucoff
|
|
Andrew
Pearlman, CEO
|
Cary
Sucoff
|
·
|
Investment
Experience; Acknowledgment of Risk
. The recipient acknowledges that
the recipient can bear the economic risk and complete loss of its
investment in the Shares and has such knowledge and experience in
financial or business matters that the recipient is capable of evaluating
the merits and risks of the investment contemplated hereby. The
recipient
understands that
investment in the Shares involves a significant degree of
risk.
|
·
|
Disclosure
of Information
. The recipient has conducted the recipient’s own due
diligence examination of the Company’s business, financial condition,
results of operations, and prospects, and has had an opportunity to
receive all information related to the Company and the Shares requested by
the recipient and to ask questions of and receive answers from the Company
regarding the Company, its business, finances and operations and the terms
and conditions of the
Shares.
|
·
|
Restricted
Securities
. The recipient understands that the Shares are
characterized as "restricted securities" under the U.S. federal securities
laws inasmuch as they are being acquired from the Company in a transaction
not involving a public offering and that under such laws and applicable
regulations such securities may be resold without registration under the
1933 Act. The recipient understands that the Shares are being offered and
sold to it in reliance upon specific exemptions from the registration
requirements of United States and state securities laws and that the
Company is relying upon the truth and accuracy of, and the recipient's
compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the recipient set forth herein in
order to determine the availability of such exemption and the eligibility
of the recipient to acquire the
Shares.
|
·
|
Legends
.
It is understood that, except as provided below, certificates evidencing
the Shares may bear the following or any similar
legend:
|
|
·
|
Accredited
Investor
. The recipient is an accredited investor as defined in
Rule 501(a) of Regulation D, as amended, under the 1933 Act, including any
amendments, modifications or interpretations (whether retroactive or not)
made to Regulation D, including, without limitation, pursuant to the
Dodd-Frank Wall Street Reform and Consumer Protection Act. The recipient
understands that no United States federal or state agency or any other
government or governmental agency has passed upon or made any
recommendation or endorsement of the
Shares.
|
|
·
|
No
General Solicitation
. The recipient did not learn of the investment
in the Shares as a result of any public advertising or general
solicitation.
|
Best
regards,
|
Agreed
to:
|
|
/s/ Cary
Sucoff
|
/s/ Andrew Pearlman
|
|
Cary
Sucoff
|
Andrew
Pearlman
|
|
Equity
Source Partners LLC
|
Medgenics,
Inc.
|
1.
|
Medgenics,
Inc. whose registered office is at 2711 Centreville Road, Suite 400,
Wilmigton, 19808, New Castle, Delaware, USA (the “Company”);
and
|
2.
|
Capita
Registrars (Jersey) Limited whose registered office is situated at
Victoria Chambers, Liberation Square, 1/3 The Esplanade, St Helier, Jersey
(the “Registrar”):
|
|
A.
|
It
is anticipated that, immediately following admission of its issued and to
be issued share capital to trading on the AIM market of the London Stock
Exchange plc, the Company will have an issued share capital comprised of
shares of common stock of par value of US $0.0001 each (the
“Shares”)
|
|
B.
|
The
Shares will from the date hereof at all times be registered on the
register of members (the “Offshore Register”) kept in
Jersey.
|
1.
|
Appointment
of Registrar
|
2.
|
Registrar’s
Duties and Responsibilities
|
2.1
|
The
Registrar shall:
|
|
2.1.1
|
carry
out and follow all reasonable Proper Instructions which may from time to
time be given to it with regard to the Registrar’s duties hereunder;
and
|
|
2.1.2
|
subject
to Clause 2.3 below, provide a registration and transfer office at such
place in Jersey as the Registrar may decide, and shall perform the
services specified in Appendix 1 to this Agreement (the “Registration
Services”).
|
2.2
|
The
Registrar undertakes to provide the Registration Services using due
diligence, reasonable skill and expertise in the execution of its duties.
The Registrar shall perform its duties hereunder in a conscientious manner
and shall comply with all statutory and regulatory requirements applicable
to it, including (without limitation) the Data Protection Act 1998 (the
“DPA”).
|
2.3.
|
The
Company shall give such assistance to the Registrar as may reasonably be
necessary to enable the Registrar to carry out its obligations
hereunder.
|
2.4
|
When
acting pursuant to Proper Instructions the Registrar shall not be under
any duty to make any enquiry as to the genuineness or authenticity of any
such instructions so long as such instructions reasonably appear to be
genuine and authentic.
|
3.
|
Agents
and Delegation
|
3.1
|
Subject
to Clause 3.2, the Registrar may, in the performance of its duties and in
the exercise of any of the powers vested in it hereunder, act by an
authorised officer or officers for the time being and employ and pay an
agent or agents (including any Associate of the Registrar) at the expense
of the Registrar to perform or concur in performing any of the duties
required to be performed hereunder and may act or rely upon the opinion or
advice or any information obtained (in the knowledge that the Registrar
will be placing reliance thereon) from any broker, lawyer, valuer,
surveyor, auctioneer or other expert (whether reporting to the Company or
the Registrar) appointed in good faith and without negligence and the
Registrar shall not be responsible for any loss occasioned by its acting
upon such opinion, advice or
information.
|
3.2
|
The
Registrar may at any time delegate in whole or in part any of its duties,
functions, powers and discretions under this Agreement to a transfer agent
in the United Kingdom or to any other delegate or agent and may disclose
(subject to due observance of and compliance with all applicable
provisions of the DPA) to such transfer agent or other delegate or agent
such information about the Company as the Registrar considers necessary or
desirable for such transfer agent or other delegate or agent to carry out
its duties.
|
4.
|
Liability
and Indemnity
|
4.1
|
The
Company shall indemnify and keep indemnified the Registrar and its agents,
officers and employees from and against any and all Liabilities which may
be suffered or incurred by or asserted against the Registrar and its
agents, officers and employees arising out of or in connection with the
performance of its or their duties hereunder except such as may be due to
the fraud, negligence or wilful default of the Registrar or its agents,
officers or employees.
|
4.2
|
Subject
always to the foregoing provisions of this Clause 4 and except in the case
of the fraud of the Registrar or its agents, officers or
employees:
|
|
4.2.1
|
the
aggregate liability of the Registrar and its agents, officers or employees
arising out of or in connection with this Agreement (whether in contract,
negligence, breach of statutory duty, restitution or otherwise) will be
limited to the lesser of £1,000,000 (one million pounds) or an amount
equal to ten (10) times the total annual fee payable to the Registrar
under this Agreement; and
|
|
4.2.2
|
in
no event shall the Registrar or its agents, officers or employees be
liable to the Company under or in connection with this Agreement for
indirect or consequential loss or damage, loss of profit, revenue, actual
or anticipated savings or goodwill, in all cases (whether caused by
negligence or otherwise).
|
4.3
|
For
the purposes of Clause 4.2, the extent of any liability shall always be
calculated in accordance with the annual fee payable in force at the time
such event happened to give rise to a claim, and not at the date such
event is discovered.
|
4.4
|
Nothing
in this Clause 4 shall exclude or limit the right of the Registrar to
recover, or the obligation of the Company to pay, any sums properly due
and payable to the Registrar under the terms of this Agreement including,
without limitation, any fees.
|
5.
|
Non-Exclusivity
|
5.1
|
The
Registrar and any Associate of the Registrar
may:
|
|
(a)
|
act
as manager, administrator or in any other role for any other company,
corporation or body of persons on such terms as may be arranged with such
company, corporation or body of persons and shall be deemed not to be
affected with notice of or to be under any duty to disclose to the Company
any fact or thing which may come to the knowledge of the Registrar or its
Associate or any servant or agent of the Registrar or its Associate in the
course of so doing or in the course of its business in any other capacity
or in any manner whatsoever otherwise than in the course of carrying out
its duties hereunder;
|
|
(b)
|
acquire,
hold or deal with for its own account or for the account of any customer
or other person and in its own name or in the name of such customer or
person or of a nominee any shares or securities for the time being issued
by the Company and any securities or other
investments.
|
5.2
|
Neither
the Registrar nor any Associate of the Registrar shall be liable to
account to the Company, its shareholders or any of them for any profits or
benefits made by or derived from or in connection with any transaction
permitted by Clause 5.1 above.
|
5.3
|
Nothing
herein contained shall prevent the Registrar or any Associate of the
Registrar from contracting or entering into any financial, banking or
other transaction with the Company or any of its shareholders or from
being interested in any such transaction and neither the Registrar nor any
Associate of the Registrar shall be liable to account to any person for
any profits or benefits made or derived by them in connection with any
such transaction.
|
6.
|
Insurance
and lost Share Certificates
|
6.1
|
Where
a shareholder claims that its share certificate (the “
old certificate
”) has
been defaced, worn-out, lost or destroyed and requests the Registrar to
issue, on behalf of the Company, a replacement share certificate (the
“
replacement
certificate
”), the Registrar shall require the shareholder to
submit an indemnity (“
Indemnity
”), in favour
of the Company and the Registrar, in respect of loss suffered as a result
of the issue of the replacement certificate and take any other steps
required in the Company’s Articles and
By-laws.
|
6.2
|
On
receipt of an Indemnity from the relevant shareholder the Registrar will
use reasonable endeavours to procure that the Company does not suffer a
loss as a result thereof, provided
always:
|
|
(a)
|
in
cases where the shareholder arranges a guarantee or insurance in support
of its Indemnity to the Company and the Registrar, the Registrar shall
have no further obligation to the Company in relation to any loss arising
as a result of the issue of the replacement certificate or the subsequent
presentation of the old certificate;
and
|
|
(b)
|
in
cases where the shareholder does not arrange a guarantee or insurance in
support of its Indemnity, the shareholder will be asked to pay an
appropriate administration fee to the Registrar and the Registrar will
insure itself for any loss arising as a result of the issue of the
replacement certificate or the subsequent presentation of the old
certificate. In such case, the Registrar’s liability to the Company to use
reasonable endeavours to procure that the Company does not suffer a loss
as a result of the issuing of a replacement certificate shall be expressly
limited to the extent and amount that the Registrar is entitled to
recover, and in fact does recover, from its insurers in respect of the
same (net of any excess which
applies).
|
6.3
|
The
Company hereby assigns to the Registrar all its future right title and
interest to recover under any such Indemnity from the relevant shareholder
to the extent that any compensation payment, expressly limited to the
extent and amount that the Registrar is able to recover, and in fact does
recover from its insurers, may be made by the Registrar to the Company.
The Company agrees that the Registrar may seek to recover the Company’s
entitlement pursuant to the
Indemnity.
|
6.4
|
Where
the Registrar has acted upon a forged transfer, the duty to procure that
the Company does not suffer loss shall be expressly limited to the extent
and amount that the Registrar is entitled to recover, and in fact does
recover, from its insurers in respect of the same under the forged
transfer insurance policy (net of any excess which
applies).
|
6.5
|
Where,
the replacement certificate, old certificate or forged transfer has been
used to effect a fraudulent or otherwise wrongful transaction through a
broker, which causes loss to the Company, the Registrar shall take
reasonable steps to recover such loss from the said broker (not including
commencing legal action) and the Registrar’s liability to the Company
shall be expressly limited to the extent and amount that the Registrar in
fact does recover from the said
broker.
|
7.
|
Proceedings
|
7.1
|
Neither
the Registrar nor any transfer agent in the United Kingdom appointed by
the Registrar nor any other delegate or agent appointed by the Registrar
hereunder shall be required to take any legal action unless fully
indemnified to its reasonable satisfaction for all costs and liabilities
that may be incurred or suffered by the Registrar or such other party and
if the Company requires the Registrar or such other party to take any
action of whatsoever nature which in the reasonable opinion of the
Registrar or such other party might make the Registrar or such other party
liable for the payment of money or liable in any other way the Registrar
or such other party shall be and be kept indemnified in any reasonable
amount and form satisfactory to the Registrar or such other party as a
pre-requisite to taking action.
|
7.2
|
The
Registrar shall be entitled at the expense of the Company (subject to
obtaining the prior approval of the Company in each and every case) to
obtain legal advice from its lawyers for the time being and/or the opinion
of counsel on any matter relating to the Company or this
Agreement.
|
8.
|
Prospectuses
and Advertisements
|
9.
|
Disclosure
|
9.1
|
Except
in so far as required by any governmental or regulatory organisation or
any applicable law or rule in any jurisdiction, the Registrar shall not
(except in exercise of its duties hereunder or as required by any
statutory or regulatory requirement applicable to it) disclose any
information relating to the affairs of the Company or any of its
subsidiaries which is not in the public domain to any person (other than
to the Directors, officers, auditors and accountants of the Company or to
any transfer agent in the United Kingdom appointed by the Registrar or to
any other delegate or agent appointed by the Registrar) not authorised by
the Company to receive such information and the Registrar shall use its
reasonable endeavours to prevent any such
disclosure.
|
9.2
|
None
of the parties hereto shall do or commit any act, matter or thing which
would or might prejudice or bring into disrepute in any manner the
business or reputation of the other parties hereto or any agent, officer
or employee thereof (which, in the case of the Registrar, shall include
any transfer agent in the United Kingdom appointed by the
Registrar).
|
9.3
|
In
the event of this Agreement being terminated the provisions of this Clause
9 shall remain in full force and
effect.
|
10.
|
Warranties
|
10.1
|
it
is a company duly incorporated and validly existing under the laws of the
jurisdiction of its incorporation;
|
10.2
|
it
has the legal right and full power and authority to carry on its business
as it is being conducted and to enter into and perform its obligations
under this Agreement, which when executed will constitute valid and
binding obligations of the Company in accordance with the terms hereof;
and
|
10.3
|
the
Company has the power and all necessary governmental, statutory,
regulatory and other consents, approvals, licences, authorisations,
registrations, waivers or exemptions (together, the “Consents”) required
to carry on its business as it is being conducted and it has complied with
the terms of all such Consents in all material respects and none of the
Consents have been revoked or otherwise
terminated.
|
11.
|
Fees
and Expenses
|
11.1
|
Subject
to Clauses 11.4 and 11.5, fees at such rate or rates as are set out in
Appendix 2 shall be payable to the Registrar by the Company quarterly in
arrears based on the number of shareholder accounts appearing on the
Offshore Registers including nil accounts each 1st January, 1st April, 1st
July and 1st October, subject to any minimum annual fee specified in
Appendix 2. The Company shall settle all such quarterly invoices
immediately on receipt.
|
11.2
|
The
Registrar shall be entitled to charge interest on all amounts due from the
Company and outstanding for more than thirty days at a rate of 3% over the
base rate of HSBC Bank Plc prevailing from time to
time.
|
11.3
|
Subject
to Clause 11.5, the initial fee as shown in the attached Appendix 2 shall
be fixed for a period of not less than twelve
months.
|
11.4
|
The
Fees of the Registrar pursuant to this Agreement and set out in the
Appendix 2 are subject to review by the Registrar in its absolute
discretion not more often than once in any calendar year nor prior to the
first anniversary of the date of admission of the shares to trading on AIM
(subject in each case to clause 11.5) and the Registrar will give to the
Company at least one month’s notice of any alteration of such charges
which alteration will take effect forthwith upon the expiration of such
notice. The Fees will be subject to a minimum annual increase at the rate
of the Retail Prices Index prevailing at that
time.
|
11.5
|
Notwithstanding
the restriction in clause 11.4 above, the Registrar shall at its own
discretion be entitled to revise the Fees at any time where a change in
law or regulation (including but not limited to the regulations from time
to time relating to CREST) affects the obligations of the Registrar making
it uneconomical for the Registrar to provide the services of a registrar
at the agreed Fees, such revisions being effective from the 21 days after
the date of the notification being delivered to the
Company.
|
11.6
|
The
Company shall reimburse to the Registrar all reasonable out of pocket
expenses properly incurred on behalf of the Company in the performance of
its duties hereunder; including but not limited to reasonable postage,
CREST and related Syntegra network charges, telephone, facsimile and
courier expenses; reasonable travelling expenses incurred on the Company’s
business (including those incurred in attending a general meeting of the
Company); reasonable printing, stationery, photocopying, storage and
forged transfer insurance.
|
11.7
|
The
Registrar is entitled to pass on all taxes, duties and tariffs directly
attributable to any amounts charged in accordance with this Clauses
11.
|
12.
|
Termination
|
12.1
|
This
Agreement shall be terminated:
|
12.1.1
|
upon
the expiry of not less than six months’ notice of termination given by the
Company to the Registrar, such notice to expire no earlier than the second
anniversary of the date of this Agreement;
or
|
12.1.2
|
upon
the expiry of not less than three months’ notice of termination given by
the Registrar to the Company; or
|
12.1.3
|
immediately,
upon one party giving to the other notice of immediate termination in the
event of:
|
(a)
|
the
property of the other party being declared
en d
é
sastre
or that other party becoming insolvent or going into liquidation (other
than a voluntary liquidation for the purpose of reconstruction or
amalgamation upon terms previously approved in writing by the other party)
or a receiver being appointed of any of its assets or if some event having
equivalent effect occurs; or
|
(b)
|
the
other party committing a material breach of this Agreement and (if such
breach shall be capable of remedy) the other party not making good such
breach within thirty days of service upon the party in breach of notice
requiring the remedy of such breach or, in the case of the Registrar,
being in the opinion of the Directors guilty of fraud, wilful misconduct
or gross negligence in the performance of its duties hereunder;
or
|
12.1.4
|
immediately,
upon the Company giving to the Registrar notice of immediate termination
in the event of the Registrar ceasing to be the holder of any licence,
consent, permit or registration enabling it to act as a Registrar of the
Company under any law applicable to
it;
|
12.2
|
The
Registrar shall be entitled to receive all Fees and other monies accrued
due up to the date of such termination. In addition, the Abort Fee set out
in Appendix 2 shall be payable by the Company to the Registrar
either:
|
12.2.1
|
on
the termination of this Agreement for whatever reason prior to the
Commencement Date; or
|
12.2.2
|
on
the day three months after the date of this Agreement in the event that
the Company’s securities are not admitted to the AIM market of the London
Stock Exchange within three months of the date of this
Agreement.
|
12.3
|
In
the event of termination of the Registrar’s appointment under this
Agreement the Registrar shall have the right by written request to require
the Company for a period of six months from the date of such termination
in all prospectuses, explanatory memoranda, and other material designed to
be read by investors and prospective investors to state (in no less
prominent fashion than the majority of the text therein) that the
Registrar has ceased to be its Registrar and also that any transfer agent
in the United Kingdom appointed by the Registrar or any other delegate or
agent appointed by the Registrar has ceased to act as such and (upon
request) to provide specimens of such material(s) to the
Registrar.
|
12.4
|
Immediately
upon the termination of this Agreement the Registrar shall deliver to the
Company and shall use all reasonable endeavours to procure that its
officers, servants, agents, and advisers shall deliver to the Company all
Records appertaining to the Company’s business as are in the possession or
under the control of the Registrar or any such persons, provided that the
Registrar shall have a lien against and shall not be required to make
delivery of such books and records until full payment has been made to the
Registrar for all fees, disbursements and expenses due to it under this
Agreement (including any costs associated with the termination of this
Agreement and the delivery of such books and
records).
|
13.
|
Amendment
|
13.1
|
Subject
to Clause 12.2, no variation of this Agreement shall be valid unless in
writing and signed by or on behalf of each of the
parties.
|
13.2
|
In
the event of a change of law or practice applicable to the Registrar or
any transfer agent in the United Kingdom appointed by the Registrar, the
Registrar may add, amend or vary the terms and conditions of this
Agreement by giving the Company thirty days prior written notice of such
amendments provided that if the Company gives written notice to the
Registrar within such period objecting to any proposed amendment the same
shall be effective only with the written agreement of both
parties.
|
14.
|
Assignment
|
14.1
|
The
Company shall not be entitled to assign or transfer all or any of its
rights, benefits and obligations
hereunder.
|
14.2
|
The
Registrar may at any time assign all or any of its rights and benefits
hereunder with the prior written consent of the Company (which shall not
be unreasonably delayed or withheld), provided that no such written
consent shall be required in the case of an assignment by the Registrar to
an Associate.
|
15.
|
Notices
|
|
Any
notice served hereunder shall be sufficiently served
if:
|
15.1.1
|
delivered
by hand or sent by registered mail addressed to the other party concerned
at its registered or principal office (as the case may be) for the time
being and a notice so sent by registered mail shall be deemed to be
received at the expiry of two clear days after the day of posting;
and
|
15.1.2
|
by
facsimile to the other party concerned at its registered or principal
office (as the case may be) for the time being and a notice so sent by
facsimile shall be deemed to be received on completion of its
transmission.
|
16.
|
Entire
Agreement
|
17.
|
Governing
Law and Jurisdiction
|
18.
|
Interpretation
and Construction
|
18.1
|
In
this Agreement, unless the context otherwise requires, the following
expressions shall have the following
meanings:
|
|
“Abort
Fee”
|
Shall
have the meaning as given in Appendix
II
|
|
“Associate”
|
means
in relation to a company, any company which is a subsidiary or a holding
company of that company or a subsidiary of any such holding company and
any individual, partnership or other incorporated association or firm
which has direct or indirect control of that company and any company which
is directly or indirectly controlled by any such individual, partnership
or other incorporated association or firm, and in relation to an
individual, partnership or other unincorporated association, means any
company directly or indirectly controlled by that individual, partnership
or other association;
|
|
“Directors”
|
means
the Directors of the Company for the time being and includes where
applicable any alternate directors;
|
|
“Proper
Instructions”
|
means
written, cabled, facsimiled or telexed instructions or instructions given
by any other means of electronic transmission in a readable form in
respect of any of the matters referred to in this Agreement signed or
purported to be signed by such one or more person(s) (whose name,
signature and office address shall have been delivered to the Registrar)
as the Directors shall from time to time have authorised to give the
particular class of instruction in question. In instances indicated in
advance by the Directors, and agreed with the Registrar, the Registrar may
also act pursuant to instructions by telephone given or purported to be
given by designated persons and such telephonic instructions shall be
deemed to be Proper Instructions. Where Proper Instructions are given by
telephone, written confirmation thereof shall be sent to the Registrar as
soon as practicable thereafter. Different persons may be authorised to
give instructions for different purposes and such persons may also include
officers of corporations other than the Company so authorised by the
Directors. A certified copy of a resolution of the Directors may be
received and accepted by the Registrar as conclusive evidence of the
authority of any such person to act and may be considered as in full force
and effect until receipt of written notice to the
contrary;
|
|
“Records”
|
means
all corporate records, registers, books of account, correspondence, files,
tables, documents, discs, print outs, data and information
systems.
|
18.2
|
In
this Agreement, any reference to:
|
|
18.2.1
|
a
Recital, Clause or a Schedule is, unless the context otherwise requires, a
reference to a recital or clause of, or a schedule to, this Agreement and
any reference to a sub-clause is, unless otherwise stated, a reference to
the sub-clause of the Clause in which the reference
appears;
|
|
18.2.2
|
this
Agreement or to any agreement or document referred to in this Agreement
shall be construed as a reference to such agreement or document as
amended, varied, modified, supplemented, restated, novated or replaced
from time to time;
|
18.2.3
|
any
statute or statutory provision shall, unless the context otherwise
requires, be construed as a reference to such statute or statutory
provision as the same may have been or may from time to time be amended,
modified, extended, consolidated, re-enacted or replaced and shall include
any subordinate legislation made
thereunder;
|
18.2.4
|
a
“subsidiary”, “group” or “holding company” shall be construed in
accordance with Article 2 of the Companies (Jersey) Law
1991.
|
18.3
|
In
this Agreement, except where the context otherwise requires, words
denoting the singular include the plural and vice versa, words denoting a
gender include every gender and references to persons include bodies
corporate and unincorporate.
|
18.4
|
The
Recitals and Schedule form part of this Agreement and shall have the same
force and effect as if they were expressly set out in the body of this
Agreement and any reference to this Agreement shall include the Recitals
and Schedule.
|
18.5
|
Clause
headings in this Agreement are inserted for convenience only and shall not
affect the construction of this
Agreement.
|
18.6
|
This
Agreement shall prevail over the Company’s standard terms and conditions
(if any).
|
SIGNED
by
for
and on behalf of
Medgenics,
Inc.
|
)
)
/s/Andrew
L. Pearlman
)
)
|
SIGNED
by
for
and on behalf of
Capita
Registrars (Jersey) Limited
|
)
)
)/s/
[Illegible]
)/s/
[Illegible]
|
1.
|
Receive
and register (within the time limits set down by the rules of the London
Stock Exchange plc) transfers, probates, powers of attorney, changes of
address, and all similar documents normally needed to maintain the
Offshore Registers in accordance with the laws of Jersey, (to the extent
applicable) the CREST Regulations and the applicable provisions of the US
Securities Act 1933 (as amended) (the “Act”) and the applicable Rules made
thereunder, including (without limitation) Regulation S and, in particular
in relation to Shares that shall from time to time be restricted
securities under the Act, to apply procedures in relation to the Company’s
Regulation S restricted Shares from time to time agreed and approved by
the Company (such agreement and approval not to be unreasonably withheld
or delayed).
|
2.
|
Maintain
and update the Offshore Registers and where applicable registers of loan
stock and debenture holders.
|
3.
|
Maintain
and update dividend and interest payment
instructions.
|
4
|
Prepare
and despatch dividend and interest warrants for up to two dividends per
year per class of share or stock and reconcile the respective bank
accounts.
|
5.
|
Prepare,
seal and issue new shares or stock certificates and issue duplicate
certificates in place of certificates alleged to be lost, destroyed or
mutilated, following
|
|
5.1
|
the
return of any mutilated certificate;
or
|
|
5.2
|
requiring
such evidence as the Registrar or Transfer Agent shall deem necessary of
the loss or destruction of certificates and an indemnity countersigned by
a bank or insurance company in respect thereof;
or
|
|
5.3
|
if
such evidence and indemnity is not offered then the Registrar or Transfer
Agent will submit any such request for duplicate certificates to the
Company.
|
6.
|
Provide
an internal audit and submit audit reports on transfers and new
certificates.
|
7.
|
Ensure
that the Register of Members shall be operated in such a way as to enable
the holding and transfer of shares in uncertificated
form.
|
8.
|
Facilitate
the provision of a secure computer link to the Company or any designated
person to facilitate the viewing of the Register of Members. An additional
fee is chargeable for this service.
|
9.
|
Prepare
and despatch name and address labels as the Company may require for the
despatch of the annual Report and Accounts and the Interim
Statement.
|
10.
|
Deal
with all correspondence and enquiries relating to the Register of Members
including, but not limited to, holding the Register of Members open for
inspection at the Registered Office of the Company and prepare such lists
and extracts of the Register of Members as are required to be or are
customarily produced under the Law.
|
11.
|
Receive,
check, evaluate and report on forms of proxy for the Company’s Annual
General Meeting.
|
12.
|
Take
all such precautions as are usual and reasonable for the purpose of
ascertaining the genuineness of all transfers, certificates, warrants for
dividends or other documents or instruments in connection with any of the
Company’s registers or with any
dividends.
|
13.
|
Maintain
in force an insurance policy to cover any claim, which may arise by reason
of any forged transfer, certificate, warrant for dividend or other
document or instrument in connection with the aforementioned
matters.
|
14.
|
Undertake
such additional duties on such terms and conditions as may be agreed with
the Company.
|
Set
up fee
|
£2,000
one off payment.
|
Annual
Maintenance Fee
|
£2.00
per shareholder account per annum
|
Intra
CREST
|
£0.20
|
Per
transfer
|
Stock
Deposit / Withdrawal
|
£0.75
|
Per
transfer
|
Off
Market Transfer
|
£0.75
|
Per
transfer
|
Transfers
utilising Representation Letters
|
£15.00
|
Per
transfer
|
Maintenance
of the register in
|
||
Jersey
and for the provision
|
:
|
£1,500
per annum
|
of
a UK transfer agent.
|
||
Generic
Web Portal access
|
:
|
£500
per annum
|
(a)
|
the
Company’s securities are not admitted to the AIM market of the London
Stock Exchange within three months of the date of this Agreement;
or
|
(b)
|
this
Agreement is terminated for whatever reason prior to the Commencement
Date,
|
Share
Certificate(s)
|
Check
As
Applicable
|
Received
|
¨
|
Stock
Transfer Form
|
|
Duly
Completed
|
¨
|
Seller
Certification
|
|
Additional
documentation will be required, depending on which box is ticked. Only one
lettered box may be checked.
|
|
IF
MORE THAN ONE LETTERED BOX IS CHECKED, REJECT TRADE.
|
|
Box
(a) - No Additional Documentation Required
|
¨
|
Box
(b) - Requires Purchaser Certification.
|
¨
|
Check
Purchaser Certification that A(i) is checked.
|
|
Box
(c) — Requires Purchaser Certification.
|
¨
|
Check
Purchaser Certification that A(iii) is checked.
|
|
Box
(d) - Requires Purchaser Certification and Opinion of Holder’s
Counsel
|
¨
|
NOTIFY
THE COMPANY
|
|
Check
Purchaser Certification that A(ii) is checked.
|
|
IF
BOX (d) IS CHECKED TRANSFER SHOULD NOT BE COMPLETED WITHOUT APPROVAL OF
COMPANY
|
|
Additionally:
|
|
·
One
of Box (e) or Box (f) on Sellers Certification must be
checked
|
¨
|
·
If
Purchaser Certification is required, then C(i) or C(ii) must be
checked
|
|
-
|
Box
(a), Box (b) or Box (c)
—
Complete
Transfer
|
|
-
|
Box
(d) — send to the Company for
approval:
|
|
-
|
Arrange
for the documents to be scanned in as a
PDF
|
|
-
|
Forward
the PDF to xxxxx at the Company, or, if not available for approval
xxxxxx
|
|
-
|
On
receipt of accept or rejection instructions from the Company, either
process the transfer or reject back to
broker.
|
|
-
|
Reject
back to the broker with covering letter stating what is
required.
|
¨
|
(a)
|
These
Shares are being transferred to the
Company.
|
¨
|
(b)
|
(i)
These Shares are being transferred in an offshore transaction not subject
to the registration requirements of the Securities Act, by virtue of
Regulation S thereunder; (ii) the offer of the Shares was not made to a US
Person as defined in Regulation S (attached hereto in
Schedule A
) (iii) (A) at the
time the buy order was originated, the transferee was outside the United
States or the holder and any person acting on its behalf reasonably
believed that the transferee was outside the United States or (B) the
transaction is executed in, on or through the facilities of the AIM Market
operated by London Stock Exchange plc, and neither the holder nor any
person acting on its behalf knows that the transaction has been
pre-arranged with a buyer in the United States; (iv) no directed selling
efforts (as defined in Regulation S) have been made in contravention of
the requirements of Regulation S; (v) the transaction is not part of a
plan or scheme to evade the registration requirements of the Securities
Act; (vi) if applicable, in the case of a transfer by a holder who is a
dealer or a person receiving a selling concession, fee or other
remuneration in connection with such transfer, such holder has complied
with the additional conditions set forth in Rule 904(b) of Regulation S;
and (vii) the holder (A) is not the Company or a distributor within the
meaning of Regulation S or an affiliate of the Company or a distributor or
(B), if it is the Company or a distributor or an affiliate of the Company
or a distributor, has complied with all additional requirements imposed by
Rule 903 of Regulation S;
|
¨
|
(c)
|
(i)
These Shares are being transferred pursuant to an exemption from
registration under the Securities Act provided by Rule 144A; (ii) the
transferee is a qualified institutional buyer (as defined under Rule 144A)
or the holder reasonably believes the transferee is a qualified
institutional buyer (as defined under Rule 144A); (iii) the holder has
taken reasonable steps to inform the transferee that they are relying on
Rule 144A; and (iv) the holder is not the
Company.
|
¨
|
(d)
|
These
Shares are being transferred pursuant to an exemption from registration
under the Securities Act and in accordance with applicable US securities
laws and in relation to which the holder has furnished to the Company an
opinion to such effect from counsel of recognized standing in form and
substance satisfactory to the Company prior to such offer, sale, pledge or
transfer.
|
¨
|
(e)
|
it
is not the Company or a distributor within the meaning of Regulation S or
an affiliate (as defined under the Securities Act) of the Company or a
distributor; or
|
¨
|
(g)
|
it
is the Company or a distributor or an affiliate of the Company or a
distributor, has complied with all additional requirements imposed by Rule
903 of Regulation S, including procuring a written declaration from the
transferee stating, among other things, that (i) the transaction is being
conducted under a valid exemption from registration under the Securities
Act; (ii) the transferee is not a US Person within the meaning of
Regulation S (or the transferee is a US Person purchasing in a transaction
exempt from registration under the Securities Act); (iii) the transferee
agrees to be bound by the provision of Regulation S regarding resales and
hedging activities; and (iv) the holder is holding the Shares in the form
of a restricted affiliate share
certificate.
|
By:
|
|
Name:
|
|
Title:
|
(i)
|
any
natural person resident in the United
States;
|
(ii)
|
any
partnership or corporation organized or incorporated under the laws of the
United States;
|
(iii)
|
any
estate of which any executor or administrator is a United States
person;
|
(iv)
|
any
trust of which any trustee is a United States
person;
|
(v)
|
any
agency or branch of a foreign entity located in the United
States;
|
(vi)
|
any
non-discretionary account or similar account (other than an estate or
trust) held by a dealer or other fiduciary for the benefit or account of a
United States person;
|
(vii)
|
any
discretionary account or similar account (other than an estate or trust)
held by a dealer or other fiduciary organized, incorporated, or (if an
individual) resident in the United States;
and
|
(viii)
|
any
partnership or corporation if:
|
|
(A)
|
organized
or incorporated under the laws of any foreign jurisdiction;
and
|
|
(B)
|
formed
by a United States person principally for the purpose of investing in
securities not registered under the Securities Act, unless it is organized
or incorporated, and owned, by accredited investors (as defined in Rule
501(a)) who are not natural persons, estates or
trusts.
|
(i)
|
any
discretionary account or similar account (other than an estate or trust)
held for the benefit or account of a non-United States person by a dealer
or other professional fiduciary organized, incorporated, or (if an
individual) resident in the United
States;
|
(ii)
|
any
estate of which any professional fiduciary acting as executor or
administrator is a United States person
if:
|
|
(A)
|
an
executor or administrator of the estate who is not a United States person
has sole or shared investment discretion with respect to the assets of the
estate; and
|
|
(B)
|
the
estate is governed by foreign law;
|
(iii)
|
any
trust of which any professional fiduciary acting as trustee is a United
States person, if a trustee who is not a United States person has sole or
shared investment discretion with respect to the trust assets, and no
beneficiary of the trust (and no settlor if the trust is revocable) is a
United States person;
|
(iv)
|
an
employee benefit plan established and administered in accordance with the
law of a country other than the United States and customary practices and
documentation of such country;
|
(v)
|
any
agency or branch of a United States person located outside the United
States if:
|
|
(A)
|
the
agency or branch operates for valid business reasons;
and
|
|
(B)
|
the
agency or branch is engaged in the business of insurance or banking and is
subject to substantive insurance or banking regulation, respectively, in
the jurisdiction where located; and
|
(vi)
|
the
International Monetary Fund, the International Bank for Reconstruction and
Development, the Inter-American Development Bank, the Asian Development
Bank, the African Development Bank, the United Nations, and their
agencies, affiliates and pension plans, and any other similar
international organizations, their agencies, affiliates and pension
plans.
|
(A)
|
We
certify that (
check
one
):
|
¨
|
(i)
we are not a US Person within the meaning of Regulation S under the
Securities Act and we are not acquiring the Shares for the account or
benefit of any US Person and we are acquiring the Shares in compliance
with the requirements of Regulation S under the Securities
Act;
|
¨
|
(ii)
we are a US Person within the meaning of Regulation S under the Securities
Act who is purchasing these Shares pursuant to an exemption from
registration under the Securities but in accordance with applicable US
securities laws and in relation to which the holder has furnished to the
Company an opinion to such effect from counsel of recognized standing in
form and substance satisfactory to the Company prior to such offer, sale,
pledge or transfer;
or
|
¨
|
(iii)
we are a US Person within the meaning of Regulation S under the Securities
Act and a qualified institutional buyer (as defined under Rule 144A of the
Securities Act) who is purchasing these Shares pursuant to an exemption
from registration under the Securities Act provided by Rule 144A;
and
|
(B)
|
We
agree (i) to resell the Shares only in accordance with the provisions of
Regulation S under the Securities Act, pursuant to registration under the
Securities Act, or pursuant to an available exemption from registration,
and (ii) not to engage in hedging transactions, directly or indirectly,
with regard to the Shares unless in compliance with the Securities Act;
and
|
(C)
|
In
addition, in connection with any subsequent transfer of these Shares, the
undersigned transferee certifies that (
check
one
):
|
|
¨
|
(i)
|
it
is not the Company or a distributor within the meaning of Regulation S or
an affiliate (as defined under the Securities Act) of the Company or a
distributor;
or
|
|
¨
|
(ii)
|
(a)
it is the Company or a distributor or an affiliate of the Company or a
distributor; (b) it will comply with all requirements imposed by Rule 903
of Regulation S in any resales of the Shares, including procuring a
written declaration from the transferee stating, among other things, that
(x) the transaction is being conducted under a valid exemption from
registration under the Securities Act; (y) the transferee is not a US
Person within the meaning of Regulation S (or the transferee is a US
Person purchasing in a transaction exempt from registration under the
Securities Act); (z) the transferee agrees to be bound by the provision of
Regulation S regarding resales and hedging activities; and (d) it will
hold the Shares in the form of a restricted affiliate share
certificate.
|
By:
|
|
Name:
|
|
Title:
|
(i)
|
any
natural person resident in the United
States;
|
(ii)
|
any
partnership or corporation organized or incorporated under the laws of the
United States;
|
(iii)
|
any
estate of which any executor or administrator is a United States
person;
|
(iv)
|
any
trust of which any trustee is a United States
person;
|
(v)
|
any
agency or branch of a foreign entity located in the United
States;
|
(vi)
|
any
non-discretionary account or similar account (other than an estate or
trust) held by a dealer or other fiduciary for the benefit or account of a
United States person;
|
(vii)
|
any
discretionary account or similar account (other than an estate or trust)
held by a dealer or other fiduciary organized, incorporated, or (if an
individual) resident in the United States;
and
|
(viii)
|
any
partnership or corporation if:
|
|
(A)
|
organized
or incorporated under the laws of any foreign jurisdiction;
and
|
|
(B)
|
formed
by a United States person principally for the purpose of investing in
securities not registered under the Securities Act, unless it is organized
or incorporated, and owned, by accredited investors (as defined in Rule
501(a)) who are not natural persons, estates or
trusts.
|
(i)
|
any
discretionary account or similar account (other than an estate or trust)
held for the benefit or account of a non-United States person by a dealer
or other professional fiduciary organized, incorporated, or (if an
individual) resident in the United
States;
|
(ii)
|
any
estate of which any professional fiduciary acting as executor or
administrator is a United States person
if:
|
|
(A)
|
an
executor or administrator of the estate who is not a United States person
has sole or shared investment discretion with respect to the assets of the
estate; and
|
|
(B)
|
the
estate is governed by foreign law;
|
(iii)
|
any
trust of which any professional fiduciary acting as trustee is a United
States person, if a trustee who is not a United States person has sole or
shared investment discretion with respect to the trust assets, and no
beneficiary of the trust (and no settlor if the trust is revocable) is a
United States person;
|
(iv)
|
an
employee benefit plan established and administered in accordance with the
law of a country other than the United States and customary practices and
documentation of such country;
|
(v)
|
any
agency or branch of a United States person located outside the United
States if:
|
|
(A)
|
the
agency or branch operates for valid business reasons;
and
|
|
(B)
|
the
agency or branch is engaged in the business of insurance or banking and is
subject to substantive insurance or banking regulation, respectively, in
the jurisdiction where located; and
|
(vi)
|
the
International Monetary Fund, the International Bank for Reconstruction and
Development, the Inter-American Development Bank, the Asian Development
Bank, the African Development Bank, the United Nations, and their
agencies, affiliates and pension plans, and any other similar
international organizations, their agencies, affiliates and pension
plans.
|
Leonard
Steinberg
|
|
CIBC
Trust Company (Bahamas) Limit as Trustee of T-555
|
|
Chicago
Investments, Inc.
|
|
Kanter
Family Foundation
|
Andrew
O’Shaughnessey
|
|
Stephen
D. McMurray
|
George
Warburton
|
|
Donald
A. Sands and Martha P. Sands
DAS
Family Trust, Donald A. Sands, Trustee
Scott
M. Gingras
|
By:
|
/s/ Andrew L.
Pearlman
|
|
Dr.
Andrew L. Pearlman, President
and
|
|
Chief
Executive Officer
|
By:
|
/s/ Anthony J.
Sarkis
|
|
Its:
|
Head
of Investment Banking
|
[NEWBRIDGE
LOGO]
|
Newbridge
Securities Corporation
7600
Jericho Tpk., Suite 202, Woodbury, NY
11797
|
|
Re:
|
Medgenics,
Inc. Public Offering of Common
Stock
|
[NEWBRIDGE
LOGO]
|
Medgenics
- Newbridge IPO Letter of Engagement
June
17, 2010
Page
2
|
[NEWBRIDGE
LOGO]
|
Medgenics
- Newbridge IPO Letter of Engagement
June
17, 2010
Page
3
|
[NEWBRIDGE
LOGO]
|
Medgenics
- Newbridge IPO Letter of Engagement
June
17, 2010
Page
4
|
[NEWBRIDGE
LOGO]
|
Medgenics
- Newbridge IPO Letter of Engagement
June
17, 2010
Page
5
|
[NEWBRIDGE
LOGO]
|
Medgenics
- Newbridge IPO Letter of Engagement
June
17, 2010
Page
6
|
[NEWBRIDGE
LOGO]
|
Medgenics
- Newbridge IPO Letter of Engagement
June
17, 2010
Page
7
|
[NEWBRIDGE
LOGO]
|
Medgenics
- Newbridge IPO Letter of Engagement
June
17, 2010
Page
8
|
The
Directors
Medgenics,
Inc
2711
Centreville Road
Suite
400
Wilmington,
19808
New
Castle
Delaware,
USA
|
|
1.
|
OUR
SERVICES TO YOU
|
||
1.1
|
At
the date of our signing of this letter we are authorised by the FSA and as
such are regulated by the FSA in the conduct of investment
business.
|
||
1.2
|
You
have appointed us and we agree to act, as your broker, in accordance with
the requirement of the AIM Rules that an AIM company appoints and retains
a broker to the Company, in relation to the proposed Admission of the
company’s shares to trading on AIM and thereafter. You should note that
SVS does not deal in securities on behalf of clients, where a client may
wish to undertake a trade in its shares, such trade is introduced to SVS’s
Designated Broker as recognised by the London Stock Exchange plc, which
designated broker may change from time to time.
|
||
1.3
|
We
will provide you with the specific services set out below in relation to
Admission (in conjunction, where appropriate, with your other advisers,
including where appropriate your Nominated Adviser, both generally and
where specifically highlighted).
|
||
1.3.1
|
We
will advise, and together with your other professional advisers, will
assist you in the preparation of suitable documents for this
purpose.
|
||
1.4
|
We
will also provide you with the services set out below as and when
appropriate.
|
||
1.4.1
|
advise
you on anticipated market reaction to new corporate initiatives of yours,
such as acquisitions, disposals and fundraisings; and
|
||
1.4.2
|
advise
on the timing, commissioning and publication of independent research on
you whenever we feel, in consultation with you, that it is appropriate for
us to do so.
|
||
1.5
|
Please
note that the items set out below are expressly excluded from the scope of
our work, unless and until you and we agree otherwise in
writing.
|
1.5.1.
|
We
are not obliged to sell, buy, place, underwrite or sub-underwrite any
issue or sale of any securities, or to lend money.
|
||
1.5.2.
|
Except
as set out in this letter, we are not obliged to provide you with any
advice or information in relation to the acquisition or disposal of any
business or undertaking, especially as to the terms of any such
transaction including the consideration relating to it. In providing any
advice to you, we will be entitled to rely on your directors’ assessment
of the commercial and financial benefits, risks and effect of any proposed
transaction (including Admission), and your directors will be responsible
for that assessment accordingly. Except as part of our provision of
corporate finance advice, we do not provide advice on the merits of buying
and selling investments generally.
|
||
1.5.3.
|
We
are not responsible for carrying out any due diligence work in relation to
any transaction including Admission. We do not accept responsibility for
due diligence or other work carried out by you or your other advisers (for
example, your legal, accounting, valuation, tax or public relations
advisers), even if we have introduced you to those advisers or advise on
the scope of that advice or receive or help to co-ordinate that advice or
the provision of the underlying information. You must ensure that the
advice that you receive from your advisers in connection with any
transaction is adequate for the purposes of that transaction and is also
addressed to us if we so request.
|
||
1.6.
|
We
will advise you in what we consider to be your best interests, in the
light of circumstances prevailing at the time at which we give our advice.
Please note that this may mean that our advice may be subject to change.
We do not expressly or by implication warrant or represent that it is or
will be possible or advisable for any transaction, including Admission, to
proceed. Our advice will also be based on our understanding of your
financial position and objectives as explained by you, as well as on other
information provided by you. If we believe that Admission or any other
particular transaction is unsuitable for you having regard to these
factors or to market conditions or to any other fact or circumstance
relating to you which comes to our attention, we may in these
circumstances, without being in breach of this letter, decline to act
further in relation to the transaction concerned, even if you wish to
continue with it.
|
||
1.7
|
We
will be pleased to consider requests to carry out other work for you from
time to time, but we are not obliged to do so, unless we expressly agree
to do so in writing. Any other work that we carry out for you from time to
time will be deemed to be provided on and subject to the terms and
conditions of this letter, or such other terms and conditions as you and
we may agree in writing and will be the subject of a separate fee as
provided by paragraph 3.4 below.
|
||
2.
|
STAFFING
|
||
2.1.
|
Kulvir
Virk and Robert Kretowicz will be your principal contacts in connection
with this Engagement.
|
||
2.2.
|
We
will try to avoid any changes in the team handling your work. If a change
is necessary, we will advise you promptly and explain the reasons for the
change.
|
||
3.
|
FEES,
COMMISSIONS AND EXPENSES
|
||
3.1.
|
All
amounts due to us by you shall be paid by you in such manner and to such
account, as we may notify to you in writing from time to
time.
|
||
3.2.
|
You
agree to pay us a fee of £15,000 per annum (or such other amount as we may
agree with you in writing), plus VAT, if applicable, which accrues on a
daily basis and is payable and shall be invoiced by us in four equal
amounts, quarterly in advance. The first payment is due on the later of
the date on which our appointment is announced and the date being 5
business days following Admission. You agree that this will be reviewed
after one year. You agree that we may increase these charges once per
calendar year at any time after the first anniversary of the date of this
letter by giving you not less than four weeks’ written notice before the
increase takes effect at which time you will have the option to terminate
the Engagement if you do not accept the
increase.
|
3.3.
|
If
the Engagement is terminated or if Admission does not proceed or, in our
reasonable opinion, we think that you will not proceed with Admission or
that Admission is not capable of being completed within a reasonable
period, in each case for any reason, then you agree that we shall retain
any fees invoiced by us or accrued but not yet invoiced under paragraph
3.2 above.
|
|
3.4.
|
If
we agree to do more work than envisaged by the scope of this letter, then
you will pay fees for that extra work in the amounts and at the times
subsequently agreed in writing between us. You and we agree to consult at
an early stage in relation to the fees applicable to any such additional
work.
|
|
3.5.
|
You
agree to reimburse us on demand for all fees, commissions and expenses
that we reasonably and properly incur in acting for you (and whether or
not any specific transaction is completed). These fees, commissions and
expenses include, but are not limited to, all out of pocket (including
travel and subsistence) expenses reasonably incurred by us, stamp duty and
stamp duty reserve tax (and any related penalties or interest), fees and
expenses payable to any stock exchange or other regulatory body, the
reasonable fees and expenses of all legal, accountancy and other
professional advisers (including the fees and expenses of our own legal
advisers on a full solicitor and own client basis) reasonably incurred,
commissions in agreed amounts payable to sub-underwriters, the fees and
expenses of registrars and receiving bankers, and printing, posting and
advertising expenses. If we so request, you will pay any such fees,
commissions and expenses direct (rather than our paying them on your
behalf and seeking reimbursement from you). If we incur fees, commissions
or expenses in a currency other than in
£
sterling, you will
reimburse us in
£
sterling for those fees, commissions and expenses (and any foreign
exchange commission we incur) at a rate of exchange reasonably selected by
us.
|
|
3.6.
|
To
the extent not specified otherwise under paragraph 3.1 above, you agree to
pay the amounts due under this letter and our invoices respectively in
cleared funds within seven days of the due date for payment under this
letter or the date of invoice, as the context requires. We reserve the
right to charge interest on late payments from the date seven days after
the relevant due date for payment until the actual date of payment (after
as well as before judgement) at the rate of 2 per cent above the base rate
from time to time of Barclays Bank plc.
|
|
3.7.
|
All
fees, commissions and expenses are subject to the addition of value added
tax, if applicable, at the prevailing rate, payable on the same basis and
at the same time as applies to payment of the relevant fees, commissions
and expenses.
|
|
3.8.
|
You
agree to make all payments under or in connection with this letter gross,
free of any rights of counterclaim or set off and without any deduction or
withholding of any nature save only as may be required by law. If you are
required by law to make a deduction or withholding from a payment, you may
do so, but you must also increase the amount of the payment so that, after
making the deduction or withholding, the recipient receives and retains
(free of any liability in respect of any such deduction or withholding) a
net sum equal to the sum which it would have received and retained had
there been no deduction or withholding. Similarly, if a payment (other
than a payment of a fee or a commission due to us under this letter) made
in connection with paragraph 9 of Schedule 1 of this letter is subject to
tax in the hands of the recipient, you must increase the payment so that,
after paying the tax, the recipient receives and retains the sum it would
have received and retained had it not been subject to that tax in the
hands of the recipient.
|
|
4.
|
COMPLAINTS
PROCEDURE AND COMPENSATION
|
|
We
operate a complaints procedure which may be summarised as follows. Any
complaint about us should be notified in writing to Kulvir Virk, Director,
at the address shown on the front page of this letter, and he will
investigate it and give his response. Once a complaint has been responded
to in writing, if no indication has been received from the complainant
that it is not satisfied with the response, then after two months from the
date of the response we may treat the complaint as settled and
resolved.
|
5.
|
MATERIAL
INTERESTS
|
|
At
the time of writing this letter, we are not aware of any matters where we
or any of our Associates have a material interest that may give rise to a
potential conflict of interest relevant to our acting for you. In the
course of acting for you, we will keep under review the existence of any
actual or potential material interest which may give rise to a potential
conflict of interest relevant to our acting for you and we will notify you
as soon as reasonably possible after we become aware of any relevant
matter. Please draw to our attention any such matter of which you may
become aware.
|
/s/
Robert Kretowicz
|
|
|||
Robert
Kretowicz,
Director
|
|
|||
for
and on behalf of
|
|
Signed: |
/s/
Andrew Pearlman
|
|
1.
|
EXCLUSIVITY
|
|
You
acknowledge that our appointment in our role as broker to the Company for
the purposes of the AIM Rules is an exclusive appointment during the term
of the Engagement. You agree not to engage any other person in such role
without our prior written consent (such consent not to be unreasonably
withheld or delayed). For the avoidance of doubt, we hereby acknowledge
that the Company reserves fully its right to appoint, as a joint or
“
lead” broker
to act with or assist us with any further fundraisings by the Company
during the term of our Engagement, another broker or financial institution
(“other broker”). In such event we will work in willing co-operation with
the Company and such other broker in relation to any such
fundraising.
|
||
2.
|
TERM
OF ENGAGEMENT
|
|
2.1
|
Either
the Company or SVS may terminate this Engagement on giving to the other
party not less than 90 days’ written notice, such notice not to take
effect prior to the first anniversary of the
Engagement.
|
|
2.2
|
If
either of us fails to perform any material obligation under this letter,
and does not remedy the failure within 14 days of being required to do so
by written demand, the other of us may terminate this agreement with
immediate effect, without prejudice to any other available right or
remedy.
|
|
2.3
|
Termination
of the Engagement does not in any way affect your or our respective rights
accrued up to the effective time of termination. Nor does it in any way
affect this paragraph 2.3, or paragraphs 4.4, 7, 9, 10, or 11 below, all
of which will remain enforceable in accordance with their
terms.
|
|
3.
|
INFORMATION,
LAW AND ANNOUNCEMENTS
|
|
3.1
|
You
agree to provide us as soon as reasonably possible from time to time with
all information relating to you and the members of your Group (including
your and their respective strategies, prospects, corporate affairs,
personnel, businesses, customer and supplier relationships, assets,
liabilities, profits and losses) that is or might reasonably be regarded
as being relevant to us for the purpose of advising you and that is or
might otherwise reasonably be regarded as being relevant for disclosure to
us in connection with the Engagement. Without prejudice to this general
obligation, you also agree to provide us with particular information that
is relevant to the Engagement, and with access to all appropriate
directors, officers, employees and advisers of the Group, in each case, if
and when we reasonably request it. As stated above, our advice will be
based on our understanding of your financial position and objectives as
explained by you, as well as other information provided by
you.
|
|
3.2
|
You
agree to ensure that all information provided to us by you or on your
behalf will (so far as you are aware, having made reasonable due and
careful enquiry) at the time it is given be Reliable Information. If you
become aware that any of the information provided to us by you or on your
behalf was not when given, or has ceased to be, Reliable Information, you
will provide us as soon as reasonably possible with all such further
information as is necessary to ensure that we have all relevant
information and that it is all Reliable Information. Unless and to the
extent we are or become actually aware, or receive fair disclosure, to the
contrary, we may assume that all information provided to us by you or on
your behalf from time to time is and will remain Reliable Information. In
no circumstances will we be obliged to verify any of
it.
|
|
3.3
|
You
must yourself (and you must ensure that each member of your Group and your
and their respective directors, officers and employees will) at all times
comply with all Applicable Laws.
|
3.4
|
You
agree that, if you ask us to communicate any financial promotion or issue
any other document relating to you or on your behalf (or to approve the
communication by you or on your behalf of any financial promotion or the
issue of any other document), we will require you to verify to our
satisfaction that:
|
|
3.4.1
|
the
information in it is Reliable Information (save to the extent that any
statement in it is made by or on behalf of any Indemnified Person);
and
|
|
3.4.2
|
the
document and its issue is in accordance with all Applicable
Laws.
|
|
3.5
|
You
will be responsible for ensuring that the information in each financial
promotion or other document contemplated in paragraph 3.4 above is
Reliable Information and you agree, if we require, to ensure that your
directors accept responsibility for the document accordingly. You agree to
make such changes as we consider necessary or desirable to any such
announcement, financial promotion or other document to ensure that it
satisfies the requirements of this paragraph 3.
|
|
4.
|
ANNOUNCEMENTS
|
|
4.1
|
Subject
to paragraph 4.3 below, you must not yourself (and you must ensure that no
member of your Group nor any of your nor their respective directors,
officers, employees or agents will) make or issue at any time any
announcement, circular or other publicity relating to you (other than
articles of a general nature or for inclusion in the trade press which is
not of a price sensitive nature) or any member of your Group or any of
your or their respective directors, officers, employees and agents, as
appropriate, or any matter referred to in this letter without our prior
approval to the form and content of the announcement (but we may not
unreasonably withhold or delay our consent).
|
|
4.2
|
You
must ensure that with respect to each such announcement, circular or other
publicity:
|
|
4.2.1
|
the
information in it is Reliable Information; and
|
|
4.2.2
|
it
and its issue is in accordance with all Applicable
Laws.
|
|
4.3
|
Paragraph
4.1 above does not apply to any announcement, circular or other publicity
required by Applicable Laws or approved prior to release by the Company’s
duly appointed nominated adviser (within the meaning of the AIM Rulea). In
such an event, you must, as far as practical, consult with us as to the
form and content of the announcement, circular or other publicity and the
manner of its issue before issuing it.
|
|
4.4
|
If
any financial promotion, announcement, document, circular or other
publicity referred to in paragraph 3 or 4 of this Schedule One is issued
and is (or is subsequently discovered to have been) issued in breach of
any provision of paragraph 3 or 4 of this Schedule One, or if we consider
that it is necessary in the light of Applicable Laws, we may require you
to make or issue at any time an announcement, document, circular or other
publicity (in a form satisfactory to us) in order to rectify or mitigate
the effect of the breach and/or to ensure compliance with Applicable
Laws.
|
|
5.
|
DEALINGS
BY THE COMPANY
|
|
5.1
|
The Company shall
itself conduct all dealings by it in its own securities through the
Designated
Broker provided that:
|
|
(i)
|
we
will not charge fees or commissions at higher than their normal market
rate (which rate shall be competitive in the market having regard to the
size of the relevant trade(s) and other appropriate factors) save that we
shall have five days in which to match the terms offered by any other
broker; and
|
|
(ii)
|
the
sale price through us of any securities proposed to be sold by us is at
least equivalent to the price that the Company can obtain elsewhere for
similar sized block of securities save that we shall have five days in
which to obtain an equivalent sale price for the relevant securities from
the date the price offered by any other broker is notified to us in
writing.
|
6.
|
CONFIDENTIALITY
|
|
6.1
|
Subject
to paragraph 6.2 below, you and we each agree to treat as strictly
confidential and not to disclose any information received or obtained as a
result of entering into or performing this letter. Specifically, you agree
not to disclose or refer to our advice in any publication issued by you or
any member of your Group without our prior written consent. You and we
each agree to ensure that, in your case, the members of your Group, and in
our case, our Associates, and our and their respective directors,
officers, employees, agents and advisers observe the provisions of this
paragraph 6 as if they were bound by it (and any breach of its terms by
any of them will be deemed to be a breach by whichever of us fails to
ensure that they so behave).
|
|
6.2
|
Each
of us can disclose information which would otherwise be confidential if
and to the extent:
|
|
6.2.1
|
required
by the law of any relevant jurisdiction or for the purposes of any
judicial proceedings, including any judicial proceedings to enforce this
letter; or
|
|
6.2.2
|
required
by (or reasonably necessary for the purpose of this letter or any
transaction contemplated in it to be disclosed to) any recognised
investment exchange or regulatory or governmental body, including the
Panel on Takeovers and Mergers, to which either of us is subject or
submits; or
|
|
6.2.3
|
the
information is disclosed on a strictly confidential basis to professional
advisers or bankers for the purpose of advising or assisting in connection
with this letter and the transactions contemplated in it;
or
|
|
6.2.4
|
the
information is disclosed to a director, officer, employee or agent of
yours or ours (or of any member of your Group or of any of our Associates)
whose function requires him to have the information;
or
|
|
6.2.5
|
the
information has come into the public domain otherwise than through the
fault of the disclosing party; or
|
|
6.2.6
|
the
information relates to you or your Group and is comprised in any document
which is reasonably required to implement any transaction contemplated in
this letter; or
|
|
6.2.7
|
the
other has agreed to the disclosure in writing,
|
|
but
you or we can only disclose under paragraphs 6.2.1 and 6.2.2 above after
consultation (where practical) with the other. If either of us makes any
disclosure under paragraph 6.2.1 or 6.2.2 above, the other of us must be
informed of the disclosure by the disclosing party as soon as reasonably
possible, unless the disclosing party is prohibited by law against
informing the other of us of any such disclosure.
|
||
6.3
|
Certain
of the information that you may give to us may be subject to the Data
Protection Act 1998, by which we will be bound to the extent that such Act
applies with respect to that information.
|
|
6.4
|
You
agree that we may nominate you for inclusion as one of our clients in any
publication that we reasonably consider to be reputable, and you agree to
consent to your inclusion accordingly if the relevant publisher asks for
it. You may at any time notify us that you do not wish to be so included
in a particular publication, or any such
publications.
|
|
6.5
|
All
correspondence and papers that we hold in connection with acting for you
will be our property (except for original contracts, share certificates
and other documents of title expressly held to your
order).
|
7.
|
CONFLICTS
|
|
7.1
|
You
acknowledge that we operate various “Chinese walls”, and control access to
information. You agree that no Indemnified Person has any duty to disclose
to you any information received or obtained in the course of carrying on
other business, for example for other clients. This is because we may owe
obligations of confidentiality to other persons, even if the information
relates to you and any transaction in which you are involved from time to
time.
|
|
7.2
|
Subject
to applicable regulatory rules and unless otherwise agreed between us in
writing from time to time, you agree that, in the course of our providing
you with corporate finance advice, our corporate finance business may deal
with or use the services of other of our businesses and any profits or
advantages this brings need not be accounted for to you. If we reasonably
believe that
the objectives of
the Engagement will be better met by us delegating the performance of any
of our obligations to others, then we may do so.
|
|
8.
|
OUR
LIABILITY
|
|
8.1
|
We
have agreed to provide services to you alone under this letter and we do
not regard any person other than you (including any of your investors,
lenders, shareholders, directors, officers, employees, agents or advisers)
as our customer in relation to the services. Any such other person should
seek his, her or its own advice. Only you may use and rely on our advice,
and then only for the purpose for which it is initially given. If and to
the extent that you receive, read or hear of advice which we may from time
to time have given to anyone other than you, that does not constitute
financial advice and you may not rely on it for any purpose whatsoever. In
addition, please note that our advice to you is confidential information
and is subject to the restrictions set out in paragraph 6
above.
|
|
8.2
|
We
will treat you as an intermediate customer as defined in the FSA Rules. As
such, you will not be entitled to any of the protections provided by the
FSA Rules to private customers and you acknowledge this
accordingly.
|
|
8.3
|
No
Indemnified Person is liable to you for any loss which you suffer or incur
in connection with the performance of obligations, or the provision of
services, by us or on our behalf under or in relation to this letter or
otherwise unless and to the extent that it is finally determined that you
have suffered or incurred the loss because of the fraud, negligence or
wilful default (which, for the avoidance of doubt will include having
disregard of matters of which we have actual knowledge) of an Indemnified
Person or our having committed a breach of any of our obligations under
this letter or of any of our obligations under FSMA or the FSA Rules or
any other rules or regulations to which such Indemnified Person may be
subject. Where any loss is suffered by you for which an Indemnified Person
and any other person are jointly and severally liable to you, the loss
recoverable by you from the Indemnified Person shall be limited so as to
be in proportion to the Indemnified Person’s relative contribution to the
overall fault of the Indemnified Person, you and any other person in
respect of the loss in question.
|
|
8.4
|
If
at any time you agree or have agreed that any of your other advisers may
limit his, her or its liability to you, you will inform us of this
arrangement as soon as reasonably practicable, and no Indemnified Person
shall be liable to you for more than he, she or it would have been liable
if such other adviser(s) had not limited his, her, its or their liability.
Accordingly, no Indemnified Person is liable to you for more than the net
amount for which the Indemnified Person would have been liable after
deducting the amount for which any other adviser(s) would have been liable
in contribution proceedings if the other adviser(s) had not limited his,
her, its or their liability. For the avoidance of doubt, you agree that,
if you allege that an Indemnified Person is liable to you and the
Indemnified Person believes that another person should be liable to you
also and/or instead, nothing in this letter limits the right of the
Indemnified Person to claim that the other person is liable to you and/or
to the Indemnified Person (including on account of a right of
contribution).
|
|
8.5
|
If
and to the extent that we fail to perform or delay performing our
obligations under or in connection with this letter as a result of any
act, event or circumstance which is not reasonably within our control
(including strikes, bad weather and breakdown or malfunction of
telecommunications or computer services), then no Indemnified Person is
responsible to you for any loss which you may suffer or incur as a result
of such failure or delay.
|
11.
|
GENERAL
|
|
11.1
|
Nothing
in this letter or any document executed under or in connection with it
creates a partnership between us or makes you our agent for any purpose,
and you do not have authority or power to bind, contract with or to incur
or create a liability or obligation for us for any
purpose.
|
|
11.2
|
This
letter is of no effect if we have not signed it. This letter may be
executed in any number of counterparts, each of which when executed and
delivered is an original, but all the counterparts together constitute the
same document.
|
|
11.3
|
The
terms of this letter may only be varied in writing signed by or on behalf
of each of the parties. However, you agree that we may vary the terms and
conditions of this letter in certain respects by giving you notice of the
changes and the changes will become effective ten business days after
service of the notice in accordance with the notice provisions in this
letter. The changes that we may make without your further consent are
changes that we, acting in good faith, consider necessary in light of
changes in applicable laws, regulations and market practice. If you do not
like the changes, you may, of course, exercise your right to terminate the
agreement between us pursuant to this letter in accordance with the
termination provisions in this letter, but we suggest that you do not do
that without first discussing with us any changes which concern you to see
if we can address your concerns.
|
|
11.4
|
You
agree to do and execute, or arrange for the doing and executing of each
necessary act, document and thing reasonably within your power to
implement this letter. Your having engaged us pursuant to this letter
confers on us all powers, discretions and authorities necessary or
desirable in connection with the performance of our obligations under or
in connection with this letter or the Engagement.
|
|
11.5
|
If
you or we fail to exercise or delay in exercising a right or remedy
provided by this letter or by law that does not constitute a waiver of the
right or remedy or a waiver of other rights of remedies. No single or
partial exercise of a right or remedy provided by this letter or by law
prevents further exercise of the right or remedy or the exercise of
another right or remedy. Our and your rights and remedies under this
letter are in addition to, and do not operate to restrict, the rights and
remedies available to you or us under English law and are not affected by
completion of anything referred to in this letter. If any provision of
this letter is illegal or unenforceable, this does not affect the
enforceability of any other provision of this
letter.
|
|
11.6
|
This
letter constitutes the entire and only agreement and understanding between
you and us in relation to our appointment as Broker to the Company, and
supersedes any previous agreement or understanding between you and us
relating to the subject matter of this letter. You and we each agree that
in entering into this letter, neither of us relies on, and neither of us
shall have any remedy in respect of, any statement, expression of opinion,
representation, warranty or understanding (whether negligently or
innocently made) of any person, other than as expressly set out in this
letter.
|
|
11.7
|
Nothing
in this letter shall operate to limit or exclude any liability for
fraud.
|
|
11.8
|
You
warrant and represent to us (with the intention of inducing us to act for
you) that you have all necessary power and authority to execute and
deliver, and to perform all your obligations and exercise all your rights
under, this letter and all documents to be executed by you under or in
connection with this letter, and that such execution, delivery,
performance of obligations and exercise of rights have been (and at all
times will be) duly authorised by all necessary corporate action and that
this letter has (and all documents to be executed by you under or in
connection with this letter have) been (and at all times will be) duly
executed by person(s) duly authorised on your behalf and constitute(s)
(and at all times will constitute) your valid and binding obligations. In
addition, we will be entitled to assume that all instructions (whether
given orally or in writing or by e-mail) from anyone who is (or whom we
reasonably believe to be) one of your directors or officers (including
your company secretary) or any of your professional advisers who have
intimated that they are so authorised or who is otherwise authorised by
you for this purpose, are duly authorised (unless and until you notify us
in writing that instructions should only be treated as duly authorised if
from certain specified persons and/or should be disregarded if from
certain specified persons).
|
1
|
DEFINITIONS
|
|
1.1
|
In
this letter, where applicable, the following definitions are
used:
|
|
Admission
|
Admission
of the Company’s shares to trading on AIM;
|
|
AIM
|
The
AIM Market of London Stock Exchange plc;
|
|
AIM
Rules
|
The
AIM Rules of the AIM Market of London Stock Exchange
plc;
|
|
Applicable
Laws
|
In
relation to a person, all applicable laws and regulations in each relevant
jurisdiction (including the Companies Act 1985, FSMA, the Criminal Justice
Act 1993 (especially Part V and relevant schedules concerning “insider
dealing”), the AIM Rules, the Listing Rules, the London Stock Exchange’s
“Admission and Disclosure Standards”, the City Code on Takeovers and
Mergers) and the requirements of any recognised investment exchange or
regulatory or governmental body to which the person is subject or
submits;
|
|
Associate
|
In
relation to SVS Securities plc, each of its parent undertakings and its
and their respective subsidiary undertakings and any undertaking in which
any of them has a participating interest (as those terms are defined in
the Companies Act 1985) and “Associates” means all of those
undertakings;
|
|
Board
|
The
board of directors of the Company from time to time;
|
|
Company
|
Medgenics,
Inc;
|
|
Designated
Broker
|
A
broker which has agreed to facilitate the execution of trades on behalf of
clients introduced to it by SVS in accordance with the Rules of the London
Stock Exchange, subject to the completion of client
documentation;
|
|
finally
determined
|
Determined
by a court or body which has jurisdiction and from which there is no right
of appeal or there is a right of appeal but the right has expired or 3
months has elapsed from the date of judgement (whichever is the earlier),
or as agreed between you and us in writing;
|
|
FSA
|
The
Financial Services Authority of the United Kingdom (or any successor
regulatory body);
|
|
FSA
Rules
|
The
rules and regulations made by the FSA under FSMA;
|
|
FSMA
|
The
Financial Services and Markets Act 2000;
|
|
Group
|
The
Company and each of its parent undertakings and its and their respective
subsidiary undertakings and any undertaking in which any of them has a
participating interest (as those terms are defined in the Companies Act
1985);
|
|
include,
includes and including
|
Must
be construed as if they were immediately followed by the words “without
limitation”;
|
|
Indemnified
Person
|
Us
and each of our Associates, and each of our and our Associates’ respective
directors, officers, employees and agents;
|
|
Listing
Rules
|
The
Listing Rules of me FSA;
|
|
loss
|
Includes
all claims, demands, actions, proceedings, losses, liabilities, damages,
costs and expenses;
|
|
Reliable
Information
|
Information
that is up to date, true and accurate in all material respects, is not
misleading, and from which there is no material omission, and, if the
information comprises any forecast or statement of opinion, expectation or
belief, it is fairly based on reasonable assumptions and honestly and
reasonably held or
made;
|
1.2
|
Headings
do not affect the interpretation of this letter.
|
|
1.3
|
In
this letter, unless otherwise stated, a reference
to:
|
|
1.3.1
|
a
paragraph is to the relevant paragraph of this
document;
|
|
1.3.2
|
any
appointment or agreement made or instruction or undertaking given by you
is to be construed as if made or given irrevocably and
unconditionally;
|
|
1.3.3
|
any
power, authority or discretion conferred on or to be exercised by us is to
be construed as being absolute and unfettered;
|
|
1.3.4
|
a
document is a reference to the document as from time to time supplemented
or varied; and
|
|
1.3.5
|
a
statutory provision includes a reference to the statutory provision as
modified or re-enacted or both from time to time after the date of this
letter, and any subordinate legislation made under the statutory provision
after the date of this letter except to the extent that such change would
otherwise create or increase any liability or burden for any
party.
|
(1)
|
MEDGENICS,
INC.
|
(2)
|
BLOMFIELD
CORPORATE FINANCE LIMITED
|
NOMINATED
ADVISER AGREEMENT
|
Blomfield
Corporate Finance Limited
|
|
12
Pepper
Street London E14 9RP
|
|
Tel
+44 (0)20 7512 0191 Fax +44 (0)20 7512 0747
|
|
Email
enquiries@blomfieldcf.com
|
|
www.blomfieldcf.com
|
|
Authorised
and Regulated by the Financial Services Authority UKLA Registered Sponsor
Member of the London Stock Exchange AIM Nominated Adviser PLUS Corporate
Adviser Registered office 12 Pepper Street London E14 9RP Registered in
England no
2910387
|
(1)
|
MEDGENICS, INC.,
whose
registered office is at 2711 Centreville Road, Suite 400, Wilmington, New
Castle, Delaware, USA (the “Company”);
and
|
(2)
|
BLOMFIELD CORPORATE FINANCE
LIMITED,
whose registered office is at 12 Pepper Street, London E14
9RP (“
BCF
”).
|
(A)
|
The
Company wishes to appoint BCF to be its nominated adviser for the purposes
of the AIM Rules. BCF has agreed to act as nominated adviser and to
perform the other obligations and services to, or for, the Company
described in this Agreement upon and subject to the terms and conditions
set out in this Agreement.
|
1.
|
Definitions
and Interpretation
|
2.
|
Appointment
of nominated adviser
|
2.1
|
Appointment -
The
Company confirms the appointment of BCF as nominated adviser to the
Company for the purposes of the AIM Rules with effect from the date of
Admission to Trading on AIM (“Admission”) and BCF confirms acceptance of
such appointment. BCF’s appointment under this Agreement confers on it all
powers, authorities and discretions on its behalf which are necessary for,
reasonably incidental to, or customary in the provision of, its services
and in BCF’s role as nominated adviser to the Company. The Company agrees
to ratify and confirm everything which BCF reasonably and lawfully does in
that capacity and in the proper exercise of such powers, authorities and
discretion.
|
2.2
|
Commencement -
The
appointment of BCF as nominated adviser to the Company shall be for an
initial term of one year from the date of Admission and shall be subject
to termination in accordance with clause
11.
|
3.
|
Nominated
adviser services
|
3.1
|
Services -
BCF’s
services as nominated adviser will comprise the
following:
|
3.1.1
|
Advising -
advising and
guiding the
directors
of the Company
from time to time and the Company as to their respective responsibilities
and obligations so as to enable them to comply, on an ongoing basis, with
the AIM Rules;
|
3.1.2
|
Providing information -
providing to the LSE such information in relation to the Company in
such form and within such time limits as the LSE may require in accordance
with the AIM Rules or as BCF (acting reasonably) advises the Company it
should provide (provided that BCF has been given the requisite information
by the directors of the Company or, at their discretion, the Company in
accordance with sub-clause 5.2.4);
|
3.1.3
|
Assistance -
providing
such other assistance on such terms as BCF and the Company may agree
in writing from time to time; and
|
3.1.4
|
Compliance with Regulations -
carrying out its obligations under this Agreement in compliance
with the relevant provisions of the FSA Rules, the AIM Rules and the
FSMA.
|
3.2
|
Duties to LSE and Conflict -
The responsibilities of BCF in its capacity as nominated adviser
are owed solely to the LSE and are set out in the AIM Rules. The Company
agrees that if at any time a conflict arises between the duties of BCF to
the Company and the duties of BCF (as the nominated adviser of the
Company) to the LSE, BCF shall, after reasonable consultation with the
Company, be entitled to act so as to fulfil its obligations to the LSE
without incurring any liability to the Company arising out of such
action.
|
4.
|
Fees
and Expenses
|
4.1
|
Annual fee -
In
consideration of BCF’s services as nominated adviser under this Agreement
the Company shall pay to BCF a fee of £37,500 per annum, (together with
VAT, where applicable), which shall accrue on a daily basis from
Appointment and shall be payable quarterly in advance, the first such
payment of £9,375 (plus VAT) to be made on
Appointment.
|
4.2
|
Expenses -
The Company
shall reimburse BCF for any out of pocket expenses reasonably incurred in
the performance of its services as nominated adviser within 5 Business
Days of production of an appropriate VAT
invoice.
|
4.3
|
Additional Services -
The fee referred to in clause 4.1 above shall be exclusive of any
additional work carried out by BCF outside the scope of this Agreement
(e.g. advice on potential acquisitions and disposals and future fund
raisings) for which a separate fee or fees will be agreed between the
Company and BCF at the relevant
time.
|
5.
|
Continuing
obligations
|
5.1
|
The
Company undertakes that whilst BCF is the Company’s nominated adviser it
will:-
|
5.1.1
|
Disclosure and consultation -
disclose to BCF full, complete and accurate details and consult in
advance with BCF in respect of any commitment, agreement, arrangement,
fact or matter proposed to be entered into or undertaken by any member of
the Group which if entered into or undertaken would, in the reasonable
opinion of BCF, require the Company to make any statement or announcement
to the public whether pursuant to the AIM Rules or
otherwise;
|
5.1.2
|
Advice -
seek advice and
guidance from BCF regarding the compliance by the Company with the AIM
Rules whenever appropriate and to take such advice and guidance into
account and comply on a timely basis with the AIM Rules and any other
obligations imposed from time to time by the LSE on companies whose
securities have been admitted to trading on AIM. BCF will expect formally
to meet the Board to review compliance and other matters at regular
intervals;
|
5.1.3
|
Co-operation with BCF -
execute or use all reasonable endeavours to procure the execution
of all such documents and do or procure the doing of all such things and
from time to time provide or procure the prompt provision to BCF of all
access and information as may reasonably be required by BCF, or be
reasonably necessary to comply with the requirements of the LSE for the
purposes of or in connection with its role as nominated adviser to the
Company and will ensure, so far as practicable, that all information
provided is true, complete and not misleading;
and
|
5.1.4
|
Compliance with relevant
regulations -
comply with and abide by the AIM Rules, the Act, the
City Code on Takeovers and Mergers, the Rules Governing Substantial
Acquisitions of Shares published by the Panel on Takeovers and Mergers,
the FSMA, the Prospectus Regulations and all other requirements (statutory
or otherwise) from time to time in force in relation to British public
companies whose securities are traded on AIM or otherwise applicable to
the Company and will comply without delay with all reasonable and proper
directions given by BCF in its role as the Company’s nominated adviser in
order to ensure compliance by the Company with such requirements. In
particular, in accordance with Rule 31 of the AIM Rules, the Company
must:
|
|
(a)
|
have
in place sufficient procedures, resources and controls to enable it to
comply with the AIM Rules;
|
|
(b)
|
seek
advice from BCF regarding its compliance with the AIM Rules whenever
appropriate and take that advice into
account;
|
|
(c)
|
provide
BCF with any information it reasonably requests or requires in order for
BCF to carry out its responsibilities under the AIM Rules for Companies
and the AIM Rules for Nominated Advisers, including any proposed changes
to the board of directors and provision of draft notifications in
advance;
|
|
(d)
|
ensure
that each of its directors accepts full responsibility, collectively and
individually, for its compliance with the AIM Rules;
and
|
|
(e)
|
ensure
that each director discloses to the Company without delay all information
which the Company needs in order to comply with Rule 17 of the AIM Rules
insofar as that information is known to the director or could with
reasonable diligence be ascertained by the
director.
|
5.2
|
The
Company undertakes that except as expressly agreed otherwise by
BCF:
|
5.2.1
|
Statements of intent -
it will comply with all statements of intent and undertakings
contained in any Prospectus or Circular published by the
Company;
|
5.2.2
|
Public releases -
it
will consult with BCF in advance concerning any statement, announcement or
document released or made available by the Company to the Company’s
shareholders or otherwise to the public which relates to the Company’s
results, dividends or prospects, or to any material acquisition, disposal,
reorganisation, take-over, management development (including, without
limitation, the appointment or removal of directors of the Company,
whether executive or non-executive or changes in their share interests and
any preliminary announcement of the Company’s annual results or interim
results) or any issues of new securities (or cancellation of existing
securities) or any other significant matter (similar or not to the
foregoing) and which any member of the Group proposes to make or publish
and take proper account of the reasonable representations of BCF in
determining the content and terms and the timing of the statement,
announcement or document and the manner in which it is to be made and the
manner of release or despatch of any such statement, announcement or
document;
|
5.2.3
|
Price sensitive information -
it will discuss with BCF in advance any other information which the
Company reasonably believes is likely materially to affect the general
character or nature of the business of the Group including, without
limitation, developments concerning or affecting the financial or trading
position or prospects of the Group or may be necessary to be made known to
the public in order to enable shareholders and the public to appraise the
position of the Group and in order to avoid the establishment of a false
market in the Company’s securities;
|
5.2.4
|
Documentation -
it will
forward to BCF proofs in final form of any accounts or of any public
statement or document or information which the Company or any member of
the Group proposes to make or publish and which relates to any matter
falling within clause 6 or otherwise to the holders of the Company’s
securities and supply to BCF without delay upon BCF requesting the same
all such documentation or information relating to the Group which BCF may
reasonably require in its capacity as nominated
adviser;
|
5.2.5
|
Notices -
it will
promptly provide to BCF without delay all information which the Company is
obliged forward to the LSE including, without limitation, copies of any
notices served by the Company under Section 212 of the Act and of any
notifications made to it under Section 198 and/or Section 324 of the
Act;
|
5.2.6
|
Management accounts -
it
will forward to BCF monthly management accounts of the Company’s affairs
within 15 Business Days of the end of the month to which the management
accounts relate and the associated board report, board minutes and any
other documentation produced to the Board in considering monthly
management accounts from the finance director of the Company. All such
management accounts shall comprise a consolidated balance sheet of the
Company as at the end of the month to which they relate, a consolidated
profit and loss account for such month and a cashflow statement for such
month;
|
5.2.7
|
Corporate governance -
it will use all reasonable endeavours to comply at all times with
the requirements under the Combined Code, as the same may be amended or
replaced from time to time.;
|
5.2.8
|
Subsidiaries -
it will
ensure that each other member of the Group adheres to the provisions of
this Agreement in all applicable respects as if each reference in this
Agreement to “the Company” contained (where applicable) an additional and
separate reference to it;
|
5.2.9
|
Accounting information –
it will supply BCF with copies of the preliminary announcement of
the Company’s annual results and the audited annual accounts of the
Company, approved by the
directors
of
the Company and by the auditors from time to time of the Company, within
six months of the end of the financial period to which they relate, and
with copies of any interim results within three months of the end of the
relevant period;
|
5.2.10
|
Further information -
authorise and direct the Company’s auditors and professional
advisers to supply BCF with any information concerning the Company which
BCF may from time to time reasonably request in its capacity as nominated
adviser;
|
5.2.11
|
Broker –
it will
provide to BCF without delay notification of any change in Broker;
and
|
5.2.12
|
Breach of AIM Rules –
it will
inform
BCF immediately
upon becoming aware of
any
breach by
the Company and/or any director of the Company of the AIM Rules and to
request the advice and guidance of BCF in relation to all matters relevant
to the Company’s compliance on an ongoing basis with the AIM
Rules.
|
5.3
|
Without
prejudice to the generality of the foregoing, the Company
undertakes:
|
5.3.1
|
Compliance with directions -
to comply with all proper and reasonable directions given by BCF in
relation to compliance with the AIM Rules;
and
|
5.3.2
|
Notice of meetings -
to
give to BCF advance notice of all meetings of the Board at the same time
as such notice is given to the directors of the Company, together with
details of the business to be considered at such meetings and copies of
all papers distributed to the
Board.
|
5.4
|
Other financial advisers -
For so long as BCF shall be nominated adviser to the Company, the
Company shall not appoint any other financial adviser or broker (save for
a Broker required under the AIM
Rules).
|
5.5
|
Directors’ confirmations and
undertakings
|
5.5.1
|
Confirmation of advice –
Each of the Directors confirms to BCF that he has received advice
and guidance from the Company’s legal advisers as to the nature of his
responsibilities and obligations under the AIM Rules, the Company’s
compliance with the AIM Rules on an on-going basis and his status as a
director of an AIM quoted company under the AIM
Rules.
|
5.5.2
|
Each
of the Directors undertakes to BCF that (while he continues to be a
director of the Company) he will:
|
|
(a)
|
Compliance with undertakings -
use all reasonable endeavours, so far as he is able, to procure
that the Company complies fully in all respects with each undertaking or
other obligation under this Agreement, including but not limited to
ensuring compliance with the matters listed in Clause 5 above and the AIM
Rules in so far as they relate to dealings in the securities of a company
whose securities have been admitted to trading on AIM and in particular
Rules 13 and 21 thereof and in default of the Company doing so, will
himself (in so far as he is able to do so) comply;
and
|
|
(b)
|
Provision of information -
provide promptly to BCF all such information which he has or which,
on reasonable enquiry, ought to be known to him relating in any way to the
Group or the Company as may be reasonably required by BCF for the purpose
of BCF complying with any legal or regulatory requirement as the Company’s
nominated adviser or otherwise complying with the terms of this
Agreement.
|
5.5.3
|
Duration of obligations -
The obligations of each Director respectively under this Agreement
shall continue only for so long as they shall remain a director of the
Company. In the event that any person is appointed a director of the
Company after the date of this Agreement
(New Director),
the
Company shall procure that any such person enters into a deed of adherence
with BCF in a form reasonably acceptable to BCF whereby they agree to
observe, perform and be bound by the undertakings and other obligations of
the Directors then binding upon the Directors under this Agreement to the
intent and effect that such person shall be deemed to be a party to this
Agreement as a Director save that any new director shall not be liable for
any antecedent breaches by any of
them.
|
6.
|
Directors’
Dealings and other Directors’
Covenants
|
6.1
|
Each
of the Directors undertakes to BCF that he
will:-
|
6.1.1
|
Restrictions on share dealings
-
in respect of any dealings in any shares in the capital of the
Company in which he is interested whilst he is a director, at all times
observe the restrictions on dealings in securities of the Company set out
in the AIM Rules;
|
6.1.2
|
Notification
by
connected persons
-
procure that any person who is a connected person in relation to
them for the purposes of Section 346 of the Act will notify the Company
and BCF as soon as practicable of any information notification of which is
required under the AIM Rules;
|
6.1.3
|
Accuracy of information -
ensure that any information supplied by him or, so far as is
reasonably practicable, the Company to BCF, including any expressions of
opinion, will be, to the best of his knowledge and belief, true, fair and
accurate and will not be misleading and will not omit any material
information. If during the course of BCF’s engagement any Director
subsequently discovers any thing or matter which renders any such
information materially untrue, unfair, inaccurate or misleading, he
undertakes to notify BCF
immediately.
|
6.1.4
|
Combined Code -
Each of
the Directors and the Company confirms to BCF that it is intended that the
Company should comply so far as practicable with the Combined Code and
undertakes that if at any time it is intended that the Company should not
so comply, then the Directors will consult with BCF (so long as BCF is the
Company’s nominated adviser) in relation to such
matters.
|
7.
|
Reference
to advice
|
8.
|
Acknowledgements
|
8.1
|
BCF’s duty of care -
The
parties acknowledge that BCF is acting solely for the Company and no one
else and accordingly that BCF will not be responsible to anyone other than
the Company for providing the protections afforded to clients of BCF or
for providing advice in relation to or in connection with any
transactions.
|
8.2
|
Legal advice -
The
Company and each of the Directors acknowledges that BCF is not responsible
for providing any legal advice to the Company any director of the Company
in respect of any applicable laws and regulations and the Company and each
of the Directors undertakes to obtain appropriate legal advice in respect
of these matters and to communicate to BCF any such advice as is relevant
to the carrying out of BCF’s services under this Agreement (save to the
extent that such advice relates to any dispute or potential dispute with
BCF).
|
8.3
|
Conflicts of interest -
The Company acknowledges that, when BCF gives the Company advice or
provides other services in accordance with this Agreement, BCF or a
Relevant Person or another client may have an interest, relationship or
arrangement that is material in relation to the transaction or investment
concerned. Where BCF becomes aware that a conflict of interest has arisen
or is likely to arise, it will promptly inform the Company in writing, but
will be under no obligation to provide details of the conflict other than
such general particulars as may be necessary to enable the Company to
assess its importance. Thereafter, the parties will in good faith, and as
soon as reasonably practicable, consult with a view to resolving a
satisfactory method or procedure in view of such
conflict.
|
8.4
|
Compliance with Rules -
The Company acknowledges that all services provided by BCF pursuant
to this Agreement are subject to the rules and regulations from time to
time of the FSA. In providing its services, BCF is proposing to treat the
Company as a “Professional Client” within the meaning of the FSA
Rules.
|
8.5
|
Failure to make announcements -
If the Company fails (in the reasonable opinion of BCF acting in
good faith and having regard to the Company’s obligations under this
Agreement) to make any announcement, the Company acknowledges that BCF
may, having first consulted with the Company, make such announcement on
the Company’s behalf instead (but without any obligation for BCF to do
so).
|
8.6
|
Accuracy of information -
Each of the Company and the Directors acknowledges that it shall
not be sufficient to provide any information in accordance with this
Agreement unless such information is also accurate and not misleading and
agrees that BCF will not be responsible for the verification of any such
information and shall accept no responsibility for its
accuracy.
|
8.7
|
Disclosure required by BCF -
The Company and each of the Directors acknowledges and accepts that
BCF may be required by law or by regulatory agencies and authorities to
disclose information and deliver documents relating to the Company and/or
the Directors in relation to BCF’s engagements under this Agreement. Each
of them expressly authorises any such disclosure or delivery provided
that, to the extent allowed, BCF will provide the Company with prompt
prior notice of any such obligations to disclose
information.
|
8.8
|
BCF’s Property -
All
correspondence and papers in BCF’s possession or control relating to its
engagement under this Agreement shall be and remain BCF’s sole property,
save for any original documents held to the Company’s
order.
|
8.9
|
BCF’s Instructions -
BCF
is entitled to assume that instructions have been properly authorised by
the Company if they are given or purported to be given by an individual or
person who is or purports to be and is reasonably believed by BCF to be a
director or authorised agent of the
Company.
|
9.
|
Indemnity
|
9.1
|
The
Company agrees to indemnify and hold harmless each of BCF (for itself and
on the basis that it shall enjoy an absolute discretion as to the
enforcement of any claim under the terms of this Clause 9.1, as trustee
for each and every Relevant Person) and each Relevant Person to the
fullest extent permitted by law against all liabilities, demands,
losses, claims, actions, damages, proceedings made, brought or threatened
against any Relevant Person (whether or not successful, compromised or
settled), costs, charges, expenses (including legal fees and expenses
reasonably incurred) and any other liabilities of whatsoever nature which
any of them may suffer or incur in any jurisdiction directly or indirectly
as a result of or arising out of or in connection
with:
|
9.1.1
|
Performance of services -
the performance by BCF or any Relevant Person of its services to
the Company pursuant to this Agreement or BCF’s role in acting as
nominated adviser;
|
9.1.2
|
Approval of press releases -
the approval or issue by BCF of any press release or of any FSMA
Financial Promotion issued by or on behalf of the
Company;
|
9.1.3
|
Breach of Agreement -
any breach or alleged breach (other than a breach alleged by BCF
which is not a proven breach) by the Company or the Directors of any of
the other provisions of this Agreement;
or
|
9.1.4
|
Transactions -
any
transactions expressly contemplated by this
Agreement;
|
9.2
|
No claims -
No claim
shall be made against BCF or a Relevant Person by the Company or the
Directors to recover any damage, cost, charge or expense which any of them
may suffer or incur by reason of or arising out of any advice or service
provided by BCF or any Relevant Person to the Company or the Directors in
relation to, or in connection with the performance of BCF’s obligations
under this Agreement or otherwise in connection with the appointment under
this Agreement or its role as the nominated adviser for the purposes of
the AIM Rules, unless and except to the extent that such damages, costs,
charges or expenses arise as a result of the fraud, negligence or wilful
default of BCF or any Relevant Person or the result of any contravention
by BCF or the Relevant Person of the FSMA, the AIM Rules or the FSA Rules
or the result of the breach by BCF of any material provision of this
Agreement.
|
10.
|
Authority
|
11.
|
Termination
|
11.1
|
Termination -
Either the
Company or BCF may terminate this Agreement on giving to the other parties
90 business days written notice, but in any event, such notice not to be
given prior to first eighteen month period of
Appointment.
|
11.2
|
BCF
may terminate this Agreement forthwith by giving written notice to the
Company in any one of the following events or circumstances, namely
if:
|
11.2.1
|
Failure to
pay
- the Company does not pay any sum
payable under this Agreement within 30 Business Days of the due date
having been given not less than 5 Business Days’ prior written notice of
any such failure to pay; or
|
11.2.2
|
Material breach of agreement -
either the Company or any of the Directors commits any breach of
any of the other terms and conditions of this Agreement, which breach (if
capable of remedy) remains unremedied within 10 Business Days’ service of
a notice specifying the breach and requiring it to be remedied;
or
|
11.2.3
|
Breach of applicable
regulations -
any director of the Company commits a fraudulent act,
or the Company or any director of any member of the Group commits any
material breach of the Act, the AIM Rules, the Prospectus Regulations, the
FSMA, the FSA Rules or any other laws or regulations to which the Group
and/or the Directors are subject from time to time;
or
|
11.2.4
|
Administration -
the
Company or any member of the Group becomes insolvent or unable or deemed
unable to pay its debts as and when they fall due or is it involved in any
administration, receivership, liquidation or insolvency proceedings or
makes an arrangement with any of its members or creditors except for the
purposes of and followed by reconstruction, amalgamation, reorganisation,
merger or consolidation on terms approved by BCF (such approval not to be
unreasonably withheld or delayed) before that step is taken;
or
|
11.2.5
|
Failure to comply with advice -
the Company fails to comply with advice given to the Company and/or
the Directors by BCF such that, in the reasonable opinion of BCF, such
failure could jeopardise or damage the reputation of
BCF.
|
11.3
|
Notification -
The
Company shall notify BCF promptly upon becoming aware of the occurrence of
a Termination Event or any event or circumstance which may give rise to
the occurrence of a Termination
Event.
|
11.4
|
Upon
termination in accordance with sub-clause
11.2:
|
11.4.1
|
Rights and obligations -
subject to the remainder of this sub-clause 11.4, the rights and
obligations of the parties under this Agreement shall (save in respect of
clause 9
(Indemnity)
and sub-clause 13.4
(Confidentiality)
terminate and be of no further
effect;
|
11.4.2
|
BCF fee -
the rights of
BCF in respect of its annual fee as referred to in sub-clause 4.1
(Annual Fee)
,
will remain in full force and
effect to the extent that the Company shall be obliged to pay BCF its
annual fee on a pro rata basis up to the date of
termination;
|
11.4.3
|
Consultation -
BCF shall
consult with the Company on its AIM status and the Company shall issue a
press announcement in such terms as BCF may reasonably
require;
|
11.4.4
|
Accrued rights -
any
rights to which any of the parties to this Agreement may be entitled
before such termination shall remain in full force and effect;
and
|
11.4.5
|
Claims -
the termination
shall not affect or prejudice any right to damages or other remedy which
the terminating party may have in respect of the Termination Event which
gave rise to the termination or any other right to damages or other remedy
which any party may have in respect of any breach of this Agreement which
existed at or before the date of
termination.
|
12.
|
Withholding
and grossing up
|
12.1
|
Deductions or withholdings -
All sums payable to BCF under this Agreement shall be paid free and
clear of all deductions or withholdings unless the deduction or
withholding is required by law, in which event the relevant person shall
pay such additional amount as shall be required to ensure that the net
amount received by BCF will equal the full amount which would have been
received by it had no such deduction or withholding been
made.
|
12.2
|
Charge to tax -
Save in
respect of any fees payable to BCF pursuant to clause 4, if the United
Kingdom Inland Revenue or any other tax authority brings into charge to
tax (or into any computation of income, profit or gains for the purposes
of any charge to tax) any sum payable to BCF under this Agreement, then
the person liable to make such payment shall pay such additional amount as
shall be required to ensure that after deduction of the tax so chargeable
there remains a sum equal to the amount that would otherwise be payable to
BCF under this Agreement (additional payments being made on demand of
BCF).
|
13.
|
General
|
13.1
|
Entire Agreement -
Subject as provided in Clause 13.5 below, this Agreement sets out
the entire agreement and understanding between the parties in respect of
the subject matter of this
Agreement.
|
13.2
|
Assignment -
Rights
arising from or in connection with this Agreement may not be assigned,
save that BCF may assign the benefit of this Agreement to any holding
company or subsidiary of BCF (both terms as defined in section 736 of the
Act) or any subsidiary of such holding company. This Agreement shall be
binding upon and endure for the benefit of the respective personal
representatives, heirs, successors and assigns of the
parties.
|
13.3
|
Variation -
No purported
variation of this Agreement shall be effective unless it is in writing and
signed by or on behalf of each of the
parties.
|
13.4
|
Confidentiality:
|
13.4.1
|
Confidential information -
Except as referred to in sub-clause 13.4.2, each party shall treat
as strictly confidential all information received or obtained as a result
of entering into or performing this Agreement which relates to the
provisions or subject matter of this Agreement, to any other party to this
Agreement or the negotiations relating to this
Agreement.
|
13.4.2
|
Disclosure permitted -
Any party may disclose information which would otherwise be
confidential if and to the
extent:
|
|
(a)
|
it
is required to do so by law or any securities exchange or regulatory or
governmental body to which it is subject wherever
situated;
|
|
(b)
|
it
considers it necessary to disclose the information to its professional
advisers, solicitors, auditors and bankers provided that it does so on a
confidential basis;
|
|
(c)
|
the
information has come into the public domain through no fault of that
party; or
|
|
(d)
|
each
party to whom it relates has given its consent in
writing.
|
13.5
|
Default interest -
If
any party defaults in the payment when due of any sum payable under this
Agreement (whether payable by agreement or by an order of a court or
otherwise), the liability of that party shall be increased to include
interest on that sum from the date when such payment was due until the
date of actual payment at a rate per annum of 3 per cent. above the base
rate from time to time of Barclays Bank plc. Such interest shall accrue
from day to day and shall be compounded
annually.
|
13.6
|
Notices
|
13.6.1
|
Notices in writing -
Any
notice to be given under this Agreement shall be in writing (unless
otherwise stated) for the attention of the person stated below and served
personally or sent by pre-paid registered mail to the respective address
stated at the beginning of this Agreement or by facsimile as set out
below, or as the party required to receive such notice may otherwise from
time to time notify to the other party giving the
notice:
|
the
Company/any
Director
|
BCF
|
||
Facsimile:
|
+972
4 988 2270
|
020
7512 0747
|
|
Attn:
|
Andy
Pearlman
|
Alan
MacKe
nz
ie
|
|
Attn:
|
Ian
Fenn
|
13.6.2
|
Service -
Any such
written notice shall be deemed to have been
served:
|
|
(a)
|
if
delivered, at the time of delivery;
|
|
(b)
|
if
posted, at 10.00 a.m. on the second Business Day after it was put into the
post; and
|
|
(c)
|
if
sent by facsimile, at the time of effective
transmission.
|
13.6.3
|
Proving service -
In
proving such service by post it shall be sufficient to prove that the
letter containing the notice was properly addressed and delivered or put
into the post as a pre-paid registered letter. In proving effective
transmission by facsimile it shall be sufficient to prove that the entire
facsimile containing such notice was sent to the appropriate number and an
answerback was received at the end of the transmission in respect of the
number of pages comprised in the
notice.
|
13.7
|
Severable Provisions -
Each of the provisions of this Agreement is severable and distinct
from the others and the invalidity, illegality or unenforceability of any
one or more of the provisions of this Agreement shall not affect the
continuation in force of the remaining provisions of this
Agreement.
|
13.8
|
Indulgence -
No neglect,
indulgence, failure to exercise or delay of any party in exercising any
right or remedy under this Agreement shall constitute a waiver of such
right or remedy and no single or partial exercise of any right or remedy
under this Agreement shall preclude or restrict any other or future
exercise of such right or remedy or the exercise of any other right or
remedy. The rights and remedies contained in this Agreement are cumulative
and not exclusive of any rights or remedies provided by
law.
|
13.9
|
Waiver -
Any waiver must
be in writing and may be given subject to any condition thought fit by the
grantor. Any waiver shall be effective only in the instance and for the
purpose for which it is given.
|
13.10
|
Indemnities -
The
indemnities set out in this Agreement shall be in addition to and not be
construed to limit, affect or prejudice any other right or remedy
available to BCF or any Relevant Person and any such indemnities shall be
enforceable by it only to the extent that such enforcement is not
prohibited by any law or regulation to which the Company is
subject.
|
13.11
|
Third Party Rights -
No
term of this Agreement is enforceable under the Contracts (Rights of Third
Parties) Act 1999 by a person who is not a party to this Agreement other
than a Relevant Person.
|
13.12
|
Counterparts -
This
Agreement may be executed in any number of counterparts and all the
counterparts when taken together will constitute one agreement. Each party
may enter into this Agreement by executing a
counterpart.
|
13.13
|
Governing law and jurisdiction
-
This Agreement shall be governed by and construed in accordance
with English Law. Each of the parties irrevocably submits for all purposes
in connection with this Agreement to the exclusive jurisdiction of the
courts of England.
|
1.
|
Definitions
|
|
Act
|
means
the Companies Act 1985;
|
|
AIM
|
means
the, a AIM Market of the LSE;
|
|
AIM
Rules
|
means
the LSE’s rules relating to AIM as amended from time to
time;
|
|
Appointment
|
the
appointment of BCF as nominated adviser as of the date of this
Agreement;
|
|
Board
|
means
the board of directors of the Company from time to
time;
|
|
Broker
|
means
the broker (as defined by the AIM Rules) appointed by the Company from
time to time;
|
|
Business
Day
|
means
any day which is not a Saturday or Sunday or a bank or other public
holiday in England;
|
Combined
Code
|
The
principles of Good Governance and Code of Best Practice prepared by the
committee on Corporate Governance published in June 1998 and renewed in
July 2003;
|
|
Directors
|
means
the Existing Directors and any New
Director;
|
|
FSMA
|
means
the Financial Services and Markets Act
2000;
|
FSMA
Financial Promotion
|
means
any communication to which section 21(1) of FSMA applies or would (but for
an exemption pursuant to section 21(2) or section 21(5) of FSMA)
apply;
|
|
FSA
|
means
Financial Services Authority
Limited;
|
|
FSA
Rules
|
means
the rules and regulations from time to time of the FSA or any successor
body including the applicable rules of the UK Financial Services
Authority’s “Conduct of Business
Sourcebook”;
|
|
Group
|
means
the group of which the Company and its subsidiary undertakings are
members;
|
|
LSE
|
means
London Stock Exchange plc;
|
Nominated
Adviser
|
means
the nominated adviser to the Company for the purposes of the AIM
Rules;
|
|
New
Director
|
shall
have the meaning in clause 5.5.3;
|
Ordinary
Shares
|
means
fully paid ordinary shares of $0.0001 each in the capital of the
Company;
|
Relevant
Person
|
means
any person being (i) BCF, (ii) an undertaking which is a subsidiary
undertaking of BCF, (iii) a parent undertaking of either of BCF or (other
than BCF) a subsidiary undertaking of any such parent undertaking, or (iv)
a director, officer or employee of any such
person;
|
Prospectus
Regulations
|
The
Prospectus Regulations 2005 issued under Part VI of
FSMA
|
Termination
Event
|
means
one of the events or circumstances mentioned in sub-clause 11.2 or any
event or circumstance which, with the giving of notice, or lapse of any
period of time, or any determination of materiality, or the fulfilment of
any other requirement might become one of the events or circumstances
mentioned in that sub-clause.
|
2.
|
Interpretation
|
2.1
|
In
this Agreement, including this
Appendix:
|
2.1.1
|
headings
are for convenience only and do not affect the construction of this
Agreement;
|
2.1.2
|
references
to any statute or any statutory provisions shall be construed first as a
reference to such statute or statutory provision as in force at the date
of this Agreement and as respectively re-enacted or consolidated and
second as a reference to any statute or statutory provision of which such
statute or statutory provision is a re-enactment or
consolidation;
|
2.1.3
|
any
obligations arising from undertakings made or given under the provisions
of this Agreement which are incurred, made or given by two or more persons
shall, unless otherwise specified, be joint and
several;
|
2.1.4
|
references
to this Agreement or any other document shall, where appropriate, be
construed as references to this Agreement or such other document as
varied, supplemented, novated and/or replaced in any manner from time to
time;
|
2.1.5
|
references
to Clauses are to the clauses of this Agreement and the Appendix to this
Agreement, unless otherwise stated;
and
|
2.1.6
|
words
denoting the singular include the plural and vice versa, words importing
gender include all genders and words denoting persons only include
corporations, unincorporated associations and
partnerships.
|
/s/
Alan
MacKenzie
|
Alan
MacKenzie
|
Chief
Executive Officer
|
/s/
Andrew
Pearlman
|
Andrew
Pearlman
|
President
and CEO
|
DATED |
2008
|
|
|
DEPOSITORY
AGREEMENT
MEDGENICS, INC . and
CAPITA
IRG TRUSTEES LIMITED
|
Depository Interest
Facility
Depository Agreement |
Version 1.1
Document A1 |
CLAUSE |
PAGE
|
|
1.
|
DEFINITIONS
AND INTERPRETATION
|
3
|
2.
|
APPOINTMENT
|
5
|
3.
|
GENERAL OBLIGATIONS, ACKNOWLEDGEMENTS AND
UNDERTAKINGS OF THE PARTIES
|
5
|
4.
|
FEES,
CHARGES AND EXPENSES
|
9
|
5.
|
ASSISTANCE
BY THE COMPANY
|
9
|
6.
|
DIVIDENDS
AND DISTRIBUTIONS
|
10
|
7.
|
INDEMNITY
IN RESPECT OF THIRD PARTY CLAIMS
|
10
|
8.
|
COMMENCEMENT, TERM AND TERMINATION OF
APPOINTMENT
|
11
|
9.
|
CONSEQUENCES
OF TERMINATION
|
11
|
10.
|
FORCE
MAJEURE
|
12
|
11.
|
CONFIDENTIAL
INFORMATION
|
12
|
12.
|
DELEGATION
|
13
|
13.
|
WAIVER
|
13
|
14.
|
ENTIRE
AGREEMENT
|
13
|
15.
|
COSTS
|
14
|
16.
|
NO
PARTNERSHIP
|
14
|
17.
|
NOTICES
|
14
|
18.
|
GOVERNING
LAW AND JURISDICTION
|
15
|
19.
|
THIRD
PARTY RIGHTS
|
15
|
20.
|
COUNTERPARTS
|
16
|
(A)
|
The
Company wishes to appoint the Depository to constitute and issue from time
to time, upon the terms of the Deed Poll (as defined below) executed or to
be executed by the Depository on or about the date of this Agreement,
series of uncertificated depository interests, each such series
representing a particular class of securities issued by the Company, with
a view to facilitating the indirect holding of, and settlement of
transactions in, such securities of each class concerned by participants
in CREST and the Depository wishes to accept such
appointment.
|
(B)
|
The
Deed Poll sets out, among other things, the terms upon which such
depository interests will be
issued.
|
(C)
|
The
Depository has agreed, among other things, that it shall comply and shall
procure that certain other persons comply, with the terms of the Deed Poll
and to provide certain other services in connection with such depository
interests.
|
1.
|
DEFINITIONS
AND INTERPRETATION
|
1.1
|
The
following words and expressions shall, unless the context otherwise
requires, have the following
meanings:
|
(a)
|
that
party being unable or admitting its inability to pay its debts as they
fall due, suspending making payments on any class of its debts or, by
reason of actual or anticipated financial difficulties, commencing
negotiations with one or more of its creditors with a view to rescheduling
any of its indebtedness;
|
(b)
|
a
moratorium being declared in respect of any indebtedness of
it;
|
(c)
|
any
corporate action, legal proceedings or other procedure or step being taken
in relation to:-
|
(i)
|
the
suspension of payments, a moratorium of any indebtedness, winding-up,
dissolution, administration, bankruptcy or reorganisation (by way of
voluntary arrangement, scheme of arrangement or otherwise) by or of that
party;
|
(ii)
|
a
composition, assignment or arrangement with any class of creditor of that
party;
|
(iii)
|
the
appointment of a liquidator, receiver, administrator, administrative
receiver, compulsory manager or other similar officer in respect of that
party or any of its assets,
|
(d)
|
that
party ceasing to carry on its business for any
reason;
|
1.2
|
In
this Agreement unless otherwise specified, reference
to:
|
(a)
|
a
"holding company"
or
"subsidiary"
shall be construed in accordance with sections 736 and 736A of the
Companies Act 1985 and a
"subsidiary undertaking"
shall be construed in accordance with section 258 of the Companies
Act 1985;
|
(b)
|
a
person includes any person, individual, company, firm, corporation,
government, state or agency of a state or any undertaking or organisation
(whether or not having separate legal personality and irrespective of the
jurisdiction in or under the law of which it was incorporated or
exists);
|
(c)
|
a
party is to a party to this Agreement and includes its successors in title
and permitted assignees;
|
(d)
|
a
"statute"
or
"statutory instrument"
or any of their provisions is to be construed as a reference to
that statute or statutory instrument or such provision as the same may
have been amended or re-enacted before the date of this
Agreement;
|
(e)
|
recitals,
clauses, paragraphs or schedules are to recitals, clauses of and
paragraphs of and schedules to this Agreement. The schedules form part of
the operative provisions of this Agreement and references to this
Agreement shall, unless the context otherwise requires, include references
to the schedules;
|
(f)
|
"writing"
includes any
methods or representing words in a legible form (other than writing on an
electronic or visual display screen) or other writing in non-transitory
form; and
|
(g)
|
words
denoting the singular shall include the plural and vice versa and words
denoting
any gender shall include all
genders.
|
1.3
|
Unless
the context otherwise requires, words and expressions defined in the Deed
Poll shall have the same meanings when used
herein.
|
1.4
|
The
index to and the headings in this Agreement are for information only and
are to be ignored for the purposes of construing the
same.
|
2.
|
APPOINTMENT
|
3.
|
GENERAL OBLIGATIONS,
ACKNOWLEDGEMENTS AND
UNDERTAKINGS
OF THE PARTIES
|
3.1
|
The
Depository hereby agrees and undertakes to the Company that, insofar as
the
following
persons are members of the Depository's Group, it shall comply and shall
procure that any Depository Interest Registrar, Custodian, Agent or other
person appointed pursuant to or who otherwise performs any duties,
responsibilities or obligations under or in connection with the Deed Poll
shall comply with the terms of the Deed Poll. The Depository shall, and
shall use reasonable endeavours to procure that such persons shall,
perform all such duties, responsibilities and obligations and shall
exercise all rights in good faith and with all reasonable skill, diligence
and care.
|
3.2
|
Without
prejudice to clause 3.1, the Depository shall and, insofar as the
following
persons
are members of the Depository's Group, shall use reasonable endeavours to
procure
that any Depository Interest Registrar, Custodian, Agent or other person
appointed
pursuant to or who otherwise performs any duties, responsibilities
or
obligations
under or in connection with the Deed Poll
shall:-
|
(a)
|
only
issue, transfer and cancel Depository Interests in accordance with the
Deed Poll;
|
(b)
|
arrange
for all Depository Interests to be admitted to CREST as participating
securities;
|
(c)
|
maintain
records of all Depository Interests cancelled or surrendered and Deposited
Property withdrawn under the Deed
Poll;
|
(d)
|
provide
such copies of and access to the Depository Interest Register and the
records maintained under clause 3.2(c) above in each case at such times
and in such form (including electronic form) as the Company may require
from time to time;
|
(e)
|
comply
with written instructions of the Company not to accept for deposit any
Shares identified in such instructions at such times and under such
circumstances as may be specified in such instructions in order to
facilitate the Company's compliance with or to avoid any breach of the
securities and other laws in any jurisdiction or to comply with the AIM
Rules for Companies published by London Stock Exchange plc from time to
time;
|
(f)
|
make
any request for any information, evidence or declaration as the Company
may require the Depository to make under clause 19.1 of the Deed Poll and
shall promptly provide to the Company all information, evidence and
declarations it receives as a result of making such
request;
|
(g)
|
forward
to all relevant Holders all of the Company's instructions referred to in
clause 19.2 of the Deed Poll and, at the Company's cost and request,
enforce the provisions of clause 19.2 of the Deed Poll;
and
|
(h)
|
perform
all of its duties, obligations and responsibilities under the Deed Poll in
accordance with all applicable laws and
regulations.
|
3.3
|
Notwithstanding
clause 15 of the Deed Poll, the Depository shall not amend or
supplement
the Deed Poll without the prior written consent of the Company
(which
consent
shall not be unreasonably withheld or delayed) provided that the
Depository
shall
be entitled to amend the Deed Poll without seeking the consent of the
Company
if
that amendment is necessary or reasonably desirable as a result of any
change in
any
statute, law, regulation or other rule applicable to the arrangements
contemplated
by
the Deed Poll or this
Agreement.
|
3.4
|
The
Depository warrants to the Company that it is an authorised person under
the Financial Services and Markets Act 2000 (
"FSMA"
)
and is duly authorised to carry out the custodial and other activities
required of it by the Deed Poll in accordance with the FSMA and undertakes
that, if and so long as the Deed Poll remains in force, it shall, at its
own burden and expense, maintain that status and authorisation or any
corresponding status under any legislation or regulatory requirement in
England which may from time to time apply to the carrying on of such
activities in addition to or in substitution for the requirements of the
FSMA. The Depository further warrants to the Company that it shall and
shall use its reasonable endeavours to procure that every Depository
Interest Registrar, Custodian, Agent or other person appointed by the
Depository pursuant to the Deed Poll who is a member of the Depository's
Group shall at all times and in all respects comply in full with and
maintain in place all necessary registrations/notifications and procedures
to comply with, the Data Protection Act
1998.
|
3.5
|
For
the avoidance of doubt and subject to the terms of this Agreement, in
acting under the Deed Poll the Depository shall have only those duties,
obligations and responsibilities expressly undertaken by it in the Deed
Poll and, except to the extent expressly provided by the Deed Poll, shall
not assume any relationship of trust for or with the Holders or any other
person.
|
3.6
|
The
Depository shall not appoint any successor Depository pursuant to clause
13 of the Deed Poll which has not been approved by the Company (such
approval not to be unreasonably withheld or delayed) unless such successor
Depository is a member of the Depository's Group. No such appointment
shall become effective unless and until the successor Depository has
entered into and become bound by an agreement to be executed as a deed
with the Company in such form as the Company may reasonably require
covenanting with the Company, inter alia, to observe, perform and be bound
by all of the terms of this Agreement as if it were the Depository named
herein.
|
3.7
|
The
Company hereby undertakes to the Depository that if the Company, or any of
its subsidiaries, makes an application to the FSA to be authorised under
FSMA then the Company shall notify the Depository of this at the same time
as the application is made.
|
3.8
|
In
the event that the Company, or any of its subsidiaries, becomes authorised
by the FSA under FSMA the parties hereby agree to revise the fees, charges
and expenses as set out in the Registrar Agreement and/or this Agreement
to reflect any additional services which the Depository will need to
provide to the Company or any additional notification requirements the
Depository will need to provide to any regulatory
authority.
|
3.9
|
In
the event that the Company, or any of its subsidiaries, becomes authorised
by the FSA under FSMA and the FSA refuse to approve the Depository's
notification to the FSA (under Part XII
"Control Over Authorised
Persons"
- sections 178-191 FSMA) of the Depository holding 10% or
more of the shares in the Company the Depository is hereby entitled to
cancel the Depository Interests in such number and manner as is
appropriate in the circumstances having first consulted the Company and
Euroclear UK & Ireland
Limited.
|
3.10
|
The
Company warrants to the Depository that as at the date of this
Agreement:
|
3.10.1
|
the
Depository does not require any permission, authorisation or licence from
any authority in any country (other than the United Kingdom) in which the
Company carries on business in order to hold Shares in the
Company;
|
3.10.2
|
no
deductions or withholdings will be due on any payment of income or capital
relating to the Shares to any Holder (including the Depository and/or any
Custodian) save for the deduction of withholding tax at the maximum rate
of 30% which is to be deducted by the Company, no deductions or
withholdings will be due on any payment of income or capital relating to
the Shares to any Holder (including the Depository and/or Custodian)
and
|
3.10.3
|
there
are no special arrangements, exclusions, restrictions, national
declarations or similar matters which attach to or apply in connection
with Shares and which would restrict the transfer of Shares by any Holder
(including the Depository and/or any
Custodian).
|
3.11
|
The
Company undertakes to notify the Depository immediately in the event that
the conditions set out in clause 3.10 above no longer
apply.
|
3.12
|
Notwithstanding
the Depository's general willingness to accept transfers of Depository
Interests the Depository will not be obliged to do so under the Deed Poll
or this Agreement if the transfer would place the Depository in breach of
any law or regulation. As at the date of this Agreement, the Company
warrants it is not aware of any such breach. If such circumstances were to
occur the Depository hereby agrees to discuss this with the Company as
soon as is reasonably practicable in order to review how to
proceed.
|
3.13
|
The
Company agrees that any changes to the provisions dealing with disclosure
of interests in shares in the Company in the Constitutional Documents of
the Company which affect the Depository will contain provisions to the
effect that any restrictions shall not apply to the Depository. The
Company further agrees that no change will be made to the provisions in
the Constitutional Documents dealing with transfer of shares in the
Company without the prior approval of the Depository, such approval not to
be unreasonably withheld or
delayed.
|
3.14
|
The
Company undertakes to indemnify the Depository in respect of any losses,
damages, claims, costs and expenses or other liabilities incurred by the
Depository by reason of breach of any warranty or undertaking in clauses
3.7 to 3.13.
|
3.15
|
Notwithstanding
anything to the contrary, the Depository shall not be obliged to accept
the issue or transfer to it of Shares if such issue or transfer would
likely result in the Depository having to make a mandatory offer for other
Shares. In the event that the Depository is required to make a mandatory
offer to purchase other Shares under applicable law, the Company shall
cooperate with the Depository in seeking an exemption or waiver of such
requirement and the Company shall bear all reasonable costs of the
Depository in connection with seeking such exemption or
waiver.
|
4.1
|
In
consideration of the performance of its duties, obligations and
responsibilities under this Agreement and the Deed Poll, and subject to
clause 4.4, the Company shall pay to the Depository (or as the Depository
shall direct) the fees and charges set out in Schedule 1, subject to and
in accordance with the terms of Schedule
1.
|
4.2
|
The
Company shall pay to the Depository (or as the Depository shall direct)
such fees that may be agreed from time to time in respect of any actions
that the Company requests the Depository to take and the Depository agrees
to take in respect of any Corporate Actions as referred to in clause
5.2.
|
4.3
|
The
Depository shall be entitled to recover any reasonable out of pocket
expenses which it incurs during the proper performance of its duties,
obligations and responsibilities under the Deed Poll and this Agreement
(including, without limitation, CREST message and network charges). Where
practicable the Depository shall obtain prior consent from the Company
before incurring any single expense exceeding £5,000. The Depository shall
submit an invoice to the Company on a quarterly basis detailing the
amounts claimed accompanied by reasonable supporting
documentation.
|
4.4
|
The
fees referred to in clause 4.1 will be reviewed on the first anniversary
of the date of this Agreement and each subsequent anniversary and if, upon
any such review, the Index Figure last published before the date of such
review shows an increase over the Index Figure last published before the
Relevant Date the fees then payable under this Agreement shall be
increased in the same
proportion.
|
4.5
|
The
Company shall pay to the Depository interest of four per cent (4%) above
the base interest rate from time to time of Barclays Bank PLC on all
amounts due and payable under this Agreement and not paid within 30 days
of the date of the relevant invoice for such amount from the date of the
relevant invoice until the date of full
payment.
|
5.
|
ASSISTANCE BY THE
COMPANY
|
5.1
|
The
Company shall provide such assistance, information and documentation in
English to the Depository as may be reasonably required by the Depository
for the purposes of the performance of its duties, responsibilities and
obligations under the Deed Poll and this Agreement. In particular the
Company will supply the Depository with enough copies of each document
that the Company intends to send to its shareholders in advance of sending
each document to its shareholders for the Depository to distribute to all
Holders.
|
5.2
|
If
the Company proposes any Corporate Action the Company agrees to give the
Depository as much notice as possible, subject to considerations of
insider dealing, market abuse and any other applicable law or regulation
which may restrict the Company from giving such notice. All such
information shall be deemed Confidential Information (as defined in clause
11.3). The Company further agrees that it will not undertake any material
change to its jurisdiction, group structure or regulatory status without
the approval of the Depository if doing so would impose any new legal or
regulatory obligations on the Depository or require the Depository to
perform its obligations or services under the Deed Poll or this Agreement
in a different way.
|
6.1
|
If
a dividend or other distribution is to be paid or made by the Company, the
Company will notify the Depository of the class or classes of shareholders
entitled to it, the currency of payment (which shall only be Sterling or
Euros, unless the parties separately agree in writing a different currency
of payment) and the amount to be paid per share. The Company will notify
the Depository of the total amount to be paid in respect of Deposited
Company Securities. Unless and then save only to the extent that the
Company makes arrangements for any such dividend or distribution to be
paid or made directly to Holders, the Company will transfer this total
amount into the Depository's client bank account on the Business Day
before the dividend or distribution is to be paid or made or at such later
time as shall nevertheless enable the Depository to make the payment on
the due date. The Depository will notify the Company in advance of the
details of its client bank
account.
|
6.2
|
The
Depository will arrange for its bank to make a payment of the dividend or
distribution to each Holder entitled to it on the day it is due for
payment. The Depository may, with the prior written consent of the
Company, pay or make the same even if it has not received sufficient funds
from the Company. In such circumstances, the Company will reimburse the
Depository on demand for any bank charges and interest it may incur as a
result, and will reimburse the Depository in respect of all sums properly
paid by it in respect of such dividend or distribution. Notwithstanding
the foregoing, the Depository reserves the right not to pay or make any
dividend or distribution unless and until the Company has put it in
sufficient funds for such
purposes.
|
7.
|
INDEMNITY IN RESPECT OF THIRD
PARTY CLAIMS
|
7.1
|
The
Depository shall indemnify the Company on an after tax basis against each
loss, liability, cost and expense reasonably incurred (including
reasonable legal fees) which the Company suffers or incurs as a result of
any claim made against the Company by any Holder, or any person having any
direct or indirect interest in any Depository Interests held by any Holder
or the Deposited Company Securities represented thereby, which arises out
of any breach of the terms of the Deed Poll or any trust declared or
arising thereunder save where such loss, liability, cost or expense arises
as a result of the fraud, negligence or wilful default of the Company. The
aggregate liability of the Depository arising out of or in connection with
this Agreement (howsoever arising) shall be limited to the lesser of (a)
£1,000,000 (one million pounds sterling) and (b) an amount equal to ten
(10) times the total annual fee payable to the Depository under this
Agreement.
|
7.2
|
The
Company shall indemnify the Depository on an after tax basis against each
loss, liability, cost and expense reasonably incurred (including
reasonable legal fees) which the Depository suffers or incurs as a result
of any claim made against the Depository by any Holder, or any person
having any direct or indirect interest in any Depository Interests held by
any Holder or the Deposited Company Securities represented thereby, which
arises out of the performance by the Depository of the obligations, duties
and responsibilities imposed upon the Depository under this Agreement and
the Deed Poll save in respect of any loss, liability, cost and expense
(including legal fees) resulting from the negligence, wilful default or
fraud of the Depository.
|
7.3
|
This
clause shall survive termination of this
Agreement.
|
8.
|
COMMENCEMENT, TERM AND
TERMINATION OF
APPOINTMENT
|
8.1
|
This
Agreement shall come into force on the date given at the top of page 3
and, subject to the following parts of this clause, shall remain in force
if and for so long as the Deed Poll shall remain in
force.
|
8.2
|
The
Company shall be entitled to serve a written notice on the Depository to
terminate the Depository's appointment and this
Agreement:
|
(a)
|
immediately
if an Event of Default occurs in relation to the Depository or the
Depository commits an irremediable material breach of this Agreement or
the Deed Poll; or
|
(b)
|
if
the Depository commits a material breach of this Agreement or the Deed
Poll and fails to remedy such breach within 30 days of being required to
do so by written notice given by the Company;
or
|
(c)
|
at
any time by giving not less than 45 days' written notice to the
Depository.
|
8.3
|
The
Depository shall be entitled to serve a written notice to terminate the
Depository's
appointment and this
Agreement:
|
(a)
|
immediately
if an Event of Default occurs in relation to the Company or if the Company
commits an irremediable material breach of this Agreement;
or
|
(b)
|
if
the Company commits a material breach of this Agreement and fails to
remedy such breach within 30 days of being required to do so by written
notice given by the Depository;
or
|
(c)
|
at
any time by giving not less than 45 days' written notice to the
Company.
|
8.4
|
Within
14 days of the service of a notice to terminate the appointment of the
Depository under clause 8.2 or 8.3 above the Depository shall be required
to serve notices on the Holders of Depository Interests of its intention
to terminate the Deed Poll. On the termination of the Deed Poll, the
appointment of the Depository and this Agreement shall automatically
terminate.
|
8.5
|
On
termination of the Deed Poll, the Company shall do or procure the doing of
all such acts and things and will execute or procure the execution of all
such documents as may be required (including on or after the termination
of this Agreement) to give effect to the provisions of clause 14.4 of the
Deed Poll. This clause 8.5 shall survive the termination of this
Agreement.
|
9.
|
CONSEQUENCES OF
TERMINATION
|
9.1
|
Termination
of this Agreement for whatever reason shall be without prejudice to any
and
all accrued rights, obligations and liabilities of any party as at the
date of termination and shall not affect the coming into force or the
continuation in force of any provision of this Agreement which is
expressly or by implication intended to come into or continue in force at
or after termination.
|
9.2
|
Upon
termination of the Deed Poll, the Depository shall provide to the Company
a fully up to date copy of the Depository Interest Register and the
records maintained under clause 3.2(c) in hard copy form and, at the
Company's cost, such other form as the Company may
require.
|
10.
|
FORCE
MAJEURE
|
10.1
|
"Event of Force Majeure"
means, in relation to any party, an event or circumstance beyond
the reasonable control of that party (the
"Claiming Party")
including, without limitation, (whether or not by the Claiming
Party) strikes, lock-outs and other industrial disputes (in each case,
whether or not relating to the Claiming Party's
workforce).
|
10.2
|
The
Claiming Party shall not be deemed to be in breach of this Agreement or
otherwise liable to any other party (the
"Non-claiming Party")
for any delay in performance or any non-performance of any
obligations under this Agreement (and the time for performance shall be
extended accordingly) if and to the extent that the delay or
non-performance is due to an Event of Force Majeure provided that (a) the
Claiming Party could not have avoided the effect of the Event of Force
Majeure by taking precautions which, having regard to all matters known to
it before the occurrence of the Event of Force Majeure and all relevant
factors, it ought reasonably to have taken but did not take and (b) the
Claiming Party has used reasonable endeavours to mitigate the effect of
the Event of Force Majeure and to carry out its obligations under this
Agreement in any other way that is reasonably
practicable.
|
10.3
|
The
Claiming Party shall promptly notify the Non-claiming Party of the nature
and extent of the circumstances giving rise to the Event of Force Majeure.
If the Event of Force Majeure in question prevails for a continuous period
in excess of 30 days after the date on which it began, the Non-claiming
Party may terminate the Depository's appointment hereunder immediately by
giving written notice to that effect to the Claiming
Party.
|
11.
|
CONFIDENTIAL
INFORMATION
|
11.1
|
Each
party undertakes that it shall not during the term of this Agreement or at
any time thereafter use, divulge or communicate to any person, except its
professional representatives or advisers or as may be required by law or
any legal or regulatory authority, any Confidential Information concerning
another party which may have or may in future come to its knowledge and
each of the parties shall use its reasonable endeavours to prevent the
publication or disclosure of any Confidential
Information.
|
11.2
|
Each
party shall, immediately upon termination of this Agreement for any reason
or upon the receipt by it of written demand from the other, return all
written Confidential Information provided to it and shall either return or
destroy all notes, memoranda and other stored information (including
information stored in any computer system or other device capable of
containing information whether in readable form or otherwise) prepared by
it which relate to any Confidential Information, whether or not any of the
same are then in its possession and it will, upon receipt of written
demand from the other, confirm in writing that all Confidential
Information has been returned or
destroyed.
|
11.3
|
For
the purposes of this clause (and clause 5.2),
"Confidential Information"
means, in relation to each party, all information relating to the
business, customers, financial or other affairs of that party or of any
member of its Group which is not in the public
domain.
|
12.
|
DELEGATION
|
12.1
|
The
Depository shall not, without the prior consent of the Company (which
consent is not to be unreasonably withheld or delayed), assign, transfer
or declare a trust of the benefit of the performance of all or any of its
obligations under this Agreement, nor any benefit arising under or out of
this Agreement.
|
12.2
|
Notwithstanding
clause 12.1, the Depository may subcontract or delegate the performance of
all or any of its duties, obligations or responsibilities under this
Agreement or the Deed Poll to any person which is (and for so long as it
remains) a member of its Group, provided that such arrangements shall not
affect the liability of the Depository to the Company under this
Agreement.
|
13.
|
WAIVER
|
13.1
|
A
waiver of any term, provision or condition of this Agreement shall be
effective only if given in writing and signed by the waiving party and
then only in the instance and for the purpose for which it is
given.
|
13.2
|
No
failure or delay on the part of any party in exercising any right, power
or privilege under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or privilege
preclude any other or further exercise thereof or the exercise of any
other right, power or
privilege.
|
13.3
|
No
breach of any provision of this Agreement shall be waived or discharged
except with the express written consent of the
parties.
|
14.
|
ENTIRE
AGREEMENT
|
14.1
|
Except
as may be applicable under the Deed Poll, this Agreement constitutes the
entire and only agreement between the parties relating to the subject
matter of this Agreement and supersedes and extinguishes any prior drafts,
agreements, undertakings, representations, warranties and arrangements of
any nature whatsoever, whether or not in writing, relating to or in
connection with this
Agreement.
|
14.2
|
Each
party acknowledges that it has not been induced to enter into this
Agreement in reliance upon, nor has it been given, any warranty,
representation, statement, assurance, covenant, agreement, undertaking,
indemnity or commitment of any nature whatsoever other than as expressly
set out in this Agreement and, to the extent it has been, it
unconditionally and irrevocably waives any claims, rights and remedies
which it might otherwise have had in relation
thereto.
|
14.3
|
The
provisions of this clause shall not exclude any liability which either of
the parties would otherwise have to the other or any right which either of
them may have to rescind this Agreement in respect of any statements made
fraudulently by the other prior to the execution of this Agreement or any
rights which any of them may have in respect of fraudulent concealment by
the other.
|
15.
|
COSTS
|
15.1
|
Save
as expressly otherwise provided in this Agreement or expressly otherwise
agreed between the parties, each of the parties shall bear its own legal,
accountancy and other costs, charges and expenses connected with the
negotiation, preparation and implementation of this Agreement and any
other agreement incidental to or referred to in this Agreement. It is
expressly agreed that the Company shall bear all of its own costs and
expenses and the costs and expenses of the Depository associated with the
negotiation, preparation and execution of the Deed Poll and this
Agreement.
|
16.
|
NO
PARTNERSHIP
|
17.
|
NOTICES
|
17.1
|
Any
notice, demand or other communication given or made under or in connection
with the matters contemplated by this Agreement shall be in writing and
shall be delivered personally or sent by fax or prepaid first class post
(air mail if posted to or from a place outside the United
Kingdom):
|
17.2
|
A
party may notify the other parties to this Agreement of a change to its
name, relevant addressee, address or fax number for the purposes of clause
17.1 provided that such notification shall only be effective
on:
|
(a)
|
the
date specified in the notification as the date on which the change is to
take place; or
|
(b)
|
if
no date is specified or the date specified is less than five Business Days
after the date on which notice is given, the date falling five Business
Days after notice of any such change has been
given.
|
18.
|
GOVERNING LAW AND
JURISDICTION
|
18.1
|
This
Agreement (and any dispute, controversy, proceedings or claim of whatever
nature arising out of or in any way relating to this Agreement or its
formation) shall be governed by and construed in accordance with English
law.
|
18.2
|
Each
of the parties to this Agreement irrevocably agrees that the courts of
England shall have exclusive jurisdiction to hear and decide any suit,
action or proceedings, and/or to settle any disputes, which may arise out
of or in connection with this Agreement and, for these purposes, each
party irrevocably submits to the jurisdiction of the courts of
England.
|
19.
|
THIRD PARTY
RIGHTS
|
20.1
|
This
Agreement may be executed in any number of counterparts and each of which
when so executed shall be an original, but all counterparts shall together
constitute one and the same
instrument.
|
20.2
|
Delivery
of an executed signature page of a counterpart by facsimile transmission
shall take effect as delivery of an executed counterpart of this
Agreement. Without prejudice to the validity of such facsimile delivery,
each party shall provide the other party with the original of such page as
soon as reasonably practicable
thereafter.
|
Set
up fee
|
£5,000
|
|
Depository
Interest and Custodian Fee
|
£3,000
|
Per
annum
|
Transfers
|
||
Intra
CREST
|
£
0.20
|
Per
transfer
|
(free
allowance equal to 25% of the number of accounts
maintained)
|
||
Stock
deposit/withdrawal
|
£
2.50
|
Per
transfer
|
Transfer
into/out of custodian
|
£
2.50
|
Per
transfer
|
Executed as deed by MEDGENICS, | ) |
INC. by its duly authorized officer | ) |
) |
Director
|
Executed as a deed by CAPITA IRG | ) |
TRUSTEES LIMITED acting by a | ) |
director and its secretary/two directors | ) |
DATED |
2008
|
|
|
TRUST
DEED POLL
by
CAPITA IRG TRUSTEES LIMITED in respect of securities in relation to
MEDGENICS,
INC.
|
|
CAPITA IRG TRUSTEES
LIMITED
The Registry
34 Beckenham Road Beckenham Kent BR3 4TU Tel: 0871 644 0335 Disclosure – Calls cost 10p per minute including VAT plus network extras |
Depository
Interest Facility
|
©
2008 Capita Registrars Limited
|
Deed
Poll
|
Document
C1
|
|
Version 1.1 |
Clause |
Page
|
|
1
|
INTERPRETATION
|
2
|
2
|
FORM
AND ISSUE OF DEPOSITORY INTERESTS
|
7
|
3
|
APPOINTMENT
OF CUSTODIAN
|
12
|
4
|
DEPOSIT
OF DEPOSITED PROPERTY; FURTHER PROVISIONS
|
13
|
5
|
DECLARATION
OF TRUST; NO SECURITY INTEREST; DUTIES WITH RESPECT TO DEPOSITED
PROPERTY
|
13
|
6
|
WITHDRAWAL
OF DEPOSITED PROPERTY ON TRANSFER AND RELATED MATTERS
|
16
|
7
|
COMPULSORY
WITHDRAWAL
|
18
|
8
|
AUTHORISATIONS,
CONSENTS, etc
|
20
|
9
|
LIABILITY
|
21
|
10
|
DEPOSITORY'S
FEES AND EXPENSES
|
26
|
11
|
INDEMNITIES
|
26
|
12
|
AGENTS
|
27
|
13
|
RESIGNATION
OF THE DEPOSITORY
|
27
|
14
|
TERMINATION
OF DEED
|
28
|
15
|
AMENDMENT
OF DEED
|
29
|
16
|
FURTHER
ACKNOWLEDGEMENTS BY THE HOLDER
|
29
|
17
|
LIABILITY
TO PAY STAMP DUTY RESERVE TAX
|
31
|
18
|
REGULATORY
REQUIREMENTS
|
32
|
19
|
DISCLOSURE
OF OWNERSHIP, etc
|
32
|
20
|
NOTICES
|
33
|
21
|
SEVERABILITY
|
34
|
22
|
COPIES
OF DEED
|
34
|
23
|
GOVERNING
LAW AND JURISDICTION
|
34
|
24
|
OVERRIDING
PROVISIONS
|
35
|
(A)
|
The
Company is a company incorporated and registered in the Territory, whose
central management and control is not exercised in the United Kingdom and
whose securities are not registered in a register kept in the United
Kingdom by or on behalf of the
Company.
|
(B)
|
Company
Securities have been admitted to trading on the Market and were admitted
to trading on the Admission
Date.
|
(C)
|
The
Regulations and the CREST Manual do not provide for the direct holding and
settlement of foreign securities such as Company Securities by
participants in CREST.
|
(D)
|
The
Depository has determined to constitute and issue from time to time, upon
the terms of this Deed, series of Depository Interests, each such series
representing a particular Class of Company Securities, with a view to
facilitating the indirect holding of, and settlement of transactions in,
Company Securities of each Class concerned by participants in CREST in
accordance with the arrangements described in the CREST
Manual.
|
(E)
|
London
Stock Exchange plc has confirmed that the Depository Interests will
not
require
an ISIN separate from that of the particular Class of Company Securities
which
it represents.
|
(F)
|
The
Depository has arranged with the Operator for the First Series of
Depository
Interests
to be admitted to CREST as participating
securities.
|
(G)
|
Title
to the Depository Interests shall be evidenced only by entry on the
Depository
Interest
Register and may be transferred only by means of the CREST
system.
|
(H)
|
Capita
Registrars Limited, an English company, number 2605568, which is already a
System Participant, has been retained by the Depository to maintain the
Depository Interest Register on behalf of the
Depository.
|
1.
|
INTERPRETATION
|
1.1
|
In
this Deed the following expressions shall have the following
meanings:-
|
Agent
|
any
agent appointed by the Depository pursuant to this
Deed;
|
Class
|
a
particular class of Company Securities, units of which are for the time
being in issue, where all the individual units of the Class concerned are
identical in all respects and cannot be separately
distinguished;
|
Company
|
shall
mean Medgenics, Inc.;
|
Company
Securities
|
securities
issued by the Company in accordance with its Constitutional Documents,
whether represented by bearer certificates or instruments or by being
recorded on a register or otherwise howsoever, and which are not
participating securities (as defined in the Regulations), but excluding
such securities or Classes of securities as the Depository may from time
to time determine;
|
Constitutional
Documents
|
the
Certificate of Incorporation, By-Laws or other constitutional documents of
the Company, as amended or replaced from time to
time;
|
CREST
Manual
|
the
document entitled the "CREST Manual" issued by the Operator but excluding
the CREST International Manual;
|
CREST
member
|
a
person who has been admitted by the Operator as a system
member;
|
CREST
Rules
|
rules
within the meaning of the Regulations and/or the FSMA made by the
Operator;
|
CREST
system
|
the
meaning ascribed thereto in the Glossary of the CREST
Manual;
|
CREST
Transfer
|
the
form of stock transfer in use from time to time within the CREST system
for a transfer of a certificated unit of a participating security to a
CREST member to be held by a CREST member in uncertificated
form;
|
Custodian
|
subject
to clause 3.3, any custodian or custodians or any nominee of any such
custodian of the Deposited Property as may from time to time be appointed
by the Depository for the purposes of this Deed;
|
Demat
Form
|
the
CREST Dematerialisation Request Form in use from time to time within the
CREST system for conversion of a unit of a participating security held by
a CREST member into uncertificated form;
|
Depository
Interest Registrar
|
Capita
Registrars Limited or such other CREST Registrar who for the time being
maintains the Depository Interest Register;
|
Depository
Interest Register
|
in relation to a particular series of
Depository Interests, the register of Holders referred to in clause 2.9
and maintained in the United Kingdom on behalf of the Depository by the
Depository Interest Registrar;
|
Depository
Interests
|
Depository
Interests of a particular series issued in uncertificated form from time
to time by the Depository on the terms and conditions of this Deed and in
accordance with the Regulations, title to which is evidenced by entry on
the Depository Interest Register and which represent a particular Class of
Company Securities;
|
Deposited
Company Securities
|
means
Company Securities of a particular Class or entitlements thereto from time
to time credited to an account of the Custodian on behalf of the
Depository in the Share Register which are to be held under the terms of
this Deed and in respect of which Depository Interests of a series
representing that Class of Company Securities shall be issued pursuant to
the terms of this Deed;
|
Deposited
Property
|
in
relation to a particular Class of Company Securities, the Deposited
Company Securities and all and any rights and other securities, property
and cash for the time being held by or for the Custodian or the Depository
and attributable to the Deposited Company
Securities;
|
FSA
|
The
Financial Services Authority;
|
FSMA
|
The
Financial Services and Markets Act 2000;
|
Holder
|
in
relation to a particular Class of Company Securities and subject to clause
6.2.1, the CREST member recorded in the Depository Interest Register for
the time being as the holder of a Depository Interest of the series which
represents Company Securities of that Class; and, where the context
admits, shall include a former Holder and the personal representatives or
successors in title of a Holder or former Holder;
|
Liabilities
|
any
liability, damage, loss, cost, claim or expense of any kind or nature
whether direct, indirect, special, consequential or
otherwise;
|
Membership
Agreement
|
the
agreement entered into by a Holder with the Operator pursuant to which the
Operator agreed to admit the Holder as a
system-member;
|
Operator
|
Euroclear
UK & Ireland Limited or such other person who is for the time being
the Operator of the CREST system for the purposes of the
Regulations;
|
Proceedings
|
any
proceeding, suit or action of any kind and in any jurisdiction arising out
of or in connection with this Deed or its subject
matter;
|
Regulations
|
The
Uncertificated Securities Regulations 2001 (SI 2001 No. 3755) and such
other regulations under Section 207 of the Companies Act 1989 as are
applicable to the Operator and/or the CREST relevant system and are from
time to time in force;
|
Schedule
|
The
schedule attached to and forming part of this Deed.
|
Share
Register
|
means
the register of members of the Company maintained in accordance with its
Constitutional Documents by the Company or on behalf of the Company by the
Share Registrar;
|
Share
Registrar
|
the
person who for the time being maintains the Share
Register;
|
Stock
Deposit Transaction
|
a
properly authenticated dematerialised instruction in respect of a
transaction type referred to in the CREST Manual as a stock
deposit;
|
Stock
Withdrawal Transaction into
New Name |
a
properly authenticated dematerialised instruction in
respect
of a transaction type referred to in the CREST Manual as a
stock withdrawal and which includes a transferee;
and
|
Stock
Withdrawal Transaction into
Own Name |
a
properly authenticated dematerialised instruction in respect of a
transaction type referred to in the CREST Manual as a stock
withdrawal and which does not include a
transferee.
|
1.2
|
In
this Deed, unless otherwise
specified:-
|
1.2.1
|
references
to clauses, sub-clauses, schedules and paragraphs are to clauses,
sub-clauses, schedules and paragraphs, of this
Deed;
|
1.2.2
|
headings
to clauses and paragraphs are for convenience only and do not affect the
interpretation of this Deed;
|
1.2.3
|
references to
a
"person"
shall
be construed so as to include any individual, firm, company, corporation,
government, state or agency of a state or any association or partnership
(whether or not having a separate legal
personality) of two or more of the
foregoing;
|
1.2.4
|
references
to any statute or statutory instrument or any provision shall be construed
as a reference to the same as it may have been, or may from time to time
be, amended, modified or
re-enacted;
|
1.2.5
|
words
importing the singular shall include the plural and vice versa unless the
context otherwise requires;
|
1.2.6
|
references
to fees, costs, charges, expenses or other payments, shall be exclusive of
any value added tax or similar tax charged or chargeable and when any
value added tax is chargeable, the Depository shall be entitled to recover
that tax in addition to the stated fees, costs, charges, expenses or other
payments;
|
1.2.7
|
words
and phrases defined in the Regulations, the CREST Rules, and the CREST
Manual which are not defined in this Deed shall have the same meanings
where used herein unless the context otherwise
requires;
|
1.2.8
|
in
construing this Deed, general words shall not be given a restrictive
meaning by reason of the fact that they are preceded or followed by words
indicating a particular class of acts, matters or things or by particular
examples intended to be embraced by the general
words;
|
1.2.9
|
any
provision to the effect that the Depository shall not be liable in respect
of a particular matter shall be construed to mean that the Depository
shall not have any liability which the Depository might, in the absence of
such a provision, incur, whether the Depository could incur such a
liability:-
|
(a)
|
under
the terms of this Deed or any other agreement or instrument relating to
the CREST system (whether such terms are express or implied by statute,
law or otherwise);
|
(b)
|
in
tort;
|
(c)
|
for
misrepresentation;
|
(d)
|
for
breach of trust or of any other duty imposed by law;
or
|
(e)
|
in
any other way;
|
1.2.10
|
unless
otherwise stated, nothing in this Deed is intended to confer a benefit on,
and no term in this Deed will, therefore, be enforceable by, any third
party pursuant to the Contracts (Rights of Third Parties) Act 1999 but
this is without prejudice to the rights and obligations of the Depository
and any Holder created by this Deed. For these purposes, a term of this
Deed shall only be
"otherwise stated"
if it
incorporates an express reference to a right or benefit of the Custodian
or the Company; and
|
1.2.11
|
if
a benefit is conferred on any third party in accordance with clause
1.2.10, the Depository may rescind or vary any term of this Deed in
accordance with its terms without the consent of the third party at all
times.
|
1.2.12
|
Where
the Custodian holds or will hold Company Securities on behalf of the
Depository, references to Company Securities being held by, transferred to
or transferred by the Depository include a reference to Company Securities
being held by, transferred to or transferred by the
Custodian.
|
2.
|
FORM AND ISSUE OF DEPOSITORY
INTERESTS
|
2.1
|
Subject
to clause 6.2, the Depository shall only issue and transfer Depository
Interests to CREST members who in accepting such issue or transfer give
Euroclear UK & Ireland the authority to confirm such membership and
supply a copy of their Membership Agreement to the Depository. In
accepting any issue or transfer to it of Depository Interests, each Holder
shall be deemed to be accepting and agreeing to the terms of this Deed and
all obligations imposed on it
hereunder.
|
2.2
|
Subject
to the provisions of this Deed, the Depository shall issue to a CREST
member such number or amount of Depository Interests of a particular
series as is equal to the number or amount (as the case may be) of Company
Securities of the relevant Class issued or transferred to the Custodian on
behalf of the Depository, for the account of that CREST
member.
|
2.3
|
Subject
to the provisions of this Deed, the Depository shall only issue Depository
Interests upon either:-
|
2.3.1
|
receipt
by the Depository of a CREST Transfer or a Demat Form in respect of a
specified number and Class of Company Securities which, in either case,
has been executed by or on behalf of the holder of such Company
Securities; or
|
2.3.2
|
the
issue or allotment to the Custodian on behalf of a CREST member of a
specified number and Class of Company Securities; and in either
case
|
2.3.3
|
receipt
by the Depository of a Stock Deposit Transaction for an equivalent number
of Depository Interests.
|
2.4
|
Receipt
by the Depository of:
|
2.4.1
|
a
completed CREST Transfer or a Demat Form as referred to in clause 2.3.1;
and
|
2.4.2
|
a
Stock Deposit Transaction for a number of Depository Interests equivalent
to that specified in such CREST Transfer or Demat
Form;
|
(a)
|
an
irrevocable instruction to the Depository to issue an equivalent number of
Depository Interests in the name of the CREST member in whose favour such
CREST Transfer is made or in whose name such Demat Form is made;
and
|
(b)
|
an
irrevocable direction to the Depository or the Depository Interest
Registrar on its behalf, to adjust by means of a registrar's adjustment
transaction the stock account of the relevant CREST member in respect of
the relevant number of Depository
Interests;
|
(i)
|
procure
that there is immediately delivered to the Custodian on
behalf
of the Depository, by unconditional credit to the Custodian's account in
the Share Register, a number or amount of Company Securities of the Class
concerned equal to the number or amount of Depository Interests to be so
issued;
|
(ii)
|
issue
such Depository Interests;
and
|
(iii)
|
send
such Registrar's adjustment
transaction.
|
2.5
|
The issue to the
Custodian on behalf of a CREST member of a specified number and Class of
Company Securities shall be deemed, subject to the provisions of this
Deed, to constitute:
|
2.5.1
|
an
irrevocable instruction to the Depository to issue an equivalent number of
Depository Interests in the name of the CREST member in whose favour such
Company Securities are issued;
and
|
2.5.2
|
a
direction to the Depository or the Depository Interest Registrar on its
behalf, to adjust by means of a registrar's adjustment transaction the
stock account of the relevant CREST member in respect of the relevant
number of Depository
Interests;
|
(a)
|
procure
that there is immediately delivered to the Custodian on behalf of the
Depository, by unconditional credit to the Custodian's account in the
Share Register, a number or amount of Company Securities of the Class
concerned equal to the number or amount of Depository Interests so
issued;
|
(b)
|
issue
such Depository Interests;
and
|
(c)
|
send
such Registrar's adjustment
transaction.
|
2.6
|
The
sending by the Depository or the Depository Interest Registrar of a
Registrar's adjustment transaction in accordance with this Deed is taken
to constitute confirmation by the Depository
that:
|
2.6.1
|
the
relevant number of Depository Interests has been issued in the name of the
relevant CREST member; and
that
|
2.6.2
|
there
has been delivered to the Custodian on behalf of the Depository, by
unconditional credit to the Custodian's account in the Share Register, a
number or amount of Company Securities of the Class concerned equal to the
number or amount of Depository Interests so
issued.
|
2.7
|
If
at any time after the date of this Deed, the Company creates any separate
Class(es) of Company Securities then any Depository Interests to be issued
in respect of any such separate Class of Company Securities shall be
issued in series, each series representing interests in a separate Class
of Company Securities.
|
2.8
|
Depository
Interests shall be issued on the terms and conditions set forth or
referred to in or prescribed pursuant to this Deed and the CREST Manual,
in each case as from time to time
amended.
|
2.9
|
The
Depository shall maintain in England separate registers in respect of each
series of Depository Interests in accordance with the Regulations. Each
such register shall record:
|
2.9.1
|
the
number of Depository Interests outstanding from time to
time;
|
2.9.2
|
the
name and address of each person holding the Depository
Interests;
|
2.9.3
|
how
many Depository Interests each such person holds;
and
|
2.9.4
|
the
date of issue and cancellation and changes in ownership in respect of all
of Depository Interests.
|
2.10
|
Title
to Depository Interests shall be evidenced only by entry on the Depository
Interest Register and may be transferred only by means of the CREST
system.
|
2.11
|
The
Depository shall, if requested to do so
by:
|
(a)
|
the
Company, arrange for the Depository Interest Register to be open to the
inspection of any Holder without charge and of any other person in general
on payment of a fee; and
|
(b)
|
any
Holder or other person who may require it, provide a copy of the
Depository Interest Register, or any part of it, on payment of a fee; and
the Depository shall cause any copy so required by a Holder to be sent to
him within 10 days beginning with the day next following that on which the
requirement is received by the
Depository.
|
2.12
|
The
fees and other provisions relating to the inspection and copying of the
Depository Interest Register will be those set out in the Companies
(Inspection and Copying of Registers, Indices and Documents) Regulations
1991 (SI 1991/1998) as amended or replaced from time to time, as if those
regulations applied to the Depository Interest Register. Each Holder
consents to such arrangements to open the Depository Interest Register for
inspection.
|
2.13
|
Depository
Interests may be issued only in uncertificated form. A request for
conversion of Depository Interests into certificated units of a security
for the purposes of the Regulations shall be deemed to be a request to the
Depository for cancellation of such Depository Interests and withdrawal of
the Deposited Property represented by such Depository Interests in
accordance with this Deed.
|
2.14
|
Subject
to clauses 9.13 and 10.2, Depository Interests shall be transferable free
from any equity, set-off or counterclaim between the Depository and the
original or any intermediate
Holder.
|
2.15
|
The
Depository shall have no obligation to arrange for the Depository
Interests to be listed on any stock exchange or quoted or permitted to be
dealt in or on any other
market.
|
2.16
|
The
Depository Interests have not been and will not be registered under the
securities legislation of any territory other than England and
Wales.
|
2.17
|
Save
for the trusts declared by clause 5.1 of this Deed, the Depository shall
not be bound by or compelled to recognise any express, implied or
constructive trust or other interest in respect of Deposited Property,
even if it has actual or constructive notice of the said trust or
interest. The Depository does not undertake any duty or obligation to any
person (other than a Holder) and accepts no liability to any such
person.
|
2.18
|
Depository
Interests may be cancelled by the Depository pursuant to clauses 6, 7 and
9.3 and, so far as the Depository considers appropriate, in the
circumstances contemplated in clauses 9.11, 9.13, 10.2 and
11.1.
|
2.19
|
The
Depository shall maintain in respect of each
Holder:
|
2.19.1
|
a
securities account showing the amount of Deposited Company Securities
attributable to that Holder and, if and so long as the Deposited Property
includes cash;
|
2.19.2
|
a
cash account recording the cash amounts (if any) attributable to such
Deposited Company Securities.
|
2.20
|
The
Depository may suspend registration of transfers of Depository Interests
and
may
in addition request the Operator to suspend the Depository Interests
if:
|
2.20.1
|
transfers
of the Deposited Company Securities are suspended;
or
|
2.20.2
|
trading
in the Deposited Company Securities is suspended in any market or on any
exchange on which the Deposited Company Securities are traded or listed or
the Deposited Company Securities are no longer transferable for any other
reason; or
|
2.20.3
|
the
Operator is entitled under the Regulations or the CREST Rules to suspend
the Deposited Company Securities;
or
|
2.20.4
|
in
all the circumstances the Depository considers it reasonable to do
so.
|
2.21
|
The
Depository shall not be bound to enquire whether any of the circumstances
described in clause 2.20 has
arisen.
|
2.22
|
The
Depository shall not be bound to enquire whether any transactions in
Depository Interests are in train before deciding to suspend or request a
suspension and shall incur no liability to any Holder or potential Holder
by reason of any suspension or request made in accordance with clause
2.20.
|
3.
|
APPOINTMENT OF
CUSTODIAN
|
3.1
|
The
Depository shall from time to time appoint one or more persons to act for
it as Custodian. The function of the Custodian shall be to hold such of
the Deposited Property as may be designated from time to time by the
Depository, and any cash or other property derived from such Deposited
Property, on behalf of the Depository. The Custodian shall be subject at
all times and in all respects to the direction of the Depository and shall
be responsible solely to it. The Depository may at any time terminate the
appointment of any Custodian and appoint a successor Custodian. The
Custodian may be a member of the same group of companies as the
Depository.
|
3.2
|
The
Depository shall require the Custodian to ensure that all Deposited
Property held by the Custodian is identified as being held on behalf of
the Depository for the account of Holders. The Depository shall not be
liable to earn any interest on or to account to the Company or any Holder
or any other person for any interest earned on moneys held either by it or
by the Custodian or by any Agent which shall have been paid by or on
behalf of the Company or any Holder under this Deed or shall otherwise
have been received in respect of Deposited
Property.
|
3.3
|
Notwithstanding
the provisions of clause 3.1, the Depository may, to the extent permitted
by applicable laws and regulations to which it is subject, itself perform
the functions of the Custodian, in which case references in this Deed to
the Custodian shall be deemed to be references to the
Depository.
|
4.
|
DEPOSIT
OF DEPOSITED PROPERTY; FURTHER
PROVISIONS
|
4.1
|
Each
person to whom Depository Interests are to be issued pursuant to this Deed
(the
"Taker")
shall be bound to give such warranties and certifications to the
Depository as the Depository may reasonably require. Each Taker shall in
any event be taken to warrant that Company Securities which are
transferred or issued to the Custodian on behalf of the Depository for the
account of the Taker are transferred or, as the case may be, issued free
and clear of all liens, charges, encumbrances or third party interests
(other than the interests therein arising pursuant to clause 5 of this
Deed) and that such transfers or, as the case may be, such issues of
Company Securities to the Custodian are not in contravention of the
Constitutional Documents of the Company or of any contractual obligation
binding on the Taker or the person making the transfer or of any
applicable law or regulation or order binding on or affecting the Taker or
the person making the transfer, and the Taker shall indemnify the
Depository and keep it indemnified from and against any liability which it
may suffer by reason of any breach of any such
warranty.
|
4.2
|
The
Depository shall be entitled to refuse to accept Company Securities for
deposit hereunder:
|
4.2.1
|
whenever
it is notified in writing that the Company has restricted the transfer of
Company Securities to comply with ownership restrictions under applicable
law or under the Constitutional Documents or any contractual provision
binding the Company; or
|
4.2.2
|
if
the Depository is requested to do so by or on behalf of the Company in
order to facilitate the Company's compliance with or to avoid any breach
of any securities or other laws in any jurisdiction;
or
|
4.2.3
|
if
such action is deemed necessary or advisable by the Depository at any time
or from time to time because of any requirement of any applicable law or
of any government or governmental authority, body or agency or any
regulatory authority or the Operator, or under any provision of this Deed
or for any other reason.
|
5.
|
DECLARATION OF TRUST; NO
SECURITY INTEREST; DUTIES WITH
RESPECT
TO DEPOSITED
PROPERTY
|
5.1
|
The
Depository hereby declares and confirms that it holds (itself or through
the
Custodian)
as bare trustee and will so hold, subject to the terms of this Deed, all
the Deposited Property pertaining to each series of Depository Interests
for the benefit of the Holders of that series as tenants in common and
that each of the Holders is entitled to rights in relation to the relevant
Deposited Property accordingly. For the avoidance of doubt, in acting
hereunder the Depository shall have only those duties, obligations and
responsibilities expressly undertaken by it in this Deed and, except to
the extent expressly provided by this Deed, does not assume any
relationship of trust for or with the Holders or any other
person.
|
5.2
|
Nothing
in this Deed is intended to nor shall create a charge or other security
interest in favour of the Depository. Any right or power of the Depository
in respect of the Deposited Property is reserved by the Depository under
its declaration of trust contained in clause 5.1 and is not given by way
of grant by any Holder.
|
5.3
|
The
Depository shall pass on to and, so far as it is reasonably able, exercise
on behalf of and shall ensure that the Custodian passes on to and, so far
as it is reasonably able, exercises on behalf of the relevant Holder(s)
all rights and entitlements which it or the Custodian receives or is
entitled to in respect of Deposited Company Securities in accordance with
this Deed and which are capable of being passed on or
exercised.
|
5.3.1
|
Any
such rights or entitlements to cash distributions, to information, to make
choices and elections, and to call for, attend and vote at general
meetings and any class meetings shall, subject to the other provisions of
this Deed, be passed on to the relevant Holder(s) immediately (and in any
event within 3 working days) upon being received by the Custodian in the
form in which they are received by the Custodian together with such
amendments or such additional documentation as shall be necessary to
effect such passing-on or, as the case may be, exercised in accordance
with the terms of this Deed.
|
5.3.2
|
Any
such rights or entitlements to any other distributions, including but not
limited to scrip dividends, to bonus issues or arising from capital
reorganisations shall be passed on to the relevant Holder(s) (a) by means
of the consolidation, sub-division, change in currency denomination,
cancellation and/or issue of Depository Interests to reflect the
consolidation, sub-division, change in currency denomination and/or
cancellation of the underlying Deposited Company Securities or the issue
of additional Depository Interests to the relevant Holder(s) to reflect
the issue of additional Company Securities to the Custodian and (b) in
either case immediately following such consolidation, sub-division, change
in currency denomination and/or cancellation or issue of such Company
Securities as the case may
be.
|
5.3.3
|
If
the Company makes a distribution in specie to the Custodian of an asset
which is not readily divisible among Holders in their due proportions, the
Custodian will use reasonable endeavours to sell the relevant asset within
a reasonable time at the best price reasonably obtainable in the market
and to distribute the net proceeds of sale appropriately. For the
avoidance of doubt, the Custodian shall not be under any obligation to
sell a relevant asset if there is in fact no market for it, nor will it be
under any obligation to operate the asset in question in order to produce
income from it.
|
5.3.4
|
If
arrangements are made which allow a Holder to take up any rights in
Company Securities requiring further payment from a Holder, it must if it
wishes the Depository to exercise such rights on its behalf put the
Depository in cleared funds before the relevant payment date or such other
date that the Depository may notify the Holders in respect of such
rights.
|
5.3.5
|
The
Depository will accept all compulsory purchase and similar notices in
respect of Depository Interests but will not, and the Custodian will not,
exercise choices, elections or voting or other rights or entitlements in
the absence of express instructions in writing or by electronic means from
the relevant Holder.
|
5.3.6
|
The
Depository shall re-allocate any Company Securities or distributions which
are allocated to the Custodian and which arise automatically out of any
right or entitlement to Deposited Company Securities to Holders
pro-rata to the Deposited Company Securities held for their
respective accounts provided that the Depository shall not be required to
account for any fractional entitlements arising from such re-allocation
which fractional entitlements shall be aggregated and given to
charity.
|
5.3.7
|
Any
other rights or entitlements shall be passed on to or, as the case may be
exercised on behalf of, Holders in such manner and by such means as the
Depository shall in its absolute discretion determine. Where the rights or
entitlements consist of reports, notices, circulars or other information
received by the Custodian, the obligation to pass them on is subject to
the Custodian having received a sufficient number of each such document to
pass on one copy to each
Holder.
|
5.4
|
The
Depository will not be bound to take notice of, nor to see to the carrying
out of, any trust, mortgage, charge, pledge or claim in favour of any
other person. A receipt from a Holder (or from a Holder's personal
representatives or nominated transferee in accordance with clause 6) for
the Depository Interests will free the Depository from responsibility to
any such other person in respect of any such interest. The Depository may
ignore any notice it receives of the right, title, interest or claim of
any other person to an interest in those assets, except where the interest
is conferred by operation of
law.
|
6.
|
WITHDRAWAL
OF DEPOSITED PROPERTY ON TRANSFER AND RELATED
MATTERS
|
6.1
|
Subject
to the provisions of this Deed, the Depository shall only cancel
Depository Interests and transfer the Deposited Property represented
thereby upon the request of the
Holder.
|
6.2
|
The
receipt by the Depository of either a Stock Withdrawal Transaction into
Own Name or a Stock Withdrawal Transaction into New Name for a specified
number of Depository Interests shall in addition to the meaning attributed
to it within the CREST system (if different) be deemed to
constitute:
|
6.2.1
|
in
the event of a Stock Withdrawal Transaction into New Name, an irrevocable
instruction to the Depository Interest Registrar to debit the account on
the Depository Interest Register of the CREST member who issued such Stock
Withdrawal Transaction and credit the account of the transferee specified
in such Stock Withdrawal Transaction, whether or not a CREST member, in
each case with the relevant number of Depository Interests and for the
avoidance of doubt any such transferee whether or not a CREST member shall
not become a Holder;
|
6.2.2
|
in
the event of a Stock Withdrawal Transaction (whether into New Name or Own
Name) an irrevocable request from the Holder on the Depository Interest
Register for those Depository Interests to be cancelled and for the
Deposited Property represented thereby to be withdrawn;
and
|
6.2.3
|
an
irrevocable instruction from the Holder on the Depository Interest
Register to the Custodian to immediately transfer the relevant Deposited
Property to the transferee specified in such Stock Withdrawal Transaction
into New Name or, in the case of a Stock Withdrawal Transaction into Own
Name, the Holder of the relevant Depository Interests (in either case the
"Transferee")
and
to pay any money comprised in or referable to the Deposited Property
relating to such Depository Interests to such
Transferee.
|
6.3.1
|
the
Depository shall be entitled to deliver to the Transferee, in lieu of the
relevant Deposited Company Securities to which he is entitled, any
securities into which such Deposited Company Securities have been
converted, sub-divided, re-denominated or consolidated, any securities
which are substituted by the Company for such Deposited Company Securities
or any proceeds and/or securities received or issued in lieu of such
Deposited Company Securities as a result of any corporate event of or
affecting the Company; and
|
6.3.2
|
without
prejudice to the generality of clause 6.3.1, where the Depository has at
the direction of the Holder assented Deposited Company Securities to a
third party pursuant to a take-over offer, the Depository shall deliver to
the Transferee in question the proceeds and/or securities received in
respect of the assented Deposited Company Securities attributed to the
Depository Interests being withdrawn in lieu of such Deposited Company
Securities;
|
6.4
|
Notwithstanding
the provisions of clause 6, the Depository shall not be required to make
arrangements for the transfer of Company Securities of a particular Class
during any period when the Share Register is
closed.
|
6.5
|
The
Depository shall not be liable to a Holder or a Transferee if any
Deposited Property cannot be delivered to or to the order of a Transferee
by reason of any prohibition imposed upon the Depository or the Holder by
applicable law or any other matter beyond the Depository's reasonable
control.
|
6.6
|
Notwithstanding
the withdrawal of Deposited Company Securities under this clause 6, income
distributions attributable thereto will be dealt with in accordance with
clause 5.
|
6.7
|
Any
person requesting cancellation of Depository Interests may be required by
the Depository to furnish it with such reasonable proof, certificates and
representations and warranties as to matters of fact, including, without
limitation, as to his identity and with such further documents and
information as the Depository may reasonably deem necessary or appropriate
for the administration or implementation of this Deed in accordance with
applicable laws and regulations. The Depository may withhold delivery of
the Deposited Property until such items are so
furnished.
|
7.1
|
If
it shall come to the notice of the Depository, or if the Depository shall
have reason to believe, that any Depository
Interests:
|
7.1.1
|
are
owned directly or beneficially by any person in circumstances which, in
the opinion of the Depository, might result in the Depository or the
Custodian suffering any liability to taxation or pecuniary, fiscal or
material regulatory disadvantage which it might not otherwise have
suffered; or
|
7.1.2
|
are
owned directly or beneficially by, or otherwise for the benefit of, any
person in breach of any law or requirement of any jurisdiction or
governmental authority or so as to result in ownership of any Company
Securities exceeding any limit under, or otherwise infringing the
Constitutional Documents of or law applicable to the Company or the terms
of issue of the Company Securities;
or
|
7.1.3
|
are
owned directly or beneficially by, or otherwise for the benefit of, any
person who fails to furnish to the Depository such proof, certificates and
representations and warranties as to matters of fact, including, without
limitation, as to his identity, as the Depository may deem necessary or
appropriate for the administration or implementation of this Deed in
accordance with applicable laws and regulations, including (without
limitation) information specified in the CREST Manual;
or
|
7.1.4
|
are
owned by a Holder who ceases at any time to be, or is suspended in whole
or in part as, a CREST member for any reason;
or
|
7.1.5
|
cease
to be capable of being held in the CREST system;
or
|
7.1.6
|
are
held by a Holder who has failed to duly and punctually perform any
obligation to the Depository or Custodian or the Company imposed upon him
by virtue of this Deed or any other agreement or instrument to which he is
a party or by which he is bound with respect to those or any other
Depository Interests, and in relation to whom the Depository determines
that it is appropriate that the provisions of this clause shall apply;
or
|
7.1.7
|
are
held on behalf of a Holder or Holders representing Shares of such value as
to require the Depository or Custodian, under applicable law, to make a
mandatory offer for other Company
Securities,
|
7.2
|
If
any regulatory authority refuses to approve the holding of the Depository
or the Custodian of Company Securities at or above a certain level, and
requires the Depository or Custodian to divest itself of some or all of
the Company Securities held by it,
then:
|
7.2.1
|
the
Depository will consult with the Company as to what action it proposes to
take; and
|
7.2.2
|
a
Holder or Holders (as appropriate) will be deemed to have requested the
cancellation of their Depository Interests and the withdrawal of the
Company Securities represented by those Depository Interests and the
provisions of clause 6.2 shall then apply as if the Holder had submitted a
Stock Withdrawal Transaction into Own
Name.
|
7.3
|
On
the Holder being deemed, at the election of the Depository, to have
requested the withdrawal of the Deposited Company Securities represented
by his Depository Interests pursuant to clause 7.1, the Depository shall
make such arrangements to the extent practicable and permitted by
applicable law and regulation for the delivery of the Deposited Property
represented by the Holder's Depository Interests to the Holder as the
Depository shall think fit. Without limitation, the Depository
may:-
|
7.3.1
|
arrange
for the Depository Interests of such Holder to be transferred (or
cancelled and re-issued) to a CREST member selected by the Depository who
shall hold the same as nominee for such Holder on such terms as the
Depository or that CREST member shall think fit;
or
|
7.3.2
|
arrange
for such Depository Interests to be cancelled and for the Deposited
Property represented thereby to be transferred to such Holder;
or
|
7.3.3
|
in
its absolute discretion, sell all or part of the Deposited Property and
deliver the net proceeds to the
Holder.
|
8.
|
AUTHORISATIONS,
CONSENTS, etc
|
8.1
|
The
Depository warrants that it is an authorised person under the FSMA and is
duly authorised to carry out the custodial and other activities required
of it by this Deed in accordance with that Act and undertakes that, if and
so long as this Deed remains in force, it shall, at its own burden and
expense, maintain that status and authorisation or any corresponding
status under any legislation or regulatory requirement in England which
may from time to time apply to the carrying on of such activities in
addition to or in substitution for the requirements of the FSMA. Subject
to clause 9, the Depository further warrants that it shall, and shall
procure that every Depository Interest Registrar, Custodian, Agent or
other person appointed by the Depository pursuant to this Deed shall, at
all times and in all respects comply with and maintain in place all
necessary registrations/notifications and procedures to comply with the
Data Protection Act 1998 at no cost to any
Holder.
|
8.2
|
Subject
to clause 8.1, if any other governmental or administrative authorisation,
consent, registration or permit or any report to any governmental or
administrative authority is required in order for the Depository to
receive Company Securities to be deposited hereunder and/or for Depository
Interests representing the same to be issued pursuant to this Deed, or in
order for Company Securities or other securities or property to be
distributed or to be subscribed or acquired in accordance with the
provisions prescribed in or pursuant to this Deed, the prospective Holder
shall apply for such authorisation, consent, registration, or permit or
file such report within the time required. The Depository shall not be
bound to issue Depository Interests or distribute, subscribe or acquire
Company Securities or other property with respect to which such
authorisation, consent, registration, permit or such report shall not have
been obtained or filed, as the case may be, and shall have no duties to
obtain any such authorisation, consent, registration or permit or to file
any such report except in circumstances where the same may only be
obtained or filed by the Depository and only without unreasonable burden
or expense.
|
9.
|
LIABILITY
|
9.1
|
The
Depository shall not incur any liability to any Holder or to any other
person for any Liabilities suffered or incurred, arising out of or in
connection with the performance or non-performance of its obligations or
duties whether arising under this Deed or otherwise save to the extent
that such Liabilities result from its negligence or wilful default or
fraud or that of any person for whom the Depository is vicariously liable
provided that the Depository shall not incur any such liability as a
result of the negligence or wilful default or fraud of any Custodian or
Agent which is not a member of the same group of companies as the
Depository unless the Depository shall have failed to exercise reasonable
care in the appointment and continued use and supervision of such
Custodian or Agent. Nor shall the Depository incur any such liability if
any Liability suffered or incurred by the Holder is attributable to or
results from the negligence or wilful default or fraud of the Operator or
the Company or the acts or omissions of any person who provides banking
services in connection with the CREST system. Except in the case of
personal injury or death, any liability incurred by the Depository to a
Holder under this Deed will be limited
to:
|
9.1.1
|
the
value (at the date the act, omission or other event giving rise to the
liability is discovered and as if such act, omission or other event had
not occurred) of the Deposited Property that would have been properly
attributable (if such act, omission or other event had not occurred) to
the Depository Interests to which the liability relates; or if
less;
|
9.1.2
|
that
proportion of £10 million which corresponds to the proportion which the
amount the Depository would otherwise be liable to pay to the Holder bears
to the aggregate of the amounts that the Depository would otherwise be
liable to pay to all or any Holders in respect of the same act, omission
or event which gave rise to such liability or if there are no such other
amounts, £10 million.
|
9.2
|
The
Depository shall not incur any liability to any Holder or to any other
person if, by reason of:
|
9.2.1
|
any
provision of any present or future law or regulation of any jurisdiction
or of any governmental authority, or by reason of the interpretation
thereof; or
|
9.2.2
|
any
compulsory withdrawal pursuant to clause 7;
or
|
9.2.3
|
the
Constitutional Documents of the Company;
or
|
9.2.4
|
the
provisions of the CREST Manual or CREST Rules or the application thereof;
or
|
9.2.5
|
any
refusal or failure of the Operator or of any other person to provide any
service in relation to the CREST system or any operational failure of the
CREST system; or
|
9.2.6
|
any
act or omission of the Company;
or
|
9.2.7
|
any
computer failure; or
|
9.2.8
|
any
circumstance beyond the reasonable control of the
Depository,
|
9.3
|
If
and to the extent that by virtue of laws of any jurisdiction outside the
United
Kingdom,
or the application or operation of those laws in any particular event or
circumstance, or by virtue of the provisions of the Constitutional
Documents or the application or operation of those provisions in any
particular event or circumstance, the Depository or the Custodian does not
acquire unconditional and absolute title or right to any Deposited
Property, or acquires a title or right to any Deposited Property which is
in any manner encumbered or defective or liable to be displaced or
avoided, or where as a result of an event or circumstance beyond the
Depository's reasonable control the Deposited Property is reduced or
depleted or the Depository does not hold sufficient Company Securities to
cover the Depository Interests in issue, neither the Depository nor the
Custodian shall be in any way liable to any Holder or any other person by
reason thereof; but in any such case the Depository shall be entitled to
take or cause to be taken such action as shall in its opinion be
reasonable or appropriate, including without limitation the cancellation
without compensation of the Depository Interests of any Holder(s)
determined by the Depository whether or not such Holder(s) are in any way
responsible for the relevant event or circumstance; and each Holder agrees
that, by acquiring and holding Depository Interests representing Company
Securities by means of the arrangements contemplated by this Deed, he
accepts the risk that, by virtue of such laws or terms and conditions, or
the application or operation thereof, or any such event or circumstance,
his interest in any relevant Deposited Property may not be entire,
complete and unimpeachable.
|
9.4
|
The
Depository may rely on, and shall not be liable for any loss suffered by
any Holder or any other person by reason of its having accepted (or the
Custodian or any other Agent or the Company or its agents having accepted)
as valid and having relied upon, any written notice, request, direction,
transfer, certificate for Company Securities (or other securities)
electronic communication or any other document or any translation thereof
or communication reasonably believed by it in good faith to be genuine
notwithstanding that the same shall have been forged or shall not be
genuine or accurate or shall not have been duly authorised or
delivered.
|
9.5
|
The
Depository may act, or take no action, on the advice or opinion of, or in
reliance upon, any certificate or information obtained from, the Company
or any reputable lawyer, valuer, accountant, banker, broker, information
provider, settlement system operator registrar or other expert whether
obtained by the Company, the Depository or otherwise and shall not except
where any such person is a member of the same group of companies as the
Depository be responsible or liable to any Holder or any other person for
any loss or liability occasioned by so acting or refraining from acting or
relying on information from persons depositing Company Securities or
otherwise entitled to the issue of Depository Interests. Any such advice,
opinion, certificate or information may be sent or obtained by letter,
telex, facsimile transmission, e-mail, telegram, cable or other electronic
communication and the Depository shall not be liable for acting on any
such advice, opinion, certificate or information notwithstanding that the
same shall have been forged or shall not be genuine or
accurate.
|
9.6
|
The
Depository may call for and shall be at liberty to accept as sufficient
evidence of any fact or matter or the expediency of any transaction or
thing, a certificate, letter or other written communication, purporting to
be signed on behalf of the Company by a director of the Company or by a
person duly authorised in writing by a director of the Company or such
other certificate from any such person as is specified in clause 9.5 which
the Depository considers appropriate and the Depository shall not be bound
in any such case to call for further evidence or be responsible to any
Holder or any other person for any loss or liability that may be
occasioned by the Depository acting on such
certificate.
|
9.7
|
The
Depository shall not be required or obliged to monitor, supervise or
enforce the observance and performance by the Company of any of its
obligations, including, without limitation, those arising under or in
connection with applicable law, or any contract or instrument to which the
Company is a party or by which it or any of its assets is bound. The
Depository makes no representation or recommendation to any person
regarding the financial condition of the Company or the advisability of
acquiring Depository Interests or Company Securities or other property or
as to the type or character or suitability of them and takes no
responsibility for the operations of the Company or the effect of them on
the value of the relevant Company Securities or Depository Interests or
any rights derived from them.
|
9.8
|
The
Depository, the Custodian and any Agent may engage or be interested in any
financial or other business transactions with the Company or any other
member of any group of which the Company is a member, or in relation to
the Deposited Property (including, without prejudice to the generality of
the foregoing, the conversion of any part of the Deposited Property from
one currency to another), may at any time hold or be interested in
Depository Interests for their own account, and shall be entitled to
charge and be paid all usual fees, commissions and other charges for
business transacted and acts done by them otherwise than in the capacity
of Depository or Custodian or Agent (as the case may be) in relation to
matters arising under this Deed (including, without prejudice to the
generality of the foregoing, charges on the conversion of any part of the
Deposited Property from one currency to another and on any sales of
property) without accounting to the Holders or any other person for any
profit arising from it.
|
9.9
|
The
Depository shall endeavour to effect any sale of securities or other
property or transferable right and any conversion of currency as is
referred to or contemplated by this Deed in accordance with its normal
practices and procedures but shall have no liability with respect to the
terms of such sale or conversion or if the effecting of such sale or
conversion shall not be reasonably
practicable.
|
9.10
|
The
Depository shall have no responsibility whatsoever to any Holder or any
other person as regards any deficiency which might arise because the
Depository is subject to or accountable for any tax in respect of any or
any part of the Deposited Property or any income or capital distribution
or other payment arising from it or any proceeds of sale. The Depository
shall be entitled to make such deductions from the Deposited Property or
any income or capital arising from it or to sell all or any of the
Deposited Property and make such deductions from the proceeds of sale
thereof as may be required by applicable law in order to comply with its
obligations to account for any tax liability in respect
thereof.
|
9.11
|
Without
prejudice to any other powers which the Depository may have hereunder, the
Depository shall be entitled to enter into any agreement with or give any
undertakings to any relevant taxation authority concerning the taxation
status of the transactions effected pursuant to this Deed and to do all
such things as may be required under the terms of any such agreement or
undertakings.
|
9.12
|
Notwithstanding
anything else contained in this Deed but subject always to the rights of a
Holder under clause 5, the Depository may refrain from doing anything
which could or might, in its reasonable opinion, be contrary to any law of
any jurisdiction or any of the CREST Rules or any regulation or
requirement of any regulatory authority or other body which is binding
upon it, or which would or might otherwise in its reasonable opinion
render it liable to any person and the Depository may do anything which
is, in its opinion, necessary to comply with any such law, regulation or
requirement or which is in its opinion necessary to avoid any such
liability.
|
9.13
|
No
provision of this Deed shall require the Depository to expend or risk its
own funds or otherwise incur any financial liability in the performance of
any of its duties or in the exercise of any of its rights or powers
hereunder. If, notwithstanding this provision, the Depository reasonably
does so, it shall be entitled to make such deductions from the Deposited
Property or any income or capital arising from it or to sell all or any of
the Deposited Property and make such deductions from the proceeds of sale
as may be required to account for any loss or liability suffered by the
Depository in respect of the Deposited
Property.
|
9.14
|
All
communications, notices, certificates, documents of title and remittances
to be delivered by or sent to or from Holders or their agents will be
delivered to or sent to or from them at their own
risk.
|
9.15
|
The
Depository shall not be liable to a Holder in respect of any of its
obligations under this Deed if it is unable to fulfil those obligations by
reason of any prohibition imposed upon the Depository or the Holder by
applicable law, any benefit attaching to Company Securities being unable
to pass through the CREST system and alternative arrangements not being
agreed with the Company or any other matter beyond the Depository's
reasonable control.
|
9.16
|
Nothing
in this Deed shall require the Depository to disclose Sensitive
Information to a Holder.
"Sensitive Information"
is information:
|
9.16.1
|
that
the Depository receives under any obligation of confidence;
or
|
9.16.2
|
the
disclosure of which in the Depository's reasonable opinion might amount to
a breach of law or regulation or the rules of any market on which Company
Securities are listed or
traded.
|
9.17
|
The
Depository shall not be liable to any Holder in respect of losses incurred
in connection with any failure to disclose Sensitive Information pursuant
to clause 9.16.
|
10.
|
DEPOSITORY'S FEES AND
EXPENSES
|
10.1
|
The
Depository shall be entitled to charge Holders in respect of the provision
of its services under this Deed the fees and expenses notified from time
to time.
|
10.2
|
The
Depository shall not be liable for any taxes, duties, charges, costs or
expenses which may become payable in respect of the Deposited Company
Securities or other Deposited Property or the Depository Interests,
whether under any present or future fiscal or other laws or regulations or
otherwise, and such amount as is proportionate or in the opinion of the
Depository referable to a Depository Interest shall be payable by the
Holder to the Depository at any time on request; or may be deducted from
Deposited Property held for the account of the Holder and/or from any
amount due or becoming due on such Deposited Property in respect of any
dividend or other distribution. In default of this, the Depository may in
its sole discretion sell, and for the account of the Holder discharge the
same out of the proceeds of sale of, any appropriate number of Deposited
Company Securities or other Deposited Property, and subsequently pay any
surplus to the Holder.
|
11.
|
INDEMNITIES
|
11.1
|
A
Holder shall be liable for and shall indemnify the Depository and the
Custodian and their respective agents, officers and employees and hold
each of them harmless from and against, and shall reimburse each of them
for, any and all Liabilities, arising from or incurred in connection with,
or arising from any act performed in accordance with or for the purposes
of or otherwise related to, this Deed insofar as they relate to Deposited
Property held for the account of, or Depository Interests held by, that
Holder, except for Liabilities caused by or resulting from any wilful
default or negligence or fraud of (i) the Depository or (ii) the Custodian
or any Agent if such Custodian or Agent is a member of the same group of
companies as the Depository or if, not being a member of the same group of
companies, the Depository shall have failed to exercise reasonable care in
the appointment and continued use and supervision of such Custodian or
Agent. The Depository shall be entitled to make such deductions from
the Deposited Property or any income or capital arising from it or to sell
all or any of the Deposited Property and make such deductions from the
proceeds of sale as may be required to discharge the obligations of the
Holder(s) under this
clause.
|
11.2
|
The
obligations of each Holder under clause 11.1 shall survive any termination
of this Deed in whole or in part and any resignation or replacement of the
Depository and any Custodian.
|
11.3
|
Should
any amount paid or payable under this Deed by a Holder be itself subject
to tax in the hands of the recipient or be required by law to be paid
under any deduction or withholding, the relevant Holder(s) will pay such
sums as will after any such tax, deduction or withholding leave the
recipient with the same amount as he would have had if no such tax had
been payable and no deduction or withholding had been made and such
payments and adjustments shall be made as may be necessary to give effect
to this clause 11.3.
|
12.
|
AGENTS
|
12.1
|
The
Depository may from time to time appoint one or more Agents on such terms
as the Depository may think fit to perform any obligations of the
Depository under this Deed and the Depository may remove any such
Agent.
|
12.2
|
In
particular but without prejudice to the generality of clause 12.1, the
Depository shall be entitled to delegate by power of attorney or otherwise
to any Agent, all or any of the powers, authorities and discretions vested
in the Depository by this Deed and such delegation may be made upon such
terms and subject to such conditions, including the power to sub-delegate,
as the Depository may think
fit.
|
12.3
|
Notice
of any appointment or removal pursuant to clause 12.1 or any delegation
pursuant to clause 12.2 shall, where such matter is in the opinion of the
Depository material to the Holders of any series of Depository Interests,
be given by or for the Depository to the Holders of that or those
series.
|
13.
|
RESIGNATION OF THE
DEPOSITORY
|
13.1
|
Subject
to clause 13.2, the Depository may resign as Depository by giving at least
30 days' prior notice in writing to that effect to the
Holders.
|
13.2
|
The
resignation of the Depository shall take effect on the date specified in
such notice provided that no such resignation shall take effect until the
appointment by the Depository of a successor Depository. The
Depository undertakes to use its reasonable endeavours to procure the
appointment of a successor Depository with effect from the date specified
in such notice as soon as reasonably practicable following the giving of
notice of resignation. Upon any such appointment and acceptance, notice
shall be given by or for the Depository to the Holders as soon as
reasonably practicable.
|
13.3
|
Upon
the resignation of the Depository (referred to in this clause 13.3 as the
"Retiring
Depository"
)
and against payment of all sums due to the Retiring Depository
under this Deed, the Retiring Depository shall deliver to its successor as
Depository (the
"Successor"
)
sufficient information and records to enable the Successor
efficiently to perform its obligations under this Deed and shall transfer
to the Successor or to a Custodian or other Agent appointed by the
Successor all Deposited Property held by the Retiring Depository as
trustee under this Deed. Upon the date when such resignation takes effect,
any Custodian appointed by the Retiring Depository shall be instructed by
the Retiring Depository to transfer to the Successor or to a Custodian or
other Agent appointed by the Successor the Deposited Property held by it
pursuant to this Deed.
|
14.
|
TERMINATION OF
DEED
|
14.1
|
The
Depository may terminate this Deed either in its entirety or in respect of
one or more series of Depository Interests by giving not less than 30
days' prior notice to that effect to the Holders of the Depository
Interests concerned. Upon such notice, each Holder shall be deemed to have
requested the cancellation of its Depository Interests and the withdrawal
of the Deposited Company Securities represented by its Depository
Interests and clause 14.3 shall
apply.
|
14.2
|
Termination
of this Deed for whatever reason shall be without prejudice to any and all
accrued rights, obligations and liabilities of the Depository and any
Holder as at the date of
termination.
|
14.3
|
During
the period from the giving of such notice to the Holders until
termination, each Holder shall be obliged to cancel the Depository
Interests held by it and withdraw the Deposited Property relating to it in
accordance with the terms of this
Deed.
|
14.4
|
If
any Depository Interests in respect of which this Deed is terminated
remain outstanding after the date of termination, the Depository shall as
soon as reasonably practicable (i) deliver the Deposited Property then
held by it under this Deed in respect of the Depository Interests to the
respective Holder; or, at its discretion (ii) sell all or part of such
Deposited Property; (iii) request the Operator to remove
the
|
|
relevant
Depository Interests from the CREST system and (iv) following such removal
shall not register transfers of the relevant Depository Interests, pass on
dividends or distributions or take any other action in respect of such
Deposited Property, except that it shall, as soon as reasonably
practicable, deliver the net proceeds of any such sale, after deducting
any sums then due to the Depository, together with any other cash then
held by it under this Deed, pro rata to Holders in respect of their
Depository Interests. After making such sale, the Depository shall,
without prejudice to clause 14.2, be discharged from all further
obligations under this Deed, except its obligation to account to Holders
for such net proceeds and other cash comprising the Deposited Property
without interest.
|
14.5
|
For
the avoidance of doubt, any obligations of a Holder herein to make
payments to the Depository and indemnify it shall survive any such
termination.
|
15.
|
AMENDMENT
OF DEED
|
15.1
|
All
and any of the provisions of this Deed (other than this clause) may at any
time and from time to time be amended or supplemented by the Depository in
any respect which it may deem necessary or desirable by a deed
supplemental to this Deed.
|
15.2
|
Notice
of any amendment or supplement, other than an amendment or supplement of a
minor or technical nature which does not in the reasonable opinion of the
Depository materially affect the interests of the Holders of the
Depository Interests concerned, shall be given by or for the Depository to
the Holders of such series within 30 days of the amendment or supplement
taking effect.
|
15.3
|
Any
amendment or supplement which shall, in the reasonable opinion of the
Depository, be materially prejudicial to the interests of the Holders as a
whole or to the Holders of one or more series of Depository Interests
shall only be made following consultation with the Company and shall not
take effect until 40 days after service of notice on the Holders at which
time the Holders shall be deemed to have accepted the amendment or
supplement.
|
15.4
|
The
Depository shall not be obliged to have regard to the consequences for the
Holders of any proposed amendment or supplement to this Deed or the
exercise of any power conferred on the Depository by this Deed except to
the extent expressly provided in this
Deed.
|
16.1.1
|
the
Depository has no responsibility for the operation or non-operation of the
CREST system; accordingly, the Depository shall be entitled without
further enquiry to execute or otherwise act upon instructions or
information or purported instructions or information received by means of
the CREST system notwithstanding that it may afterwards be discovered that
such instructions or information were not genuine or were not initiated by
the Operator, a CREST member or other person authorised to give them; any
such execution or action by the Depository shall, save in the case of
wilful default or reckless disregard of its obligations, constitute a good
discharge to the Depository, which shall not be liable for any Liabilities
suffered or incurred by the Holder or any other person arising in whatever
manner directly or indirectly from and/or as a result of such execution or
action;
|
16.1.2
|
the
Depository and the Custodian rely on the Company and/or the Share
Registrar to supply information relating to cash distributions, corporate
actions, forthcoming meetings of the holders of those securities and other
matters having a bearing on the rights of persons holding Depository
Interests representing Company Securities; accordingly the content of the
information made available to Holders and the time at which such
information is available will reflect the content of and timing of the
supply of information to the Depository, the Custodian or its nominee, for
which no responsibility is
accepted;
|
16.1.3
|
the
Holder shall not cause or endeavour to cause the Depository, the Custodian
or its nominee to make or assert any right or claim whatsoever against the
Operator or the Company or its directors, officers, employees or
agents;
|
16.1.4
|
the
Depository and the Custodian may hold Holders' money entitlements in
client bank accounts outside the United Kingdom on a pooled basis pending
distribution and such money may not be protected as effectively as money
held in a bank account in the United Kingdom; in particular, the relevant
bank may be entitled to combine funds held in a client bank account with
any other account of the Depository or the Custodian or to exercise any
right of set-off or counterclaim against money held in a client bank
account in respect of any sum owed to it on any other account by the
Depository or the Custodian;
|
16.1.5
|
the
Depository undertakes to take reasonable care in the selection and
continued use of any person who provides banking and related services in
connection with the Deposited Company Securities but neither the
Depository nor the Custodian is responsible for the acts or omissions of
any such person; and the Holder further acknowledges and agrees that any
such person is responsible only to any or both of the Depository and the
Custodian and undertakes to take no action to recover damages,
compensation or payment or remedy of any other nature from any such
person; and that
|
16.1.6
|
nothing
in this Deed shall prevent the Depository carrying out nominee or
depository services for anybody
else.
|
17.
|
LIABILITY TO PAY STAMP DUTY
RESERVE TAX
|
17.1
|
The
Holder agrees and acknowledges that if and to the extent that stamp duty
reserve tax
("SDRT")
is not payable on agreements to transfer certain Depository
Interests by virtue of the Stamp Duty Reserve Tax (UK Depository Interests
in Foreign Securities) Regulations 1999, it shall be the responsibility of
the Holder, and not the Depository or any other person, to ensure that any
Depository Interests which the Holder is proposing to acquire or dispose
of by means of the CREST system and which are identified by the CREST
system as being exempt from the charge to SDRT on their transfer are so
exempt.
|
17.2
|
The
Holder undertakes:
|
17.2.1
|
to
notify the Operator and the Depository immediately if Depository Interests
which the Holder is proposing to acquire or dispose of by means of the
CREST system and which are identified by the CREST system as being exempt
from the charge to SDRT on their transfer are not so exempt;
and
|
17.2.2
|
to
pay to the Operator any SDRT and any interest, charges or penalties in
relation to late or non-payment of SDRT arising directly or indirectly
from any agreement of the Holder to acquire or dispose of Depository
Interests or Company Securities represented or to be represented by
Depository Interests which are not exempt for whatever reason from the
charge to SDRT on their transfer and to hold the Depository harmless from
any and all Liabilities arising from or incurred in connection
therewith.
|
17.3
|
For
the purposes of this clause 17, a CREST member will be taken to be
proposing to
acquire
Depository Interests or to have entered into an agreement to
acquire
Depository
Interests if he acquires Depository Interests from another
CREST
member
or if the Depository Interests are to be issued to him and to be proposing
to dispose of Depository Interests or to have entered into an agreement to
dispose of Depository Interests if he disposes of Depository Interests to
another CREST member or if the Depository Interests would, as a result, be
cancelled.
|
18.
|
REGULATORY
REQUIREMENTS
|
18.1
|
The
Depository is regulated in the conduct of its investment business (which
for these purposes is taken to refer to the safeguarding and
administration of the holdings of Company Securities in the manner
described in this Deed) by the FSA. The following further provisions apply
in relation to such investment
business.
|
18.2
|
The
Holder may give instructions to the Depository in the manner described in
this Deed. The Depository will not specifically acknowledge such
instructions.
|
18.3
|
The
Depository has established procedures in accordance with the requirements
of the FSA for the effective consideration of complaints by Holders. All
formal complaints should be made in writing to the compliance officer of
the Depository at the registered office address of the Depository from
time to time. In addition, Holders have a right of complaint direct to the
Financial Ombudsman Service.
|
18.4
|
A
statement is available from the Depository describing Holders' rights to
compensation if the Depository is unable to meet its
liabilities.
|
18.5
|
None
of the Depository, the Custodian or its nominee shall (a) arrange for any
Company Securities or other Deposited Property to be lent to any other
person, or (b) charge in favour of any other person any such property as
security.
|
19.
|
DISCLOSURE OF OWNERSHIP,
etc
|
19.1
|
The
Depository or the Custodian may from time to time require from any Holder
or former or prospective
Holder:
|
19.1.1
|
information
as to the capacity in which such Holder owns, owned, holds or held
Depository Interests and regarding the identity of any other person or
persons who then or previously has or has had any interest of any kind
whatsoever in such Depository Interests and/or the underlying Company
Securities represented thereby and the nature of any such interest;
and
|
19.1.2
|
evidence
or declaration of nationality or residence of the legal or beneficial
owner(s) of Depository Interests registered or to be registered in his
name and such information as is required for the transfer of the relevant
Company Securities to the Holder, and such other information as may be
necessary or desirable for the purposes of this Deed or any other
agreement or arrangement relating to the CREST system. Each Holder agrees
to provide any such information requested by the Company or the Depository
or the Custodian and consents to the disclosure of such information by the
Depository or Custodian or the Company to the extent necessary or
desirable to comply with their respective legal or regulatory obligations
in any jurisdiction or any provision of the Constitutional Documents of
the Company.
|
19.2
|
To
the extent that provisions of or governing any Company Securities or the
Constitutional Documents of the Company or applicable law or regulation in
any jurisdiction may require the disclosure to the Company of, or
limitations in relation to, beneficial or other ownership of or any
interest of any kind whatsoever in Company Securities or other securities,
the Holders of Depository Interests shall comply with the provisions of
such Constitutional Documents, and applicable laws and regulations and
with the Company's instructions in respect of such disclosure or
limitation, as may be forwarded to them from time to time by the
Depository. Holders shall comply with all such disclosure requirements of
the Company from time to
time.
|
20.
|
NOTICES
|
20.1.1
|
personally
on any person or on a director or officer or the secretary of any party
and shall be treated as served at the time of such
service;
|
20.1.2
|
by
prepaid first class post (or by airmail if from one country to another)
and shall be treated as served on the second (or if by airmail the fourth)
business day after the date of posting. In proving service it shall be
sufficient to prove that the envelope containing the notice was correctly
addressed, postage paid and
posted;
|
20.1.3
|
by
delivery of the notice through the letterbox of the party to be served and
shall be treated as served on the first business day after the date of
such delivery;
|
20.1.4
|
if
by fax when received in a legible form;
or
|
20.1.5
|
if
by e-mail or other electronic communication (such contact details as
agreed by the party to be served) when received in a legible
form.
|
21.
|
SEVERABILITY
|
22.
|
COPIES OF
DEED
|
23.
|
GOVERNING LAW AND
JURISDICTION
|
23.1
|
This
Deed and the Depository Interests shall be governed by and construed in
accordance with English law.
|
23.2
|
For
the benefit of the Depository, the Holder irrevocably agrees that the
courts of England shall have jurisdiction to hear and determine any suit,
action or proceeding, and to settle any disputes, which may arise out of
or in connection with this Deed. For such purposes, the Holder irrevocably
submits to the jurisdiction of the courts of
England.
|
23.3
|
The
Holder irrevocably waives any objection which it might now or hereafter
have to the courts referred to in clause 23.2 being nominated as the forum
to hear and determine any suit, action or proceeding, and to settle any
disputes, which may arise out of or in connection with this Deed and agree
not to claim any such court is not a convenient or appropriate
forum.
|
23.4
|
The
submission to the jurisdiction of the courts referred to in clause 23.2
shall not (and shall not be construed so as to) limit the right of the
Depository to take proceedings against the Holder in any other court of
competent jurisdiction nor shall the taking of proceedings in any one or
more jurisdictions preclude the taking of proceedings in any other
jurisdiction, whether concurrently or
not.
|
24.
|
OVERRIDING
PROVISIONS
|
24.1
|
For
so long as the Depository Interests remain a participating security in
CREST, no
provision
of this Deed or of any other instrument relating to the Depository
Interests
of
that series shall apply or have effect to the extent that it is in any
respect
inconsistent
with:-
|
24.1.1
|
the
holding of the Depository Interests in uncertificated
form;
|
24.1.2
|
the
transfer of title to the Depository Interests by means of a relevant
system; or
|
24.1.3
|
the
Regulations.
|
24.2
|
Without
prejudice to the generality of clause 24.1 and notwithstanding anything
contained
in this Deed or any such
instrument:-
|
24.2.1
|
all
Depository Interest Registers shall be maintained at all times in the
United Kingdom;
|
24.2.2
|
Depository
Interests may be issued in uncertificated form in accordance with and
subject as provided in the
Regulations;
|
24.2.3
|
title
to the Depository Interests which are recorded on a Depository Interest
Register as being held in uncertificated form may be transferred by means
of the relevant system
concerned;
|
24.2.4
|
the
Depository shall comply with the provisions of regulations 25 and 26 of
the Regulations in relation to the Depository
Interests;
|
24.2.5
|
regulation
41 of the Regulations may be applied by the Depository where relevant;
and
|
24.2.6
|
a
number of persons up to but not exceeding four may be registered as joint
holders of a Depository
Interest.
|
Admission
Date
|
4
th
December 2007
|
Board
Resolution
|
the
resolution of the Board of Directors of the Company duly passed on
[ ] 2008 by virtue of which the
Company treats a CREST Transfer or a Demat Form in which either no
transferee or a transferee other than the Custodian is specified together
with a Stock Deposit Transaction for a number of Depository Interests
equivalent to that specified in such CREST Transfer or Demat Form as valid
instruments of transfer of shares in the capital of the Company and to
authorise the same for registration as valid transfers of the number of
securities specified therein to the Custodian;
|
Company
|
Medgenics,
Inc., a company incorporated and registered in the Territory with limited
liability under the Delaware General Corporation Law under file number
3166521 and the common shares of which have been admitted to trading on
the Market;
|
First
Series of Depository Interests
|
all
Depository Interests from time to time constituted and issued in
accordance with this Deed in relation to Company Securities which are
common shares of US$0.0001 par value each having the rights set out in the
Constitutional Documents of the Company;
|
Market
|
Alternative
Investment Market (
"AIM"
)
of the London Stock Exchange plc;
|
Territory
|
United
States of America where the Company is incorporated and
registered.
|
The Common Seal of | ) |
CAPITA IRG TRUSTEES LIMITED | ) |
was hereunto affixed in | ) |
the presence of: | ) |
The
Company:
|
MEDGENICS,
INC.
|
|
By:
|
|
|
Name:
|
||
Title:
|
|
||
(Name
of entity Investor)
|
||
By:
|
|
|
Name:
|
||
Title:
|
|
|
(Name
of individual Investor)
|
|
|
|
(Signature
of individual Investor)
|
Aggregate
Purchase Price for Debentures Purchased:
|
$
|
Address
for Notice:
|
|
|
|
|
Title
|
Application
Date/
Number
|
Owner
|
File Status
|
|||
IN
VITRO MICRO-
|
16-Nov-94
|
US
5,888,720
|
||||
ORGANS
|
US
08/341,409
|
Yissum
|
Issued
|
|||
30-Mar-99
|
||||||
IN
VITRO MICRO-
|
17-Nov-94
|
Issued
|
||||
ORGANS
|
111676
|
Yissum
|
16-Mar-05
|
|||
IN
VITRO MICRO-
|
21-Dec-94
|
Yissum
|
Pending
|
|||
ORGANS
|
Europe
03019593.7
|
|||||
IN
VITRO MICRO-
|
09-Jun-00
|
|||||
ORGANS,
AND USES
|
US
10/320,703
|
Yissum
|
Pending
|
|||
RELATED
THERETO
|
Issuance
Date: __________ _, 2009
|
Original
Principal Amount: U.S.
$________
|
MEDGENICS,
INC.
|
|
By:
|
|
Name:
|
|
Title:
|
Date of Conversion:
|
|
Aggregate Conversion Amount to be converted:
|
|
Conversion Price:
|
|
Number of shares of Common Stock to be issued:
|
|
Issue to:
|
|
Facsimile
Number:
|
|
Authorization:
|
|
By:
|
|
Title:
|
|
Dated:
|
|
Account Number:
|
|
(if electronic book entry transfer)
|
|
Transaction Code Number:
|
|
(if electronic book entry transfer)
|
MEDGENICS,
INC.
|
|
By:
|
|
Name:
|
|
Title:
|
THE
COMPANY:
|
MEDGENICS,
INC.,
|
||
By:
|
/s/ Andrew L. Pearlman
|
||
Name:
|
|||
Title:
|
PURCHASERS:
|
|||
WINDY
CITY, INC.
|
WINDY
CITY, INC.
|
||
By:
|
/s/ Joel Kanter
|
||
Name: Joel
Kanter
|
|||
Title:
President
|
|||
Number
of
Shares: 48,148
|
Address
for Notice:
|
||
EUGENE
BAUER
|
/s/
Eugene
Bauer
|
|
Eugene
Bauer
|
||
Number
of
Shares: 96,295
|
Address
for Notice:
|
59
MONTECITO RD
|
|
SAN
RAFAEL, CA 94901
|
ANDREW
L. PEARLMAN
|
/s/
Andrew L. Pearlman
|
|
Andrew
L. Pearlman
|
||
Number
of
Shares: 48,148
|
Address
for Notice:
|
||
THE
COMPANY
:
|
MEDGENICS,
INC.
|
||
By:
|
/s/ Andrew L. Pearlman | ||
Name:
|
Andrew L. Pearlman | ||
Title:
|
President & CEO | ||
PURCHASERS
:
|
|||
[Name
of Entity Purchaser]
|
|||
By:
|
|||
Name:
|
|||
Title:
|
|||
Number
of Shares:
|
|||
Address
for Notice:
|
|
||
|
[Name
of Individual Purchaser]
|
||
|
Number
of Shares:
|
||
Address
for Notice:
|
|
||
1.
|
PURCHASE
AND SALE OF NOTES AND WARRANTS.
|
2.
|
BUYER’S
REPRESENTATIONS AND WARRANTIES.
|
3.
|
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
|
4.
|
COVENANTS.
|
5.
|
REGISTER;
LEGEND.
|
6.
|
CONDITIONS
TO THE COMPANY’S OBLIGATION TO
SELL.
|
7.
|
CONDITIONS
TO EACH BUYER’S OBLIGATION TO
PURCHASE.
|
8.
|
TERMINATION.
|
9.
|
MISCELLANEOUS.
|
COMPANY:
|
|||
MEDGENICS,
INC
|
|||
By:
|
/s/ Andrew L. Pearlman
|
||
Name:
Andrew L. Pearlman
|
|||
Title:
President
|